Minneapolis, Minnesota - (Cheap Web Hosting Directory) - February 23, 2007 - Global e-commerce and web hosting outsourcing provider, Digital River, has finalized its internal investigation of the company’s historical stock option grant practices, conducted by a Special Committee appointed by the company’s Board of Directors.

As a result of the investigation, with the assistance of outside legal counsel and forensic accounting experts, the company will record non-cash stock-based compensation expense and related tax effects in the aggregate amount of approximately $9.4 million, after tax, spread over the nine year period from 1998 through 2006. None of the expense relates to option grants to the current Board of Directors and executive officers. The investigation revealed no evidence that any officer or director of the company engaged in any wrongdoing for personal enrichment. The investigation also found that no director or member of the committee charged with awarding stock options to employees knowingly failed to comply with the relevant accounting principles.

The Special Committee identified circumstances where documentation of certain grants was lacking. The Committee also determined that the company misapplied GAAP by using incorrect measurement dates for financial accounting and reporting purposes on a number of occasions. Approximately 99.7 percent of the expense related to grants made prior to December 31, 2002.

The impact for the three most recent fiscal years is expected to be as follows:

• For fiscal year 2006, approximately $85,000 of stock-based compensation expense, after tax, recorded in the company’s fourth fiscal quarter;
• For fiscal year 2005, a benefit of approximately $2.2 million will be recorded. This is the result of approximately $2.5 million in cumulative tax benefit for the periods from 1998 through 2005 that will be recorded in 2005, offset by stock-based compensation expense of approximately $300,000; and
• For fiscal year 2004, approximately $817,000 of stock-based compensation expense will be recorded.

The adjustments related to 2005 will be reflected via restatement in the company’s 2006 fourth quarter earnings release scheduled for February 8, 2007. Disclosure related to the investigation and the impact on prior fiscal years will be included in the company’s annual report on Form 10-K for the period ended December 31, 2006, which is expected to be filed on a timely basis on or before March 1, 2007. Because of the foregoing stock-based compensation charges, the financial information and opinions of the company’s registered independent public accounting firms contained in previously filed reports for the years 2005 and prior should no longer be relied upon.The company continues to cooperate with the Securities and Exchange Commission’s informal inquiry related to this matter.

Founded in 1994, Digital River, Inc., focuses on e-commerce outsourcing, building and managing online businesses for more than 40,000 software publishers, manufacturers, distributors and online retailers. Its multi-channel e-commerce solution, which supports both direct and indirect sales, is designed to help companies of all sizes maximize online revenues as well as reduce the costs and risks of running an e-commerce operation. The company’s comprehensive platform offers site development and hosting, order management, fraud prevention, export controls, tax management, physical and digital product fulfillment, multi-lingual customer service, advanced reporting and strategic marketing services. Digital River is headquartered in Minneapolis with offices in major U.S. cities as well as Cologne, Germany; London, England; Shannon, Ireland; Luxembourg, Luxembourg; Taipei, Taiwan; and Tokyo, Japan.

For more information about Digital River, please visit: www.digitalriver.com.