##### 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,
    2010oro

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

04-3520763(State or Other Jurisdiction
    of Incorporation or Organization)

(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-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer o

Accelerated filer o

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

Smaller reporting company þ   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


15Item 1B.


Unresolved Staff Comments


30Item 2.


Properties


30Item 3.


Legal Proceedings


30Item 4.


Reserved


30PART IIItem 5.


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


30Item 6.


Selected Financial Data


32Item 7.


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


33Item 7a.


Quantitative and Qualitative Disclosures About
    Market Risk


42Item 8.


Financial Statements and Supplementary Data


42Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


43Item 9A.


Controls and Procedures


43Item 9B.


Other Information


44PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


44Item 11.


Executive Compensation


44Item 12.


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


44Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


44Item 14.


Principal Accounting Fees and Services


44PART IVItem 15.


Exhibits and Financial Statement Schedules


45Signatures


48EX-10.4.BEX-21.1EX-23.1EX-31.1EX-31.2EX-32.1      Form 10-K
 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, including information relating to
    revenues generated from our on-demand automated voice messaging
    service to businesses, governments and other organizations, our
    efforts to expand our presence in large in-house, or
    first-party, collection departments, and other functional
    departments, of organizations and in, expected increases in cost
    of revenues, 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 revenues for 2011 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 reports filed
    with the SEC after the filing of this annual 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 SEC. 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.
  This annual report on
    Form 10-K
    also contains market data related to our business and industry.
    These market data include projections that are based on a number
    of assumptions. If these assumptions turn out to be incorrect,
    actual results may differ from the projections based on these
    assumptions. As a result, our markets may not grow at the rates
    projected by these data, or at all. The failure of these markets
    to grow at these projected rates may have a material adverse
    effect on our business, results of operations, financial
    condition and the market price of our common stock.
 1




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##### Table of Contents



PART I  Item 1.
    Business  Overview
      end-clients business-to-consumer,
  (781) 897-2500. www.soundbite.com.
  Industry
    Background and Trends
    Shift
    from Reactive to Proactive Customer Communications
     2




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
    Consumers now access and exchange information over a variety of
    communications channels, including email, mobile or text
    messaging, the Internet, instant messaging, social media and
    voice. Communicating with customers through varying and multiple
    channels will generally increase response rates.
    As they have gained experience with multiple communications
    channels, consumers have developed stronger preferences for the
    types of communications they wish to receive and the channels by
    which those communications are received. According to a May 2009
    Forrester Consulting publication, organizations that honored
    consumer communications preferences reported substantial
    business benefits, including higher response rates, stronger
    customer relationships and improved customer
    experiences  all of which resulted in higher revenue
    and profitability.
    Consumers increasingly rely on their mobile devices and mobile
    device applications and no longer consider the home phone, if it
    exists, as their primary communications device. With more than
    5 billion mobile subscribers around the world, businesses
    need to leverage the multiple communications channels accessible
    from a mobile device in order to provide relevant and timely
    information to customers effectively and efficiently.    Requirements
    for PCC Solutions
   3




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Our
    Solution
      Unified communications across multiple
    channels.
  Lower Total Cost of Ownership.
  Automation of Communications.
  Improvement of Contact Center Performance.
  Burstable Capacity.
  Rapid Initiation and Modification of
    Campaigns.
 4




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Our
    Strategy
    Expand Internationally. multi-channel
  Target mobile opportunities.
  Extend Technology Leadership into Hosted Contact
    Centers.
  Increase Revenue from Indirect Channel.
  Selectively Seek Strategic Acquisitions.
  Our
    Service
  e-mail
  Marketing

Customer Care

Payments

Collections   Loyalty programs
       Promotions
       Service activations

   Delivery notifications
       Program enrollment 
       Surveys

   Payment reminders
       Self-service payments
       Expedited payments

   Contingent collections
       Early-stage collections
       Settlement offers    5




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Client Access Layer .
  Client Web Interface
  FTP Automation
  Web Services API
  Agent Portal
  CTI Connect
 6




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Enterprise Management .
  Core Components .
  Contact and Preference Management
  Campaign Strategy Manager
  
    Flexible scripting languages to control the client interactions.
    This enables a client interaction to be both highly personalized
    and dynamic in nature.
    Multi-Pass Campaigns effects multiple overlapping passes through
    a contact list in accordance with client-defined parameters, in
    order to maximize contact list penetration and response rates.
    These passes may span different channels, occur over multiple
    days, and define the escalation conditions in which our service
    moves to a different phone number or
    e-mail
    address within a campaign.
    Contact Ordering prioritizes contacts based on client-specified
    criteria or on the likelihood that customers will be reached at
    a particular time.  Campaign and Contact Center Management
  
    Pacing provides a client with the ability to select a model to
    control the rate of outgoing messages. The model selected may be
    either fixed-rate, time-based (rate determined by a time window)
    or agent-based. For Pacing involving contact center agents,
    adjustments are made based on factors such as agent
    availability, average talk time and average hold time.
    Call Forecasting provides continuously refreshed data concerning
    current and anticipated future contact attempts. Contact center
    managers use the data for contact center agent resource planning.
    Contact Center Reports, which are available in near real-time,
    provide details on customer interactions with contact centers
    and furnish performance metrics related to contact center
    performance.  Analytics and Reporting
  Dialog Engine
 7




