1163698--3/14/2008--SOUNDBITE_COMMUNICATIONS

related topics

{regulation, government, change}

{stock, price, operating}

{product, market, service}

{acquisition, growth, future}

{system, service, information}

{stock, price, share}

{personnel, key, retain}

{property, intellectual, protect}

{customer, product, revenue}

{provision, law, control}

{cost, operation, labor}

{competitive, industry, competition}

{financial, litigation, operation}

{tax, income, asset}

{control, financial, internal}

Our quarterly operating results can be difficult to predict and can fluctuate substantially, which could result in volatility in the price of our common stock. Our clients are not obligated to pay any minimum amount for use of our service on an on-going basis, and if they discontinue use of our service or do not use our service on a regular basis, our revenues would decline. We derive a significant portion of our revenues from the sale of our service for use in the collections process, and any event that adversely affects the collection agencies industry or in-house collection departments would cause our revenues to decline. Actual or perceived breaches of our security measures could diminish demand for our service and subject us to substantial liability. Interruptions or delays in service from our key vendors would impair the delivery of our on-demand service and could substantially harm our business and operating results. Our business will be harmed if we fail to develop new features that keep pace with technological developments or to transition successfully to a Voice over Internet Protocol telephony infrastructure. If the on-demand delivery model is not widely accepted for AVM services, our revenues would decline or fail to grow and we could incur operating losses. We face intense competition, and our failure to compete successfully would make it difficult for us to add and retain clients and would impede the growth of our business. Mergers or other strategic transactions involving our competitors could weaken our competitive position, which could harm our operating results. Our continued growth could strain our personnel resources and infrastructure, and if we are unable to implement appropriate controls and procedures to manage our growth, we will not be able to implement our business plan successfully. If we fail to retain our chief executive officer, chief operating and financial officer, chief technology officer, and other key personnel, our business would be harmed and we might not be able to implement our business plan successfully. Failure to expand our direct sales force successfully will impede our growth. Because competition for employees in our industry is intense, we might not be able to attract and retain the highly skilled employees we need to execute our business plan. If we are unable to protect our intellectual property rights, we would be unable to protect our proprietary technology and our brand. Our product development efforts could be constrained by the intellectual property of others, and we could be subject to claims of intellectual property infringement, which could be costly and time-consuming. Our platform relies on technology licensed from third parties, and our inability to maintain licenses of this technology on similar terms or errors in the licensed technology could result in increased costs or impair the implementation or functionality of our service, which would adversely affect our business and operating results. Any expansion of our business into international markets would expose us to additional business risks, and failure to manage those risks could adversely affect our business and operating results. Our limited operating history makes predicting future operating results more difficult. We might enter into acquisitions that are difficult to integrate, disrupt our business, dilute stockholder value or divert management attention. The consolidation of our customers can reduce the number of our customers and adversely affect our business. Our ability to use net operating loss carryforwards in the United States may be limited. If we are unable to raise capital when needed in the future, we may be unable to execute our growth strategy, and if we succeed in raising capital, we may dilute investors percentage ownership of our common stock or may subject our company to interest payment obligations and restrictive covenants. Risks Related to Regulation of Use of Our Service We derive a significant portion of our revenues from the sale of our service for use in the collections process, and our business and operating results could be substantially harmed if new U.S. federal and state laws or regulatory interpretations in one or more jurisdictions either make our service unavailable or less attractive for use in the collections process or expose us to regulation as a debt collector. We could be subject to significant penalties or damages if our clients violate U.S. federal or state restrictions on the use of artificial or prerecorded messages to contact wireless telephone numbers, and our business and operating results could be substantially harmed if those restrictions make our service unavailable or less attractive for use in the collections process. We could be subject to penalties if we or our clients violate federal or state telemarketing restrictions due to a failure of our service or otherwise, which could harm our financial position and operating results. Our failure to comply with numerous and overlapping information security and privacy requirements could subject us to fines and other penalties as well as claims by our clients for damages, any of which could harm our reputation and business. Any expansion of our business into international markets would require us to comply with additional debt collection, telemarketing, data privacy or similar regulations, which could make it costly or difficult to operate in these markets. Risks Related to Ownership of Our Common Stock Because our common stock has been traded publicly only for a limited time and our stock price might be volatile, investors might lose some or all of their investments. If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline. Future sales of our common stock by existing stockholders could cause our stock price to decline. Our directors, executive officers and their affiliated entities will continue to have substantial control over us and could limit the ability of other stockholders to influence the outcome of key transactions, including changes of control. Our corporate documents and Delaware law make a takeover of our company more difficult, which could prevent certain changes in control and limit the market price of our common stock. We do not intend to pay dividends on our common stock in the foreseeable future.

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1163698--3/14/2008--SOUNDBITE_COMMUNICATIONS_INC