You should carefully consider the risks and uncertainties described below
before making an investment decision. Our business, financial condition and
operating results could be adversely affected by any of the following factors,
in which event the trading price of our common stock could decline, and you
could lose part or all of your investment. The risks and uncertainties described
below are not the only ones that we face. Additional risks and uncertainties not
presently known to us, or that we currently think are immaterial, may also
impair our business operations.
RISKS RELATED TO OUR BUSINESS
OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE REPRESENTATIVE OF OUR RESULTS AS
A SEPARATE COMPANY.
The historical financial information included in this prospectus may not
reflect what our results of operations, financial position and cash flows would
have been had we been a separate, stand-alone entity during the periods
presented or what our results of operations, financial position and cash flows
will be in the future. This is because:
- we made certain adjustments and allocations since Daisytek did not
account for us as, and we were not operated as, a single stand-alone
business for the periods presented; and
- the information does not reflect many significant changes that will occur
in our funding and operations as a result of our new agreements with IBM
and our separation from Daisytek.
We cannot assure you that the adjustments and allocations we made in
preparing our historical combined financial statements appropriately reflect our
operations during such periods as if we had, in fact, operated as a stand-alone
entity or what the actual effect of our separation from Daisytek will be.
Accordingly, we cannot assure you that our historical results of operations are
indicative of our future operating or financial performance.
OUR REVENUE IS DEPENDENT UPON OUR CLIENTS' BUSINESS AND PRODUCT SALES; ALL OF
OUR CLIENT AGREEMENTS ARE TERMINABLE BY THE CLIENT AT WILL.
Our revenue is primarily transaction based and will fluctuate with the
volume of transactions or level of sales of the products by our clients for
which we provide transaction management services. If we dedicate significant
resources to clients whose business does not generate substantial transactions
or whose products do not generate substantial customer sales, our business may
be materially adversely affected. In addition, all of our agreements with our
clients are terminable by the client at will. Therefore, we cannot assure you
that any of our clients will continue to use our services for any period of
WE ANTICIPATE INCURRING SIGNIFICANT EXPENSES IN THE FORESEEABLE FUTURE WHICH MAY
REDUCE OUR PROFITABILITY.
In order to reach our business growth objectives, we expect to incur
significant operating and marketing expenses, as well as capital expenditures,
during the next several years. We also expect to incur significant expenses in
connection with the spin-off of our company from Daisytek. In order to offset
these expenses, we will need to generate significant additional revenue. If our
revenue grows more slowly than we anticipate or if our operating and marketing
expenses exceed our expectations, we may not generate sufficient revenue to be
profitable or be able to sustain or increase profitability on a quarterly or an
annual basis in the future.
OUR SYSTEMS MAY NOT ACCOMMODATE SIGNIFICANT GROWTH IN OUR NUMBER OF CLIENTS.
Our success depends on our ability to handle a large number of transactions
for many different clients in various product categories. We expect that the
volume of transactions will increase significantly as we expand our operations.
If this occurs, additional stress will be placed upon the network hardware and
software that manages our operations. We cannot assure you of our ability