1041514--8/29/2007--NET_1_UEPS_TECHNOLOGIES

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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, AS WELL AS THE OTHER INFORMATION IN THIS FORM 10-K, BEFORE DECIDING TO INVEST IN OUR SHARES OF COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS WOULD SUFFER. IF THIS HAPPENS, THE TRADING PRICE OF OUR COMMON STOCK WOULD LIKELY DECLINE AND YOU MIGHT LOSE ALL OR PART OF YOUR INVESTMENT IN OUR COMMON STOCK. The South African Social Security Agency, or SASSA, is in the process of conducting a national tender for the distribution of welfare grants in which bidders had the opportunity to bid for all of South Africa or on a province-by-province basis. If we were not to receive contracts to continue to distribute these grants in each of the provinces where we currently distribute them, or if we do win these contracts, but the terms are not as favorable to us as our current contracts, our financial condition, results of operations and cash flows would be materially and adversely affected. Changes in current government regulations relating to social welfare grants could adversely affect our revenues and cash flows. We may have difficulty managing our growth which could limit our ability to increase sales and cash flow. There are risks relating to operating in South Africa that could adversely affect our business, operating results, cash flows and financial condition. There are risks relating to other countries in which we intend to operate that could adversely affect our future business, operating results, cash flows and financial condition. Volatility in the South African Rand to U.S. dollar exchange rate may adversely affect our reported operating results. The loss of the services of Dr. Belamant or any of our other executive officers would adversely affect our business. We face a highly competitive employment market and may not be successful in attracting and retaining a sufficient number of skilled employees, particularly in the technical and sales areas and senior management. We pre-fund the payment of social welfare grants on behalf of our South African government customers and any payment defaults by these customers would adversely affect our operations. Our ability to operate our wage payment and insurance products businesses may be limited by existing South African banking and financial services laws and regulations. We may face competition from the incumbent retail banks in South Africa in the unbanked market segment. Patent competition may adversely affect our products or processes, and limited patent protection, a lack of proprietary protection and the potential to incur costly litigation could be harmful to our operations. The copyrights and certain related intellectual property rights in earlier versions of our UEPS software are jointly owned and potentially subject to non-exclusive rights, which may reduce our future revenues. Our current license agreement with Visa imposes long-term restrictions on our ability to license rights in our technology and could inhibit our ability to realize additional revenue from these rights in our technology. Our license agreement with Visa substantially impacts our ability to defend and enforce our patents licensed to Visa and could substantially inhibit our ability to protect the rights in our technology. We depend upon third-party suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business. We may not be able to exploit technological advances quickly and successfully, which could impair our competitive position and operations. We may incur material losses in connection with our distribution of cash to recipients of social welfare grants. We may undertake other acquisitions that could increase our costs or liabilities or be disruptive to our business. EasyPay is subject to substantial governmental regulation and may be adversely affected by liability under, or any future inability to comply with, existing or future regulations or requirements Our international operations require us to comply with a number of U.S. and international regulations. We may be required to raise additional financing by issuing new securities with terms or rights superior to those of our shares of common stock, which could adversely affect the market price of our shares of common stock. We may have difficulty raising necessary capital to fund operations as a result of market price volatility for our shares of common stock. Our quarterly operating results may fluctuate significantly as a result of factors outside of our control, which could cause the market price of our common stock to decline. The period between our initial contact with a potential customer and the sale of our products or services to that customer tends to be long and may be subject to delays which may have an impact on our revenues. We may become subject to a U.S. tax liability for failing to withhold on certain distributions on instruments issued in connection with the Aplitec transaction. Shipments of our electronic payment systems may be delayed by factors outside of our control, which can harm our reputation and our relationships with our customers. Force majeure events, such as terrorist attacks, other acts of violence or war, political instability and health epidemics may adversely affect us.

Full 10-K form ▸

1041514--8/29/2007--NET_1_UEPS_TECHNOLOGIES_INC