1094348--3/23/2006--ELOYALTY

related topics

{product, market, service}

{property, intellectual, protect}

{personnel, key, retain}

{control, financial, internal}

{capital, credit, financial}

{operation, international, foreign}

{stock, price, operating}

{regulation, government, change}

{cost, operation, labor}

{competitive, industry, competition}

{system, service, information}

We depend on good relations with our major clients and any harm to these good relations may materially and adversely harm our business or our ability to compete effectively. If we do not effectively manage the risks associated with increasingly complex client projects and new services offerings, our profit margins and our financial results may suffer. Our ability to retain our existing professionals, and our ability to recruit additional talented professionals, are critical to the success of our business. We rely heavily on our senior management team for the success of our business. Our industry is very competitive and, if we fail to compete successfully, our market share and business will be adversely affected. We must keep pace with the rapid rate of technological innovation and change, as well as evolving industry standards, in order to build our business. We depend on our ability to rapidly learn, use and integrate software and other technology developed by third parties to successfully compete in the CRM market, and our ability to maintain and grow our business may be affected by our ability to maintain strong relationships with CRM software providers and other alliance partners. It may be difficult for us to sufficiently access the debt or equity markets to meet our financial needs. We have a limited ability to protect our intellectual property rights, which are important to our success and competitive position. Others could claim that our services, software or solutions infringe their intellectual property rights or violate contractual protections. Increasing government regulation could cause us to lose clients or impair our business. Risks associated with international operations may adversely affect our business. If growth in the use of CRM technologies declines, demand for our services may decrease. Our financial results are subject to significant fluctuations because of many factors, any of which could adversely affect our stock price. We must maintain our reputation and expand our name recognition to remain competitive. Compliance with internal control reporting requirements could increase our costs.

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1094348--3/23/2006--ELOYALTY_CORP