1335239--4/16/2010--Epazz

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{product, market, service}

{property, intellectual, protect}

{stock, price, share}

{control, financial, internal}

{stock, price, operating}

{system, service, information}

{acquisition, growth, future}

{personnel, key, retain}

{investment, property, distribution}

{debt, indebtedness, cash}

{provision, law, control}

{product, liability, claim}

{interest, director, officer}

{competitive, industry, competition}

{financial, litigation, operation}

{condition, economic, financial}

{customer, product, revenue}

{regulation, government, change}

RISKS RELATED TO OUR BUSINESS We owed $958,487 as of December 31, 2009, to repay our liabilities and we may need to raise additional funds in the future to repay these obligations and continue our op erations and these funds may not be available on acceptable terms or at all. Failure to raise additional funds could require us to substantially reduce or terminate our operations. The Note payable in connection with the acquisition of DFI and PRMI is secured by a security interest in substantially all of the assets of DFI, PRMI and the Company. The Note payable in connection with the acquisition of AutoHire Software is secured by a security interest in all of the subscription agreements of customers relating to the AutoHire Software entered into prio r to February 1, 2010. We have a history of losses and we anticipate that our expenses will dramatically increase as we execute our business plan. Thus, we will likely experience continued losses in the near future and may not ever achieve or maintain profitability. Shares eligible for future sale may adversely affect the market price of our common stock, as the future sale of a substantial am ount of outstanding stock in the public marketplace could reduce the price of our common stock. Additionally, shares issued in our planned offering will cause immediate and substantial dilution to our existing shareholders. Our success and the success of DFI and PRMI depend in part upon our ability to develop new products and enhance our existing products. Failure to successfully introduce new or enhanced products to the market may adversely affect our business. Our operating results, including the operating results of DFI and PRMI, are difficult to predict and fluctuate substantially from quarter to quarter and year to year, which may increase the difficulty of financial planning and forecasting and may result in declines in our stock price. Defects or errors in our software could adversely affect our reputation, result in significant costs to us and impair our ability to sell our software. Our market is subject to rapid technological change and if we fail to continually enhance our products and services in a timely manner, our revenue and business would be harmed. Our management has no senior management experience in the software industry which may hinder our ability to manage our operations. Significant unauthorized use of our products would result in material loss of potential revenues and our pursuit of protection for our intellectual property rights could result in substantial costs to us. We may face product liability claims from our future customers which could lead to additional costs and losses to the Company. We may not be able to respond to technological changes with new software applications, which could materially adversely affect our sales and profitability. Our failure to offer high quality customer support services could harm our reputation and could materially adversely affect our sales of software applications and results of operations. We expect to rely on off-shore independent contract service providers and, as a result, will be exposed to potential service problems from those providers. Our business could be harmed if our independent third party contractors violate labor or other laws. Our future success depends on ou r ability to respond to changing customer demands, identify and interpret trends and successfully market new products. Our business and the success of our products could be harmed if we are unable to establish and maintain a brand image. We may fail in introducing and promoting our products to the software market, which will have an adverse effect on our ability to generate revenues. We will face intense competition, including competition from companies with significantly greater resources than ours, and if we are unable to compete effectively with these companies, our business could be harmed. We depend on key personnel to manage our business effectively in a rapidly changing market, and if we are unable to retain existing personnel, our business could be harmed. The disr uption, expense and potential liability associated with unanticipated future litigation against us could have a material adverse effect on our business, results of operations and financial condition. Protection of our intellectual property is limited, and any misuse of our intellectual property by others could materially adversely affect our sales and results of operations. We may incur significant litigation expenses protecting our intellectual property or defending our use of intellectual property, which may have a material adverse effect on our cash flow and results of operations. Our competitors may develop similar, non-infringing products that adversely affect our ability to generate revenues. Claims that we misuse the intellectual property of others could subject us to significant liability and disrupt our business, which could materially adversely affect our results of operations and financial condition. Our business may be negativ ely impacted as a result of changes in the economy and corporate and institutional spending. We may e ngage in future acquisitions or investments that present many risks, and we may not realize the anticipated financial and strategic goals for any of these transactions. We may be unable to scale our operations successfully and fail to attain our planned growth. RISKS RELATED TO OUR CAPITAL STRUCTURE There is currently a limited public market for our securities. Moving forward, our stock price may be volatile and illiquid. The price of our common stock may be volatile. We may experience a decline in revenue or volatility in our operating results, which may adversely affect the market price of our common stock. The President and Chief Executive officer of the Company has significant influence over our company. If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline. Shareholders may be diluted significantly through our efforts to obtain financ ing and satisfy obligations through the issuance of additional shares of our common stock. If we are late in filing our Quarterly or Annual Reports with the SEC, we may be de-listed from the Over-The-Counter Bulletin Board. In the future, we will incur significant increased costs as a result of operating as a fully reporting company in connection with Section 404 of the Sarbanes Oxley Act, and our management will be required to devote substantial time to compliance initiatives. State securities laws may limit secondary trading, which may r estrict the States in which and conditions under which you can sell shares. Investors may face significant restrictions on the resale of our common stock due to federal regulations of penny stocks.

Full 10-K form ▸

1335239--4/16/2010--Epazz_Inc