1007800--3/30/2007--SIPEX

related topics

{customer, product, revenue}

{product, market, service}

{system, service, information}

{operation, natural, condition}

{competitive, industry, competition}

{debt, indebtedness, cash}

{stock, price, operating}

{personnel, key, retain}

{control, financial, internal}

{stock, price, share}

{loss, insurance, financial}

{property, intellectual, protect}

{product, liability, claim}

{acquisition, growth, future}

{operation, international, foreign}

{regulation, change, law}

{cost, regulation, environmental}

We may need to obtain a significant amount of additional capital in the future and may not be able to secure adequate funds on a timely basis or on terms acceptable to us. Our management has identified certain material weaknesses in the design and operation of our internal controls, which, if not adequately addressed, could result in accounting errors, call into question the accuracy of our financial results. If we are unable to accurately forecast demand for our products, we may be unable to efficiently manage our inventory. We are not currently listed on a national exchange or market, and can offer no assurance that we will ever be listed. We may face unforeseen complications from the transfer our manufacturing processes to Silan in China and Episil Technologies in Taiwan. We may experience difficulties in developing and introducing new or enhanced products necessitated by technological advances. The introduction of our new products may be delayed in order to test for and resolve design flaws. We depend on distributors who sell directly to OEMs and the loss of one or more of our significant distributors could have a material adverse effect on our business. We may not successfully expand our sales and distribution channels. We derive a substantial portion of our revenues from Future, a related party, and our revenues would likely decline significantly if Future elected not to make, cancel, reduce or defer purchases of our products. Affiliates of Future, our largest distributor, beneficially own a significant percentage of our common stock, which will allow them to significantly influence matters requiring stockholders approval and could discourage potential acquisition of our Company. Occasionally, we enter into agreements that expose us to potential damages that exceed the value of the agreement. We may face significant risks related to our international operations. Our inability to meet any increase in demand could reduce our market share. If we are unable to compete effectively with existing or new competitors, we will experience fewer customer orders, reduced revenues, reduced gross margins and lost market share. The implementation of a new management information system may disrupt our business. A failure of our information systems would adversely impact our ability to process orders for and manufacture products. We have only limited protection for our proprietary technology. Our future success depends on retaining our key personnel and attracting and retaining additional highly qualified employees. Product defects or compatibility problems with our products could damage our reputation, decrease market acceptance of our technology, cause us to replace defective or incompatible products at a substantial cost and result in potentially costly litigation. The manufacturing processes for our products are very complex, which may result in manufacturing difficulties. We increasingly rely on outside foundries to supply certain of our wafers and those foundries may not produce at acceptable levels. Our ability to meet current demand or any increase in demand for our products may be limited by our ability to test our semiconductor wafers. The facilities of certain of our significant customers and third party wafer suppliers are located in areas susceptible to earthquakes and other natural disasters. We rely on outside suppliers to assemble, test and ship product to our customers. We must comply with significant environmental regulations, employment tax regulations, employment practices and other governmental regulations which are difficult and expensive. We substantially increased our outstanding indebtedness with the issuance of 5.5% Redeemable Convertible Senior Notes Due 2026, and we may not be able to pay our debt and other obligations.

Full 10-K form ▸

1007800--3/30/2007--SIPEX_CORP