Support.com 2007 Annual Report Download - page 29

our costs, cause customers and partners to fail to renew or to terminate their use of our offerings, and harm our reputation and our ability to attract new
customers.
Our systems collect, access, use, and store personal customer information and enable customer transactions, which poses security risks, requires us to
invest significant resources to prevent or correct problems caused by security breaches, and may harm our business.
A fundamental requirement for online communications, transactions and support is the secure collection, storage and transmission of confidential
information. Our systems collect and store confidential and/or personal information of our customers, including credit card information, and our employees and
contractors may access and use that information in the course of providing services for our customers. In addition, we collect and retain personal information of
our employees in the ordinary course of our business. We and our third-party contractors use commercially available technologies to secure this information.
Despite these measures, third parties may attempt to breach the security of our data or that of our customers. In addition, errors in the storage or transmission of
data could breach the security of that information. We may be liable to our customers for any breach in security and any breach could subject us to governmental
or administrative proceedings or monetary penalties, and harm our business and reputation. Also, computers are vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions, which could lead to interruptions, delays or loss of data. We may be required to expend significant capital and other
resources to comply with mandatory privacy and security standards required by law, industry standard, or contract, and to further protect against security
breaches or to correct problems caused by any breach.
Privacy concerns and laws or other domestic or foreign regulations may require us to incur significant costs and may reduce the effectiveness of our
solutions, and our failure to comply with those laws or regulations may harm our business and cause us to lose customers.
Our software contains features that allow our customers and our consumer technology support technicians to access, control, monitor or collect information
from computers running the software. Federal, state and foreign government bodies and agencies, however, have adopted or are considering adopting laws and
regulations restricting or otherwise regulating the collection, use and disclosure of personal information obtained from consumers and individuals. Those
regulations could be costly to implement, could reduce the efficiency of our operations, and could require us to modify our products, systems or services.
Liability for violation of, costs of compliance with, and other burdens imposed by such laws and regulations may limit the use and adoption of our solutions and
reduce overall demand for them. Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our solutions. In
addition, we may face claims about invasion of privacy or inappropriate disclosure, use, storage, or loss of this information. Any imposition of liability could
harm our reputation, cause us to lose customers and cause our operating results to suffer.
Our reported results of operations will continue to be materially and adversely affected by our adoption of SFAS 123R.
Statement of Financial Accounting Standards No. 123 (revised 2004),"Share-Based Payment" (SFAS 123R) became effective in our first quarter of 2006,
and has resulted in our recognition of substantial compensation expense relating to our employee stock options and employee stock purchase plans. Historically,
we generally have not recognized in our statement of operations any compensation expense related to stock option grants we issue under our stock option plans
or the discounts we provide under our employee stock purchase plans. We are now required to measure the compensation expense related to employee stock
awards on a fair value basis, which leads to substantial additional compensation expense and a material adverse effect on our reported results of operations.
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Source: SUPPORTSOFT INC, 10-K, March 13, 2008