78536--3/15/2006--REWARDS_NETWORK

related topics

{system, service, information}

{personnel, key, retain}

{investment, property, distribution}

{condition, economic, financial}

{provision, law, control}

{stock, price, share}

{stock, price, operating}

{regulation, government, change}

{operation, international, foreign}

{loss, insurance, financial}

{financial, litigation, operation}

{competitive, industry, competition}

{debt, indebtedness, cash}

{cost, operation, labor}

A significant number of our active member accounts are obtained from our relationships with airlines and other program partners. A significant amount of our benefits currency is concentrated in one industry group. We have minimum program partner purchase obligations and other performance requirements. We depend on our ability to attract and retain restaurants. We depend on our ability to attract and retain active members. Changes in our programs that affect the rate of rewards received by members could have adverse consequences. We must maintain an appropriate balance between the number of members and the number of participating restaurants in each market. We are subject to changes to payment card association rules and practices. We depend upon our relationships with payment card issuers, transaction processors, presenters and aggregators. Network interruptions, processing interruptions or processing errors could occur. We are susceptible to a changing regulatory environment. Privacy concerns of our program partners, payment card processors and the public may result in increased operating costs. Our security measures may not be successful. We are susceptible to restaurant credit risk. Economic changes could hurt our business. Our allowance for doubtful dining credits accounts is an estimate and may prove inadequate to absorb actual losses. We could lose key personnel. We are a defendant in lawsuits that, if adversely determined, could result in significant monetary damages and expenses to us and/or restrictions on how we conduct our business. If we are unable to obtain sufficient cash, our business, financial condition and results of operations may be adversely affected. The expansion of our program into Canada may not be successful. We are controlled by Samstock, L.L.C. and its affiliates. Our board of directors may issue our authorized preferred stock without stockholder approval. The future sales of restricted and other shares may cause dilution to each stockholder s percentage ownership interest and could cause our stock price to decline. The price of our common stock could be volatile. Delaware corporate law, our certificate of incorporation and our by-laws contain anti-takeover provisions that could delay or prevent a change of control even if the change of control would be beneficial to our stockholders.

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78536--3/15/2006--REWARDS_NETWORK_INC