UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-29361

aQuantive, Inc.

(Exact name of registrant as specified in its charter)

Washington
(State of Incorporation) 91-1819567
(I.R.S. Employer Identification Number)

821 Second Avenue, 18th Floor
Seattle, Washington 98104
(Address of principal executive offices)
(206) 816-8800
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     The number of shares of the registrant’s Common Stock outstanding as of August 1, 2007 was 80,806,426.

AQUANTIVE, INC.
FORM 10-Q
FOR THE QUARTER ENDED June 30, 2007
TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 4. Submission of Matters to a Vote of Security Holders	26
Item 6. Exhibits	27
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

2

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AQUANTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)

	June 30,		December 31,
	2007		2006
Assets
Current assets:
Cash and cash equivalents	$	95,144	$	147,795
Short-term investments		214,553		131,012
Accounts receivable, net of allowances of $3,853 and $4,087 at June 30, 2007 and December 31, 2006, respectively		271,093		273,174
Other receivables		3,132		2,312
Prepaid expenses and other current assets		6,407		4,459
Deferred tax assets, net		4,451		4,475
Total current assets		594,780		563,227
Property and equipment, net		43,152		34,343
Goodwill		276,875		269,325
Other intangible assets, net		45,627		47,255
Long-term investments		18,975		32,509
Other assets		3,544		2,754
Deferred tax assets, net		12,187		2,915
Total assets	$	995,140	$	952,328
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	164,848	$	194,386
Accrued liabilities		60,710		56,686
Pre-billed media		23,643		27,945
Deferred rent, current portion		1,120		1,027
Deferred revenue		13,726		16,517
Total current liabilities		264,047		296,561
Long-term accrued liabilities		596		3,720
Notes payable		79,715		80,000
Deferred rent, less current portion		4,055		4,221
Total liabilities		348,413		384,502
Shareholders’ equity:
Preferred stock, $0.01 par value; 21,084 shares authorized and none issued or outstanding
Common stock, $0.01 par value; 200,000 shares authorized; 80,046 and 77,768 issued and outstanding at June 30, 2007 and December 31, 2006, respectively		801		778
Paid-in capital		575,086		522,657
Retained earnings		64,891		41,036
Accumulated other comprehensive income		5,949		3,355
Total shareholders’ equity		646,727		567,826
Total liabilities and shareholders’ equity	$	995,140	$	952,328

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
Revenue	$	155,975	$	105,629	$	298,596	$	197,814
Expenses:
Cost of revenue		24,793		15,258		48,381		28,636
Client support		72,019		46,458		136,986		91,630
Product development		4,873		3,608		9,712		7,288
Sales and marketing		10,318		7,331		20,849		13,971
General and administrative		25,948		11,710		40,998		20,968
Amortization of intangible assets		2,912		2,149		5,655		4,185
Client reimbursed expenses		2,544		1,242		4,599		2,110
Total costs and expenses		143,407		87,756		267,180		168,788
Other operating income		505		—		1,551		—
Income from operations		13,073		17,873		32,967		29,026
Interest and other income, net		4,380		3,746		8,509		5,445
Interest expense		603		582		1,190		1,164
Income before income taxes		16,850		21,037		40,286		33,307
Provision for income taxes		7,237		8,700		16,431		13,355
Net income	$	9,613	$	12,337	$	23,855	$	19,952
Basic net income per share	$	0.12	$	0.16	$	0.30	$	0.28
Diluted net income per share	$	0.11	$	0.15	$	0.27	$	0.25
Shares used in computing basic net income per share		79,238		76,157		78,688		72,207
Shares used in computing diluted net income per share		90,844		87,448		89,970		83,707
Comprehensive income:
Net income	$	9,613	$	12,337	$	23,855	$	19,952
Items of comprehensive income		1,984		640		2,594		624
Comprehensive income	$	11,596	$	12,977	$	26,448	$	20,576

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AQUANTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Six Months Ended
	June 30,
	2007			2006
Cash flows from operating activities:
Net income	$	23,855		$	19,952
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,494			11,774
Stock-based compensation expense		9,370			9,625
Excess tax benefit from stock-based compensation		(25,895	)		(10,774	)
Other non-cash items		(658	)		866
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net		8,706			(22,112	)
Other receivables, prepaid expenses and other current assets		(1,266	)		(3,805	)
Other assets		(1,655	)		186
Accounts payable		(34,725	)		4,741
Accrued liabilities		3,455			(825	)
Pre-billed media		(4,538	)		17,920
Deferred revenue		(2,973	)		(2,120	)
Deferred rent		(77	)		(63	)
Deferred taxes		15,615			10,490
Net cash provided by operating activities		5,708			35,855
Cash flows from investing activities:
Purchases of property and equipment		(18,289	)		(10,988	)
Purchases of available-for-sale investments		(157,692	)		(7,529	)
Proceeds from sales and maturities of available-for-sale investments		92,991			10,028
Purchases of other long-term investments		(4,182	)		—
Acquisitions and related earn-out payments, less cash received of $86 in 2006		(13,584	)		(47,958	)
Net cash used in investing activities		(100,756	)		(56,447	)
Cash flows from financing activities:
Proceeds from equity offering, net of issuance costs		—			198,317
Proceeds from exercises of common stock options and issuance of common stock under the ESPP		16,229			9,143
Excess tax benefit from stock-based compensation		25,895			10,774
Net cash provided by financing activities		42,124			218,234
Effect of exchange rate on cash and cash equivalents		273			118
Net (decrease) increase in cash and cash equivalents		(52,651	)		197,760
Cash and cash equivalents, beginning of period		147,795			77,272
Cash and cash equivalents, end of period	$	95,144		$	275,032

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AQUANTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007
(in thousands, except per share amounts)
(unaudited)

1. Organization and Operations of the Company

     aQuantive, Inc., a Washington corporation, is a digital marketing services and technology company. We are organized into three segments:

     Digital Marketing Services (DMS). Our DMS segment consists of Avenue A | Razorfish, an interactive agency which provides a full-service offering, including website development, interactive marketing and creative development and branding through several offices located in the United States and five interactive and creative agencies located in Europe and Asia Pacific. The agencies within our digital marketing services segment help clients use the Internet as an integrated online business channel to build one-to-one relationships with their customers — ranging from consumers and business customers, to partners and employees.

     Digital Marketing Technologies (DMT). Our DMT segment consists of Atlas, a provider of digital marketing technologies and expertise. Atlas’ software suite enables agencies and enterprise marketers to manage their entire digital marketing effort, including planning campaigns, displaying ads, and optimizing their websites. In addition, select publishers utilize Atlas to manage digital advertising inventory. Our DMT segment also includes AdManager, an ad serving technology that provides web publishers an inventory management solution that enables the publishers to maximize revenue earned from premium display and text placements.

     Digital Performance Media (DPM). Our DPM segment consists of DRIVEpm and Franchise Gator. DRIVEpm is an online advertising network and behavioral targeting business, serving as an intermediary between online publishers and advertisers by procuring online advertising inventory from publishers and reselling that inventory to advertisers on a highly targeted basis. DRIVEpm has operations in both the United States and Europe. Franchise Gator is an extension of the performance media business, focused on the franchise industry, which addresses clients’ needs for online leads. Franchise Gator helps franchise marketers generate leads by presenting prospective franchisees with profiles of franchise opportunities and businesses from a variety of industry sectors, and in turn, providing franchisors with a cost-effective mode of franchise marketing.

2. Summary of Significant Accounting Policies

  Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements include the accounts of aQuantive, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

     These statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of our management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the three and six months ended June 30, 2007 and 2006 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the year ending December 31, 2007. Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles (GAAP) in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

     These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our audited financial statements and the accompanying notes for the years ended December 31, 2006, 2005, and 2004, as included in our Annual Report on Form 10-K filed with the SEC.

  Reclassifications

     Certain prior year amounts have been reclassified to conform to the 2007 presentation.

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  Use of Estimates in the Preparation of Financial Statements

     The preparation of our consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognition for fixed-price contracts, stock-based compensation expense, the carrying amount of property and equipment, intangible assets and goodwill, valuation allowances for receivables, deferred income tax assets and liabilities, state and city taxes, contingencies and obligations related to employee benefits. Actual results could differ from those estimates.

