| Our management is required to periodically evaluate the design and effectiveness of our disclosure controls and procedures |
| During the course of its evaluation for the year ended December 25, 2004, our management identified a material weakness in our application of generally accepted accounting standards, which continued through December 31, 2005 |
| In addition, we have documented and tested our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires our management to annually assess the effectiveness of our internal control over financial reporting |
| During the course of our testing we identified the need to increase the accounting staff’s overall knowledge and understanding of Securities and Exchange Commission rules and regulations and generally accepted accounting standards |
| We plan to increase the staff’s knowledge through the hiring of resources and additional training |
| Any failure to implement or difficulties experienced in implementing improved controls or any failure to maintain existing effective controls could have a material adverse effect on our business, operating results and stock price |
| For the year ended December 31, 2005 we have increased our accounting staff and we are evaluating the necessity for additional resources |
| As a result of the material weakness described above, our disclosure controls and procedures were not effective as of December 31, 2005, which could result in a material misstatement in our annual and interim financial statements |
| We have experienced a history of losses and have a significant accumulated deficit |
| Since inception, we have incurred significant net operating losses |
| As of December 31, 2005 we had an accumulated deficit of dlra114dtta1 million |
| While we did generate a profit in 2005, there can be no assurance that we will maintain profitability in the future |
| Our revenue and cash flow could be negatively affected by the loss of any of the few customers who account for a substantial portion of our revenues |
| A few customers account for a substantial portion of our revenues |
| The table below indicates what the percentages of our total revenues were from a particular customer in a given year |
| The symbol “*” indicates that sales to that particular customer for the given year were below 10 percent of our total revenues |
| Sales as a Percent of Total Revenue _________________________________________________________________ Customer _________________________________________________________________ 2005 _________________________________________________________________ 2004 _________________________________________________________________ 2003 _________________________________________________________________ Skyworks Solutions, Inc |
| 32 % 31 % 20 % Samsung Electronics 15 28 33 Victor Company of Japan (JVC) 13 * 12 United States Government Funded Research and Development Contracts 6 2 2 We anticipate that sales to Skyworks Solutions, Samsung and JVC will continue to represent a significant portion of our revenues for 2006, although we expect that our revenues from Samsung and JVC will decrease from their 2005 levels |
| We believe that historically we have provided Skyworks Solutions with the vast majority of its HBT transistor wafers |
| Our primary competition for display sales to Samsung and JVC are Sony and Sanyo |
| Based on current negotiations we anticipate that Sony and Sanyo’s share of camcorder business will increase in 2006 and our business will decline |
| A significant reduction or delay in orders from any of our significant customers, particularly Skyworks Solutions, would materially reduce our revenue and cash flow and adversely affect our ability to achieve or maintain profitability in the future |
| We believe the reduced sales volume to Samsung and JVC will adversely impact our cash flow and profitability in 2006 |
| Our ability to generate cash flow and profitability in 2006 similar to the levels achieved in 2005 will be dependent on developing new customers, increasing our market share of customers who use our CyberDisplay products for digital still camera applications and finding new applications for our CyberDisplay products, particularly eyewear devices |
| We have increased sales of CyberDisplay products for military applications in the year ended December 31, 2005 from historical levels |
| Such sales are to government contractors for the United States military |
| The amount and timing of such orders is dependent upon the United States military procurement processes, the government contractor’s ability to successfully manage the program, and our ability to deliver more sophisticated CyberDisplay products |
| 15 ______________________________________________________________________ We may be unable to increase revenues from CyberDisplay^™ products if new products and applications are not developed |
| CyberDisplay revenues for the fiscal years 2005, 2004 and 2003 were dlra47dtta6 million, dlra49dtta1 million and dlra43dtta6 million, respectively |
| The decrease in 2005 CyberDisplay revenues from 2004 has resulted primarily from a decrease in sales of our CyberDisplay product to customers for use in camcorders, offset, in part by an increase in sales of our displays to the military and digital still camera markets |
| Discussions with our customers indicate that our competition is dramatically reducing their prices and we believe the average sales price of our displays to consumer product customers will have to decline if we are to remain competitive in the market place |
