1056386--3/10/2006--INTERNAP_NETWORK_SERVICES

related topics

{system, service, information}

{product, market, service}

{stock, price, share}

{acquisition, growth, future}

{operation, natural, condition}

{property, intellectual, protect}

{debt, indebtedness, cash}

{control, financial, internal}

{stock, price, operating}

{competitive, industry, competition}

{personnel, key, retain}

{product, candidate, development}

{operation, international, foreign}

{regulation, change, law}

{financial, litigation, operation}

Risks Related to Our Business We have a history of losses and may not achieve or sustain profitability. Our operations have historically been cash flow negative, and we have depended on equity and debt financings to meet our cash requirements, which may not be available to us in the future on favorable terms. While we believe that we currently have adequate internal control procedures in place, we are still exposed to potential risks from legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002. We may not be able to compete successfully against current and future competitors. Pricing pressure could decrease our revenue and threaten the attractiveness of our premium priced services. We depend on a number of Internet network service providers to provide Internet connectivity to our network access points. If we are unable to obtain required connectivity services on a cost-effective basis or at all, or if such services are interrupted or terminated, our growth prospects and business, results of operations and financial conditions would be adversely affected. We depend on third-party suppliers for key elements of our network infrastructure and to provide services. If we are unable to obtain products or services, such as network access loops or local loops, on favorable terms or at all, or in the event of a failure of these suppliers to deliver their products and services as agreed, our ability to provide our services on a competitive and timely basis would be impaired and our results of operations and financial conditions would be adversely affected. A failure in the redundancies in our network operations centers, network access points or computer systems would cause a significant disruption in our Internet connectivity services, and we may experience significant disruptions in our ability to service our customers. The increased use of high power density equipment may limit our ability to fully utilize our data centers. Our business could be harmed by prolonged electrical power outages or shortages, increased costs of energy or general availability of electrical resources. Any failure of our physical infrastructure or services could lead to significant costs and disruptions that could reduce our revenue and harm our business reputation and financial results. Our results of operations have fluctuated in the past and may continue to fluctuate, which could have a negative impact on the price of our common stock. The terms of our existing credit facility impose restrictions upon us. In the event of overcapacity created in the Internet connectivity and IP services market, we may record additional significant restructuring charges and goodwill impairment. If we are unable to deploy new network access points or do not adequately control expense associated with the deployment of new network access points, our results of operations could be adversely affected. We have acquired and may acquire other businesses, and these acquisitions involve numerous risks. Because we have limited experience operating internationally, our international operations may not be successful. Disputes with vendors regarding the delivery of services may materially impact our results of operations and cash flows. We depend upon our key employees and may be unable to attract or retain sufficient numbers of qualified personnel. If we fail to adequately protect our intellectual property, we may lose rights to some of our most valuable assets. We may face litigation and liability due to claims of infringement of third-party intellectual property rights. Risks Related to Our Industry The future evolution of the high performance Internet connectivity market, and therefore the role of our products and services, cannot be predicted with certainty. If we are unable to respond effectively and on a timely basis to rapid technological change, we may lose or fail to establish a competitive advantage in our market. Our network and software are vulnerable to security breaches and similar threats that could result in our liability for damages and harm our reputation. Terrorist activity throughout the world and military action to counter terrorism could adversely impact our business. If governments modify or increase regulation of the Internet, the provision of our services could become more costly. Risks Related to Our Capital Stock Our common stockholders may experience significant dilution, which would depress the market price of our common stock. Our stock price may be volatile.

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1056386--3/10/2006--INTERNAP_NETWORK_SERVICES_CORP