Support.com 2005 Annual Report Download - page 20

technical review, assessment of competitive products and approval at a number of management levels within a customer’s
organization. In addition, in the wake of Sarbanes-Oxley, companies have enhanced their approval processes making sales more
difficult or protracted. While our customers are evaluating our products and services, we may incur substantial sales and marketing
expenses and spend significant management effort to complete these sales. Any delay in completing sales in a particular quarter or the
failure to complete a sale after expending resources during the sales cycle could cause our operating results to suffer.
We must achieve broad adoption and acceptance of our real-time service management products and services or we will not
increase our market share or expand our business.
We must achieve broad market acceptance and adoption of our products and services or our business and operating results will
suffer. Specifically, we must encourage our customers to transition from using traditional or competitive support and service methods
to our support and service automation solutions. To accomplish this, we must:
• continually improve the performance, features and reliability of our products and services to address changing industry
standards and customer needs; and
If we fail to manage our business effectively, then our infrastructure, management and resources might be strained.
• develop integration with other support-related technologies.
As we expand our business operations, this will likely place a significant strain on our resources especially in light of the recent
reduction in our workforce. With less personnel, or in the event we are unable to retain the required personnel, we may be unable to
meet our business objectives. In addition, if we experience significant and rapid growth or a change in the complexity of our
operations, including through acquisitions of businesses or technologies, we may need to expand and otherwise improve our internal
systems, including our internal control over financial reporting, disclosure controls and procedures, management information systems,
customer relationship and support systems, and other operating and administrative systems and controls. This effort may cause us to
make significant capital expenditures or incur significant expenses, and divert the attention of management, sales, support and finance
personnel from our business operations, which may adversely affect our financial performance in one or more quarters. Moreover,
growth in the future will result in increased responsibilities of management personnel. Managing growth will require substantial
resources that we may not have or otherwise be able to obtain.
If we are unable to maintain our disclosure controls and procedures, including our internal control over financial reporting,
our ability to report our financial results on a timely and accurate basis may be adversely affected.
We have evaluated our “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as well as our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act
of 2002. Our independent registered public accounting firm has performed a similar evaluation of our internal control over financial
reporting. Effective controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot
provide reliable financial reports or prevent fraud, our operating results could be harmed. As of December 31, 2005, we concluded
that our internal control over financial reporting were effective, as further described below in Item 9A, Controls and Procedures.
However, in 2004 we had material weaknesses in our internal controls and we cannot be certain that we will continue to have
adequate controls over our financial processes and reporting in the future. If weaknesses are identified, our ability to report our
financial results on a timely and accurate basis may be adversely affected. In addition, if we cannot maintain internal control over
financial reporting and disclosure controls and procedures, investors may lose confidence in our reported financial information, which
could have a negative effect on the trading price of our common stock.
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