1017968--3/23/2006--EDGEWATER_TECHNOLOGY

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{customer, product, revenue}

{tax, income, asset}

{personnel, key, retain}

{stock, price, operating}

{product, market, service}

{competitive, industry, competition}

{property, intellectual, protect}

{provision, law, control}

{acquisition, growth, future}

{condition, economic, financial}

Risk Factors Affecting Finances, Business Prospects and Stock Volatility Our success depends on a limited number of significant customers, and our results of operations and financial condition could be negatively affected by the loss of a major customer or significant project or the failure to collect a large account receivable. Our lack of long-term customer contracts reduces the predictability of our revenues because these contracts may be canceled on short notice and without penalty. If we fail to satisfy our customers expectations, our existing and continuing business could be adversely affected. We may have lower margins, or lose money, on fixed-price contracts. Competition in the IT and management consulting services market is intense and, therefore, we may lose projects to, or face pricing pressure from, our competitors or prospective customers internal IT departments or international outsourcing firms. Because we rely on highly-trained and experienced personnel to design and build complex systems for our customers, an inability to retain existing employees and attract new qualified employees would impair our ability to provide our services to existing and new customers. We depend on our key personnel, and the loss of their services may adversely affect our business. Past or Future business combination transactions or other strategic alternatives could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our business. Volatility of our stock price could result in expensive class action litigation. We may not be able to protect our intellectual property rights or we may infringe upon the intellectual property rights of others, which could adversely affect our business. Fluctuations in our quarterly revenues and operating results may lead to reduced prices for our stock. Anti-takeover provisions in our charter documents, our stockholder rights plan and/or Delaware law could prevent or delay a change in control of our Company. If clients view offshore development as a viable alternative to our service offerings, our pricing, revenue, margins and profitability may be negatively affected. We may be required to record additional goodwill impairment charges in future quarters. We may not generate enough income this year or in future periods to maintain the current net carrying value of our deferred tax asset. Material changes to our strategic relationship with Hyperion.

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1017968--3/23/2006--EDGEWATER_TECHNOLOGY_INC/DE/