1098834--3/15/2006--FARGO_ELECTRONICS

related topics

{property, intellectual, protect}

{customer, product, revenue}

{system, service, information}

{product, market, service}

{regulation, government, change}

{personnel, key, retain}

{cost, regulation, environmental}

{regulation, change, law}

{stock, price, operating}

{acquisition, growth, future}

{operation, international, foreign}

If we cannot or do not adequately protect or enforce our domestic or international intellectual property rights, others may offer products similar to ours which could depress our prices and gross profit margins or result in loss of market share. We may not be able to adequately protect ourselves against infringement claims of others, which if successfully brought could require us to redesign or cease marketing our products. Our markets are highly competitive and many of our competitors have substantial resources. Competition may result in price reductions, lower gross profits and loss of market share. We rely on sole and single-source suppliers, which could cause delays, increases in costs or prevent us from completing customer orders, all of which could materially harm our business. Our business success depends wholly on the continued demand for card printing systems and related materials. Our products incorporate technologies that we do not own and we could lose revenue if we are unable to obtain these technologies in the future. The design of our systems or where they are manufactured could result in manufacturing delays and other problems that cause us to fail to meet the demand for our systems on a timely basis, increase the cost of our systems, or both. Our systems may have manufacturing or design defects that we discover after shipment, which could negatively affect our revenues, increase our costs and harm our reputation. We do not maintain significant inventories of component parts or finished goods and our failure to adequately forecast demand could result in shortages and damage our business. Our strategy of providing secure issuance solutions may not be successful. Technology in our industry evolves rapidly, potentially causing our products to become obsolete, and we must continue to enhance existing systems and develop new systems or we will lose sales. All of our sales are made through independent distributors and integrators, over whom we have limited control, and if they do not effectively market or sell our products, our sales will decline. We sell a significant portion of our products internationally and purchase important components from foreign suppliers, which exposes us to currency fluctuations and other risks. If our systems fail to comply with domestic and international government regulations, or if these regulations result in a barrier to our business, we could lose sales. International environmental regulations, such as the Reduction of Hazardous Substances (RoHS) and Waste of Electrical and Electronic Equipment (WEEE), could increase costs or limit our ability to sell products. Our quarterly operating results have been volatile as a result of many factors and continued volatility may cause our stock price to fluctuate. If we fail to attract and retain highly skilled managerial and technical personnel, we may fail to remain competitive. We may need to raise additional capital to fund our future operations, and any failure to obtain additional capital when needed or on satisfactory terms could damage our business. Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

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1098834--3/15/2006--FARGO_ELECTRONICS_INC