811696--5/1/2006--SHARPER_IMAGE

related topics

{customer, product, revenue}

{stock, price, operating}

{product, market, service}

{property, intellectual, protect}

{system, service, information}

{condition, economic, financial}

{personnel, key, retain}

{operation, natural, condition}

{financial, litigation, operation}

{provision, law, control}

{investment, property, distribution}

{acquisition, growth, future}

{cost, operation, labor}

{competitive, industry, competition}

{cost, contract, operation}

If we fail to continuously offer new merchandise that our customers find attractive, the demand for our products may be limited. If we do not maintain sufficient inventory levels, if we are unable to deliver our products to our customers in sufficient quantities, or if our inventory levels are too high, our operating results will be adversely affected. A significant portion of our sales during any given period of time may be generated by a particular product or line of products and if sales of those products or line of products decrease, our results of operations may be adversely affected. Poor economic conditions may reduce consumer spending on discretionary retail products such as the ones we offer. Our success depends in part on our ability to internally design and develop our Sharper Image Design products. We rely on foreign sources of production and our business would be adversely affected if our suppliers are not able to meet our demand and alternative sources are not available. We depend on our vendors ability to timely deliver sufficient quantities of products and our business can be harmed by work stoppages or other interruptions to delivery of products. Our ability to protect our proprietary technology, which is vital to our business, particularly our air purification products, is uncertain and our inability to protect these rights could impair our competitive advantage and cause us to incur substantial expense to enforce our rights. Our quarterly operating results and comparable store sales are subject to significant fluctuations and seasonality. We are dependent on the success of our advertising and direct marketing efforts and our profitability will be adversely affected by increased costs associated with these efforts. Our wholesale sales present certain risks that could adversely affect our profitability. Our business will be harmed if we are unable to successfully implement our growth strategy. The expansion of our store operations could result in increased expenses with no guarantee of increased profitability. We rely on our catalog operations which could have significant cost increases and could have unpredictable results. We have distribution and fulfillment operations located in Little Rock, Arkansas; Ontario, California; and Richmond, Virginia. Any disruption of the operations in these centers could make it difficult to meet customer demand. We experience intense competition in the rapidly changing retail markets and if we are unable to compete effectively, we may not be able to maintain profitability. We maintain a liberal merchandise return policy, which allows customers to return most merchandise, and as a result, excessive merchandise returns could harm our business. We may be subject to risks associated with our products, including product liability or patent and trademark infringement claims. If we lose our key personnel, we may not be able to successfully develop and merchandise our products. A single shareholder exerts considerable influence over our business affairs and may make business decisions which may not be in your best interest. Our common stock price is volatile. Our charter documents, Delaware law, stockholders rights plan and other agreements may make a takeover of us more difficult. We face risks arising from the outcome of various litigation matters. Our business could be negatively impacted by natural disasters and their effects. As a well known company we are susceptible to unsolicited attention in the print and electronic media. We are reliant on third party credit processors for a portion of our business. We have received notice from an investment group that it intends to replace members of our Board of Directors.

Full 10-K form ▸

811696--5/1/2006--SHARPER_IMAGE_CORP