1022509--3/14/2007--TUMBLEWEED_COMMUNICATIONS

related topics

{customer, product, revenue}

{property, intellectual, protect}

{control, financial, internal}

{system, service, information}

{product, market, service}

{provision, law, control}

{financial, litigation, operation}

{personnel, key, retain}

{stock, price, operating}

{cost, operation, labor}

{operation, international, foreign}

{acquisition, growth, future}

{condition, economic, financial}

Although we have attained positive cash flow from operations, we have a history of losses and may experience losses in the future. If we lose the services of executive officers or other key employees, our ability to develop our business and secure customer relationships will suffer. If we have elected an ineffective strategy, or do not execute our strategy well, and in particular if we do not develop our products, marketing and distribution channels more successfully than our competitors, our business could be harmed. Economic conditions that result in a decrease in information technology spending could adversely affect our ability to maintain and increase revenue. Fluctuations in our quarterly operating results may not be predictable and may result in significant volatility in our stock price. Contractual issues may arise during the negotiation of license agreements that may delay the anticipated closure of a transaction and our ability to recognize revenue as anticipated. A limited number of customers account for a high percentage of our revenue, and the failure to maintain or expand these relationships could adversely affect our future revenue. Our appliance products may not be adopted in the market and expose us to hardware costs and supply chain issues. We may be unable to adequately protect our intellectual property rights or may be subject to claims of patent infringement, either of which could result in substantial costs to us. The enforcement of our intellectual property rights, especially through patent infringement lawsuits we may initiate, could result in substantial litigation costs and ultimately may not result in additional revenue to us or a favorable judicial determination. Failure to license necessary third party software incorporated in our products could cause delays or reductions in our sales. Our international business exposes us to additional risks that may result in future additional costs or limit the market for product sales. We rely on public key cryptography and other security techniques that could be breached, resulting in reduced demand for our products and services. Our stock price could be adversely affected if we are unable to continue to favorably assess the effectiveness of our internal control over financial reporting or if our independent registered public accounting firm is unable to provide an unqualified report on our assessment. The terms of any financing we may obtain could result in substantial dilution of existing stockholders. Our certificate of incorporation and bylaws contain provisions that could discourage or prevent an acquisition of us, which could depress our stock price. We are a defendant in a purported securities class action lawsuit that could divert management attention and resources or eventually expose us to liability.

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1022509--3/14/2007--TUMBLEWEED_COMMUNICATIONS_CORP