**EXHIBIT 99.1**
**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS**
     In passing the Private Securities Litigation Reform Act of 1995 (the“Reform Act”), Congress encouraged public companies to make “forward-lookingstatements” by creating a safe harbor to protect companies from securities lawliability in connection with forward-looking statements. Radyne ComStreamintends to qualify both its written and oral forward-looking statements forprotection under the Reform Act and any other similar safe harbor provisions.
     “Forward-looking statements” are defined by the Reform Act. Generally,forward-looking statements include expressed expectations of future events andthe assumptions on which the expressed expectations are based. The words“believe,” “expect,” “anticipate,” “intends,” “forecast,” “project,” andsimilar expressions identify forward-looking statements. This Annual Report onForm 10-K for the year ended December 31, 2003 contains forward-lookingstatements” that involve risks and uncertainties. Such statements may include,but not are limited to: (i) continued growth in demand for satellite systemground-based equipment and satellite-delivered communications services, (ii)continued global deregulation and privatization of telecommunications carriers,(iii) continued growth in worldwide demand for Internet over Satelliteconnectivity and communications serves in general, (iv) an increase in totalforeign sales, and (v) sufficient cash reserves and cash from operations tofund planned future operations and capital requirements through the end of2004. Such forward-looking statements are within the meaning of that term inSection 27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. All forward-looking statementsare inherently uncertain as they are based on various expectations andassumptions concerning future events and they are subject to numerous known andunknown risks and uncertainties that could cause actual events or result todiffer materially from those projected. Due to those and other uncertaintiesand risks, the investment community is urged not to place undue reliance onwritten or oral forward-looking statements of Radyne ComStream. RadyneComStream undertakes no obligation to update or revise this CautionaryStatement Regarding Forward-Looking Statements to reflect future developments.In addition, Radyne ComStream undertakes no obligation to update or reviseforward-looking statements to reflect changed assumptions, the occurrence ofunanticipated events, or changes to future operating results over time.
     Radyne ComStream provided the following risk factor disclosure inconnection with its continuing effort to qualify its written and oralforward-looking statements under the safe harbor protection of the Reform Actand any other similar safe harbor provisions. Important factors currently knownto management that could cause actual results to differ materially from thosein forward-looking statements include the disclosures contained in theCompany’s Annual Report on Form 10-K to which this statement is appended as anexhibit and also include the following:
**RISK FACTORS**
     You should carefully consider the following risks before you decide to buyour securities. If any of the following risks actually occur, our business,financial condition or results of operations would likely suffer. As a result,the trading price of our securities could decline, and you may lose all or partof the money you paid to buy our securities.
*We Have A History Of Inconsistent Operating Results, And Could Suffer Losses InThe Future.*
     As a result of operating losses from time to time in prior years, we hadan accumulated deficit of $9.5 million at December 31, 2003. Our earnings infiscal 2001 deteriorated significantly compared to the prior year and due tofurther sales declines during 2002, we experienced further losses. While theCompany regained profitability during 2003, we accomplished it throughaggressive cost cutting more than through increased sales. There are noassurances that the cost cutting measures instituted during the 2002 and 2003fiscal years will be effective in the years to come and the Company’s forecastsrely heavily on increased revenues (of which there are no assurances) topredict future profitability. A failure to achieve either lower costs orhigher sales would affect our profitability and could result in losses.
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*Our Quarterly Operating Results Have Fluctuated Significantly In The Past, AndWe Anticipate That They Could Do So In The Future, Which Could Adversely AffectOur Stock Price.*
     We may continue to experience significant quarter to quarter fluctuationsin our operating results, which may result in volatility in the price of ourcommon stock. These fluctuating operating results derive from a variety offactors, including the following:
• timing of the initiation and completion of our purchase orders;
• demand for our products;
• introduction of new or enhanced products by us or our competitors;
• growth of demand for Internet-based products and services in developing countries;
• timing of significant marketing programs we may implement;
• extent and timing of hiring additional personnel;
• competitive conditions in our industry; and
• general economic conditions in the United States and abroad.
     The factors described above are difficult to forecast and could harm ourbusiness, financial condition and results of operations. Furthermore, the lasttwo years have been challenging for the telecommunication and Internetindustries, thereby resulting in longer sales cycles and delays in the purchasedecision-making process of existing and potential customers of our products andservices. Accordingly, we may have difficulty in accurately forecasting ourrevenues for any future quarter.
