901696--7/23/2007--MTI_TECHNOLOGY

related topics

{stock, price, operating}

{cost, operation, labor}

{control, financial, internal}

{product, market, service}

{stock, price, share}

{customer, product, revenue}

{acquisition, growth, future}

{personnel, key, retain}

{system, service, information}

{financial, litigation, operation}

{property, intellectual, protect}

{provision, law, control}

{regulation, government, change}

{operation, international, foreign}

We are dependent upon EMC as the main supplier for our storage solutions, and disruptions in supply or increases in costs could harm our business materially. We may need additional financing to continue to carry on our existing operations and such additional financing may not be available. Our stock ownership is concentrated in a few stockholders who may be able to influence corporate decisions. We have experienced challenges associated with integrating our company and Collective. A significant portion of our revenues occurs in the last month of a given quarter. Consequently, our results of operations for any particular quarter are difficult to predict. We have a history of operating losses, and our future operating results may depend on the success of our cost reduction initiatives and on other factors. We are subject to financial and operating risks associated with international sales and services. The storage market is characterized by rapid technological change, and our success will depend on EMC s ability to develop new products. The markets for the products and services that we sell are intensely competitive, which may lead to reduced sales of our products, reduced profits and reduced market share for our business. Our quarterly results may fluctuate from period to period. Therefore, historical results may not be indicative of future results or be helpful in evaluating the results of our business. Our solutions are complex and may contain undetected software or hardware errors that could be difficult, costly, and time-consuming to repair. Domestic employment at MTI, including employment of our domestic key personnel, is generally at will. We may have difficulty managing any future growth effectively. We may face inherent costly damages or litigation costs if third parties claim that we infringe upon their intellectual property rights. If we and our partners are unable to comply with evolving industry standards and government regulations, we may be unable either to sell our solutions or to be competitive in the marketplace. Our common stock is not traded on a national securities exchange and is subject to the penny stock rules. Our stock price may be volatile, which could lead to losses by investors and to securities litigation. We may not have registered, or we may not have had an exemption from registering, certain options under the California securities laws and may incur liability to repurchase the options or face potential claims under the California securities laws. We have identified a material weakness in our internal control over financial reporting that could cause investors to lose confidence in the reliability of our financial statements and result in a decrease in the value of our securities. Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. Our stockholders may be diluted by the conversion of outstanding Series A and Series B and the exercise of warrants to purchase common stock. We have adopted anti-takeover defenses that could affect the price of our common stock.

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901696--7/23/2007--MTI_TECHNOLOGY_CORP