FormerXBC Inc XEBEQ

Operations Risk

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1) We currently depend on a relatively limited number of customers for most of our revenues and a decrease in revenue from these customers could materially adversely affect our business, consolidated financial condition, and results of operations. 2) We are dependent on third party suppliers for key materials and components for our products. If these suppliers become unable or unwilling to provide us with enough materials and components on a timely and cost-effective basis, we may be unable to manufacture our products cost-effectively or at all, and our revenues and gross margins would suffer. 3) Any failures or delays in field tests of our products could negatively affect our customer relationships and increase our manufacturing costs.