1077926--4/2/2007--AUDIBLE

related topics

{system, service, information}

{product, market, service}

{property, intellectual, protect}

{personnel, key, retain}

{control, financial, internal}

{operation, international, foreign}

{operation, natural, condition}

{cost, operation, labor}

{gas, price, oil}

{stock, price, share}

{provision, law, control}

{competitive, industry, competition}

{cost, regulation, environmental}

{customer, product, revenue}

We have limited revenue, we have a history of losses, and we may not be profitable in the future. We have identified material weaknesses in internal control over financial reporting which may adversely affect our operations. If too many AudibleListener members refrain from using their audio credits on a timely basis, there will be a delay in recognizing the revenue until the credits are either used or expire. If our efforts to attract new AudibleListeners are not successful, our revenues will be affected adversely. If we experience excessive rates of churn, our revenues may decline. The market for our service is uncertain and consumers may not be willing to use the Internet to purchase spoken audio content, which could cause our business to grow more slowly. We may not be able to license or produce sufficiently compelling audio content to attract and retain customers and grow our revenue. If manufacturers of electronic devices do not manufacture, make available or sell a sufficient number of products suitable for our service, our revenue may not grow. We must establish, maintain and strengthen our brand names, trademarks and service marks in order to acquire customers and generate revenue. Increasing availability of digital audio technologies may increase competition and reduce our revenue, market share and profitability. Our industry is highly competitive and we cannot assure you that we will be able to compete effectively. Capacity constraints and failures, delays, or overloads could interrupt our service and reduce the attractiveness of our service to existing or potential customers. We could be liable for substantial damages if there is unauthorized duplication of the content we sell. We do not have a comprehensive disaster recovery plan and we have limited back-up systems, and a disaster could severely damage our operations and could result in loss of customers. Problems associated with the Internet could discourage use of Internet-based services like ours and adversely affect our business. The loss of key employees could jeopardize our growth prospects. Our inability to hire new employees may hurt our growth prospects. Our new facility in Newark may not lead to an increase in operational efficiencies or employee performance. Our common stock has been relatively thinly traded and we cannot predict the extent to which a trading market will develop, which may adversely affect our share price. We may not be able to protect our intellectual property, which could jeopardize our competitive position. Other companies may claim that we infringe their copyrights or patents, which could subject us to substantial damages. We could be sued for content that we distribute over the Internet, which could subject us to substantial damages. Future government regulations may increase our cost of doing business on the Internet, which could adversely affect our cost structure. We may become subject to sales and other taxes for direct sales over the Internet, which could affect our revenue growth. A variety of risks could adversely affect our international activities. Our charter and bylaws could discourage an acquisition of our company that would benefit our stockholders.

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1077926--4/2/2007--AUDIBLE_INC