1112920--3/9/2006--GLOBALSCAPE

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{product, market, service}

{stock, price, share}

{personnel, key, retain}

{system, service, information}

{operation, international, foreign}

{stock, price, operating}

{product, liability, claim}

{provision, law, control}

{control, financial, internal}

{property, intellectual, protect}

{cost, regulation, environmental}

{product, candidate, development}

{competitive, industry, competition}

GlobalSCAPE s new product introductions may fail to generate sufficient revenue. GlobalSCAPE may fail to develop or license the intellectual property needed to launch new products. GlobalSCAPE may not be able to develop its sales force as needed to successfully market its new products. If GlobalSCAPE loses key personnel it may not be able to execute its business plan. We face significant competition and competition in our market is likely to increase. GlobalSCAPE utilizes open source software in some of its products. Future government regulation may increase our cost of doing business and reduce demand for our products If an effective internet sales tax scheme is implemented, demand for our products could decrease. Taxes imposed by foreign governments may decrease demand for our products in those markets. GlobalSCAPE may not be able to compete effectively with larger, better-positioned companies, resulting in lower margins and loss of market share. It may be difficult for GlobalSCAPE to recruit software developers and other technical and management personnel because GlobalSCAPE is a relatively small company. GlobalSCAPE s ability to develop its software will be seriously impaired if it is not able to use its foreign subcontractors. GlobalSCAPE may incur losses as it attempts to expand its business. GlobalSCAPE s operations are vulnerable to security breaches that could harm the quality of its products and services or disrupt its ability to deliver its products and services. GlobalSCAPE s products may expose customers to invasion of privacy, causing customer dissatisfaction. GlobalSCAPE s products may contain defects that may be costly to correct, delay market acceptance of its products and damage its reputation. GlobalSCAPE s products rely on the prevalence of Windows-based operating systems and if that technology fails to maintain or improve market share, GlobalSCAPE s products would not be as marketable. GlobalSCAPE s internal controls are limited, increasing the risk of employee mismanagement or error. Risks Related to Stock Ownership Our stock is a penny stock, which makes it more difficult to sell. Our stock price is/may be volatile. We do not pay dividends on our common stock. Our principal shareholders may control our management decisions. Anti-takeover provisions in GlobalSCAPE s charter and Delaware law could inhibit others from acquiring GlobalSCAPE. Stockholders ownership of GlobalSCAPE stock may be significantly diluted, affecting the value of the stock.

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1112920--3/9/2006--GLOBALSCAPE_INC