EXHIBIT 99.1


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS

In passing the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"), Congress encouraged public companies to make "forward-looking statements"
by creating a safe harbor to protect companies from securities law liability in
connection with forward-looking statements. White Electronic Designs Corporation
(the "Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe harbor
provisions.

"Forward-looking statements" are defined in the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. The words
"believe," "expect," "anticipate" and other similar statements of expectations
identify forward-looking statements, and include expectations regarding the
future demand for the Company's products, reduction of inventory value, and
future research and development expenditures, future funding sources for capital
expenditures, liquidity for the next twelve months, and the effect of accounting
changes on the amortization of goodwill, all of which speak only as of the date
the statement is made. Such forward-looking statements are within the meaning of
that term in Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All forward-looking
statements are inherently uncertain as they are based on various expectations
and assumptions concerning future events and they are subject to numerous known
and unknown risks and uncertainties that could cause actual events or results to
differ materially from those projected. Due to those and other uncertainties and
risks, the investment community is urged not to place undue reliance on written
or oral forward-looking statements of the Company. The Company undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events, or changes to future
operating results over time.

Important factors currently known to management that could cause actual results
to differ materially from those in forward-looking statements include the
disclosures contained in the Company's Quarterly Report on Form 10-Q to which
this statement is appended as an exhibit and also include the following:

RISK FACTORS

OPERATING RESULTS

Capital Expenditures and Operating Expenses. The Company's need for continued
significant expenditures for capital equipment purchases, research and
development and ongoing customer service and support, among other factors, will
make it difficult for the Company to reduce its operating expenses in a
particular period if the Company's net sales for a period are not met because a
substantial component of the operating expenses are fixed costs. Accordingly,
there can be no assurance that the Company will be able to be profitable or that
it will not sustain losses in future periods. Due to the foregoing factors, it
is likely that in some future quarter the Company's operating results will be
below the expectations of public market analysts and investors. In such an
event, the price of the Company Common Stock may be materially adversely
affected.

Microelectronic Business. In connection with the Company's microelectronics
memory business, a wide array of factors could cause the Company's results of
operations and gross margins to fluctuate in the future from period to period.
The primary factors that might affect the Company's results of operations in
this regard include the cyclical nature of the semiconductor market; any loss of
a principal customer or any short term loss of a customer due to product
inventory accumulation by the customer; any inability to procure required
components; any adverse changes in the mix of products sold by the Company; and
any downturn of the semiconductor market which could cause a decline in selling
unit prices, diminished inventory value, and less demand for commercial memory
products as customers restrict inventory levels.

Even in the absence of cyclical conditions, the average selling prices of our
products have historically decreased during the products' lives, and we expect
this trend to continue. In order to offset these


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average selling price decreases, we attempt to decrease manufacturing costs, and
introduce new, higher priced products that incorporate advanced features. If
these efforts are not successful, our business, financial condition, and results
of operations could be seriously harmed.

Reduction in Inventory Values. Historically, the Company has experienced
reductions in value of the Company's inventories due to unexpected demand
declines, resulting from a softening of the semiconductor and telecommunications
industries. Such declines in inventory valuation have had an adverse effect on
the Company's financial condition and results of operations in the past and
could have an adverse effect on the Company's financial condition and results of
operations in future periods.

DEPENDENCE ON DEFENSE INDUSTRIES

Our current orders from defense-related companies account for a material portion
of the Company's overall revenues. Military capital expenditure levels fluctuate
from year to year and depend on factors that are outside the control of the
Company. In addition, the U.S. defense industry has been moving toward the
purchase of "commercial off-the-shelf" ("COTS") products rather than those
manufactured as compliant to specified military standards. In fiscal 2001,
military related sales accounted for approximately 46% of the Company's overall
sales. Changes in military spending and the shift in military demand for
microelectronics and display products may have an adverse effect on the sales
and profit of the Company. Reductions in military spending could adversely
affect our business, financial condition, and results of operations.

DEPENDENCE ON INTERNATIONAL SALES AND PURCHASES

The Company anticipates that international sales will continue to account for a
significant portion of the Company's net sales. In fiscal 2001, foreign sales
accounted for approximately 22% of the Company's overall sales. In addition, the
majority of the components used by the Company in connection with products for
military applications are acquired from foreign manufacturers worldwide,
particularly countries located in Asia. As a result, a significant portion of
the Company's sales and purchases are subject to the risks of international
business, including fluctuations in foreign currencies which can diminish demand
for the Company's products by making them more expensive, trade disputes,
changes in regulatory requirements, tariffs and other barriers, the possibility
of quotas, duties, taxes or other changes or restrictions upon the importation
or exportation of the products being implemented by the United States, timing
and availability of export licenses and the general economies and government
stability of these countries in which the Company transacts business. Foreign
suppliers of semiconductors and displays are regularly threatened with, or
involved in, pending trade disputes and sanctions which, if realized, could
materially adversely effect the Company by closing off critical sources of
supply for the raw materials used to produce our products.

