1031283--3/13/2007--ENTRUST

related topics

{system, service, information}

{customer, product, revenue}

{property, intellectual, protect}

{personnel, key, retain}

{product, market, service}

{operation, natural, condition}

{regulation, government, change}

{stock, price, operating}

{acquisition, growth, future}

{provision, law, control}

{operation, international, foreign}

{competitive, industry, competition}

{product, candidate, development}

{gas, price, oil}

CERTAIN FACTORS THAT MAY AFFECT OUR BUSINESS Our revenues and operating results are subject to significant fluctuations and such fluctuations may lead to a reduced market price for our stock. Estimating future revenues is difficult, and our failure to do so accurately may lead to a reduced market price for our stock and reduced profitability. Because of the lengthy and unpredictable sales cycle associated with our large software transactions, we may not succeed in closing transactions on a timely basis or at all, which would adversely affect our revenues and operating results. A limited number of customers has accounted for a significant percentage of our revenues, which may decline if we cannot maintain or replace these customer relationships, and for a significant percentage of our accounts receivable. The U.S. and Canadian Federal Governments account for a significant percentage of our revenues, which may decline or be subject to delays, which would adversely affect our operating results. We sometimes enter into complex contracts, which require ongoing monitoring and administration. Failure to monitor and administer these contracts properly could result in liability or damages. War, the significant threat of war, or a terrorist act could adversely affect our business. A widespread outbreak of an illness or other health issue could negatively affect our business, making it more difficult and expensive to meet our obligations to our customers, and could result in reduced demand from our customers. If the enterprise information technology budgets and the digital identity security market do not continue to grow, demand for our products and services will be adversely affected. A breach of security at one of our customers, whether or not due to our products, could harm our reputation and reduce the demand for our products. Sales of our products may decline if some of our products are found to contain bugs or errors. Our revenues may decline if we cannot compete successfully in an intensely competitive market. Our business will not be successful if we do not keep up with the rapid changes in our industry. We may have difficulty managing our operations, which could adversely affect our ability to successfully grow our business. We depend on our key personnel for the success of our business and the loss of one or more of our key personnel could have an adverse effect on our ability to manage our business or could be negatively perceived in the capital markets. If we fail to continue to attract and retain qualified personnel, our business may be harmed. We may not be able to protect our intellectual property rights, which could make us less competitive and cause us to lose market share. We have been subject to, and may in the future become subject to, intellectual property infringement claims that could be costly and could result in a diversion of management s attention. We may lose access to technology that we license from outside vendors, which loss could adversely affect our ability to sell our products. We rely on partners to integrate our products with their products and to resell our products. Changes in these relationships could adversely affect our ability to sell our products. We may lose suppliers whose loss could adversely affect our ability to sell our products. Current and future acquisitions or investments could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations. We face risks associated with our international operations, which, if not managed properly, could have a significant adverse effect on our business, financial condition or results of operations. If the laws regarding exports of our products further limit or otherwise restrict our business, we could be prohibited from shipping our products to restricted countries, which would result in a loss of revenues. Our stock price is volatile and may continue to be volatile in the future. Provisions of our charter and bylaws may delay or prevent transactions that are in our shareholders best interests.

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1031283--3/13/2007--ENTRUST_INC