1023362--2/19/2010--POWERWAVE_TECHNOLOGIES

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{customer, product, revenue}

{product, market, service}

{cost, operation, labor}

{property, intellectual, protect}

{acquisition, growth, future}

{condition, economic, financial}

{operation, natural, condition}

{stock, price, share}

{cost, regulation, environmental}

{product, liability, claim}

{control, financial, internal}

{operation, international, foreign}

{product, candidate, development}

{stock, price, operating}

{personnel, key, retain}

{provision, law, control}

{tax, income, asset}

{system, service, information}

Our business faces significant risks. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently think are immaterial also may impair our business operations. If any of the events or circumstances described in the following risks actually occur, our business, financial condition and results of operation could suffer, and the trading price of our Common Stock could decline, and you may lose all or a part of your investment. Risks Related to the Business We rely upon a few customers for the majority of our revenues and the loss of any one or more of these customers, or a significant loss, reduction or rescheduling of orders from any of these customers, would have a material adverse effect on our business, financial condition and results of operations. Our operating results have been adversely impacted by the worldwide economic crisis and credit tightening. We have previously experienced significant reductions in demand for our products by certain customers and if this continues, our operating results will be adversely impacted. We will need additional capital in the future and such additional financing may not be available on favorable terms or at all. We may be adversely affected by the bankruptcy of our customers. We may incur unanticipated costs as we complete the restructuring of our business. We may need to undertake restructuring actions in the future. The potential for increased commodity and energy costs may adversely affect our business, financial condition and results of operations. We have experienced, and will continue to experience, significant fluctuations in sales and operating results from quarter to quarter. Our average sales prices have declined, and we anticipate that the average sales prices for our products will continue to decline and negatively impact our gross profit margins. Our suppliers, contract manufacturers or customers could become competitors. Our success is tied to the growth of the wireless services communications market and our future revenue growth is dependent upon the expected increase in the size of this market. Our reliance on contract manufacturers exposes us to risks of excess inventory or inventory carrying costs. Future additions to, or consolidations of manufacturing operations may present risks, and we may be unable to achieve the financial and strategic goals associated with such actions. Future acquisitions, or strategic alliances, may present risks, and we may be unable to achieve the financial and strategic goals intended at the time of any acquisition or strategic alliance. We depend on single sources or limited sources for key components and products, which exposes us to risks related to product shortages or delays, as well as potential product quality issues, all of which could increase the cost of our products thereby reducing our operating profits. We may fail to develop products that are sufficiently manufacturable, which could negatively impact our ability to sell our products. We may fail to develop products that are of adequate quality and reliability, which could negatively impact our ability to sell our products. If we are unable to hire and retain highly-qualified technical and managerial personnel, we may not be able to sustain or grow our business. There are significant risks related to our internal and contract manufacturing operations in Asia and Europe. The initial sales cycle associated with our products is typically lengthy, often lasting from nine to eighteen months, which could cause delays in forecasted sales and cause us to incur substantial expenses before we record any associated revenues. We conduct a significant portion of our business internationally, which exposes us to increased business risks. Protection of our intellectual property is limited. We are at risk of third-party claims of infringement that could harm our competitive position. The communications industry is heavily regulated. We must obtain regulatory approvals to manufacture and sell our products, and our customers must obtain approvals to operate our products. Any failure or delay by us or any of our customers to obtain these approvals could negatively impact our ability to sell our products. We are subject to numerous governmental regulations concerning the manufacturing and use of our products. We must stay in compliance with all such regulations and any future regulations. Any failure to comply with such regulations, and the unanticipated costs of complying with future regulations, may adversely affect our business, financial condition and results of operations. The wireless communications infrastructure equipment industry is extremely competitive and is characterized by rapid technological change, frequent new product development, rapid product obsolescence, evolving industry standards and significant price erosion over the life of a product. If we are unable to compete effectively, our business, financial condition and results of operations would be adversely affected. Our failure to enhance our existing products or to develop and introduce new products that meet changing customer requirements and evolving technological standards could have a negative impact on our ability to sell our products. Our business depends on effective information management systems. We may experience significant variability in our quarterly and annual effective tax rate. Our business is subject to the risks of earthquakes and other natural catastrophic events, and to interruptions by man-made problems such as computer viruses or terrorism. At times over the past year, our stock price has not met the minimum bid price for continued listing on the NASDAQ Global Select Market. Our ability to publicly or privately sell equity securities and the liquidity of our Common Stock could be adversely affected if we are delisted from the NASDAQ Global Select Market or if we are unable to transfer our listing to another stock market. The price of our Common Stock has been, and may continue to be, volatile and our shareholders may not be able to resell shares of our Common Stock at or above the price paid for such shares. Failure to maintain effective internal controls over financial reporting could adversely affect our business and the market price of our Common Stock. Negative conditions in the financial and credit markets may impact our liquidity. Our shareholder rights plan and charter documents could make it more difficult for a third-party to acquire us, even if doing so would be beneficial to our shareholders.

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1023362--2/19/2010--POWERWAVE_TECHNOLOGIES_INC