1125536--3/31/2006--CONVERA

related topics

{property, intellectual, protect}

{system, service, information}

{control, financial, internal}

{stock, price, operating}

{product, market, service}

{regulation, government, change}

{operation, international, foreign}

{acquisition, growth, future}

{personnel, key, retain}

{tax, income, asset}

{provision, law, control}

{stock, price, share}

{interest, director, officer}

We have had a history of operating losses and will likely incur future losses; if our losses continue and we are unable to achieve profitability, our stock price will likely suffer. Our ability to achieve profitability is highly dependent on our Excalibur Web offering and if Excalibur fails to achieve market acceptance we will be unable to grow our business and achieve profitability. While we believe we will have sufficient funds for our operations for at least the next twelve months, it is possible that we will during or after that time. We may need additional capital in the future, and it may not be available on acceptable terms, or at all, and if we do not receive any necessary additional capital, it could harm our financial condition and future prospects. We experience quarterly fluctuations in our operating results, which may adversely affect our stock price We are in an extremely competitive market, and if we fail to compete effectively or respond to rapid technological change, our revenues and market share will be adversely affected We design our products to work with certain systems and changes to these systems may render our products incompatible with these systems, and we may be unable to sell our products Our software products are complex and may contain errors that could damage our reputation and decrease sales We derive a significant portion of our revenues from sales to U.S. Government agencies, which are subject to budget cuts and, consequently, a change in the size and timing of our U.S. Government contracts may materially affect our operating results As a U.S. Government contractor, we are subject to a number of procurement rules and regulations. We depend on international sales, particularly in the United Kingdom, and any economic downturn, changes in laws, changes in currency exchange rates or political unrest in the United Kingdom or in other countries could have a material adverse effect on our business Our Excalibur Web offering relies on a third party hosting facility, and any failure or interruption in the services provided by this third party could harm our ability to operate our business and damage our reputation. We depend on proprietary technology licensed from third parties; if we lose these licenses, it could delay shipments of products incorporating this technology and could be costly Because of the technical nature of our business, our intellectual property is extremely important to our business, and adverse changes to our intellectual property could harm our competitive position We may in the future be subject to intellectual property rights claims, which are costly to defend, could require us to pay damages and could limit our ability to use certain technologies in the future. We depend on our key personnel, the loss of whom would adversely affect our business, and we may have difficulty attracting and retaining skilled employees Our stock price may fluctuate which may make it difficult to resell shares of our stock We may not be able to use net operating loss carryforwards Our amended and restated certificate of incorporation, bylaws, ownership and Delaware law contain provisions that could discourage a third party from acquiring us and consequently decrease the market value of an investment in our stock Allen Holding Inc. and related parties exercise voting control over a significant percentage of our outstanding shares, and our other shareholders may not have an effective say in any matters upon which our shareholders vote

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1125536--3/31/2006--CONVERA_CORP