**Exhibit 99.01**
**RISK FACTORS AFFECTING OUR BUSINESS AND FUTURE RESULTS**
     *You should consider carefully each of the following risks and all of theother information in this prospectus and the documents we incorporate byreference before investing in our Class A common stock. If any of the followingrisks and uncertainties develop into actual events, our business, financialcondition or results of operations could be materially adversely affected.*
**RISKS RELATED TO OUR BUSINESS**
     **We have a history of losses and can offer no assurance that we willmaintain our recent profitability.**
     We have incurred annual net losses for the past five years. We incurrednet losses of $13.5 million, $17.8 million and $89.5 million for the yearsended December 31, 2003, 2002 and 2001, respectively. As of December 31, 2003,we had an accumulated deficit of $131.3 million. We have never declared or paidcash dividends on our Class A common stock and do not currently anticipatepaying any cash dividends on our Class A common stock in the foreseeablefuture. We expect to incur significant expenses in the near term, especiallydue to product development, sales and marketing and administrative expenses.Therefore, we will need to generate significant additional revenue and controlcosts to achieve and sustain profitability on a quarterly or annual basis. Ifwe are not able to increase revenue or control costs, our operating results andprofitability could be adversely affected.
     **Our stock price, like that of many technology companies, has been and maycontinue to be volatile.**
     We expect that the market price of our Class A common stock will continueto be volatile. We are involved in a highly visible, rapidly changing industryand stock prices in our industry and similar industries have risen and fallenin response to a variety of factors, including:
• announcements of new wireless data communications technologies and new providers of wireless datacommunications; • acquisitions of, or strategic alliances among, providers of wireless data communications; • changes in recommendations by securities analysts regarding the results or prospects of providers ofwireless data communications; • changes in investor perceptions of the acceptance or profitability of wireless data communications; and • other global economic uncertainties.
     **If wireless carriers do not continue to provide additional products andservices to their subscribers, our business could be harmed.**
     If wireless carriers limit their product and service offerings or do notpurchase additional products containing our applications, our business will beharmed. Wireless carriers face implementation and support challenges inintroducing Internet-based services via wireless devices, which may slow therate of adoption or implementation of our products and services. Historically,wireless carriers have been relatively slow to implement complex new servicessuch as Internet-based services. Our future success depends upon a continuedincrease in the use of wireless devices to access the Internet and upon thecontinued development of wireless devices as a medium for the delivery ofnetwork-based content and services. We have no control over the pace at whichwireless carriers implement these
 

 

new services. The failure of wireless carriers to introduce and supportservices utilizing our products in a timely and effective manner could reducesales of our products and services and seriously harm our business.
     **We may fail to support our anticipated growth in operations which couldreduce demand for our services and materially adversely affect our revenue.**
     Our business strategy is based on the assumption that the number ofcustomers, the amount of information they want to receive and the number ofservices we offer will all increase. We must continue to develop and expand oursystems and operations to accommodate this growth. The expansion and adaptationof our systems operations requires substantial financial, operational andmanagement resources. Due to the limited deployment of our services to date,the ability of our systems and operations to connect and manage a substantiallylarger number of customers while maintaining superior performance is unknown.Any failure on our part to develop and maintain our wireless data services aswe experience rapid growth could significantly reduce demand for our servicesand materially adversely affect our revenue.
     **We could incur substantial costs from product liability claims relating toour software.**
     Our agreements with customers may require us to indemnify customers forour own acts of negligence and non-performance. Product liability and otherforms of insurance are expensive and may not be available in the future. Wecannot be sure that we will be able to maintain or obtain insurance coverage atacceptable costs or in sufficient amounts or that our insurer may not disclaimcoverage as to a future claim. A product liability or similar claim mayadversely affect our business, operating results or financial condition.
     **Our operating results could be adversely affected by any interruption ofour data delivery services or system failure.**
     Our E9-1-1, market data, enterprise mobility and mobile asset delivery andlogistics operations depend on our ability to maintain our computer andtelecommunications equipment and systems in effective working order, and toprotect our systems against damage from fire, natural disaster, power loss,telecommunications failure, sabotage, unauthorized access to our system orsimilar events. Although all of our mission-critical systems and equipment aredesigned with built-in redundancy and security, any unanticipated interruptionor delay in our operations could have a material adverse effect on ourbusiness, financial condition and results of operations.
     Furthermore, any addition or expansion of our facilities to increasecapacity could increase our exposure to natural or other disasters. Ourproperty and business interruption insurance may not be adequate to compensateus for any losses that may occur in the event of a system failure or a breachof security. Furthermore, insurance may not be available to us at all or, ifavailable, may not be available to us on commercially reasonable terms.
     **Because we rely on a few key customers, our revenue may decline if we failto retain those customers.**
     To date, the largest customers for our product and service offerings interms of revenue generated have been Lucent, Verizon Wireless, and the U.S.government. For the year ended December 31, 2003, two customers eachindividually accounted for 10% or more of our total revenue: Verizon Wirelessand various U.S. government agencies. For the year ended December 31, 2002, twocustomers each individually accounted for 10% or more of our total revenue:Verizon Wireless and various U.S. government agencies. For the year endedDecember 31, 2001, two customers each individually accounted for 10% or more oftotal revenue: Lucent Technologies and various U.S. Government agencies. Weexpect to generate a significant portion of our total revenue from thesecustomers for the foreseeable future. For the year ended December 31, 2003, thelargest customers for our Service Bureau segment were Verizon Wireless, USCellular and Cingular, the largest customers for our Network Solutions segmentwere various U.S. government agencies, the largest customers for our NetworkSoftware segment were Verizon and Hutchison 3G. The existing largest customersfor the Enterprise Business in 2003, prior to our acquisition of that unit fromAether, were Merrill Lynch, Goldman Sachs, Bank of America, Office Depot andCorporate Express, and we expect these customers to carry on as customers ofour Enterprise segment in 2004. Our growth depends on maintaining relationshipswith these important customers and on developing other customers anddistribution
 

