1111665--3/16/2006--TELECOMMUNICATION_SYSTEMS_INC

related topics

{product, market, service}

{system, service, information}

{customer, product, revenue}

{provision, law, control}

{regulation, government, change}

{operation, international, foreign}

{acquisition, growth, future}

{property, intellectual, protect}

{personnel, key, retain}

{stock, price, operating}

{control, financial, internal}

{cost, regulation, environmental}

{product, liability, claim}

{competitive, industry, competition}

We may fail to support our anticipated growth in operations which could reduce demand for our services and materially adversely affect our revenue. We could incur substantial costs from product liability claims relating to our software. Our operating results could be adversely affected by any interruption of our data delivery services or system failure. Because we rely on a few key customers, our revenue may decline if we fail to retain those customers. Because we rely on key partners to expand our marketing and sales efforts, if we fail to maintain or expand our relationships with strategic partners and indirect distribution channels our license revenues could decline. Because our business may not generate sufficient cash to fund operations, we may not be able to continue to grow our business if we are unable to obtain additional capital when needed. Variations in quarterly operating results due to factors such as changes in demand for our products and changes in our mix of revenues and costs may cause our Class A common stock price to decline. Growing market acceptance of open source software could cause a decline in our revenues and operating margins. Because our product offerings are sold internationally, we are subject to risks of conducting business in foreign countries. We derive a significant portion of our revenue from sales to various agencies of the U.S. government which has special rights unlike other customers and exposes us to additional risks that could have a material adverse effect on our business, financial condition and operating results. Because several of our competitors have significantly greater resources than we do, we could lose customers and market share. While we characterize a significant portion of our revenue as being recurring there is no guarantee that we will actually achieve this revenue. The loss of key personnel or any inability to attract and retain additional personnel could harm our business. Our past and future acquisitions of companies or technologies could prove difficult to integrate, disrupt our business, dilute stockholder value or adversely affect operating results or the market price of our Class A common stock. One of the suppliers of wireless services to our Enterprise division has been sued for patent infringement, which raises uncertainty regarding its ability to continue to supply us with these services. An interruption in the supply of products and services that we obtain from third parties could cause a decline in sales of the services from the Enterprise division, and products we purchase to avoid shortages may become obsolete before we can use them. Because the wireless data industry is a new and rapidly evolving market, our product and service offerings could become obsolete unless we respond effectively and on a timely basis to rapid technological changes. Concerns about personal privacy and commercial solicitation may limit the growth of mobile location services and reduce demand for our products and services. Because many providers are not in compliance with current regulatory mandates and because our industry is undergoing rapid technological and regulatory change, our future performance is uncertain. Our E9-1-1 business is dependent on state and local governments and the regulatory environment for Voice over Internet Protocol (VoIP) services is developing. Because the industries which we serve are currently in a cycle of consolidation, the number of customers may be reduced which could result in a loss of revenue for our business. Because our software may contain defects or errors, our sales could decrease if these defects or errors adversely affect our reputation or delays shipments of our software. If we are unable to integrate our products with wireless service providers systems we may lose sales to competitors. Because our systems may be vulnerable to systems failures and security risks, we may incur significant costs to protect against the threat of these problems. If mobile equipment manufacturers do not overcome capacity, technology and equipment limitations, we may not be able to sell our products and services. Because the market for most mobile content delivery and mobile location products is new, our future success is uncertain. If wireless handsets pose health and safety risks, we may be subject to new regulations and demand for our products and services may decrease. If we are unable to protect our intellectual property rights or are sued by third parties for infringing upon intellectual property rights, we may incur substantial costs. Risks Related to Our Capital Structure and Common Stock A majority of our Class A common stock is beneficially owned by a small number of holders, and those holders could thereby transfer control of us to a third party without anyone else s approval or prevent a third party from acquiring us. Our governing corporate documents contain certain anti-takeover provisions that could prevent a change of control that may be favorable to shareholders. Because this report contains forward-looking statements, it may not prove to be accurate.

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1111665--3/16/2006--TELECOMMUNICATION_SYSTEMS_INC_/FA/