**EXHIBIT 99.1**
     Risks Related to Our Company that May Affect Our Financial Condition and Operating Results
     **We have substantial existing debt, are highly leveraged and are currently in default on amaterial secured note.**
     All of our assets are pledged as collateral under all of our investor and other debt. Adefault by us under our secured debt could result in a foreclosure on all of our assets and thediscontinuation of our operations.
     At December 31, 2004, we had approximately $3.7 million in outstanding debt under convertibledebentures and notes that we issued in 2001 and 2002. These debtholders have a security interestin all of our assets, including our proprietary technologies. Of this amount, approximately $3.2million is long term non-interest bearing and non-convertible debt mostly due on December 31, 2006.This debt has 38,035,426 warrants attached to it that can begin to be exercised on or afterOctober 1, 2005.
     On October 29, 2004, the holder of the senior secured note with $539,078 of principal andaccrued interest outstanding as of December 31, 2004 (the “Note”) demanded payment in full. OnMarch 15, 2005, the holder of this Note again demanded payment in full and has indicated that, inthe absence of immediate resolution of this matter, the holder will explore immediate foreclosureon its secured interest under the Note, which consists of substantially all of the assets of theCompany. According to its terms, this Note became due and payable in full on January 1, 2003. TheCompany has not made, and cannot make, any such payment at this time. The Company is currentlyinvestigating the circumstances surrounding the execution and approval of the Note and disputes theamount it may owe under the Note. While the Company hopes to negotiate a settlement to this demandthat will be mutually acceptable to both parties, no assurance can be given that the Company willbe successful in this endeavor.
     In the event that we are unable to negotiate a mutually acceptable settlement with the holderof the Note or satisfy our repayment obligations under our other secured debt, or we otherwisedefault under the terms of such other debt, the holders of such debt may seek to foreclose theirsecurity interests and liens on our assets. In such event, if we are unable to reach a pay outarrangement satisfactory to the holders of this secured debt or seek satisfactory debt relief underfederal bankruptcy laws, we believe that the Company would no longer be able to operate. In thatevent, we believe that it is most likely that the Company’s assets would be sold and that theproceeds from such sale would not be sufficient to satisfy the liens of our secured creditors.This would leave no funds for the payment of any of our unsecured obligations to third parties,including any judgment creditors that might arise. In addition, this would leave no funds orassets available for distribution to our shareholders.
     **Our most recent financial statements include a going concern paragraph.**
     Our independent accountants’ report for our most recent year-end audit and the notes to ouryear-end 2004 audited financial statements included in this annual report for the year endedDecember 31, 2004 identify factors that, in the opinion of our independent accountants, raisesubstantial doubts about our ability to continue as a going concern. For additional informationregarding our independent accountant’s report, please refer to Note 1 to our audited financialstatements included in this annual report on Form 10-KSB.
     **Substantially all of our revenue over the past eighteen months has been associated with onlyone customer, the loss of whom would severely jeopardize our ability to maintain our operations.**
     In 2004, our largest customer accounted for 81% of our revenue, and our second largestcustomer accounted for 14% of our revenue. Consequently, the loss of our largest customer wouldhave a material adverse effect on our revenue and would likely result in the cessation of ouroperations if we are not otherwise able to expand our revenue base. The Company has experienced adecline in revenues from its
 

 

