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The following is an excerpt from a 10KSB SEC Filing, filed by IN STORE MEDIA SYSTEMS INC on 4/20/2005.
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FIREPOND, INC. - 10KSB - 20050420 - RESULTS_OF_OPERATIONS

Results of Operations

The Company's operational costs historically have increased or decreased primarily due to the expansion or contraction of the Company's ongoing research and development efforts. The Company has incurred operating expenses of $15,309,514 from inception through December 31, 2002. These expenses include $3,320,137 in research and development expenses and $11,608,110 in general and administrative expenses. As a result of the Bankruptcy Proceedings and a cessation of all operations except the prosecution of the Bankruptcy Proceedings and the LGS Adversary Proceeding, the general and administrative expenses of the Company were substantially reduced.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001. For the year ended December 31, 2002, the Company sustained net losses of $2,321,512 as compared to net losses of $4,653,268 for the year ended December 31, 2001. The decrease in net operating losses primarily was due to a decrease in general and administrative expenses.

The Company's operating expenses for the year ended December 31, 2002, decreased by approximately 37% to $2,027,070, as compared to operating expenses of $3,223,376 for the same period last year. The decrease in operating expenses in 2002 was due to a decrease in general and administrative expenses. General and administrative expenses decreased by $1,155,866 or approximately 37% to $1,980,930 for the 2002 year, as compared to general and administrative expenses of $3,136,796 for the same period the prior year. The decrease in general and administrative expenses primarily was due to a reduction in stock based compensation to employees and consultants, and a reduction of expenses incurred with management consultants.

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The Company's net non-operating expense (including non-operating interest income and interest expense) decreased to $279,522 for the year ended December 31, 2002, as compared to non-operating expenses of $1,448,398 for the year ended December 31, 2001. The decrease was primarily due to a decrease of approximately 82% in interest expense and a decrease of approximately 80% in debt conversion costs for the year ended December 31, 2002. Interest expense for the year ended December 31, 2002 was $148,370 compared to $806,657 for the prior year. For the year ended December 31, 2002, debt conversion costs equaled $128,856 compared to $631,512 for the prior year due to the decrease in the number of notes converted to the Company's common stock during 2002 as compared to 2001.

Year Ended December 31, 2001 Compared To Year Ended December 31, 2000. For the year ended December 31, 2001, the Company sustained net losses of $4,653,268, as compared to net losses of $2,512,686 for the year ended December 31, 2000. The increase in loss primarily was due to an increase in interest expense, debt conversion costs, and general and administrative expenses.

The Company's operating expenses for the year ended December 31, 2001, increased by approximately 77% to $3,223,376, as compared to operating expenses of $1,824,011 for the same period last year. The increase in operating expenses in 2001 was due to increases in general and administrative expenses. General and administrative expenses increased by $1,432,075 or approximately 84% to $3,136,796 for the 2001 fiscal year, as compared to general and administrative expenses of $1,704,721 for the 2000 fiscal year. The increase in general and administrative expenses primarily was due to increases of $585,772 in stock based compensation to employees and consultants, and an increase of $683,674 in expenses incurred with management consultants.

The Company's net non-operating expense (including non-operating interest income and interest expense) increased to $1,448,398 for the year ended December 31, 2001, as compared to non-operating expenses of $688,675 for the year ended December 31, 2000. The increase was primarily due to an increase of approximately 288% in interest expense and an increase of approximately 117% in debt conversion costs for the year ended December 31, 2001. The increase in interest expense was primarily due to the increase in value assigned to the extension of the warrant exercise period related to the Company's debt offerings. The effect of the valuation assigned to the warrants resulted in a decrease in interest expense of $95,901 and an increase in interest expense of $474,175 for the years ended December 31, 2000 and 2001 respectively. Debt conversion costs for the year ended December 31, 2001, increased to $631,512 due to the increase in the number of notes converted to the Company's common stock during 2001 as compared to 2000.

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