The Company accounts for its acquisitions utilizing the purchase method of accounting. Under the purchase method of accounting, the total consideration paid is allocated to the underlying assets and liabilities, based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of certain acquired assets and liabilities, identifiable intangible assets in particular, is subjective in nature and often involves the use of significant estimates and assumptions including, but not limited to: estimates of revenue growth rates, determination of appropriate discount rates, estimates of advertiser and publisher turnover rates, and estimates of terminal values. These assumptions are generally made based on available historical information. Definite-lived identifiable intangible assets are amortized on a straight-line basis, as this basis approximates the expected cash flows from the Company’s existing definite-lived identifiable intangible assets

Intangible Assets

 

The Company records the purchase of intangible assets in accordance with SFAS 142 “Goodwill and Other Intangible Assets.” Intangible assets consist of Customer Relationships, $600,000, and Developed Technology, $790,000.

 

Customer Relationships are amortized based upon the estimated percentage of annual or period projected cash flows generated by such relationships, to the total cash flows generated over the estimated three year life of the Customer Relationships. Accordingly, amortization for the four month period ending December 31, 2007 is 52% and 43% and 5% for the years ended December 31, 2008 and 2009, respectively.

Developed Technology is being amortized on a straight-line basis over 5 years.

 

As of September 30, 2007, Intangible Assets, net of amortization are $1,298,906.

 

 

The Company tests goodwill for impairment in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. Accordingly, goodwill is tested for impairment at least annually at the reporting unit level or whenever events or circumstances indicate that goodwill might be impaired. The Company has determined its reporting units based on the guidance in SFAS No. 142 and Emerging Issues Task Force (“EITF”) Issue D-101, “Clarification of Reporting Unit Guidance in Paragraph 30 of FASB Statement No. 142.” As of September 30, 2007, the Holdings reporting units consisted of the Company and Desktop. The Company, and now Holdings, has elected to test for goodwill impairment annually as of December 31.

 

Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry or economic trends, a significant decline in the Company’s stock price for a sustained period of time, and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair market value of the assets.

 

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Revenue Recognition

 

The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition in Financial Statements.”  Under SAB No. 104, the Company recognizes revenue when the following criteria have been met: persuasive evidence of an arrangement exists, the fees are fixed or determinable, no significant Company obligations remain, and collection of the related receivable is reasonably assured.

 

Revenues consist of amounts charged to customers, net of discounts, credits and amounts paid or due under revenue sharing arrangements, for actions on advertisements placed on our publisher vendor’s websites. The Company’s revenue is recognized in the period that the advertising impressions, click-throughs or actions occur, when lead-based information is delivered or, provided that no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and prices are fixed or determinable. Additionally, consistent with the provisions of EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” the Company recognizes revenue as a principal. Accordingly, revenue is recognized on a gross basis.

 

The Company’s financial instruments, including cash and cash equivalents, accounts payable and accrued expenses, are carried at historical cost basis. At September 30, 2007, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

 

 

The Company uses the asset and liability method of accounting for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year, and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. A liability (including interest if applicable) is established in the consolidated financial statements to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Applicable interest is included as a component of income tax expense and income taxes payables.

 

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Stock-based Compensation

 

Compensation expense associated with the granting of stock based awards to employees and directors and non-employees is recognized in accordance with SFAS No. 123(R), ”Share Based Payment” and related interpretations. SFAS No. 123(R) requires companies to estimate and recognize the fair value of stock-based awards to employees and directors. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method.

 

Basic and Diluted Net Income Per Common Share

 

Basic net income per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per common share is computed using the weighted-average number of common shares outstanding for the period, and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents.

 

Recent Accounting Pronouncements

SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"): In February 2007, the FASB issued SFAS 159 which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 will be effective for us on January 1, 2008. We are currently evaluating the impact of adopting SFAS 159 on our financial position, cash flows, and results of operations.