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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 a billing zip code.
    Direct Connect to Contact Center allows a voice recipient to
    connect directly to a contact center in order to speak with an
    agent.  Delivery Channels . Free-to-End
  Security and Compliance . need-to-know e-mail
  Reports on the Processing of
    Transactions by Service Organizations
  Our
    Client Management Services
      Enterprise Program Directors
  Professional Services
 8




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Training, Documentation and General Help Desk around-the-clock
  Business
    Segments and Geographic Information
    Clients
        
    7 of the 10 largest issuing banks;
    5 of the 10 largest U.S. telecommunications and media
    providers;
    4 of the 10 largest U.S. retailers; and
    10 of the 20 largest U.S. utility providers.    T-Mobile T-Mobile
  Sales and
    Marketing
     9




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Technology,
    Development and Operations
  Technology
  text-to-speech
      Research
    and Development
      Operations
    around-the-clock
 10




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on-site
      Competition
    On-Premise
    Predictive Dialers
    
    breadth of features;
    speed of deployment;
    capital investment required;
    pricing model for customers; and
    capacity, including burstability.     11




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Hosted
    Customer Communications Solutions
    
    return on investment;
    breadth of features;
    price;
    brand awareness based on referenceable customer base; and
    security and reliability.      Intellectual
    Property
     12




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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
   13




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
    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 in placing
    calls to residences and 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 Controlling the Assault of Non-Solicited Pornography and
    Marketing (CAN-SPAM) Act, which sets standards for the sending
    of commercial
    e-mail;
    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
    the Fair Credit Reporting Act, which defines permissible uses of
    consumer information furnished to or obtained from consumer
    reporting agencies.  out-of-pocket
      Employees
   14




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Our
    History
  (781) 897-2500. www.soundbite.com Form 10-K, Form 10-Q Form 8-K Form 10-K.
  PART II.  OTHER
    INFORMATION
  Item 1A.
    Risk
    Factors  An investment in our common stock involves a high degree of
    risk. Investors should consider carefully the risks and
    uncertainties described below and all of the other information
    contained in this report before deciding whether to purchase our
    common stock. The market price of our common stock could decline
    due to any of these risks and uncertainties, and investors might
    lose all or part of their investments in our common stock.
  Risks
    Related to Our Business and Industry
  If the
    market for proactive customer communications, or PCC, solutions
    does not develop as we anticipate, our revenues would decline or
    fail to grow and we could incur operating losses.
  e-mail
   15




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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;
    our ability to sell new applications and increased usage of
    existing applications to existing clients;
    technical difficulties or interruptions in our on-demand 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;
    changes in the rates we incur for services provided by
    telecommunication or data carriers or by text or email
    aggregators;
    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
    communication 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.  quarter-to-quarter
     16




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Defects
    in our platform, disruptions in our on-demand service or errors
    in execution could diminish demand for our PCC service and
    subject us to substantial liability.
          Interruptions,
    delays in service or errors in execution from our key vendors
    would impair the delivery of our service and could substantially
    harm our business and operating results.
   17




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Actual
    or perceived breaches of our security measures could diminish
    demand for our service and subject us to substantial
    liability.
    The
    global recession and related credit crisis may continue to
    adversely affect our business.
   18




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Our
    clients are not typically obligated to pay any minimum amount
    for 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.
        Our
    business will be harmed if we fail to develop new features that
    keep pace with technological developments and emerging consumer
    trends.
    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.
   19




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Mergers
    or other strategic transactions involving our competitors could
    weaken our competitive position, which could harm our operating
    results.
  e-commerce
   20




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The
    expansion of our business into international markets exposes 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 sales and
    other operations in countries outside of the United States;
    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;
    limited protection of intellectual property in some countries
    outside of the United States;
    challenges encountered under local business practices, which
    vary by country and often favor local competitors;
    challenges caused by distance, language and cultural
    differences; and
    difficulty in establishing and maintaining reseller
    relationships.    Failure
    to maintain our direct sales force 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.
   21




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If we
    are unable to protect our intellectual property rights, we would
    be unable to protect our technology and our brand.
    We are
    subject to risks associated with outsourcing services to third
    parties, and failure to manage those risks could adversely
    affect our business and operating results.
  off-hours
  
