1183941--12/29/2006--ACTIVIDENTITY

related topics

{cost, operation, labor}

{stock, price, operating}

{customer, product, revenue}

{product, market, service}

{operation, international, foreign}

{regulation, change, law}

{acquisition, growth, future}

{control, financial, internal}

{personnel, key, retain}

{tax, income, asset}

{property, intellectual, protect}

{system, service, information}

{product, candidate, development}

{condition, economic, financial}

Risk Factors That May Affect Results of Operations and Financial Condition We have a history of losses and we expect to experience losses in the foreseeable future. Our cost-reduction initiatives may not result in the anticipated savings or more efficient operations and may harm our long-term viability. It is difficult to integrate acquired companies, products and technologies into our operations and our inability to do so could greatly lessen the value of any such acquisitions. We have recorded significant write-downs in recent periods for impairment of acquired intangible assets and may have similar write-downs in future periods. If the members of our management team are unable to work together effectively or if there is additional turnover in senior management, our ability to manage and expand our business will suffer. Employee turnover could adversely impact our revenues, costs and productivity. Increased costs associated with corporate governance compliance may significantly impact the results of our operations. We derive revenue from only a limited number of products and we do not have a diversified product base. Our customer base is highly concentrated and the loss of any one of these customers or delay in anticipated orders could adversely affect our business. Our quarterly results are difficult to predict, and if we miss quarterly financial expectations, our stock price could decline. We have a long and often complicated sales cycle, which can result in significant revenue fluctuations from quarter to quarter. The market for our products is still developing and if the industry adopts standards or a platform different from our platform, then our competitive position would be negatively affected. We may be adversely affected by operating in international markets. Failure to fully implement new information systems may adversely affect our business. We rely on strategic relationships with other companies to develop and market our products. If we are unable to enter into additional relationships, or if we lose an existing relationship, our business could be harmed. Our operating results could suffer if we are subject to an intellectual property infringement claim.

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1183941--12/29/2006--ACTIVIDENTITY_CORP