1069502--4/23/2008--VARSITY_GROUP

related topics

{system, service, information}

{control, financial, internal}

{product, market, service}

{personnel, key, retain}

{customer, product, revenue}

{stock, price, operating}

{regulation, change, law}

{regulation, government, change}

{capital, credit, financial}

{interest, director, officer}

{condition, economic, financial}

RISKS RELATED TO OUR FINANCIAL CONDITION OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. WE HAVE LIMITED FINANCIAL RESOURCES AND OPERATE IN A HIGHLY SEASONAL BUSINESS WHICH MAY IMPACT OUR ABILITY TO FUND OUR OPERATIONS. WE MAY REQUIRE ADDITIONAL FUNDING, WHICH MAY NOT BE AVAILABLE ON FAVORABLE TERMS OR AT ALL. WE HAVE A HISTORY OF LOSSES, MAY CONTINUE TO INCUR LOSSES IN THE FUTURE AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY. RISKS RELATED TO OUR BUSINESS WE HAVE A LIMITED OPERATING HISTORY UPON WHICH TO EVALUATE AN INVESTMENT IN OUR COMPANY. WE MUST CONTINUE TO CONVERT SCHOOLS TO OUR TEXTBOOK PROGRAM AND RETAIN THEM IN THE PROGRAM. WE PRIMARILY RELY ON ONE SUPPLIER TO MEET OUR TEXTBOOK FULFILLMENT NEEDS. WE FACE SIGNIFICANT COMPETITION IN THE ONLINE TEXTBOOK MARKETS AND THAT COMPETITION MAY INCREASE SUBSTANTIALLY BECAUSE OF THE LOW BARRIERS TO MARKET ENTRY. IF WE FAIL TO FIELD AND RETAIN A QUALIFIED WORKFORCE, OUR OPERATING PERFORMANCE AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED. THE LOSS OF ANY OF OUR KEY MANAGEMENT COULD NEGATIVELY AFFECT OUR BUSINESS. YOU SHOULD NOT RELY ON OUR QUARTERLY OPERATING RESULTS AS AN INDICATION OF OUR FUTURE RESULTS BECAUSE THEY ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS. WE FACE SIGNIFICANT INVENTORY RISK WITH OUR TEXTBOOKS. IF WE ARE UNABLE TO ADAPT AS INTERNET TECHNOLOGIES AND CUSTOMER DEMANDS CONTINUE TO EVOLVE, OUR SERVICES AND PRODUCTS COULD BECOME LESS DESIRABLE. WE DEPEND ON A THIRD-PARTY SERVICE PROVIDER FOR OUR INFORMATION TECHNOLOGY INFRASTRUCTURE. IF OUR THIRD-PARTY SERVICE PROVIDER EXPERIENCES ANY SYSTEM FAILURE OR INADEQUACY, OUR OPERATIONS COULD BE JEOPARDIZED. CONCERNS ABOUT SECURITY ON THE INTERNET MAY REDUCE THE USE OF OUR WEBSITE AND IMPEDE OUR GROWTH. WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES AFFECTING THE INTERNET THAT COULD ADVERSELY AFFECT OUR BUSINESS. DECREASED EFFECTIVENESS OF SHARE-BASED COMPENSATION COULD ADVERSELY AFFECT OUR ABILITY TO ATTRACT AND RETAIN EMPLOYEES. AS INTERNET TECHNOLOGY AND REGULATION ADVANCES, WE MAY NOT BE ABLE TO PROTECT OUR DOMAIN NAMES. SOME STATES MAY IMPOSE A NEW SALES TAX ON OUR BUSINESS. IF OUR STOCK PRICE IS VOLATILE, WE MAY BECOME SUBJECT TO SECURITIES LITIGATION WHICH IS EXPENSIVE AND COULD RESULT IN A DIVERSION OF RESOURCES.

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1069502--4/23/2008--VARSITY_GROUP_INC