*We Depend On International Sales, Which Could Cause Our Sales Levels To BeVolatile.*
     We are dependent on sales to customers outside the United States. Weexpect that international sales will continue to account for a significantportion of our revenues for the foreseeable future. For example, sales to ourforeign customers were approximately 48% for the year ended December 31, 2003,47% for the year ended December 31, 2002 and 46% for the year ended December31, 2001. Additionally, we estimate that approximately 60% of our domesticsales are eventually exported. Moreover, the growth in the use of satellitesfor Internet traffic in recent years has been centered on connecting Internetservice providers, or ISPs, with Internet servers. U.S. based ISPs rarely usesatellites to provide point-to-point infrastructure for the Internet.Accordingly, we expect that our sales to the Internet Service Provider marketwill be primarily to customers located outside the United States. As a resultof our dependence on foreign markets, the occurrence of any negativeinternational political, economic or geographic events could result insignificant revenue shortfalls. These shortfalls could cause our business,financial condition and results of operations to be harmed. Some of the risksof doing business internationally include:
• changing regulatory requirements;
• fluctuations in the exchange rate for the United States dollar;
• the availability of export licenses;
• political and economic instability;
• difficulties in staffing and managing foreign operations, tariffs and other trade barriers;
• changes in diplomatic and trade relationships;
• complex foreign laws and treaties;
• acts of terrorism; and
• difficulty of collecting foreign account receivables.
     In addition, we are subject to the Foreign Corrupt Practices Act, whichprohibits us from making payments to government officials and others in orderto influence the granting of contracts we may be seeking. Our non-U.S.competitors are not subject to this law and this may give them a competitiveadvantage over us.
*Fluctuations in the Valuations of Foreign Currencies Could Decrease thePurchasing Power of our Foreign Customers, Reduce Sales and Decrease ourEarnings.*
     Our foreign sales are denominated in United States dollars. As a result,any decrease in the value of foreign currencies relative to the United Statesdollar may materially adversely affect the demand for our products byincreasing their costs in the currency of those countries. For example, thevalue of the Mexican Peso, Venezuelan Bolivar and the Brazilian Real havedeteriorated against the Dollar over the last two years and these markets haveexperienced decreased bookings and adversely affected our results of operationsin 2003.
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*We Depend On Developing Markets And Their Uncertain Growth Potential CouldResult In A Reduction In Revenues And Even Losses.*
     We believe a substantial portion of the growth in demand for our productswill depend upon customers in developing countries. We cannot provideassurance that such increases in demand will occur or that prospectivecustomers will accept our products. The degree to which we are able topenetrate potential markets in developing countries will be affected to a largeextent by the speed with which other competing elements of the communicationsinfrastructure, such as other satellite-delivered solutions, telephone lines,television cable, and land-based solutions, are installed in these developingcountries.
*The Sales And Implementation Cycles for our Products are Long And Have RecentlyIncreased, and We May Incur Substantial, Non-Recoverable Expenses or DevoteSignificant Resources To Sales That May Not Occur When Anticipated, If At All*.
     A customer’s decision to purchase our products involves a significantcommitment of its resources and a lengthy evaluation and product qualificationprocess. After a customer decides to purchase our products, the timing of theirdeployment and implementation depends on a variety of factors specific to eachcustomer. Further, prospective customers may delay purchasing our products inorder to evaluate new technologies and develop and implement new wirelesssystems. Throughout the sales cycle, we spend considerable resources educatingand providing information to prospective customers regarding the use andbenefits of our products. Our sales cycle for new customers is lengthy,typically from four to five months, which is an increase from the two to threemonths we experienced in the past couple of years.
*The Continuing Downturn In The Rapidly Evolving Telecommunications And InternetIndustries Could Harm Our Business.*
     Our success depends upon the continued growth of the telecommunicationsindustry, particularly with regard to the Internet. The rapid growth andevolution in the global telecommunications and Internet industries and the needfor high-speed or enhanced telecommunications products has been slowed byrecent economic conditions in the United States and elsewhere. The potentialgrowth in these areas is unpredictable. We cannot provide assurance that thederegulation, privatization and economic globalization of the worldwidetelecommunications market that has resulted in historical demand fortechnologies and services will resume in a manner favorable to us or ourbusiness strategies.
*Competition In Our Industry Is Intense And Can Lead To Reduced Sales And MarketShare.*
     The markets for ground segment systems are highly competitive. We have anumber of major competitors in the satellite communications equipment field.These include large companies, such as Hughes Network Systems, Inc., NEC, andComtech Telecommunications Corp., which have significantly larger and morediversified operations and greater financial, marketing, personnel and otherresources than we possess. As a result, these competitors may develop andexpand their products more quickly, adapt more quickly to new or emergingtechnologies and changes in customer requirements, take advantage ofacquisition and other opportunities more readily, and devote greater resourcesto the marketing and sale of their products than we can.