| We believe the average sales price of our consumer displays will decrease in the range of 15prca to 20prca during the fiscal year 2006 |
| We believe that we have captured significant market share in the camcorder market; however, we believe that the camcorder market will decline over the next few years as new technologies, particularly digital video recorders, enter the market |
| In addition we expect our sales to camcorder manufacturers to decline at a faster rate than the overall decline in the camcorder market as we have chosen not to match the lower prices being offered by our competitors for some camcorder models |
| Accordingly, if we are unable to expand into new markets, particularly eyewear, revenues from CyberDisplay products will decline, which may impact our ability to achieve or maintain profitability in the future |
| In fiscal year 2004 we had initial sales of display products into the military product and digital still camera markets |
| We are gaining experience in selling displays into these markets |
| We believe that our success in penetrating these and other markets, particularly military night vision goggles, will significantly impact our ability to increase sales of CyberDisplays |
| In addition, our military products have a higher gross margin than our consumer display products and our success in increasing sales of military products are expected to significantly impact our ability to achieve or maintain profitability |
| Accordingly, if we are unable to successfully sell our display products to digital still cameras, eyewear, and military product makers, we may be unable to grow CyberDisplay product revenues and our ability to achieve or maintain profitability will be adversely affected |
| The eyewear market segment may not develop or may take longer to develop than we anticipate |
| Eyewear is the term used by the Company to describe a device which is worn in a similar fashion as eye glasses and contains one or two CyberDisplay displays for the viewing of video images |
| The source of these video images may be storage devices such as video iPods, DVD players or digital multimedia broadcasting (DMB) tuners |
| Currently the consumer may view the image through a direct view LCD display which may range in size from one to four inches diagonal |
| We believe that the consumer will find this experience unsatisfactory and we believe eyewear will be a preferred solution |
| We sell to eyewear manufacturers individual displays, backlight and integrated circuits or a binocular display module (BDM), which contains the various components combined into one unit |
| We are also investigating selling a complete eyewear solution |
| The eyewear manufacturing companies which are currently buying our displays for eyewear products tend to be small with limited financial resources and in-house engineering expertise |
| We believe that eyewear is a critical product for the long term revenue and cash flow growth of the CyberDisplay product line |
| If the eyewear market does not develop or we are unable to create and manufacture product(s) which meet the needs of the eyewear market we may be unable to grow CyberDisplay product revenues and our ability to achieve or maintain profitability will be adversely affected |
| We may not be able to increase our military production capacity |
| A critical part of our business strategy is to expand production capacity to manufacture displays for the military product market |
| A significant part of this strategy is the implementation of a new manufacturing line which can utilize 8 inch wafers for our display production |
| The conversion of our existing 6 inch line to 8 inch will require the investment in new equipment and the redesign of our existing display products |
| It may also require the re-qualification of our existing display products with our customers |
| If we are unable to execute our military product display production facility plan, including the implementation of an 8 inch production line, or we can only manufacture and ship our CyberDisplay products in limited quantities, our revenues from CyberDisplay products may not grow, which may impact our ability to achieve or maintain profitability in the future |
| Our ability to offer and manufacture higher level CyberDisplay assemblies and modules will impact our ability to increase revenues and achieve or maintain profitability |
| An important factor in our ability to expand into new markets, such as binocular display modules, or BDMs, digital still cameras and military products, will 16 ______________________________________________________________________ be our ability to design and manufacture higher-level assemblies (HLAs) |
| These HLAs typically consist of one or two CyberDisplay products, a backlight, lens and housing |
| Some HLAs also include a set of display driver electronics or a display driver chip |
| Our goal is to deliver an integrated HLA to our customer which eases integration into their products |
| These products will require more complex integration of a greater variety of components than we currently use for our existing display products |
| They will require us to invest in additional engineering, manufacturing and test capability |
| Accordingly, if we are unable to develop and market these new display products or if we are unable to manufacture them in a cost-effective manner, our revenues may not grow and we may not be able to achieve or maintain profitability |
| Our competitors can provide integrated solutions |
| Many portable consumer electronic devices, including camcorders and digital still cameras, have two displays for viewing images, an electronic viewfinder (EVF) and a flip-out or group view display |
