22252--5/3/2010--COMARCO

related topics

{customer, product, revenue}

{product, market, service}

{property, intellectual, protect}

{stock, price, operating}

{provision, law, control}

{personnel, key, retain}

{product, liability, claim}

{operation, international, foreign}

{condition, economic, financial}

{operation, natural, condition}

{competitive, industry, competition}

In the first quarter of fiscal 2011, the US Consumer Product Safety Commission in cooperation with us, announced a voluntary recall of one of our power adapters. In addition, we may experience quality or safety defects in our products in the future that could cause us to institute additional product recalls, require us to provide replacement products and harm our reputation. A significant portion of our revenue is derived from two customers and we are dependent upon our relationships with them and upon their performance. Any loss of, reduction, cancellation, or delay in purchases by these customers would negatively impact our revenue, business, prospects, and operating results. If we fail to accurately forecast customer demand, we may have excess or insufficient product inventory, which may increase our operating costs and harm our business. Our business and operational results are subject to the seasonal demand fluctuations of the consumer product and retail industries, as well as general economic and retail uncertainty. Our customers may cancel their orders, change production quantities or delay production, any of which would reduce our sales and adversely affect our operating results. Failure to adjust our operations in response to changing market conditions or failure to accurately estimate demand for our products could adversely affect our operating results. The 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 consumer electronics industry is highly competitive, and our profitability will be adversely affected if we are not able to compete effectively. The average selling prices of our products will likely decrease over their sales cycles, especially upon the introduction of new products, which may negatively affect our revenue and operating results. Economic, political, and other risks associated with our international sales and operations could adversely affect our results of operations. We rely on a limited number of contract manufacturers and suppliers and any delays, disruptions or quality control problems in the manufacturing operations of such manufacturers and suppliers or any disruptions in our relationships with our contract manufacturers and suppliers could adversely impact our ability to sell our products, harm our reputation, impair our customer relations and adversely affect our business, results of operations and prospects. 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 corporate headquarters or the loss of one of our contract manufacturer s facilities 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. 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 Restated Articles of Incorporation and our Amended and Restated Bylaws and at least one agreement to which we are a party contain provisions which may discourage attempts by others to acquire or merge with us, which could reduce the market value of our common stock.

Full 10-K form ▸

22252--5/3/2010--COMARCO_INC