 

channels. The loss of any of the customers discussed in this paragraph wouldhave a material adverse impact on our business.
     **Because our business may not generate sufficient cash to fund operations,we may not be able to continue to grow our business if we are unable to obtainadditional capital when needed.**
     We believe that our cash and cash equivalents, and the funds anticipatedto be generated from operations will be sufficient to finance our operationsfor at least the next twelve months. Although, we currently believe that wehave sufficient capital resources to meet our anticipated working capital andcapital expenditures requirements beyond the next twelve months, unanticipatedevents and opportunities may make it necessary for us to return to the publicmarkets or establish new credit facilities or raise capital in privatetransactions in order to meet our capital requirements. We cannot assure youthat we will be able to raise additional capital in the future on termsacceptable to us, or at all.
     **Variations in quarterly operating results due to factors such as changesin demand for our products and changes in our mix of revenues may cause ourClass A common stock price to decline.**
     We expect our quarterly operating results to fluctuate. For example, ourNetwork Solutions segment revenue in 2002 and 2003 has been higher in thesecond half of the year. We therefore believe that quarter-to-quartercomparisons of our operating results may not be a good indication of our futureperformance, and you should not rely on them to predict our future performanceor the future performance of our Class A common stock. Our quarterly revenues,expenses and operating results could vary significantly fromquarter-to-quarter. If our operating results in future quarters fall below theexpectations of market analysts and investors, the market price of our stockwill fall.
     **Because our product offerings are sold internationally, we are subject torisks of conducting business in foreign countries.**
     Wireless carriers in Hong Kong, the United Kingdom, Italy, Austria,Sweden, Australia, New Zealand, Egypt, Romania and five countries in Centraland South America have purchased our Network Software products. In addition, asignificant portion of the revenue historically generated by the EnterpriseBusiness has typically been generated outside the United States. We believe ourrevenue will be increasingly dependent on business in foreign countries, and wewill be subject to the social, political and economic risks of conductingbusiness in foreign countries, including:
• inability to adapt our products and services to local businesspractices, customs and mobile user preferences; • costs of adapting our product and service offerings for foreign markets; • inability to locate qualified local employees, partners and suppliers; • reduced protection of intellectual property rights; • the potential burdens of complying with a variety of U.S. and foreignlaws, trade standards and regulatory requirements, including theregulation of wireless communications and the Internet and uncertaintyregarding liability for information retrieved and replicated in foreigncountries; • general geopolitical risks, such as political and economic instabilityand changes in diplomatic and trade relations; and • unpredictable fluctuations in currency exchange rates.
     Any of the foregoing risks could have a material adverse effect on ourbusiness by diverting time and money toward addressing them or by reducing oreliminating sales in such foreign countries.
 

