RELL Richardson Electronics Ltd.

Risks

• We may not achieve our plan for sales growth and margin targets.
• We have historically incurred significant charges for inventory obsolescence, and may incur similar charges in the future.
• We face competitive pressures that could have a material adverse effect on our business.
• We are dependent on a limited number of vendors to supply us with essential products.
• International operations represent a significant percentage of our business and present a variety of risks that could impact our results.
• We rely heavily on information technology systems that, if not properly functioning, could materially adversely affect our business.
• Our products may be found to be defective or our services performed may result in equipment or product damage and, as a result, warranty and/or product liability claims may be asserted against us.
• Failure to successfully implement our growth initiatives, or failure to realize the benefits expected from these initiatives if implemented, may create ongoing operating losses or otherwise adversely affect our business, operating results and financial condition.
• We may not be successful in identifying, consummating and integrating future acquisitions.
• Economic weakness and uncertainty could adversely affect our revenues and gross margins.
• Major disruptions to our logistics capability or to the operations of our key vendors or customers could have a material adverse impact on our operations.
• We may be subject to intellectual property rights claims, which are costly to defend, could require payment of damages or licensing fees, and/or could limit our ability to use certain technologies in the future.
• If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls over financial reporting, we may not be able to detect fraud or report our financial results accurately or timely.
• If we are deemed to be an investment company, we will be required to meet burdensome compliance requirements and restrictions on our activities.
• The company recorded a non-cash impairment charge for the full value of our goodwill and there remains the risk of possible additional future identifiable intangible asset impairment, which could reduce the value of our assets and reduce our net income in the year in which the write-off occurs.