##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934  Commission file number:
    001-33790
      SoundBite Communications,
    Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware(State or Other Jurisdiction
    of
    Incorporation or Organization)

04-3520763(I.R.S. Employer
    Identification Number)22 Crosby Drive
    Bedford, Massachusetts(Address of Principal
    Executive Offices)

01730(Zip Code)   Registrants telephone number, including area code:
 (781) 897-2500
      Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class:

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share

The NASDAQ Global Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
    Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer þ
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      Documents Incorporated by Reference
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


16Item 1B.


Unresolved Staff Comments


31Item 2.


Properties


31Item 3.


Legal Proceedings


31Item 4.


Submission of Matters to a Vote of Security
    Holders


32PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


33Item 6.


Selected Financial Data


34Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


36Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


49Item 8.


Financial Statements and Supplementary Data


49Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


49Item 9A(T).


Controls and Procedures


49Item 9B.


Other Information


50PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


50Item 11.


Executive Compensation


50Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


50Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


50Item 14.


Principal Accounting Fees and Services


50PART IVItem 15.


Exhibits and Financial Statement Schedules


51Signatures


53Ex-10.13 Summary of 2008 Cash Compensation PlanEx-21.1 List of subsidiaries of RegistrantEx-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32.1 Section 906 Certification of CEO & CFO   i




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Forward-Looking
    Information
  This Annual Report on
    Form 10-K
    contains, in addition to historical information, forward-looking
    statements within the meaning of Section 21E of the
    Securities Exchange Act of 1934, including information relating
    to revenues generated from our on-demand AVM service to
    businesses, governments and other organizations, our efforts to
    expand our presence in collection agencies and large in-house,
    or first-party, collection departments, expected increases in
    cost of revenue, our expected gross margins for future periods,
    our spending on research and development, our ability to remain
    competitive and achieve future growth, information with respect
    to other plans and strategies for our business and factors that
    may influence our revenue for the fiscal quarter of 2008 and
    thereafter. Words such as expect,
    anticipate, intend, plan,
    believe, seek, estimate and
    variations of these words and similar expressions are intended
    to identify our forward-looking statements. These
    forward-looking statements are not guarantees of future
    performance and involve risks and uncertainties including those
    described in Item 1A  Risk Factors
    and elsewhere in this annual report and that are otherwise
    described from time to time in our Securities and Exchange
    Commission reports filed after this report. The forward-looking
    statements included in this annual report represent our
    estimates as of the date of this annual report. We specifically
    disclaim any obligation to update these forward-looking
    statements in the future, except as specifically required by law
    or the rules of the Securities and Exchange Commission. These
    forward-looking statements should not be relied upon as
    representing our estimates or views as of any date subsequent to
    the date of this annual report.
 1




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PART I  Item 1.
    Business  Overview
        Industry
    Background and Trends
  e-mail,
  E-mail e-mails e-mails
 2




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Inefficiencies
    of Contact Centers
    
    Cost.  Contact center agents are expensive to
    hire, train and retain and also require facilities and
    infrastructure with associated additional expense. Accenture
    estimated, as of 2006, that the call center industry spends 60%
    of its annual budget on human resource expenses, including
    paying from $4,000 to nearly $7,000 to hire and train a new
    agent.
    Capacity.  A contact center agent can handle
    only a limited number of calls per hour. In order to maintain
    service levels during peaks in usage, a contact center must hire
    additional agents, who are likely to experience significant down
    time during slower periods.
    Productivity.  Contact center agents routinely
    spend time unproductively, leaving voice messages, getting a
    busy signal or no answer, connecting to the wrong individual, or
    waiting to connect with a customer.
    Customization.  Contact center agents cannot
    provide the
    customer-by-customer
    personalization that an organization might desire for a
    campaign, and organizations typically are unwilling to incur the
    agent retraining costs necessary to test alternate approaches
    either before or during a campaign.
    Quality.  Widely varying levels of agent skill
    and experience and high rates of turnover make it difficult for
    a contact center to deliver high quality customer interactions
    uniformly and consistently. In August 2005 destinationCRM.com
    estimated that contact centers turnover, on average, 40% of
    their agents each year.      
    Cost.  Predictive dialers require a significant
    upfront investment in hardware and software, as well as
    recurring expenditures for maintenance and, in some cases,
    dedicated information technology, or IT, staff. A predictive
    dialer subsequently may need to be upgraded or replaced in order
    to take advantage of a newly available technology.
    Capacity.  Although predictive dialers increase
    the number of interactive calls a contact center agent can
    handle each hour, the number of calls by an agent remains
    limited. Moreover, the number of one-way messages deliverable by
    a predictive dialer is limited by the telephony infrastructure
    of the contact center.
    Productivity.  While predictive dialers
    automate the dialing process and reduce the idle time of contact
    center agents, they introduce new drawbacks. Call recipients
    frequently hang up during the dialer 3




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pause that occurs while a predictive dialer locates an
    available agent, and predictive dialers often fail to detect
    answering machines correctly.  
    Interaction limitations.  Predictive dialers do
    not address the inherent inability of contact center agent
    interactions to provide organizations with the consistency,
    customization and uniform quality typically required for an
    effective campaign.  Emergence
    of
    IP-Enabled
    Contact Centers
    IP-based IP-based
    Opportunities
    for Automated Voice Messaging Solutions
    Our
    Solution
     4




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Lower total cost of ownership.
  Improved contact center agent
    productivity.
  Enhanced agentless interactions.
  Burstable capacity.
  Rapid service deployment and campaign
    modification.
  Usage-based pricing model.
  Our
    Strategy
    Leverage referenceable client base.
  Exploit on-demand platform.
 5




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Broaden service offering.
  Aggressively migrate to VoIP. IP-based
  Selectively pursue strategic acquisitions and
    relationships.
  Our
    On-Demand Service
  e-mail
  Collections

Marketing

Customer Care Payment reminders

 Credit card activations

 Contract and subscription renewals Early-stage collections

 Surveys

 Delivery notifications Contingent collections

 Welcome calls

 Scheduled service outages    6




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CUSTOMER
    CONTACT PLATFORM
  
