852437--9/28/2007--AVATECH_SOLUTIONS

related topics

{stock, price, share}

{acquisition, growth, future}

{provision, law, control}

{control, financial, internal}

{customer, product, revenue}

{debt, indebtedness, cash}

{property, intellectual, protect}

{interest, director, officer}

{system, service, information}

Risk Factors Relating to Our Business Generally We have a history of significant losses and may never achieve consistent profitability. We have a limited operating history, which makes it difficult to evaluate our business and prospects. Our reliance on the sale and integration of a single software vendor s products could decrease our revenues and our profitability. If our relationship with Autodesk is not renewed, our revenues would significantly decrease and such decrease would jeopardize our viability. Our products may contain undetected errors that could harm our sales and revenue and result in increased operating expenses and liabilities. We may inadvertently infringe on third party proprietary rights, which could result in costly litigation, reduced sales and revenue and a decline in the price of our stock. If we are unable to raise additional capital on favorable terms, our ability to fund growth and otherwise operate our business will be significantly limited. The terms of our indebtedness imposes restrictions on our ability to raise capital, if necessary. We may not be able to successfully expand through strategic acquisitions, which could decrease our profitability. Any acquisition we make could disrupt our business and harm our financial condition and operations. Risk Factors Relating to our Stock and Capital Structure Several factors could materially and adversely affect the price of our stock. The conversion of our Series D Convertible Preferred Stock, the conversion of our Series E Convertible Preferred Stock, the conversion of our Series F Cumulative Convertible Preferred Stock, and the exercise of a substantial number of outstanding warrants issued in connection with those Preferred Stock issuances, and certain other warrants, would increase the amount of our common stock in the trading market, which could substantially affect the market price of our common stock. The exercise of outstanding options will dilute the percentage ownership of our stockholders, and any sales in the public market of shares of our common stock underlying such options may adversely affect prevailing market prices for our common stock. The Selling Stockholders may choose to sell shares at prices below the current trading price. Risk Factors Relating to our Certificate of Incorporation Our Certificate of Incorporation and bylaws could delay or prevent the acquisition or sale of our company and prevent our shareholders from receiving any potential benefit from an offer to acquire us. The liability of our directors is limited. It is unlikely that we will issue dividends on our common stock in the foreseeable future.

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852437--9/28/2007--AVATECH_SOLUTIONS_INC