866830--3/8/2006--STAKTEK_HOLDINGS

related topics

{customer, product, revenue}

{product, market, service}

{property, intellectual, protect}

{stock, price, operating}

{regulation, change, law}

{cost, operation, labor}

{personnel, key, retain}

{acquisition, growth, future}

{competitive, industry, competition}

{operation, natural, condition}

{operation, international, foreign}

{product, liability, claim}

{product, candidate, development}

{cost, regulation, environmental}

We may not be able to increase our revenue and our operating results are likely to fluctuate, which may cause the trading price of our common stock to decline. Because we do not have long-term agreements with our customers and generally do not have a significant backlog of unfilled orders, our revenue and operating results in any quarter are difficult to forecast and are substantially dependent upon customer orders received and fulfilled in that quarter. We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from, any key customer could significantly reduce our revenue. If we fail to protect our proprietary rights, our customers or our competitors might gain access to our technologies, which could adversely affect our ability to sell or license our memory solutions or to compete successfully in our markets and harm our operating results. A court invalidation or limitation of our key patents could significantly harm our business, financial condition and results of operations. Our revenues may suffer if we cannot continue to license or enforce our intellectual property rights or if third parties assert that we violate their intellectual property rights. We are subject to risks relating to product concentration and lack of revenue diversification. The average selling prices of our services and technologies could decrease rapidly, which may negatively impact our revenue and gross margins. We are a relatively small company with limited resources compared to some of our current and potential competitors, and we may not be able to compete effectively and maintain or increase our market share. If we acquire other businesses or technologies in the future, these acquisitions could disrupt our business and harm our business, financial condition or results of operations. As our current services and technology offerings evolve, we continue to derive a significant portion of our revenue from royalties, which is inherently risky. It is difficult for us to verify royalty amounts owed to us under our licensing agreements, and this may cause us to lose revenue. Because our licensing cycle is lengthy and costly, it is difficult to predict future revenues, which may cause us to miss analysts estimates and may result in our stock price declining. Our marketing and sales efforts may be unsuccessful. Our reliance on our memory manufacturer customers for the DRAM chips used in products that incorporate our technologies subjects us to the risk of a shortage of these chips, adversely impacting our ability to fulfill orders from other customers, risks of natural disasters and other factors that could cause disruptions in the supply of DRAM chips. If we are unable to manufacture our products efficiently or we experience credit losses or other collections issues, our business, financial condition or results of operation could suffer. If we are unable to develop new and enhanced solutions that achieve market acceptance in a timely manner, our operating results and competitive position could be harmed. If we do not create and implement new designs to expand our licensable technology portfolio, our competitive position could be harmed or our operating results adversely affected. Failure by our licensees to introduce products using our technology could limit our royalty revenue growth. Products that incorporate our technologies generally have long sales and implementation periods, and our customers require that our technologies undergo a lengthy and expensive qualification process without any assurance of revenue. If the supply of materials used to manufacture our products is interrupted, or our manufacturing turnaround times are extended, our results of operations could be adversely affected. We relocated the substantial majority of our manufacturing operations from Austin, Texas to Reynosa, Mexico: our failure to continue to manage these operations and our growth, as well as issues associated with the location of this facility, could materially and adversely affect our business. We operate our manufacturing facility in Mexico as a Maquiladora and any loss of this status or change in the laws affecting Maquiladoras, or disputes with the labor union in Mexico, could materially harm our financial results. We derive a substantial portion of our revenue from our license agreement with Samsung. Royalties paid to us by Samsung have been decreasing over time and they may continue to decline as a result of Samsung not utilizing as much of our stacking technology as it utilized in the past, which could materially harm our business, financial condition or results of operations. The consumer electronics markets is a highly competitive and volatile market and if we are not successful in this or other new markets, our business, operating results or financial condition could be adversely affected. We have hired new members of our management team and have realigned our infrastructure, which may disrupt our business and adversely affect our operations. Austin Ventures controls us, and will continue to control us, as long as it beneficially owns a majority of our common stock. Austin Ventures and its designees on our board of directors may have interests that conflict with our interests. Our operations could be disrupted by power outages, political unrest, natural disasters or other disasters. We intend to expand our research and development activities and other operations, and this expansion may strain our resources and increase our operating expenses. Products that incorporate our technologies must conform to industry standards in order to be widely accepted by OEMs for use in their products. We depend on a few key personnel to manage our business effectively, and if we lose the services of any of those personnel or are unable to hire additional personnel, our business could be harmed. If our services and technologies are used in defective products or include defective parts, we may be subject to product liability or other claims. We may be involved in costly legal proceedings to enforce or protect our intellectual property rights or to defend against claims that we infringe the intellectual property rights of others. We may be involved in costly legal proceedings involving our contracts, which could include our licensees, potential licenses or strategic partners. Our failure to comply with environmental laws and regulations could subject us to significant fines and liabilities, and new laws and regulations or changes in regulatory interpretation or enforcement could make compliance more difficult and costly. Economic, political and other risks associated with international sales and operations could adversely affect our revenue. Adoption of the Financial Accounting Standards Board s ( FASB s ) Statement 123(R) will adversely affect our results of operations, and changes to existing accounting pronouncements or taxation rules or practices may adversely affect our business, financial condition or results of operations. Recently enacted and proposed changes in securities laws and regulations have increased our costs.

Full 10-K form ▸

866830--3/8/2006--STAKTEK_HOLDINGS_INC