**Exhibit99.01**

 

**CAUTIONARYSTATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

 

Zamba Corporation desires to take advantage of the“safe harbor” provisions of the Private Securities Litigation Reform Act of1995 and is filing this cautionary statement in connection with the reform act.This Quarterly Report on Form 10-Q and any other written or oralstatements made by or on our behalf may include forward-looking statements thatreflect our current views with respect to future events and future financial performance.The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,”“project,” “could,” “may,” and the negatives of such words, and other similarexpressions identify forward-looking statements.

 

We wish to caution you that any forward-lookingstatements made by us or on our behalf are subject to uncertainties and otherfactors that could cause such statements to be wrong. Some of theseuncertainties and other factors are listed under the caption “Risk Factors”below (many of which we have discussed in prior SEC filings).  Although we have attempted to listcomprehensively these important factors, we also wish to caution investors thatother factors may prove to be important in the future in affecting ouroperating results.  New factors emergefrom time to time, and it is not possible for us to predict all of thesefactors, nor can we assess the impact each factor or combination of factors mayhave on our business.

 

You are further cautioned not to place undue relianceon those forward-looking statements because they speak only of our views as ofthe date the statements were made. We undertake no obligation to publiclyupdate or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise.

 

**RISKFACTORS**

 

**Ifwe do not grow our revenues enough to regain profitability, we will have toobtain additional financing to continue operations.**

 

Although we recorded net income of $2,603,000 for thenine months ended September 30, 2003, we lost $237,000 during the quarter endedSeptember 30, 2003, and our income for the same nine-month period includes again on sale of investment of $2,603,000 and an extraordinary gain from debtextinguishment of $198,000.  If we hadnot realized these gains, we would have lost $198,000 for the nine months endedSeptember 30, 2003.  Our revenues haveincreased only slightly over the last six quarters, from $2.5 million in thesecond quarter of 2002 to $2.7 million in the third quarter of 2003.  Our revenue was stronger in the beginning ofthe third quarter than it was at the end of the third quarter, and we do notyet foresee an increase in our revenues in the fourth quarter of 2003. We havesignificantly reduced our cost structure, beginning in the second quarter of2002, and this reduction has resulted in significantly improved results fromoperations.   However, if we are unableto increase our revenues further, we may consider selling some or all of ourassets or attempting to raise additional capital to reduce our losses from operations.

 

Over the past eighteenmonths, we have substantially funded our operations through private sales ofour common stock and shares of Series A Preferred Stock in NextNet Wireless,Inc., from which we have received approximately $9.4 million.  We have also supported our operations byborrowing funds under our banking relationship with Silicon Valley Bank, which,since July 29, 2002, has been in the form of an Accounts Receivable PurchaseAgreement.  If our revenue does notincrease over the amount recorded in the third quarter, we may have to obtainadditional financing to fund our operations. We could attempt to obtain financing by selling additional shares of ourcommon stock or NextNet Series A Preferred Stock, borrowing additional amountsfrom Silicon Valley Bank under our Accounts Receivable Purchase Agreement, orfinding an alternative means of financing our operations.  There is no assurance that we will be ableto obtain any financing or that, if we are successful in finding financing, itwill be on favorable terms.

 

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Under our AccountsReceivable Purchase Agreement with Silicon Valley Bank, which expires July 29,2004, we can receive advances from Silicon Valley Bank of up to 80% of oureligible accounts receivable, to a maximum accounts receivable balance of $2.5million.  However, Silicon Valley Bankcan terminate the agreement at any time or reject any or all of our requestsfor advances, which could cause us to be dependent upon the timeliness of ourcollections from our clients.  If we areunable to increase our revenues, manage our growth and projects effectively, orobtain additional financing, we may realize a material adverse effect in thequality of our services and products, our ability to retain key personnel, andour business, financial condition and results of operations.

 

**We couldbe classified as an inadvertent investment company.**

 

Our holdings of NextNetmay constitute investment securities under the Investment Company Act of1940.  A company may be deemed to be aninvestment company if it owns investment securities with a value exceeding 40%of its total assets, subject to certain exclusions.  We do not currently believe that we are an investment company,because our Board of Directors has determined in good faith that the value ofour NextNet securities do not exceed 40% of our total assets, not includingcash.  If either the value of ourNextNet securities were to increase or the value of other assets were todecrease such that the value of our NextNet securities were to exceed 40% ofour total assets, not including cash, we would have to seek an exclusion orsafe harbor from the provisions of the Investment Company Act of 1940.  If an exclusion or safe harbor were notavailable to us, we would have to attempt to reduce our investment securitiesas a percentage of our total assets in order to avoid becoming subject to therequirements of the Investment Company Act of 1940.  This reduction can be attempted in a number of ways, includingthe disposition of investment securities and the acquisition of non-investmentsecurity assets.  If we were required tosell investment securities, we may sell them sooner than we otherwise would,which may require that those securities be sold at a substantial discount, andwe may never realize anticipated benefits from, or may incur losses on, theseinvestments.  Further, if only a portionof the shares of NextNet that we own are sold at a discount, the value of theremaining shares may be adversely affected. Some investments may not be sold due to contractual or legalrestrictions or the inability to locate a suitable buyer.  Moreover, we may incur tax liabilities whenwe sell assets.

