Stamps.com 2010 Annual Report Download - page 23

TABLE OF CONTENTS
takeover of our company. Our competitors may also seek to have the USPS 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 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:
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
Our corporate headquarters are located in Los Angeles, California where we have approximately 41,000 square feet under a
lease expiring in May 2012. We believe that our existing facilities are suitable and adequate for our present purposes.
ITEM 3. LEGAL PROCEEDINGS.
On November 22, 2006, we filed a lawsuit against Endicia, Inc. and PSI Systems, Inc. in the United States District Court for
the Central District of California for infringement of eleven of our patents covering, among other things, Internet postage
technology. We seek an injunction, unspecified damages, and attorneys’ fees. On November 10, 2008, we were required to select
fifteen claims (from over six hundred claims available) to be the subject of the trial. On November 9, 2009, the Court granted the
summary judgment motion of Endicia, Inc. and PSI Systems, Inc. that the fifteen claims we selected are invalid. We have filed
an appeal.
On August 8, 2008, PSI Systems, Inc. filed a lawsuit against us in the same court, alleging that we infringed three PSI
Systems patents related to Internet postage technology. PSI Systems seeks an injunction, unspecified damages, and attorneys’
fees. On September 16, 2008, we filed counterclaims for infringement of four more of our patents. In our counterclaim, we seek
an injunction, unspecified damages, and attorneys’ fees. The Court issued a “Markman order” to determine the meaning of the
claims on May 14, 2010. The Court has scheduled a trial commencement date of June 21, 2011.
On October 22, 2004, Kara Technology Incorporated filed suit against us in the United States District Court for the Southern
District of New York, alleging, among other claims, that we infringed certain Kara Technology patents and that we
misappropriated trade secrets owned by Kara Technology, most particularly with respect to our NetStamps feature. On October
6, 2010, we entered into the final settlement agreement with Kara Technology Incorporated and Mr. Salim Kara to resolve all
outstanding litigation among the parties. Under the terms of the agreement, we made a $5.1 million payment for settlement of all
claims asserted in the litigation, purchased the patents asserted in the litigation for $0.4 million, and granted Mr. Salim Kara
options
• variations in our operating results,
• variations between our actual operating results and the expectations of securities analysts,
• investors and the financial community,
• sales by stockholders holding larger blocks of our stock,
• announcements of developments affecting our business, systems or expansion plans by us or others, and
• market volatility in general.
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