largest customer without a corresponding increase in revenues from other sources. While theCompany is hopeful that revenues from this customer as well as new sources will increase over thenear term, without this increase or an additional capital infusion, or both, the Company will notbe able to meet its current and future financial obligations. Even if we are successful in growingthe size and depth of our customer base, we have historically generated substantially all of ourrevenue from a limited number of customers, substantially all of which are in the manufacturingindustry. We remain focused on expanding our sales and marketing efforts toward companies in otherindustries and other vertical markets, particularly for business-to-business integration and moreextensive efforts in mobile computing and RFID technology tracking opportunities. Nevertheless, weexpect that a small number of customers in the manufacturing industry will continue to account fora substantial portion of our revenue for the near term. Any significant decline in the demand for,and market acceptance of, our software in the manufacturing industry would have a material adverseeffect on our ability to execute our business plan in the short-term. Even if we expand ourcustomer base, we believe that our current customers will continue to provide a substantial portionof our revenue through additional license, implementation services and maintenance fees. Moreover,if we successfully market our products in new vertical markets, we expect that customers in some ofthose new vertical markets are likely to have different requirements and may require us to changeour product design or features, sales methods, support capabilities or pricing policies. Anyfailure by us to successfully address any new vertical markets will have an adverse effect on ourresults of operations.
     **We have a large accumulated deficit, we expect future losses, and we may never achieve ormaintain profitability.**
     We have historically experienced operating losses in each of our fiscal years since January 1,1995. At December 31, 2004, we had an accumulated deficit of **$**26,050,000. In addition, since1997, we have continued to allocate a substantial proportion of our internal resources toactivities associated with the development, marketing and sale of our current suite of new softwareproducts. During the last three years, we have also undertaken a complete restructuring of oursales and marketing organization and have commenced several new customer acquisition strategies.This strategy of increased emphasis on new product development and the suspension of much of ourtraditional sales activities. This reorganization resulted in a substantial reduction in ourtraditional service revenues during the affected periods. Despite our history of losses, webelieve it is vital to our future success that we continue to allocate working capital toward oursales and marketing strategies.
     **If expenditures related to our sales and marketing activities are not accompanied or shortlyfollowed by increased revenue, our quarterly and annual operating losses could be greater thanexpected until we are able to delay or reduce expenditures.**
     Many factors, including the factors described in this annual report, may result in ourincurring losses for 2005. We need to increase our quarterly revenues and control our quarterlyexpenses in order to obtain profitability.
     **If we do not retain our key management personnel and attract and retain other highly skilledemployees, our business will suffer.**
     Our future success depends on the skills, experience and performance of our senior managementteam, other key personnel and advisors, and their ability to operate effectively, both individuallyand as a group. Each of our key employees is bound by an employment agreement with the Company.Although we maintain “key man” insurance in the amount of $1 million on the lives of each of GeorgeE. Mendenhall, Ph.D., Chairman and Chief Executive Officer, and Stuart E. Massey, Executive VicePresident, recovery under such insurance may not be adequate to compensate us for the full impactresulting from the death of either of these officers. If any of our existing senior management orother key research, engineering and development or sales and marketing personnel were to leave theCompany, it would be difficult to replace them, and our business would be materially harmed. If weare able to achieve our anticipated sales growth, our success will also depend on our ability torecruit, retain and motivate additional highly skilled sales, marketing and engineering personnel.We believe we will face significant competition for individuals with the skills required todevelop, market and support our products and services. If we fail to recruit and retain
 

 

sufficient numbers of these highly skilled employees, our ability to compete will besignificantly harmed, and our business will suffer.
     **If we do not effectively compete with new and existing competitors, our revenues and operatingmargins will decline.**
     The market for our products is intensely competitive, evolving, and subject to rapidtechnological change. We expect the intensity of competition to increase in the future. As aresult of increased competition, we may have to reduce the prices of our products and services, andwe may experience reduced gross margins and loss of market share, any one of which couldsignificantly reduce our future revenues and operating results. Many of our current and potentialcompetitors have longer operating histories, significantly greater financial, technical, productdevelopment and marketing resources, as well as better name recognition and larger customer basesthan we do. These competitors may be able to develop products comparable or superior to thoseoffered by us, or adapt more quickly than we can to new technologies, evolving industry trends orcustomer requirements. They are also positioned to devote greater resources to the development,promotion and sale of their products than we are. Accordingly, we may not be able to competeeffectively in our markets, and competition may intensify and harm our business and its operatingresults. If we are not successful in developing enhancements to existing products and introducingnew products in a timely manner, garnering customer acceptance or generating additional licensingrevenues, our gross margins may decline and cause our business and operating results to suffer.
     **Variations in the time it takes us to sell our products may cause fluctuations in ouroperating results.**
     Our customers generally consider a wide range of factors before committing to purchase ourproducts, including product benefits, the ability to operate with existing and future computersystems, the ability to accommodate increased transaction volumes, and product reliability. Someof our customers are addressing these factors for the first time when they consider whether to buyour products and services. As a result, we or other parties must educate potential customers onthe use and benefits of our products and services. In addition, the purchase of our productsgenerally involves a significant commitment of capital and other resources by a customer. Thiscommitment often requires significant technical review, assessment of competitive products, andapproval at a number of management levels within a customer’s organization.
     The length of our sales cycles may vary based on the industry in which the potential customeroperates, and is difficult to predict for any particular license transaction. Because of thenumber of factors influencing our sales process, the period between our initial contact with a newcustomer and the time when we are able to recognize revenue from that customer varies widely inlength. Our sales cycles typically range from one to six months. For larger opportunities with newcustomers, however, these cycles may be longer. The length and variability of our sales cyclesmakes it difficult to predict whether particular sales will be concluded in any given quarter. Ifone or more of our license transactions are not consummated in a given quarter, our results ofoperations for that quarter may be below our expectations and the expectations of analysts andinvestors which would be likely to cause a decline in our stock price.
     **Significant unanticipated fluctuations in our actual or anticipated quarterly revenues andoperating results may cause us not to meet securities analysts’ or investors’ expectations and mayresult in a decline in our stock price.**
     Our quarterly operating results have fluctuated significantly in the past and may fluctuatesignificantly in the future. Moreover, as a result of the evolving nature of the markets in whichwe compete, it is difficult to accurately forecast our revenue in any given period. Accordingly,we believe that period-to-period comparisons of our historical results of operations are notnecessarily meaningful and should not be relied upon as indications of sustainable trends or otherfuture performance. If our revenues, operating results or earnings are below the levels expectedby investors or securities analysts, our stock price is likely to decline.
 

