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BECAUSE WE MUST ALWAYS HAVE SUFFICIENT CAPACITY, WE MAY ENTER INTO
DISADVANTAGEOUS CONTRACTS.
We expect that the number of transactions and products that we handle will
continue to grow in the future. In order to ensure that we are able to handle
such additional transactions and products, we may be required to locate and
obtain additional facilities, including warehouse space, and acquire additional
systems and equipment. If we overestimate the facilities and systems capacity
that we require, we may be obligated to pay for more capacity than we actually
use, resulting in our incurring costs without corresponding revenue. Conversely,
if we underestimate our capacity needs, we may be unable to provide the
necessary services for our clients or may be required to obtain additional
capacity through more expensive means. The occurrence of either of these
situations could significantly reduce our operating margins and adversely affect
our business.
WE FACE COMPETITION FROM MANY SOURCES THAT COULD ADVERSELY AFFECT OUR BUSINESS.
Many companies offer, on an individual basis, one or more of the same
services we do, and we face competition from many different sources depending
upon the type and range of services requested by a potential client. Our
competitors include vertical outsourcers, which are companies that offer a
single function, such as call centers, public warehouses or credit card
processors, and many of these companies have greater capabilities than we do for
the function they provide. We also compete against transportation logistics
providers who offer product management functions as an ancillary service to
their primary transportation services. In many instances, our competition is the
in-house operations of our potential clients themselves. The in-house operations
departments of potential clients often believe that they can perform the same
services we do, while others are reluctant to outsource business functions which
involve direct customer contact. We cannot be certain that we will be able to
compete successfully against these or other competitors in the future.
OUR SALES AND IMPLEMENTATION CYCLES ARE HIGHLY VARIABLE AND MAY CAUSE OUR
OPERATING RESULTS TO VARY WIDELY.
The sales cycle for our services is variable, typically ranging between a
few weeks to several months from initial contact with the potential client to
the signing of a contract. Occasionally sales require substantially more time.
Delays in executing client contracts may affect our revenue and cause our
operating results to vary widely. We believe that a potential client's decision
to purchase our services is discretionary, involves a significant commitment of
its resources and is influenced by intense internal and external pricing and
operating comparisons. To successfully sell our services, we generally must
educate our potential clients regarding the use and benefit of our services,
which can require significant time and resources. Consequently, the period
between initial contact and the purchase of our services is often long and
subject to delays associated with the lengthy approval and competitive
evaluation processes that typically accompany significant operational decisions.
Additionally, the time required to implement our systems and integrate a new
client can range from several weeks to several months. Delays in integrating new
clients may affect our revenue and cause our operating results to vary widely.
WE ARE DEPENDENT ON OUR KEY PERSONNEL, AND WE NEED TO HIRE AND RETAIN SKILLED
PERSONNEL TO SUSTAIN OUR BUSINESS.
Our performance is highly dependent on the continued services of our
executive officers and other key personnel, the loss of any of whom could
materially adversely affect our business. We currently do not have employment
agreements with any of our executive officers or key personnel. In addition, we
need to attract and retain other highly-skilled technical and managerial
personnel for whom there is intense competition. We cannot assure you that we
will be able to attract and retain the personnel necessary for the continuing
growth of our business. Our inability to attract and retain qualified technical
and managerial personnel would materially adversely affect our ability to
maintain and grow our business.
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