897893--5/12/2008--PEERLESS_SYSTEMS

related topics

{property, intellectual, protect}

{acquisition, growth, future}

{customer, product, revenue}

{product, market, service}

{operation, international, foreign}

{product, candidate, development}

{system, service, information}

{stock, price, share}

{stock, price, operating}

{personnel, key, retain}

{interest, director, officer}

We have certain indemnification obligations under the Asset Purchase Agreement with KMC that might result in us not receiving all of the proceeds of the asset sale. Our current growth strategy depends in part on our ability to successfully invest in and/or acquire the assets or businesses of other companies. Our failure to complete transactions that accomplish these objectives could reduce our earnings and slow our growth. The Adobe License Agreement is set to expire on June 30, 2008, and we do not expect that this agreement will be renewed. We may be unable to meet certain conditions of closing the Prism transaction which will slow our realization of certain financial and strategic goals. We may be unsuccessful in realizing our financial and strategic objectives with respect to our acquisition of substantially all of the assets of Prism. We rely on relationships with certain customers and any adverse change in those relationships will harm our business. We are involved in a contract dispute, which, if not remedied, could result in the loss of the Adobe agreement and could harm our business. If we are not in compliance with our license agreements, we may lose our rights to sublicense technology; our competitors are aggressively pursuing the sale of licensed third party technology. We may become subject to litigation as a result of an intellectual property infringement claim asserted by Screentone Systems Corporation against one of our customers. If we enter new markets or distribution channels this could result in higher operating expenses that may not be offset by increased revenue. Our licensing revenue is subject to significant fluctuations which may materially and adversely affect our operating results. Our revenue from engineering services is subject to significant fluctuations. The future demand for our products is uncertain. The industry for imaging systems for digital document products involves intense competition and rapid technological changes, and our business may suffer if our competitors develop superior technology. If we fail to adequately protect our intellectual property or face a claim of intellectual property infringement by a third party, we could lose our intellectual property rights or be liable for damages. Our international activities may expose us to risks associated with international business. We rely on the services of our executive officers and other key personnel, whose knowledge of our business and industry would be extremely difficult to replace. Our stock price may experience extreme price and volume fluctuations. Failure to maintain our Nasdaq listing would adversely affect the trading price and liquidity of our common stock.

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897893--5/12/2008--PEERLESS_SYSTEMS_CORP