3. Net Loss per Share

Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of common and potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of stock options and warrants and conversion of convertible debt (using the treasury stock method). Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. The treasury stock effect of options, warrants and conversion of convertible debt to shares of common stock outstanding at September 30, 2007, respectively, has not been included in the calculation of the net loss per share as such effect would have been anti-dilutive. As a result of these items, the basic and diluted loss per share for all periods presented are identical. The following table summarizes the weighted average shares outstanding:

 

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			Three-month period ended September 30, 2007			From June 14, 2007 (inception) to September 30, 2007)
Net (loss)		$	(937,787	)	$	(937,787	)
Weighted-average common shares
outstanding—basic			23,756,165			22,292,694
Dilutive effect of stock options			-			-
Number of shares used to compute net
income per common share—diluted			23,756,165			22,292,694
Net (loss) per common share:
Basic			(0.04	)		(0.04	)
Diluted			(0.04	)		(0.04	)

 

4. Income Taxes

As part of the allocation of purchase price associated with the Desktop Merger (see Note1) as deferred tax liabilities of $556,000 were established as a result of differences between the book and tax basis of acquired intangible assets. In addition, as of September 30, 2007 the company has a net deferred tax asset of $243,582 recognized as of result of $1,217,806 consolidated net loss before income taxes for the period from June 14, 2007 (inception) to September 30, 2007. The deferred tax asset is net of a $191,506 valuation allowance.

The difference between the statutory overall combined federal and state benefit of 40% and the effective 23.7% benefit for the three month period ended September 30, 2007 is a result of a $191,506 valuation allowance provision.

5. Shareholders’ Equity

Common Stock

 

At inception, CAN issued 14,000,000 common shares to two founders for a subscription receivable of $14,000 or $0.001 per share. The subscription payment was received in August 2007.

 

On June 28, 2007, CAN issued 2,600,000 common shares to three officers pursuant to their employment agreements. A subscription receivable of $2,600 or $0.001 per share was recorded as of July 31, 2007. The subscription payment was received in August 2007.

During July and August 2007 the Company issued 7,138,000 common stock for proceeds of $6,998,416 net of offering costs of $139,584.

On August 28, 2007 the Company is deemed to have issued 6,575,000 common shares pursuant to a recapitalization (See Note1).

On August 28, 2007 the Company issued 500,000 common shares upon conversion of $250,000 mandatory redeemable convertible debt.

 

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On August 31, 2007, the Company issued 3,500,000 common shares in consideration for the purchase of Desktop (See Note 1),

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited in the local currency with a limited number of financial institutions in the United States. The balances in the United States held at any one financial institution may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of September 30, 2007, there was approximately $1,941,000 in excess of insurable limits.

 

Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential bad debts.

 

For the period from June 14, 2007 (inception) to September 30, 2007, the Company had various significant customers with individual percentage of total revenues equaling 10% or greater as follows:

 

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			From June 14, 2007 (inception) to September 30, 2007)
Customer 1			47	%
Customer 2			16	%
% of total Revenues			63	%

 

At September 30, 2007concentration of accounts receivable with Significant Customers representing 10% or greater of accounts receivable was as follows: 

 

		2007
Customer 1			34	%
Customer 4			12	%
% of total Accounts Receivable			46	%

 

8. Related Party transactions

 

Accounts payable to related parties was $22,412 as of September 30, 2007.

 

9. Subsequent events

Other Common Stock Grants for Services

Consulting Agreement and Warrant Granted

 

On October 12, 2007, the Company entered into an additional consulting agreement with a provider of investor and public relation services (the “Second Consulting Agreement”). Under the terms of the Second Consulting Agreement, the service provider is to provide described services under an 18-month term at fees of $12,000 monthly. In connection with the Company entering into the Second Consulting Agreement, The Company issued, on October 12, 2007, 600,000 additional warrants for Holdings common stock at an exercise price of $0.01 per share (the “Additional Warrant”). The Additional Warrants expires on October 31, 2007, In addition, as of the date, Holding entered into the Consulting Agreement, the Additional Warrant to be issued under such Consulting Agreement is fully vested and non-forfeitable. Accordingly, in accordance with Emerging Issues Task Force 00-18, “Accounting Recognition for Certain transactions Involving Equity Instruments Granted to Other Than Employees” the fair market value of the Additional Warrant, $599,402, will be deferred and recognized pro rata over the agreement term. The value of the warrants will be reflected in equity as well as the corresponding unamortized deferred compensation. On October 22, 2007, the consultant exercised the Additional Warrant and the Company received $6,000.

