1142512--3/16/2006--ZIPREALTY

related topics

{system, service, information}

{product, market, service}

{loan, real, estate}

{stock, price, operating}

{property, intellectual, protect}

{personnel, key, retain}

{regulation, change, law}

{stock, price, share}

{regulation, government, change}

{customer, product, revenue}

{acquisition, growth, future}

{provision, law, control}

{condition, economic, financial}

{tax, income, asset}

{operation, natural, condition}

Our business could be harmed by transitions in the real estate markets and economic events that are out of our control and may be difficult to predict. Our business model is new and unproven, and we cannot guarantee our future success. If we fail to recruit, hire and retain qualified agents, we may be unable to service our clients and our growth could be impaired. Our failure to effectively manage the growth of our ZipAgents and our information and control systems could adversely affect our ability to service our clients. Our operating results are subject to seasonality and vary significantly among quarters during each calendar year, making meaningful comparisons of successive quarters difficult. Interest rates have been at historic lows for the past several years, and increases in interest rates have the potential to negatively impact the housing market. If consumers do not continue to use the Internet as a tool in their residential real estate buying or selling process, we may be unable to attract new clients and our growth and financial results may suffer. Our success depends in part on our ability to successfully expand into additional real estate markets. Unless we develop, maintain and protect a strong brand identity, our business may not grow and our financial results may suffer. We have numerous competitors, many of which have valuable industry relationships and access to greater resources than we do. Changes in federal and state real estate laws and regulations, and rules of industry organizations such as the National Association of REALTORS , could adversely affect our business. We derive a significant portion of our leads through third parties, and if any of our significant lead generation relationships are terminated, impaired or become more expensive, our ability to attract new clients and grow our business may be adversely affected. Our ability to expand our business may be limited by state laws governing cash rebates to home buyers. We may be unable to integrate our technology with each MLS on a cost-effective basis, which may harm our operating results and adversely affect our ability to service clients. If we fail to comply with real estate brokerage laws and regulations, we may incur significant financial penalties or lose our license to operate. We may have liabilities in connection with real estate brokerage activities. We may be subject to liability for the Internet content that we publish. We monitor and evaluate the use of our website by our registered users, which could raise privacy concerns. We may need to change the manner in which we conduct our business if government regulation of the Internet increases. Our reputation and client and agent service offerings may be harmed by system failures and computer viruses. Our business is geographically concentrated, which makes us more susceptible to business interruption and financial loss due to natural disasters, inclement weather, economic or market conditions or other regional events outside of our control. Our intellectual property rights are valuable and our failure to protect those rights could adversely affect our business. We may in the future be subject to intellectual property rights disputes, which could divert management attention, be costly to defend and require us to limit our service offerings. If we fail to attract and retain our key personnel, our ability to meet our business goals will be impaired and our financial condition and results of operations will suffer. We intend to evaluate acquisitions or investments in complementary technologies and businesses and we may not realize the anticipated benefits from, and may have to pay substantial costs related to, any acquisitions or investments that we undertake. Accounting for employee stock options using the fair value method, could significantly reduce our net income in future periods. The value of our services could be diminished if anti-spam software filters out an increasing portion of the emails we send. Because our marketing relationship with E-LOAN represents a source of revenue for us and funding for our clients, we could be harmed if this relationship became impaired. OTHER RISKS RELATED TO OUR STOCK PRICE Our stock price may be volatile. Our share price could decline due to the large number of outstanding shares of our common stock eligible for future sale. Our principal stockholders, executive officers and directors own a significant percentage of our stock, and as a result, the trading price for our shares may be depressed and these stockholders can take actions that may be adverse to your interests. Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.

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1142512--3/16/2006--ZIPREALTY_INC