1075656--3/8/2006--MOBILITY_ELECTRONICS

related topics

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{stock, price, operating}

{property, intellectual, protect}

{stock, price, share}

{regulation, government, change}

{provision, law, control}

{product, liability, claim}

{personnel, key, retain}

If we fail to continue to introduce new products and product enhancements that achieve broad market acceptance on a timely basis, we will not be able to compete effectively, and we will be unable to increase or maintain our revenue. The average selling prices of our products may decrease over their sales cycles, especially upon the introduction of new products, which may negatively affect our gross margins. We depend on large purchases from a small number of significant customers, and any loss, cancellation or delay in purchases by these customers could cause a shortfall in revenue, excess inventory and inventory holding or obsolescence charges. Our success depends in part upon sales to OEMs, whose unpredictable demands and requirements may subject us to potential adverse revenue fluctuations. Our success is dependent in part upon our relationships with strategic private-label resellers. We outsource the manufacturing and fulfillment of our products, which limits our control of the manufacturing process and may cause a delay in our ability to fill orders. Our reliance on sole sources for key components may inhibit our ability to meet customer demand. If we fail to protect our intellectual property, our business and ability to compete could suffer. We may be subject to intellectual property infringement claims that are costly to defend and could limit our ability to use certain technologies in the future. Acquisitions could have negative consequences, which could harm our business. We may not be able to adequately manage our anticipated growth, which could impair our efficiency and negatively impact operations. Our inventory management is complex and failure to properly manage inventory growth may result in excess or obsolete inventory, the write-down of which may negatively affect our operating results. We have experienced returns of our products, which could in the future harm our reputation and negatively impact our operating results. We may have design quality and performance issues with our products that may adversely affect our reputation and our operating results. We may incur product liability claims which could be costly and could harm our reputation. If we are unable to hire additional qualified personnel as necessary or if we lose key personnel, we may not be able to successfully manage our business or achieve our objectives. We may not be able to secure additional financing to meet our future capital needs. Risks Related To Our Industry Intense competition in the market for mobile electronic devices could adversely affect our revenue and operating results. Should the market demand for mobile electronic devices decrease, we may not achieve anticipated revenue. If our products fail to comply with domestic and international government regulations, or if these regulations result in a barrier to our business, our revenue could be negatively impacted. Risks Related To Our Common Stock Our common stock price has been volatile, which could result in substantial losses for stockholders. Our stock price may decline if additional shares are sold in the market. Our executive officers, directors and principal stockholders have substantial influence over us. Provisions of our certificate of incorporation and bylaws could make a proposed acquisition that is not approved by our board of directors more difficult.

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1075656--3/8/2006--MOBILITY_ELECTRONICS_INC