Keynote Systems (KEYN) 8-K/A Index to Financial Statements

Exhibit 99.2

INDEX TO PRO FORMA FINANCIAL STATEMENTS

Keynote Systems, Inc.

Unaudited Pro Forma Condensed Combined Financial Information:
Pro Forma Condensed Combined Balance Sheet as of March 31, 2008	3
Pro Forma Condensed Combined Statement of Operations for Keynote Systems, Inc. for the twelve months ended September 30, 2007 and for Zandan S.A. for the twelve months ended December 31, 2007	4
Pro Forma Condensed Combined Statement of Operations for Keynote Systems, Inc. and for Zandan S.A. for the six months ended March 31, 2008	5
Notes to Unaudited Pro Forma Condensed Combined Financial Information	6

Keynote Systems, Inc.

Unaudited Pro Forma Condensed Combined Financial Information

On April 16, 2008, Keynote Systems, Inc., a Delaware corporation (“Keynote”), announced it had entered into a definitive share purchase agreement (the “Agreement”) and acquired Zandan S.A. (“Zandan”). Pursuant to the Agreement, Keynote acquired the outstanding shares of Zandan for approximately €924,000 in cash, a portion of which is being held in escrow for any indemnification claims that may arise.

The following unaudited pro forma condensed combined financial information for Keynote gives effect to the acquisition of Zandan. The unaudited pro forma condensed combined financial data were prepared from (1) Keynote’s audited historical consolidated financial statements included in Keynote’s Form 10-K for the year ended September 30, 2007, (2) Keynote’s unaudited historical condensed consolidated financial statements included in Keynote’s Form 10-Q for the period ended March 31, 2008, (3) Zandan’s audited historical financial statements as of and for the year ended December 31, 2007, included elsewhere in this Form 8-K/A, and (4) Zandan’s unaudited historical financial statements as of and for the six months ended March 31, 2008, and should be read in conjunction with those financial statements.

The unaudited pro forma condensed combined balance sheet at March 31, 2008 assumes the Zandan acquisition took place as of March 31, 2008. The total purchase price including direct transaction costs of approximately €1.7 million (or approximately $2.7 million) has been allocated to the assets and liabilities based on management’s preliminary estimates of the representative fair values with the excess consideration over the net assets acquired allocated to goodwill. These preliminary estimates are subject to adjustment based on the final allocation of purchase costs including the finalization of the valuation of identifiable intangibles and deferred revenue. Any change in fair value of the net assets of Zandan will change the amount of the purchase price allocated to goodwill.

The unaudited pro forma condensed combined statements of operations combine the historical statement of operations for Keynote for the twelve months ended September 30, 2007 and for Zandan for the twelve months ended December 31, 2007, being Zandan’s most recent fiscal year end that ended within 93 days of Keynote’s most recent fiscal year ended September 30, 2007. The unaudited pro forma condensed combined statements of operations also combines the historical statement of operations for Keynote for the six months ended March 31, 2008 and for Zandan for the six months ended March 31, 2008. The statement of operations for Zandan for the six months ended March 31, 2008 were derived by adding the three months ended December 31, 2007 to the three months ended March 31, 2008. The three months ended December 31, 2007 of Zandan is also included in the pro forma income statements for the year ended December 31, 2007. Summarized operating information about this duplicated quarter is as follows (in thousands):

Revenue	$	362
Expenses		(1,228	)
Net loss	$	(866	)

The unaudited pro forma condensed combined information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transactions had been consummated at the dates indicated, nor is it necessarily indicative of future operating results or financial position of the combined companies.

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Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2008
(In thousands)

