840883--3/30/2006--BTU_INTERNATIONAL_INC

related topics
{operation, international, foreign}
{cost, operation, labor}
{product, market, service}
{system, service, information}
{personnel, key, retain}
{regulation, change, law}
{gas, price, oil}
In the past year, we have substantially improved our global supply chain and reduced our material costs. Failure to maintain these cost reductions would negatively affect our profit margins. Sales of our products to the energy generation markets are subject to substantial risks. If we are unable to increase sales and reduce costs, our profitability may be affected negatively. Our future success will depend on our ability to effectively develop and market our products against those of our competitors. Our international sales and operations are subject to the economic, political, legal and business environments of the countries in which we do business, and our failure to operate successfully or adapt to changes in these environments could cause our international sales and operations to be limited or disrupted. A majority of our revenue is generated from sales in the Asia Pacific region. Our operations are particularly vulnerable to instability in this region and competition from organizations based in this region. Our business systems to manage our Chinese operations are still being developed. If they are not developed and implemented, it could have a material adverse effect on our business. Our primary computer business system in the U.S. is outdated. A significant malfunction could disrupt our business operations. Some of the requirements of Sarbanes-Oxley affect us as a small company disproportionately, and we may not be able to comply in a timely manner despite substantial effort and expense. If we fail to maintain positive relationships with key personnel, we may be unable to successfully grow our business.

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