 

We will suffer adverse consequences if we are deemedto be an investment company under the Investment Company Act of 1940.  We have not held ourselves out as aninvestment company, but if we were to be deemed an investment company, we wouldbecome subject to registration and regulation as an investment company underthe Investment Company Act of 1940.  Ifwe failed to register, we would be prohibited from engaging in business orissuing our securities and might be subject to civil and criminal penalties fornoncompliance.  In addition, certain ofour contracts might be voidable, and a court-appointed receiver could takecontrol of our company and liquidate our business.  If we registered as an investment company, we would be subject torestrictions regarding our operations, investments, capital structure,governance and reporting of our results of operations, among other things, andour ability to operate as we have in the past would be adversely affected.

 

**Themarket for our stock is subject to rules and risks relating to low-pricedstock.**

 

Our common stock iscurrently listed for trading on the NASD Over-The-Counter Bulletin Board and issubject to the “penny stock rules” adopted pursuant to Section 15(g) of theSecurities Exchange Act of 1934, as amended. In general, the penny stock rules apply to non-Nasdaq or non-national stockexchange companies whose common stock trades at less than $5.00 per share orwhich have tangible net worth of less than $5,000,000 ($2,000,000 if thecompany has been operating for three or more years).  Such rules require, among other things, that brokers who trade“penny stock” to persons other than “established customers” complete certaindocumentation, make suitability inquiries of investors and provide investorswith certain information concerning trading in the security, including a riskdisclosure document, quote information, broker’s commission information andrights and remedies available to investors in penny stocks.  Many brokers have decided not to trade“penny stock” because of the requirements of the penny stock rules and, as aresult, the number of broker-dealers willing to act as market makers in suchsecurities is limited.  The “penny stockrules,” therefore, may have an adverse impact on the

 

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market for our common stock and may affect our ability to attractcompetitive funding.  Further, becauseour stock is currently listed on the Over-The-Counter Bulletin Board, thismeans that, among other things, our stock is less liquid as compared to when itwas listed on the Nasdaq stock market. As a result, investors in our common stock will be less able to sellstock holdings or receive accurate stock price quotations.

 

**The lossof a significant client could impact our operations.**

 

We derive a substantial part of our revenues from asmall number of clients. During the third quarter of 2003, 99.6% of ourrevenues came from our top ten customers and 83.8% came from our top fivecustomers.  During the third quarter of2003, three clients — a financial services company (41%), Union Bank of California(17%), and Direct Energy (14%) — each comprised more than 10% of our revenues.During the nine months ended September 30, 2003, four clients — a financialservices company (21%), Union Bank of California (19%), Direct Energy (11%) andSymbol (11%) — each comprised more than 10% of our revenues.  The loss of one or more of these clientscould materially adversely affect our business, financial condition and resultsof operations.

 

**Theremay be a conflict of interest among Zamba’s directors and officers with regardto our holdings in NextNet Wireless, Inc.**

 

Two of our directors, Joe Costello and Dixon Doll, arealso shareholders and directors of NextNet.  Mr. Costello is Chairman of both companies.  We have sold approximately $7.7 million of NextNet Series APreferred Stock we owned during 2002 and the first quarter of 2003 to fundoperations, including sales of approximately $2.0 million to Mr. Costello and$150,000 to investment entities managed by Dr. Doll.  Additionally, another director of Zamba, Sven Wehrwein, has beena consultant for NextNet, and Mike Carrel, Zamba’s CFO, has also providedservices for NextNet.  In their roles asdirectors and officers of Zamba and directors or consultants for NextNet, thesedirectors may be faced with situations that require them to recuse themselvesfrom voting on matters affecting our company.

 

**Ourfuture use of net operating loss carryforwards (NOL’s) may be limited.**

 

Our current cash flow is benefited because we havesubstantial NOL’s that eliminate or reduce the federal and state income taxeson any future taxable income.  The NOL’scould be lost or significantly reduced if there is a significant change in ourmajor shareholders.

 

**We faceadditional risks that are incidental to our business.**

 

•                  We are experiencing continuedpressure on pricing and margins in the sale of our services, which may impairour ability to sustain profitability or positive cash flow.

•                  The markets we face are highlycompetitive and we may not be able to compete effectively, especially againstcompetitors with greater resources or market identification.

•                  Our business may suffer unless globaleconomic conditions improve.

•                  The price of our common stock couldfluctuate significantly, which may result in losses for investors.

•                  Anti-takeover effects of Delawarelaw, our Stockholder Rights Plan, and our change in control severancearrangements could prevent a change in control of our company.

•                  Our success depends on our retentionof certain key personnel, our ability to hire additional key personnel and themaintenance of good relations with our employees.

 

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