3197--4/2/2007--CECO_ENVIRONMENTAL

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{customer, product, revenue}

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{control, financial, internal}

{stock, price, operating}

{product, market, service}

{capital, credit, financial}

{cost, regulation, environmental}

{cost, contract, operation}

{regulation, change, law}

{interest, director, officer}

{competitive, industry, competition}

{operation, natural, condition}

{operation, international, foreign}

{property, intellectual, protect}

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Our dependence upon fixed-price contracts could adversely affect our operating results. If actual costs for our projects with fixed-price contracts exceed our original estimates, our profits will be reduced or we may suffer losses. We have a substantial amount of indebtedness, which may adversely affect our ability to operate our business, remain in compliance with debt covenants, make payments on our debt and limit our growth. Our inability to deliver our backlog on time could affect our future sales and profitability, and our relationships with our customers. Since our financial performance is seasonal, current results are not necessarily indicative of future results. Our financial performance may vary significantly from period to period, making it difficult to estimate future revenue. We have a history of net losses, and may not be profitable in the future. Percentage-of-completion method of accounting for contract revenue may result in material adjustments that would adversely affect our operating results. A significant portion of our accounts receivable are related to large contracts, which increases our exposure to credit risk. Changes in billing terms can increase our exposure to working capital and credit risk. Customers may cancel or delay projects. As a result our backlog may not be indicative of our future revenue. Our gross margins are affected by shifts in our product mix. We face significant competition in the markets we serve. Increasing costs for manufactured components, raw materials, transportation, health care and energy prices may adversely affect our profitability. Our business is affected by the health of the markets we serve. Our industry has recently experienced shortages in the availability of qualified personnel. Any difficulty we experience replacing or adding qualified personnel could adversely affect our business. We rely on a few key employees whose absence or loss could disrupt our operations or be adverse to our business. We may make future acquisitions, which involve numerous risks that could impact our business and results of operations. Our manufacturing operations are dependent on third-party suppliers. The relocation of our largest manufacturing and corporate office facility located in Cincinnati, Ohio could result in a negative impact on the Company s financial performance. Our operations outside of the United States are subject to political, investment and local business risks. If we do not develop improved products and new products in a timely manner in response to industry demands, our business and revenues will be adversely affected. Our business can be significantly affected by changes in technology and regulatory standards. We might be unable to protect our intellectual property rights and our products could infringe the intellectual property rights of others, which could expose us to costly disputes. Work stoppages or similar difficulties could significantly disrupt our operations. We may incur material costs as a result of product liability claims, which could adversely affect our business, results of operations and financial condition and cash flows. Liability to customers under warranties may adversely affect our reputation, our ability to obtain future business and our earnings. We may become liable for the obligations of our subcontractors. Our business is subject to risks of terrorist acts, acts of war and natural disasters. There are inherent limitations in all internal control systems over financial reporting, and misstatements due to error or fraud may occur and not be detected. If we are unable to complete our assessment of the adequacy of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock. Our executive officers and directors are able to exercise significant influence over our company, and their interests may conflict with those of our other stockholders. We have engaged in the past, and continue to engage, in related party transactions and such transactions present possible conflicts of interest. The limited liquidity for our common stock could affect your ability to sell your shares at a satisfactory price. Issuance of shares under our stock incentive plan or in connection with financing transactions will dilute current stockholders. The number of shares of our common stock eligible for future sale could adversely affect the market price of our stock. Our ability to issue preferred stock could adversely affect the rights of holders of our common stock. Certain provisions in our charter documents have anti-takeover effects. Because we have no plans to pay any dividends for the foreseeable future, investors must look solely to stock appreciation for a return on their investment in us.

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3197--4/2/2007--CECO_ENVIRONMENTAL_CORP