1168195--3/12/2010--SOURCEFIRE

related topics

{customer, product, revenue}

{system, service, information}

{property, intellectual, protect}

{product, market, service}

{stock, price, operating}

{acquisition, growth, future}

{stock, price, share}

{control, financial, internal}

{provision, law, control}

{regulation, change, law}

{financial, litigation, operation}

{personnel, key, retain}

{regulation, government, change}

{operation, international, foreign}

New competitors could emerge and could impair our sales. We achieved profitability on an annual basis for the first time in 2009, which we may not be able to maintain. 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. Federal and state governmental agencies have contributed to our revenue growth and have become important customers for us. If we cannot attract sufficient government agency customers, our revenue and competitive position will suffer. If we do not continue to establish and effectively manage our indirect distribution channels, or if our resellers, distributors and other partners fail to perform as expected, our revenue could suffer. We are subject to risks of operating internationally that could impair our ability to grow our revenue abroad. 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 could be harmed. If our new products and product enhancements do not achieve sufficient market acceptance, our results of operations and competitive position could suffer. If existing customers do not make subsequent purchases from us or renew their support arrangements with us, or if our relationships with our largest customers are impaired, our revenue could decline. Defects, errors or vulnerabilities in our products could harm our reputation and business and divert our resources. Our networks, products and services may be targeted by hackers. We may acquire additional businesses, products or technologies as part of our long-term growth strategy, and such acquisitions may not ultimately be successful or may not result in expected strategic benefits. In the future, we may not be able to secure financing necessary to make acquisitions or to operate and grow our business as planned. If other parties claim commercial ownership rights to Snort or ClamAV, our reputation, customer relations and results of operations could be harmed. We rely on software licensed from other parties, the loss of which could increase our costs and delay delivery of our products. Our inability to hire or retain key personnel, or to effectively manage headcount increases, could impair our intended growth. Our business is subject to corporate governance, public disclosure, accounting and tax requirements that have increased both our costs and the risk of noncompliance. Any material disruption or problem with the operation of our information systems may adversely impact our business, operating processes and internal controls. Potential uncertainty resulting from unsolicited acquisition proposals and related matters may adversely affect our business. Risks Relating to Our Intellectual Property and Litigation Our products contain 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. Our intellectual property rights may be difficult to enforce, which could enable others to compete with us or to copy or use aspects of our products without compensating us. 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. Claims that our products infringe the proprietary rights of others could harm our business and cause us to incur significant costs. Future litigation could have a material adverse impact on our results of operations, financial condition and liquidity. We primarily utilize a just-in-time contract manufacturing and inventory process and depend on a limited number of manufacturers of our hardware products, which increases our vulnerability to supply disruption. In some cases, we purchase products from contract manufacturers and hold them in inventory pending sale to our customers. If demand for these products does not meet our expectations, or if these products become obsolete, we could be required to write down the value of our inventory, which could adversely affect our results of operations. Risks Relating to Our Common Stock The price of our common stock may be subject to wide fluctuations. 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.

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1168195--3/12/2010--SOURCEFIRE_INC