 

     In addition, we expect to experience significant fluctuations in our future quarterly revenuesand operating results as a result of many factors specific to our operations, including:
 •  the difficulty in predicting the size and timing of our customer orders;  •  the mix of our products and services sold and the mix of our distribution channels;  •  the lengthy sales cycle for some of our products;  •  the market acceptance of our products;  •  the terms and timing of our financing activities;  •  whether we are able to successfully expand our sales and marketing programs; and  •  the possible loss of any of our key personnel.
     Our revenues and operating results depend upon the volume and timing of customer orders andpayments, and the date of product delivery. New software licensing, service and maintenancecontracts may not result in revenues in the quarter in which the contracts are signed, and we maynot be able to predict accurately when revenues from these contracts will be recognized. Werealize substantially higher gross margins on our license revenues as compared to our services andmaintenance revenues. Consequently, our profit margins for any particular quarter will be highlydependent on the mix of license, service and maintenance revenues in that quarter. If we cannotgenerate new customer orders, or our customers delay or cancel their orders in a particularquarter, these factors will have a material adverse effect on our revenues, and more significantlyon a percentage basis, on our net income or loss in that quarter.
     **Defects in our software products could diminish demand for our products and expose us tocostly liability that would adversely affect our operating results.**
     The *Synapse*TM software products we offer are internally complex. Complex software may containerrors or defects, particularly when first introduced or when new versions or enhancements arereleased. Although we conduct extensive testing, we may not discover software defects that affectour current or new products or enhancements until after they are sold. Although we have notexperienced any material software defects to date, any errors or defects that may be discoveredcould result in:
 •  loss of revenue;  •  product returns or order cancellations;  •  delay in market acceptance of our products;  •  diversion of our development resources;  •  distraction of our management;  •  damage to our customer relationships and our reputation;  •  increased service and warranty costs; and  •  costly litigation defense.
     In addition, our license and service agreements with our customers typically containprovisions designed to limit our exposure to potential product liability claims. It is possible,however, that the limitation of liability provisions contained in our license and serviceagreements may not be effective as a result of existing or future federal, state or local laws,ordinances or judicial decisions. Although we have not experienced any product liability claims todate, sale and support of our products entails the risk of such claims, which could be substantialin light of our customers’ use of many of our products in mission-critical applications. We do notmaintain product liability insurance. If a claimant brings a product liability claim against us, itcould have a material adverse effect on our business, results of operations and financialcondition.
 

 