    The failure of a third-party vendor to provide high-quality
    services that conform to required specifications or contractual
    arrangements could impair our ability to enhance our PCC
    solutions or to develop new solutions, could create exposure for
    non-compliance with our contractual commitments to our clients,
    or could otherwise adversely affect our business and operating
    results. In particular, a client may impose specific
    requirements on us, such as an obligation to provide our PCC
    solutions using only personnel in the United States, with which
    it may be difficult or impossible for a third-party vendor to
    comply or for which we may be unable to monitor compliance.
    If a third-party vendor fails to maintain and protect the
    security and confidentiality of data to which it has access, we
    could be exposed to lawsuits or damage claims that, if upheld,
    could materially and adversely affect our profitability or we
    could be subject to substantial regulatory fines or other
    penalties.
    If a third-party vendor fails to comply with other applicable
    regulatory requirements, we may be held liable for the
    vendors failures or violations. We cannot assure you that
    our third-party vendors are, or will be, in full compliance with
    all applicable laws and regulations at all times or that our
    third-party vendors will be able to comply with any future laws
    and regulations.   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 on-demand service, which would adversely affect our business
    and operating results.
  text-to-speech
  We
    have in the past and may in the future enter into acquisitions;
    these acquisitions may be 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; 23




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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 suppliers and clients
    of the acquired business;
    difficulties in incorporating acquired technology and rights
    into our service and platform;
    unexpected expenses resulting from the acquisition;
    potential unknown liabilities associated with acquired
    businesses; and
    unanticipated expenses related to acquired technology and its
    integration into our existing technology.    out-of-pocket
  Industry
    consolidation could reduce the number of our clients 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; 24




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
    develop new services and 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.
       25




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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.
         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.
          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.
   27




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The
    expansion of our business into international markets requires us
    to comply with additional debt collection, telemarketing, data
    privacy or similar regulations, which may make it costly or
    difficult to operate in these markets.
   28




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Risks
    Related to Ownership of Our Common Stock
  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.
   29




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We do
    not intend to pay dividends on our common stock in the
    foreseeable future.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      Item 3.
    Legal
    Proceedings   Item 4.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Price of Common Stock
   30




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Fiscal Year Ended December 31, 2010

High


LowFirst quarter

$
3.01


$
2.81Second quarter

$
2.88


$
2.86Third quarter

$
2.72


$
2.60Fourth quarter

$
2.85


$
2.79   Fiscal Year Ended December 31, 2009

High


LowFirst quarter

$
1.90


$
1.21Second quarter

$
2.52


$
1.37Third quarter

$
3.45


$
2.25Fourth quarter

$
3.25


$
2.20       Issuer
    Purchases of Equity Securities
   31




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Item 6.
    Selected
    Financial Data    Years Ended December 31,2010


2009


2008


2007


2006(In thousands, except per share data)Statement of Operations Data:Revenues

$
39,494


$
40,183


$
43,211


$
39,492


$
29,069Cost of revenues


15,955



15,899



16,695



14,258



9,505Gross profit


23,539



24,284



26,516



25,234



19,564Operating expenses:Research and development


5,886



5,628



5,151



3,913



3,453Sales and marketing


14,171



14,784



17,974



14,702



12,172General and administrative


6,799



7,836



9,977



5,999



3,820Impairment of goodwill






121



248







Total operating expenses


26,856



28,369



33,350



24,614



19,445Operating (loss) income


(3,317
)


(4,085
)


(6,834
)


620



119Other income (expense):Interest income


9



70



936



476



299Interest expense














( 222
)


(398
)Warrant charge for change in fair value














( 352
)


(177
)Gain on litigation settlement










4,600







Other, net


(7
)














6Total other income (expense), net


2



70



5,536



(98
)


(270
)(Loss) income before provision for income taxes and cumulative
    change in accounting


(3,315
)


(4,015
)


(1,298
)


522



(151
)(Benefit) provision for income taxes


(30
)


16



21



56



(Loss) income before cumulative change in accounting


(3,285
)


(4,031
)


(1,319
)


466



(151
)Cumulative change in accounting


















28Net (loss) income


(3,285
)


(4,031
)


(1,319
)


466



(123
)Accretion of preferred stock














(37
)


(44
)Net (loss) income attributable to common stockholders

$
(3,285
)

$
(4,031
)

$
(1,319
)

$
429


$
(167
)(Loss) income per common share:Basic:Before cumulative change in accounting

$
(0.20
)

$
(0.25
)

$
(0.09
)

$
0.15


$
(0.35
)Cumulative change in accounting

$



$



$



$



$
0.05Net (loss) income attributable to common stockholders

$
(0.20
)

$
(0.25
)

$
(0.09
)

$
0.15


$
(0.30
)Diluted:Before cumulative change in accounting

$
(0.20
)

$
(0.25
)

$
(0.09
)

$
0.03


$
(0.35
)Cumulative change in accounting

$



$



$



$



$
0.05Net (loss) income attributable to common stockholders

$
(0.20
)

$
(0.25
)

$
(0.09
)

$
0.03


$
(0.30
)Weighted average common shares outstanding:Basic


16,344



15,961



15,369



2,860



557Diluted


16,344



15,961



15,369



12,778



557   32




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2010


2009


2008


2007


2006Balance Sheet Data:Cash and cash equivalents

$
34,157


$
36,322


$
37,425


$
35,674


$
7,251Working capital


37,553



40,359



41,665



39,920



7,566Total assets


45,975



47,754



49,830



50,489



18,229Total indebtedness, including current portion


















3,544Redeemable convertible preferred stock


















30,788Total stockholders equity (deficit)