DOWNTURNS IN THE MARKETS IN WHICH WE SELL OUR PRODUCTS

During the years of 1999 and 2000, the telecommunications industry saw explosive
growth in sales mainly because of advances in computer technology, development
of enhanced signal carrying technologies, and the expansion of the Internet.
However, during 2001 the Company experienced a dramatic decline in orders for
networking and telecommunication equipment because of slowing demand, broadband
overcapacity, and failure of hundreds of Internet companies. We currently sell a
large majority of our commercial microelectronic products to original equipment
manufacturers in the telecommunications industry. The growth of this industry
helped our commercial division grow significantly during 1999 and 2000. However,
the downturn in the industry and the United States' economy in general in 2001
adversely affected the sales of our commercial division. The Internet is still
in a formative and developmental stage. There may be unpredictable changes in
the future that may cause reduced growth in Internet usage. It would be
reasonable to assume that the telecommunications industry could continue to
experience declining, or slow growth rates, similar to many other industries
that grew and matured. At this time, there does not appear to be any indications
that growth in this industry will return to high levels during 2002. Given our
current dependence on this industry for a large portion of our sales and
profits, a continued period of slow growth, or a significant worsening of the
United States' economy in general, would have a material adverse effect on our
business.

Our continued success also depends on continued growth of other various
industries that use our


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products, including the following industries: medical electronics and equipment,
global positioning systems and devices, outdoor liquid crystal displays,
industrial controls, aviation electronics and equipment, and military equipment.
Any decline in the demand for equipment in these industries could also seriously
harm our business, financial condition, and operating results.

ABSENCE OF CONTRACTUALLY ASSURED SOURCES OF SUPPLY/GENERAL LIMITATIONS ON SUPPLY

The most significant raw materials that the Company purchases in its operations
are memory devices in wafer, die and component forms and AMLCD panels. In a time
of strong demand for memory integrated circuits and other products, sources of
supply of wafers, die and other components may be constrained and subject to
shortages, and the ability of the Company to compete is heavily dependent on its
ability to maintain access to steady sources of supply. AMLCD panels may also be
in short supply, at times. The Company is highly dependent on one SRAM
semiconductor manufacturer for memory devices, one major display manufacturer of
AMLCD panels, and one package manufacturer of ceramic packages for military
components. No assurance can be given that existing access to the Company's
current sources of supply may not be impaired in the future. Any such impairment
could have a material adverse effect on the Company.

A manufacturer's ability to compete is heavily dependent on its ability to
maintain access to steady sources of supply. To address these needs, the Company
has maintained strong relationships with leading semiconductor, display, and
ceramic package manufacturers in the United States and the Far East. The Company
has no specific long-term contractual arrangement with its vendors.

The Company has not encountered, and does not anticipate encountering any
significant difficulty in its purchase of components (some of which must be
ordered months in advance). However, any disruption of supplies from one of our
key vendors could seriously harm our business, financial condition, and results
of operations.

MAINTAINING QUALIFIED PERSONNEL

The Company's ability to compete in the market and successfully manufacture
quality products is dependent on our ability to attract and retain qualified
employees in the areas of product design, engineering, operations management,
manufacturing production, and sales. The demand for people with expertise in
these areas has been very high for the past several years, and competition for
qualified talent is intense. The loss of key personnel in any one of these
areas, particularly in our display segment, could have a material adverse effect
on the results of the business segment.

PROTECTION OF INTELLECTUAL PROPERTY RIGHTS

We rely on trade secret protection for our technology, in part through
confidentiality agreements with our employees, consultants, and third parties.
However, these parties may breach these agreements, and we may not have adequate
remedies for any breach. The loss of proprietary internal information could have
an adverse effect on our business.

RISKS OF TECHNOLOGY CHANGE AND DEVELOPMENT OF NEW PRODUCTS

The Company's future results of operations will be dependent upon its ability to
improve and market its existing products and to develop, manufacture and market
new products. There can be no assurance that the Company will be able to
continue to improve and market its existing products or develop and market new
products, or that technological developments will not cause the Company's
products or technology to become obsolete or noncompetitive.

Many of the Company's display products have been developed based on products
procured from Sharp Electronics Corporation ("Sharp"). Competitors in the flat
panel display business are investing substantial resources in the development
and manufacture of flat panel displays using a number of alternative
technologies. In the event these efforts result in the development of products
that offer significant advantages over Sharp's and the Company's products, and
the Company is unable, in a timely manner, to improve its technology or develop
or acquire alternative technology that is more competitive, the


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Company's business and results of operations will be adversely affected.

Like many other companies that operate in the microelectronic and display
industries, we face a highly competitive, quickly changing environment marked by
rapid obsolescence of existing products. Our future success depends on our
ability to develop and introduce new products that customers choose to buy.
Ultimately, whether we can successfully introduce these new products depends on
our ability to develop and implement new ways of manufacturing products. If we
are unable to design, develop, manufacture, market and sell new products
successfully, our business, financial condition, and results of operations would
be seriously harmed.

VOLATILE MARKET PRICE FOR COMPANY STOCK

The market price for the Company's Common Stock is subject to fluctuations in
response to a number of factors, including variations in the Company's quarterly
operating results, perceptions about market conditions in the microelectronics
and defense industries, and the effect of general economic conditions, many of
which are unrelated to the Company's operating performance. In addition, the
stock market generally has experienced significant price and volume
fluctuations. These market fluctuations could have a material adverse effect on
the market price or liquidity of the Company's Common Stock.

ENVIRONMENTAL REGULATIONS

The Company is subject to a variety of federal, state and local governmental
regulations related to the storage, use, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in its manufacturing process.
Increasing public attention has been focused on the environmental impact of
microelectronic manufacturing operations. While the use of toxic, volatile or
otherwise hazardous substances by the Company is small, there can be no
assurance that changes in environmental regulations will not impose the need for
additional capital equipment or other requirements. Any failure by the Company
to control the use of, or to adequately restrict the discharge of, hazardous
substances under present or future regulations could subject the Company to
substantial liability or could cause its manufacturing operations to be
suspended. Such liability or suspension of manufacturing operations could have a
material adverse effect on the Company's business, financial conditions and
results of operations.


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