     Competition from current competitors or future entrants in the markets inwhich we compete could cause us to lose orders or customers or could force usto lower the prices we charge for our products, all of which would have amaterial adverse impact on our business, financial condition, and results ofoperations.
*Our Products May Become Obsolete Due To Rapid Technological Change.*
     The telecommunications industry, including the ground-based satellitecommunications systems business, is characterized by rapid and continuoustechnological change. Future technological advances in the telecommunicationsindustry may result in the introduction of new products or services thatcompete with our products or render them obsolete. Our success depends in parton our ability to respond quickly to technological changes through theimprovement of our current products and the development of new products.Accordingly, we believe that we will need to allocate a substantial amount ofcapital to research and development activities in the future. We may notgenerate cash flow from operations or have access to outside financing inamounts that are sufficient to adequately fund the development of new products.Even if we are able to obtain the required funding to
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develop new products, we cannot assure you that we will be able to developproducts that we will be able to sell successfully. Our inability to improveour existing products and develop new products could have a material adverseeffect on our business, financial condition, and results of operations.
*Our Research And Development Efforts Are Costly And The Results Are Uncertain,Which May Reduce Our Profitability And Could Result In Losses.*
     Our continued growth depends on penetrating new markets, adapting existingsatellite communications products to new applications, and introducing newcommunications products that achieve market acceptance and benefit from ourestablished international distribution channels. Accordingly, we are activelyapplying our communications expertise to design and develop new hardware andsoftware products and enhance existing products. These efforts are costly. Weexpended $6.3 million, or 11% of our net sales, in fiscal 2003 on research anddevelopment activities. This was a decrease from the prior year in which wespent $8.7 million, or 15% of our net sales for the year. Additionally, ourresearch and development program may not produce successful results, whichwould have a material adverse effect on our business, financial condition, andresults of operations.
*Continued Growth Through Acquisition Could Prove Unsuccessful And Strain OurPersonnel And Systems And Divert Our Resources.*
     We have pursued, and will continue to pursue, growth opportunities throughinternal development and acquisition of complementary businesses, products andtechnologies. Our operations have expanded significantly as a result of ouracquisitions of ComStream, Armer, and Tiernan. We are unable to predictwhether or when any other prospective acquisition will be completed. However,in order to pursue successfully the opportunities presented by the groundsegment and emerging satellite-delivered communications andInternet/intranet-infrastructure markets, we will be required to continue toexpand our operations. This expansion could entail various risks, includingthe following:
• difficulty of assimilating the operations and personnel of acquiredbusinesses or products due to unforeseen circumstances; • the necessity to attract, train, motivate, and manage a significantly larger number of employees; • the use of a disproportionate amount of our management’s attention or our resources; • substantial cash expenditures, potentially dilutive issuances ofequity securities, the incurrence of additional debt and contingentliabilities, and amortization expenses related to goodwill and otherintangible assets; • potential disruption of our ongoing business; • our inability, once integrated, to achieve comparable levels ofrevenues, profitability or productivity as our existing business orotherwise perform as expected; and • our potential inability to obtain the desired financial andstrategic benefits from the acquisition or investment.
     Moreover, we cannot assure you that we will be able to successfullyidentify suitable acquisition candidates, complete acquisitions, or expand intonew markets. The occurrence of any of the risks described above or any failureto manage further growth in an efficient manner and at a pace consistent withour business could have a material adverse effect on our growth and ourbusiness, financial condition, and results of operations.
*Our Ability To Use Our Net Operating Loss Carryforwards May Be Limited By TheOwnership Change Caused By The Sale Of All Of The Shares Of Our Common StockHeld By Our Majority Stockholders.*
     We have net operating loss carryforwards that expire between the years2017 and 2022. As a result of the recent sale by Stetsys Pte Ltd. and StetsysUS, Inc. of all of the shares of our common stock held by each company, we willexperience an ownership change as defined by Section 382 of the U.S. InternalRevenue Code of 1986, as amended. Because of the ownership change, we will belimited in our ability to use the net operating losses from before the date ofthe ownership change to offset items of taxable income realized after thatdate. The annual limitation may also result in the expiration of netoperating losses before utilization.
In addition, any future ownership change could further limit the availabilityof our net operating loss carryforwards to offset tax liabilities and may beviewed negatively by a prospective buyer of the stock.
