PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT FOR
FORWARD LOOKING STATEMENTS
MARKET RISKS AND OTHER BUSINESS FACTORS
In passing the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"), 15 U.S.C.A. Sections 77z 2 and 78u 5 (Supp. 1996), Congress encouraged
public companies to make "forward looking statements" by creating a safe
harbor to protect companies from securities law liability in connection with
forward looking statements. Leapfrog Smart Products, Inc. ("the "Company")
intends to qualify both its written and oral forward looking statements for
protection 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 and the
assumptions on which the expressed expectations are based. All forward looking
statements are inherently uncertain as they are based on various expectations
and assumptions concerning future events and they are subject to numerous
known and unknown risks and uncertainties which could cause actual events or
results to differ materially from those projected. Due to those uncertainties
and risks, the investment community is urged not to place undue reliance on
written or oral forward looking statements of the Company. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, the Company undertakes no obligation
to update or revise forward looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results
over time.
The Company provides the following risk factor disclosure in connection with
its continuing effort to qualify its written and oral forward looking
statements for the safe harbor protection of the Reform Act and any other
similar safe harbor provisions. Important factors currently known to
management that could cause actual results to differ materially from those in
forward looking statements include the disclosures incorporated herein by
reference and set forth in Item 3, Risk Factors of Form SB-1, filed herewith
on May 11, 2000 with the Securities and Exchange Commission
("SEC") and also include the following:
Liquidity
The Company is considering the sale of equity in connection with a secondary
offering later in 2000. The Company does not have any underwriting commitments
for such sale of equity. There can be no assurance that any such sale will
close by such date or at all or that the Company will continue to consider
such an offering.
Litigation And Government Investigations
Numerous federal and state civil and criminal laws govern software technology
operations, development and ancillary activities. In general, these laws
provide for various fines, penalties, multiple damages, assessments and
sanctions for violations.
Evolving Industry Standards; Rapid Technological Changes
The Company's success in its business will depend in part upon its continued
ability to enhance its existing techniques and services, to introduce new
techniques and services quickly and cost effectively to meet evolving client
needs and to respond to emerging industry standards and other technological
changes. There can be no assurance that the Company will be able to respond
effectively to new industry standards. Moreover, there can be no assurance
that competitors of Leapfrog Smart Products, Inc. will not develop competitive
techniques, or that any such competitive techniques will not have an adverse
effect upon the Company's operating results.
Moreover, management intends to continue to implement "best practices" and
other established process improvements in its operations going forward. There
can be no assurance that the Company will be successful in refining, enhancing
and developing its operating strategies and systems going forward, that the
costs associated with refining, enhancing and developing such strategies and
systems will not increase significantly in future periods.
Volatility Of Stock Price
The Company believes factors such as liquidity and financial resources and
quarter to quarter and year to year variations in financial results could
cause the market price of the Company's common stock to fluctuate
substantially. Any adverse announcement with respect to such matters or any
shortfall in revenue or earnings from levels expected by management could have
an immediate and material adverse effect on the trading price of the Company's
common stock in any given period. As a result, the market for the Company's
common stock may experience material adverse price and volume fluctuations and
an investment in the Company's common stock is not suitable for any investor
who is unwilling to assume the risk associated with any such price and volume
fluctuations.
