1274032--3/31/2010--INFOSONICS

related topics

{customer, product, revenue}

{stock, price, share}

{stock, price, operating}

{product, market, service}

{property, intellectual, protect}

{operation, international, foreign}

{product, candidate, development}

{debt, indebtedness, cash}

{financial, litigation, operation}

{condition, economic, financial}

{control, financial, internal}

{system, service, information}

{competitive, industry, competition}

{personnel, key, retain}

{provision, law, control}

{cost, operation, labor}

Risks Relating to Our Business A recently passed Argentina tariff may substantially increase the cost at the point of sale for certain imported electronics, including the products we sell, and thus will have a material adverse impact on our sales in Argentina. We buy a significant amount of our products from a limited number of suppliers, who may not provide us with competitive products at reasonable prices when we need them in the future. The loss or reduction in orders from principal customers or a reduction in prices we are able to charge these customers will have a negative impact upon our financial results. We have been experiencing net losses and expect that net losses may continue for the near future. If we continue to operate at a loss, our business may not be financially viable. We may not succeed in our introduction and establishment of proprietary products in our markets. Our operating results may vary significantly, which may cause our stock price to fluctuate. Our ability to borrow under our secured credit facility may be limited. Our ability to attain future profitability depends on our ability to increase existing margins, including through increased net sales, which we may not be able to do. Our business depends on the continued tendency of wireless handset manufacturers and carriers to outsource aspects of their business to us. We have and could continue to lose existing customers or orders and potential customers as a result of consolidation in the wireless telecommunications carrier industry. We face many risks relating to intellectual property rights. Our sales and inventory risk may be materially affected by fluctuations in regional demand patterns and economic factors for which we cannot plan. All of our revenues from continuing operations during the fiscal year ended December 31, 2009 were generated outside of the United States in countries that may have volatile currencies or other risks. We may not be able to adequately respond to rapid technological changes in the wireless handset industry, which could cause us to lose customers. Substantial defaults by our customers on accounts receivables could have a significant negative impact on our cash flow and financial condition. We rely on our suppliers to provide favorable terms, including payment terms, in order for us to make appropriate product purchases, and without such terms, our ability to procure products could be impacted. We rely on our information technology systems to function efficiently, without interruptions, and if it does not, customer relationships could be harmed. We face risks related to our dependence on third parties to manufacture the products we distribute, including our proprietary verykool products. The wireless handset industry is intensely competitive and we may not be able to continue to compete against well-established competitors with greater resources. We rely on trade secret laws and agreements with our key employees and other third parties to protect our proprietary rights, which may not afford adequate protection. We are dependent on a small number of personnel. We may become subject to lawsuits alleging medical risks associated with our wireless handsets, the cost of which could be substantial. Risks Related To Our Common Stock The market for our common stock is volatile and our stock price could decline. We may be delisted from The NASDAQ Stock Market if we do not satisfy continued listing requirements. If our common stock were delisted from The NASDAQ Stock Market, you may find it difficult to dispose of your shares and our share price may be adversely affected. The ability of our stockholders to control our policies or effect a change in control of our company is limited, which may not be in our stockholders' best interests. Stockholders have been and may be diluted as a result of past or future offerings or other financings or equity grants. Our largest stockholder may have strategic interests that differ from those of our other stockholders, and can significantly influence important corporate matters.

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1274032--3/31/2010--INFOSONICS_CORP