1077866--3/16/2009--LOOKSMART

related topics

{system, service, information}

{product, market, service}

{condition, economic, financial}

{acquisition, growth, future}

{control, financial, internal}

{capital, credit, financial}

{financial, litigation, operation}

{competitive, industry, competition}

{stock, price, share}

{customer, product, revenue}

{stock, price, operating}

{loan, real, estate}

{personnel, key, retain}

{provision, law, control}

{product, liability, claim}

{property, intellectual, protect}

Risks Related to our Business Our financial results are highly concentrated in the online search advertising business; if we are unable to grow online search advertising revenues and find alternative sources of revenue, our financial results will suffer We rely primarily on our distribution network partners to generate quality search queries and display advertisements that generate paid clicks; if we are unable to maintain or expand the scope and quality of this network, our ability to generate revenue may be seriously harmed We have generated significant losses in the past and we may be unable to achieve operating profitability in the foreseeable future, and if we achieve profitability, we may be unable to maintain it, which could result in a decline in our stock price If we experience downward pressure on our match rate, paid click rate, and/or revenue-per-click, or we are unable to rebuild our match rate, paid click rate, and/or revenue-per-click, our financial results will suffer Our growth depends on our ability to retain and grow our advertiser base; if our search advertiser base and average advertiser spend falls, our financial results will suffer Our growth depends upon our ability to offer and support our technology services to online publishers, and there are risks associated with introducing new products and services If we do not introduce new and upgraded products and services and successfully adapt to our rapidly changing industry, our financial condition may suffer We face intense competitive pressures, which could materially and adversely affect our financial results Our acquisition of businesses and technologies may be costly and time-consuming; acquisitions may also dilute our existing stockholders Our success depends on our ability to attract and retain key personnel; if we were unable to attract and retain key personnel in the future, our business could be materially and adversely impacted We face capacity constraints on our software and infrastructure systems that may be costly and time-consuming to resolve Our ability to retain existing credit facilities or obtain new credit facilities may adversely affect the way we conduct our business Risks Related to Operating in our Industry Economic conditions, political events, and other circumstances could materially adversely affect the Company Cyclical and seasonal fluctuations in the economy, in internet usage and in traditional retail shopping have affected, and are likely to continue to affect, our business If we fail to prevent, detect and remove invalid search queries and clicks, we could lose the confidence of our search advertisers, thereby causing our business to suffer Any failure in the performance of our key operating systems could materially and adversely affect our revenues Our business and operations depend on Internet service providers and third party technology providers, and any failure or system downtime experienced by these companies could materially and adversely affect our revenues We may face liability for claims related to our products and services, and these claims may be costly to resolve We could be subject to infringement claims that may be costly to defend, result in the payment of settlements or damages or cause us to change the way we conduct our business Litigation, regulation, legislation or enforcement actions directed at or materially affecting us may adversely affect the commercial use of our products and services and our financial results Privacy-related regulation of the Internet could limit the ways we currently collect and use personal information, which could decrease our advertising revenues or increase our costs Online commerce security risks, including security breaches, identity theft, service disrupting attacks and viruses, could harm our reputation and the conduct of our business, which could have a material adverse effect on our financial results New tax treatment of companies engaged in Internet commerce may adversely affect the commercial use of our search service and our financial results Risks Related to the Capital Market Our quarterly revenues and operating results may fluctuate for many reasons, each of which may negatively affect our stock price Our stock price is extremely volatile, and such volatility may hinder investors ability to resell their shares for a profit or avoid a loss We may need additional capital in the future to support our operations and, if such additional financing is not available to us, on reasonable terms or at all, our liquidity and results of operations will be materially and adversely impacted A significant market downturn may lead to a decline in the value of securities we hold in our investment portfolio Provisions of Delaware corporate law and provisions of our charter and bylaws may discourage a takeover attempt

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1077866--3/16/2009--LOOKSMART_LTD