 

     **We derive a significant portion of our revenue from sales to variousagencies of the U.S. government which has special rights unlike other customersand exposes us to additional risks that could have a material adverse effect onour business, financial condition and operating results.**
     Sales to various agencies of the U.S. government accounted forapproximately 32% of our total revenue for the fiscal year ended December 31,2003, all of which was attributable to our Network Solutions segment. Ourability to earn revenue from sales to the U.S. government can be affected bynumerous factors outside of our control including:
• *The U.S. government may terminate the contracts it has with us.*All ofthe contracts we have with the U.S. government are, by their terms,subject to termination by the U.S. government either for itsconvenience or in the event of a default by us. In the event oftermination of a contract by the U.S. government, we may have littleor no recourse. • *Our contracts with the U.S. government may be terminated due toCongress failing to appropriate funds.*Our U.S. government contractsare conditioned upon the continuing availability of Congressionalappropriations. Congress usually appropriates funds for a givenprogram on a fiscal-year basis even though contract performance maytake more than one year. Any failure by Congress to appropriate fundsto any program that we participate in could materially delay orterminate the program and have a material adverse effect on ourbusiness. • *We are subject to procurement and other related laws and regulationswhich carry significant penalties for non-compliance.*We are subjectto extensive and complex U.S. government procurement laws andregulations. Failure to comply with these laws and regulations andwith laws governing the export of controlled products and commodities,and any significant violations of any other federal law, could subjectus to potential contract termination, civil and criminal penalties,and under certain circumstances, suspension and debarment from futureU.S. government contracts.
     Additionally, the U.S. government may audit and review our costs andperformance on their contracts, as well as our accounting and generalpractices. The costs and prices under these contracts may be subject toadjustment based upon the results of any audits. Future audits may harm ourbusiness.
     **We may no longer be able to bid for corporate contracts as aminority-owned business enterprise.**
     From 1989 until June 1998, we participated as a minority-owned businessenterprise in the Section 8(a) Business Development Program under the U.S.Small Business Act. We currently continue to perform some federal governmentcontracts awarded to us prior to June 1998. If corporate enterprises no longerconsider us a minority-owned business, it may be more difficult for us tocompete and our business could be harmed. Additionally, Maurice B. Tosé, ourPresident, Chief Executive Officer and Chairman of the Board, could, withoutseeking anyone else’s approval, transfer voting control of our Class A commonstock to a third party. Such a transfer could also cause us to lose our statusas a minority-owned business among corporate enterprises.
     **Because several of our competitors have significantly greater resourcesthan us, we could lose customers and market share.**
     Our business is highly competitive. Several of our competitors aresubstantially larger than we are and have greater financial, technical andmarketing resources than we do. In particular, larger competitors have certainadvantages over us which could cause us to lose customers and impede ourability to attract new customers, including: larger bases of financial,technical, marketing, personnel and other resources; more establishedrelationships with wireless carriers; more funds to deploy products andservices; and the ability to lower prices of competitive products and servicesbecause they are selling larger volumes.
 

 

