932372--4/17/2006--Orange_21

related topics

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{stock, price, share}

{property, intellectual, protect}

{stock, price, operating}

{operation, international, foreign}

{product, liability, claim}

{financial, litigation, operation}

{cost, regulation, environmental}

{provision, law, control}

{personnel, key, retain}

{regulation, change, law}

Risks Related to Our Business If we are unable to continue to develop innovative and stylish products, demand for our products may decrease. We may not be able to compete effectively, which will cause our net sales and market share to decline. If our marketing efforts are not effective, our brands may not achieve the broad recognition necessary to our success. If we are unable to leverage our business strategy successfully to develop new products, our business may suffer. Our business could be impacted negatively if our sales are concentrated in a small number of popular products. Our business could be harmed if we fail to maintain proper inventory levels. If we are unable to recruit and retain key personnel necessary to operate our business, our ability to develop and market our products successfully may be harmed. If we are unable to retain the services of our primary product designer, our ability to design and develop new products likely will be harmed. If we are unable to maintain and expand our endorsements by professional athletes, our ability to market and sell our products may be harmed. Any interruption or termination of our relationships with our manufacturers could harm our business. Our manufacturers must be able to continue to procure raw materials and we must continue to receive timely deliveries from our manufacturers to sell our products profitably. Any failure to maintain ongoing sales through our independent sales representatives or maintain our international distributor relationships could harm our business. We face business, political, operational, financial and economic risks because a significant portion of our operations and sales are to customers outside of the United States. Fluctuations in foreign currency exchange rates could harm our results of operations. We may experience conflicts of interest with our significant stockholder, No Fear, Inc., which could harm our other stockholders. If we fail to secure or protect our intellectual property rights, competitors may be able to use our technologies, which could weaken our competitive position, reduce our net sales or increase our costs. We may be subject to claims by third parties for alleged infringement of their proprietary rights, which are costly to defend, could require us to pay damages and could limit our ability to use certain technologies in the future. If we fail to manage any growth that we might experience, our business could be harmed and we may have to incur significant expenditures to address this growth. We incur significant expenses as a result of being a public company. We may not address successfully problems encountered in connection with our acquisition of LEM or any future acquisitions, which could result in operating difficulties and other harmful consequences. Our eyewear products may subject us to product liability claims, which are expensive to defend and may require us to pay damages. We could incur substantial costs to comply with foreign environmental laws, and violations of such laws may increase our costs or require us to change certain business practices. Risks Related to the Market for Our Common Stock Our stock price may be volatile, and you may not be able to resell our shares at a profit or at all. Fluctuations in our operating results on a quarterly and annual basis could cause the market price of our common stock to decline. Future sales of our common stock in the public market could cause our stock price to fall. Delaware law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable. We are party to securities litigation that distracts our management, is expensive to conduct and seeks a damage award against us.

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932372--4/17/2006--Orange_21_Inc.