	Historical						Pro Forma
	KEYNOTE			ZANDAN
	SYSTEMS, INC.			S.A.			Adjustments			Combined
ASSETS
Current assets:
Cash and cash equivalents	$	42,875		$	27		$	(1,467	) (1)	$	41,435
Short-term investments		65,060			—			—			65,060
Total cash, cash equivalents, and short-term investments		107,935			27			(1,467	)		106,495
Accounts receivable, net		5,988			189			—			6,177
Prepaid and other current assets		2,703			179			—			2,882
Inventories		1,059			—			—			1,059
Deferred tax assets		3,922			219			—			4,141
Total current assets		121,607			614			(1,467	)		120,754
Deferred costs		1,301			—			—			1,301
Property, software and equipment, net		35,480			106			—			35,586
Goodwill		63,129			—			2,691	(4)		65,820
Identifiable intangible assets, net		7,963			—			734	(3)		8,697
Deferred tax assets		—			377			—			377
Other assets		—			152			—			152
Total assets	$	229,480		$	1,249		$	1,958		$	232,687
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	2,285		$	256		$	1,237	(1)	$	3,778
Accrued expenses		11,656			1,430			—			13,086
Deferred revenue		19,824			1,172			(938	) (2)		20,058
Current portion of obligations under capital leases		24			—			—			24
Total current liabilities		33,789			2,858			299			36,946
Long-term portion of capital lease obligation		31			—			—			31
Deferred rent and other long-term liabilities		292			—			—			292
Long-term deferred revenue		2,136			285			(236	) (2)		2,185
Long-term deferred tax liabilities		2,347			—			—			2,347
Long-term debt		—			288			—			288
Total liabilities		38,595			3,431			63			42,089
Stockholders’ equity (deficit):
Common stock		18			6,821			(6,821	) (5)		18
Treasury stock		(1,151	)		—			—			(1,151	)
Additional paid-in capital		325,525			—			—			325,525
Accumulated deficit		(140,188	)		(9,017	)		8,716	(5)		(140,489	)
Accumulated other comprehensive income		6,681			14			—			6,695
Total stockholders’ equity (deficit)		190,885			(2,182	)		1,895			190,598
Total liabilities and stockholders’ equity (deficit)	$	229,480		$	1,249		$	1,958		$	232,687

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Unaudited Pro Forma Condensed Combined Statement of Operations for Keynote Systems, Inc. for the twelve months ended September 30, 2007 and for Zandan S.A.for the twelve months ended December 31, 2007

	Historical						Pro Forma
	KEYNOTE			ZANDAN
(in thousands, except per share data)	SYSTEMS, INC.			S.A.			Adjustments			Combined
Net Revenue:
Subscription services	$	42,662		$	726		$	—		$	43,388
Ratable licenses		13,220			821			—			14,041
Professional services		11,872			161			—			12,033
		—			—			—			—
Total revenue, net		67,754			1,708			—			69,462
Costs and Expenses:
Costs of revenue
Direct costs of subscription services		8,389			120			—			8,509
Direct costs of ratable licenses		4,598			134			—			4,732
Direct costs of professional services		8,164			1,092			—			9,256
Development		11,559			1,204			—			12,763
Operations		7,673			—			—			7,673
Amortization of intangible assets — software		754			—			—			754
Total costs of revenue		41,137			2,550			—			43,687
Sales and marketing		20,127			1,315			—			21,442
General and administrative		9,856			1,193			—			11,049
Excess occupancy income		(265	)		—			—			(265	)
Amortization of identifiable intangible assets — other		2,195			—			351	(1)		2,546
Total costs and expenses		73,050			5,058			351			78,459
Loss from operations		(5,296	)		(3,350	)		(351	)		(8,997	)
Interest income (expenses) and other, net		4,750			(220	)		(119	) (2)		4,411
Loss before provision (benefit) from income taxes		(546	)		(3,570	)		(470	)		(4,586	)
(Provision for) benefit from income taxes		(4,145	)		107			—			(4,038	)
Net loss	$	(4,691	)	$	(3,463	)	$	(470	)	$	(8,624	)
Net loss per share:
Basic and diluted net loss per share	$	(0.27	)	$	(0.37	)	$	—		$	(0.49	)
Number of shares used in computing basic and diluted net loss per share		17,553			9,412			—			17,553

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Unaudited Pro Forma Condensed Combined Statement of Operations for Keynote Systems, Inc. and Zandan S.A. for the six months ended March 31, 2008

	Historical						Pro Forma
	KEYNOTE			ZANDAN
(in thousands, except per share data)	SYSTEMS, INC.			S.A.			Adjustments			Combined
Net Revenue:
Subscription services	$	21,964		$	286		$	—		$	22,250
Ratable licenses		8,607			335			—			8,942
Professional services		4,783			41			—			4,824
Total revenue, net		35,354			662			—			36,016
Costs and Expenses:
Costs of revenue:
Direct costs of subscription services		4,336			49			—			4,385
Direct costs of ratable licenses		2,714			153			—			2,867
Direct costs of professional services		3,599			460			—			4,059
Development		6,293			526			—			6,819
Operations		4,027			—			—			4,027
Amortization of intangible assets — software		416			—			—			416
Total costs of revenue		21,385			1,188			—			22,573
Sales and marketing		12,296			585			—			12,881
General and administrative		4,988			974			—			5,962
Excess occupancy income		(590	)		—			—			(590	)
Amortization of identifiable intangible assets — other		1,079			—			176	(1)		1,255
Total costs and expenses		39,158			2,747			176			42,081
Loss from operations		(3,804	)		(2,085	)		(176	)		(6,065	)
Interest income (expenses) and other, net		2,031			85			(60	) (2)		2,056
Loss before provision (benefit) from income taxes		(1,773	)		(2,000	)		(236	)		(4,009	)
(Provision for) benefit from income taxes		(289	)		44			—			(245	)
Net loss	$	(2,062	)	$	(1,956	)	$	(236	)	$	(4,254	)
Net loss per share:
Basic and diluted net loss per share	$	(0.12	)	$	(0.05	)	$	—		$	(0.25	)
Number of shares used in computing basic and diluted net loss per share		17,180			36,399			—			17,180

