1062613--5/28/2010--FAIRPOINT_COMMUNICATIONS

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{debt, indebtedness, cash}

{system, service, information}

{interest, director, officer}

{condition, economic, financial}

{stock, price, share}

{loan, real, estate}

{cost, contract, operation}

{capital, credit, financial}

{regulation, change, law}

{tax, income, asset}

{stock, price, operating}

{control, financial, internal}

{personnel, key, retain}

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Risks Related to the Chapter 11 Cases For the duration of the Chapter 11 Cases, our operations, including our ability to execute our business plan, will be subject to the risks and uncertainties associated with bankruptcy, which could have a material adverse effect on our business, financial condition, results of operations and liquidity. Operating under Bankruptcy Court protection for a long period of time may harm our business. We may not be able to obtain confirmation of the Plan. The Plan results in holders of our common stock receiving no distribution on account of their interests and cancellation of their common stock Even if the Plan is consummated, we will continue to face risks. The DIP Credit Agreement contains restrictions that could significantly restrict our ability to operate our business. Because our financial statements will reflect adjustments based on our application of the Reorganizations Topic of the ASC ("Fresh Start Accounting"), information reflecting our results of operations and financial condition will not be comparable to prior periods and may vary significantly from the Fresh Start Accounting adjustments. Risks Related to Our Substantial Indebtedness and Common Stock Our stock is no longer listed on a national securities exchange. It will likely be more difficult for stockholders and investors to sell our common stock or to obtain accurate quotations of the share price of our common stock. We have substantial indebtedness which could have a negative impact on our financing options and liquidity position. We are a holding company and rely on dividends, interest and other payments, advances and transfers of funds from our operating subsidiaries and investments, to meet our debt service and other obligations, and to pay dividends, if any, on our common stock. To operate and expand our business, service our indebtedness and meet our other cash needs, we will require a significant amount of cash, which may not be available to us. We may not generate sufficient funds from operations to repay or refinance our indebtedness at maturity or otherwise, to fund our operations or to pay dividends, if any, on our common stock in the future. Our financing arrangements subject us to various restrictions that could limit our operating flexibility, our ability to make payment on our debt and to fund dividends on our common stock. Limitations on our ability to use NOL carryforwards, and other factors requiring us to pay cash to satisfy our tax liabilities in future periods, may affect our ability to repay our indebtedness and pay dividends to our stockholders in the future. The price of our common stock has fluctuated and may continue to fluctuate substantially, which could negatively affect holders of our common stock. Future sales or the possibility of future sales of a substantial amount of our common stock may depress the price of our common stock. Our stockholders may not receive the same level of dividends as historically paid by us or any dividends at all. Risks Related to Our Business Since the Cutover, we have experienced certain systems functionality issues that have had, and may continue to have, a material impact on our business, financial condition, results of operations and liquidity. We provide services to customers over access lines, and if we lose access lines, our business, financial condition, results of operations and liquidity may be adversely affected. We provide access services to other communications companies, and if these companies were to become insolvent or experience substantial financial difficulties, our business, financial condition, results of operations and liquidity may be adversely affected. We are subject to competition that may adversely impact our business, financial condition, results of operations and liquidity. We may not be able to successfully integrate new technologies, respond effectively to customer requirements or provide new services. The geographic concentration of our operations in Maine, New Hampshire and Vermont make our business susceptible to local economic and regulatory conditions and consumer trends, and an economic downturn, recession or unfavorable regulatory action in any of those states may adversely affect our business, financial condition, results of operations and liquidity. We outsource a portion of our billing function. If our service provider inadequately performs or experiences a significant degradation or failure with respect to the services it provides or the applicable agreement is terminated, it could have a significant impact on the operation of our business. A network disruption could cause delays or interruptions of service, which could cause us to lose customers. We depend on third parties for our provision of long distance and bandwidth services. Our success will depend on our ability to attract and retain qualified management and other personnel. We will be exposed to risks relating to evaluations of internal control systems required by Section 404 of the Sarbanes-Oxley Act. Our financial condition and results of operations could be adversely affected if assets held in our Company sponsored pension plans suffer significant losses in market value. Risks Relating to Our Regulatory Environment We are subject to significant regulations that could change in a manner adverse to us.

Full 10-K form ▸

1062613--5/28/2010--FAIRPOINT_COMMUNICATIONS_INC