$
41,190


$
43,032


$
45,754


$
46,165


$
(19,765
)   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 and elsewhere in this report.
  Overview
      business-to-consumer,
    Key
    Components of Results of Operations
  Revenues
     33




---



##### Table of Contents



Cost of
    Revenues
    Operating
    Expenses
  Research and Development.
  Sales and Marketing.
  General and Administrative.
  Additional
    Key Measures of Financial Performance
       34




---



##### Table of Contents



As of December 31,2010


2009


2008(In thousands)Cash flows generated from (used in) operating activities

$
313


$
(294
)

$
3,776Proceeds from sale of equipment


2







28Contingent purchase price payments to Mobile Collect


(503
)


(256
)


(651
)Investments in capitalized software


(500
)






Purchases of property and equipment


(1,567
)


(885
)


(1,528
)Free cash flow (non-GAAP)

$
(2,255
)

$
(1,435
)

$
1,625           Critical
    Accounting Policies
     35




---



##### Table of Contents



Valuation
    of Goodwill
        Income
    Taxes
   36




---



##### Table of Contents



Results
    of Operations
    Years Ended December 31,2010


2009


2008Statement of Operations Data:Revenues


100.0
%


100.0
%


100.0
%Cost of revenues


40.4



39.6



38.6Gross margin


59.6



60.4



61.4Operating expenses:Research and development


14.9



14.0



11.9Sales and marketing


35.9



36.8



41.6General and administrative


17.2



19.5



23.1Impairment of goodwill


0.0



0.3



0.6Total operating expenses


68.0



70.6



77.2Operating loss


(8.4
)


(10.2
)


(15.8
)Total other income


0.0



0.2



12.8Loss before provision for income taxes


(8.4
)


(10.0
)


(3.0
)(Benefit) provision for income taxes


(0.1
)


0.0



0.1Net loss


(8.3
)%


(10.0
)%


(3.1
)%   Comparison
    of Years Ended December 31, 2010 and 2009
  Revenues
  2010

2009

Year-to-Year ChangePercentage of



Percentage of



PercentageAmount

Revenues

Amount

Revenues

Amount

Change(Dollars in thousands)Revenues

$
39,494



100.0
%

$
40,183



100.0
%

$
(689
)


(1.7
)%     Cost of
    Revenues and Gross Profit
  2010

2009

Year-to-Year ChangePercentage of



Percentage of



PercentageAmount

Revenues

Amount

Revenues

Amount

Change(Dollars in thousands)Cost of revenues

$
15,955



40.4
%

$
15,899



39.6
%

$
56



0.4
%Gross profit


23,539



59.6



24,284



60.4



(745
)


(3.1
)    37




---



##### Table of Contents



Operating
    Expenses
  2010


2009


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Research and development

$
5,886



14.9
%

$
5,628



14.0
%

$
258



4.6
%Sales and marketing


14,171



35.9



14,784



36.8



(613
)


(4.1
)General and administrative


6,799



17.2



7,836



19.5



(1,037
)


(13.2
)Impairment of goodwill






0.0



121



0.3



(121
)


(100.0
)Total operating expenses

$
26,856



68.0
%

$
28,369



70.6
%

$
(1,513
)


(5.3
)%   Research and Development.
  Sales and Marketing.
  General and Administrative.
  Impairment of Goodwill.
  Operating
    Loss and Other Income
  2010


2009


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Operating loss

$
(3,317
)


(8.4
)%

$
(4,085
)


(10.2
)%

$
768



18.8
%Other income:Interest and other income


2



0.0



70



0.2



(68
)


(97.1
)Loss before provision for income taxes

$
(3,315
)


(8.4
)%

$
(4,015
)


(10.0
)%

$
700



17.4
%     Net
    Loss
   38




---



##### Table of Contents



Comparison
    of Years Ended December 31, 2009 and 2008
  Revenues
  2009

2008

Year-to-Year ChangePercentage of



Percentage of



PercentageAmount

Revenues

Amount

Revenues

Amount

Change(Dollars in thousands)Revenues

$
40,183



100.0
%

$
43,211



100.0
%

$
(3,028
)


(7.0
)%     Cost of
    Revenues and Gross Profit
  2009

2008

Year-to-Year ChangePercentage of



Percentage of



PercentageAmount

Revenues

Amount

Revenues

Amount

Change(Dollars in thousands)Cost of revenues

$
15,899



39.6
%

$
16,695



38.6
%

$
(796
)


(4.8
)%Gross profit


24,284



60.4



26,516



61.4



(2,232
)


(8.4
)     Operating
    Expenses
  2009


2008


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Research and development

$
5,628



14.0
%

$
5,151



11.9
%

$
477



9.3
%Sales and marketing


14,784



36.8



17,974



41.6



(3,190
)


(17.7
)General and administrative


7,836



19.5



9,977



23.1



(2,141
)


(21.5
)Impairment of goodwill


121



0.3



248



0.6



(127
)


(51.2
)Total operating expenses

$
28,369



70.6
%

$
33,350



77.2
%

$
(4,981
)


(14.9
)%   Research and Development.
  Sales and Marketing.
 39




---



##### Table of Contents



General and Administrative.
  Impairment of Goodwill.
  Operating
    Loss and Other Income
  2009


