1083712--3/31/2009--WEBMEDIA_BRANDS

related topics

{product, market, service}

{system, service, information}

{property, intellectual, protect}

{personnel, key, retain}

{stock, price, operating}

{control, financial, internal}

{regulation, change, law}

{capital, credit, financial}

{investment, property, distribution}

{loan, real, estate}

{cost, operation, labor}

{acquisition, growth, future}

{tax, income, asset}

{interest, director, officer}

{provision, law, control}

Risks Related to Our Business We may fail to identify or successfully acquire businesses and content that would otherwise enhance our product offerings to our customers and users, and as a result our revenue may decrease or fail to grow. We may fail to successfully integrate or achieve expected synergies from recent or future acquisitions, which could result in increased expenses, diversion of management s time and resources and a reduction in expected revenues, any of which could cause our stock price to fluctuate or decline. Given the tenure and experience of our CEO and his guiding role in developing our business and growth strategy since our inception, our growth may be inhibited or our operations may be impaired if we were to lose his services. Our CEO and other employees with specialized knowledge and expertise in the operation of one or more of our businesses could use that knowledge and expertise to compete against us, which could reduce our market share. Our quarterly operating results are subject to fluctuations, and our stock price may decline if we do not meet the expectations of investors and analysts. We are exposed to potential liabilities in connection with the sale of the Jupiterimages business to Getty Images. We are unable to compete with the Jupiterimages business for five years from the date of the closing of the Sale. Because a limited number of advertisers constitute a significant portion of our revenues, our revenues could decline significantly if one or more of these advertisers were to cease advertising with us. Our business may suffer if we are unable to maintain or enhance awareness of our brands or if we incur excessive expenses attempting to promote our brands. We have generated significant losses since inception and may not report net income in the future. The impairment of a significant amount of goodwill and intangible assets on our balance sheet could result in a decrease in earnings and, as a result, our stock price could decline. Our business, which is dependent on centrally located communications and computer hardware systems, is vulnerable to natural disasters, telecommunication failures, terrorism and similar problems, and we are not fully insured for losses caused by all of these incidents. System failures and other events may prohibit users from accessing our networks or Web sites, which could reduce traffic on our networks or Web sites and result in decreased capacity for advertising space and reduced revenues. Our network operations may be vulnerable to hacking, viruses and other disruptions, which may make our products and services less attractive and reliable and could result in increased costs and reduced revenues. Our intellectual property is important to our business, and our failure to protect that intellectual property could result in increased expenses and adversely affect our future growth and success. If we fail to maintain an effective direct sales force, our revenues could decline significantly. Intense competition in each of our businesses could reduce our market share, which could result in a decrease in revenue. We may not be able to attract and retain qualified personnel, which could impact the quality of our content and services and the effectiveness and efficiency of our management, resulting in increased costs and losses in revenue. We face potential liability for information that we publish or distribute, which could spur costly litigation against us. Our stock price could continue to be extremely volatile, making an investment in our common stock less predictable and more risky, and could spur costly litigation against us. Because our stock ownership is heavily concentrated with Alan M. Meckler, our Chairman and CEO, Mr. Meckler will be able to influence matters requiring stockholder approval. Our charter documents and the Delaware General Corporation Law may inhibit a takeover, even if such takeover would be beneficial to our stockholders. We have identified a material weakness in our internal control over financial reporting that, if not remediated, could affect our ability to prepare timely and accurate financial reports, which could cause investors to lose confidence in our reported financial information and could have a negative effect on the trading price of our stock. Risks Related to the Information Technology and Internet Industries A lack of continued growth in the use of information technology and the Internet could inhibit the growth of our business. If we are unable to adapt to the relatively new and rapidly changing Internet advertising environment, we may be unable to attract advertisers to our networks and our revenues could suffer. Legal uncertainties could add additional costs and risks to doing business on the Internet, which would cause an increase in the costs and risks associated with operating our business. Regulation could reduce the registration or value of our domain names. Changes in laws and standards relating to data collection and use practices and the privacy of Internet users and other individuals could impair our efforts to advertise our products and services and thereby decrease our advertising revenue. Taxation of online commerce in certain states or jurisdictions could result in a decrease in sales and an increase in compliance costs, either of which could cause our stock price to decline. The information technology and Internet industries are characterized by rapid technological change, which could require frequent and costly technological improvements and, if we fail to continually improve our content offerings and services, we could cease to be competitive in our businesses.

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1083712--3/31/2009--WEBMEDIA_BRANDS_INC.