| We only provide the display that is used as the electronic viewfinder |
| Our competitors may offer both EVF and flip-out displays and both displays may be run by the same interface electronics |
| A customer who buys our display is required to buy the flip-out display from another vendor who may compete with us |
| This may require our customer to purchase additional interface electronics to run our display |
| Our competitors may be able to offer a bundled solution of both displays and the interface electronics cheaper than the cost of buying our display and the other display and the interface electronics separately |
| If we are unable to offer displays with sufficient performance advantages over other displays to justify the additional cost of buying individual components versus a bundled solution or if our customers can not procure cost efficient interface electronics to run our display products we may lose market share or be unable to grow our business which in turn would adversely affect our ability to achieve or maintain profitability |
| Our CyberDisplay^™ products may not be widely accepted by the market |
| Our success will in large part depend on the widespread adoption of the viewing format of our CyberDisplay products in multiple applications |
| Our success also depends upon the widespread consumer acceptance of our customers’ products |
| CyberDisplay products work best when used close to the eye, which may not be acceptable to consumers |
| Potential customers may be reluctant to adopt our CyberDisplay products because of concerns surrounding perceived risks relating to: • The introduction of our display technology generally; • Consumer acceptance of our CyberDisplay products; and • The relative complexity, reliability, usefulness and cost-effectiveness of our display products compared to other display products available in the market or that may be developed by our competitors |
| In addition, our customers may be reluctant to rely upon a relatively small company like us for a critical component |
| We cannot assure investors that prospective customers will adopt our CyberDisplay products or that consumers will accept our CyberDisplay products in future applications |
| If we fail to achieve market acceptance of our CyberDisplay products, our business may not be successful and we may not be able to achieve or maintain profitability |
| Our ability to manufacture and distribute our CyberDisplay^™ products would be severely limited if the third parties that we rely on to manufacture integrated circuits for our CyberDisplay^™ products fail to provide those services |
| We depend on a Taiwanese company and a Korean company for the fabrication of integrated circuits for our CyberDisplay products |
| We have no long-term contracts with either of these two companies |
| These two companies use different methods to manufacture the integrated circuits and a shortage at one company cannot necessarily be supplied by the other company |
| If either company were to terminate its arrangement with us or become unable to provide the required capacity and quality on a timely basis, we would be able to manufacture and ship our CyberDisplay products only in limited quantities until replacement foundry services could be obtained |
| Furthermore, we cannot assure investors that we would be able to establish alternative manufacturing and packaging relationships on acceptable terms |
| Our reliance on these foundries involves certain risks, including: • Lack of control over production capacity and delivery schedules; • Limited control over quality assurance, manufacturing yields and production costs; 17 ______________________________________________________________________ • The risks associated with international commerce, including unexpected changes in legal and regulatory requirements, changes in tariffs and trade policies and political and economic instability; and • Natural disasters such as earthquakes, tsunami, mudslides, drought, hurricanes and tornadoes |
| One of the foundries and several other third parties with which we do business are located in Taiwan |
| Due to natural disasters such as earthquakes and typhoons that have occasionally occurred in Taiwan, many Taiwanese companies, including the Taiwanese foundry we use, have experienced related business interruptions |
| Our business could suffer significantly if either of the foundries we use had operations which were disrupted for an extended period of time, due to natural disaster, political unrest or otherwise |
| In addition, our CyberDisplays are manufactured on 6-inch silicon wafers |
| State of the art silicon production uses 8-inch wafers |
| If the 6-inch production facilities were not restored we may be required to redesign our displays so that they can be manufactured on an 8-inch production line |
| If the displays had to be redesigned we may have to have the displays re-qualified by our customers, which would adversely affect our business until such qualification is complete |
| There were reports that consumer demand was negatively impacted by the outbreak of SARS Our sales, manufacturing and distribution processes, and in turn our overall business operations, may be adversely affected if SARS, Avian Flu or similar situations occur |
| We depend on third parties to provide integrated circuit chip sets and other critical raw materials for use with our CyberDisplay^™ products |
| We do not manufacture the integrated circuit chip sets necessary for use with our CyberDisplay products |
