Support.com 2007 Annual Report Download - page 30

If we are unable to maintain effective 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 Exchange Act, as well as our internal
control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002 as of December 31, 2007. 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 would be
harmed. As of December 31, 2006, we concluded that we had a material weakness in our internal control over financial reporting, as further described in Item 9A
of Part II of our 2006 Form 10-K, Control and Procedures. Our independent registered public accounting firm reached the same conclusion. In the first quarter of
2007, we implemented corrective actions that remediated this material weakness. During 2007, we monitored the effectiveness of these controls and believe the
controls to be effective as of December 31, 2007. However, we cannot be certain that these measures will continue to be effective, or if other 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 establish effective internal
control over financial reporting and disclosure controls and procedures, investors may lose confidence in our reported financial information, which could cause
the market price of our common stock to decline.
Failure to resolve litigation or claims asserted against us may lead to continued costs and expenses and divert management's attention from our
business, which could cause our revenue and our stock price to decline.
A securities class action lawsuit was filed against us and other issuers in November 2001. Should this lawsuit linger for a longer period of time, whether
ultimately resolved in our favor or not, or further lawsuits be filed against us, coverage limits of our insurance or our ability to pay such amounts may not be
adequate to cover the fees and expenses and any ultimate resolution associated with such litigation. The size of these payments, if any, individually or in the
aggregate, could seriously impair our cash reserves and financial condition. The continued defense of this lawsuit also could result in diversion of our
management's time and attention away from business operations, which could cause our financial results to decline. A failure to resolve definitively current or
future material litigation in which we are involved or in which we may become involved in the future, regardless of the merits of the respective cases, could also
cast doubt as to our prospects in the eyes of customers, potential customers and investors, which could cause our revenue and stock price to decline.
We may not obtain sufficient patent protection, which could harm our competitive position, increase our expenses and harm our business.
Our success and ability to compete depend to a significant degree upon the protection of our software and other proprietary technology. It is possible that:
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our pending patent applications may not be issued;
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competitors may independently develop similar technologies or design around any of our patents;
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patents issued to us may not be broad enough to protect our proprietary rights; and
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our issued patents could be successfully challenged.
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Source: SUPPORTSOFT INC, 10-K, March 13, 2008