||potentially adverse tax consequences;
||foreign currency fluctuations; and
Any one or more of these factors could materially adversely affect our business in a number of
ways, such as increased costs, operational difficulties and reductions in revenue.
We are uncertain about our need for and the availability of additional funds.
Our future capital needs are difficult to predict. We may require additional capital to take
advantage of unanticipated opportunities, including strategic alliances and acquisitions and to
fund capital expenditures, or to respond to changing business conditions and unanticipated
competitive pressures. We may also require additional funds to finance operating losses, including
continuing operating losses currently anticipated to be incurred by eCOST. Should these
circumstances arise, our existing cash balance and credit facilities may be insufficient and we may
need to raise additional funds either by borrowing money or issuing additional equity. We cannot
assure you that such resources will be adequate or available for all of our future financing needs.
Our inability to finance our growth, either internally or externally, may limit our growth
potential and our ability to execute our business strategy. If we are successful in completing an
additional equity financing, this could result in further dilution to our stockholders or reduce
the market value of our common stock.
We may engage in future strategic alliances or acquisitions that could dilute our existing
stockholders, cause us to incur significant expenses or harm our business.
We may review strategic alliance or acquisition opportunities that would complement our
current business or enhance our technological capabilities. Integrating any newly acquired
businesses, technologies or services may be expensive and time-consuming. To finance any
acquisitions, it may be necessary for us to raise additional funds through borrowing money or
completing public or private financings. Additional funds may not be available on terms that are
favorable to us and, in the case of equity financings, may result in dilution to our stockholders.
We may not be able to operate any acquired businesses profitably or otherwise implement our growth
strategy successfully. If we are unable to integrate any newly acquired entities or technologies
effectively, our operating results could suffer. Future acquisitions could also result in
incremental expenses and the incurrence of debt and contingent liabilities, any of which could harm
our operating results.
If we fail to maintain an effective system of internal controls, we may not be able to accurately
report our financial results or prevent fraud. As a result, current and potential stockholders
could lose confidence in our financial reporting, which could harm our business, and the trading
price of our common stock.
We have begun a process to document and evaluate our internal controls over financial
reporting to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires
annual management assessments of the effectiveness of our internal controls over financial
reporting and a report by our independent auditors addressing these assessments. Based on the
current requirements, and our current public float, we were not required to comply with Section 404
as of December 31, 2006. We are currently subject to the management assessment portion of Section
404 for the year ending December 31, 2007, but we are not subject to the requirement to obtain a
report by our independent auditors opining on these assessments. Under current law, we will be
subject to the independent auditor requirement for the year ending December 31, 2008. In this
regard, our management has been dedicating internal resources, has engaged outside consultants and
has begun to develop a detailed work plan to (i) assess and document the adequacy of internal
controls over financial reporting, (ii) take steps to improve control processes, where appropriate,
and (iii) validate through testing that controls are functioning as documented. If we fail to
correct any issues in the design or operating effectiveness of internal controls over financial
reporting or fail to prevent fraud, current and potential stockholders could lose confidence in our
financial reporting, which could harm our business and the trading price of our common stock.
Delivery of our and our clients products could be delayed or disrupted by factors beyond our
control, and we could lose customers and clients as a result.
We rely upon third party carriers for timely delivery of our and our clients product
shipments. As a result, we