1297203--9/21/2009--HS3_TECHNOLOGIES

related topics

{stock, price, share}

{product, market, service}

{acquisition, growth, future}

{interest, director, officer}

{customer, product, revenue}

{property, intellectual, protect}

{personnel, key, retain}

{cost, operation, labor}

{competitive, industry, competition}

Risks Related To Our Business We will require significant additional financing, the availability of which cannot be assured, and if we are unable to obtain such financing, our business may fail. We operate in a highly-competitive industry and our failure to compete effectively may adversely affect our ability to generate revenue. Rapid technological changes in our industry could render our security products or services non-competitive or obsolete and consequently affect our ability to generate revenues. We could lose our competitive advantages if we are not able to protect our proprietary technology and intellectual property rights against infringement, and any related litigation could be time-consuming and costly. We may not be able to hire and retain qualified personnel to support our growth and if we are unable to retain or hire such personnel in the future, our ability to improve our security products and services and implement our business objectives could be adversely effected. We have a history of losses and negative cash flows, which is likely to continue unless our security products gain sufficient market acceptance to generate a commercially viable level of sales. We may be dependent upon third party manufacturers to produce our security products. We could be adversely affected by an increase in our manufacturers services or a significant decline in our manufacturers financial condition. As a result, our business may fail and investors may lose their entire investment. The limitation of any one of our manufactures available manufacturing capacity due to significant disruption in their manufacturing operation could have a material adverse effect on sales revenue and results of operations and financial condition. Unless we can establish significant sales of our current security products and services, our potential revenues may be significantly limited. There is a high risk of business failure due to the fact that we have not commenced commercial operations with positive cash flow. If we fail to effectively manage our growth our future business results could be harmed and our managerial and operational resources may be strained. Our security products and services may become obsolete and unmarketable if we are unable to respond adequately to rapidly changing technology and customer demands. Demand for our security products and services might be insufficient for us to become profitable. Risks Related To Our Common Stock A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations. If we issue additional shares of common stock in the future, it will result in the dilution of our existing shareholders. If a market for our shares of common stock does not develop, shareholders may be unable to sell their shares of common stock. Trading of our stock may be restricted by the Securities and Exchange Commission s penny stock regulations which may limit a stockholder s ability to buy and sell our stock The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements, which may limit a stockholder s ability to buy and sell our shares of common stock. We may be unable to continue as a going concern in which case our securities will have little or no value. Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

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1297203--9/21/2009--HS3_TECHNOLOGIES_INC.