2008


Year-to-Year ChangePercentage of





Percentage of





PercentageAmount


Revenues


Amount


Revenues


Amount


Change(Dollars in thousands)Operating loss

$
(4,085
)


(10.2
)%

$
(6,834
)


(15.8
)%

$
2,749



40.2
%Other income:Interest income


70



0.2



936



2.2



(866
)


(92.5
)Gain on litigation settlement










4,600



10.6



(4,600
)


(100.0
)Total other income


70



0.2



5,536



12.8



(5,466
)


(98.7
)Loss before provision for income taxes

$
(4,015
)


(10.0
)%

$
(1,298
)


(3.0
)%

$
(2,717
)


(209.3
)%     Net
    Loss
    Liquidity
    and Capital Resources
  Resources
     40




---



##### Table of Contents



Credit
    Facility Borrowings
      Operating
    Cash Flow
    Working
    Capital
    As of December 31,2010


2009


2008(Dollars in thousands)Cash and cash equivalents

$
34,157


$
36,322


$
37,425Accounts receivable, net of allowance for doubtful accounts


6,577



6,878



6,641Working capital

$
37,553


$
40,359


$
41,665       Requirements
  Capital
    Expenditures
   41




---



##### 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

$
856


$
1,582


$



$



$
2,438Operating leases  hosting facilities


1,120



159











1,279Total

$
1 ,976


$
1,741


$



$



$
3,717     Effects
    of Inflation
    Off-Balance-Sheet
    Arrangements
  Regulation S-K
  Recent
    Accounting Pronouncements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk      Item 8.
    Financial
    Statements and Supplementary Data  page F-1
 42




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Managements
    Evaluation of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of a company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with U.S. generally accepted accounting
    principles and that receipts and expenditures of a company are
    being made only in accordance with authorizations of management
    and directors of a company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of a
    companys assets that could have a material effect on the
    financial statements.   43




---



##### Table of Contents



Internal Control-Integrated
    Framework
    Changes
    in Internal Control over Financial Reporting
    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   44




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Exhibit



Filed



Filing DateNumber

Description of Exhibit

Herewith

Form

with SEC

Exhibit 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 November 2, 2009
    between Silicon Valley Bank and the Registrant



10-Q

November 6, 2009


10
.110
.4a

Amendment dated as of March 2, 2010 to Loan and Security
    Agreement dated as of November 2, 2009 between Silicon
    Valley Bank and the Registrant



10-Q

May 7, 2010


10
.110
.4b

Amendment dated as of February 18, 2011 to Loan and
    Security Agreement dated as of November 2, 2009 between
    Silicon Valley Bank and the Registrant

X10
.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 Grant Notice and Incentive Stock
    Option Agreement under the 2007 Stock Incentive Plan of the
    Registrant



8-K

March 8, 2010


10
.110
.8

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



8-K

March 8, 2010


10
.210
.9

Form of Restricted Stock Unit Grant Notice and Restricted Stock
    Unit Agreement under the 2007 Stock Incentive Plan of the
    Registrant



8-K

March 8, 2010


10
.310
.10

Employment Offer Letter entered into as of April 21, 2009
    between the Registrant and James A. Milton



8-K

April 21, 2009


10
.1 45




---



##### Table of Contents



Exhibit



Filed



Filing DateNumber

Description of Exhibit

Herewith

Form

with SEC

Exhibit Number10
.10a

Amendment dated as of May 6, 2010 to Employment Offer
    Letter entered into as of April 21, 2009 between the
    Registrant and James A. Milton



10-Q

May 7, 2010


10
.110
.11

Form of Executive Retention Agreement entered into as of
    May 1, 2009 between the Registrant and James A. Milton



8-K

April 21, 2009


10
.210
.12

Form of Executive Retention Agreement entered into as of
    November 28, 2008 between the Registrant and each of Mark
    D. Friedman, Robert C. Leahy, and Timothy R. Segall



8-K

November 28, 2008


99
.110
.13

Form of Executive Retention Agreement, dated as of
    March 29, 2010, entered into by and between SoundBite
    Communications, Inc. and Diane Albano



8-K

March 29, 2010


10
.1Form of Change in Control Agreement entered into as of
    May 1, 2009 between the Registrant and James A. Milton



8-K

April 21, 2009


10
.310
.15

Form of Change in Control Agreement entered into as of
    November 28, 2008 between the Registrant and each of Mark
    D. Friedman, Robert C. Leahy and Timothy R. Segall



8-K

November 28, 2008


99
.210
.16

Form of Change in Control Agreement, dated as of March 29,
    2010, entered into by and between the Registrant and Diane Albano



8-K

March 29, 2010


10
.110
.17

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
.18

2010 Management Cash Compensation Plan (Amended and Restated as
    of May 6, 2010)



10-Q

May 7, 2010


10
.110
.19

Compensation Arrangements with Outside Directors (Amended and
    Restated as of March 17, 2010)



