22252--5/1/2006--COMARCO

related topics

{product, market, service}

{customer, product, revenue}

{property, intellectual, protect}

{acquisition, growth, future}

{stock, price, operating}

{stock, price, share}

{capital, credit, financial}

{personnel, key, retain}

{provision, law, control}

{product, liability, claim}

{operation, international, foreign}

{operation, natural, condition}

{regulation, government, change}

A significant portion of our revenue is derived from the sale of our WTS products to customers in the wireless communications industry, which has experienced a significant downturn during the past several years. If the wireless communications industry does not continue to improve, our operating results and financial condition could suffer. A significant portion of our revenue is derived from the sale and maintenance of emergency call box systems to governmental customers that have experienced severe budgetary constraints in the recent past. If current and planned projects to install or upgrade call box systems are delayed, our operating results and financial condition could suffer. Failure to adjust our operations due to changing market conditions or failure to accurately estimate demand for our products could adversely affect our operating results. The WTS and ChargeSource products we make are complex and have short life cycles. If we are unable to rapidly and successfully develop and introduce new products, some of our products may become obsolete and our operating results could suffer. The wireless communications and consumer electronics industries are highly competitive, and our profitability will be adversely affected if we are not able to compete effectively. 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 revenue and operating results. A significant portion of our revenue is dependent in part upon our relationships with our strategic distribution partners and their performance. If we are unable to successfully manage our relationships with the distributors of our mobile power products, our revenue and operating results could suffer. A significant portion of our revenue is derived from a limited number of customers, and any loss of, cancellation or delay in purchases by these customers could cause a significant decrease in our revenue. We may experience quality or safety defects in our products that could cause us to institute product recalls, require us to provide replacement products and harm our reputation. Economic, political and other risks associated with our international sales and operations could adversely affect our results of operations. Our failure to address laws and regulations governing our government contracts, could adversely affect our business and operating results. Disruptions in our relationships with our suppliers or in our suppliers operations could result in shortages of necessary components and adversely affect our operations. Third parties may claim that we are infringing their intellectual property, and we could suffer significant litigation, settlement or licensing costs and expenses or be prevented from selling certain products. Third parties may infringe our intellectual property rights, and we may be required to spend significant resources enforcing these rights or otherwise suffer competitive injury. If we suffer the loss of our manufacturing facility due to catastrophe, our operations would be adversely affected. We depend upon the services of key personnel, and may not be able to attract and retain additional key personnel. We may not be able to successfully integrate future acquisitions, which could adversely affect our business, financial condition and results of operations. We may need additional capital in the future to fund the growth of our businesses, which we may not be able to obtain or obtain on acceptable terms. Our quarterly operating results are subject to significant fluctuations and, if our operating results decline or are worse than expected, our stock price could fall. Our stock price has been and will likely remain highly volatile. Our articles of incorporation and shareholder rights plan could make a potential acquisition that is not approved by our board of directors more difficult. The trading volume of our common stock often has been limited and may depress the price for our common stock.

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22252--5/1/2006--COMARCO_INC