   Change in Accrued Business Tax Liability

     Our estimated business tax liability decreased during the first quarter of 2006 primarily due to a settlement with the City of Seattle for a business tax obligation for the fiscal years 1999 through 2002. During the three months ended March 31, 2006, we made a final settlement payment of $527 and reversed the remaining liability of $1,900, which was recorded as a reduction of general and administrative expense in our Condensed Consolidated Statement of Operations.

   Revenue Recognition

     We follow Staff Accounting Bulletin (SAB) 101, “Revenue Recognition in Financial Statements,” as updated by SAB 104, “Revenue Recognition” which outlines the basic criteria that must be met to recognize revenue and provides guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with the SEC. In addition, SAB 104 integrates the guidance in Emerging Issues Task Force Issue (EITF) 00-21, “Revenue Arrangements with Multiple Deliverables.” We also follow SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts”. In addition, we follow the final consensus reached by the EITF in July 2000 on EITF 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.”

     Digital Marketing Services. Our digital marketing services segment consists of interactive advertising and creative agencies that help clients use the Internet as an integrated online business channel. The digital marketing services business provides the following digital marketing services: customer-focused websites, enterprise websites, interactive marketing and creative development and branding.

     Revenue from website development services are derived from either fixed fee consulting contracts or from time and materials consulting contracts. Revenues derived from fixed-fee consulting contracts are recognized as services are rendered using the percentage-of-completion method with progress-to-complete measured using labor hour inputs. Estimates on percentage-of-completion contracts are reviewed periodically with adjustments recorded in the period in which the revisions are made. Any anticipated losses on contracts are charged to operations as soon as they are determinable. Billings on uncompleted contracts may be greater than or less than the revenues recognized in the accompanying condensed consolidated financial statements. If billings are less than revenue recognized, the unbilled portion is recorded as unbilled receivables within accounts receivable and if billings are more than revenue recognized, the portion that exceeds recognized revenue is recorded as deferred revenue. Revenues derived from time and materials consulting contracts are recognized as the services are performed. Unbilled receivables totaled $20,147 and $9,065 at June 30, 2007 and December 31, 2006, respectively.

     Interactive marketing includes online media, search engine, email and analytics services. We earn fees for online media in different ways depending on the contractual terms with the client. The majority of revenue is earned based on the dollar amount of advertising space purchased on behalf of its clients. We recognize this revenue over the period of the campaign at the rate at which the advertising is delivered. Revenue can also be earned based on a fixed fee consulting arrangement, which is recognized ratably over the period of the campaign.

     We present most of our online media revenue on a net basis, excluding the cost of media purchased for our clients. We buy advertising space from publisher websites on behalf of our clients as an agent and earn fees based on the dollar amount of advertising space we purchase. As we act as an agent and are not the primary obligor in these transactions, revenue is presented on a net basis. For a smaller portion of our online media, we are the principal in the transaction and accordingly, revenues are presented on a gross basis with the cost of the media recorded as revenue. The mix of where we act as an agent or a principal is contract-dependent and can vary from agency to agency.

7

     E-mail services are volume based, and revenue is generally recognized when impressions are delivered. We recognize revenue from search engine marketing programs based on either volume or as a subscription. Revenue from the volume-based service is generally recognized when impressions are delivered and revenue from the subscription-based service is recognized ratably over the service period. Revenue is generally recognized for analytics services when results are achieved based on contract milestones. It is our policy to recognize any loss on services as soon as management estimates indicate a loss will occur.

     Digital Marketing Technologies. Atlas offers digital marketing technology solutions for advertising agencies, enterprise marketers (large companies who manage their own marketing programs) and publishers. Atlas provides agencies and enterprise marketers with online advertising campaign management, rich media, search engine marketing, and website optimization tools and services through the proprietary Atlas Digital Marketing Suite, which includes Atlas Media Console, Atlas Rich Media, Atlas Search and Atlas Site Optimization. Atlas Publisher is a technology product that enables select publishers to increase revenue by utilizing lower value and remnant inventory. Such services are recognized based on either volume or subscription except for Atlas Site Optimization which is recognized based on contract milestones. Revenue from the volume-based services is recognized based on the volume in the period of usage. Revenue from subscription-based services is recognized ratably over the service period. Accipiter offers hosted advertisement serving and ad management and behavioral targeting software solutions to web publishers. We recognize revenue from hosted solutions over the service period. We recognize revenue for the software licensing solutions in accordance with Statement of Position 97-2, Software Revenue Recognition, as amended. Accipiter was acquired in December 2006 and to date, software license revenue recorded in our Condensed Consolidated Statement of Operations has not been significant.

     Digital Performance Media. DRIVEpm provides a broad array of variables that advertisers can use to target potential customers. The targeting offering is sold primarily on a Cost Per Thousand Impressions (CPM) basis. DRIVEpm also provides clients the ability to reach their customers on a Cost Per Action (CPA), Cost Per Click (CPC), CPM or a hybrid pricing structure.

     Revenue for these offerings is volume-based and generally recognized based on the volume in the period of usage. Revenue generated from digital performance media is presented on a gross basis, which consists of the gross value of digital performance media’s billings to clients. Under their contracts with clients and publisher websites, DRIVEpm is the primary obligor to the arrangements and is the principal in the transaction.

     In May 2006, we acquired Franchise Gator, an extension of our performance media business which addresses clients’ needs for online leads in the franchise industry. Revenue is earned in two different ways depending on the contractual agreements with the client. Services are sold on a cost per lead (CPL) basis and revenue for services sold on that basis is recognized based on the volume of leads generated during the period. Revenue is also generated from subscription-based contracts and recognized ratably over the service period.

     All Segments. For each of our lines of business, revenue is deferred in cases where we have not yet earned revenue but have billed the customer or received payment from the customer prior to providing the services. Revenue is recognized only when collection of the resulting receivable is reasonably assured.

     Revenue also includes any reimbursements received from our clients related to expenses incurred by our employees in servicing our clients. Such expenses include airfare, mileage, meals and hotel stays. All reimbursable project expenses billed to customers are recorded as a component of revenues and all reimbursable project expenses incurred are recorded as a component of operating expenses.

   Recently Issued Accounting Pronouncements

     In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109”, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in an income tax return. FIN 48 was effective beginning January 1, 2007. The adoption of FIN 48 did not have a material impact on our financial condition or results of operations.

     In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”, which establishes a framework for measuring fair value and requires expanded disclosure about the information used to measure fair value. This statement is effective for fiscal years beginning after November 15, 2007. The statement applies whenever other statements require, or permit, assets or liabilities to be measured at fair value, but does not expand the use of fair value in any new

8

circumstances. We do not expect the adoption of this statement to have a material impact on our financial condition or results of operations.

3. Acquisitions and Other Investments

    Business Combinations

     On March 6, 2007, we acquired 100% of the outstanding shares of Duke, an interactive advertising agency located in Paris, France. We purchased Duke to expand our presence in the European market. In connection with the acquisition, we paid $9,435. The total purchase price was assigned to the assets acquired and liabilities assumed based on their fair values on the acquisition date. Based on our valuation, $4,573 was assigned to intangible assets for tradename and customer relationships, and $5,041 was assigned to goodwill. The results of Duke have been included in our consolidated results and in our digital marketing services segment since the date of acquisition. Had this acquisition been completed on January 1, 2007 or 2006, the pro-forma results would not have been material to our Condensed Consolidated Statement of Operations for the first six months of 2007 and 2006.

     Many of our recent acquisitions have related purchase agreements that provide for future contingent payments. These payments are determined based on the operating performance of the acquired entities over a stated period of time. Due to the uncertainty of achieving the financial results the purchase price is adjusted when the contingency is resolved and the additional consideration is distributable and determinable beyond a reasonable doubt. The following table summarizes our estimates of future contingent payments in the period of expected payment, should actual results be consistent with management’s current estimates.

	Year Ending December 31,
	2008				2009				2010				2011
	Low		High		Low		High		Low		High		Low		High
Digital Marketing Services (1)	$	—	$	—	$	39,500	$	77,700	$	5,800	$	8,700	$	3,500	$	12,200

(1) In addition to the contingent payments shown in the table, we will also make non-contingent payments totaling $8,736 subsequent to June 30, 2007. These payments relate to the acquisitions made during 2006 and 2007 and have been accrued on our Condensed Consolidated Balance Sheet as of June 30, 2007.

