722313--3/9/2007--NORTECH_SYSTEMS

related topics

{customer, product, revenue}

{operation, international, foreign}

{debt, indebtedness, cash}

{operation, natural, condition}

{competitive, industry, competition}

{product, liability, claim}

{personnel, key, retain}

{cost, regulation, environmental}

{acquisition, growth, future}

We operate in a in the highly competitive EMS (Electronic Manufacturing Services) industry. A large percentage of our sales have been made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. We are dependent on suppliers for electronic components and may experience shortages, cost premiums and shipment delays that would adversely affect our customers and us. Our customers cancel orders, change order quantity, timing and specifications and if not managed would have an adverse affect on inventory carrying costs. The manufacture and sale of our products carries potential risk for product liability claims. We depend heavily on our people and may from time to time have difficulty attracting and retaining skilled employees. Operating in foreign countries expose our operations to risks that could adversely affect our operating results. Non-compliance with environmental laws may result in restrictions and adverse effects on operations. We may be subject to risks associated with our acquisitions, and the risks could have an adverse effect on our operating results. If we fail to comply with the covenants contained in our revolving credit facility we may be unable to secure additional financing and repayment obligations on our outstanding indebtedness may be accelerated. Our business may be impacted by natural disasters.

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722313--3/9/2007--NORTECH_SYSTEMS_INC