| Instead, we rely on third party independent contractors for these integrated circuit chip sets and other critical raw materials such as special glasses and chemicals |
| The critical raw materials, including the glasses and chemicals used in manufacturing the CyberDisplay products are used by other display manufacturers, many of which are much larger than Kopin |
| In addition, our higher-level CyberDisplay assemblies and modules include lenses, backlights, printed circuit boards and other components, which we purchase from third party suppliers |
| Some of these third party contractors and suppliers are small companies with limited financial resources |
| We believe that one of the suppliers of a critical component for our higher-end CyberDisplay military assemblies may be having financial difficulties |
| We are currently attempting to find another source for the manufacture of this component |
| If any of these third party contractors or suppliers were unable or unwilling to supply these integrated circuit chip sets or other critical raw materials to us, we would be unable to manufacture and sell our CyberDisplay products until a replacement supplier could be found |
| We cannot assure investors that a replacement third party contractor or supplier could be found on reasonable terms or in a timely manner |
| As a result, we were unable to meet customer demand and our revenues, manufacturing yield and gross margins were adversely affected |
| Currently there is strong worldwide demand for display materials because of the significant growth of display sales over the last few years |
| Any interruption in our ability to manufacture and distribute our CyberDisplay products could cause our display business to be unsuccessful and the value of investors’ investment in us may decline |
| If we are unable to significantly increase our unit sales volume and reduce our production costs, our business will suffer |
| Our III-V and CyberDisplay product lines currently have significant fixed costs and our ability to achieve or maintain profitability depends upon achieving significant sales volumes and higher gross profit margins |
| Our III-V product group is primarily comprised of heterojunction bipolar transistor (HBT) products |
| If we are unable to increase our III-V and CyberDisplay production levels and reduce manufacturing costs, we may lose customer orders and our business may be unprofitable |
| We may be unable to increase revenues from our HBT transistor wafers if the third party foundries we plan on using can not get qualified or are unable to produce the required product |
| We have entered into an agreement with Kopin Taiwan Corporation (KTC) to provide foundry services to manufacture HBT transistor wafers for us |
| We entered into this agreement to provide us with additional capacity if needed |
| The ability to use KTC as a foundry is predicated on our ability to have our customers qualify our products, which utilize KTC’s 18 ______________________________________________________________________ HBT transistor wafers |
| If we are unable to get the products which utilize KTC’s wafers qualified by our customers and we are unable to meet customer demand utilizing only our internal resources we may lose customer orders and our profitability may be negatively affected |
| We may be unable to increase revenues from HBT transistor wafers if new product applications are not developed |
| A critical market for our HBTs is wireless handsets |
| The growth rate of the wireless handset market has been very unpredictable over the last several years |
| If the wireless handset unit volume grows in the range of 5 to 10 percent for the fiscal year 2006 our HBT revenues may decrease unless we increase our market share or new markets are developed |
| Revenues may also decline if we lose any of our customers or such customers reduce their orders from us |
| Accordingly, if we are unable to find additional applications for our HBT transistor wafers or increase our market share, our HBT transistor revenue may not grow and such absence of growth may impact our ability to achieve or maintain profitability |
| We generally do not have long-term contracts with our CyberDisplay customers, which makes forecasting our revenues and operating results difficult |
| We generally do not enter into long-term agreements with our CyberDisplay customers obligating them to purchase our products |
| Our business is characterized by short-term purchase orders and shipment schedules and we generally permit orders to be canceled or rescheduled before shipment without significant penalty |
| As a result, our customers may cease purchasing our products at any time, which makes forecasting our revenues difficult |
| In addition, due to the absence of substantial non-cancelable backlog, we typically plan our production and inventory levels based on internal forecasts of customer demand, which are highly unpredictable and can fluctuate substantially |
| Our operating results are difficult to forecast because we are continuing to invest in capital equipment and increasing our operating expenses for new product development |
| If we fail to accurately forecast our revenues and operating results, our business may not be successful and the value of investors’ investment in us may decline |
| We may not be able to realize any profits under a multi-year supply agreement with a significant HBT customer |
| In December 2005 we amended a supply agreement with a significant HBT customer that expires in July 2008, excluding a last buy option contained in the agreement |