     Other Investments

     In January 2007, we formed a capital and business alliance with Digital Palette, Inc. We acquired newly issued shares of Digital Palette resulting in a total investment of approximately $4,182 and an ownership percentage of 19.4 percent of the outstanding common shares. Digital Palette is a Japanese corporation engaged in planning, production and consulting services focusing on digital content. Dentsu, Inc., the largest marketing service firm in Japan, is the majority shareholder of Digital Palette. The investment in Digital Palette is carried at cost and included within long-term investments on our Condensed Consolidated Balance Sheet. The investment will be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

4. Merger Agreement

     On May 17, 2007, we entered into an Agreement and Plan of Merger (the Merger Agreement) with Microsoft Corporation (Microsoft) and Arrow Acquisition Company, a wholly owned subsidiary of Microsoft, providing for the acquisition of aQuantive, Inc. (aQuantive) by Microsoft through a merger of Arrow Acquisition Company into aQuantive (the Merger). Upon closing, each share of our common stock issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive an amount of cash equal to $66.50.

     Vested stock options will be cashed out in the Merger for an amount equal to the difference between the exercise price per share of the applicable stock option and $66.50. Unvested stock options will be converted into Microsoft stock options based on the terms of the Merger Agreement. Vesting for certain stock options and restricted stock awards for directors and executive officers, will be accelerated. All outstanding convertible notes will be converted at closing into the right to receive an amount of cash equivalent to

9

$66.50 times the number of shares into which such notes were convertible immediately prior to the effective time of the Merger.

     Consummation of the Merger is subject to approval by our shareholders and certain other closing conditions. A special meeting of our shareholders has been scheduled for August 9, 2007, to consider a proposal to approve the Merger Agreement. The Merger Agreement contains certain termination rights for both Microsoft and us and provides that, in the event of termination of the Merger Agreement under specified circumstances, we may be required to pay Microsoft a termination fee of $175,000. Upon closing of the Merger, certain expenses that are contingent on the Merger closing would become payable. These expenses include approximately $36 million dollars related to investment banking fees.

     In connection with the Merger, we incurred investment banking and other professional fees and entered into an employee retention plan during the second quarter of 2007. In the second quarter of 2007, we recorded $10,860 within general and administrative expenses in our Condensed Consolidated Statement of Operations, of which $10,072 related to investment banking and other professional fees. As of June 30, 2007, we had $1,714 of accrued liabilities recorded on our Condensed Consolidated Balance Sheet related to these expenses.

5. Goodwill

     Changes in the carrying amount of goodwill for the six months ended June 30, 2007 by segment are as follows:

	Balance as of				Balance as of
	June 30,				December 31,
	2007		Increases		2006
Digital marketing services	$	170,542	$	5,759	$	164,783
Digital marketing technologies		60,307		715		59,592
Digital performance media		46,026		1,076		44,950
	$	276,875	$	7,550	$	269,325

     Increases to goodwill typically include additions as a result of purchase price allocations in connection with our acquisitions and contingent consideration paid during the year for some of our acquisitions. We have entered into agreements that require the payment of additional consideration to the selling shareholders if certain specified earnings levels are achieved in the future. Goodwill is increased subsequent to the acquisition date when the contingency is resolved and the additional consideration is distributable and determinable beyond a reasonable doubt. The increases also include changes resulting from foreign currency translation adjustment of goodwill from acquisitions of foreign subsidiaries.

     The net increase in goodwill during the six months ended June 30, 2007 is primarily due to $5,041 of goodwill recorded as a result of the acquisition of Duke on March 6, 2007 and changes from foreign currency translation adjustments.

6. Stock-Based Compensation

Stock Options and Share Awards

     Stock options to purchase our common stock are granted to employees at an exercise price of not less than the fair market value of our common stock on the grant date. The term of the options and the right of exercise may not exceed ten years from the date of grant. The stock options typically vest 20% after the first year and ratably over the following twelve quarters.

     Under terms of a share award agreement with our CEO, we awarded a nonvested share grant of 115 shares of common stock in January 2006, which will vest over a period of 60 months based on his continued employment with us. There are no other share awards outstanding.

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Employee Stock Purchase Plan

     During the six months ended June 30, 2007 and 2006, employees purchased 185 and 164 shares, respectively, under our employee stock purchase plan. Our plan permits eligible employees to acquire shares of our common stock through periodic payroll deductions of up to 20% of base cash compensation. The price at which the common stock may be purchased is 85% of the lesser of the fair market value of our common stock on the first day of the applicable semi-annual offering period or on the last day of the respective purchase period. As a result of the pending merger with Microsoft described in Note 4, the plan has been suspended for all purchase periods beginning after July 31, 2007.

Valuation of Awards

     The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. Expected volatilities were based on historical volatility of our stock and implied volatility from traded options on our stock. The expected term of options granted was derived from the analysis of various hypothetical settlement scenarios and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate was the U.S. treasury zero-coupon rate corresponding to the expected term of the option. We have never paid cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, an expected dividend yield of zero has been used in the Black-Scholes option pricing model.

     The fair value for options and share awards granted under our stock option plans was estimated at the date of grant using the Black-Scholes option-pricing model, assuming the following weighted average assumptions:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Weighted average risk-free interest rate		4.74	%		4.90	%		4.58	%		4.48	%
Expected term, in years		4.2			4.1 – 7.2			4.2			4.1 – 7.2
Weighted average expected volatility		59	%		61	%		56	%		63	%
Dividend yield		—			—			—			—

     The fair value of the shares granted under our employee stock purchase plan was estimated using the Black-Scholes option-pricing model with the following assumptions for purchase offering periods in effect during the first and second quarters of 2007 and 2006:

	Six Months Ended
	June 30,
	2007			2006
Weighted average risk-free interest rate		5.17			4.53	%
Expected term, in years		0.5 — 1			0.5 — 1
Weighted average expected volatility		45	%		47	%
Dividend yield		—			—

     As of June 30, 2007, the total unrecognized compensation expense related to nonvested option grants, nonvested stock awards and shares granted under the employee stock purchase plan was $35,018, which is expected to be recognized over a weighted-average period of 2.50 years.

Award Activity

     Option activity was as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Options			Exercise		Contractual Term		Intrinsic
	Outstanding			Price		(Years)		Value
Balance, December 31, 2006		12,332		$	9.69
Granted		1,366
Exercised		(2,072	)
Forfeited and expired		(200	)
Balance, June 30, 2007		11,426		$	12.34		5.4	$	587,964
Exercisable at June 30, 2007		5,972		$	6.97		4.3	$	339,386

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     The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between our closing stock price on June 30, 2007 and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options on June 30, 2007. The weighted average grant-date fair value of options granted during the three months ended June 30, 2007 and 2006 was $20.73 and $13.37, respectively. The weighted average grant-date fair value of options granted during the six months ended June 30, 2007 and 2006 was $13.89 and $13.22, respectively.

     Nonvested share activity was as follows:

	Nonvested Shares
	Outstanding
Nonvested at December 31, 2006		105
Granted		—
Vested		(5	)
Forfeited and expired		—
Nonvested at March 31, 2007		100

     The weighted average grant date fair value of nonvested shares outstanding as of June 30, 2007 was $25.24. The total fair value of share awards vested during the three and six months ended June 30, 2007 was $183 and $220, respectively.

7. Shareholders’ Equity

     Changes in our shareholders’ equity during the six months ended June 30, 2007 were as follows:

	Total
	Shareholders’
	Equity
Balance, December 31, 2006	$	567,826
Exercise of common stock options		13,102
Issuance of common stock — Employee Stock Purchase Plan		3,127
Excess tax benefit from exercise of common stock options		26,568
Unrealized loss on available for sale investments		(11	)
Currency translation gain		2,605
Stock-based compensation expense		9,370
Conversion of convertible notes		285
Net income		23,855
Balance, June 30, 2007	$	646,727

8. Other Operating Income

     Other Operating Income includes credits resulting from the extinguishment of liabilities related to media served prior to 2004. In the first and second quarters of 2007, the statute of limitations for these liabilities expired or the vendors acknowledged no outstanding balance due. Accordingly, the related liabilities were decreased and credits of $0.5 million and $1.6 million were recorded within Operating Income in our Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2007, respectively. We currently have approximately $0.7 million of payables remaining in our balance sheet for which the statute of limitation period is still open or a formal acknowledgement from the vendor has not been obtained. Accordingly, we may recognize additional operating income from the extinguishment of these liabilities in future periods.