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Notes to Unaudited Pro Forma Condensed Combined Financial Information

1. Allocation of preliminary purchase price as of the acquisition date (April 16, 2008).

The unaudited pro forma condensed financial statements reflect the preliminary purchase price of Zandan S.A. of approximately $2.7 million which consists of the following (in thousands):

Cash paid	$	1,467
Direct transaction costs		1,237
Preliminary purchase price	$	2,704

The preliminary purchase price of the acquisition of Zandan, as of the acquisition date (April 16, 2008) has been allocated to assets and liabilities based on management’s preliminary estimate of its fair value. The excess of the purchase consideration over the fair value of the net assets acquired has been allocated to goodwill. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition of April 16, 2008 (in thousands):

Cash and cash equivalents	$	19
Accounts receivable		148
Prepaids, deferred costs and other current assets		179
Research tax credit		601
Other assets		567
Property, equipment, and software, net		105
Amortizable intangible assets:
Customer based intangibles		100
Technology based intangibles		634
Goodwill		2,691
Total assets acquired		5,044
Liabilities assumed:
Deferred revenue		(208	)
Other liabilities		(2,132	)
Total liabilities assumed		(2,340	)
Total	$	2,704

The preliminary purchase price is dependent upon the finalization of the closing balance sheet of Zandan and the finalization of the independent valuation of the intangible assets and certain other net assets which are estimated to be completed by September 2008. Any adjustments to the closing balance sheet or fair value of the net assets of Zandan will change the amount of the purchase price allocable to goodwill. Final purchase accounting adjustments may therefore differ materially from the pro forma adjustments presented here.

2. Adjustments to unaudited pro forma condensed combined balance sheets

The adjustments to the unaudited pro forma condensed combined balance sheet as of March 31, 2008 have been calculated as if the acquisition occurred on that date and are as follows:

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(1)	To reflect the acquisition of Zandan for the total purchase costs of approximately $2.7 million as described in Note 1.
(2)	To adjust historical deferred revenue of Zandan to the estimated fair value of the related obligation.
(3)	To recognize the estimated fair value of identified intangible assets as follows:

(In thousands, except for			Estimated Lives of
estimated lives)	Fair Value		Intangible Assets		Annual Amortization
Customer Contracts	$	100		3	$	34
Technology		634		2		317
	$	734			$	351

(4) Recognition of goodwill in the amount of $2.7 million which represents the excess of the purchase consideration over the fair value of the net assets acquired and identified intangible assets.

(5) To eliminate the historical stockholders’ deficit accounts of Zandan

Net deferred tax asset, excluding the research tax credit, related to the acquisition of Zandan is fully offset by a valuation allowance and, accordingly, no such amounts are included in the accompanying condensed combined balance sheet.

3. Adjustments to unaudited pro forma condensed combined statement of operations for Keynote Systems, Inc. for the twelve months ended September 30, 2007 and for Zandan S.A. for the twelve months ended December 31, 2007.

The adjustments to the unaudited pro forma condensed combined statement of operations have been calculated assuming that the acquisition occurred as of October 1, 2006 and are as follows:

(1) To reflect amortization of identified intangible assets resulting from the Zandan acquisition. The amortization of intangible assets is described in Note 2.

(2) To reflect the decrease in interest income arising from the reduction of short-term investments for payment of the purchase price.

4. Adjustments to unaudited pro forma condensed combined statement of operations for Keynote Systems, Inc. and of Zandan S.A. for the six months ended March 31, 2008.

The adjustments to the unaudited pro forma condensed combined statement of operations have been calculated assuming that the acquisition occurred as of October 1, 2006 and are as follows:

(1) To reflect amortization of identified intangible assets resulting from the Zandan acquisition. The amortization of intangible assets is described in Note 2.

(2) To reflect the decrease in interest income arising from the reduction of short-term investments for payment of the purchase price.

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