895665--4/2/2007--SUPERCONDUCTOR_TECHNOLOGIES

related topics

{product, market, service}

{property, intellectual, protect}

{customer, product, revenue}

{stock, price, operating}

{acquisition, growth, future}

{stock, price, share}

{regulation, government, change}

{provision, law, control}

{cost, regulation, environmental}

{personnel, key, retain}

{operation, international, foreign}

{interest, director, officer}

We rely on a small number of customers for the majority of our commercial revenues and the loss of any one of these customers, or a significant loss, reduction or rescheduling of orders from any of these customers, could have a material adverse effect on our business, results of operations and financial condition. The wireless communication industry is highly concentrated, which limits the number of potential customers, and further industry consolidation could result in the loss of key customers. We experience significant fluctuations in sales and operating results from quarter to quarter. Our sales cycles are unpredictable, making future performance uncertain. We depend on the capital spending patterns of wireless network operators, and if capital spending is decreased or delayed, our business may be harmed. Our reliance on a limited number of suppliers and the long lead time of components for our products could impair our ability to manufacture and deliver our systems on a timely basis. Our reliance on a limited number of suppliers exposes us to quality control issues. We expect decreases in average selling prices, requiring us to reduce product costs in order to achieve and maintain profitability. Our ability to protect our patents and other proprietary rights is uncertain, exposing us to possible losses of competitive advantage. We depend on specific patents and licenses to technologies, and we will likely need additional technologies in the future that we may not be able to obtain. Intellectual property infringement claims against us could materially harm results of operations. We currently rely on specific technologies and may not successfully adapt to the rapidly changing wireless telecommunications equipment market. Other parties may have the right to utilize technology important to our business. Our failure to anticipate and respond to developments in the wireless telecommunications market could substantially harm our business. We may not be able to compete effectively against alternative technologies. We depend upon government contracts for a substantial amount of revenue, and our business may suffer if significant contracts are terminated, adversely modified, or we are unable to win new contracts. Because competition for target employees is intense, we may be subject to claims of unfair hiring practices, trade secret misappropriation or other related claims. If we are unable to forecast our inventory needs accurately, we may be unable to obtain sufficient manufacturing capacity or may incur unnecessary costs and produce excess inventory. Our success depends on the attraction and retention of senior management and technical personnel with relevant expertise. Regulatory changes negatively affecting wireless communications companies could substantially harm our business. We may acquire or make investments in companies or technologies that could cause loss of value to stockholders and disruption of business. If we are unable to implement appropriate controls and procedures to manage our expected growth, we may not be able to successfully offer our products and implement our business plan. Compliance with environmental regulations could be especially costly due to the hazardous materials used in the manufacturing process. The reliability of market data included in our public filings is uncertain. Our international operations expose us to certain risks. Risks Related to Our Common Stock Our stock price is volatile. We have a significant number of outstanding warrants and options, and future sales of these shares could adversely affect the market price of our common stock. Our corporate governance structure may prevent our acquisition by another company at a premium over the public trading price of STI shares.

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895665--4/2/2007--SUPERCONDUCTOR_TECHNOLOGIES_INC