In the future, we may attempt to acquire other businesses or seek an
equity or strategic partner to expand our services or capabilities in connection
with our efforts to grow our business. Acquisitions involve certain risks and
uncertainties and may require additional financing. Therefore, we can give no
assurance with respect to whether we will be successful in identifying
businesses to acquire or an equity or strategic partner, whether we or they will
be able to obtain financing to complete a transaction, or whether we or they
will be successful in operating the acquired business.
CONTINUED LISTING ON NASDAQ SMALLCAP MARKET
In June 2002, the NASDAQ approved our transition from the NASDAQ
National Market System to the NASDAQ SmallCap Market. Our securities began
trading on the NASDAQ SmallCap Market on June 10, 2002.
This transition occurred in response to NASDAQ Marketplace Rule
4450(a)(5), which requires a minimum bid price of $1.00 for continued listing on
the NASDAQ National Market. The SmallCap Market also has a minimum bid price of
$1.00 per share. However, as compared to the 90-day grace period provided by the
NASDAQ National Market, the SmallCap Market currently has a longer bid price
minimum grace period of 180 days from receipt of NASDAQ Delisting Notification
(February 14, 2002 for the Company). This grace period extended us through
August 13, 2002.
Due to our compliance with the initial listing requirements for the
NASDAQ SmallCap Market, on August 14, 2002 we have been provided an additional
180 day grace period, or until February 10, 2003 to regain compliance. We can,
however, provide no assurance as to our ability to maintain compliance with the
listing standards and our continued listing in the NASDAQ SmallCap Market.
The seasonality of our business is dependent upon the seasonality of
our clients' business and their sale of their products. Accordingly, our
management must rely upon the projections of our clients in assessing quarterly
variability. We believe that with our current client mix, our business activity
will be at it lowest in the quarter ended March 31 and at its highest in the
quarter ended June 30.
We believe that results of operations for a quarterly period may not be
indicative of the results for any other quarter or for the full year.
Management believes that inflation has not had a material effect on our
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
On January 1, 2002, we adopted the provisions of EITF D-103 "Income
Characterization of Reimbursements Received for 'Out-of-Pocket' Expenses
Incurred." For the periods presented above, our billings for reimbursements of
'out-of-pocket' expenses, such as travel, and certain third-party vendor
expenses such as shipping and handling costs and telecommunication charges are
included in gross service fee revenue. The related reimbursable costs are
reflected as pass-through charges and reduce total gross service fee revenue in
computing net service fee revenue.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses the accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. We are currently assessing the impact on the
consolidated financial statements and will adopt the provisions of this standard
by the first quarter of 2003.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal