873538--3/15/2006--OPEN_SOLUTIONS

related topics

{system, service, information}

{customer, product, revenue}

{acquisition, growth, future}

{debt, indebtedness, cash}

{product, market, service}

{property, intellectual, protect}

{control, financial, internal}

{personnel, key, retain}

{regulation, change, law}

{stock, price, operating}

{stock, price, share}

{tax, income, asset}

{operation, international, foreign}

{regulation, government, change}

{financial, litigation, operation}

{cost, operation, labor}

Consolidation in the banking and financial services industry could adversely impact our business by eliminating a number of our existing and potential clients. Our success depends on decisions by potential clients to replace their legacy computer systems, and their failure to do so would adversely affect demand for our products and services. If we fail to expand our outsourcing business and other sources of recurring revenue, we may be unable to successfully implement our business strategy. We have had several profitable quarters, but we may never achieve continued sustained profitability. If we fail to adapt our products and services to changes in technology or in the marketplace, we could lose existing clients and be unable to attract new business. We encounter a long sales and implementation cycle requiring significant capital commitments by our clients which they may be unwilling or unable to make. We utilize certain key technologies from third parties, and may be unable to replace those technologies if they become obsolete or incompatible with our products. We operate in a competitive business environment, and if we are unable to compete effectively, we may face price reductions and decreased demand for our products. An impairment of the value of our goodwill, capitalized software costs and other intangible assets could significantly reduce our earnings. Our quarterly revenues, operating results and profitability will vary from quarter to quarter, which may result in volatility in our stock price. We face a lengthy sales cycle for our core software, which may cause fluctuations in our revenues from quarter to quarter. If we do not retain our senior management and other key employees, we may not be able to successfully implement our business strategy. Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our senior subordinated convertible notes and our bank financing. Our level of fixed expenses may cause us to incur operating losses if we are unsuccessful in maintaining our current revenue levels. We rely on our direct sales force to generate revenue, and may be unable to hire additional sales personnel in a timely manner. We have entered into and may continue to enter into or seek to enter into business combinations and acquisitions which may be difficult to integrate, disrupt our business, dilute stockholder value or divert management attention. We receive a portion of our revenues from relationships with strategic marketing partners, and if we lose one or more of these marketing partners or fail to add new ones it could have a negative impact on our business. We rely on internally developed software and systems as well as third-party products, any of which may contain errors and bugs. We could be sued for contract or product liability claims and lawsuits may disrupt our business, divert management s attention or have an adverse effect on our financial results. Government regulation of our business could cause us to incur significant expenses, and failure to comply with applicable regulations could make our business less efficient or impossible. Our limited ability to protect our proprietary technology and other rights may adversely affect our ability to compete. If we are found to infringe the proprietary rights of others, we could be required to redesign our products, pay royalties or enter into license agreements with third parties. We may not have sufficient funds available to pay amounts due under our senior subordinated convertible notes. We face risks associated with our Canadian operations that could harm our financial condition and results of operations. To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. If we fail to effectively manage our growth, our financial results could be adversely affected. The requirements of being a public company strain our resources and distract management. Failure to continue to comply with all of the requirements imposed by Section 404 of the Sarbanes-Oxley Act of 2002 could result in a negative market reaction. The design of other core vendors software or their use of financial incentives may make it more difficult for clients to use our complementary products. Operational failures in our outsourcing centers could cause us to lose clients. Unauthorized disclosure of data, whether through breach of our computer systems or otherwise, could expose us to protracted and costly litigation or cause us to lose clients. We may need additional capital in the future, which may not be available to us, and if we raise additional capital, it may dilute your ownership in us. The price of our common stock may be volatile. If a substantial number of shares of our common stock become available for sale and are sold in a short period of time, the market price of our common stock could decline significantly.

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873538--3/15/2006--OPEN_SOLUTIONS_INC