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9. Net Income Per Share

     The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income per share:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Net income (numerator for basic)	$	9,613		$	12,337		$	23,855		$	19,952
Add: Interest expense on convertible notes, net of tax		354			354			707			707
Adjusted net income (numerator for diluted)	$	9,967		$	12,691		$	24,562		$	20,659
Shares (denominator for basic and diluted):
Gross weighted average common shares outstanding		79,341			76,266			78,791			72,316
Less: weighted average shares issued and unvested		(103	)		(109	)		(103	)		(109	)
Shares used in computation of basic net income per share		79,238			76,157			78,688			72,207
Add: Dilutive effect of employee stock options and stock awards		5,448			5,128			5,121			5,337
Add: Dilutive effect of convertible debt		6,158			6,163			6,161			6,163
Shares used in computation of diluted net income per share		90,844			87,448			89,970			83,707
Basic net income per share	$	0.12		$	0.16		$	0.30		$	0.28
Diluted net income per share	$	0.11		$	0.15		$	0.27		$	0.25

     Using the “treasury stock method,” during the three months ended June 30, 2007 and 2006, 99 and 1,695, respectively, and during the six months ended June 30 2007, and 2006, 902 and 1,279, respectively, weighted average common stock equivalent shares related to stock options were excluded from the calculation of diluted net income per share, as their effect is anti-dilutive.

10. Segment Reporting

     We report selected segment information in our financial reports to shareholders in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.”

     The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The segment information provided reflects the three distinct lines of business within our organizational structure: digital marketing services, digital marketing technologies and digital performance media.

     Unallocated corporate expenses, including amounts recorded for stock-based compensation expense, are centrally managed at the corporate level and not reviewed by our chief operating decision maker in evaluating results by segment.

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     Segment information for the three and six months ended June 30, 2007 and 2006 is as follows:

	Three Months Ended June 30, 2007
	Digital			Digital		Digital		Unallocated
	Marketing			Marketing		Performance		Corporate
	Services			Technologies		Media		Expenses (2)			Total
Revenue	$	94,162	(1)	$	40,188	$	21,625	$	—		$	155,975
Costs and expenses:
Cost of revenue		754	(1)		11,568		12,264		207			24,793
Client support		67,815			—		1,858		2,346			72,019
Product development		—			4,493		—		380			4,873
Sales and marketing		2,126			4,787		3,078		327			10,318
General and administrative		6,283			3,453		866		15,346	(3)		25,948
Amortization of intangible assets		2,120			298		494		—			2,912
Client reimbursed expenses		2,544			—		—		—			2,544
Total costs and expenses		81,642			24,599		18,560		18,606			143,407
Other operating income		505			—		—		—			505
Income (loss) from operations	$	13,025		$	15,589	$	3,065	$	(18,606	)		13,073
Interest and other income, net												4,380
Interest expense												603
Income before income taxes												16,850
Provision for income taxes												7,237
Net income											$	9,613

	Three Months Ended June 30, 2006
	Digital			Digital		Digital		Unallocated
	Marketing			Marketing		Performance		Corporate
	Services			Technologies		Media		Expenses (2)			Total
Revenue	$	64,064	(1)	$	29,683	$	11,882	$	—		$	105,629
Costs and expenses:
Cost of revenue		1,254	(1)		7,817		6,044		143			15,258
Client support		43,089			—		939		2,430			46,458
Product development		—			3,031		—		577			3,608
Sales and marketing		1,397			3,837		1,716		381			7,331
General and administrative		4,193			2,562		536		4,419			11,710
Amortization of intangible assets		1,583			311		255		—			2,149
Client reimbursed expenses		1,242			—		—		—			1,242
Total costs and expenses		52,758			17,558		9,490		7,950			87,756
Income (loss) from operations	$	11,306		$	12,125	$	2,392	$	(7,950	)		17,873
Interest and other income, net												3,746
Interest expense												582
Income before income taxes												21,037
Provision for income taxes												8,700
Net income											$	12,337

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	Six Months Ended June 30, 2007
	Digital			Digital		Digital		Unallocated
	Marketing			Marketing		Performance		Corporate
	Services			Technologies		Media		Expenses (2)			Total
Revenue	$	177,215	(1)	$	78,332	$	43,049	$	—		$	298,596
Costs and expenses:
Cost of revenue		858	(1)		22,686		24,450		387			48,381
Client support		128,785			—		3,591		4,610			136,986
Product development		—			8,929		—		783			9,712
Sales and marketing		4,750			9,316		6,166		617			20,849
General and administrative		12,463			7,229		1,632		19,674	(3)		40,998
Amortization of intangible assets		4,027			642		986		—			5,655
Client reimbursed expenses		4,599			—		—		—			4,599
Total costs and expenses		155,482			48,802		36,825		26,071			267,180
Other operating income		1,551			—		—		—			1,551
Income (loss) from operations	$	23,284		$	29,530	$	6,224	$	(26,071	)		32,967
Interest and other income, net												8,509
Interest expense												1,190
Income before income taxes												40,286
Provision for income taxes												16,431
Net income											$	23,855

	Six Months Ended June 30, 2006
	Digital			Digital		Digital		Unallocated
	Marketing			Marketing		Performance		Corporate
	Services			Technologies		Media		Expenses (2)			Total
Revenue	$	119,276	(1)	$	57,352	$	21,186	$	—		$	197,814
Costs and expenses:
Cost of revenue		1,981	(1)		15,046		11,323		286			28,636
Client support		85,232			—		1,681		4,717			91,630
Product development		—			5,955		—		1,333			7,288
Sales and marketing		2,986			7,552		2,682		751			13,971
General and administrative		6,373	(4)		5,000		948		8,647			20,968
Amortization of intangible assets		3,218			622		345		—			4,185
Client reimbursed expenses		2,110			—		—		—			2,110
Total costs and expenses		101,900			34,175		16,979		15,734			168,788
Income (loss) from operations	$	17,376		$	23,177	$	4,207	$	(15,734	)		29,026
Interest and other income, net												5,445
Interest expense												1,164
Income before income taxes												33,307
Provision for income taxes												13,355
Net income											$	19,952

(1) A small portion of our media business generates revenue that is presented on a gross basis. Accordingly, both revenue and cost of revenue include the cost of media purchased for our clients.

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(2) For the three and six months ended June 30, 2007 and 2006, stock-based compensation expense included in unallocated corporate expenses was as follows:

	Three Months Ended June 30,				Six Months Ended June 30
	2007		2006		2007		2006
Cost of revenue	$	207	$	143	$	387	$	286
Client support		2,346		2,430		4,610		4,717
Product development		288		385		585		959
Sales and marketing		314		381		604		751
General and administrative		1,511		1,537		3,184		2,912
Total stock-based compensation	$	4,666	$	4,876	$	9,370	$	9,625

(3)	For the three and six months ended June 30, 2007, unallocated general and administrative expense includes $10,860 in investment banking fees and other expenses related to the Merger. See Note 4 for additional information about the Merger.
(4)	For the six months ended June 30, 2006, general and administrative expense for the digital marketing services segment includes the $1,900 reversal of a business tax liability. See Note 2 for additional information about this change in tax liability.

11. Legal Proceedings

     We are currently the subject of a consolidated lawsuit pending in the United States District Court for the Southern District of New York, which alleges violations of the federal securities laws in connection with disclosures contained in our prospectus for our initial public offering in February 2000. Razorfish, Inc., which was acquired by us in July 2004, is also similarly the subject of this consolidated lawsuit relating to its initial public offering in April 1999. The lawsuit generally relates to underwriting practices and disclosure of commissions to be earned by the underwriters. Substantially similar actions have been filed concerning the initial public offerings for more than 300 different issuers, and these cases have been coordinated for purposes of resolving common issues in pleadings as: In re Initial Public Offering Securities Litigation, 21MC92.