On October 12, 2007, Holdings granted 671,000 common stock options at an exercise price of $1.00 per share to certain employees of Holdings. Of this amount 625,000 options expire September 21, 2012 and vest one quarter per year over 3 years and the remaining 46,000 options expire September 21, 2012 and vest one quarter per year over 4 years.

The total value related to the aforementioned options granted is approximately $449,000, to be recognized over the respective vesting periods.

 

Stock Settelment

 

On October 12, 2007, the Company agreed to issue 66,667 shares in settlement of outstanding legal fees. The shares were valued at $1.00 per share.

 

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Item 2. Management’s Discussion and Analysis or Plan of Operation

 

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Cautionary Factors That May Affect Future Results” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

 

Company Overview

 

We are a start-up provider of Internet advertising solutions for Internet publishers and advertisers. We intend to offer advertisers an integrated multi-channel Internet advertising solution designed to satisfy their growing demand for new customer leads and acquisitions. We intend to deliver pay-for-performance-based Internet advertising solutions known as cost-per-action, or CPA, cost-per-click, or CPC, and cost-per-thousand, or CPM. With CPA, an advertiser only pays when an Internet user completes an action as defined by the advertiser. Examples of CPA actions include, but are not limited to, the acquisition of qualified database entrants (such as opt-in email), driving sign-ups, downloads, inquiries or acquiring paying customers. In the case of CPC, an action is defined by an Internet user clicking on an advertisement.

In the case of CPM, we believe we are revolutionizing the way advertisers are able to purchase online media. In the past, marketers are unable to pinpoint exactly which websites attract a high percentage of the target audience they are trying to reach based on their desired metric. With our ad network, interCLICK, we empower the advertiser to reach the exact target audience by offering unparalleled transparency as well as a suite of advanced targeting capabilities that ensure brand metrics are achieved without sacrificing reach or quality. With this approach, interCLICK is taking the inefficiencies out of the buyer/seller dynamic by allowing CPM advertisers to achieve a direct response metric, whether it’s a click, lead or a sale. This fundamental difference allows online marketers to achieve better ROI while still being able to target the premium websites.

Prior to August 28, 2007, we were a public company, without material assets or activities. On August 28, 2007, we completed a reverse merger, pursuant to which a wholly-owned subsidiary of ours merged with and into a private company, Customer Acquisition Network, Inc., with such private company being the surviving company. In connection with this reverse merger, we discontinued our former business and succeeded to the business of Customer Acquisition Network, Inc. as our sole line of business. For financial reporting purposes, Customer Acquisition Network, Inc., and not us, is considered the accounting acquirer. Accordingly, the historical financial statements presented and the discussion of financial condition and results of operations herein are those of Customer Acquisition Network, Inc. and do not include our historical financial results. All costs associated with the reverse merger, other than financing related costs in connection with the simultaneous sale of $1,575,000 of common stock on August 31, 2007, were expensed as incurred.

 

On August 31, 2007, we consummated the acquisition of Desktop Interactive, Inc., known in the industry as interClick, one of the nation’s leading Internet advertising networks. ComScore, the industry standard utilized to measure an ad network’s capability to reach unique online visitors, recently rated interClick as the eleventh largest and fastest-growing Ad Network in the United States. interClick reaches 85 million unique U.S. visitors per month, or 47% of the U.S. online population, with impressions per month exceeding four billion. interClick’s rapidly expanding customer base includes some of the world’s largest Internet publishers and advertisers.

 

Results of Operations

The following table presents our results of operations for the three months ended September 30, 2007. It should be noted that our results of operations and our liquidity and capital resources discussions include the operation of Desktop for the one month period of September 30, 2007 and the operations of Holdings for the three months ended September 30, 2007.

