788920--9/28/2010--PRO_DEX

related topics

{customer, product, revenue}

{financial, litigation, operation}

{condition, economic, financial}

{personnel, key, retain}

{product, market, service}

{regulation, change, law}

{property, intellectual, protect}

{regulation, government, change}

{control, financial, internal}

{debt, indebtedness, cash}

{stock, price, operating}

{stock, price, share}

{cost, regulation, environmental}

We face significant uncertainty in the industry due to government healthcare reform. Our operations are subject to a number of complex government regulations, the violation of which could have a material adverse effect on our business. We face significant competition from a number of different sources, which could negatively impact our results of operations and business conditions. Our quarterly results can fluctuate significantly from quarter to quarter, which may negatively impact the price of our shares and/or cause significant variances in the prices at which such shares trade. A substantial portion of our business is derived from our three core business areas that, if not serviced properly, may result in a material adverse impact upon our business, results of operations and financial condition. A substantial portion of our revenue is derived from a small number of customers such that if we were to lose one, it could have a material adverse effect on our business, financial condition and results of operations. We have recently violated certain credit facility covenants and risk violating additional credit facility covenants in the future, which could result in an event of default under our credit facilities and in the acceleration of all amounts owing under all of our credit facilities, the loss of one or more of credit facilities and the need for us to seek alternative financing. The global economic environment may impact our business, operating results or financial condition. The industry in which we operate is subject to significant technological change and any failure or delay in addressing such change could adversely affect our competitive position or could make our current products obsolete. We face risks and uncertainties associated with potential litigation by or against us, which could have a material adverse effect on our business, results of operations and financial condition . Our products may be subject to product liability legal claims which may cost us significant amounts in both money and management time and resources We rely heavily on our proprietary technology, which if not properly protected or deemed invalid, could have a material adverse effect on our business, results of operations and financial condition. Our failure to manage changing sales levels could harm us by having a material adverse effect on our business and results of operations. Our operations are dependent upon our key personnel. If such personnel were to leave unexpectedly, we may not be able to execute our business plan. The failure to maintain the market price of our common stock may affect our ability to remain a publicly-traded company on the NASDAQ exchange. We are subject to changes in and interpretations of financial accounting matters that govern the measurement of our performance, compliance with which could be costly and time consuming Our evaluation of internal controls and remediation of potential problems is costly and time consuming and could expose weaknesses in financial reporting.

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788920--9/28/2010--PRO_DEX_INC