     The widespread adoption of open industry standards such as the WirelessAccess Protocol specifications may make it easier for new market entrants andexisting competitors to introduce products that compete with our softwareproducts. Because our Wireless Carrier segment is part of an emerging market,we cannot identify or predict which new competitors may enter the mobilelocation services industry in the future. With time and capital, it would bepossible for competitors to replicate any of our products and service offeringsor develop alternative products. Additionally, the wireless communicationsindustry continues to experience significant consolidation which may make itmore difficult for smaller companies, like us, us to compete. Our competitorsinclude application developers, telecommunications equipment vendors, locationdetermination technology vendors and information technology consultants, andmay include traditional Internet portals and Internet infrastructure softwarecompanies. We expect that we will compete primarily on the basis of price, timeto market, functionality, quality and breadth of product and service offerings.
     Our newly acquired Enterprise Business developed software using standardindustry development tools. Many of its agreements with wireless carriers,wireless handheld device manufacturers and data providers are non-exclusive.Competitors could develop and use the same products and services in competitionwith us. With time and capital, it would be possible for competitors toreplicate our services.
     These competitors could include wireless network carriers, mobile and/orwireless software companies, wireless data services providers and wirelesssystems integrators and database vendors. As discussed above, many of ourpotential competitors have significantly greater resources than we do.Furthermore, competitors may develop a different approach to marketing theservices we provide in which subscribers may not be required to pay for theinformation provided by our services. Competition could reduce our market shareor force us to lower prices to unprofitable levels.
     **The loss of key personnel or any inability to attract and retainadditional personnel could harm our business.**
     Our future success will depend in large part on our ability to hire andretain a sufficient number of qualified personnel, particularly in sales andmarketing and research and development. If we are unable to do so, our businesswould be harmed. Our future success also depends upon the continued service ofour executive officers and other key sales, engineering and technical staff.The loss of the services of our executive officers and other key personnelwould harm our operations. We maintain key person life insurance on certain ofour executive officers. We would be harmed if one or more of our officers orkey employees decided to join a competitor or if we fail to attract qualifiedpersonnel. Our ability to attract qualified personnel may be adversely affectedby a decline in the price of our Class A common stock. In the event of adecline in the price of our Class A common stock, the retention value of stockoptions will decline and our employees may choose not to remain with us, whichcould harm our business.
     **Because our operating results are subject to significant fluctuations, wemay not meet expectations of investors and the market price of our Class Acommon stock may decline.**
     Our quarterly revenue and operating results are difficult to predict andare likely to fluctuate from quarter-to-quarter. For example, we generallyderive a significant portion of our Wireless Carrier license revenue frominitial license fees. The initial license fees that we receive in a particularquarter may vary significantly. As these projects begin and end, quarterlyresults may vary. As a result, in some future periods, our results ofoperations may be below the expectations of analysts and investors which couldcause the market price of our Class A common stock to decline. Additionalfactors that have either caused our results to fluctuate in the past or thatare likely to affect it in the future include:
• changes in our relationships with Lucent, the U.S. government or other customers; • timing of introduction of new products and services; • changes in pricing policies and product offerings by us or our competitors;
 

 

• costs associated with advertising, marketing and promotional efforts to acquire new customers; • capital expenditures and other costs and expenses related to improving our business,expanding operations and adapting to new technologies and changes in consumer preferences;and • our lengthy and unpredictable sales cycle.
**RISKS RELATED TO OUR ACQUISITION OF THE ENTERPRISE BUSINESS**
     **Our purchase of the Enterprise Business and any future acquisitions ofcompanies or technologies could prove difficult to integrate, disrupt ourbusiness, dilute stockholder value or adversely affect operating results or themarket price of our Class A common stock.**
     In January 2004, we purchased the Enterprise Business and in the future,we may acquire or make investments in other companies, services andtechnologies. If we fail to properly evaluate and execute acquisitions andinvestments, our business and prospects may be seriously harmed. Tosuccessfully complete an acquisition, we must:
• properly evaluate the technology; • accurately forecast the financial impact of the transaction, includingaccounting charges and transaction expenses; • integrate and retain personnel; • combine potentially different corporate cultures; and • effectively integrate products and services, and research anddevelopment, sales and marketing and support operations.
     If we fail to do any of these, we may suffer losses, our management may bedistracted from day-to-day operations and the market price of our Class Acommon stock may be materially adversely affected. In addition, if weconsummate future acquisitions using our equity securities or convertible debt,existing stockholders may be diluted which could have a material adverse effecton the market price of our Class A common stock.
     **Our recent acquisitions and strategic alliances may not deliver the valuewe paid or will pay for them and may result in excessive expenses if we do notsuccessfully integrate them, or if the costs and management resources we expendin connection with the integrations exceed our expectations.**
     We expect that our recent purchase of the Enterprise Business and anyacquisitions, strategic alliances or investments we may pursue in the futurewill have a continuing, significant impact on our business, financial conditionand operating results. The value of the companies or assets that we acquire orinvest in may be less than the amount we paid if there is a decline of theirposition in the respective markets they serve or a decline in general of themarkets they serve.
     Our financial results may be adversely affected if:
• we fail to assimilate the acquired assets with our pre-existing business; • we lose any of our key employees as a result of the acquisitions; • our management’s attention is diverted by other business concerns; or
 

 

