SOURCE: NaviSite, Inc.

November 12, 2008 09:43 ET

NaviSite, Inc. Receives NASDAQ Deficiency Letter

ANDOVER, MA--(Marketwire - November 12, 2008) - NaviSite, Inc. (NASDAQ: NAVI), a leading provider of enterprise hosting and application services, announced today that on November 6, 2008, it received a letter from the NASDAQ Stock Market that the Company is not in compliance with NASDAQ Marketplace Rule 4310(c)(3), which requires the Company to have a minimum of $2,500,000 in stockholders' equity, $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years.

The deficiency letter indicates that the NASDAQ staff is reviewing the Company's eligibility for continued listing on The Nasdaq Capital Market. The Company has until November 21, 2008 to provide NASDAQ with a specific plan to achieve and sustain compliance with all NASDAQ Capital Market listing requirements. The Company expects to submit a compliance plan on or prior to the abovementioned date.

While the Company intends to submit a plan of compliance, there can be no assurance that the NASDAQ staff will ultimately determine that the plan adequately addresses the deficiency. If, upon conclusion of the review process, NASDAQ determines that the Company's compliance plan does not adequately address the issue of compliance with NASDAQ's listing requirements, the Company would receive written notification from NASDAQ that its securities are subject to being delisted and the Company will have the option of requesting a hearing and appealing the decision to a NASDAQ Listing Qualifications Panel.

About NaviSite

NaviSite is a leading provider of enterprise hosting and application services. More than 1,500 customers depend on NaviSite for application development, implementation and management on its web infrastructure platforms in 17 state-of-the-art data centers supported by more than 700 professionals. NaviSite provides customized and scalable solutions leveraging its broad range of application development capabilities, packaged software implementation expertise, deep portfolio of best in class technologies and a full suite of web-hosting and internet infrastructure options. For more information, please visit www.navisite.com.

This release contains forward-looking statements, which address a variety of subjects including the expected future operating and financial results, including profitability, revenue growth and EBITDA, success and performance of NaviSite's product and service offerings, and NaviSite's strategic business plans for growing its customer base and increasing sales. All statements other than statements of historical fact, including without limitation those with respect to NaviSite's goals, plans and strategies set forth herein, are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements. NaviSite's success, including its ability to improve its gross profit, improve its cash flows, expand its operations and revenue, and reach and sustain profitability, depends on its ability to execute on its business strategy and the continued and increased demand for and market acceptance of its products and services; the possibility that financial forecasts of the Company may not be achieved, including those as to expected EBITDA and revenue, or an inability to realize expected synergies or make expected future investments in NaviSite's businesses or NaviSite may be unable to raise the necessary funds to meet its payment obligations to its lending group under its senior secured credit facility and other creditors; NaviSite's management may face strain on managerial and operational resources as they try to oversee the expanded operations; NaviSite may not be able to expand its operations in accordance with its business strategy; NaviSite may experience difficulties integrating technologies, operations and personnel in accordance with its business strategy; NaviSite's acquisition of companies and businesses may not produce expected cost savings, operational efficiencies or revenue; NaviSite's products, technologies, and resources may not successfully operate with the technology, resources and/or applications of third parties; NaviSite derives a significant portion of its revenue from a small number of customers and the loss of any of those customers could significantly damage NaviSite's financial condition and results of operations; and increased competition and technological changes in the markets in which NaviSite competes. For a detailed discussion of cautionary statements that may affect NaviSite's future results of operations and financial results, please refer to NaviSite's filings with the Securities and Exchange Commission, including NaviSite's most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Forward-looking statements represent management's current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.

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