1045769--3/16/2006--HYPERCOM

related topics

{operation, international, foreign}

{customer, product, revenue}

{stock, price, share}

{financial, litigation, operation}

{property, intellectual, protect}

{competitive, industry, competition}

{product, market, service}

{provision, law, control}

{acquisition, growth, future}

{control, financial, internal}

{operation, natural, condition}

{cost, contract, operation}

{product, liability, claim}

{personnel, key, retain}

{system, service, information}

{stock, price, operating}

{regulation, government, change}

The loss of one or more of our key customers could significantly reduce our revenues and profits. Our products may contain defects that may be difficult or even impossible to correct. Product defects could result in lost sales, additional costs and customer erosion. We may accumulate excess or obsolete inventory that could result in unanticipated price reductions and write downs and adversely affect our financial results. Security is vital to our customers and therefore breaches in the security of transactions involving our products or services could adversely affect our reputation and results of operations. If we are unable to adequately protect our proprietary technology, our competitors may develop products substantially similar to our products and use similar technologies, which may result in the loss of customers. Our products and other proprietary rights may infringe on the proprietary rights of third parties, which may expose us to claims and litigation. A disruption in our manufacturing capabilities or those of our third-party manufacturers or suppliers would negatively impact our ability to meet customer requirements. International operations pose additional challenges and risks that if not properly managed could adversely affect our financial results. Our failure to sell our UK lease business where we provide our POS products directly to end-user merchants under sales-type leases that are subject to governmental regulation and involve a risk of default may result in us having to take a further write down of the value of this business or result in higher than anticipated lease defaults that, if excessive, could impair our profitability. Fluctuations in currency exchange rates may adversely affect our financial results. Adverse resolution of litigation, including litigation arising out of the restatement of our consolidated financial statements, may adversely affect our business or financial results. Our future success is substantially dependent on the continued service of our senior management and other key employees. We have in the past and may in the future make acquisitions and strategic investments, which will involve numerous risks. We may not be able to address these risks without substantial expense, delay or other operational or financial problems. Force majeure events, such as terrorist attacks, other acts of violence or war, and health epidemics may affect the markets in which our common stock trades, our ability to operate and our financial results. China s changing economic environment may impact our ability to do business in China. Uncertainties with respect to the Chinese legal system may adversely affect us. If we are unable to maintain the quality of our internal control over financial reporting, any unremediated material weaknesses could materially and adversely affect our ability to provide timely and accurate information about our business, which could harm our business and stock price. Risks Related To The Industry The markets in which we compete are highly competitive, maturing, and subject to price erosion. We are subject to industry and technology changes and are dependent on development and market acceptance of new products. If we are unable to adequately respond to these changes and to market demands in a timely manner, our business will not be successful. We are subject to extensive industry standards and government regulations. Our failure to properly comply with these standards and regulations could adversely affect our production and sales. Risks Related To Our Common Stock Our stock price has been and may continue to be volatile. Our publicly-filed reports are reviewed by the SEC from time to time and any significant changes required as a result of any such review may result in material liability to us, and have a material adverse impact on the trading price of our common stock We are subject to anti-takeover effects of certain charter and bylaw provisions and Delaware law. Our stock price could be affected because a substantial number of shares of our common stock will be available for sale in the future. We do not plan to pay any dividends on our common stock in the foreseeable future.

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1045769--3/16/2006--HYPERCOM_CORP