1040853--6/27/2007--PHARSIGHT

related topics

{customer, product, revenue}

{product, market, service}

{stock, price, share}

{stock, price, operating}

{regulation, government, change}

{personnel, key, retain}

{system, service, information}

{property, intellectual, protect}

{acquisition, growth, future}

{control, financial, internal}

{operation, international, foreign}

{debt, indebtedness, cash}

Risks That Affect Our Future Operations We may not be able to generate sufficient revenues to sustain profitability. We have a limited amount of capital resources and we may not be able to sustain or grow our business if we cannot sustain profitability or raise additional funds on a timely basis. The terms of our credit facilities contain covenants that limit our flexibility and prevent us from taking certain actions. Our quarterly operating results may fluctuate significantly and may not be predictive of future financial results. We may be required to defer recognition of software license revenue for a significant period of time after entering into an agreement, which could negatively impact our results of operations. An increase in services revenue as a percentage of total revenue, or a decrease in software license revenue as a percentage of total revenue, may decrease our overall margins. Because our sales and implementation cycles are long and unpredictable, our revenues are difficult to predict and may not meet our expectations or those of our investors. Our revenue is concentrated in a few customers, and if we lose any of these customers our revenue may decrease substantially. We may need to change our pricing models to compete successfully. If we are unable to generate additional sales from existing customers and/or generate sales to new customers, we may not be able to realize sufficient revenues to sustain or increase our profitability. Our revenues and results of operations would be adversely affected if a customer cancels a contract for services or software deployment with us. We may lose existing customers or be unable to attract new customers if we do not develop new products and services or if our offerings do not keep pace with technological changes. If the security or confidentiality of our customers data is compromised or breached, we could be liable for damages and our reputation could be harmed. If we are unable to complete a project due to scientific limitations or otherwise meet our customers expectations, our reputation may be adversely affected and we may not be able to generate new business. Our future success depends on our ability to continue to retain and attract qualified employees. If we lose key members of our management, scientific or development staff, or our scientific advisors, our reputation may be harmed and we may lose business. Our business depends on our intellectual property rights, and if we are unable to adequately protect them, our competitive position will suffer. If we become subject to infringement claims by third parties, we could incur unanticipated expense and be prevented from providing our products and services International sales of our product account for a significant portion of our revenue, which exposes us to risks inherent in international operations. Changes in government regulation could decrease the need for the products and services we provide. While we believe we currently have adequate internal control over financial reporting, we will be required, as of March 31, 2008, to evaluate and report on the effectiveness of our internal control under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from the evaluation and reporting could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price. Risks Related To Our Industry Our market may not develop as quickly as expected, and companies may enter our market, thereby increasing the amount of competition and impairing our business prospects. Government regulation of the pharmaceutical industry may restrict our operations or the operations of our customers and, therefore, adversely affect our business. Consolidation in the pharmaceutical industry could cause disruptions of our customer relationships, interfere with our ability to enter into new customer relationships and have a negative impact on our revenues Reductions in the IT and/or research and development budgets of our customers may affect our sales. Recent or continued withdrawals of drugs from the public market could affect pharmaceutical spending, reduce the demand for our products and have a negative impact on our revenues. Risks Related to Our Stock Our common stock only trades on the Over-the-Counter Bulletin Board system, and has experienced reduced trading volumes and stock price since it began to be traded there. Should we decide to relist our common stock on the Nasdaq, the criteria for relistment may be difficult for us to achieve. The public market for our common stock may be volatile. Insiders continue to hold a significant portion of our stock, which may negatively affect your investment. The redemption of our preferred stock, or the election by the preferred stockholders to receive their dividend payments in shares instead of cash, may negatively affect our financial condition.

Full 10-K form ▸

1040853--6/27/2007--PHARSIGHT_CORP