  Secure Web and Data Integration
    Interfaces.
  Core Components.
  List Management
  Script Interaction text-to-speech
  
    Automated Right-Party Verification enables the identity of a
    customer to be verified without contact center agent involvement
    by, for example, having a recipient enter his or her billing zip
    code.
    Direct Connect to Contact Center allows a recipient to connect
    directly to a contact center in order to speak with a contact
    center agent. 7




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
    Campaign Strategy defines the frequency and nature of the
    customer interactions to be employed to achieve the goals of a
    campaign. This component includes the following features:  
    Multi-Pass Campaigns are multiple overlapping passes through a
    contact list determined in accordance with client-defined
    parameters and intended to maximize contact list penetration and
    response rates.
    Call Pass Escalation defines the conditions in which our service
    moves to a different phone number or
    e-mail
    address within a contact pass.
    Contact Ordering prioritizes contacts based on client-specified
    criteria, such as the amount owed, or on the likelihood that
    customers will be reached at a particular time.  Agent
    Management
  
    AutoManage monitors and controls campaign performance to adjust
    the pace of outgoing calls to balance the flow of calls to the
    contact center. Based on our proprietary algorithm, adjustments
    are made based on factors such as contact center agent
    availability, average talk time and average hold times.
    Call Forecasting provides continuously refreshed data concerning
    current and anticipated future contact attempts that contact
    center managers can use for contact center agent resource
    planning.
    Contact Center Reports are available in near real-time and
    provide details on customer interactions with contact centers,
    including ring time, waiting time and talk time.  Compliance Management
  Reporting and Analytics
  Enterprise Management
  Security. need-to-know e-mail
   8




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Delivery Channels. e-mail.
  Complementary Services.
  Our
    Client Management Services
      Implementation, Training and General Help Desk around-the-clock
  Solutions Consulting
  Customer Analytics
  Business
    Segments and Geographic Information
    Clients
   9




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T-Mobile
  Sales and
    Marketing
      e-mail
  Technology,
    Development and Operations
  Technology
  text-to-speech
   10




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Research
    and Development
      Operations
  around-the-clock on-site
           11




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Competition
    Predictive
    Dialers
    
    breadth of features;
    speed of deployment;
    capital investment required;
    pricing model for customers; and
    capacity, including burstability.        Hosted
    AVM Solutions
    
    price;
    return on investment;
    breadth of features;
    brand awareness based on referenceable customer base; and
    security and reliability. 12




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Intellectual
    Property
         13




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
    identify, license and integrate equivalent technology from
    another source;
    rewrite the technology ourselves; or
    rewrite portions of our source code to accommodate the change or
    no longer use the technology.    Government
    Regulation
    
    the Fair Debt Collection Practices Act, which regulates the
    timing and content of debt collection communications;
    the Telephone Consumer Protection Act, which restricts the
    circumstances under which automated telephone dialing systems
    and artificial or prerecorded messages may be used to contact
    wireless telephone numbers;
    Federal Trade Commission and Federal Communications Commission
    telemarketing regulations, which have been promulgated under the
    authority of the Telemarketing and Consumer Fraud and Abuse
    Prevention Act and the Telephone Consumer Protection Act and
    which restrict the timing, content and manner of telemarketing
    calls, including the use of automated dialing systems,
    predictive dialing techniques, and artificial or prerecorded
    voice messages;
    the Gramm-Leach-Bliley Act, which regulates the disclosure of
    consumer nonpublic personal information received from our
    financial institution clients and requires those clients to
    impose administrative, technical, and physical data security
    measures in their contracts with us; and 14




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
    the Fair Credit Reporting Act, which defines permissible uses of
    consumer information furnished to or obtained from consumer
    reporting agencies.  out-of-pocket
      Employees
      Our
    History
  (781) 897-2500. www.soundbite.com. Form 10-K.
   15




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Item 1A.  Risk
    Factors    Risks
    Related to Our Business and Industry
  If the
    market for automated voice messaging products and services does
    not develop as we anticipate, our revenues would decline or fail
    to grow and we could incur operating losses.
    e-mail,
    Defects
    in our platform, disruptions in our service or errors in
    execution could diminish demand for our service and subject us
    to substantial liability.
     16




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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 ability to attract new clients, including the length of our
    sales cycles, or to sell increased usage of our service to
    existing clients;
    technical difficulties or interruptions in our service;
    changes in privacy protection and other governmental regulations
    applicable to the communications industry;
    changes in our pricing policies or the pricing policies of our
    competitors;
    the financial condition and business success of our clients;
    purchasing and budgeting cycles of our clients;
    acquisitions of businesses and products by us or our competitors;
    competition, including entry into the market by new competitors
    or new offerings by existing competitors;
    our ability to hire, train and retain sufficient sales, client
    management and other personnel;
    timing of development, introduction and market acceptance of new
    services or service enhancements by us or our competitors;
    concentration of marketing expenses for activities such as trade
    shows and advertising campaigns;
    expenses related to any new or expanded data centers; and
    general economic and financial market conditions. 17




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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.
       18




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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.
   19




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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.
    
    the security capabilities and reliability of our on-demand
    service;
    reluctance by organizations to trust third parties to store and
    manage critical customer data;
    our ability to continue to achieve and maintain high levels of
    client satisfaction;
    the level of customization we offer;
    our ability to meet the needs of broader segments of the
    customer contact market;
    a substantial decrease in the cost of hardware and software
    necessary for organizations to maintain their customer contact
    technology in-house; and
    adverse publicity about us, our service or on-demand AVM
    services in general, whether based on poor performance by us or
    our competitors or on third-party reviews and industry analyst
    reports.    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.
     20




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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.
   21




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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.
   22




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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.
   23




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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.
    
    difficulty in establishing, staffing and managing international
    sales operations;
    challenges encountered under local business practices, which
    vary by country and often favor local competitors;
    challenges caused by distance, language and cultural differences;
    compliance with multiple, conflicting and changing laws and
    regulations, including employment and tax laws and regulations;
    longer payment cycles in some countries;
    currency exchange rate fluctuations; and
    limited protection of intellectual property in some countries
    outside of the United States.    Our
    limited operating history makes predicting future operating
    results more difficult.
    
