866609--3/2/2009--ION_GEOPHYSICAL

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{product, market, service}

{debt, indebtedness, cash}

{system, service, information}

{customer, product, revenue}

{operation, international, foreign}

{stock, price, share}

{operation, natural, condition}

{gas, price, oil}

{condition, economic, financial}

{personnel, key, retain}

{loan, real, estate}

{property, intellectual, protect}

{acquisition, growth, future}

{tax, income, asset}

{stock, price, operating}

{cost, regulation, environmental}

The current economic and credit environment and lower oil and natural gas prices could have a continuing adverse affect on demand for certain of our products and services, our results of operations, our cash flows, our financial condition, our ability to borrow and our stock price. We have a substantial amount of outstanding indebtedness, and we will need to pay or refinance our existing indebtedness or incur additional indebtedness, which may adversely affect our operations. To comply with our indebtedness and other obligations, we will require a significant amount of cash and will be required to satisfy certain debt financial covenants. Our ability to generate cash and satisfy debt covenants depends on many factors beyond our control. Given the reduced budgets for capital expenditures by E P companies, demand for our products and services and our results of operations will be adversely affected. We derive a substantial amount of our revenues from foreign operations and sales, which pose additional risks. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Due to the international scope of our business activities, our results of operations may be significantly affected by currency fluctuations We may not gain rapid market acceptance for our full-wave digital products, which could materially and adversely affect our results of operations and financial condition. Our operating results may fluctuate from period to period, and we are subject to seasonality factors. Our outstanding shares of Series D-1 Cumulative Convertible Preferred Stock, Series D-2 Cumulative Convertible Preferred Stock and Series D-3 Cumulative Convertible Preferred Stock are convertible into shares of our common stock. The conversion of these securities would result in substantial dilution to existing stockholders, and sales in the open market of the shares of common stock acquired upon conversion may have the effect of reducing the then-current market prices for our common stock. Technologies and businesses that we acquire (including those in connection with the ARAM acquisition) may be difficult to integrate, disrupt our business, dilute stockholder value or divert management attention. Goodwill and other intangible assets that we have recorded in connection with our acquisitions are subject to mandatory annual impairment evaluations and as a result, we could be required to write-off additional goodwill and other intangible assets, which may adversely affect our financial condition and results of operations. We are exposed to risks related to complex, highly technical products. Reservoir Exploration Technology (RXT) has been a significant customer of our Marine Imaging Systems segment. A loss of business from this customer could adversely affect our sales and financial condition if RXT is not replaced by another customer or customers. We rely on highly skilled personnel in our businesses, and if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow effectively. If we do not effectively manage our transitions into new products and services, our revenues may suffer. Technological change in the seismic industry requires us to make substantial research and development expenditures. We invest significant sums of money in acquiring and processing seismic data for our ION Solutions multi-client data library. The loss of any significant customer could materially and adversely affect our results of operations and financial condition. Our ION Solutions and Data Management Solutions segments increase our exposure to the risks experienced by more technology-intensive companies. We are subject to intense competition, which could limit our ability to maintain or increase our market share or to maintain our prices at profitable levels. Certain of our facilities could be damaged by hurricanes and other natural disasters, which could have an adverse effect on our results of operations and financial condition. We have outsourcing arrangements with third parties to manufacture some of our products. If these third party suppliers fail to deliver quality products or components at reasonable prices on a timely basis, we may alienate some of our customers and our revenues, profitability, and cash flow may decline. Additionally, the current global economic crisis could have a negative impact on our suppliers, causing a disruption in our vendor supplies. A disruption in vendor supplies may adversely affect our results of operations. Our outsourcing relationships may require us to purchase inventory when demand for products produced by third-party manufacturers is low. We may be unable to obtain broad intellectual property protection for our current and future products and we may become involved in intellectual property disputes. Our operations, and the operations of our customers, are subject to numerous government regulations, which could adversely limit our operating flexibility. If we, our option holders or our existing stockholders holding registration rights sell additional shares of our common stock in the future, the market price of our common stock could decline.

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866609--3/2/2009--ION_GEOPHYSICAL_CORP