| Under the terms of this agreement we have agreed to maintain capacity levels for manufacturing HBT wafers and we committed to a declining pricing schedule |
| The agreement also requires us to give prior notice if we exit our HBT product line |
| In consideration for this agreement the customer agreed to source 100prca of its HBT wafer needs from us subject to the customer’s right to source HBT wafers from other sources if we are unable to meet its requirements under certain circumstances |
| We agreed that failure to meet our supply obligations under the agreement would allow our customer to obtain court ordered specific performance |
| If we do not perform we could then be liable for monetary damages up to a maximum of dlra45 million |
| The agreement obligates us to provide wafers at preset prices and as a result, our ability to make a profit under this agreement will be subject to fluctuations in the prices of raw materials, meeting customer wafer demand and to any increase in costs of goods or services required for us to perform under the agreement |
| If we are unable to manufacture the HBT wafers below these preset prices we may not be able to achieve or maintain profitability |
| We may have to record additional impairment losses |
| In fiscal year 2004 we entered into an agreement to transfer our CyberLite LED operations into the KoBrite joint venture |
| Our CyberLite LED operations were performed in our facility located at 200 John Hancock Road, Taunton, MA In addition, a portion of our III-V product line operations was performed in our 200 John Hancock Road facility |
| With the discontinuance of the CyberLite LED operations the recoverability of the 200 John Hancock Road leasehold improvement assets will be evaluated based on the cash flow from our III-V product line |
| In fiscal year 2004, based upon forecasted cash flow of our III-V product line, we recorded an impairment charge of dlra3dtta2 million |
| The forecast also indicated that an impairment charge might be necessary in the future unless the cash flows from our III-V product line continue at current levels |
| In addition, in fiscal year 2006 we are anticipating a decline in sales of our CyberDisplay products to customers who use them in camcorder applications |
| The forecasts used in our impairment analyses are based on certain estimates relating to III-V and CyberDisplay product line cash flows |
| If such estimates were too high, we may be required to record an additional impairment charge in the future |
| 19 ______________________________________________________________________ We may record additional losses from our investment in the KoBrite joint venture, which may impact our ability to achieve or maintain profitability |
| We account for our investment in the KoBrite joint venture using the equity method, which requires us to record our proportional share of their operating results up to the amount we have invested or committed to support, which is our current dlra3dtta0 million investment |
| In the twelve months ended December 31, 2005 we recorded dlra209cmam000 of losses from the KoBrite joint venture (which represented KoBrite operations for a 9 month period as we include KoBrite results one quarter in arrears and the investment in the Company was made in the first quarter of fiscal 2005) |
| We anticipate that the joint venture will incur additional losses in the near term |
| If the joint venture generates operating losses in the future we will record additional losses, which will impact our ability to achieve or maintain profitability |
| A disruption to our information technology systems could significantly impact our operations and impact our revenue and profitability |
| We maintain proprietary data processing systems and use customized software systems |
| An interruption to these systems for an extended period may impact our ability to operate the businesses and process transactions which could result in a decline in sales and affect our ability to achieve or maintain profitability |
| Fluctuations in operating results make financial forecasting difficult and could adversely affect the price of our common stock |
| Our quarterly and annual revenues and operating results may fluctuate significantly for several reasons, including: • The timing and successful introduction of additional manufacturing capacity; • The timing of the initial selection of our III-V and CyberDisplay products as a component in our customers’ new products; • Availability of interface electronics for our CyberDisplay products supplied; • Competitive pressures on selling prices of our products; • The timing and cancellation of customer orders; • Our ability to introduce new products and technologies on a timely basis; • Our ability to successfully reduce costs; • The cancellation of US government contracts; and • Our ability to secure agreements from our major customers for the purchase of our products |
| We typically plan our production and inventory levels based on internal forecasts of customer demand, which are highly unpredictable and can fluctuate substantially |
| Our operating results are difficult to forecast because we are continuing to invest in capital equipment and increasing our operating expenses for new product development |
| As a result of these and other factors, investors should not rely on our revenues and our operating results for any one quarter or year as an indication of our future revenues or operating results |
| If our quarterly revenues or results of operations fall below expectations of investors or public market analysts, the price of our common stock could fall substantially |