    we have a single service offering and face risks in developing
    complementary services or new service offerings;
    we could encounter difficulties in managing the growth, if any,
    of our business; and
    we could be unable to forecast accurately the behavior of
    existing and potential clients or the demand for customer
    contact products.    We
    might enter into acquisitions that are difficult to integrate,
    disrupt our business, dilute stockholder value or divert
    management attention.
    
    difficulties in integrating the operations and personnel of the
    acquired companies;
    maintenance of acceptable standards, controls, procedures and
    policies;
    potential disruption of ongoing business and distraction of
    management; 24




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
    impairment of relationships with employees and clients as a
    result of any integration of new management and other personnel;
    inability to maintain relationships with clients of the acquired
    business;
    difficulties in incorporating acquired technology and rights
    into products and services;
    unexpected expenses resulting from the acquisition;
    potential unknown liabilities associated with acquired
    businesses; and
    unanticipated expenses related to acquired technology and its
    integration into existing technology.      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.
    
    fund ongoing operations;
    take advantage of opportunities, including more rapid expansion
    of our business or the acquisition of complementary products,
    technologies or businesses; 25




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
    develop new products; and
    respond to competitive pressures.    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.
   26




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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.
     27




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e-mail
  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.
         28




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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.
   29




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Future
    sales of our common stock by existing stockholders could cause
    our stock price to decline.
  lock-up lock-up
  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.
   30




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Item 1B.  Unresolved
    Staff Comments    Item 2.
    Properties      Location

Owner

Operator

Date Agreement ExpiresAshburn, VA

Equinix

InterNap

October 2008Somerville, MA

InterNap

InterNap

November 2008Toronto, Canada

Pier 1 Network

Pier 1 Network

August 2008Enterprises

Enterprises   Item 3.
    Legal
    Proceedings      Pretrial discovery is ongoing in this
    matter.
 31




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Item 4.
    Submission
    of Matters to a Vote of Security Holders                                   32




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Price of Common Stock
    Fiscal Year Ended December 31, 2007

High


LowFourth quarter (from November 6, 2007)

$
8.25


$
5.50         Form S-1 No. 333-142144)
       33




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Issuer
    Purchases of Equity Securities
    Item 6.
    Selected
    Financial Data    Years Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share data)Statement of Operations Data:Revenues

$
39,492


$
29,069


$
16,448


$
7,754


$
3,266Cost of revenues


14,258



9,505



4,967



2,750



2,007Gross profit


25,234



19,564



11,481



5,004



1,259Operating expenses:Research and development


3,913



3,453



2,097



1,208



1,529Sales and marketing


14,702



12,172



5,888



2,715



2,147General and administrative


5,999



3,820



2,221



1,714



2,327Total operating expenses


24,614



19,445



10,206



5,637



6,003Operating income (loss)


620



119



1,275



(633
)


(4,744
)Other income (expense):Interest income


476



299



149



12



10Interest expense


(222
)


(398
)


(264
)


(245
)


(369
)Warrant charge for change in fair value


(352
)


(177
)










Other, net






6











Total other expense, net


(98
)


(270
)


(115
)


(233
)


(359
)Income (loss) before provision for income taxes and cumulative
    change in accounting


522



(151
)


1,160



(866
)


(5,103
)Provision for income taxes


56















Income (loss) before cumulative change in accounting


466



(151
)


1,160



(866
)


(5,103
)Cumulative change in accounting






28











Net income (loss)


466



(123
)


1,160



(866
)


(5,103
)Accretion of preferred stock


(37
)


(44
)


(24
)






Deemed dividend














(117
)


Net income (loss) attributable to common stockholders

$
429


$
(167
)

$
1,136


$
(983
)

$
(5,103
) 34




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Years Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share data)Income (loss) per common share:Basic:Before cumulative change in accounting

$
0.15


$
(0.35
)

$
2.41


$
(2.14
)

$
(16.46
)Cumulative change in accounting

$



$
0.05


$



$



$
Net income (loss) attributable to common stockholders

$
0.15


$
(0.30
)

$
2.41


$
(2.14
)

$
(16.46
)Diluted:Before cumulative change in accounting

$
0.03


$
(0.35
)

$
0.13


$
(2.14
)

$
(16.46
)Cumulative change in accounting

$



$
0.05


$



$



$
Net income (loss) attributable to common stockholders

$
0.03


$
(0.30
)

$
0.13


$
(2.14
)

$
(16.46
)Weighted average common shares outstanding:Basic


2,860



557



471



459



310Diluted


12,778



557



9,045



459



310   As of December 31,2007


2006


2005


2004


2003(In thousands)Balance Sheet Data:Cash and cash equivalents

$
35,674


$
7,251


$
9,529


$
2,179


$
723Working capital


39,920



7,566



8,981



1,403



(735
)Total assets


50,489



18,229



17,385



4,703



2,423Total indebtedness, including current portion






3,544



3,478



1,911



1,564Redeemable convertible preferred stock






30,788



31,076



22,619



19,542Total stockholders equity (deficit)


46,165



(19,765
)


(19,716
)


(20,867
)


(19,887
)  35




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  You should read the following discussion in conjunction with
    our financial statements and related notes appearing elsewhere
    in this
    Form 10-K.
    In addition to historical information, this discussion contains
    forward-looking statements that involve risks, uncertainties and
    assumptions that could cause our actual results to differ
    materially from our expectations. Factors that could cause such
    differences include those described in
    Item 1A  Risk Factors above and
    elsewhere in this report.
  Overview
      Background
  e-mail.
    Customer Inter@ction Solutions
   36




---



##### Table of Contents



Call Center Magazines Collection Advisor Magazines Customer Inter@ction Solutions
    Revenues
  Usage-based Fees.
  Revenue Recognition in Financial
    Statements.
      Fees for Ancillary Services.
 37




---



##### Table of Contents



Cost
    of Revenues
  set-up
  Operating
    Expenses
  Research and Development.
  Sales and Marketing.
  General and Administrative.
  Critical
    Accounting Policies
   38