8-K

March 29, 2010


10
.110
.20

Summary of 2010 Management Cash Compensation Plan



8-K

December 11, 2009


10
.110
.21

Compensation Arrangements with Outside Directors (Amended and
    Restated as of December 9, 2009)



8-K

December 11, 2009


10
.221
.1

List of subsidiaries of Registrant

X23
.1

Consent of Deloitte & Touche LLP

X31
.1

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

X 46




---



##### Table of Contents



Exhibit



Filed



Filing DateNumber

Description of Exhibit

Herewith

Form

with SEC

Exhibit Number31
.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. 47




---



##### Table of Contents



SIGNATURES      By:
    /s/  James
    A. Milton      Form 10-K
  Signature

Title/s/  James
    A. MiltonJames
    A. Milton

President and Chief Executive Officer (Principal Executive Officer)/s/  Robert
    C. LeahyRobert
    C. Leahy

Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer)/s/  Eric
    R. GilerEric
    R. Giler

Director/s/  James
    A. GoldsteinJames
    A. Goldstein

Director/s/  Vernon
    F. LoboVernon
    F. Lobo

Director/s/  Justin
    J. PerreaultJustin
    J. Perreault

Director/s/  James
    J. RoszkowskiJames
    J. Roszkowski

Director/s/  Eileen
    RuddenEileen
    Rudden

Director/s/  Regina
    O. SommerRegina
    O. Sommer

Director  48




---



##### Table of Contents



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


F-2Financial Statements:Consolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Stockholders
    Equity


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  
         
    F-2




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Consolidated Balance Sheets
  December 31,2010


2009(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
34,157


$
36,322Accounts receivable, net of allowance for doubtful accounts of
    $197 and $152 at December 31, 2010 and 2009


6,577



6,878Prepaid expenses and other current assets


1,183



1,344Total current assets


41,917



44,544Property and equipment, net


2,550



2,789Intangible assets, net


517



79Goodwill


762



213Other assets


229



129Total assets

$
45,975


$
47,754LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,067


$
973Accrued expenses


3,297



3,212Total current liabilities


4,364



4,185Other liabilities


421



537Total liabilities


4,785



4,722Commitments and contingencies (note 6)Stockholders equity:Common stock, $0.001 par value 
    75,000,000 shares authorized; 16,576,701 and
    16,506,730 shares issued at December 31, 2010 and
    2009; 16,381,316 and 16,311,345 shares outstanding at
    December 31, 2010 and 2009


17



17Additional paid-in capital


69,454



68,011Treasury stock, at cost  195,385 shares at
    December 31, 2010 and 2009


(132
)


(132
)Accumulated other comprehensive loss


(72
)


(72
)Accumulated deficit


(28,077
)


(24,792
)Total stockholders equity


41,190



43,032Total liabilities and stockholders equity

$
45,975


$
47,754    F-3




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Consolidated Statements of
    Operations
  Years Ended December 31,2010


2009


2008(In thousands, except shareand per share amounts)Revenues

$
39,494


$
40,183


$
43,211Cost of revenues


15,955



15,899



16,695Gross profit


23,539



24,284



26,516Operating expenses:Research and development


5,886



5,628



5,151Sales and marketing


14,171



14,784



17,974General and administrative


6,799



7,836



9,977Impairment of goodwill






121



248Total operating expenses


26,856



28,369



33,350Operating loss


(3,317
)


(4,085
)


(6,834
)Other income:Interest and other income


2



70



936Gain on litigation settlement










4,600Total other income


2



70



5,536Loss before provision for income taxes


(3,315
)


(4,015
)


(1,298
)(Benefit) provision for income taxes


(30
)


16



21Net loss

$
(3,285
)

$
(4,031
)

$
(1,319
)Loss per common share:Basic and diluted

$
(0.20
)

$
(0.25
)

$
(0.09
)Weighted average common shares outstanding:Basic and diluted


16,344,213



15,961,491



15,369,089    F-4




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Consolidated Statements of Stockholders
    Equity
  AccumulatedAdditional





Other





Total


TotalCommon Stock


Paid-In


Treasury


Comprehensive


Accumulated


Shareholders


ComprehensiveShares


Amount


Capital


Stock


Income


Deficit


Equity (Deficit)


Loss(in thousands, except share and per share amounts)Balance, January 1, 2008


15,420,888


$
15


$
65,720


$
(132
)

$
4


$
(19,442
)

$
46,165Issuance of common stock for option exercises


234,680



1



125















126Issuance of common stock for cashless warrant exercises


46,076























Stock-based compensation expense










858















858Comprehensive loss:Net loss






















(1,319
)





$
(1,319
)Translation adjustments


















(76
)










(76
)Total comprehensive loss





























$
(1,395
)Balance, December 31, 2008


15,701,644



16



66,703



(132
)


(72
)


(20,761
)


45,754Issuance of common stock for option exercises


805,086



1



331















332Stock-based compensation expense










977















977Comprehensive loss:Net loss and total comprehensive loss






















(4,031
)





$
(4,031
)Balance, December 31, 2009


16,506,730



17



68,011



(132
)


(72
)


(24,792
)