• we assume unanticipated liabilities related to the acquired assets.
     In addition, the companies and business units we have acquired or investedin or may acquire or invest in are subject to each of the business risks wedescribe in this section, and if they incur any of these risks the businessesmay not be as valuable as the amount we paid. Further, we cannot guarantee thatwe will realize the benefits or strategic objectives we are seeking to obtainby acquiring or investing in these companies.
     **One of the suppliers of wireless services to the Enterprise Business hasbeen sued for patent infringement which raises uncertainty regarding itsability to continue to supply us with these services.**
     Research In Motion Limited (“RIM”), which supplies the Enterprise Businesswith hardware and wireless services that are in turn packaged with otherservices and resold, is engaged in legal proceedings with NTP Inc. whichalleges that certain RIM products infringed on patents held by NTP Inc. Thiscreates uncertainty regarding RIM’s ability to continue to supply theEnterprise Business with services. RIM’s inability to supply services to theEnterprise Business could cause a loss of revenue and increase our net losses.
     **An interruption in the supply of products and services that we obtain fromthird parties could cause a decline in sales of the services from the newlyacquired Enterprise Business, and products we purchase to avoid shortages maybecome obsolete before we can use them.**
     In designing, developing and supporting the wireless data services of ournewly acquired Enterprise Business, we rely on wireless carriers, wirelesshandheld device manufacturers, content providers, software providers andcompanies that manage some of our other services such as our internal IToperations and customer care services. These suppliers may experiencedifficulty in supplying us products or services sufficient to meet our needs orthey may terminate or fail to renew contracts for supplying us these productsor services on terms we find acceptable. Any significant interruption in thesupply of any of these products or services could cause a decline in sales ofour services unless and until we are able to replace the functionality providedby these products and services. We also depend on third parties to deliver andsupport reliable products, enhance our current products, develop new productson a timely and cost-effective basis and respond to emerging industry standardsand other technological changes. In addition, we rely on the ability of ourcontent providers — including Reuters, the New York Stock Exchange, Inc., theChicago Board of Trade, the Nasdaq Stock Market, Inc. and the Options PriceReporting Authority — to continue to provide us with uninterrupted access tothe news and financial information we provide to our customers. The failure ofthird parties to meet these criteria, or their refusal or failure to deliverthe information for whatever reason, could materially harm our business.
**INDUSTRY RISKS**
     **Because the wireless data industry is a new and rapidly evolving market,our product and service offerings could become obsolete unless we respondeffectively and on a timely basis to rapid technological changes.**
     The successful execution of our business strategy is contingent uponwireless network operators launching and maintaining mobile location services,our ability to create new network software and mobile asset products and adaptour existing network software products to rapidly changing technologies,industry standards and customer needs. As a result of the complexities inherentin our product offerings, new technologies may require long development andtesting periods. Additionally, new products may not achieve market acceptanceor our competitors could develop alternative technologies that gain broadermarket acceptance than our products. If we are unable to develop and introducetechnologically advanced products that respond to evolving industry standardsand customer needs, or if we are unable to complete the development andintroduction of these products on a timely and cost effective basis, ourbusiness will suffer.
     New laws and regulations that impact our industry could increase costs orreduce opportunities to earn revenue. The wireless carriers that use ourproduct and service offerings are subject to regulation by domestic, and insome cases, foreign, governmental and other agencies. Regulations that affectthem could increase our costs or reduce our
 

 

