1048611--3/16/2007--COLOR_KINETICS

related topics

{customer, product, revenue}

{acquisition, growth, future}

{property, intellectual, protect}

{control, financial, internal}

{stock, price, operating}

{cost, operation, labor}

{personnel, key, retain}

{system, service, information}

{operation, international, foreign}

{competitive, industry, competition}

{operation, natural, condition}

{stock, price, share}

Because we have a limited history of profitable operations and typically do not have a substantial backlog, it is difficult to evaluate the likelihood that we will maintain profitability in any future period. Our products could contain defects or they may be installed or operated incorrectly, which could reduce sales of those products or result in claims against us. If the companies to which we outsource the manufacture of our products fail to meet our requirements for quality, quantity and timeliness, our revenues and reputation in the marketplace could be harmed. We face substantial competition, and our failure to compete effectively could harm our business and our prospects for future success. We may incur substantial costs or lose important rights as a result of litigation or other proceedings relating to patent and other intellectual property rights. If we are unable to obtain and maintain patent protection for our technologies and otherwise protect our intellectual property, the value of our technologies and products will be adversely affected. If critical components that we currently purchase from a small number of suppliers become unavailable, we may incur delays in shipment, which could damage our business. If we are unable to increase production capacity for our products in a timely manner, we may incur delays in shipment and our revenues and reputation in the marketplace could be harmed. We believe that certification and compliance issues are critical to adoption of LED lighting systems, and failure to obtain such certification or compliance would harm our business. Our gross margins are subject to variability. We depend for a substantial portion of our revenue on sales made by distributors and independent sales representatives, and the failure to manage successfully our relationships with these third parties, or the termination of these relationships, could cause our revenue to decline and harm our business. Our OEM business consumes significant time and resources with no guarantee of revenues; OEM and licensing revenues are generally not subject to our control. We have limited experience conducting operations internationally, which may make overseas expansion more difficult and costly than we expect and adversely affect our revenue growth and profitability. The loss of the services of any members of our key management team could adversely affect our ability to execute our business strategy and, as a result, adversely affect our sales and profitability. We may pursue acquisitions and investments in new businesses, products or technologies that involve numerous risks, which could disrupt our business and may harm our financial condition. We are relocating our principal executive offices, which could disrupt our operations and harm our business. If we are unable to manage our growth effectively, our future growth, profitability and liquidity could be adversely affected. Our operations are concentrated in a small number of facilities, and unavailability of one or more of these facilities could interrupt our business. We must comply with new regulatory requirements regarding internal control over financial reporting and corporate governance, which will cause us to incur significant costs, and our failure to comply with these requirements could cause our stock price to decline. If we are unable to obtain additional capital as needed in the future, our growth could be limited and we may be unable to pursue our current business strategy. The market price of our common stock may be volatile, which could result in substantial losses for investors holding our shares. We could be the subject of securities class action litigation due to future stock price volatility.

Full 10-K form ▸

1048611--3/16/2007--COLOR_KINETICS_INC