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*Our Competitive Position Relies Heavily On Our Proprietary Technology AndIntellectual Property.*
     We rely on our proprietary technology and intellectual property tomaintain our competitive position. Unauthorized parties could attempt to copyaspects of our technologies or to obtain information that we regard asproprietary. We may not be able to police unauthorized use of our intellectualproperty. Our failure to protect our proprietary technology and intellectualproperty could adversely affect our competitive position.
     We generally rely on confidentiality agreements with our employees andsome of our suppliers to protect our proprietary technology. We also controlaccess to and distribution of confidential information concerning ourproprietary technology. We cannot guarantee that the other parties to theseagreements will not disclose or misappropriate the confidential informationconcerning our proprietary technology, which could have a material adverseeffect on our business.
     We rely on patents to protect certain of our proprietary technology.Patents, however, often provide only narrow protection that may not preventcompetitors from developing products that function in a manner similar to thosecovered by our patents. In addition, some foreign countries in which we sellour products do not provide the same level of protection to intellectualproperty as the laws of the United States provide. We cannot assure you thatany patents we currently own or control, or that we may acquire in the future,will prevent our competitors from independently developing products that aresubstantially similar or superior to ours.
     We may find it necessary to take legal action in the future to enforce orprotect our intellectual property rights. Litigation can be very expensive andcan distract our management’s time and attention, which could adversely affectour business. In addition, we may not be able to obtain a favorable outcome inany intellectual property litigation.
*Our Products Could Infringe On The Intellectual Property Of Others.*
     Third parties may in the future assert that our technology violates theirintellectual property rights. As a result of such claims, we could be requiredto enter into licensing arrangements or develop non-infringing products, whichcould be prohibitively expensive or could divert a significant amount ofresources from other aspects of our business.
     We may find it necessary to take legal action in the future to defendagainst claims that our products or technologies infringe the rights of thirdparties. Litigation can be very expensive and can distract our management’stime and attention, which could adversely affect our business. In addition, wemay not be able to obtain a favorable outcome in any intellectual propertylitigation.
*We Depend Upon Certain Suppliers And Subcontractors, The Loss Of Which CouldCause An Interruption In The Production Of Our Products.*
     We rely on subcontractors to assemble and test some of our products.Additionally, our products use a number of specialized chips and customizedcomponents or subassemblies produced by a limited number of suppliers. Wemaintain limited inventories of these products and do not have long-term supplycontracts with our vendors. In the event our subcontractors or suppliers areunable or unwilling to fulfill our requirements, we could experience aninterruption in product availability until we are able to secure alternativesources of supplies. We are also subject to price increases by suppliers thatcould increase the cost of our products or require us to develop alternativesuppliers, which could interrupt our business. It may not be possible toobtain alternative sources at a reasonable cost. Supply interruptions couldcause us to lose orders or customers, which would result in a material adverseimpact on our business, financial condition, and results of operations.
*Stock Prices Of Technology Companies Are Volatile, Which Could Result InSubstantial Losses To Investors.*
     The trading price of our common stock and redeemable warrants have beenvolatile over the past couple of years and could continue to be volatile inresponse to factors including the following, some of which are beyond ourcontrol:
• decreased demand in the Internet-services sector;
• variations in our operating results;
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• announcements of technological innovations or new services by us or our competitors;
• changes in expectations of our future financial performance, including financial estimates by securities analysts andinvestors;
• changes in operating and stock price performance of other technology companies similar to us;
• conditions or trends in the technology industry;
• additions or departures of key personnel; and
• future sales of our common stock.
     Domestic and international stock markets often experience significantprice and volume fluctuations. These fluctuations, as well as general economicand political conditions unrelated to our performance, may adversely affect theprice of our common stock and redeemable warrants.
*The Large Number Of Shares Eligible For Future Sale May Adversely Affect TheMarket Price Of Our Common Stock.*
     A large number of our issued and outstanding shares of common stock are,and common stock underlying our warrants may be, eligible for future sale. Thesale, or availability for sale, of a substantial number of shares of commonstock in the public market could materially adversely affect the market priceof our common stock and could impair our ability to raise additional capitalthrough the sale of our equity securities.
*Nasdaq Could Delist Our Common Stock Or Redeemable Warrants, Which Could MakeIt More Difficult For You To Sell Or Obtain Quotations As To The Price Of OurCommon Stock Or Redeemable Warrants.*
     We are currently in compliance with Nasdaq’s continued listingrequirements. However, if we cannot satisfy Nasdaq’s continued listingcriteria in the future, Nasdaq could delist our common stock or redeemablewarrants. In the event of delisting, trading, if any, would be conducted onlyin the over-the-counter market in the so-called “pink sheets” or the NASD’sElectronic Bulletin Board. As a result, an investor would likely find it moredifficult to sell or obtain quotations as to the price of our common stock orredeemable warrants.
