Annual Report 2009 (1 MB, pdf) - Vasco

Future issuances of blank check preferred stock may reduce voting power of common stock and may have
anti-takeover effects that could prevent a change in control.
Our corporate charter authorizes the issuance of up to 500,000 shares of preferred stock with such
designations, rights, powers and preferences as may be determined from time to time by our Board of Directors,
including such dividend, liquidation, conversion, voting or other rights, powers and preferences as may be
determined from time to time by the Board of Directors without further stockholder approval. The issuance of
preferred stock could adversely affect the voting power or other rights of the holders of common stock. In
addition, the authorized shares of preferred stock and common stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in control.
Risks Related to Technology and Intellectual Property
Technological changes occur rapidly in our industry and our development of new products is critical to
maintain our revenue.
The introduction by our competitors of products embodying new technologies and the emergence of
new industry standards could render our existing products obsolete and unmarketable. Our future revenue growth
and operating profit will depend in part upon our ability to enhance our current products and develop innovative
products to distinguish ourselves from the competition and to meet customers’ changing needs in the data
security industry. We cannot assure you that security-related product developments and technology innovations
by others will not adversely affect our competitive position or that we will be able to successfully anticipate or
adapt to changing technology, industry standards or customer requirements on a timely basis.
Our products contain third-party, open-source software and failure to comply with the terms of the
underlying open-source software licenses could restrict our ability to sell our products or otherwise result
in claims of infringement.
Our products are distributed with software programs licensed to us by third-party authors under “opensource”
licenses, which may include the GNU General Public License (GPL), the GNU Lesser Public License
(LGPL), the BSD License and the Apache License. These open-source software programs include, without
limitation, Linux, Apache, Openssl, IPTables, Tcpdump, Postfix, Cyrus, Perl, Squid and Snort. These third-party,
open-source programs are typically licensed to us for no fee and the underlying license agreements generally
require us to make available to users the source code for such programs, as well as the source code for any
modifications or derivative works we create based on these third-party, open-source software programs.
We do not believe that we have created any modifications or derivative works to, an extended version
of, or works based on, any open-source software programs referenced above. We include instructions to users on
how to obtain copies of the relevant open-source code and licenses.
We do not provide end users a copy of the source code to our proprietary software because we believe
that the manner in which our proprietary software is aligned or communicates with the relevant open-source
programs does not create a modification, derivative work or extended version of, or a work based on, that opensource
program requiring the distribution of our proprietary source code.
Our ability to commercialize our products by incorporating third-party, open-source software may be
restricted because, among other reasons:
• the terms of open-source license agreements are unclear and subject to varying interpretations,
which could result in unforeseen obligations regarding our proprietary products or claims of
infringement;
• it may be difficult to determine the developers of open-source software and whether such licensed
software infringes another party’s intellectual property rights;
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