---



##### Table of Contents



Stock-Based
    Compensation
  Accounting
    for Stock Issued to Employees Accounting for Certain
    Transactions Involving Stock Compensation, an Interpretation of
    APB Opinion No. 25.
  Share-Based Payment
        Share-Based Payment
 39




---



##### Table of Contents



Allowance
    for Doubtful Accounts
    Income
    Taxes
   40




---



##### Table of Contents



Results
    of Operations
    Years Ended December 31,2007


2006


2005Statement of Operations Data:Revenues


100.0
%


100.0
%


100.0
%Cost of revenues


36.1



32.7



30.2Gross margin


63.9



67.3



69.8Operating expenses:Research and development


9.9



11.9



12.8Sales and marketing


37.2



41.9



35.8General and administrative


15.2



13.1



13.5Total operating expenses


62.3



66.9



62.1Operating income


1.6



0.4



7.8Total other expense, net


(0.3
)


(0.9
)


(0.7
)Income (loss) before provision for income taxes and cumulative
    change in accounting


1.3
%


(0.5
)


7.1Provision for income taxes


0.1







Income (loss) before cumulative change in accounting


1.2



(0.5
)


7.1Cumulative change in accounting






0.1



Net income (loss)


1.2
%


(0.4
)%


7.1
%   Comparison
    of Years Ended December 31, 2007 and 2006
  Revenues
  2007


2006


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Revenues

$
39,492



100.0
%

$
29,069



100.0
%

$
10,423



35.9
%     Cost of
    Revenues and Gross Profit
  2007


2006


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Cost of revenues

$
14,258



36.1
%

$
9,505



32.7
%

$
4,753



50.0
%Gross profit


25,234



63.9



19,564



67.3



5,670



29.0  41




---



##### Table of Contents



Operating
    Expenses
  2007


2006


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Research and development

$
3,913



9.9
%

$
3,453



11.9
%

$
460



13.3
%Sales and marketing


14,702



37.2



12,172



41.9



2,530



20.8General and administrative


5,999



15.2



3,820



13.1



2,179



57.0Total operating expenses

$
24,614



62.3
%

$
19,445



66.9
%

$
5,169



26.6
%   Research and Development.
  Sales and Marketing.
  General and Administrative.
 42




---



##### Table of Contents



Operating
    and Other Income
  2007


2006


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Operating income

$
620



1.6
%

$
119



0.4
%

$
501



421.0
%Other income (expense):Interest income


476



1.2



299



1.0



177



56.2Interest expense


(222
)


(0.6
)


(398
)


(1.3
)


176



50.8Warrant charge for change in fair value


(352
)


(0.9
)


(177
)


(0.6
)


(175
)


*Other, net










6



0.0



(6
)


*Total other expense, net


(98
)


(0.3
)


(270
)


(0.9
)


172



63.7Income(loss) before provision for income taxes and cumulative
    change in accounting

$
522



1.3
%

$
(151
)


(0.5
)%

$
673



445.7
%     *
    
    Not meaningful    FSP 150-5.
  Net
    Income (Loss)
    Comparison
    of Years Ended December 31, 2006 and 2005
  Revenues
  2006


2005


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Revenues

$
29,069



100.0
%

$
16,448



100.0
%

$
12,621



76.7
%    43




---



##### Table of Contents



Cost of
    Revenues and Gross Profit
  2006


2005


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Cost of revenues

$
9,505



32.7
%

$
4,967



30.2
%

$
4,538



91.4
%Gross profit


19,564



67.3



11,481



69.8



8,083



70.4       Operating
    Expenses
  2006


2005


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Research and development

$
3,453



11.9
%

$
2,097



12.8
%

$
1,356



64.7
%Sales and marketing


12,172



41.9



5,888



35.8



6,284



106.7General and administrative


3,820



13.1



2,221



13.5



1,599



72.0Total operating expenses

$
19,445



66.9
%

$
10,206



62.1
%

$
9,239



90.5
%   Research and Development.
  Sales and Marketing.
  General and Administrative.
 44




---



##### Table of Contents



Operating
    and Other Income
  2006


2005


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Operating income

$
119



0.4
%

$
1,275



7.8
%

$
(1,155
)


(90.7
)%Other income (expense):Interest income


299



1.0



149



0.9



149



99.3Interest expense


(398
)


(1.3
)


(264
)


(1.6
)


(134
)


50.8Warrant charge for change in fair value


(177
)


(0.6
)










(177
)


*Other, net


6



0.0











6



*Total other expense, net


(270
)


(0.9
)


(115
)


(0.7
)


(155
)


136.8Income before provision for income taxes and cumulative change
    in accounting

$
(151
)


(0.5
)%

$
1,160



7.1
%

$
(1,311
)


*     *
    
    Not meaningful    FSP 150-5.
  Cumulative
    Change in Accounting
  No. 150-5
  Net
    Income (Loss)
    Liquidity
    and Capital Resources
  Resources
     45




---



##### Table of Contents



Equity
    Sales
      Credit
    Facility Borrowings
      Operating
    Cash Flow
    As of December 31,2007


2006


2005(Dollars in thousands)Net cash provided by operating activities

$
3,277


$
750


$
426   FSP 150-5.
 46




---



##### Table of Contents



Working
    Capital
    As of December 31,2007


2006


2005(Dollars in thousands)Cash and cash equivalents

$
35,674


$
7,251


$
9,529Accounts receivable, net of allowance for doubtful accounts


7,261



5,921



3,655Working capital


39,920



7,566



8,981       Requirements
  Capital
    Expenditures
   47




---



##### Table of Contents



Contractual
    Obligations and Requirements
    Less Than


1 to 3


3 to 5


More Than1 Year


Years


Years


5 Years


Total(Dollars in thousands)Operating leases  office space

$
663


$
1,601


$
1,748


$
690


$
4,702Operating leases  hosting facilities


1,078



34











1,112Total

$
1,741


$
1,635


$
1,748


$
690


$
5,814       Effects
    of Inflation
    Off-Balance-Sheet
    Arrangements
  Regulation S-K
  Recent
    Accounting Pronouncements
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities, Including and Amendment of FASB Statement
    No. 115. instrument-by-instrument
    Business Combinations
 48




