The residential real estate industry is one of the largest in the United States. According to REAL Trends, an industry research firm, residential real estate sales totaled over $1.5 trillion in 2003, which represented over 14% of U.S. gross domestic product that year. Also according to the REAL Trends, sales of existing homes comprise the vast majority of the residential real estate market, accounting for $1.3 trillion of 2003 total home sales. Additionally, REAL Trends reported that total residential real estate brokerage commissions and fees, which are primarily derived from existing home sales, were approximately $60 billion in 2003. Favorable demographic, cultural and economic trends have contributed to consistent long-term growth in the residential real estate industry. From 1983 to 2003, the residential real estate industry grew at a compound annual growth rate of 9% in terms of aggregate sales volume.

According to REAL Trends, the 10 largest brokerage firms accounted for approximately 10% of all brokered residential real estate transaction volume in 2003, and the single largest firm accounted for less than 5% of total transaction volume. According to NAR, there are in excess of one million licensed real estate agents in the United States and an estimated 70,000 residential real estate brokerage firms.

The Company offers individuals who register on the Company’s web site access to complete available home listings data, including pictures, from the local MLSs in the markets in which the Company operates. Unlike many real estate web sites, the Company shows listings from all broker participants in the MLSs, not just its own listings. The Company updates this data frequently, often multiple times daily. The Company’s web site is password protected, so only individuals who provide basic registration information, agree to the terms of use and then return to the Company’s site to input a code which the Company emails to them at the time of their registration, are able to access complete home listings data.

One of the most popular consumer web site tools is called ZipNotify, which allows consumers to receive an automatic email notification each time a property which meets their desired search criteria is listed on the local MLSs. The ZipNotify tool is also interactive, so with one click the consumer can login to see more detailed information on the home, schedule a visit with one of the Company’s agents to see the home, or send an email to one of the agents requesting more information about the property.

The Company also offers the clients additional services to make their home purchase or sale more convenient. Through its network of preferred providers, the Company offers insurance, inspection, moving, home improvement and utility services.

Cost of revenues for the year ended December 31, 2002 was $13.5 million and increased by 48.2% to $19.9 million for the year ended December 31, 2003.

Product development expenses were $1.7 million for fiscal 2003, an increase of 10.1%, compared to fiscal 2002.

Marketing and business development expenses increased to $4.5 million for fiscal 2003, an increase of 12.4%, compared to fiscal 2002.