929940--9/28/2006--ASPEN_TECHNOLOGY_INC

related topics

{product, market, service}

{stock, price, operating}

{stock, price, share}

{system, service, information}

{personnel, key, retain}

{property, intellectual, protect}

{regulation, change, law}

{acquisition, growth, future}

{financial, litigation, operation}

{provision, law, control}

{capital, credit, financial}

{control, financial, internal}

{loss, insurance, financial}

{gas, price, oil}

{operation, international, foreign}

{product, liability, claim}

Risks Related to our Business Fluctuations in our quarterly revenues, operating results and cash flow may cause the market price of our common stock to fall. Our lengthy sales cycle makes it difficult to predict quarterly revenue levels and operating results. We derive a majority of our total revenues from customers in the oil and gas, chemicals, petrochemicals and petroleum industries, which are highly cyclical, and our operating results may suffer if these industries experience an economic downturn. We have identified four material weaknesses in our internal control over financial reporting as of June 30, 2006 that, if not remedied effectively, could result in material misstatements in our financial statements for future periods. We face risks related to securities litigation and investigations that could have a material adverse effect on our business, financial condition and results of operations. New accounting standards or interpretations of existing accounting standards could adversely affect our operating results. We face increased competition and continuing obligations as a result of the sale of our operator training business and Hyprotech intellectual property to Honeywell and the settlement of proceedings with KBC Advanced Technologies, which could cause us to lose market share and otherwise harm our operating results. If economic conditions and the markets for our products do not continue to improve, sales of our product lines, particularly our manufacturing/supply chain product suites, will be adversely affected. If we do not continue to make the technological advances required by the marketplace, our business could be seriously harmed. If we are unable to successfully market our products to senior executives of potential customers, our revenue growth may be limited. If we are unable to develop or maintain strategic alliance relationships, our revenue growth may be harmed. We may suffer losses on fixed-price engagements. Our business may suffer if we fail to address the challenges associated with international operations. We may not be able to protect our intellectual property rights, which could make us less competitive and cause us to lose market share. Third-party claims that we infringe upon the intellectual property rights of others may be costly to defend or settle and could damage our business. Because some of our software products incorporate technology licensed from, or provided by, third parties, the loss of our right to use that technology or defects in that third party technology could harm our business. Our software is complex and may contain undetected errors. We may be subject to significant expenses and damages because of liability claims. Implementation of our products can be difficult and time-consuming, and customers may be unable to implement our products successfully or otherwise achieve the benefits attributable to our products. If we are not successful in attracting and retaining management team members and other highly qualified individuals in our industry, we may not be able to successfully implement our business strategy. Recently enacted and proposed changes in securities laws and regulations may increase our costs. Risks Related to our Common Stock Our common stock may experience substantial price and volume fluctuations. Our common stockholders may experience further dilution as a result of provisions contained in our outstanding Series D preferred and warrants. We are obligated to register for public sale shares of common stock issuable pursuant to our outstanding Series D preferred and warrants, and sales of those shares may result in a decrease in the price of our common stock. We may need to raise capital in the future and may not be able to secure adequate funds on terms acceptable to us or at all. The holders of our Series D preferred and WB and WD warrants own a substantial portion of our capital stock that may afford them significant influence over our affairs. Our corporate documents and provisions of Delaware law may prevent a change in control or management that stockholders may consider desirable.

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929940--9/28/2006--ASPEN_TECHNOLOGY_INC_/DE/