1325460--3/17/2008--ATS

related topics

{regulation, government, change}

{stock, price, share}

{acquisition, growth, future}

{interest, director, officer}

{cost, operation, labor}

{stock, price, operating}

{personnel, key, retain}

{financial, litigation, operation}

{tax, income, asset}

{cost, contract, operation}

{property, intellectual, protect}

{debt, indebtedness, cash}

{competitive, industry, competition}

{customer, product, revenue}

Risks Associated with Our Acquisitions Certain of our key personnel who have joined us and will join us as a result of our acquisitions may be unfamiliar with the requirements of operating a public company, which may adversely affect our operations, including significantly reducing our revenues and net income, if any. We may not be successful in identifying acquisition candidates and, if we undertake acquisitions, they could be expensive, increase our costs or liabilities, or disrupt our business. Additionally, if we are unable to successfully integrate companies we acquire, our revenue and operating results may be impaired. Our stockholders are dependent on a single business. As a result of our acquisitions, we have substantial amounts of goodwill and intangible assets, and changes in future business conditions could cause these assets to become impaired, requiring substantial write-downs that would adversely affect our financial results. If the benefits of our various acquisitions do not meet the expectations of financial or industry analysts, the market price of our common stock may decline. Members of our board of directors may have conflicts of interest that could hinder our ability to make acquisitions. We may not have sufficient financial resources to carry out our acquisition strategy; we may need to use our stock to fund acquisitions to a greater extent than we originally intended. If third parties bring claims against us or if any of the entities we have acquired have breached any of their representations, warranties or covenants set forth in the acquisition agreement for each respective transaction, we may not be adequately indemnified for any losses arising therefrom. Loss of our President and Chief Executive Officer could hurt our operations and our expansion efforts. Risks Related to Our Business and Operations The loss or impairment of ATSI's relationship with the U.S. government and its agencies could adversely affect our business. Changes by the U.S. government in its spending priorities may cause a reduction in the demand for the products or services that we may ultimately offer, which could adversely affect our business. We are required to comply with complex procurement laws and regulations, and the cost of compliance with these laws and regulations and penalties and sanctions for any non-compliance could adversely affect our business. The U.S. government may reform its procurement or other practices in a manner adverse to us. Government contracts are usually awarded through a competitive bidding process that entails risks not present in other circumstances. Restrictions on or other changes to the U.S. government's use of service contracts may harm our operating results. Our contracts with the U.S. government and its agencies are subject to audits and cost adjustments. A portion of our business depends upon obtaining and maintaining required security clearances, and our failure to do so could result in termination of certain of our contracts or cause us to be unable to bid or rebid on certain contracts. We may not receive the full amounts authorized under the contracts included in our backlog, which could reduce our revenue in future periods. Without additional Congressional appropriations, some of the contracts included in our backlog will remain unfunded, which could significantly harm our prospects. Loss of our GSA contracts or GWACs would impair our ability to attract new business. U.S. government contracts often contain provisions that are unfavorable, which could adversely affect our business. Our failure to comply with complex procurement laws and regulations could cause us to lose business and subject us to a variety of penalties. The markets we compete in are highly competitive, and many of the companies we compete against have substantially greater resources. Our failure to attract and retain qualified employees, including our senior management team, may adversely affect our business. Our debt includes covenants that restrict our activities and create the risk of defaults, which could impair the value of our stock. A default under our debt could lead to a bankruptcy or other financial restructuring that would significantly adversely affect the value of our stock. If we are unable to fund our capital expenditures, we may not be able to continue to develop new offerings and services, which would have a material adverse effect on our business. Our employees may engage in misconduct or other improper activities, which could harm our business. Our failure to obtain and maintain necessary security clearances may limit our ability to perform classified work for government clients, which could cause us to lose business. We may be unable to protect or enforce our intellectual property rights. We may be harmed by intellectual property infringement claims. Our quarterly revenue, operating results and profitability could be volatile. If subcontractors on our prime contracts are able to secure positions as prime contractors, we may lose revenue. We sometimes incur costs before a contract is executed or appropriately modified. To the extent a suitable contract or modification is not later signed and these costs are not reimbursed, our revenues and profits will be reduced. We may lose money or incur financial penalties if we agree to provide services under a performance-based contract arrangement. If we are unable to manage our growth, our business may be adversely affected. Risks Related to Our Capital Structure and Our Warrants Because we do not currently intend to pay dividends on our common stock, stockholders will benefit from an investment in our common stock only if it appreciates in value. The significant number of our outstanding warrants may place a ceiling on, or otherwise adversely affect, the value of our common stock. If certain stockholders exercise their registration rights, it may have an adverse effect on the market price of our common stock. If we are unable to maintain a current prospectus relating to the common stock underlying our warrants, our warrants may be worthless. The warrant agreement governing our warrants permits us to redeem the warrants and it is possible that we could redeem the warrants at a time when a prospectus has not been current, resulting in the warrant holder receiving less than fair value of the warrant or the underlying common stock. Over-the-Counter Bulletin Board quotation of our securities limits the liquidity and price of our securities. Risks Associated with Limited Experience as a Public Company This is the first full year of ATSI operating as a public company. Fulfilling our obligations incident to being a public company will be expensive and time consuming.

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1325460--3/17/2008--ATS_CORP