 

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Results of Operations

 

			Three months ended September 30, 2007
Revenues		$	1,169,991
Cost of Revenue			1,083,613
Gross profit			86,378
Operating expenses
Sales and marketing			109,884
General and administrative			939,849
Amortization of intangible assets			91,094
Merger & Acquisition cost			187,353
Total operating expenses			1,328,179
(Loss) from operations			(1,241,802	)

 

Revenues

Revenues for the three months ended September 30, 2007 were $1,169,991 and represent one month of Desktop operations. With the continued overall growth in online advertising and other strategic initiatives undertaken by Desktop, we expect our advertising revenues to continue to increase. Post acquisition, we implemented strategic growth plans including the hiring of additional sales and marketing resources, to expand our advertiser base and lessen our dependency on any one particular advertiser.

 

Cost of Revenue and Gross Profit

Cost of revenue for the three months ended September 30, 2007 were $1,083,613 and represents the amounts we paid to website publishers on Desktop’s online advertising network. Cost of revenue and attendant gross margins represent one month of post acquisition operations of Desktop. We pay our publishers on a cost per thousand (CPM) or a revenue share basis. The amount of display advertisements we are able to deliver e.g. impressions, is based upon the level of publishing media we can acquire. Based on our ComScore rating, as of September 30, 2007, we currently reach 47% of the domestic online population and are ranked as the eleventh largest ad network in the domestic online marketplace. We expect to continue to expand our publisher base as well as increase the levels of acquired publishing media, particularly with tier one publishers. 

  

Prior to our acquisition of Desktop on August 31, 2007, we made a strategic decision that on a going forward basis, we would discontinue our relationship with a previously underperforming ad network partner and replace it with the respective network’s primary advertiser. While we were successful in implementing our strategy, we experienced a decline in gross profit margins for the month of September. Gross profit margin was $86,378 or 7.4%.

 

Our gross profit percentage was below pro forma historical pre-acquisition levels. However, due to our current online reach, coupled with the broadening and expansion of our advertiser base, we expect to return to pre-acquisition levels of gross profit margins.

 

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Unaudited Desktop Interactive, Inc Pro Forma Revenues and Gross Profit Margins

Unaudited Pro Forma Revenues and Gross Profit Margins. 

On a pro forma basis, assuming the acquisition of Desktop took place on January 1, 2007, Desktop revenues and gross profit margin percentages for the three month and nine month periods ended September 30, 2007 were $3,491,000 and $6,399,000 respectively and 16.9% and 21.9%, respectively. The unaudited pro forma revenues and gross margins are not necessarily indicative of future results.

Operating Expenses:

Sales and Marketing

Sales and marketing expenses consist primarily of compensation of sales and marketing, network development and related support resources, sales commissions and trade shows. Sales and marketing expenses were $109,884 and represent one month of post acquisition operations of Desktop. We expect sales and marketing costs to increase as a result of our continued expansion of sales and marketing resources and the expected overall growth in our business.

General and Administrative 

General and administrative expenses consist primarily of executive and administrative compensation, facilities costs, insurance, depreciation, technology support and hosting and professional services fees. Total general and administrative expenses were $939,848 of which $314,942 represents one month of post acquisition operations of Desktop. The remaining expense primarily represents Holdings executive and administrative salaries, facilities costs, insurance and professional services fees. In addition, total general and administrative expenses include $225,000 of expenses associated with signing bonuses and related costs associated with executive employment contracts, including the President of Desktop.

Professional fees for the three months ended September 30,2007 was $206,107 of which $187,353 have been reclassified from general and administrative expenses to merger, acquisition and organizational costs due to the nature of the services rendered during the three months ended September 30, 2007.

Merger, Acquisition and Organizational Costs

Merger, Acquisition and Organizational Costs consist primarily of legal fees associated with the formation of Customer Acquisition Network, Inc., legal fees related to the recapitalization and merger of Customer Acquisition Network, Inc. a wholly-owned subsidiary of Holdings and audit and accounting services related to the acquisition of Desktop. Total merger, acquisition and organizational costs were $187,353 for the three months ended September 30, 2007.

