Stamps.com 2004 Annual Report Download - page 15

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Risks Related to Our Stock
The tax value of our net operating losses could be impaired if we trigger a change of control pursuant to
Section 382.
Under the complicated rules of Internal Revenue Code (IRC) Section 382, a change in ownership can occur
whenever there is a shift in ownership by more than 50 percent by one or more five-percent shareholders within a
three-year period. If a change of ownership is triggered, the NOLs may be impaired, which could harm stockholder
value.
Our charter documents could deter a takeover effort, which could inhibit your ability to receive an
acquisition premium for your shares.
The provisions of our certificate of incorporation, bylaws and Delaware law could make it difficult for a
third party to acquire us, even if it would be beneficial to our stockholders. In addition, we are subject to the
provisions of Section 203 of the Delaware General Corporation Law, which could prohibit or delay a merger or
other takeover of our Company, and discourage attempts to acquire us.
The US Postal Service may object to change of control of our common stock.
The US Postal Service may raise national security or similar concerns to prevent foreign persons from
acquiring significant ownership of our common stock or of Stamps.com. The US Postal Service also has regulations
regarding the change of control of approved PC Postage providers. These concerns may prohibit or delay a merger
or other takeover of our company. Our competitors may also seek to have the US Postal Service block the
acquisition by a foreign person of our common stock or our Company in order to prevent the combined company
from becoming a more effective competitor in the market for PC Postage.
Our stock price is volatile
The price at which our common stock has traded since our initial public offering in June 1999 has
fluctuated significantly. The price may continue to be volatile due to a number of factors, including the following,
some of which are beyond our control: variations in our operating results, variations between our actual operating
results and the expectations of securities analysts, investors and the financial community, announcements of
developments affecting our business, systems or expansion plans by us or others, and market volatility in general.
As a result of these and other factors, investors in our common stock may not be able to resell their shares
at or above their original purchase price. In the past, securities class action litigation often has been instituted against
companies following periods of volatility in the market price of their securities. This type of litigation, if directed at
us, could result in substantial costs and a diversion of management’ s attention and resources.
Shares of our common stock held by existing stockholders may be sold into the public market, which could
cause the price of our common stock to decline.
If our stockholders sell into the public market substantial amounts of our common stock purchased in
private financings prior to our initial public offering, or purchased upon the exercise of stock options or warrants, or
if there is a perception that these sales could occur, the market price of our common stock could decline. All of these
shares are available for immediate sale, subject to the volume and other restrictions under Rule 144 of the Securities
Act of 1933.
ITEM 2. PROPERTIES
Our corporate headquarters are located in a 36,000 square foot facility in Los Angeles, California under a
lease expiring in March, 2010. We believe that our existing facility is suitable and adequate for our present purposes,
and that such facility is substantially being utilized or we have plans to utilize it.