| We may be unable to modify our products to meet regulatory or customer requirements |
| From time to time our products are subject to new domestic and international requirements such as the European Union’s Restriction on Hazardous Substances (RoHS) Directive |
| If we are unable to comply with these regulations we may not be permitted to ship our products, which would adversely affect our revenue and ability to achieve or maintain profitability |
| Increased competition may result in decreased demand or lower prices for our products |
| Competition in the markets for our products is intense and we may not be able to compete successfully |
| We compete with several companies primarily engaged in the business of designing, manufacturing and selling integrated circuits or alternative display technologies, as well as the supply of other discrete products |
| Our competitors could develop new process technologies that may be superior to ours, including technologies that target markets in which our 20 ______________________________________________________________________ products are sold |
| Many of our existing and potential competitors have strong market position, considerable internal manufacturing capacity, established intellectual property rights and substantial technological capabilities |
| Furthermore, they also have greater financial, technical, manufacturing, and marketing resources than we do, and we may not be able to compete successfully with them |
| In addition, many of our existing and potential customers manufacture or assemble displays and wireless communications devices and have substantial in-house technological capabilities and substantially greater resources than we do |
| We may not be able to sell our products to these customers and they may commercialize their internal capabilities to become our competitors |
| If one of our large customers establishes internal design and manufacturing capabilities, it could have an adverse effect on our operating results |
| We expect competition to increase |
| This could mean lower prices or reduced demand for our products |
| Any of these developments would have an adverse effect on our operating results |
| Disruptions of our production of our III-V and CyberDisplay products would adversely affect our operating results |
| If we were to experience any significant disruption in the operation of our facilities, we would be unable to supply III-V and CyberDisplay products to our customers |
| Our manufacturing processes are highly complex and customer specifications are extremely precise |
| We periodically modify our processes in an effort to improve yields and product performance and to meet particular customer requirements |
| In 2006 we anticipate commencing the process to establish an 8 inch CyberDisplay manufacturing line and phasing out our 6 inch manufacturing line |
| Converting to an 8 inch line will require changes to our manufacturing processes |
| Process changes or other problems that occur in the complex manufacturing process can result in interruptions in production or significantly reduced yields |
| Additionally, as we introduce new equipment into our manufacturing processes, our III-V and CyberDisplay products could be subject to especially wide variations in manufacturing yields and efficiency |
| We may experience manufacturing problems that would result in delays in product introduction and delivery or yield fluctuations |
| We are also subject to the risks associated with the shortage of raw materials used in the manufacture of our products |
| If we fail to keep pace with changing technologies, we may lose customers |
| Rapidly changing customer requirements, evolving technologies and industry standards characterize the wireless communications, semiconductor materials and display industries |
| To achieve our goals, we need to enhance our existing products and develop and market new products that keep pace with continuing changes in industry standards, requirements and customer preferences |
| If we cannot keep pace with these changes, our business could suffer |
| We may not be successful in protecting our intellectual property and proprietary rights |
| Our success depends in part on our ability to protect our intellectual property and proprietary rights |
| We have obtained certain domestic and foreign patents and we intend to continue to seek patents on our inventions when appropriate |
| We also attempt to protect our proprietary information with contractual arrangements and under trade secret laws |
| Our employees and consultants generally enter into agreements containing provisions with respect to confidentiality and the assignment of rights to inventions made by them while in our employ |
| These measures may not adequately protect our intellectual and proprietary rights |
| Existing trade secret, trademark and copyright laws afford only limited protection and our patents could be invalidated or circumvented |
| Moreover, the laws of certain foreign countries in which our products are or may be manufactured or sold may not fully protect our intellectual property rights |
| Misappropriation of our technology and the costs of defending our intellectual property rights from misappropriation could substantially impair our business |
| If we are unable to protect our intellectual property and proprietary rights, our business may not be successful and the value of investors’ investment in us may decline |
| Our products could infringe on the intellectual property rights of others |