Risks Related to Our Industry 
     **If we fail to adapt to the rapid technological change that characterizes our markets, we couldlose market share, or our products could become obsolete.**
     The market for our software products and services is characterized by:
 •  rapid and constant technological change;  •  frequent new product introductions and enhancements;  •  uncertain product life cycles;  •  changing customer requirements; and  •  evolving industry standards.
     The introduction of products embodying new technologies, the emergence of new industrystandards, or changes in customer requirements could render some or all of our existing productsobsolete and unmarketable. Moreover, decreases in the cost of existing competing products orservices could enable our current or potential customers to fulfill their own needs for transactionprocessing and integration systems and services in a more cost-efficient manner than through thepurchase of our products and services. As a result, our success depends upon our ability torespond to changing customer requirements and to enhance existing products and services to keeppace with technological developments and emerging industry standards. We have investedsignificantly in technology, and we anticipate that it will be necessary for us to continue to doso. Failure to develop and introduce enhancements to our existing products and services in atimely manner in response to changing market conditions or customer requirements will materiallyand adversely affect our business, results of operations and financial condition.
     **If we fail to adequately protect our proprietary rights, we may lose these rights and ourbusiness may be seriously harmed.**
     Our success depends upon our proprietary technology. To establish and protect our proprietaryrights, we rely primarily on a combination of:
 •  patent law;  •  copyright law;  •  trademark and trade secret laws;  •  confidentiality procedures and agreements;  •  licensing arrangements; and  •  the complex nature of our technologies.
     As part of our confidentiality procedures, we enter into non-disclosure agreements with ouremployees upon hiring them, and with our customers and strategic partners when we enter intolicense, service and maintenance agreements with respect to our software, documentation and otherproprietary information. Despite these precautions, third parties could copy or otherwise obtainand use our products or technologies without authorization, or develop similar technologiesindependently. It is difficult for us to police unauthorized use of our products. Because of thisdifficulty in determining the extent to which piracy of our software products may exist, softwarepiracy remains a persistent problem. Expensive litigation may be necessary in the future toenforce our intellectual property rights. Moreover, effective protection of intellectual propertyrights is unavailable or limited in certain foreign countries. While we believe that our productsand technologies are protected against infringement, as a practical matter, existing laws mayafford only limited protection. Consequently, the protection of our proprietary rights may not beadequate, and our competitors could independently develop similar technologies, duplicate ourproducts, reverse-engineer, or design around the intellectual property rights we hold.
 

 

     **Our products may infringe upon the intellectual property rights of others, which may cause usto incur unexpected costs or prevent us from selling our products.**
     The commercial success of our business depends upon our products not infringing anyintellectual property rights of others and upon no claims for infringement being made against us.We have conducted periodic patent searches to determine whether or not we may be infringing thepatent or trademark rights of any third parties. We have also applied for patent protection of ourproprietary *Synapse*TM software. Because patent applications in the United States are not publiclydisclosed until the patent is issued, applications of which we are not aware may have been filedwhich are similar to our software products. Consequently, we may be subject to legal proceedingsand claims from time to time in the ordinary course of our business, including claims of allegedinfringement of the patents, trademarks and other intellectual property rights of third parties byus or our licensees in connection with their use of our products. Intellectual property litigationis expensive and time-consuming, and could divert our management’s attention away from running ourbusiness. If we were to discover that any of our products violated the intellectual propertyrights of others, we would have to obtain licenses from these parties in order to continuemarketing our products without substantial re-engineering. We might not be able to obtain thenecessary licenses on acceptable terms or at all. If we could not obtain such licenses, we mightnot be able to re-engineer our products successfully or in a timely manner. We believe that we arenot infringing any intellectual property rights of third parties, but there can be no assurancethat such infringement will not occur. If we fail to address any infringement issues successfully,we will be forced to incur significant costs and could be prevented from selling our products.
Other Risks 
     **The price of our Common Stock may fluctuate significantly and may be negatively affected byfactors beyond our ability to control or predict.**
     The price of our Common Stock is subject to the volatility generally associated with Internet,middleware, software, and technology stocks in general, and may also be affected by broader markettrends unrelated to our or our competitors’ operating performances. Our stock price and the stockprices of many other companies in the technology and emerging growth sectors have historicallyexperienced wide fluctuations, including rapid rises and declines in stock prices that have oftenbeen unrelated to the operating performance of such companies. These downward trends andfluctuations are typically the result of the combination of general economic, political and marketconditions, most recently including recessions, the threat of terrorist activities, and concernsover the accuracy of financial reporting by several large publicly traded corporations. Thesefactors are beyond our ability to control or predict. We can provide no assurance that thesedownward trends and the events giving rise to them will not continue for the foreseeable future, orthat they will not materially adversely affect the market price of our Common Stock.
     **The number of our shares of Common Stock that are or may become eligible for sale in the nearfuture may cause the market price for our common stock to decline significantly, even if ourbusiness is doing well.**
     Trading in our Common Stock has historically been very limited and has made the market priceof our Common Stock vulnerable to significant fluctuations. At February 28, 2005 we had 32,510,400issued and outstanding shares of Common Stock, 22,504,271 additional shares currently issuable uponthe exercise of employee stock options and Common Stock purchase warrants, 38,035,426 additionalshares issuable after October 1, 2005 upon exercise of warrants, and an additional, and 6,962,625stock options that will begin vesting in late 2005. Assuming all of the outstanding options andwarrants were fully exercised, the Company’s fully diluted shares outstanding would be 100,012,722.
     Once the shares issuable pursuant to outstanding options, warrants and convertible debt,become eligible for resale under Rule 144, or their resale is otherwise registered by us with theCommission, if the holders of these shares sell substantial amounts of their shares into the publicmarket during a short period
 

