Stamps.com 2004 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2004 Stamps.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 64

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64

8
RISK FACTORS
You should carefully consider the following risks and the other information in this Report and our other
filings with the SEC before you decide to invest in our company or to maintain or increase your investment. The
risks and uncertainties described below are not the only ones facing Stamps.com. Additional risks and uncertainties
may also adversely impact and impair our business. If any of the following risks actually occur, our business, results
of operations or financial condition would likely suffer. In that case, the trading price of our common stock could
decline, and you may lose all or part of your investment.
This Report contains forward-looking statements based on the current expectations, assumptions, estimates
and projections about Stamps.com and the Internet. These forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements as
a result of many factors, including those described in this section and elsewhere in this Report. Stamps.com does not
undertake to update publicly any forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
Risks Related to Our Business
We may not successfully implement strategies to increase the adoption of our service which would limit our
growth, adversely affect our business and cause the price of our common stock to decline.
Our future profitability will depend on our ability to successfully implement our strategy of increasing the
adoption of our service. Factors that might cause our revenues, margins and operating results to fluctuate include the
factors described in the subheadings below as well as:
y The costs of our marketing programs to establish and promote the Stamps.com brands;
y The demand for our service;
y Our ability to develop and maintain strategic distribution relationships;
y The number, timing and significance of new products or services introduced by us and by our
competitors;
y Our ability to develop, market and introduce new and enhanced services on a timely basis;
y The level of service and price competition;
y Our operating expenses;
y US Postal Service regulation and policies relating to PC Postage; and
y General economic factors.
We have a history of losses and we may incur losses in the future which may reduce the trading price of our
common stock.
We have experienced significant net losses since our inception and we may experience net losses in the future. We
incurred net losses of $4.7 million for the year ended December 31, 2004, though we realized net income of $1.5
million during the quarter ended December 31, 2004. Although we achieved profitability during the last two fiscal
quarters of 2004, we cannot be certain that we will be able to sustain or increase such profitability in the future.
We implemented pricing plans that may adversely affect our future revenues and margins.
Our ability to generate gross margins depends upon the ability to generate significant revenues from a large
base of active customers. In order to attract customers in the future, we may run special promotions and offers such
as free discounts on fees, postage and supplies, and other promotions. We cannot be sure that customers will be