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general economic downturns, businesses may bring in-house previously outsourced
functions in order to avoid or delay layoffs.
OUR MARKET IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND TO COMPETE WE MUST
CONTINUALLY ENHANCE OUR SYSTEMS TO COMPLY WITH EVOLVING STANDARDS.
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our services and the underlying
network infrastructure. If we are unable to adapt to changing market conditions,
client requirements or emerging industry standards, our business could be
adversely affected. The Internet and e-commerce are characterized by rapid
technological change, changes in user requirements and preferences, frequent new
product and service introductions embodying new technologies and the emergence
of new industry standards and practices that could render our technology and
systems obsolete. Our success will depend, in part, on our ability to both
internally develop and license leading technologies to enhance our existing
services and develop new services. We must continue to address the increasingly
sophisticated and varied needs of our clients and respond to technological
advances and emerging industry standards and practices on a cost-effective and
timely basis. The development of proprietary technology involves significant
technical and business risks. We may fail to develop new technologies
effectively or to adapt our proprietary technology and systems to client
requirements or emerging industry standards.
RISKS RELATED TO THIS OFFERING
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK AFTER THIS
OFFERING MAY AFFECT OUR STOCK PRICE.
The market price of our common stock could drop as a result of sales of
substantial amounts of common stock in the public market after the closing of
this offering or the perception that substantial sales could occur. After this
offering, Daisytek will own 14,305,000 shares of our common stock. If Daisytek
distributes these shares to its stockholders, they will be eligible for
immediate resale in the public market, other than any shares held by our
affiliates. In addition, upon completion of the spin-off, outstanding Daisytek
options held by our employees will be converted into options to purchase our
common stock. We cannot predict whether substantial amounts of our common stock
will be sold in the open market in anticipation of, or following, any
distribution of our shares by Daisytek to its stockholders. Daisytek has the
sole discretion to determine the timing, structure and all terms of its
distribution of our common stock, all of which may also affect the level of
market transactions in our common stock. In addition, these factors could make
it more difficult for us to raise funds through future offerings of our common
stock.
PURCHASERS OF OUR COMMON STOCK IN THIS OFFERING WILL EXPERIENCE IMMEDIATE AND
SUBSTANTIAL DILUTION.
The initial public offering price is substantially higher than the net
tangible book value per share of our outstanding common stock immediately after
this offering. The net tangible book value per share represents the amount of
our total tangible assets less our total liabilities divided by the total number
of shares of common stock outstanding prior to this offering. Accordingly,
purchasers of common stock will experience immediate and substantial net
tangible book value dilution of approximately $12.69 per share, or approximately
84.6% of the offering price of $15.00 per share.
WE DO NOT EXPECT TO PAY DIVIDENDS TO OUR STOCKHOLDERS.
We have not paid any cash dividends on our common stock and anticipate for
the foreseeable future that any earnings will be retained for the operation and
expansion of our business.
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