1168195--2/28/2008--SOURCEFIRE

related topics

{customer, product, revenue}

{product, market, service}

{system, service, information}

{property, intellectual, protect}

{acquisition, growth, future}

{stock, price, operating}

{operation, international, foreign}

{personnel, key, retain}

{stock, price, share}

{provision, law, control}

{control, financial, internal}

{financial, litigation, operation}

{capital, credit, financial}

New competitors could emerge or our customers or distributors could internally develop alternatives to our products, and either such development could impair our sales. Our quarterly operating results are likely to vary significantly and be unpredictable, in part because of the purchasing and budget practices of our customers, which could cause the trading price of our stock to decline. Economic, market and political conditions may adversely affect our revenue growth and our efforts to achieve profitability. The market for network security products is rapidly evolving, and the complex technology incorporated in our products makes them difficult to develop. If we do not accurately predict, prepare for and respond promptly to technological and market developments and changing customer needs, our competitive position and prospects will be harmed. If our new products and product enhancements do not achieve sufficient market acceptance, our results of operations and competitive position will suffer. If existing customers do not make subsequent purchases from us or if our relationships with our largest customers are impaired, our revenue could decline. If we cannot attract sufficient government agency customers, our revenue and competitive position will suffer. We are subject to risks of operating internationally that could impair our ability to grow our revenue abroad. In the future, we may not be able to secure financing necessary to operate and grow our business as planned. Our inability to acquire and integrate other businesses, products or technologies could seriously harm our competitive position. If other parties claim commercial ownership rights to Snort or ClamAV, our reputation, customer relations and results of operations could be harmed. Our products contain third party open source software, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products. We could be prevented from selling or developing our products if the GNU General Public License and similar licenses under which our products are developed and licensed are not enforceable or are modified so as to become incompatible with other open source licenses. Efforts to assert intellectual property ownership rights in our products could impact our standing in the open source community, which could limit our product innovation capabilities. Our proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our products without compensating us. Claims that our products infringe the proprietary rights of others could harm our business and cause us to incur significant costs. We rely on software licensed from other parties, the loss of which could increase our costs and delay software shipments. Defects, errors or vulnerabilities in our software products would harm our reputation and divert resources. Our networks, products and services are vulnerable to, and may be targeted by, hackers. We utilize a just-in-time contract manufacturing and inventory process, which increases our vulnerability to supply disruption. We depend on a single source to manufacture our enterprise class intrusion sensor product; if that sole source were to fail to satisfy our requirements, our sales revenue would decline and our reputation would be harmed. Our expected transition to a new chief executive officer could be disruptive to our business, and our inability to hire or retain other key personnel would also slow our growth. We depend on resellers and distributors for our sales; if they fail to perform as expected, our revenue will suffer. If we do not continue to establish and effectively manage our OEM relationships, our revenue could decline. Our inability to effectively manage our expected headcount growth and expansion and our additional obligations as a public company could seriously harm our ability to effectively run our business. The price of our common stock may be subject to wide fluctuations. We and certain of our officers and directors have been named as co-defendants in, and are the subject of, certain legal proceedings which may result in substantial costs and divert management s attention and resources. Sales of substantial amounts of our common stock in the public markets, or the perception that they might occur, could reduce the price that our common stock might otherwise attain. As a result of becoming a public company, we are obligated to develop and maintain proper and effective internal controls over financial reporting and are subject to other requirements that will be burdensome and costly. We may not complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock. Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

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1168195--2/28/2008--SOURCEFIRE_INC