5117--12/1/2006--EMTEC

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{product, market, service}

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{acquisition, growth, future}

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We cannot assure you that we can successfully increase the portion of our revenues derived from IT services. If we are unsuccessful our future results may be adversely affected. Our new services have not achieved widespread client acceptance. If they do not achieve market acceptance, our profit potential may be adversely affected. We may not be able to compete effectively in the highly competitive IT services industry. Our inability to maintain high personnel utilization rates may adversely impact our profit potentiality. Our revenues and expenses are unpredictable. A decrease in revenues or increase in expenses could materially adversely affect our operating results. Since our inception, we have funded our operations primarily from borrowings under our credit facility. Reduction in or elimination of our credit facilities with our primary trade vendors could have a material adverse effect on our business and operations. Our revenues are derived from a few major customers, the loss of any of which could cause our results of operations to be adversely affected. Adverse changes in U.S. Federal Government fiscal spending could have a negative effect on our sales, gross margin, and cash flow. Our quarterly sales and cash flows are volatile, which makes our future financial results difficult to forecast. We must maintain our status as an authorized reseller/service of IT products. The loss on any one of such authorizations could have a material adverse effect on our business and operations. We have no long-term sales commitments from any of our suppliers. A loss of any of our principal supplier would material adversely affect our IT reseller business. Our client engagements entail significant risks and a failure to meet a client s expectations could materially adversely affect our reputation and business. We intend to expand our business through acquisitions of complementary businesses. There is no certainty, however, that we will be successful in acquiring any new businesses or that any such acquisitions will help us achieve our strategic objectives. Holders of our common stock may face a lack of liquidity. The market price of our common stock has been and is likely to continue to be volatile, which may make it difficult for shareholders to resell common stock when they want to and at prices they find attractive. Compliance with changing regulations of corporate governance and public disclosure may result in additional expenses. Infrastructure systems consolidation and implementation of new systems at Old Emtec could have a material adverse affect on our business. Difficulties with the integration of the historical Darr business with the historical Emtec business may impose substantial costs and delays and cause other unanticipated problems for us.

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5117--12/1/2006--EMTEC_INC/NJ