Support.com 2007 Annual Report Download - page 25

operating cash flows, and our other sources of cash, we do not anticipate the potential lack of liquidity on these investments will affect our ability to execute our
current business plan.
We have recorded long-lived assets, and our results of operations would be adversely affected if their value becomes impaired.
Goodwill and identifiable intangible assets were recorded in part due to our acquisition of substantially all of the assets of Core Networks Incorporated in
September 2004. We also have certain intangible assets with an indefinite life. We assess the impairment of goodwill and indefinite life intangible assets annually
or more often if events or changes in circumstances indicate that the carrying value may not be recoverable. We assess the impairment of acquired product rights
and other finite life intangible assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. As a result of our
discontinuance of active marketing and selling of one of the products we acquired from Core Networks, and a reevaluation of the fair value of the Core
Network's technology intangible assets, we recognized a non-cash write-down of approximately $1.7 million during the fourth quarter of 2007. An impairment
loss was recognized because the sum of the discounted future net cash flows expected to result from the use of the assets and their eventual disposition was less
than the carrying amounts. Such impairment loss was measured as the difference between the carrying amounts of the assets and their fair value. Furthermore, we
evaluate cash flows at the lowest operating level. If the number of reporting units increases in the future, as it has in 2008, this may make impairment more
probable than it would be with fewer reporting units. As was the case in the fourth quarter of 2007, future write-downs of goodwill or net long-lived and
intangible assets, would cause our operating results to suffer.
We may engage in investments, dispositions, acquisitions or other strategic transactions that could divert management attention and prove difficult to
integrate with our business.
We may engage in acquisitions or divestitures of certain assets, businesses, products or technologies, or in other strategic initiatives. Acquisitions,
divestitures and other strategic transactions are inherently risky. Certain transactions may be subject to closing conditions, which may not be satisfied, and
transactions may not be completed, even after public announcement. Acquisitions may require further use of our cash resources, the issuance of equity or debt
securities, or the incurrence of other forms of debt, any of which could harm our financial condition, results of operations, or our interest expense and leverage. If
we issue equity securities, current stockholders' percentage ownership and earnings per share may be diluted. The process of integrating businesses, technologies,
services or products may result in unforeseen operating difficulties and expenditures. Acquisitions and divestitures could involve a number of other potential
risks to our business, including the following:
•
unanticipated costs and liabilities and unforeseen accounting charges or fluctuations;
•
delays and difficulties in delivery of products and services;
•
failure to integrate management information systems, personnel, research and development, marketing, sales and support operations;
•
loss of key employees;
•
diversion of management's attention from other business concerns and disruption of our ongoing business;
•
difficulty in maintaining controls and procedures;
•
uncertainty on the part of our existing customers about our ability to operate after a transaction;
•
loss of customers;
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Source: SUPPORTSOFT INC, 10-K, March 13, 2008