28452--4/17/2007--DEVCON_INTERNATIONAL

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General Risk Factors Relating to our Business Our officers and directors have the ability to significantly influence the outcome of any matters submitted to a vote of our shareholders. Our future success is dependent, in part, on key personnel and failure to retain these key personnel would adversely affect our operation. In addition, inherent uncertainties associated with the acquisition of past or future acquisition candidates may cause the acquisition candidates or us to lose key employees. We are subject to significant debt, debt service, dividend service and redemption obligations which could have an adverse effect on our results of operations. If we do not successfully implement our business strategy, we may not be able to repay or refinance our senior debt or comply with the terms of the Series A Convertible Preferred Stock. Our stock is thinly traded. We do not currently pay any dividends on our common stock. The common stock warrants and shares of Series A convertible preferred stock are deemed under generally accepted accounting principles to contain embedded derivative financial instruments, the periodic valuation of which may result in us recognizing charges due to changes in the market value of these derivative financial instruments. We have identified material weaknesses in our internal control over financial reporting that may prevent us from being able to accurately report our financial results or prevent fraud, which could harm our business and operating results, the trading price of our stock and our access to capital. We have incurred and will continue to incur increased costs as a result of securities laws and regulations relating to corporate governance matters and public disclosures. We are subject to a financial covenant under the Series A Convertible Preferred Stock which restricts our ability to incur indebtedness and could have an adverse effect on our results of operations. If the holders of our Series A Convertible Preferred Stock seek to force a redemption of their shares, we would not have sufficient liquidity to effect this redemption. Risk Factors Relating to our Electronic Security Services Division We intend to continue our strategy of developing a strong regional presence and, as a result, experience significant growth, some of which may adversely affect our operating results, financial condition and existing business. Our inability to continue to acquire businesses in the electronic security services industry could have adverse consequences on our results of operations. Integrating our acquired businesses may be disruptive to or cause an interruption of our business which could have a material adverse effect on our operating results and financial condition. We have encountered and may continue to encounter difficulties implementing our business plan. We have a history of losses, which are likely to continue. Our electronic security services operations are geographically concentrated making us vulnerable to economic and environmental risks inherent to those locations. Our electronic security services division operates in a highly competitive environment and we may not be able to compete effectively for customers, causing us to lose all or a portion of our market share. Increased adoption of false alarm ordinances by local governments may adversely affect our business. Future government regulations or other standards could have an adverse effect on our operations. Increased adoption of statutes and governmental policies purporting to void automatic renewal provisions in our customer contracts, or purporting to characterize certain of our charges as unlawful, may adversely affect our business. Cyclical industry and economic conditions have affected and may continue to adversely affect the financial condition and results of operations of our electronic security services division. Our electronic security services division s business is subject to attrition of subscriber accounts. Lower crime rates could have an adverse effect on our results of operations. We rely on technology that may become obsolete, which could require significant capital expenditures. Shifts in our current and future customers selection of telecommunications services could increase customer attrition and could adversely impact our earnings and cash flow. The loss of our Underwriter Laboratories listing could negatively impact our competitive position. We are exposed to greater risks of liability for employee acts or omissions, or system failure, than may be inherent in other businesses. Risk Factors Relating to our Materials Division and Construction Division Petit, a vendor and landlord of ours in St. Martin, continues to indicate that he believes court intervention will be required to compel compliance by us with respect to the terms of the settlement agreement settling a previous dispute we had with Petit. We have entered into transactions with our affiliates which result in conflicts of interests. We are subject to some risks due to the nature of our foreign operations. Some of our construction contracts have fixed price terms which do not take into account unanticipated changes in production costs, which we would not be able to pass on to the customer. We may incur specified penalties or losses under some of the clauses in the contracts governing our projects. General economic conditions in the markets in which we conduct business could have a material impact upon our operations. Our materials division operates in a highly competitive environment and we may not be able to compete effectively for customers, causing us to lose all or a portion of our market share. We are highly dependent on supplies of cement, concrete block, aggregates and sand and a failure to maintain adequate supplies would adversely affect our operations. Some of our significant customers are governmental agencies of islands in the Caribbean which may constitute a credit risk. We are highly dependent on the availability of barging and towing services in the Caribbean. We are in the process of relocating our ready-mix concrete operation on Sint Maarten from a parcel of land being leased on a month-to-month basis pursuant to a verbal agreement and we have not received all the necessary permits to operate a ready-mix batch plant on the leased parcel to which we are relocating. On March 21, 2007, we sold substantially all of our construction division assets and we believe we have the following risks related to the sale.

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28452--4/17/2007--DEVCON_INTERNATIONAL_CORP