*We Have Provisions In Our Certificate Of Incorporation That SubstantiallyEliminate The Personal Liability Of Members Of Our Board Of Directors ForViolations Of Their Fiduciary Duty Of Care As A Director And That Allow Us ToIndemnify Our Officers And Directors. This Could Make It Very Difficult ForYou To Bring Any Legal Actions Against Our Directors For Such Violations OrCould Require Us To Pay Any Amounts Incurred By Our Directors In Any SuchActions.*
     Pursuant to our certificate of incorporation, members of our Board ofDirectors will have no liability for violations of their fiduciary duty of careas a director, except in limited circumstances. This means that you may beunable to prevail in a legal action against our directors even if you believethey have breached their fiduciary duty of care. In addition, our certificateof incorporation allows us to indemnify our directors from and against any andall expenses or liabilities arising from or in connection with their serving insuch capacities with us. This means that if you were able to enforce an actionagainst our directors or officers, in all likelihood we would be required topay any expenses they incurred in defending the lawsuit and any judgment orsettlement they otherwise would be required to pay.
*The Loss Of The Services Of Certain Members Of Our Senior Management Or TheInability To Attract Or Retain Additional Technical Personnel Could Impair OurAbility To Conduct And Expand Our Business.*
     Our future performance depends significantly on Robert C. Fitting, ourChief Executive Officer, and Steve Eymann, our Executive Vice President andChief Technical Officer. The loss of either of these key employees wouldadversely affect our operations. Mr. Fitting is 68 years old and we mayeventually need to effect an appropriate transition to a new Chief ExecutiveOfficer. Any such transition may disrupt our business, customers andemployees.
     Our continued ability to attract and retain highly skilled personnel alsois critical to the operation and expansion of our business. The market forskilled engineers and other technical personnel is extremely competitive, andrecruitment and retention costs are high. Although we have been able toattract and retain the personnel necessary to operate our business, we may notbe able to do so in the future, particularly as we continue to expand
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our business into Internet-related products and other markets. Thefailure to attract and retain personnel with the necessary skills when neededcould materially and adversely affect our business and expansion plans.
*Since One Member Of Our Board Of Directors Is Not a Resident Of The UnitedStates And Certain Of Our Assets Are Located Outside Of The United States, YouMay Not Be Able To Enforce Any U.S. Judgment For Claims You May Bring AgainstSuch Director Or Assets.*
     One member of our board of directors is a resident of Singapore, and animmaterial portion of our assets and a substantial portion of the assets ofthis director is located outside the United States. As a result, it may bemore difficult for you to enforce a lawsuit within the United States againstthis non-U.S. resident than if he were a resident of the United States. Also,it may be more difficult for you to enforce any judgment obtained in the UnitedStates against our assets or the assets of our non-U.S. resident directorlocated outside the United States than if these assets were located within theUnited States. We cannot assure you that foreign courts would enforceliabilities predicated on U.S. federal securities laws in original actionscommenced in such foreign jurisdiction or judgments of U.S. courts obtained inactions based upon the civil liability provisions of U.S. federal securitieslaws.
*Anti-Takeover Effect Of Delaware Law And Our Charter.*
     Under the Delaware general Corporation Law, which we are subject to, itwill be more difficult for a third party to take control of the Company and maylimit the price some investors are willing to pay for shares of our commonstock. Furthermore, our certificate of incorporation authorizes the issuanceof up to 10,000,000 shares of preferred stock without a vote or otherstockholder approval.
*Terrorist Attacks and War May Negatively Impact All Aspects of Our Operations,Revenues, Costs and Stock Price.*
     Recent terrorist attacks in the United States, as well as future eventsoccurring in response or connection to them, including, without limitation,future terrorist attacks against United States targets, actual conflictsinvolving the United States or its allies or military or trade disruptionsimpacting our domestic or foreign suppliers of merchandise, may impact ouroperations, including, among other things, causing delays or losses in thedelivery of wafer supplies to us and decreased sales of our products. Moregenerally, any of these events could cause consumer confidence and spending todecrease or result in increased volatility in the United States and worldwidefinancial markets and economy. They also could result in economic recession inthe United States or abroad. Any of these occurrences could have a significantimpact on our operating results, revenues and costs.
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