| Companies in the wireless communications, semiconductor and display industries steadfastly pursue and protect intellectual property rights |
| This has resulted in considerable and costly litigation to determine the validity of patents and claims by third parties of infringement of patents or other intellectual property |
| Our products, including former products such as our light emitting diodes (LEDs), could be found to infringe on the intellectual property rights of others |
| Other companies may hold or obtain patents or inventions or other proprietary rights in technology necessary for our business |
| Periodically companies inquire about our products and technology in their attempts to assess whether 21 ______________________________________________________________________ we violate their intellectual property rights |
| If we are forced to defend against infringement claims, we may face such costly litigation, diversion of technical and management personnel, and product shipment delays, even if the allegations of infringement are unwarranted |
| If there is a successful claim of infringement against us and we are unable to develop non-infringing technology or license the infringed or similar technology on a timely basis, or if we are required to cease using one or more of our business or product names due to a successful trademark infringement claim against us, it could adversely affect our business |
| Our business could suffer if we lose the services of, or fail to attract, key personnel |
| In order to continue to provide quality products in our rapidly changing business, we believe it is important to retain personnel with experience and expertise relevant to our business |
| Our success depends in large part upon a number of key management and technical employees |
| The loss of the services of one or more key employees, including Dr |
| John CC Fan, our President and Chief Executive Officer, could seriously impede our success |
| We do not maintain any “key-man” insurance policies on Dr |
| In addition, due to the level of technical and marketing expertise necessary to support our existing and new customers, our success will depend upon our ability to attract and retain highly skilled management, technical, and sales and marketing personnel |
| Competition for highly skilled personnel is intense and there may be only a limited number of persons with the requisite skills to serve in these positions |
| Due to the competitive nature of the labor markets in which we operate, we may be unsuccessful in attracting and retaining these personnel |
| Our inability to attract and retain key personnel could adversely affect our ability to develop and manufacture our products |
| We may pursue acquisitions and investments that could adversely affect our business |
| In the past we have made, and in the future we may make, acquisitions of, and investments in, businesses, products and technologies that could complement or expand our business |
| If we identify an acquisition candidate, we may not be able to successfully negotiate or finance the acquisition or integrate the acquired businesses, products or technologies into our existing business and products |
| Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, amortization expenses and write-downs of acquired assets |
| We may incur significant liabilities if we fail to comply with stringent environmental regulations or if we did not comply with these regulations in the past |
| We are subject to a variety of federal, state and local governmental regulations related to the use, storage, discharge and disposal of toxic or otherwise hazardous chemicals used in our manufacturing process |
| The failure to comply with present or future regulations could result in fines being imposed on us, suspension of production, or a cessation of operations |
| Any failure on our part to control the use of, or adequately restrict the discharge of, hazardous substances, or otherwise comply with environmental regulations, could subject us to significant future liabilities |
| In addition, we cannot be certain that we have not in the past violated applicable laws or regulations, which violations could result in required remediation or other liabilities |
| We also cannot be certain that past use or disposal of environmentally sensitive materials in conformity with then existing environmental laws and regulations will protect us from required remediation or other liabilities under current or future environmental laws or regulations |
| Investors should not expect to receive dividends from us |
| We have not paid cash dividends in the past, nor do we expect to pay cash dividends for the foreseeable future |
| We anticipate that earnings, if any, will be retained for the development of our businesses |
| Our stock price may be volatile in the future |
| The trading price of our common stock has been subject to wide fluctuations in response to quarter-to-quarter variations in results of operations, announcements of technological innovations or new products by us or our competitors, general conditions in the wireless communications, semiconductor and display markets, changes in earnings estimates by analysts or other events or factors |
| In addition, the public stock markets recently have experienced extreme price and trading volatility |
| This volatility has significantly affected the market prices of securities of many technology companies for reasons frequently unrelated to the operating performance of the specific companies |
| These broad market fluctuations may adversely affect the market price of our common stock |