ability to sell our products and services. In addition, there are an increasingnumber of laws and regulations pertaining to wireless telephones and theInternet under consideration in the United States and elsewhere.
     The applicability to the Internet of existing laws governing issues suchas intellectual property ownership and infringement, copyright, trademark,trade secret, taxation, obscenity, libel, employment and personal privacy isuncertain and developing. Any new legislation or regulation, or the applicationor interpretation of existing laws, may have a material adverse effect on ourbusiness, results of operations and financial condition. Additionally,modifications to our business plans or operations to comply with changingregulations or certain actions taken by regulatory authorities might increaseour costs of providing our product and service offerings and materiallyadversely effect our financial condition.
     **Concerns about personal privacy and commercial solicitation may limit thegrowth of mobile location services and reduce demand for our products andservices.**
     In order for mobile location products and services to function properly,wireless carriers must locate their subscribers and store information on eachsubscriber’s location. Although data regarding the location of the wirelessuser resides only on the wireless carrier’s systems, users may not feelcomfortable with the idea that the wireless carrier knows and can track theirlocation. Carriers will need to obtain subscribers’ permission to gather anduse the subscribers’ personal information, or they may not be able to providecustomized mobile location services which those subscribers might otherwisedesire. If subscribers view mobile location services as an annoyance or athreat to their privacy, that could reduce demand for our products and servicesand have an adverse effect on prospective sales.
     **Because many providers are not in compliance with current regulatorymandates and because our industry is undergoing rapid technological andregulatory change, our future performance is uncertain.**
     The Federal Communication Commission, or FCC, has mandated that certainlocation information be provided to operators when they receive an emergency9-1-1 (E9-1-1) call. Phase I of the FCC’s 9-1-1 mandate required providers tobe able to locate wireless E9-1-1 callers within their originating cell sectorsite and report their callback number by April 1998. Phase II of the FCCmandate required providers to be able to pinpoint the location of all E9-1-1callers within 125 meters in 67% of all cases by October 1, 2001. Although boththe Phase I and Phase II deadlines have passed, many providers are notcurrently in compliance with either phase of the FCC’s mandate. Even so, webelieve that many public safety jurisdictions are continuing to deploy Phase Itechnology and when available, we believe they will deploy Phase II technology.
     Carriers’ obligations to provide Phase I and Phase II services are subjectto request by public safety organizations. Due to complex regulatory, fundingand political issues many public safety organizations have not yet requestedthis service. As a result, wireless carriers and wireless users may neverexhibit sufficient demand for our mobile location services. Technical failures,time delays or the significant costs associated with developing or installingimproved location technology could slow down or stop the deployment of ourmobile location products. If deployment of improved location technology isdelayed, stopped or never occurs, market acceptance of our products andservices may be adversely affected.
     In addition, we will rely on third-party providers to manufacture anddeploy devices that determine the precise geographic location of wireless usersto comply with Phase II of the FCC mandate. The extent and timing of thedeployment of our products and services is dependent both on public safetyrequests for such service and wireless carrier’s ability to certify theaccuracy of and deploy the precise location technology. Because we will rely onthird-party location technology instead of developing the technology ourselves,we have little or no influence over its improvement. If the technology neverbecomes precise enough to satisfy wireless users’ needs or the FCC’srequirements, we may not be able to increase or sustain demand for our productsand services, if at all.
     **Our E9-1-1 business is dependent on state and local governments.**
 

 

     Under the FCC’s mandate, a wireless carrier’s obligation to provide E9-1-1services is required only if state and local governments request the service.As part of a state or local government’s decision to request E9-1-1, they havethe authority to develop cost recovery mechanisms. However, cost recovery is nolonger a condition to wireless carriers obligations to deploy the service. Ifstate and local governments do not widely request that E9-1-1 services beprovided or we become subject to significant pressures from wireless carrierswith respect to pricing of E9-1-1 services, our E9-1-1 business would besignificantly harmed and future growth of our business would be significantlyreduced.
     **Because the industries which we serve are currently in a cycle ofconsolidation, some of the number of our customers may be reduced which couldresult in a loss of revenue for our business.**
     The telecommunications industry generally is currently undergoing aconsolidation phase. Many of our customers, specifically customers of ourWireless Carrier segment, have or may become the target of acquisitions. If thenumber of our customers is significantly reduced as a result of thisconsolidation trend, and the resulting companies do not utilize our productofferings, our financial condition and results of operations could bematerially adversely affected.
**TECHNOLOGY RISKS**
     **Because our software may contain defects or errors, our sales coulddecrease if these defects or errors adversely affect our reputation or delaysshipments of our software.**
     The software products that we develop are complex and must meet thestringent technical requirements of our customers. We must quickly develop newproducts and product enhancements to keep pace with the rapidly changingsoftware and telecommunications markets in which we operate. Software ascomplex as ours is likely to contain undetected errors or defects, especiallywhen first introduced or when new versions are released. Our software may notbe error or defect free after delivery to customers, which could damage ourreputation, cause revenue losses, result in the rejection of our software orservices, divert development resources and increase service and warranty costs,each of which could have a serious harmful effect on us.
     **If we are unable to integrate our products with wireless carriers’ systemswe may lose sales to competitors.**
     Our Wireless Carrier and Enterprise segment products operate with wirelesscarriers’ systems, various wireless devices and in the case of our E9-1-1offering, with mobile telephone switches. If we are unable to continue todesign our software to operate with these systems and devices, we may losesales to competitors. Mobile telephone switches and wireless devices can bemanufactured according to many different standards and may have differentvariations within each standard. Combining our products with each type ofswitch or device requires a specialized interface and extensive testing. If, asa result of technology enhancements or upgrades to carrier systems, ourproducts can no longer operate with such systems, we may no longer be able tosell our products. Further, even if we successfully redesign our products tooperate with these systems, we may not gain market acceptance before ourcompetitors.
     **Because our systems may be vulnerable to systems failures and securityrisks, we may incur significant costs to protect against the threat of theseproblems.**
     We provide for the delivery of information and content to and fromwireless devices in a prompt and timely manner. Any systems failure that causesa disruption in our ability to facilitate the transmission of information tothese wireless devices could result in delays in end users receiving thisinformation and cause us to lose customers. Our systems could experience suchfailures as a result of unauthorized access by hackers, computer viruses,hardware or software failures, power or telecommunications failures and otheraccidental or intentional actions which could disrupt our systems. We may incursignificant costs to prevent such systems disruptions.
     In addition, increasingly our products will be used to create or transmitsecure information and data to and from wireless devices. For example, oursoftware can be used to create private address lists. To protect private
 

