1366246--3/13/2009--GLU_MOBILE

related topics

{customer, product, revenue}

{product, market, service}

{operation, international, foreign}

{control, financial, internal}

{capital, credit, financial}

{personnel, key, retain}

{property, intellectual, protect}

{acquisition, growth, future}

{competitive, industry, competition}

{debt, indebtedness, cash}

{investment, property, distribution}

{stock, price, share}

{provision, law, control}

{stock, price, operating}

We have a history of net losses, may incur substantial net losses in the future and may not achieve profitability. We have a limited operating history in an emerging market, which may make it difficult to evaluate our business. Our financial results could vary significantly from quarter to quarter and are difficult to predict, particularly in light of the current economic environment, which in turn could cause volatility in our stock price. The markets in which we operate are highly competitive, and many of our competitors have significantly greater resources than we do. We may need to raise additional capital or borrow funds to grow our business, and we may not be able to raise capital or borrow funds on terms acceptable to us or at all. Our stock price has fluctuated and declined significantly since our IPO in March 2007, and may continue to fluctuate, may not rise and may decline further, which could cause our stock to be delisted from trading on the NASDAQ Global Market. We have outstanding debt obligations and may incur additional debt in the future, which could adversely affect our financial condition and results of operations. A continued slowdown in sales of mobile devices, particularly the devices for our carrier-based business which represents the vast majority of our revenues, could have a material adverse impact on our revenues, financial position and results of operations. Changes in foreign exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results. Some provisions in our certificate of incorporation, bylaws and the terms of some of our licensing and distribution agreements and our credit facility may deter third parties from seeking to acquire us. Failure to renew our existing brand and content licenses on favorable terms or at all and to obtain additional licenses would impair our ability to introduce new mobile games or to continue to offer our current games based on third-party content. We currently rely primarily on wireless carriers to market and distribute our games and thus to generate our revenues. In particular, subscribers of Verizon Wireless represented 21.4% of our revenues in 2008. The loss of or a change in any significant carrier relationship, including their credit worthiness, could materially reduce our revenues and adversely impact our cash position. End user tastes are continually changing and are often unpredictable; if we fail to develop and publish new mobile games that achieve market acceptance, our sales would suffer. A shift of technology platform by wireless carriers and mobile handset manufacturers could lengthen the development period for our games, increase our costs and cause our games to be of lower quality or to be published later than anticipated. Inferior deck placement would likely adversely impact our revenues and thus our operating results and financial condition. We have depended on no more than ten mobile games for a majority of our revenues in recent fiscal periods. If these games do not continue to succeed or we do not release highly successful new games, our revenues would decline. If we are unsuccessful in establishing and increasing awareness of our brand and recognition of our mobile games or if we incur excessive expenses promoting and maintaining our brand or our games, our potential revenues could be limited, our costs could increase and our operating results and financial condition could be harmed. We face added business, political, regulatory, operational, financial and economic risks as a result of our international operations and distribution, any of which could increase our costs and hinder our growth. Wireless carriers generally control the price charged for our mobile games and the billing and collection for sales of our mobile games and could make decisions detrimental to us. If we fail to deliver our games at the same time as new mobile handset models are commercially introduced, our sales may suffer. Future mobile handsets may significantly reduce or eliminate wireless carriers control over delivery of our games and force us to rely further on alternative sales channels, which, if not successful, could require us to increase our sales and marketing expenses significantly. If a substantial number of the end users that purchase our games by subscription change mobile handsets or if wireless carriers switch to subscription plans that require active monthly renewal by subscribers, our sales could suffer. If we fail to maintain and enhance our capabilities for porting games to a broad array of mobile handsets, our attractiveness to wireless carriers and branded content owners will be impaired, and our sales and financial results could suffer. Our industry is subject to risks generally associated with the entertainment industry, any of which could significantly harm our operating results. If one or more of our games were found to contain hidden, objectionable content, our reputation and operating results could suffer. Our business and growth may suffer if we are unable to hire and retain key personnel. Acquisitions could result in operating difficulties, dilution and other harmful consequences. If we fail to maintain an effective system of internal controls, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which could negatively impact the price of our stock. If we do not adequately protect our intellectual property rights, it may be possible for third parties to obtain and improperly use our intellectual property and our business and operating results may be harmed. Our business is subject to increasing regulation of content, consumer privacy, distribution and online hosting and delivery in the key territories in which we conduct business. If we do not successfully respond to these regulations, our business may suffer. Third parties may sue us for intellectual property infringement, which, if successful, may disrupt our business and could require us to pay significant damage awards. Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management s attention and affect our ability to attract and retain qualified members for our board of directors.

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1366246--3/13/2009--GLU_MOBILE_INC