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk      Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   Item 9A(T).Controls
    and Procedures  Rules 13a-15(e) 15d-15(e)
  Rules 13a-15(f) 15d-15(f))
   49




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.  Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters
    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   50




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Deloitte & Touche LLP,
    Independent Registered Public Accounting Firm


F-2Financial Statements:Consolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Stockholders
    Equity (Deficit)


F-5Consolidated Statements of Cash Flows


F-6Notes to Consolidated Financial Statements


F-7  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Accounting for Uncertainty in
    Income Taxes. Share-Based Payment No. 150-5, Issuers Accounting under FASB Statement No. 150
    for Freestanding Warrants and Other Similar Instruments on
    Shares that are Redeemable
      F-2




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Consolidated Balance Sheets
  December 31,2007


2006(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
35,674


$
7,251Accounts receivable, net of allowance for doubtful accounts of
    $176 and $88 at December 31, 2007 and 2006


7,261



5,921Prepaid expenses and other current assets


1,309



610Total current assets


44,244



13,782Property and equipment, net


6,096



4,447Other assets


149



Total assets

$
50,489


$
18,229LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED
    STOCK AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Bank line of credit

$



$
889Equipment line of credit  current portion






1,666Accounts payable


457



633Accrued expenses


3,867



2,546Preferred stock warrant liability






482Total current liabilities


4,324



6,216Non-current liabilities:Equipment line of credit  net of current portion






990Total liabilities


4,324



7,206Commitments and contingencies (note 6)Redeemable convertible preferred stock, $0.001 par
    value  at carrying value; no shares authorized,
    issued and outstanding at December 31, 2007,
    46,513,420 shares authorized and 45,779,304 shares
    issued and outstanding at December 31, 2006, liquidation
    preference of $30,430,000 and redemption value of $30,208,000 at
    December 31, 2006






30,788Stockholders equity (deficit):Common stock, $0.001 par value 
    75,000,000 shares authorized; 15,420,888 shares issued
    and 15,225,503 shares outstanding at December 31,
    2007; 821,471 shares issued and 626,086 shares
    outstanding at December 31, 2006


15



1Additional paid-in capital


65,720



274Treasury stock, at cost  195,385 shares at
    December 31, 2007 and 2006


(132
)


(132
)Accumulated other comprehensive income


4



Accumulated deficit


(19,442
)


(19,908
)Total stockholders equity (deficit)


46,165



(19,765
)Total liabilities, redeemable convertible preferred stock and
    stockholders equity (deficit)

$
50,489


$
18,229    F-3




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Consolidated Statements of Operations
  Years Ended December 31,2007


2006


2005(In thousands, except shareand per share amounts)Revenues

$
39,492


$
29,069


$
16,448Cost of revenues


14,258



9,505



4,967Gross profit


25,234



19,564



11,481Operating expenses:Research and development


3,913



3,453



2,097Sales and marketing


14,702



12,172



5,888General and administrative


5,999



3,820



2,221Total operating expenses


24,614



19,445



10,206Operating income


620



119



1,275Other income (expense):Interest income


476



299



149Interest expense


(222
)


(398
)


(264
)Warrant charge for change in fair value


(352
)


(177
)


Other, net






6



Total other expense, net


(98
)


(270
)


(115
)Income (loss) before provision for income taxes and cumulative
    change in accounting


522



(151
)


1,160Provision for income taxes


56







Income (loss) before cumulative change in accounting


466



(151
)


1,160Cumulative change in accounting






28



Net income (loss)


466



(123
)


1,160Accretion of preferred stock


(37
)


(44
)


(24
)Net income (loss) attributable to common stockholders

$
429


$
(167
)

$
1,136Income (loss) per common share:Basic:Before cumulative change in accounting

$
0.15


$
(0.35
)

$
2.41Cumulative change in accounting

$



$
0.05


$
Net income (loss) attributable to common stockholders

$
0.15


$
(0.30
)

$
2.41Diluted:Before cumulative change in accounting

$
0.03


$
(0.35
)

$
0.13Cumulative change in accounting

$



$
0.05


$
Net income (loss) attributable to common stockholders

$
0.03


$
(0.30
)

$
0.13Weighted average common shares outstanding:Basic


2,859,797



557,063



470,539Diluted


12,778,255



557,063



9,044,567    F-4




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Consolidated Statements of Stockholders
    Equity (Deficit)
  AccumulatedAdditional





Other





TotalCommon Stock


Paid-In


Treasury


Comprehensive


Accumulated


ShareholdersShares


Amount


Capital


Stock


Income


Deficit


Equity (Deficit)(In thousands, except share and per share amounts)Balance, January 1, 2005


658,288


$
1


$
207


$
(131
)

$



$
(20,945
)

$
(20,868
)Issuance of common stock for warrant and options exercises


41,948







15















15Accretion of transaction costs for preferred stock










(24
)














(24
)Comprehensive and net income






















1,160



1,160Balance, December 31, 2005


700,236



1



198



(131
)






(19,785
)


(19,717
)Issuance of common stock for option exercises


121,235







56















56Purchase of treasury stock














(1
)










(1
)Accretion of transaction costs for preferred stock










(44
)














(44
)Stock-based compensation expense










64















64Comprehensive and net loss






















(123
)


(123
)Balance, December 31, 2006


821,471



1



274



(132
)






(19,908
)


(19,765
)Initial public offering, net of offering costs


4,947,022



4



33,500















33,504Conversion of preferred stock into common stock


9,613,942



10



30,815















30,825Issuance of common stock for option exercises


38,453







16















16Accretion of transaction costs for preferred stock










(37
)














(37
)Stock-based compensation expense










318















318Reclassification of preferred stock warrant liability










834















834Comprehensive income:Net income






















466



466Translation adjustments


















4







4Comprehensive income


























470Balance December 31, 2007


15,420,888


$
15


$
65,720


$
(132
)

$
4


$
(19,442
)