 

information like this from security breaches, we may incur significant costs.Further, if a third party were able to misappropriate our proprietaryinformation or disrupt our operations, we could be subject to claims,litigation or other potential liabilities that could materially adverselyimpact our business.
     Our wireless data services provided by our Enterprise segment aredependent on real-time, continuous feeds from Reuters and others. The abilityof our subscribers to make securities trades, receive sales leads and receivecritical business information requires timely and uninterrupted connectionswith our wireless network carriers. Any disruption from our satellite feeds orbackup landline feeds could result in delays in our subscribers’ ability toreceive information or execute trades. We cannot be sure that our systems willoperate appropriately if we experience a hardware or software failure,intentional disruptions of service by third parties, an act of God or an act ofwar. A failure in our systems could cause delays in transmitting data, and as aresult we may lose customers or face litigation that could involve materialcosts and distract management from operating our business.
     **If mobile equipment manufacturers do not overcome capacity, technology andequipment limitations, we may not be able to sell our products and services.**
     The wireless technology currently in use by most wireless carriers haslimited bandwidth, which restricts network capacity to deliverbandwidth-intensive applications like data services to a large number of users.Because of capacity limitations, wireless users may not be able to connect totheir network when they wish to, and the connection is likely to be slow,especially when receiving data transmissions. Data services also may be moreexpensive than users are willing to pay. To overcome these obstacles, wirelessequipment manufacturers will need to develop new technology, standards,equipment and devices that are capable of providing higher bandwidth servicesat lower cost. We cannot be sure that manufacturers will be able to developtechnology and equipment that reliably delivers large quantities of data at areasonable price. If more capacity is not added, a sufficient market for ourproducts and services is not likely to develop or be sustained and sales of ourproducts and services would decline and our business would suffer.
     **Because the market for most mobile content delivery and mobile locationproducts is new, our future success is uncertain.**
     The market for mobile content delivery and mobile location products andservices is new and its potential is uncertain. In order to be successful, weneed wireless network operators to launch and maintain mobile location servicesutilizing our products, and need corporate enterprises and individuals topurchase and use our mobile content delivery and mobile location products andservices. We cannot be sure that wireless carriers or enterprises will acceptour products or that a sufficient number of wireless users will ultimatelyutilize our products.
     **If wireless handsets pose health and safety risks, we may be subject tonew regulations and demand for our products and services may decrease.**
     Media reports have suggested that certain radio frequency emissions fromwireless handsets may be linked to various health concerns, including cancer,and may interfere with various electronic medical devices, including hearingaids and pacemakers. Concerns over radio frequency emissions may have theeffect of discouraging the use of wireless handsets, which would decreasedemand for our services. In recent years, the FCC and foreign regulatoryagencies have updated the guidelines and methods they use for evaluating radiofrequency emissions from radio equipment, including wireless handsets. Inaddition, interest groups have requested that the FCC investigate claims thatwireless technologies pose health concerns and cause interference with airbags,hearing aids and other medical devices. There also are some safety risksassociated with the use of wireless handsets while driving. Concerns over thesesafety risks and the effect of any legislation that may be adopted in responseto these risks could limit our ability to market and sell our products andservices.
     **If we are unable to protect our intellectual property rights or are suedby third parties for infringing upon intellectual property rights, we may incursubstantial costs.**
 

 

