Stamps.com 2001 Annual Report Download - page 15

The success of our business will depend upon our ability to make our Internet postage services widely available, and to achieve widespread
adoption of our services.
We face numerous risks in conjunction with the introduction, sale and commercial availability of our services because of our limited experience
with the commercial rollout and use of our services. Specifically, our Internet postage service was introduced on October 22, 1999. As a result,
we cannot be sure that our services will be widely available or adopted, that they will successfully process large numbers of user transactions or
that our services will contain features that appeal to the broad range of customers that we target. If we experience problems with the availability,
adoption, scalability or functionality of our services or if we are unable to offer attractive service enhancements in a timely manner, our ability
to attract and retain customers and our results of operations will be adversely impacted.
If we fail to effectively market and sell our Internet postage service, we may never achieve profitability and our business will be substantially
harmed and could fail.
In order to acquire customers and achieve wide distribution and use of our services, we must develop and execute cost-effective marketing
campaigns and sales programs. Given the limited amount of time that our services have been commercially available, we have very limited
experience conducting marketing campaigns. In addition, we have recently increased our emphasis on direct selling efforts and have only
recently retained the resources necessary to support a direct sales channel. However, we have very limited experience in acquiring customers
through a direct sales channel. In connection with our new business strategy, we have significantly reduced our marketing budget. As a result of
these limited marketing and sales experiences, and our reduced marketing budget, we cannot predict our ability to attract customers for our
services, and we may fail to generate significant interest in any of our services. Furthermore, we may be unable to generate significant interest
in our services in a cost-effective manner. If we fail to generate interest in our services or to acquire customers in a cost-effective manner, our
results of operations will be adversely affected and we may never achieve profitability.
If we fail to meet the demands of our customers, our business will be substantially harmed and could fail.
Our Internet postage services must meet the commercial demands of our customers, which range from individuals to small businesses. We
cannot be sure that our services will appeal to or be adopted by a wide range of customers. Moreover, our ability to obtain and retain customers
depends on our customer service capabilities. As part of our new business strategy, we have significantly reduced our support offerings. If we
are unable at any time to address customer service issues adequately or to provide a satisfactory customer experience for current or potential
customers, our business and reputation may be harmed. If we experience extensive interest in our services, we may fail to meet the expectations
of customers due to limited experience in operating our services and the strains this demand will place on our Web site, customer service
operations, professional services group, network infrastructure or systems. If we fail to meet the demands of our customers or if our customers
implement and employ our services more slowly than we expect, our business, results of operation and ability to achieve profitability will be
negatively affected.
Success by Pitney Bowes in its suits against us alleging patent infringement could prevent us from offering our Internet postage services and
severely harm our business or cause it to fail.
On June 16, 1999, Pitney Bowes sued us for alleged patent infringement in the United States District Court for the District of Delaware. The
suit originally alleged that we are infringing two patents held by Pitney Bowes related to postage application systems and electronic indicia. The
suit seeks treble damages, a preliminary and permanent injunction from further alleged infringement, attorneys' fees and other unspecified
damages. We answered the complaint on August 6, 1999, denying the allegations of patent infringement and asserting a number of affirmative
defenses. Pitney Bowes filed a similar complaint in early June 1999 against one of our competitors, E-Stamp Corporation, alleging infringement
of seven Pitney Bowes patents. On April 13, 2000, Pitney Bowes asked the court for permission to amend its complaint to drop allegations of
patent infringement
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2002. EDGAR Online, Inc.