     In June 2004, a stipulation of settlement and release of claims against the issuer defendants, including Razorfish and us, was submitted to the court for approval. On August 31, 2005, the court preliminarily approved the settlement. In December 2006, the appellate court overturned the certification of classes in the six test cases that were selected by the underwriter defendants and plaintiffs in the coordinated proceedings. Because class certification was a condition of the settlement, it was unlikely that the settlement would receive final Court approval. On June 25, 2007, the Court entered an order terminating the proposed settlement based upon a stipulation among the parties to the settlement. Plaintiffs have indicated that they will seek to amend their allegations and file amended complaints. It is uncertain whether there will be any revised or future settlement. Despite the uncertainties relating to the settlement, we do not currently believe we have any material financial exposure related to this litigation, and if we were to have financial exposure we believe it would be covered by insurance.

     From time to time, we are party to routine litigation incidental to our business. We believe the ultimate resolution of these routine matters will not have a material adverse effect on our financial condition and results of operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     This Quarterly Report contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “estimates,” “may,” “will” and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Our actual results could differ materially and adversely from those discussed in any forward-looking statements as a result of various factors. Factors that could cause or contribute to such differences include, but are not limited to, the risk of unforeseen changes in client online marketing and advertising budgets, unanticipated loss of clients or delays in anticipated campaigns and projects, the potential failure to attract new clients due to our inability to competitively market our services, the risk of fluctuating demand for the our services, the potential negative effects on our business of consolidation in the internet advertising industry, the potential failure to maintain desired client relationships or to achieve effective advertising campaigns for clients, slower-than-expected development of the Internet advertising market either domestically or in international markets, quarterly fluctuations in operating results, costs and risks related to acquisitions of technologies, businesses or brands, risks relating to international operations, the short term nature of our contracts with clients, which generally are cancelable on 90 days’ or less notice, and the uncertainties, potential costs, and possible business impacts of new legislation or litigation involving us. A complete list of our risk factors are included in our Annual Report on Form 10-K, for the year ended December 31, 2006 as filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made in this report and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.

     We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an introduction to aQuantive’s segments. In this section we discuss our results of operations for the three and six months ended June 30, 2007 compared to the three and six months ended June 30, 2006. We then provide an analysis of changes in our cash flows and discuss our financial commitments in the section titled “Liquidity, Capital Resources and Commitments.”

Overview

     We are a digital marketing services and technology company that helps marketers acquire, retain and grow customers across digital media. We are organized into three segments: digital marketing services, digital marketing technologies and digital performance media.

     Merger Announcement

     On May 17, 2007, we entered into an Agreement and Plan of Merger with Microsoft Corporation (Microsoft) and Arrow Acquisition Company, a wholly owned subsidiary of Microsoft, providing for the acquisition of aQuantive, Inc. (aQuantive) by Microsoft through a merger of Arrow Acquisition Company into aQuantive (the Merger). Upon closing, each share of our common stock issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive an amount of cash equal to $66.50.

     Consummation of the Merger is subject to approval by our shareholders and certain other closing conditions. A special meeting of shareholders has been scheduled for August 9, 2007 to consider a proposal to approve the Merger Agreement. See Note 4 to our Condensed Consolidated Financial Statements for additional information.

   Acquisitions and Comparability of Operations

     Our results of operations for the three and six months ended June 30, 2007 include the results of several acquisitions included in the below table. The results of these acquisitions should be factored into the comparison of our three and six months ended June 30, 2007 and 2006 results.

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Company	Acquisition Date	Segment	Location
Duke	March 2007	DMS	France
Accipiter	December 2006	DMT	United States
e-Crusade	October 2006	DMS	China
Neue Digitale	August 2006	DMS	Germany
Amnesia	July 2006	DMS	Australia
Franchise Gator	May 2006	DPM	United States

  Digital Marketing Services (DMS)

     Our DMS segment consists of Avenue A | Razorfish and a number of other international agencies. Avenue A | Razorfish is an interactive agency located in the United States that provides a full-service offering, including website development, interactive marketing and creative development and branding.

   Digital Marketing Technologies (DMT)

     Our DMT segment consists of Atlas, a provider of digital marketing technologies and expertise and Accipiter, a publisher-side ad serving technology provider. Atlas’s software suite enables agencies and enterprise marketers to manage their entire digital marketing effort, including planning campaigns, displaying ads, search engine marketing and optimizing their websites. In addition, select publishers utilize Atlas to manage digital advertising inventory. Accipiter provides web publishers an inventory management solutions that enables the publishers’ direct sales force to maximize revenue earned from premium display and text placements.

   Digital Performance Media (DPM)

     Our DPM segment consists of DRIVEpm and Franchise Gator. DRIVEpm is a performance media and behavioral targeting business. DRIVEpm serves as an intermediary between online publishers and advertisers by procuring online advertising inventory from publishers and reselling that inventory to advertisers on a highly targeted basis. DRIVEpm has operations in both the United States and Europe. Franchise Gator is an extension of the performance media business, focused on the franchise industry, which addresses clients’ needs for online leads.

Critical Accounting Policies and Judgments

     The preparation of financial statements in conformity with GAAP in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company’s most critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and that require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions or conditions.

     There have been no changes to our critical accounting policies during the six months ended June 30, 2007 as compared to what was previously disclosed in our Form 10-K for the year ended December 31, 2006.

Estimates and Assumptions Related to Financial Statements

     The discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those affecting revenues, obligations related to employee benefits, stock-based compensation expense, the allowance for doubtful accounts, allowance for sales credits, intangible assets, goodwill, state, local and federal income taxes and legal contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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Results of Operations

     The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our segmental information included in Note 10 to our Condensed Consolidated Financial Statements.

     Revenue

     Revenue was $156.0 million and $298.6 million during the three and six months ended June 30, 2007, respectively, and $105.6 million and $197.8 million during the three and six months ended 2006, respectively. The increase in revenue is primarily due to the growth in demand for digital marketing services and technologies resulting from new client wins, increased spending from existing clients and additional revenue contributed by acquisitions.

     Revenue from digital marketing services increased to $94.2 million and $177.2 million for the three and six months ended June 30, 2007, respectively, from $64.1 million and $119.3 million for the three and six months ended June 30, 2006, respectively. The increase in revenue is primarily attributable to an increase in our clients’ advertising budgets leading to larger web development projects and increased volumes of media utilized in advertising campaigns in addition to an increasing client base. Additionally, the recently acquired international interactive agencies contributed $10.6 million and $16.7 million for the three and six months ended June 30, 2007, respectively.

     Revenue from digital marketing technologies increased to $40.2 million and $78.3 million for the three and six months ended June 30, 2007, respectively, from $29.7 million and $57.4 million for the three and six months ended June 30, 2006, respectively. The increase in revenue is primarily the result of increased use of the Atlas Digital Marketing Suite and increased volumes of advertisements displayed over the Internet by existing customers, combined with a consistent increase in client base of both agencies and direct advertisers around the world. Atlas Rich Media also contributed to revenue growth due to an increased demand for rich media advertisements and customer response to the integration of Atlas Rich Media in the Atlas Digital Marketing Suite. Accipiter, acquired in December 2006, contributed $2.4 million and $4.7 million for the three and six months ended June 30, 2007, respectively.

     Revenue from digital performance media was $21.6 million and $43.0 million for the three and six months ended June 30, 2007, respectively, as compared to $11.9 million and $21.2 million for the three and six months ended June 30, 2006, respectively. The increase in revenue is primarily due to our increased client base and an increase in spending from existing clients. Additionally, our acquisitions contributed $2.8 million and $6.0 million for the three and six months ended June 30, 2007, respectively.

  Cost of Revenue

     Cost of revenue was $24.8 million and $48.4 million for the three and six months ended June 30, 2007, respectively, and $15.3 million and $28.6 million for the three and six months ended June 30, 2006, respectively. Cost of revenue increased primarily due to the growth in our digital technologies and digital performance media segments.

     Cost of revenue associated with our digital marketing technologies segment consists primarily of the salaries and related expenses of the client support personnel and personnel directly supporting the maintenance of our technology used to display advertisements over the Internet. In addition, cost of revenue includes bandwidth and technology infrastructure costs associated with delivering advertisements over the Internet. Cost of revenue associated with digital marketing technologies increased to $11.6 million and $22.7 million for the three and six months ended June 30, 2007, respectively, from $7.8 million and $15.0 million for the three and six months ended June 30, 2006, respectively. Cost of revenue increased primarily due to an increase in salary and related expenses related to an increase in technology support personnel and the acquisition of Accipiter. The increase in cost of revenue was also due to increased depreciation expense related to capital investments in our technology infrastructure for the build out of new data centers and amortization expense of developed technology.