$
46,165    F-5




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Consolidated Statements of Cash Flows
  Years Ended December 31,2007


2006


2005(In thousands)Cash flows from operating activities:Net income (loss)

$
466


$
(123
)

$
1,160Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization of property and equipment


2,869



1,947



842Allowance for doubtful accounts


56



147



123Change in fair value of preferred stock warrant liability


352



177



Cumulative change in accounting






(28
)


Stock-based compensation


318



64



Noncash charge attributable to warrants






22



55Loss on disposal of property and equipment


132







19Change in operating assets and liabilities:Accounts receivable


(1,396
)


(2,414
)


(2,214
)Prepaid expenses and other current assets


(699
)


(278
)


(197
)Other assets


(149
)






Accounts payable


7



139



45Accrued expenses


1,321



1,097



593Net cash provided by operating activities


3,277



750



426Cash flows from investing activities:Purchases of property and equipment


(4,833
)


(3,149
)


(3,082
)Net cash used in investing activities


(4,833
)


(3,149
)


(3,082
)Cash flows from financing activities:Proceeds from equipment and bank line of credit


2,345



1,467



2,248Repayments of equipment and bank line of credit


(5,890
)


(1,401
)


(681
)Treasury stock purchase






(1
)


Proceeds from issuance of preferred stock










8,424Proceeds from issuance of common stock upon initial public
    offering, net of offering costs


33,504







Proceeds from issuance of common stock upon exercise of stock
    options


16



56



15Net cash provided by financing activities


29,975



121



10,006Effect of exchange rate changes on cash and cash equivalents


4







Net increase (decrease) in cash and cash equivalents


28,423



(2,278
)


7,350Cash and cash equivalents, beginning of year


7,251



9,529



2,179Cash and cash equivalents, end of year

$
35,674


$
7,251


$
9,529Supplemental disclosure of cash flow information:Cash paid during the period:Interest

$
250


$
326


$
171Supplemental disclosure of non-cash investing and financing
    activities:Accretion of redeemable convertible preferred stock

$
37


$
44


$
24Property and equipment, included in accounts payable

$
82


$
265


$
869Reclassification of fair value of preferred stock warrant
    liability

$



$
332


$
Reclassification to equity of fair value of preferred stock
    warrant liability

$
834


$



$
Conversion of redeemable preferred stock to common stock

$
30,825


$



$
    F-6




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.



Notes to
    Consolidated Financial Statements  1.  Nature
    of Business
      2.  Summary
    of Significant Accounting Policies
  Principles
    of Consolidation
      Segment
    Data
    Use of
    Estimates
    Comprehensive
    Income
    Cash
    and Cash Equivalents
   F-7




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Accounts
    Receivable and Allowance for Doubtful Accounts
      Years Ended December 31,2007


2006


2005Balance, beginning

$
88


$
114


$
5Provision for bad debts


56



147



123Net uncollectible accounts recovered (written off)


32



(173
)


(14
)Balance, end

$
176


$
88


$
114   Concentration
    of Credit Risk
      Development
    of Software for Internal Use
  98-1,
  Property
    and Equipment
   F-8




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Impairment
    of Long-Lived Assets
    Fair
    Value of Financial Instruments
    Guarantees:
    Indemnified Obligations
    Revenues
  Usage-based Fees.
  Revenue Recognition in Financial Statements Revenue
    Recognition
  Fees for Ancillary Services.
   F-9




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Research
    and Development Costs
    Income
    Taxes
    Accounting for Uncertainty in Income Taxes
  Freestanding
    Preferred Stock Warrants
  No. 150-5, Issuers Accounting under FASB Statement No. 150
    for Freestanding Warrants and Other Similar Instruments on
    Shares that are Redeemable (FSP 150-5). FSP 150-5, FSP 150-5 FSP 150-5.
  FSP 150-5.
 F-10




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Basic
    and Diluted Income (Loss) Per Share
    Years Ended December 31,2007


2006


2005Numerator:Net income (loss) attributable to common stockholders

$
429


$
(167
)

$
1,136Denominator:Weighted average shares used in computing net income (loss) per
    common share  basic


2,859,797



557,063



470,539Add dilutive securities:Stock options


1,674,284







249,260Restricted stock


5,078







758Common stock warrants


100,170







Conversion of redeemable convertible preferred stock


8,138,926







8,324,010Weighted average shares used in computing net income (loss) per
    common share  diluted


12,778,255



557,063



9,044,567     Years Ended December 31,2007


2006


2005Stock options


85,749



1,954,110



566,966Restricted stock






7,040



Preferred stock warrants






151,645



151,645Conversion of redeemable convertible preferred stock






9,613,942



   Accounting
    for Stock-Based Compensation
  Share-Based Payment
   F-11




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Accounting for
    Stock-Based Compensation.
    Recent
    Accounting Pronouncements
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities, Including an Amendment of FASB Statement
    No. 115 instrument-by-instrument
    Business Combinations
 F-12




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  3.  Property
    and Equipment
    As of December 31,2007


2006Computer equipment

3 years

$
7,733


$
6,842Computer software

3 years


3,041



1,720Furniture and fixtures

3 years


556



243Office equipment

3 years


402



222Leasehold improvements

Lesser of useful 
    life or lease term


539



167Total




12,271



9,194Less  accumulated depreciation and amortization




(6,175
)


(4,747
)Property and equipment, net



$
6,096


$
4,447     4.  Debt
       F-13




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      5.  Accrued
    Expenses
    December 31,2007


2006Accrued payroll related items

$
1,375


$
1,152Accrued telephony


539



533Accrued professional fees


768



138Accrued rent and related payments*


199



Accrued other


986



723Total accrued expenses

$
3,867


$
2,546     *
    
    See Note 6 below  6.
    Commitments
    and Contingencies    2008

$
1,7412009


8162010


8192011


8562012


8922013


690Total future minimum lease payments

$
5,814      F-14




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##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Litigation
    and Claims
       F-15




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  7.
    Redeemable
    Convertible Preferred Stock    Series A


