1043946--3/31/2006--VERTICALNET

related topics

{system, service, information}

{stock, price, share}

{product, market, service}

{customer, product, revenue}

{debt, indebtedness, cash}

{acquisition, growth, future}

{personnel, key, retain}

{operation, international, foreign}

{stock, price, operating}

{property, intellectual, protect}

{financial, litigation, operation}

{provision, law, control}

We may require additional capital for our operations and obligations. We may not generate an operating profit. We generate a significant portion of our revenues and accounts receivable from two customers. We have contractual obligations to provide consulting services over many periods. If we fail to meet client expectations in the performance of our services, our business could suffer. We may be unable to maintain our listing on the Nasdaq Capital Market, which could cause our stock price to fall and decrease the liquidity of our common stock. If our stock is delisted from the Nasdaq Capital Market or our share price declines significantly, then our stock may be deemed to be penny stock. If our stock is delisted from the Nasdaq Capital Market, we may be unable to license our products and sell our services to prospective or existing customers. Our success depends on our ability to retain key management personnel, whom we may not be able to retain. We may not be able to hire or retain enough additional personnel to meet our hiring needs. Fluctuations in our quarterly operating results may cause our stock price to decline. If we are able to grow our business, we may not be able to manage the growth successfully. We may seek to acquire another business or raise additional capital, which could dilute the ownership of our existing shareholders. New versions and releases of our products may contain errors or defects. We utilize third-party software that we incorporate into and include with our products and solutions, and impaired relations with these third-parties, defects in third-party software, or their inability or failure to enhance their software over time could have a material adverse effect on our operating performance and financial condition. We have shifted a significant portion of our product development operations to India, which poses significant risks. Our target markets are evolving and characterized by rapid technological change, with which we may not be able to keep pace. We may ultimately be unable to compete in the markets for the products and services we offer. If we do not develop the Verticalnet brand in the supply management solution industry, our revenues might not increase. We may not be able to protect our proprietary rights and may infringe the proprietary rights of others. Several lawsuits have been brought against us and the outcome of these lawsuits is uncertain. Shares eligible for future sale by our current or future shareholders may cause our stock price to decline. Anti-takeover provisions and our right to issue preferred stock could make a third-party acquisition of us difficult. Our common stock price is likely to remain highly volatile. Acquisitions may disrupt or otherwise have a negative impact on our business. Interruptions or delays in service from our third-party Web hosting facilities could impair the delivery of our service and harm our business. If our security measures are breached and unauthorized access is obtained to a customer s data, our on-demand applications may be perceived as not being secure and customers may curtail or stop using our service. If our software or the third-party software we use to support and enable our applications is subject to intrusion or corruption by third parties, our applications could become unstable or unavailable to our customers. If our on-demand application model is not widely accepted, our operating results will be harmed. Because we will recognize revenue from our on-demand applications over the term of the agreement, downturns or upturns in sales may not be immediately reflected in our operating results. We do not have an adequate history with our on-demand application model to predict the rate of customer renewals and the impact these renewals will have on our revenue or operating results. A failure to adequately expand our direct sales force may impede our growth. Changes in the value of the U.S. dollar, in relation to the currencies of foreign countries where we transact business, could harm our operating performance and financial condition. Our indebtedness and debt service obligations may adversely affect our cash flow. Issuance of shares of common stock upon conversion or repayment of our convertible notes and exercise of warrants will dilute the ownership interest of existing shareholders and could adversely affect the market price of our common stock. Our convertible notes are secured by substantially all of our assets. Our convertible notes provide that upon the occurrence of various events of default and change of control transactions, the holders would be entitled to require us to redeem the convertible notes for cash, which could leave us with little or no working capital for operations or capital expenditures.

Full 10-K form ▸

1043946--3/31/2006--VERTICALNET_INC