     Our success and competitive position depends in large part upon ourability to develop and maintain the proprietary aspects of our technology. Wealso rely on a combination of copyright, trademark, service mark, trade secretlaws, confidentiality provisions and various other contractual provisions toprotect our proprietary rights, but these legal means provide only limitedprotection. If we fail to protect our intellectual property, we may be exposedto expensive litigation or risk jeopardizing our competitive position.Similarly, third parties could claim that our future products or servicesinfringe upon our intellectual property rights. Claims like these could requireus to enter into costly royalty arrangements or cause us to lose the right touse critical technology.
     Our ability to protect our intellectual property rights is also subject tothe terms of any future government contracts. We cannot assure you that thefederal government will not demand greater intellectual property rights orrestrict our ability to disseminate intellectual property. We are also a memberof the Wireless Application Protocol Forum, Ltd. and have agreed to licensesome of our intellectual property to other members on fair and reasonable termsto the extent that the license is required to develop non-infringing products.
**RISKS RELATED TO OUR CAPITAL STRUCTURE AND COMMON STOCK**
     **A majority of our Class A common stock is beneficially owned by a smallnumber of holders, and those holders could thereby transfer control of us to athird party without anyone else’s approval or prevent a third party fromacquiring us.**
     We have two classes of common stock: Class A common stock and Class Bcommon stock. Holders of Class A common stock generally have the same rights asholders of Class B common stock, except that holders of Class A common stockhave one vote per share while holders of Class B common stock have three votesper share. As of February 6, 2004, Maurice B. Tosé, our President, ChiefExecutive Officer and Chairman of the Board, beneficially owned 9,226,418shares of our Class B common stock and 1,131,995 shares of our Class A commonstock. Therefore, in the aggregate, Mr. Tosé beneficially owned sharesrepresenting approximately 53.8% of our total voting power, assuming noconversion or exercise of issued and outstanding convertible or exchangeablesecurities held by our other shareholders. Accordingly, on this basis, Mr. Tosécontrols us through his ability to determine the outcome of elections ofdirectors, amend our charter and by-laws and take other actions requiringstockholder action, including mergers, going private transactions and otherextraordinary transactions. Mr. Tosé could, without seeking anyone else’sapproval, transfer voting control of us to a third party. Such a transfer couldhave a material adverse effect on our stock price, and our business, operatingresults and financial condition. Mr. Tosé is also able to prevent a change ofcontrol regardless of whether holders of Class A common stock might benefitfinancially from such a transaction.
     **Our governing corporate documents contain certain anti-takeover provisionsthat could prevent a change of control that may be favorable to shareholders.**
     We are a Maryland corporation. Anti-takeover provisions of Maryland lawand provisions contained in our charter and by-laws could make it moredifficult for a third party to acquire control of us, even if a change incontrol would be beneficial to shareholders. These provisions include thefollowing:
• authorization of the board of directors to issue preferred stock; • prohibition of cumulative voting in the election of directors; • limitation of the persons who may call special meetings of stockholders; and • establishment of advance notice requirements for nominations for electionto the board of directors or for proposing matters that can be acted on bystockholders at stockholder meetings.
 

 

     These provisions could delay, deter or prevent a potential acquirer fromattempting to obtain control of us, depriving you of an opportunity to receivea premium for your Class A common stock. These provisions could thereforematerially adversely affect the market price of our Class A common stock.
     **Because this prospectus contains forward-looking statements, it may notprove to be accurate.**
     This prospectus, including the documents we incorporate by reference,contains forward-looking statements and information relating to our company.These statements are based upon TCS’ current expectations and assumptions thatare subject to a number of risks and uncertainties that would cause actualresults to differ materially from those anticipated. We generally identifyforward-looking statements using words like “believe,” “intend,” “expect,”“may,” “should,” “plan,” “project,” “contemplate,” “anticipate,” or othersimilar statements. We base these statements on our beliefs as well asassumptions we made using information currently available to us. We do notundertake to update our forward-looking statements or risk factors to reflectfuture events or circumstances.
     Statements in this prospectus that are forward-looking include, but arenot limited to, the following: we expect to generate a significant portion ofour total revenue from Verizon Wireless and various U.S. government agencies,our two largest customers as of December 31, 2003, for the foreseeable future;we expect the Enterprise Business’s existing largest customers in 2003 to carryon as customers of our Enterprise segment in 2004; we believe that our cash andcash equivalents, and the funds anticipated to be generated from operationswill be sufficient to finance our operations for at least the next twelvemonths; we expect that we will compete primarily on the basis of price, time tomarket, functionality, quality and breadth of product and service offerings; inJanuary 2004, we acquired substantially all of the assets of the EnterpriseBusiness and in the future, we may acquire or make investments in othercompanies, services and technologies; and we expect that our recent acquisitionof substantially all of the assets of the Enterprise Business and anyacquisitions, strategic alliances or investments we may pursue in the futurewill have a continuing, significant impact on our business, financial conditionand operating results.