Series B


Series C


Series D


TotalPreferred Stock


Preferred Stock


Preferred Stock


Preferred Stock


Preferred StockCarrying





Carrying





Carrying





Carrying





CarryingShares


Value


Shares


Value


Shares


Value


Shares


Value


Shares


ValueBalance, January 1, 2005


2,055,385


$
7,229



8,380,729


$
7,353



20,512,821


$
8,037






$




30,948,935


$
22,619Issuance of Series D Preferred Stock, net of issuance costs
    of $75,968


























14,830,369



8,424



14,830,369



8,424Accretion of preferred stock for transaction costs






4







8







6







6







24Warrants granted for equipment line of credit






























9







9Balance, December 31, 2005


2,055,385



7,233



8,380,729



7,361



20,512,821



8,043



14,830,369



8,439



45,779,304



31,076Accretion of preferred stock for transaction costs






7







15







11







11







44Reclassification of preferred stock warrant liability






(113
)






(97
)






(113
)






(9
)






(332
)Balance, December 31, 2006


2,055,385



7,127



8,380,729



7,279



20,512,821



7,941



14,830,369



8,441



45,779,304



30,788Accretion of preferred stock for transaction costs






6







13







9







9







37Mandatory conversion to common stock


(2,055,385
)


(7,133
)


(8,380,729
)


(7,292
)


(20,512,821
)


(7,950
)


(14,830,369
)


(8,450
)


(45,779,304
)


(30,825
)Balance December 31, 2007





$







$







$







$







$
  F-16




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  8.
    Warrants
    to Purchase Redeemable Convertible Preferred Stock    Valuations
    of Warrants
    As of December 31, 2005Redeemable Convertible

Series A


Series B


Series C


Series DPreferred Stock Warrants

Preferred Stock


Preferred Stock


Preferred Stock


Preferred Stock


TotalGranted for lease agreement

$
63


$



$



$



$
63Granted for bank line of credit


51















51Granted for bank line of credit






13











13Granted for bank equipment line






84











84Granted for bank line of credit










65







65Granted for bank equipment line










47







47Granted for bank line of credit














9



9Total

$
114


$
97


$
112


$
9


$
332   FSP 150-5
  9.  Common
    Stock
  Authorized
    Shares
    Warrants to purchase common stock


151,645Outstanding options to purchase common stock


2,176,048Shares reserved for future option grants


1,390,8843,718,577   Reverse
    Stock Split
  1-for-5.681818
 F-17




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##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Initial
    Public Offering
    Stock
    Options
  2000
    Stock Incentive Plan
    2007
    Stock Incentive Plan
      Year Ended December 31,2007


2006


2005Weighted





Weighted





WeightedAverage





Average





AverageNumber of


Exercise


Number of


Exercise


Number of


ExerciseOptions


Price


Options


Price


Options


PriceOutstanding  beginning of year


1,954,110


$
0.570



1,728,272


$
0.461



1,285,259


$
0.427Granted


299,658



7.596



616,969



0.974



608,415



0.505Exercised


(38,453
)


0.404



(121,235
)


0.492



(41,947
)


0.361Forfeited


(39,267
)


2.102



(269,896
)


0.828



(123,455
)


0.363Outstanding  end of year


2,176,048


$
1.512



1,954,110


$
0.570



1,728,272


$
0.461Exercisable  end of year


1,438,970


$
0.683



1,025,811


$
0.466



696,602


$
0.491    F-18




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      WeightedAverageWeighted


Remaining


AggregateNumber of


Average


Contractual


IntrinsicShares


Price


Term (In Years)


ValueVested


1,438,970


$
0.683



6.48


$
8,947Expected to vest


605,141


$
3.132



8.59


$
2,280     Options Vested andCurrentlyOptions Outstanding


ExercisableWeighted-





Weighted-Average





AverageRemaining





RemainingNumber of


Contractual


Number of


ContractualExercise Price

Options


Life (Years)


Options


Life (Years)$0.35 - $0.69


1,515,437



6.47



1,262,659



6.23$1.01 - $4.95


407,395



8.45



150,135



8.13$6.95 - $11.88


253,216



9.54



26,176



9.21Total


2,176,048



7.19



1,438,970



6.48       Weighted AverageGrant DateNon-Vested Shares

Shares


Fair ValueNon-vested as of January 1, 2007


7,040


$
0.49Vested


(2,640
)


0.49Non-vested as of December 31, 2007


4,400


$
0.49   Accounting for Stock Issued to Employees.
 F-19




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              Year Ended December 31,2007

2006Risk Free Rate

4.50 - 5.71%

4.37 - 5.08%Expected Life

6.02 - 6.25 years

6.02 - 6.25 yearsExpected Volatility

75.3%

78.4%Expected Dividend Yield

0%

0%Forfeiture Rate

17.9%

18.9%      F-20




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##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Year Ended December 31,2007


2006Cost of revenues

$
6


$
1Research and development


17



6Sales and marketing


120



28General and administrative


175



29Total stock-based compensation

$
318


$
64   10.  Income
    Taxes
    Year Ended December 31,2007


2006


2005Current tax expense

$
56


$



$
Deferred tax expense (benefit)


(116
)


60



145Research credits generated


(162
)


(4
)


(144
)Net operating losses utilized


851



290



639Valuation allowance increase (decrease)


(573
)


(346
)


(640
)Total

$
56


$



$
     December 31,2007


2006


2005Tax at U.S. federal statutory rate


34.0
%


(34.0
)%


34.0
%State taxes, net of federal benefit


3.6







6.3Non-deductible items-meals


10.9



41.1



2.3Non-deductible items-stock options


13.0



17.4



2.8Non-deductible items-warrants


22.9



42.2



Canadian subsidiary loss


(0.7
)






Change in valuation allowance (including use of net operating
    loss)


(72.8
)


(66.7
)


(45.4
)10.9
%



%



%  F-21




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##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    As of December 31,2007


2006Deferred tax assets:Net operating loss carryforwards

$
6,197


$
7,048Accounts receivable


71



44Accrued expenses


110



127Research and development credits


911



749Depreciation


144



38Deferred tax assets


7,433



8,006Valuation allowance


(7,433
)


