928054--3/31/2010--FLOTEK_INDUSTRIES

related topics

{stock, price, share}

{condition, economic, financial}

{acquisition, growth, future}

{customer, product, revenue}

{gas, price, oil}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{personnel, key, retain}

{operation, natural, condition}

{control, financial, internal}

{product, market, service}

{competitive, industry, competition}

{system, service, information}

{loss, insurance, financial}

{operation, international, foreign}

{property, intellectual, protect}

{provision, law, control}

{stock, price, operating}

Risks Related to Our Business We have not had profitable operations during 2009 and may not be profitable in 2010. Demand for the majority of our services is substantially dependent on the levels of expenditures by the oil and gas industry. Current global economic conditions continue to result in low oil and gas prices. If current global economic conditions and the availability of credit worsen or continue for an extended period, this could reduce our customers levels of expenditures and have a significant adverse effect on our revenue, margins and overall operating results. Our business depends primarily on domestic spending by the oil and gas industry, and this spending and our business may be adversely affected by industry conditions or by new or increased government regulations that are beyond our control. We may not be able to generate sufficient cash flows, to meet our debt service obligations or other liquidity needs, and we may not be able to successfully negotiate waivers or a new credit agreement to cure any covenant violations under our current credit agreements. Our new senior credit facility contains certain covenants that could limit our flexibility and prevent us from taking certain actions, which could adversely affect our ability to execute our business strategy. Our future success and profitability may be adversely affected if we or our suppliers fail to develop and introduce new and innovative products and services that appeal to our customers. We intend to pursue strategic acquisitions, which could have an adverse impact on our business. If we do not manage the potential difficulties associated with expansion successfully, our operating results could be adversely affected. Our ability to grow and compete in the future will be adversely affected if adequate capital is not available. Our current insurance policies may not be adequate to protect our business from all potential risks. We are subject to complex foreign, federal, state and local environmental, health and safety laws and regulations, which expose us to costs and liabilities that could have a material adverse effect on our business, financial condition and results of operations. Regulation of greenhouse gases and climate change could have a negative impact on our business. If we are unable to adequately protect our intellectual property rights or are found to infringe intellectual property rights of others our business is likely to be adversely affected. We and our customers are subject to risks associated with doing business outside of the United States which may expose us to political risk, foreign exchange risk and other uncertainties. The loss of certain key customers could have a material adverse effect on our results of operations and could result in a decline in our revenue. The loss of certain key suppliers, our inability to secure raw materials on a timely basis, or our inability to pass commodity price increases on to our customers could have a material adverse effect on our ability to service our customer s needs and could result in a loss of customers. Our inability to develop new products or differentiate our products could have a material adverse effect on our ability to service our customer s needs and could result in a loss of customers. If we lose the services of key members of our management, we may not be able to manage our operations and implement our growth strategy effectively. Failure to maintain effective disclosure controls and procedures and internal controls over financial reporting could have an adverse effect on our operations and the trading price of our common stock. Risks Related to Our Industry The extension of the worldwide recession could continue to have an adverse effect on exploration and production activity and result in lower demand for our services and products. Continuation of the global credit crisis could have an adverse impact on our customers and on our dealings with lenders, insurers and financial institutions. A period of prolonged depressed oil and natural gas prices may result in reduced demand for our products and services which may adversely affect our business, financial condition and results of operations. Competition from new and existing competitors within our industry could have an adverse effect on our results of operations. Our industry has experienced a high rate of employee turnover. Any difficulty we experience attracting or retaining personnel or agents could adversely affect our business. Severe weather could have a material adverse impact on our business. A terrorist attack or armed conflict could harm our business. Risks Related to Our Securities The market price of our common stock has been and may continue to be volatile. An active market for our common stock may not continue to exist or may not continue to exist at current trading levels. If we do not meet the New York Stock exchange continued listing requirements, our common stock may be delisted, which could have an adverse impact on the liquidity and market price of our common stock. We have no plans to pay dividends on our common stock, and, therefore, investors will have to look to stock appreciation for return on their investments. Certain anti-takeover provisions of our charter documents and under Delaware law could discourage or prevent others from acquiring our company, which may adversely affect the market price of our common stock. Future issuance of additional shares of our common stock could cause dilution of ownership interests and adversely affect our stock price. We may issue additional shares of preferred stock or debt securities with greater rights than our common stock. Disclaimer of Obligation to Update

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928054--3/31/2010--FLOTEK_INDUSTRIES_INC/CN/