43,032Issuance of common stock for option exercises


60,563







90















90Issuance of common stock for restricted stock units


9,408























Stock-based compensation expense










1,353















1,353Comprehensive loss:Net loss and total comprehensive loss






















(3,285
)





$
(3,285
)Balance, December 31, 2010


16,576,701


$
17


$
69,454


$
(132
)

$
(72
)

$
(28,077
)

$
41,190    F-5




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
 Consolidated
    Statements of Cash Flows  Years Ended December 31,2010


2009


2008(In thousands)Cash flows from operating activities:Net loss

$
(3,285
)

$
(4,031
)

$
(1,319
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation of property and equipment


1,836



2,486



3,205Amortization of intangible assets


62



126



145Provision for doubtful accounts


60



33



42Stock-based compensation


1,353



977



858Impairment of goodwill






121



248(Gain) loss on disposal of property and equipment


(2
)


25



(20
)Change in operating assets and liabilities, net of effect of
    acquisition:Accounts receivable


241



(270
)


626Prepaid expenses and other current assets


161



(123
)


86Other assets


(100
)


(67
)


87Accounts payable


64



370



85Accrued expenses and other liabilities


(77
)


59



(267
)Net cash (used in) provided by operating activities


313



(294
)


3,776Cash flows from investing activities:Proceeds received from sale of equipment


2







28Cash paid related to acquisition of business


(503
)


(256
)


(651
)Investments in capitalized software


(500
)






Purchases of property and equipment


(1,567
)


(885
)


(1,528
)Net cash used in investing activities


(2,568
)


(1,141
)


(2,151
)Cash flows from financing activities:Proceeds from exercise of stock options


90



332



126Net cash provided by financing activities


90



332



126Net (decrease) increase in cash and cash equivalents


(2,165
)


(1,103
)


1,751Cash and cash equivalents, beginning of year


36,322



37,425



35,674Cash and cash equivalents, end of year

$
34,157


$
36,322


$
37,425Supplemental disclosure of cash flow information:Cash paid during the period for income taxes

$
7


$
20


$
46Supplemental disclosure of non-cash investing activities:Property and equipment, included in accounts payable

$
173


$
139


$
4Contingent cash payment to Mobile Collect included in accrued
    expenses

$
163


$
118


$
40    F-6




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to
    Consolidated Financial Statements  1.
    Nature
    of Business    2.
    Summary
    of Significant Accounting Policies  Subsequent
    Events
    Use of
    Estimates
    Principles
    of Consolidation
    Foreign
    Currency
    Segment
    Data
   F-7




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Cash
    and Cash Equivalents
    Accounts
    Receivable and Allowance for Doubtful Accounts
      Years Ended December 31,2010


2009


2008Balance, beginning

$
152


$
218


$
176Provision for bad debts


60



33



42Net uncollectible accounts written off


(15
)


(99
)


Balance, end

$
197


$
152


$
218   Concentration
    of Credit Risk
      Development
    of Software for Internal Use
   F-8




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Property
    and Equipment
    Goodwill
    Long-lived
    Assets
    Revenues
       F-9




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Research
    and Development Costs
    Accounting
    for Stock-Based Compensation
    Income
    Taxes
      Basic
    and Diluted Loss Per Share
   F-10




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Years Ended December 31,2010


2009


2008Numerator:Net loss

$
(3,285
)

$
(4,031
)

$
(1,319
)Denominator:Weighted average shares used in computing net loss per common
    share  basic and diluted


16,344,213



15,961,491



15,369,089     Years Ended December 31,2010


2009


2008Stock options


3,298,369



2,764,267



2,571,995Unvested stock


69,542







2,744Warrants to purchase common stock






33,686



62,772   Comprehensive
    Loss
    Recent
    Accounting Pronouncements
    3.
    Property
    and Equipment    As of December 31,2010


2009Computer equipment

$
9,854


$
9,352Computer software


3,881



3,505Furniture and fixtures


556



556Office equipment & machinery


402



402Leasehold improvements


561



543Total


15,254



14,358Less  accumulated depreciation and amortization


(12,704
)


(11,569
)Property and equipment, net

$
2,550


$
2,789    F-11




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
  4.
    Line
    of Credit      5.
    Accrued
    Expenses    December 31,2010


2009Accrued payroll related items

$
946


$
874Accrued telephony


632



646Accrued professional fees


362



543Accrued other


1,357



1,149Total accrued expenses

$
3,297


$
3,212   6.
    Commitments
    and Contingencies    2011

$
1,9762012


1,0512013


690Total future minimum lease payments

$
3,717     Litigation
    and Claims
   F-12




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
      7.
    Common
    Stock and Warrants  Authorized
    Shares
    Outstanding options to purchase common stock


3,298,369Shares reserved for future option grants


680,1633,978,532   Warrants
    8.
    Stock-based
    compensation  Stock
    Options
  2000
    Stock Incentive Plan
    2007
    Stock Incentive Plan
   F-13




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended December 31, 2010Weighted


Weighted


AggregateAverage


Average Remaining


IntrinsicNumber of


Exercise


Contractual Term


ValueOptions


Price


(in years)


