1032863--3/8/2010--FORCE_PROTECTION

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{cost, contract, operation}

{acquisition, growth, future}

{customer, product, revenue}

{financial, litigation, operation}

{provision, law, control}

{product, market, service}

{competitive, industry, competition}

{stock, price, operating}

{condition, economic, financial}

{regulation, change, law}

{property, intellectual, protect}

{personnel, key, retain}

{cost, regulation, environmental}

{operation, natural, condition}

{operation, international, foreign}

{stock, price, share}

If we are unable to obtain future orders for our vehicles, products or services, our financial position, results of operations, and cash flows could be adversely affected and our business may fail. We rely on sales to the U.S. government, and a failure to obtain new contracts or a reduction of sales under existing contracts with the U.S. government could adversely affect our operating performance and our ability to generate cash flow to fund our operations. The continuation and renewal of contracts with the U.S. government are contingent upon the availability of governmental funding, which may be unpredictable. Our U.S. government contracts may be terminated or adversely modified prior to completion, which could adversely affect our business. Many of our orders are subject to the competitive bidding process, which we may not win, and we may incur expenses that we are unable to recoup, creating losses. Our business may be materially affected if we are unable to anticipate the demand for and sale of next generation vehicles, products or services to meet the demands of our customers, and our net sales may decline. In response to competitive opportunities or to meet customer demands, we may start the development and manufacture of certain of our products for which we may not have orders and may incur losses. We rely on joint ventures, teaming agreements, subcontractors and suppliers to manufacture, perform some of the assembly of our vehicles, or supply products. The loss of any critical partner could delay our manufacturing operations, which could affect our ability to meet our contract delivery requirements to our customers. Our limited control over our joint ventures, partners and subcontractors may delay or prevent us from implementing our business strategy which may adversely affect our financial results. Our configuration management process for our fielded fleet is still maturing and may result in inadequate delivery of service and repair parts which may decrease our ability to generate life cycle revenue. Our business may be adversely affected by the severe and rapid downturn in the economy. Changes in the pace of operations in Iraq or Afghanistan or the duration of involvement by the U.S. military and foreign militaries in areas of conflict could have an impact on contracts for our vehicles, spare parts and sustainment services. As a result, we may have unexpected revenue shortfalls. We are expanding international operations, which subjects us to additional business risks that may have a material adverse effect on our business. We may make acquisitions, which may pose risks to our business and dilute the ownership of our existing stockholders. Our operations could be adversely affected by interruptions of production that are beyond our control. We are subject to and may continue to be subject to lawsuits alleging false or misleading public statements and/or omissions concerning our business, internal controls and financial results. The DCAA continues to audit certain of our price proposals and indirect rate submissions as required by the Federal Acquisition Regulations (FAR). As a result, the DCAA could question or disallow our proposed costs under some of our government contracts, and our profits may be adversely affected. Presently, all of our contracts are on a fixed-price basis, which could subject us to losses if there are cost overruns. We may require additional capital to provide for our working capital needs. Our ability to operate effectively could be impaired if we were to lose the services of our key personnel, or if we are unable to recruit qualified managers and key personnel in the future. We must comply with export control laws, foreign corrupt practices, numerous miscellaneous federal national security laws, regulations, and procedures, as well as the rules and regulations of foreign jurisdictions, and our failure to comply could adversely affect our business. We are presently subject to a number of legal proceedings and claims and we may become subject to additional legal proceedings and claims in the future. We may not be able to adequately safeguard our intellectual property rights and trade secrets from unauthorized use, and we may become subject to claims that we infringe on others' intellectual property rights. Compliance with increasing environmental regulations and the effects of potential environmental liabilities could have a material adverse financial effect on us. Risks Related to our Common Stock Our articles of incorporation authorize the issuance of shares of blank check preferred stock. Our stock price has been volatile, and the value of an investment in our common stock may decline. Anti-takeover provisions in our articles of incorporation and by-laws, as well as Nevada Corporation Law, could make it difficult for our shareholders to replace or remove our current Board of Directors or have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock.

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1032863--3/8/2010--FORCE_PROTECTION_INC