     Cost of revenue associated with our digital performance media line of business was $12.3 million and $24.5 million for the three and six months ended June 30, 2007, respectively, and $6.0 million and $11.3 million for the three and six months ended June 30, 2006, respectively, and relates to the cost of the advertising space purchased from websites to resell to our clients. The increase in cost of revenue is primarily due to increased volumes of advertising space sold as a result of an increased client base and increased spending levels from our existing clients.

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   Client Support

     Client support expenses associated with our digital marketing services segment consist primarily of salaries and related expenses for client support personnel for our U.S.-based interactive advertising agency, Avenue A | Razorfish, and our international creative and interactive agencies. Client support also includes expenses for contractors retained for their specialized skill sets to work on client projects. Client support expenses associated with digital marketing services increased to $67.8 million and $128.8 million for the three and six months ended June 30, 2007, respectively, from $43.1 million and $85.2 million for the three and six months ended June 30, 2006, respectively. The increase in client support expenses was due in part to the contributions from the international creative and interactive agencies acquired subsequent to June 30, 2006, which contributed $9.2 million and $14.4 million of client support expenses during the three and six months ended June 30, 2007, respectively. Client support expenses also increased due to additional client support personnel at Avenue A | Razorfish hired to support increased spending from existing clients and to support new clients and projects.

     Client support expenses associated with our digital performance media segment consist primarily of salaries and related expenses for client support personnel for DRIVEpm and Franchise Gator. Client support expenses associated with digital performance media were $1.9 million and $3.6 million during the three and six months ended June 30, 2007, respectively, and $0.9 million and $1.7 million for the three and six months ended June 30, 2006, respectively. Client support expenses increased due to higher headcount, and related expenses resulting from the growth of business.

     Product Development

     Product development expenses consist primarily of salaries and related expenses for product development personnel associated with our digital marketing technologies segment. Product development expenses for our digital marketing technologies segment increased to $4.5 million and $8.9 million for the three and six months ended June 30, 2007, respectively, compared to $3.0 million and $6.0 million for the three and six months ended June 30, 2006, respectively. The increase in expense was primarily due to an increase in product development personnel necessary to support the continued development of Atlas Publisher, Atlas Rich Media and Atlas Search, enhance our existing Atlas Digital Marketing Suite and invest in new technologies.

     Sales and Marketing

     Sales and marketing expenses associated with our digital marketing services segment consist primarily of salaries and commissions and related expenses for personnel dedicated entirely to the sales and marketing efforts of our US-based interactive agency, Avenue A | Razorfish and our international agencies. In addition, sales and marketing expenses include professional service fees and marketing costs such as trade shows, the costs of advertising our services in trade publications and the cost of client and publisher summits. Sales and marketing expenses associated with digital marketing services increased to $2.1 million and $4.8 million for the three and six months ended June 30, 2007, from $1.4 million and $3.0 million for the three and six months ended June 30, 2006. The increase in sales and marketing expenses consist primarily of an increase in payroll expenses related to our sales and marketing personnel.

     Sales and marketing expenses associated with our digital marketing technologies segment consist primarily of salaries and commissions and related expenses for our sales force. In addition, these expenses include salaries of sales and marketing personnel and marketing costs such as trade shows and the costs of advertising our services on the Internet. Sales and marketing expenses associated with digital marketing technologies increased to $4.8 million and $9.3 million for the three and six months ended June 30, 2007 from $3.8 million and $7.6 million for the three and six months ended June 30, 2006. This increase was primarily due the acquisition of Accipiter.

     Sales and marketing expenses associated with our digital performance media segment consist primarily of salaries and commissions and related expenses for our DRIVEpm and Franchise Gator sales force. Sales and marketing expenses increased to $3.1 million and $6.2 million for the three and six months ended June 30, 2007 from $1.7 million and $2.7 million for the three and six months ended June 30, 2006. Over the past year, our digital performance media segment, particularly DRIVEpm, increased the number of sales personnel significantly.

     General and Administrative

     General and administrative expenses consist of the salaries and related expenses for executive, legal, finance, human resource, corporate IT and administrative personnel, professional fees, insurance and other general corporate expenses such as depreciation and facilities costs for our corporate headquarters in Seattle. General and administrative expenses included in our digital marketing services, technologies, and performance media segments consist primarily of a direct allocation of these corporate costs based on

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headcount in each segment. General and administrative expenses increased to $25.9 million and $41.0 million for the three and six months ended June 30, 2007, respectively, from $11.7 million and $21.0 million for the three and six months ended June 30, 2006, respectively. The increase in general and administrative expenses was primarily due to $10.9 million in investment banking fees and other expenses related to the Merger (see Note 4 to our Condensed Consolidated Financial Statements). Additionally, salary and facilities-related expenses increased due to additional corporate headcount needed to support the growth of our operating units along with costs associated with continued development and support of our corporate financial systems. The increase was also due to higher business tax expense in the first quarter 2007 due to the reversal of a business tax accrual of $1.9 million that occurred in the first quarter of 2006. The reversal of the tax accrual resulted from the settlement of the audit with the City of Seattle during the three and six months ended June 30, 2006 as further discussed in Note 2 to our Condensed Consolidated Financial Statements.

     Amortization of Intangible Assets

     Amortization of intangible assets relates primarily to customer relationships purchased through various acquisitions. Amortization of intangible assets was $2.9 million and $5.7 million during the three and six months ended June 30, 2007, respectively, compared to $2.1 million and $4.2 million during the three and six months ended June 30, 2006, respectively. The increase in expense is due to the amortization of intangible assets related to the acquisitions of Franchise Gator in May 2006, Amnesia in July 2006, Neue Digitale in August 2006, eCrusade in October 2006, Accipiter in December 2006 and Duke in March 2007. Amortization of intangible assets associated with purchased technology is recorded as a cost of revenue and was $0.4 million and $0.9 million during the three and six months ended June 30, 2007, respectively, and $0.2 million and $0.4 million during the three and six months ended June 30, 2006, respectively. The increase is primarily due to Accipiter technology acquired in December 2006.

     Client Reimbursed Expenses

     Client reimbursed expenses include all reimbursable project expenses that are billable to our clients. These reimbursable project expenses are also recorded as a component of revenue. We recorded $2.5 million and $4.6 million of client reimbursed expenses for the three and six months ended June 30, 2007, compared to $1.2 million and $2.1 million for the three and six months ended June 30, 2006. The increase in client reimbursed expenses is primarily due to increased project expenses incurred to support new clients and increased spending by existing clients in the creative and web development business.

     Other Operating Income

     Other operating income includes credits resulting from the extinguishment of liabilities related to media served prior to 2004. In the first six months of 2007, the statute of limitations for these liabilities expired or the vendors formally acknowledged no outstanding balances due. Accordingly, the related liabilities were decreased and a $0.5 million and $1.6 million credit was recorded within Operating Income in our Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2007, respectively. We currently have approximately $0.7 million remaining in our balance sheet for which the statute of limitation period is still open or a formal acknowledgment from the vendor has not been obtained. As a result, we may recognize additional operating income from the extinguishment of these liabilities in future periods.

     Income from Operations

     During the three and six months ended June 30, 2007, the digital marketing services segment generated $13.0 million and $23.3 million of income from operations, or 14% and 13% of digital marketing services revenue, compared to $11.3 million and $17.4 million, or 18% and 15% of digital marketing services revenue, during the three and six months ended June 30, 2006. The decrease in operating margins is primarily due to the impact of our recent international acquisitions. Additionally, an increase in business tax expense for the six months of 2007 when compared to the same period in the prior year due to the reversal of a $1.9 million business tax accrual that occurred in the first quarter of 2006, contributed to the decrease in operating margins.

     The digital marketing technologies segment generated $15.6 million and $29.5 million of income from operations, or 39% and 38% of digital marketing technologies revenue, during the three and six months ended June 30, 2007, compared to $12.1 million and $23.2 million, or 41% and 40% of digital marketing technologies revenue, during the three and six months ended June 30, 2006. The decrease in operating margins was primarily due to increased cost of revenue as a result of investments made in our technology infrastructure and increased product development expenses primarily due to additional product development personnel.