 

of time, or if those shareholders are perceived by the market as intending to sell them, ourstock price may decline significantly.
     **Our Common Stock is deemed to be “penny stock,” which may make it more difficult for investorsto sell their shares due to suitability requirements.**
     Our Common Stock is deemed to be “penny stock” as that term is defined in Rule 3a51-1promulgated under the Securities Exchange Act of 1934, as amended. These requirements may reducethe potential market for our Common Stock by reducing the number of potential investors. This maymake it more difficult for investors in our Common Stock to sell shares to third parties or tootherwise dispose of them. This could cause our stock price to decline. Penny stocks are stock:
 •  With a price of less than $5.00 per share;  •  That is not traded on a “recognized” national exchange;  •  Whose prices are not quoted on the National Association of Securities DealersAutomated Quotation System (“Nasdaq”) (Nasdaq listed stock must still have a price ofnot less than $5.00 per share); or  •  In issuers with net tangible assets less than $2.0 million (if the issuer has beenin continuous operation for at least three years) or $5.0 million (if in continuousoperation for less than three years), or with average revenues of less than $6.0million for the last three years.
     Broker/dealers dealing in penny stocks are required to provide potential investors with adocument disclosing the risks of penny stocks. Moreover, broker/dealers are required to determinewhether an investment in a penny stock is a suitable investment for a prospective investor.
     **Failure to raise additional capital or generate the significant capital necessary to expandour operations and invest in new products could reduce our ability to compete and result in lowerrevenues.**
     Even if we are successful in realizing our expected 2005 objectives, we expect that we willstill require additional third-party financing in the future to implement our growth strategies andachieve our long-term objectives. In light of the recent downward trends experienced by thecapital markets, we cannot be certain that we will be able to obtain additional debt or equityfinancing on favorable terms, or at all. If we obtain additional equity financing, ourshareholders may experience significant dilution of their ownership interests and the per sharevalue of our Common Stock could decline. If we engage in debt financing, we may be required toaccept terms that restrict our ability to incur additional indebtedness or that force us tomaintain specified liquidity or other ratios, any of which could harm our business. If we needadditional capital and cannot raise it on acceptable terms, we may not be able to, among otherthings:
 •  develop or enhance our products and services;  •  continue to implement our sales and marketing strategies;  •  acquire complementary technologies, products or businesses;  •  expand operations, in the United States or internationally;  •  hire, train and retain employees; and  •  respond to competitive pressures or unanticipated working capital requirements.
Our failure to do any of these things could result in lower revenues and could seriously harm orresult in the discontinuation of our operations.
 

 

     **Anti-takeover provisions in our Articles and state corporate laws could discourage or preventa takeover, even if an acquisition of our company would be beneficial to our shareholders.**
     In many cases, shareholders receive a premium for their shares when a company is purchased byanother enterprise. Various provisions in our Articles, our Bylaws and in the South Carolinacorporation statutes could deter and make it more difficult for a third party to bring about amerger, sale of control, or similar transaction involving the Company without approval of our boardof directors, even if the transaction would be beneficial to our shareholders. These anti-takeoverprovisions make it less likely that a change in control will occur and tend to perpetuate existingmanagement. As a result, our shareholders may be deprived of opportunities to sell some or all oftheir shares at prices that represent a premium over market prices. The Company’s currentanti-takeover provisions currently include:
 •  provisions in our Articles establishing three classes of directors with staggeredterms, which means that only one-third of the members of the board of directors iselected each year, and each director serves for a term of three years;  •  provisions in our Articles authorizing the board of directors to issue a series ofpreferred stock without shareholder action, which issuance could discourage a thirdparty from attempting to acquire, or make it more difficult for a third party toacquire, a controlling interest in us;  •  provisions in our Articles prohibiting cumulative voting in the election ofdirectors, which would otherwise allow less than a majority of shareholders to electdirector candidates;  •  provisions in our Bylaws relating to meetings of shareholders which limit who maycall a meeting and what matters may be voted upon;  •  provisions in our Bylaws establishing advance notice requirements for nominationsfor election to the board of directors and for proposing matters that can be actedupon by shareholders at shareholder meetings; and  •  state law provisions that require two-thirds of the shareholders to approve mergersand similar transactions and amendments to our articles of incorporation.
     In addition, the South Carolina Business Combination Act, the South Carolina Control ShareAcquisition Act and the vesting terms of our stock option plans may discourage, delay or prevent achange in control of our Company.