1015923--3/31/2010--OPTIMAL_GROUP

related topics

{financial, litigation, operation}

{system, service, information}

{customer, product, revenue}

{operation, international, foreign}

{regulation, government, change}

{loss, insurance, financial}

{acquisition, growth, future}

{tax, income, asset}

{stock, price, share}

{stock, price, operating}

{personnel, key, retain}

{competitive, industry, competition}

If the current global economic conditions continue to deteriorate and the current financial crisis deepens, WowWee s business and our financial results may continue to be adversely affected. We may be subject to litigation from the Internet gambling merchants that used our former payments processing business for their U.S. Internet gambling business activities seeking to force us to pay to them related processing reserve account balances. Liquidity problems or bankruptcy of WowWee s key customers could have a material adverse effect on WowWee s business, our financial condition and our results of operations. If the bid price for our common stock fall below $1.00 per share, we may not be able to maintain our listing on the NASDAQ Global Market, which would subject the trading of our common share to the SEC s penny stock rules and would decrease the liquidity of our common shares. The obligations of United Bank Card Inc. under the Purchase and Sale Option Agreement among Optimal Payments Corp., United Bank Card, Inc. and Jared Isaacman, dated as of February 2, 2009, are unsecured and there is a risk that we will not receive payment in full of the purchase price payable thereunder. Our business depends upon the services of key personnel. We may be unable to find suitable acquisition candidates and we may not be able to successfully integrate businesses we acquire into our operations. We are subject to the risk that a taxation authority could challenge certain filing positions we have taken, and that a successful challenge could require us to pay significant additional taxes. We are subject to exchange rate fluctuations between the U.S. dollar and the Canadian dollar and Euros. Our operating strategy for WowWee might not succeed and the anticipated benefits to us from our acquisition of WowWee might not be realized. If WowWee does not satisfy consumer preferences our results of operations may be adversely affected. WowWee s business is seasonal and its annual operating results depend, in large part, upon the relatively brief holiday season in the fourth quarter of the year. Tighter inventory management by retailers resulting in shorter lead times for production and possible shipping disruptions during peak demand times may adversely affect WowWee s ability to deliver its products in time to meet retailer demands. WowWee s sales are concentrated among a relatively small number of major retailer customers, which exposes WowWee to any financial difficulties or changes in purchasing preferences or policies of these customers. All of WowWee s products are manufactured in China and we are subject to the risk that political developments, including currency revaluation and trade relations between China and the markets in which WowWee s products are sold, could increase the costs of producing and delay or prevent shipping such products. A reduction or interruption in the supply of raw materials, parts and components or a significant increase in the price of supplies used to produce WowWee s products could negatively affect WowWee s gross profit margins. As a developer and supplier of consumer products, WowWee is subject to various government regulations, violation of which could subject us to sanctions. WowWee could be the subject of future product liability suits or product recalls, which could harm WowWee. Failure by WowWee to protect its proprietary intellectual property and information could have a material adverse effect on WowWee, our financial condition and results of operations. Optimal Payments is at risk of loss due to fraud, disputes and merchant insolvency Optimal Payments may not be able to safeguard against security and privacy breaches in its electronic transactions. Optimal Payments payments systems might be used for illegal or improper purposes. Optimal Payments must comply with credit card association rules and practices, which could impose additional costs and burdens on its payments business The failure of Optimal Payments systems, the systems of third parties or the Internet could negatively impact its business and harm its reputation for reliability. If Optimal Payments relationships with its banking partner deteriorates, its ability to process transactions could be impaired or halted Optimal Payments operates in a competitive market for its services Optimal Payments relies upon non-exclusive arrangements with independent sales agents to acquire and retain its customers Optimal Payments business is subject to fluctuations in general business conditions. The legal status of online gaming is uncertain in some of the jurisdictions in which Optimal Payments has provided settlement processing services for online gaming activities. Future enforcement proceedings may subject us to substantial penalties. Reports of enforcement proceedings that are unfavorable to Optimal Payments or to its customers or suppliers may adversely affect the trading price of our common shares. Optimal Payments status under certain financial services regulations is unclear. We have a material amount of intangible assets which, if they become impaired, would result in a reduction in our net income. We may be subject to additional litigation stemming from our operation of the U-scan self-checkout business.

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1015923--3/31/2010--OPTIMAL_GROUP_INC