     The digital performance media segment generated $3.1 million and $6.2 million of income from operations, or 14% of digital performance media revenue during the three and six months ended June 30, 2007, compared to income from operations of $2.4

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million and $4.2 million, or 20% of revenue during the three and six months ended June 30, 2006. The decrease in operating margins is primarily due to higher cost of inventory sold in 2007 and an increase in headcount in the sales and marketing department.

     Interest and Other Income, Net

     Net interest and other income consists primarily of earnings on our cash, cash equivalents, investments and foreign currency transaction exchange gains and losses. Net interest and other income was $4.4 million and $8.5 million for the three and six months ended June 30, 2007, respectively, compared to $3.7 million and $5.4 million for the three and six months ended June 30, 2006, respectively. The increase in net interest and other income was a result of interest income earned from the investment of proceeds from the equity offering which was completed in March 2006 and the proceeds from the exercise of the over-allotment option in April 2006 combined with higher interest rates on invested cash balances. Foreign currency transaction gains and losses were not significant for the three and six months ended June 30, 2007 and 2006.

     Interest Expense

     Interest expense was $0.6 million and $1.2 million during the three and six months ended June 30, 2007, and remained unchanged compared to the same period in 2006. Interest expense relates to the outstanding convertible debt bearing an annual interest rate of 2.25 percent.

     Provision for Income Taxes

     The provision for income taxes was $7.2 million and $16.4 million during the three and six months ended June 30, 2007, compared to $8.7 million and $13.4 million during the three and six months ended June 30, 2006. During the three and six months ended June 30, 2007, we recorded a provision for income taxes based on an effective tax rate of 43% and 41%. During the three and six months ended June 30, 2006 our effective tax rate was 41% and 40%. For interim reporting purposes, we record our income tax provision based on our estimated annual effective tax rate as of the end of each quarter. The increase in our effective tax rate in the three and six months ended June 30, 2007 compared to the three and six months ended June 30, 2006 is primarily due to the expectation that income will be earned in higher taxed jurisdictions in 2007 as a result of our continued international expansion.

Liquidity, Capital Resources and Commitments

     Since our inception, we have financed our operations primarily through the net proceeds from private and public sales of equity securities as well as cash flows from our operations. In March 2006, we completed a follow-on public offering of our common stock which raised net proceeds of $172.4 million. In April 2006 we raised an additional $25.9 million as a result of the exercise in full of the over-allotment option granted to the underwriters of our follow-on public offering.

     As of June 30, 2007, we had cash and cash equivalents of $95.1 million, investments in marketable securities of $214.6 million, and $79.7 million of convertible debt on our Condensed Consolidated Balance Sheet.

     Net Cash from Operating Activities

     Net cash provided by operating activities was $5.7 million and $35.9 million during the six months ended June 30, 2007 and 2006, respectively. Our net cash provided by operating activities is primarily a result of our net income adjusted by non-cash expenses such as depreciation and amortization, stock-based compensation expense and changes in operating assets and liabilities, which are influenced by the timing of cash collections from our clients and cash payments for purchases of media and other expenses.

     In the six months ended June 30, 2007 the difference between reported net income and cash provided by operating activities was primarily due to depreciation and amortization, stock-based compensation, and decreases in our net deferred tax assets and, which were offset by decreases in accounts payable and excess tax benefits from stock option exercises. The decrease in our net deferred tax assets during the six months ended June 30, 2007 is primarily due to the utilization of net operating loss carry-forwards during the period. The decrease in the accounts payable balance is primarily due to the timing of cash payments to publishers during the six months ended June 30, 2007. Pursuant to the provisions of SFAS No. 123(R), cash flows from the tax benefits resulting from tax deductions in excess of compensation cost recognized in our income statement have been classified as a reduction of operating cash flows and amounted to $25.9 million in the six months ended June 30, 2007.

     In the six months ended June 30, 2006 the difference between reported net income and cash provided by operating activities was primarily due to depreciation and amortization, stock-based compensation expense, and increases in pre-billed media, which were offset by increases in accounts receivable and excess tax benefit from stock option exercises. The increase in pre-billed media was

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primarily due to certain clients prepaying for advertising space they planned to use for interactive advertising campaigns during the remainder of 2006. The increase in accounts receivable was due to the growth of our business and higher pre-billed media. The effect of tax benefits from option exercises presented as a reduction of operating cash flows were $10.8 million in the six months ended June 30, 2006.

     Net Cash from Investing Activities

     Our investing activities include the purchase and sale of investments, purchases of property and equipment, and the funding of acquisitions. Net cash used in investing activities was $100.8 million and $56.4 million for the six months ended June 30, 2007 and 2006, respectively. The increase is mainly the result of higher investments in marketable securities and purchases of other long-term investments, which were partially offset by decreases in business acquisitions.

     In accordance with our investment policy, we purchase primarily investment-grade marketable securities. During the six months ended June 30, 2007 and 2006, we had net purchases of marketable securities of $64.7 million and proceeds of $2.5 million, respectively. In January 2007, we also made an investment of $4.2 million in Japan-based Digital Palette, which is further described in Note 3 to our Condensed Consolidated Financial Statements.

     Capital expenditures relate primarily to the purchase of computers and software for general operational purposes, including our ad serving capabilities, the development of our proprietary technology and leasehold improvements for our facilities. During the six months ended June 30, 2007 and 2006, capital expenditures were $18.3 million and $11.0 million, respectively.

     The following table summarizes cash used to fund various acquisitions during the six months ended June 30, 2007 and 2006. Amounts represent cash consideration paid, including transaction costs, post-closing requirements and contingency payments earned, net of cash acquired.

	Six Months Ended June 30,
	2007		2006
	(in thousands)
Duke	$	9,435	$	—
Franchise Gator		1,986		19,583
eCrusade		708		—
TechnologyBrokers/Media Brokers		687		—
Accipiter		768		—
GO TOAST				1,333
iFRONTIER		—		26,460
NetConversions		—		582
Total cash payments	$	13,584	$	47,958

     Net Cash from Financing Activities

     Our financing activities primarily relate to the proceeds from issuance of common stock through our stock option and employee stock purchase plans and our excess tax benefits from stock option exercises. In 2006 it also includes the proceeds of $198.3 million from issuance of common stock in a follow-on public offering.

     Proceeds from the exercises of common stock options and issuance of common stock through our employee stock purchase plan were $16.2 million and $9.1 million for the six months ended June 30, 2007 and 2006, respectively. The increase in proceeds was primarily due to the increase in the price of our common stock, which led to an increased volume of stock option exercises.

     Pursuant to SFAS No. 123(R), the cash flows from the tax benefits from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) have been classified as financing cash inflows. For the six months ended June 30, 2007 and 2006, cash flows from excess tax benefits on option exercises were $25.9 million and $10.8 million, respectively.

     We believe that our current cash, cash equivalents and short-term investments, together with cash from operating activities, will be sufficient to meet our anticipated cash needs for working capital, capital expenditures, debt service, and future contingent payments for our acquired businesses for at least the next 12 months.

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     Contractual Obligations

     As of June 30, 2007, we had material commitments related to our convertible debt and operating leases for office space and office equipment. In addition, we had material obligations related to ad content delivery services and guaranteed payments to selling shareholders of businesses acquired prior to June 30, 2007. The following are our contractual commitments and obligations as of June 30, 2007 (in thousands):

	Six Months
	Ending		Year Ending December 31,
	December 31,								2011 and
	2007		2008		2009		2010		Thereafter		Total
Commitments:
Operating leases	$	13,627	$	14,520	$	13,980	$	13,529	$	42,198	$	97,854
Ad content delivery services		2,595		4,336		—		—		—		6,931
Convertible debt (including interest payments)		900		1,800		1,800		1,800		104,915		111,215
Accrued liabilities (1)		6,206		2,760		100		100		175		9,341
Total commitments	$	23,328	$	23,416	$	15,880	$	15,429	$	147,288	$	225,341

(1) Accrued liabilities mostly relate to short and long term payments to selling shareholders of businesses acquired during 2006 and 2007. These short and long term liabilities amount to $9.0 million and $0.3 million, respectively and are presented in the liability section of our Consolidated Balance Sheet at June 30, 2007.

