813619--3/29/2006--SOUTHWALL_TECHNOLOGIES_INC

related topics

{customer, product, revenue}

{personnel, key, retain}

{product, market, service}

{debt, indebtedness, cash}

{property, intellectual, protect}

{stock, price, operating}

{operation, international, foreign}

{acquisition, growth, future}

{financial, litigation, operation}

{product, liability, claim}

{cost, regulation, environmental}

{condition, economic, financial}

Our working capital position, financial commitments and historical performance may raise doubt about our ability to have positive earnings in the future. A few stockholders own a majority of our shares and will be able to exert control over us and our significant corporate decisions. Covenants or defaults under our credit and other loan agreements may prevent us from borrowing or force us to curtail our operations. Our ability to borrow is limited by the nature of our equipment and some of our accounts receivable If we default under our secured credit facilities and financing arrangements, the lenders could foreclose on the assets we have pledged to them requiring us to significantly curtail or even cease our operations Our quarterly revenue and operating results are volatile and difficult to predict. If we fail to meet the expectations of public market analysts or investors, the market price of our common stock may decrease significantly. We expect to be subject to increased foreign currency risk in our international operations. Our suppliers and subcontractors may impose more onerous payment terms on us. We depend on a small number of customers for nearly all of our revenues, and the loss of a large customer could materially adversely affect our revenues or operating results. We must continue to develop new products or enhance existing products on a timely basis to compete successfully in a rapidly changing marketplace. Our ability to successfully identify suitable target companies and integrate acquired companies or technologies may affect our future growth. If one of our customers is able to enforce a European automotive film patent, we may be restricted from using the methods present in such patent to produce some of our products. Failure to meet the volume requirements of our customers may result in a loss of business or contractual penalties. We depend on our OEM customers for the sale of our products. We rely upon our OEM customers for information relating to the development of new products so that we are able to meet end-user demands. We depend on a distributor for the sale of our after-market products. We face intense competition, which could affect our ability to increase our revenue, maintain our margins and increase our market share. We are dependent on key suppliers of materials, which may prevent us from delivering product in a timely manner. We are dependent on a few qualified subcontractors to add properties to some of our products. We are dependent on key suppliers of production machines, which may prevent us from delivering an acceptable product on a timely basis and limit our capacity for revenue growth. Fluctuations or slowdowns in the overall electronic display industry have and may continue to adversely affect our revenues. If we are unable to adequately protect our intellectual property, third parties may be able to duplicate our products or develop functionally equivalent or superior technology. Performance, reliability or quality problems with our products may cause our customers to reduce or cancel their orders. If we fail to recruit and retain a significant number of qualified technical personnel we may not be able to develop, enhance and introduce our products on a timely basis, and our business will be harmed We may be unable to attract or retain the other highly skilled employees that are necessary for the success of our business. Our business is susceptible to numerous risks associated with international operations. If we fail to comply with environmental regulations, our operations could be suspended. We rely on our domestic sales representatives, without whom our architectural product sales may suffer. We may experience unanticipated warranty or other claims with respect to our products, which may lead to extensive litigation costs and expenses. We may face extensive damages or litigation costs if our insurance carriers seek to have us indemnify them for settlements of past and outstanding litigation.

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813619--3/29/2006--SOUTHWALL_TECHNOLOGIES_INC_/DE/