1094561--3/9/2007--QUOVADX

related topics

{product, candidate, development}

{system, service, information}

{product, market, service}

{financial, litigation, operation}

{cost, contract, operation}

{customer, product, revenue}

{cost, regulation, environmental}

{property, intellectual, protect}

{control, financial, internal}

{stock, price, share}

{personnel, key, retain}

{tax, income, asset}

{acquisition, growth, future}

{provision, law, control}

{product, liability, claim}

We have historically incurred losses and we may not be able to achieve or sustain profitability. We face risks related to the class action and derivative lawsuits. We face risks related to a formal investigation being conducted by the SEC. As we pursue our strategic initiatives, we are subject to risks that could impair our ability to maintain revenues or successfully implement our strategy. A contract with a major customer, the Medical University of South Carolina, expired on December 31, 2006. Failure to generate other sources of revenue to compensate for the resulting reduction in revenue and operating income, may adversely affect our future operating results. We operate in an industry with rapidly changing technology and, if we do not successfully modify our products to incorporate new technologies or introduce new products, we may not be able to increase revenue or our revenue may decline. We face increased competition in the marketplace and lengthening sales cycles in each of our divisions that could impact our operations negatively. Goodwill, other intangible assets and capitalized software make up a significant portion of our total assets and are subject to recurring tests for impairment. We have a history of recording impairments for these assets and future impairments could adversely affect our operating results. We face saturated or diminishing markets for some of our key products. A significant portion of our recurring revenue comes from maintenance agreements that require periodic renewals. ISD and Rogue Wave rely on the effectiveness of channel partners and third-party influencers to help achieve revenue goals. If we fail to maintain and expand these types of relationships, our business may suffer. We rely on third party distributors for ISD and Rogue Wave to report their sales of our software license products accurately and on a timely basis in order to report revenue accurately. If they do not report sales of our products to us accurately and in a timely manner our ability to recognize revenue in the appropriate period may be impacted and we risk fluctuations in our revenues. Revenue from our international operations in ISD and Rogue Wave has historically been significant and we hope to increase our international revenue going forward. As a result, we may become subject to additional uncertainties in the international marketplace which could adversely affect our operating results. We are exposed to infringement risks. We rely on third parties for technology in our products. Our products may be affected by unknown software defects. We may be unable to recruit and retain key employees who are essential to our operations. We could incur liabilities related to the regulation, use and misuse of information. If security of our customer and patient information were to be compromised, we could be liable for damages and our reputation could suffer. If compliance with government regulation of healthcare becomes more costly and difficult for our customers, we may be unable to increase revenue in ISD and CareScience. If we do not establish and maintain our brands, our reputation could be adversely affected. We have risk in sustaining professional service revenue in our markets. We are regulated by the federal and state governments and compliance with current and future labor laws may impact our earnings. Our stock price has traded well below the $5.00 per share minimum threshold established by many institutional investors as criteria for ownership. We have implemented anti-takeover provisions that may adversely impact the market price of our common stock.

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1094561--3/9/2007--QUOVADX_INC