Any cancellations or delays in planned customer purchases of our products or services could materially adversely affect our net income and could substantially reduce quarterly revenues.

Because we do not know when, or if, potential customers will place orders and finalize contracts, we cannot accurately predict revenue and operating results for future quarters. If there is a downturn in potential customers’ businesses, the domestic economy in general, or in international economies where we derive substantial revenue, potential customers may defer or cancel planned purchases of our products. Because we base operating expenses on anticipated revenue levels and because a high percentage of our expenses are relatively fixed, delays in the recognition of revenues from even a limited number of product license transactions could cause significant variations in operating results from quarter to quarter, which could cause net income to fall significantly short of anticipated levels.

If a large number of the orders that are typically booked at the end of a quarter are not booked, our net income for that quarter could be substantially reduced.

Our software license revenue in any quarter often depends on orders booked and shipped in the last month, weeks or days of that quarter. At the end of each quarter, we typically have either minimal or no backlog of orders for the subsequent quarter. If a large number of orders or several large orders do not occur or are deferred, revenue in that quarter could be substantially reduced.

Seasonal trends in sales of our software products could adversely affect our quarterly operating results.

Our sales of software products have been affected by seasonal purchasing trends that materially affect our quarter-to-quarter operating results. We expect these seasonal trends to continue in the future. Revenue and operating results in our quarter ending December 31 are typically higher relative to other quarters because many customers make purchase decisions based on their calendar year-end budgeting requirements and because we measure our sales incentive plans for sales personnel on a calendar year basis. As a result, we have historically experienced a substantial decline in revenue in the first quarter of each fiscal year relative to the preceding quarter.

The lengthy sales cycle for products makes revenues susceptible to fluctuations.

Any delay in the sales cycle of a large transaction or a number of smaller transactions could result in significant fluctuations in our quarterly operating results. Our sales cycles typically take many months to complete and vary depending on the product, service or solution that is being sold. The length of the sales cycle may vary depending on a number of factors over which we have little or no control, including the size of a potential transaction and the level of competition that we encounter in our selling activities. The sales cycle can be further extended for sales made through third party distributors.

Our future revenue and our ability to make investments in developing our products is substantially dependent upon our installed customer base continuing to license our products and renew our service agreements.

We depend on our installed customer base for future revenue from services and licenses of additional products. If our customers fail to renew their maintenance agreements, our revenue will be harmed. The maintenance agreements are generally renewable annually at the option of the customers and there are no minimum payment obligations or obligations to license additional software. Therefore, current customers may not necessarily generate significant maintenance revenue in future periods. In addition, customers may not necessarily purchase additional products or services. Our services revenue and maintenance revenue also depend upon the continued use of these services by our installed customer base. Any downturn in software license revenue could result in lower services revenue in future quarters. Moreover, if either license revenue or revenue from services declines, we may not have sufficient cash to finance investments or acquire technology.

The success of our international operations is dependent upon many factors which could adversely affect our ability to sell our products internationally and could affect our profitability.

International sales represented approximately 51% of our total revenue during the year ended December 31, 1999. The international operations are, and any expanded international operations will be, subject to a variety of risks associated with conducting business internationally that could adversely affect our ability to sell our products internationally, and therefore, our profitability, including the following:

	Difficulties in staffing and managing international operations,
	Problems in collecting accounts receivable,
	Longer payment cycles,
	Fluctuations in currency exchange rates,
	Seasonal reductions in business activity during the summer months in Europe and certain other parts of the world,
	Uncertainties relative to regional, political and economic circumstances,
	Recessionary environments in foreign economies, and
	Increases in tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers imposed by foreign countries.

In particular, instability in the Asian/Pacific and Latin American economies and financial markets, which together accounted for approximately 19% of our total net revenues during the year ended December 31, 1999, could adversely affect our ability to sell our products internationally.