Digital River 2002 Annual Report Download - page 28

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We may be unable to successfully and cost effectively market, sell and distribute our services in foreign markets. This may be more difficult or
take longer than anticipated especially due to international challenges, such as language barriers, currency exchange issues and the fact that the
Internet infrastructure in foreign countries may be less advanced than the U.S. Internet infrastructure. If we are unable to successfully expand
our international operations, or manage this expansion, our operating results and financial condition could be harmed.
New obligations to collect or pay sales tax could substantially increase the cost to us of doing business.
Currently, we collect sales, use or other similar taxes with respect to electronic software download in states where we believe that we have
Nexus. The application of sales related taxes to interstate and international sales over the Internet is unclear and evolving. Local, state or foreign
jurisdictions may seek to impose sales or use tax collection obligations on out-of-state companies like ours that engage in electronic commerce.
A successful assertion by one or more states or any foreign country that we should collect sales, use or other taxes on the sale of merchandise
through our E-Business Services Division or on shipments of software could harm our results of operations. In addition, any failure by an E-
Business client to collect obligatory sales or use taxes could cause the relevant jurisdiction to attempt imposing that obligation on us.
Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.
Keeping abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure,
including the Sarbanes-Oxley Act of 2002, new SEC regulations and Nasdaq Stock Market rules, has required an increased amount of
management attention and external resources. We intend to invest all reasonably necessary resources to comply with evolving corporate
governance and public disclosure standards, and this investment may result in increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities to compliance activities.
Internet-related stock prices are especially volatile and this volatility may depress our stock price or cause it to fluctuate significantly.
The stock market, and the trading prices of Internet-related companies in particular, have been notably volatile. This volatility is likely to
continue in the short-term and is not necessarily related to the operating performance of affected companies. This broad market and industry
volatility could significantly reduce the price of our Common Stock at any time, without regard to our operating performance. Factors that could
cause our stock price in particular to fluctuate include and are not limited to:
•actual or anticipated variations in quarterly operating results;
•announcements of technological innovations;
•the ability to sign new clients and retention of existing clients;
•new products or services that we or our competitors offer;
•changes in financial estimates by securities analysts;
•conditions or trends in the Internet and online commerce industries;
•global unrest and terrorist activities;
•changes in the economic performance and/or market valuations of other Internet or online electronic commerce companies;
•our announcement of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
•additions or departures of key personnel; and
•sales of our Common Stock.