(8,006
)Total deferred tax assets

$



$
          F-22




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##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  11.  Benefit
    Plan
    12.
    Subsequent
    event (unaudited)    13.
    Selected
    Quarterly Financial Data (unaudited)  Mar. 31,


June 30,


Sept. 30,


Dec. 31,2007


2007


2007


2007(In thousands except per share data)Revenues

$
8,761


$
9,338


$
10,067


$
11,326Cost of revenues


3,165



3,695



3,619



3,780Gross profit


5,596



5,643



6,448



7,546Net income (loss)(1)


(839
)


428



(277
)


1,154Basic earnings per share(1)


(1.36
)


0.65



(0.44
)


0.12Diluted earnings per share(1)


(1.36
)


0.03



(0.44
)


0.08   Mar. 31,


June 30,


Sept. 30,


Dec. 31,2006


2006


2006


2006Revenues

$
5,178


$
6,998


$
7,779


$
9,114Cost of revenues


1,940



2,088



2,583



2,894Gross profit


3,238



4,910



5,196



6,220Income (loss) before cumulative change in accounting


(476
)


152



10



163Cumulative change in accounting


28











Net income (loss)(2)


(448
)


152



10



163Basic earnings per share(2)


(0.91
)


0.26



0.00



0.23Diluted earnings per share(2)


(0.91
)


0.01



0.00



0.01     (1)
    
    Net income (loss) and basic and diluted earnings per share
    include the effect of (charges) income related to the change in
    fair value of the Companys Preferred Stock Warrants for
    each of the four quarters ended December 31, 2007 as
    follows: ($808,000), $251,000, ($389,000) and $595,000,
    respectively.(2)
    
    Net income (loss) and basic and diluted earnings per share
    include the effect of charges of ($177,000) related to the
    change in fair value of the Companys Preferred Stock
    Warrants for the quarter ended December 31, 2006. F-23




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules              Incorporated by ReferenceExhibit



Filed



Filing Date

ExhibitNumber

Description of Exhibit

Herewith

Form

with SEC

Number3
.1

Restated Certificate of Incorporation of the Registrant



10-Q

November 14, 2007


3
.13
.2

Amended and Restated By-Laws of the Registrant



S-1

October 15, 2007


3
.44
.1

Specimen certificate for shares of common stock of the Registrant



S-1

October 15, 2007


4
.110
.1

Lease dated May 18, 2007 between RAR2-Crosby Corporate
    Center QRS, Inc. and the Registrant



S-1

October 15, 2007


10
.1910
.2

Agreement dated as of August 29, 2003, as amended, between
    the Registrant and Internap Network Services Corporation



S-1

October 15, 2007


10
.310
.3

Agreement dated as of October 9, 2004, between the
    Registrant and ColoSpace, Inc.



S-1

October 15, 2007


10
.410
.4

Loan and Security Agreement dated as of July 19, 2007
    between Silicon Valley Bank and the Registrant



10-Q

November 14, 2007


10
.710
.5

Investors Rights Agreement dated as of June 17, 2005,
    among the Registrant, the Investors named therein, John
    McDonough and David Parker, as amended



S-1

October 15, 2007


4
.210
.6

2007 Stock Incentive Plan of the Registrant



S-1

October 15, 2007


10
.1210
.7

Form of Incentive Stock Option Agreement under 2007 Stock
    Incentive Plan of the Registrant



S-1

October 15, 2007


10
.1310
.8

Form of Nonstatutory Stock Option Agreement under 2007 Stock
    Incentive Plan of the Registrant



S-1

October 15, 2007


10
.1410
.9

Form of Restricted Stock Agreement under 2007 Stock Incentive
    Plan of the Registrant



S-1

October 15, 2007


10
.1510
.10

Form of Change in Control Agreement entered into between the
    Registrant and each of Christopher Hemme, Timothy Segall, Peter
    Shields and Richard Underwood



S-1

October 15, 2007


10
.1610
.11

Form of Indemnification Agreement entered into (or to be entered
    into) between the Registrant and each of its executive officers
    and directors from time to time



S-1

October 15, 2007


10
.1710
.12

Summary of 2007 Management Cash Compensation Plan



S-1

October 15, 2007


10
.18 51




---



##### Table of Contents



Incorporated by ReferenceExhibit



Filed



Filing Date

ExhibitNumber

Description of Exhibit

Herewith

Form

with SEC

Number10
.13

Summary of 2008 Management Cash Compensation Plan

X10
.14

Compensation Arrangements with Outside Directors (effective
    November 13, 2007)



10-Q

November 14, 2007


10
.621
.1

List of subsidiaries of Registrant

X31
.1

Certification of principal executive officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002

X31
.2

Certification of principal financial officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002

X32
.1

Certification of principal executive officer and principal
    financial officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350

X     
    
    Management contracts or compensatory plans or arrangements
    required to be filed as an exhibit hereto pursuant to
    Item 15(a) of the
    Form 10-K. 52




---



##### Table of Contents



SIGNATURES      By:
    /s/  Peter
    R. Shields       Form 10-K
  Signature

Title

Date/s/  Peter
    R. ShieldsPeter
    R. Shields

President, Chief Executive Officer and Director(Principal Executive Officer)

March 14, 2008/s/  Robert
    C. LeahyRobert
    C. Leahy

Vice President and Chief Financial Officer (Principal
    Financial Officer)

March 14, 2008/s/  Christopher
    A. HemmeChristopher
    A. Hemme

Vice President, Finance and Treasurer (Principal Accounting
    Officer)

March 14, 2008/s/  Eric
    R. GilerEric
    R. Giler

Director

March 14, 2008/s/  James
    A. GoldsteinJames
    A. Goldstein

Director

March 14, 2008/s/  Justin
    J. PerreaultJustin
    J. Perreault

Director

March 14, 2008/s/  James
    J. RoszkowskiJames
    J. Roszkowski

Director

March 14, 2008/s/  Regina
    O. SommerRegina
    O. Sommer

Director

March 14, 2008/s/  Vernon
    F. LoboVernon
    F. Lobo

Director

March 14, 2008  53