**Exhibit99.01**

 

**CAUTIONARYSTATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

 

Zamba Corporation desiresto take advantage of the “safe harbor” provisions of the Private SecuritiesLitigation Reform Act of 1995 and is filing this cautionary statement inconnection with the reform act. This Quarterly Report on Form 10-Q and anyother written or oral statements made by or on our behalf may includeforward-looking statements that reflect our current views with respect tofuture events and future financial performance. The words “believe,” “expect,”“anticipate,” “intend,” “estimate,” “forecast,” “project,” “could,” “may,” andthe negatives of such words, and other similar expressions identifyforward-looking statements.

 

We wish to caution youthat any forward-looking statements made by us or on our behalf are subject touncertainties and other factors that could cause such statements to be wrong.Some of these uncertainties and other factors are listed under the caption“Risk Factors” below (many of which we have discussed in prior SECfilings).  Although we have attempted tolist comprehensively these important factors, we also wish to caution investorsthat other 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 cautionednot to place undue reliance on those forward-looking statements because theyspeak only of our views as of the date the statements were made. We undertakeno obligation to publicly update or revise any forward-looking statements,whether as a result of new information, future events or otherwise.

 

**RISKFACTORS**

 

**If we do not grow our revenues enough toremain profitable, we will have to obtain other financing to continueoperations.**

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Although we significantlyreduced our cost structure during 2002 and recorded net income of $2,840,000for the six months ended June 30, 2003, this amount included a gain onsale of investment of $2,603,000 and an extraordinary gain from debtextinguishment of $198,000.  If we hadnot realized these gains, our net income would have been $39,000 for the sixmonths ended June 30, 2003.  Ourrevenues have increased only slightly over the last five quarters, from $2.5million in the second quarter of 2002 to $2.9 million in the second quarter of2003.  To fund our operations duringthis period, we have received approximately $9.4 million from private sales ofour common stock and shares of Series A Preferred Stock in NextNet Wireless,Inc.   We have also supported ouroperations by borrowing funds under our banking relationship with SiliconValley Bank, which, since July 29, 2002, has been in the form of anAccounts Receivable Purchase Agreement.

 

We did not sell any ofour common stock or NextNet Series A Preferred Stock in the second quarter, butif we are unable to maintain profitability, we may have to sell additionalshares of our common stock or NextNet Series A Preferred Stock, borrowadditional amounts from Silicon Valley Bank under our Accounts ReceivablePurchase Agreement, or find an alternative means of financing ouroperations.  There is no assurance thatwe will be able to obtain any financing or that, if we are successful infinding financing, it will be on favorable terms.  The number of potential purchasers of our NextNet holdings isquite limited, for many reasons, including the fact that investors have notbeen generally interested in telecommunications products companies over thepast few years.

 

Under our AccountsReceivable Purchase Agreement with Silicon Valley Bank, which expiresJuly 29, 2004, we can receive advances from Silicon Valley Bank of up to80% of our eligible accounts receivable, to a maximum accounts receivablebalance of $2.5 million.  Silicon ValleyBank can reject any or all of our requests for advances, which could cause usto be dependent upon the timeliness of our 

 

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collections fromour clients.  If we are unable to growour revenues, manage our growth and projects effectively, or obtain additionalfinancing, we may realize a material adverse effect in the quality of ourservices and products, our ability to retain key personnel, and our business,financial condition and results of operations.

 

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

 

Our holdings of NextNet may constitute investmentsecurities under the Investment Company Act of 1940.  We will suffer adverse consequences if we are deemed to be aninvestment company under the Investment Company Act of 1940.  A company may be deemed to be an investmentcompany if it owns investment securities with a value exceeding 40% of itstotal assets, subject to certain exclusions. We have not held ourselves out as an investment company, but if we wereto be deemed an investment company, we would become subject to registration andregulation as an investment company under the Investment Company Act of1940.  If we failed to register, we wouldbe prohibited from engaging in business or issuing our securities and might besubject to civil and criminal penalties for noncompliance.  In addition, certain of our contracts mightbe voidable, and a court-appointed receiver could take control of our companyand liquidate our business.  If weregistered as an investment company, we would be subject to restrictionsregarding our operations, investments, capital structure, governance andreporting of our results of operations, among other things, and our ability tooperate as we have in the past would be adversely affected.

 

We do not currentlybelieve that we are an investment company, because our Board of Directors hasdetermined in good faith that the value of our NextNet securities do not exceed40% of our total assets, not including cash. If either the value of our NextNet securities were to increase or thevalue of other assets were to decrease such that the value of our NextNetsecurities were to exceed 40% of our total assets, not including cash, we wouldhave to seek an exclusion or safe harbor from the provisions of the InvestmentCompany Act of 1940.  If an exclusion orsafe harbor were not available to us, we would have to attempt to reduce ourinvestment securities as a percentage of our total assets in order to avoidbecoming subject to the requirements of the Investment Company Act of1940.  This reduction can be attemptedin a number of ways, including the disposition of investment securities and theacquisition of non-investment security assets. If we were required to sell investment securities, we may sell themsooner than we otherwise would, which may require that those securities be soldat a substantial discount, and we may never realize anticipated benefits from,or may incur losses on, these investments. Further, if only a portion of the shares of NextNet that we own are soldat a discount, the value of the remaining shares may be adverselyaffected.  Some investments may not besold due to contractual or legal restrictions or the inability to locate asuitable buyer.  Moreover, we may incurtax liabilities when we sell assets.

 

Because the value of ourNextNet securities is less than 40% of our total assets, not including cash, wehave withdrawn the application we filed on April 14, 2003 with theSecurities and Exchange Commission (“SEC”) to seek an order declaring Zamba tobe engaged in a business other than that of owning or holding securities basedon our historical development, the activities of our officers, directors andemployees, how we represent Zamba’s business, the nature of our assets andsources of our income.

 

**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-nationalstock exchange companies whose common stock trades at less than $5.00 per shareor which 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

 

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makers in such securitiesis limited.  The “penny stock rules,”therefore, may have an adverse impact on the market for our common stock andmay affect our ability to attract competitive funding.  Further, because our stock is currentlylisted on the Over-The-Counter Bulletin Board, this means that, among otherthings, our stock is less liquid as compared to when it was listed on theNasdaq stock market.  As a result,investors in our common stock will be less able to sell stock holdings orreceive accurate stock price quotations.

 

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

 

We derive a substantialpart of our revenues from a small number of clients. During the second quarter of2003, 99% of our revenues came from our top ten customers and 68% came from ourtop five customers.  During the secondquarter of 2003, three clients — MBNA (24%), Union Bank of California (14%),and Direct Energy (12%) — 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 with regard to ourholdings in NextNet Wireless, Inc.**

 

Two of our directors, JoeCostello and Dixon Doll, are also shareholders and directors of NextNet.   Mr. Costello is Chairman of bothcompanies.  We have sold approximately$7.7 million of NextNet Series A Preferred Stock during 2002 and the firstquarter of 2003 to fund operations, including sales of approximately $2.0million to Mr. Costello and $150,000 to investment entities managed by Dr.Doll.  Additionally, another director ofZamba, Sven Wehrwein, has been a consultant for NextNet.  In their roles as directors of Zamba anddirectors or consultants for NextNet, these directors may be faced withsituations that require them to recuse themselves from voting on mattersaffecting our company.

 

**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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