1063085--12/29/2006--CATAPULT_COMMUNICATIONS

related topics

{product, market, service}

{customer, product, revenue}

{property, intellectual, protect}

{stock, price, operating}

{provision, law, control}

{financial, litigation, operation}

{control, financial, internal}

{system, service, information}

{operation, international, foreign}

{personnel, key, retain}

{product, liability, claim}

{cost, regulation, environmental}

{acquisition, growth, future}

Our ability to deliver products that meet customer demand is dependent on our ability to meet new and changing requirements for telecommunications test systems and services. Our success depends on the timely development and introduction of new products. Historically, our revenues have been dependent upon a few significant customers, the loss of one or more of which could significantly reduce our revenues. Our business is dependent on our customers outsourcing their telecommunications testing needs, and our business could be harmed if the market for outsourced testing solutions declines or fails to grow. We face foreign business, political and economic risks because a significant portion of our sales is to customers outside the United States. We face intense competition in our markets from more established test solutions providers, and if we are unable to compete successfully we may not be able to maintain or grow our business. Our success depends on the continued growth of the telecommunications industry and increased use of our test solutions, and lack of growth in this industry could harm our business. Our business could be harmed if we were to lose the services of one or more members of our senior management team, or if we are unable to attract and retain qualified personnel. We may not be able to achieve the anticipated benefits of any acquisitions we may make of other companies, products or technologies. The inability to successfully defend claims from taxing authorities could adversely affect our operating results and financial position. We are a defendant in a lawsuit with a distributor in Belgium, and an adverse result in this matter could require us to pay significant damages. Many of our suppliers are sole source or single source suppliers, and our inability to obtain adequate amounts of components from these suppliers could harm our business. We depend on a limited number of independent manufacturers, which reduces our ability to control our manufacturing process. The high level of complexity and integration of our products increases the risk of latent defects, which could damage customer relationships and increase our costs. We face exposure to product liability claims, which if successful could harm our business. Our success is dependent on our ability to protect our intellectual property, and our failure to protect our intellectual property could have a significant adverse impact on our business. We could become subject to litigation regarding intellectual property, which could divert management attention, be costly to defend and prevent us from using or selling the challenged technology. Environmental laws and regulations subject us to a number of risks and could result in significant liabilities and costs. Risks Related to Our Stock Our stock has been, and likely will continue to be, subject to substantial price and volume fluctuations due to a number of factors, many of which will be beyond our control. If we are unable to determine and demonstrate that we maintain effective internal control over financial reporting, this may cause investors to lose confidence in our reported financial information and the price of our stock could drop significantly. Sales of substantial amounts of our common stock by our major stockholders and others could adversely affect the market price of our common stock. Our principal stockholders could prevent or delay a change in control.

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1063085--12/29/2006--CATAPULT_COMMUNICATIONS_CORP