1091158--3/13/2007--WEBSIDESTORY

related topics

{product, market, service}

{system, service, information}

{stock, price, share}

{acquisition, growth, future}

{property, intellectual, protect}

{stock, price, operating}

{customer, product, revenue}

{debt, indebtedness, cash}

{cost, operation, labor}

{regulation, government, change}

{personnel, key, retain}

{regulation, change, law}

{control, financial, internal}

{operation, international, foreign}

{tax, income, asset}

{competitive, industry, competition}

Our indebtedness could adversely affect our financial health. Covenants in our senior secured revolving credit facility may limit our ability to operate our business. If we cannot successfully integrate our business with the businesses of Avivo and Visual Sciences, or if the benefits of these business combinations do not meet the expectations of investors or financial or industry analysts, the market price of our common stock may decline. We operate in highly competitive markets, which could make it difficult for us to acquire and retain customers. Many of our services are sold pursuant to short-term subscription agreements, and if our customers elect not to renew these agreements, our revenue may decrease. Because we recognize the majority of our revenue from subscriptions to our services over the term of the applicable agreement, the lack of subscription renewals or new subscription agreements may not be immediately reflected in our operating results. We may have difficulty maintaining our profitability. If we fail to respond to rapidly changing technology or evolving industry standards, our services may become obsolete or less competitive. We may be liable to our customers and may lose customers if we provide poor service, if our services do not comply with our agreements or if there is a loss of data. We may expand through acquisitions of, or investments in, other companies or through business relationships, all of which may divert our management s attention, result in additional dilution to our stockholders or consume resources that are necessary to sustain our business. Fluctuations in our operating results may make it difficult to predict our future performance and may result in volatility in the market price of our common stock. We rely on a small number of third parties to support our network, any disruption of which could affect our ability to provide our services and could harm our reputation. A rapid expansion of our networks and systems could cause us to lose data or cause our networks or systems to fail. If our security measures are breached and unauthorized access is obtained, our services may be perceived as not being secure, and customers may hold us liable or stop using our services. Any failure to adequately expand our direct sales force will impede our growth. We may encounter difficulties managing our growth, which could adversely affect our results of operations. The success of our business depends in large part on our ability to protect and enforce our intellectual property rights. If a third party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or expensive licenses, and our business may be harmed. If we fail to develop our brands cost-effectively, our business may suffer. We rely on our management team and will need to hire additional personnel to grow our business. Our business strategy includes expanding our international operations; therefore, our business is susceptible to risks associated with international operations. We previously identified material weaknesses in our internal control over financial reporting, and our business and stock price may be adversely affected if our internal controls are not effective. Changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations. Our net operating loss carryforwards may expire unutilized, which could prevent us from offsetting future taxable income. Risks Related to Our Industry Widespread blocking or erasing of cookies or limitations on our ability to use cookies may impede our ability to collect information with our technology and reduce the value of that data. Privacy concerns and laws or other domestic or foreign regulations may subject us to litigation or limit our ability to collect and use Internet user information, resulting in a decrease in the value of our services and an adverse impact on the sales of our services. The success of our business depends on the continued growth of the Internet as a business tool and the growth of the web analytics market. Risks Related to the Securities Market and the Ownership of Our Common Stock Our stock price may be volatile and you may not be able to sell your shares at an attractive price. We might require additional capital to support business growth and this capital might not be available on acceptable terms, or at all. Future sales of our common stock by our stockholders may depress our stock price.

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1091158--3/13/2007--WEBSIDESTORY_INC