(in 000s)Outstanding  January 1, 2010


3,019,595


$
2.51Granted


634,050



3.01Exercised


(60,563
)


1.49Forfeited or expired


(294,713
)


3.82Outstanding  December 31, 2010


3,298,369


$
2.51



7.5


$
2,599Exercisable  end of year


1,827,128


$
2.42



6.5


$
1,913Vested & expected to vest  end of year


3,066,437


$
2.51



7.4


$
2,493     Number of


Grant DateUnits


Fair ValueOutstanding  January 1, 2010


Granted


78,950


$
3.04Vested


(9,408
)


3.04Outstanding  December 31, 2010


69,542


$
3.04Expected to vest  December 31, 2010


69,542


$
3.04            F-14




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Year Ended December 31,2010

2009

2008Risk Free Rate

2.42 - 3.04%

1.81 - 3.40%

2.71 - 3.77%Expected Life

6.02 - 6.25 years

6.02 - 6.25 years

6.02 - 6.25 yearsExpected Volatility

65.6 - 74.9%

61.0 - 64.3%

57.2 - 65.4%Weighted Average Volatility

66.0%

63.8%

61.5%Expected Dividend Yield

0%

0%

0%       Year Ended December 31,2010


2009


2008Cost of revenues

$
41


$
22


$
33Research and development


241



101



85Sales and marketing


476



352



403General and administrative


595



502



337Total stock-based compensation

$
1,353


$
977


$
858   9.
    Goodwill
    And Intangibles  Free-To-End-User
   F-15




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Balance at January 1, 2009:Goodwill

$
248Accumulated impairment losses


(248
)Net balance at January 1, 2009


Addition to goodwill


334Impairments recognized


(121
)Balance at December 31, 2009:Goodwill


582Accumulated impairment losses


(369
)Net balance at December 31, 2009


213Additions to goodwill


549Impairments recognized


Balance at December 31, 2010:Goodwill

$
1,131Accumulated impairment losses


(369
)Net balance at December 31, 2010

$
762     NetGross


Accumulated


CarryingDecember 31, 2010

Value


Amortization


ValueTechnology

$
10


$
10


$
Non-compete agreements


20



11



9Customer relationships


320



312



8Internal-use software


500



0



500$
850


$
333


$
517December 31,
    2009Technology

$
10


$
10


$
Non-compete agreements


20



7



13Customer relationships


320



254



66$
350


$
271


$
79  F-16




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##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ending December 31,

Amount2011

$
1512012


1702013


1682014


28Total

$
517   10.
    Fair value
           F-17




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##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets


Significant Other


Significantfor Identical


Observable


UnobservableInstruments


Inputs


Inputs


Total(Level 1)


(Level 2)


(Level 3)


BalanceDecember 31, 2010:AssetsCash equivalents:Money market fund deposits

$
33,134


$



$



$
33,134Total assets measured at fair value

$
33,134


$



$



$
33,134December 31, 2009:AssetsCash equivalents:Money market fund deposits

$



$
35,626


$



$
35,626Total assets measured at fair value

$



$
35,626


$



$
35,626   11.
    Income taxes
      As of December 31,2010


2009Deferred tax assets:Net operating loss carryforwards

$
7,600


$
6,809Accounts receivable


79



61Intangibles amortization and goodwill


13



222Accrued expenses


227



177Research and development credits


1,573



1,356Deferred revenue


88



62Stock compensation


312



162Depreciation


238



102Deferred tax assets


10,130



8,951Valuation allowance


(10,130
)


(8,951
)Total deferred tax assets

$



$
  F-18




---



##### Table of Contents



SOUNDBITE
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,2010


2009


2008Tax at U.S. federal statutory rate

$
(1,140
)

$
(1,365
)

$
(445
)Current state taxes, net of federal benefit


7



9



6Research and development and other credits (generated) used


(217
)


(292
)


44Nondeductible meals and entertainment


27



28



51Nondeductible stock options


319



223



255Foreign subsidiaries


(3
)






2State tax operating losses and other


(201
)






Change in valuation allowance


1,179



1,413



108$
(30
)

$
16


$
21          F-19




---



##### Table of Contents



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


June 30,


Sept. 30,


Dec. 31,2010


2010


2010


2010(In thousands, except per share data)Revenues

$
9,872


$
9,752


$
9,723


$
10,147Cost of revenues


4,016



3,931



3,961



4,047Gross profit


5,856



5,821



5,762



6,100Net (loss) income


(1,065
)


(1,108
)


(1,183
)


71Basic and diluted (loss) earnings per share

$
(0.07
)

$
(0.07
)

$
(0.07
)

$
0.00   Mar. 31,


June 30,


Sept. 30,


Dec. 31,2009


2009


2009


2009Revenues

$
9,433


$
9,684


$
10,457


$
10,609Cost of revenues


3,754



3,784



4,202



4,159Gross profit


5,679



5,900



6,255



6,450Net loss


(1,049
)


(1,589
)


(689
)


(704
)Basic and diluted loss per share

$
(0.07
)

$
(0.10
)

$
(0.04
)

$
(0.04
)  F-20