Stock Based Compensation

Stock based compensation includes amortization of the value of warrants issued to non employees in regard to providing of professional services. The value of warrants granted to non- employees is being amortized over the life of the respective professional services contracts. Stock based compensation for the three- months ended September 30, 2007 was $43,311

 

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Amortization of Intangible Assets

Amortization of intangible assets for the three months ended September 30, 2007 was $91,094. This amount represents the amortization of intangible assets, Customer Relationships and Developed Technology, acquired through the acquisition of Desktop.

Intangibles associated with Customer Relationships, $600,000 are being amortized on an accelerated basis wherein 52% will be amortized by December 31, 2007, 43% though December 31, 2008 and the remainder in 2009. The Company recorded amortization expense of $91,094 related to Customer Relationships for the three months ended September 30, 2007.

Liquidity and Capital Resources

At September 30, 2007, the Company had a cash and cash equivalent balance of approximately $2.0 million and working capital of approximately $1.5 million. Net cash used in operations was approximately $0.9 million for the three months ended September 30, 2007. The use of cash consisted primarily of net losses of $937,000 offset primarily by a net increase in working capital of $42,000 by non-cash items such as amortization of intangible assets related to the acquisition of Desktop of $0.1 million.

Cash used in investing activities for the three months ended September 30, 2007 was approximately $4.3 million. The primary use of the cash was to purchase our newly acquired subsidiary, Desktop. Cash used for the purchase of Desktop was approximately $4.3 million, Net of Cash Acquired.

Cash provided by financing activities for the three months ended September 30, 2007 was approximately $7.3 million, net of offering cost. The completion of the private placement in August 2007 resulted in net proceeds to the company of approximately $7.0 million.

 

The convertible note issued by the founders June, 2007 resulted in cash proceeds of $250,000.

 

 

Critical Accounting Policies and Estimates

Revenue Recognition

 

The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition in Financial Statements.”  Under SAB No. 104, the Company recognizes revenue when the following criteria have been met: persuasive evidence of an arrangement exists, the fees are fixed or determinable, no significant Company obligations remain, and collection of the related receivable is reasonably assured.

 

Revenues consist of amounts charged to customers, net of discounts, credits and amounts paid or due under revenue sharing arrangements, for actions on advertisements placed on our publisher vendor’s websites. The Company’s revenue is recognized in the period that the advertising impressions, click-throughs or actions occur, when lead-based information is delivered or, provided that no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and prices are fixed or determinable. Additionally, consistent with the provisions of EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” the Company recognizes revenue as a principal. Accordingly, revenue is recognized on a gross basis.

 

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Fair Value of Financial Instruments

 

The Company’s financial instruments, including cash and cash equivalents, accounts payable and accrued expenses, are carried at historical cost basis. At September 30, 2007, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

 

Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. A liability (including interest if applicable) is established in the consolidated financial statements to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Applicable interest is included as a component of income tax expense and income taxes payables.

 

Stock-based Compensation

 

Compensation expense associated with the granting of stock based awards to employees and directors and non-employees is recognized in accordance with SFAS No. 123(R), ”Share Based Payment” and related interpretations. SFAS No. 123(R) requires companies to estimate and recognize the fair value of stock-based awards to employees and directors. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method.

 

Basic and Diluted Net Income Per Common Share

 

Basic net income per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per common share is computed using the weighted-average number of common shares outstanding for the period, and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents.

 

Cautionary Factors That May Affect Future Results

 

This quarterly report on Form 10-QSB and other written reports and oral statements made by us from time to time may contain so-called “forward-looking statements,” all of which are subject to risks and uncertainties. One can identify these forward-looking statements by their use of words such as “expects,” “plans,” “will,” “estimates,” “forecasts,” “projects” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address our growth strategy, financial results and our future performance. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially.

 

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Generally accepted accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of our condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our condensed financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.