1053374--3/16/2006--IPASS

related topics

{system, service, information}

{product, market, service}

{acquisition, growth, future}

{regulation, change, law}

{customer, product, revenue}

{operation, international, foreign}

{property, intellectual, protect}

{stock, price, operating}

{condition, economic, financial}

{competitive, industry, competition}

Our customers require a high degree of reliability in our services, and if we cannot meet their expectations, demand for our services will decline. We face strong competition in our market, which could make it difficult for us to succeed. The telecommunications industry has experienced a dramatic decline, which may cause consolidation among network service providers and impair our ability to provide reliable, redundant service coverage and negotiate favorable network access terms. If our security measures are breached and unauthorized access is obtained to a customer s internal network, our virtual network may be perceived as not being secure and enterprises may curtail or stop using our services. If enterprise connectivity demand does not continue to expand, we may experience a shortfall in revenues or earnings or otherwise fail to meet public market expectations. If we are unable to meet the challenges related to the market acceptance and provision of our policy management services, our ability to grow the business may be harmed. Our long sales and service deployment cycles require us to incur substantial sales costs that may not result in related revenues. There are approximately 24 countries in which we provide dial-up access only through Equant. The loss of Equant as a dial-up network service provider would substantially diminish our ability to deliver global network access. If our channel partners do not successfully market our services to their customers or corporate end users, then our revenues and business may be adversely affected. If we fail to address evolving standards and technological changes in the enterprise connectivity and policy management services industry, our business could be harmed. Our software is complex and may contain errors that could damage our reputation and decrease usage of our services. Because much of our business is international, we encounter additional risks, which may reduce our profitability. Completed or future acquisitions or investments could dilute the ownership of our existing stockholders, cause us to incur significant expenses or harm our operating results. If we are unable to effectively manage future expansion, our business may be adversely impacted. We currently are, and in the future may be, subject to securities class action lawsuits due to decreases in our stock price. Litigation arising from disputes involving third parties could disrupt the conduct of our business. If licenses to third party technologies, including our license with RSA Security, do not continue to be available to us at a reasonable cost, or at all, our business and operations may be adversely affected. Litigation arising out of intellectual property infringement could be expensive and disrupt our business. New accounting pronouncements may impact our future financial position and results of operations. Risks Relating to Our Industry Security concerns may delay the widespread adoption of the Internet for enterprise communications, or limit usage of Internet-based services, which would reduce demand for our products and services. Financial, political or economic conditions could adversely affect our revenues. Government regulation of, and legal uncertainties regarding, the Internet could harm our business.

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1053374--3/16/2006--IPASS_INC