     Many of our recent acquisitions have related purchase agreements that provide for future contingent payments. These payments are determined based on either the revenue or operating performance or combination of both for the acquired entities over a stated period of time. These payments are recorded as an increase to goodwill when the actual amounts are determined, due to the uncertainty of achieving the financial results. The following table summarizes our estimates of future contingency payments in the period of expected payment by acquisition should actual results be consistent with management’s current estimates.

	Year Ending December 31,
	2008				2009				2010				2011
	Low		High		Low		High		Low		High		Low		High
Digital Marketing Services	$	—	$	—	$	39,500	$	77,700	$	5,800	$	8,700	$	3,500	$	12,200

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest Rate Risk

     The primary objective of our investment activities is to preserve capital while at the same time maximizing yield without significantly increasing risk. As of June 30, 2007 we had short-term and long-term marketable securities of $214.6 million and $14.8 million, respectively. We classify our investments in marketable securities as short-term or long-term based on their maturities from purchase date and our reasonable expectation as to when they will be converted into cash. We classify all our investments in marketable securities as available-for-sale securities, which are carried at fair value with unrealized gains or losses reported as a separate component of shareholders’ equity. As of June 30, 2007, unrealized gains and losses in our marketable securities were not significant. Our exposure to market risk includes interest income sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because the majority of our investments are investment-grade debt securities issued by corporations and U.S. government agencies. Fixed-rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating-rate securities may produce less income than expected if interest rates fall. Our investments are of a short-term nature; as of June 30, 2007 our portfolio had a weighted-average time to maturity of less than six months. We place our investments with high-quality issuers and limit the amount of credit exposure to any one issuer. Due to the nature of our investments and their short maturity, we believe that we are not subject to any material market risk exposure.

     As of June 30, 2007, we had $79.7 million in outstanding fixed-rate convertible debt with an interest rate of 2.25%. The fair value of this debt has historically been subject to change as a result of movements in interest rates. Given the pending acquisition of aQuantive, Inc. by Microsoft (see Note 4 to our Condensed Consolidated Financial Statements) at June 30, 2007, the market value of our fixed-rate long-term convertible debt would not be impacted by the interest rate changes as our convertible notes were trading at their conversion value.

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     Foreign Currency Exchange Rate Risk

     Several of our recent acquisitions have related purchase agreements that provide for future contingent payments that are denominated in foreign currencies and are based on the operating performance of the acquired businesses over a period of time. We do not record a liability until the contingency is resolved and the additional consideration is determinable beyond reasonable doubt. We are subject to foreign exchange risk on these future payments. We have estimated a range for these future payments which is disclosed in Note 3 to our Condensed Consolidated Financial Statements. These future payments have not been recorded in our Condensed Consolidated Balance Sheet as of June 30, 2007. An assumed decline of the US dollar against these currencies would result in additional cash payments ranging from $2.4 million to $4.9 million (5% rate decline), $4.9 million to $9.9 million (10% rate decline) and $9.8 million to $19.7 million, (20% rate decline). Any additional payment amounts resulting from foreign exchange rate fluctuations until the contingency is resolved will be recorded as an increase to goodwill with no impact on our future results of operations.

     Certain foreign-currency denominated amounts due to the selling shareholders of acquired businesses have been accrued on our Condensed Consolidated Balance Sheet at June 30, 2007. An assumed decline of 5%, 10% and 20% of the US dollar against these currencies would result in an increase of our liability of $0.3 million, $0.5 million and $1.1 million, respectively. Foreign currency fluctuations between June 30, 2007 and the date the payment is made for these accrued amounts will be recorded as a foreign currency gain or loss in our Condensed Consolidated Statement of Operations.

     We transact business in the United Kingdom, France, Germany, Australia and China and are thus subject to exposure from adverse movements in foreign currency exchange rates. The assets and liabilities of our foreign subsidiaries have functional currencies other than the US dollar and are translated to US dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. A 10% appreciation in the US dollar during the three and six-months ended June 30, 2007 would have resulted in a reduction of income before provision for income taxes of $0.3 million and $0.7 million for the three and six months ended June 30, 2007, respectively. A 10% adverse change in the foreign currency rates as of June 30, 2007 would have resulted in a $13.6 million decrease of our foreign subsidiaries’ net assets, excluding intercompany balances. Such a change in our results and financial position would have resulted from applying a different exchange rate to translate and revalue the financial statements of our foreign subsidiaries. Our foreign operations are also subject to risks typical of an international business, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures and regulations and restrictions, and foreign currency exchange rate volatility. Accordingly, our results could be adversely affected by changes in these or other factors.

     We do not use derivative financial instruments to manage interest rate risk, to reduce our exposure to changes in foreign currency exchange rates, or for speculative trading purposes.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and our chief financial officer, of the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based on this evaluation, our chief executive officer and our chief financial officer have concluded that, as of the date of the evaluation, our disclosure controls and procedures were effective.

Changes in Internal Controls

     No change was made to our internal controls over financial reporting for the three and six months ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     We are currently the subject of a consolidated lawsuit pending in the United States District Court for the Southern District of New York, which alleges violations of the federal securities laws in connection with disclosures contained in our prospectus for our initial public offering in February 2000. Razorfish, Inc., which was acquired by us in July 2004, is also similarly the subject of this consolidated lawsuit relating to its initial public offering in April 1999. The lawsuit generally relates to underwriting practices and disclosure of commissions to be earned by the underwriters. Substantially similar actions have been filed concerning the initial public offerings for more than 300 different issuers, and these cases have been coordinated for purposes of resolving common issues in pleadings as: In re Initial Public Offering Securities Litigation, 21MC92.

     In June 2004, a stipulation of settlement and release of claims against the issuer defendants, including Razorfish and us, was submitted to the court for approval. On August 31, 2005, the court preliminarily approved the settlement. In December 2006, the appellate court overturned the certification of classes in the six test cases that were selected by the underwriter defendants and plaintiffs in the coordinated proceedings. Because class certification was a condition of the settlement, it was unlikely that the settlement would receive final Court approval. On June 25, 2007, the Court entered an order terminating the proposed settlement based upon a stipulation among the parties to the settlement. Plaintiffs have indicated that they will seek to amend their allegations and file amended complaints. It is uncertain whether there will be any revised or future settlement. Despite the uncertainties relating to the settlement, we do not currently believe we have any material financial exposure related to this litigation, and if we were to have financial exposure we believe it would be covered by insurance.

     From time to time, we are party to routine litigation incidental to our business. We believe the ultimate resolution of these routine matters will not have a material adverse effect on our financial condition and results of operations.

ITEM 1A. RISK FACTORS

     There have been no material changes from risk factors previously disclosed in Item 1A included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, which was filed with the SEC on March 1, 2007.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     We held our Annual Meeting of Shareholders on May 9, 2007. 73,887,926 shares were represented in person or by proxy constituting 94.05 percent of the outstanding shares and entitled to vote at the annual meeting.

     Proposal Number 1 — Election of Directors, to serve until the 2010 Annual Meeting of Shareholders, or until their respective successors are elected and qualified:

	For		Withheld
Linda J. Srere		73,547,891		340,035
Jaynie M. Studenmund		73,481,030		406,896

     Three continuing directors, Nicolas J. Hanauer, Brian P. McAndrews and Jack Sansolo, PhD, have terms that expire in 2008 and continuing directors, Richard P. Fox and Michael B. Slade, have terms expiring in 2009.

     Proposal Number 2 — Ratification of KPMG LLP to act as independent registered public accounting firm for fiscal year 2007:

For	73,557,231
Against	274,376
Abstain	56,319

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ITEM 6. EXHIBITS

2.1	Agreement and Plan of Merger by and among Microsoft Corporation, Arrow Acquisition Company, and aQuantive, Inc., dated as of May 17, 2007 (incorporated herein by reference to Exhibit 2.1 filed with our current Report on Form 8-K filed May 18, 2007).
31.1	Certification of Brian P. McAndrews Pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of M. Wayne Wisehart Pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Brian P. McAndrews Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of M. Wayne Wisehart Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 8, 2007.

AQUANTIVE, INC.
By:	/s/ M. WAYNE WISEHART M. Wayne Wisehart
	Chief Financial Officer
	(Authorized Officer and Principal Financial Officer)

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