International Data Corporation’s U.S. Small Business 2005-2009 Forecast (March 2005) and U.S. Home Office 2005-2009 Forecast (May 2005) estimate that there are over 20 million small office, home office, commonly known as SOHO, firms in the United States, which IDC defines as small firms with fewer than 10 employees as well as home-based businesses. According to the U.S. Census Bureau, 89% of new businesses established each year in the United States have fewer than 10 employees. In Europe, according to a report by the European Network for SME Research, nearly 90% of European Union businesses had less than 10 employees in 2003. IDC’s Worldwide Internet Usage and Commerce 2004-2007 Forecast: Internet Commerce Market Model Version 9.1 (March 2004) estimates that worldwide consumer online spending will grow from $307 billion in 2004 to $759 billion in 2007, with U.S. and European consumers contributing approximately 75% of total amount spent online. In addition, The Freedonia Group estimates that commercial printing demand in the United States will grow from $68.5 billion in 2003 to $84.0 billion in 2008.

Small businesses and consumers seeking graphic design services or printed products have traditionally had three principal alternatives, which are self-service, professional graphic designers and commercial printers, and wholesale/retail print distribution channels. Online commerce provides significant advantages and opportunities to small business customers and consumers seeking high quality graphic design services and customized print products at affordable prices. These customers do not typically require the high quantity print runs that are required to achieve low per-unit pricing and do not maintain dedicated procurement departments to negotiate pricing effectively. It is believed the high price, inconvenience and complexity of traditional printing methods historically has dissuaded these customers from purchasing high-quality printed products for business or personal use. It is believed that the highly fragmented, geographically dispersed small business and consumer markets for graphic design and printing services is ideally suited for Internet-based procurement, as the Internet provides a standardized interface through web browsers, availability seven days a week, 24 hours a day, the ability to offer a wide selection of products and services and the opportunity to efficiently aggregate individual orders into larger print runs.

Through its proprietary technology the Company offers a new approach to graphic design, reducing or eliminating the need for purchased software or a professional graphic designer. The Company provides a simple, quick, and affordable way for customers with no training or experience in graphic arts to produce high-quality, personalized, professional looking graphic designs. The Company provides its customers powerful web-based design and editing software that uses algorithms to automatically create matching design combinations from among over 70,000 high-quality photographic and illustration stock images, thousands of layouts and templates, dozens of fonts and dozens of color schemes. Customers also can easily incorporate their own uploaded photographs, logos or complete designs.

Most customers use the Company’s full complement of web browser-based design and editing software to create personalized materials. In addition, customers are able to upload their own designs to the Company’s system. Customers who want the Company to perform some or all of the design work can contact its design service representatives, who will provide custom designs free of charge.

Once a customer has created a design for a particular product, the Company’s software systems can generate and display one or more matching products of possible interest to the customer using the same design elements without requiring the customer to perform any additional design tasks. A customer can add these additional products to his or her order with a single keystroke.

The Company uses one of the highest quality commercial printing processes in the market. For print jobs in quantities of 250 or more, the Company uses state of the art 40-inch MAN Roland presses that normally are employed only for long run print jobs, such as high end consumer goods packaging, in which quantities of hundreds of thousands or more are produced. For smaller quantities, the Company typically employs Hewlett-Packard Indigo or similar types of professional digital printing equipment.

The Company designs, prints, processes and delivers multiple high-quality customized orders in as little as three days.

Cost of revenue for the nine months ended March 31, 2005 increased by 45% to $25.3 million, compared to $17.5 million for the same period during 2004.

Technology and development expenses for the nine months ended March 31, 2005 were $8.0 million, an increase of $1.9 million, or 31%, compared to $6.1 for the same period in 2004

Marketing and selling expenses increased $9.5 million, or 67%, to $23.5 million for the nine months ended March 31, 2005, as compared to $14.1 million for the same period in 2004.

Net loss for the nine months ended March 31, 2005 was $18.1 million, compared to net income for the nine months ended March 31, 2004 of $1.9 million.