AGYS » Topics » Prolonged economic weakness causes a decline in spending for information technology, adversely affecting our financial results.

These excerpts taken from the AGYS 10-K filed Jun 9, 2009.
Prolonged economic weakness causes a decline in spending for information technology, adversely affecting our financial results.
Our revenue and profitability depend on the overall demand for our products and services and continued growth in the use of technology in business by our customers, their customers, and suppliers. In challenging economic environments, our customers may reduce or defer their spending on new technologies. At the same time, many companies have already invested substantial resources in their current technological resources, and they may be reluctant or slow to adopt new approaches that could disrupt existing personnel, processes and infrastructures. Delays or reductions in demand for information technology by end users could have a material adverse effect on the demand for our products and services. In the last year, we have experienced weakening in the demand for our products and services. If the markets for our products and services continue to soften, our business, results of operations or financial condition could be materially adversely affected.
 
If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls over financial reporting, we may not be able to report our financial results accurately or timely or detect fraud, which could have a material adverse effect on our business. While we believe that our plans to remediate our 2009 material weakness in internal controls over financial reporting, discussed in Item 9A of this report, will return us to the status of having adequate internal controls over financial reporting, we continue to be exposed to risks that those internal controls may be inadequate and we may have difficulty accurately reporting our financial results on a timely basis.
An effective internal control environment is necessary for the company to produce reliable financial reports and is an important part of its effort to prevent financial fraud. Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control structure and procedures for financial reporting. We have an ongoing program to perform the system and process evaluation and testing necessary to comply with these requirements and to remediate internal control deficiencies and material weaknesses.
While management evaluates the effectiveness of the company’s internal controls on a regular basis, these controls may not always be effective. There are inherent limitations on the effectiveness of internal controls, including collusion, management override, and failure in human judgment. In addition, control procedures are designed to reduce rather than eliminate business risks. In the event that our chief executive officer, chief financial officer or independent registered public accounting firm determines that our internal controls over financial reporting are not effective as defined under Section 404, we may be unable to produce reliable financial reports or prevent fraud, which could materially adversely affect our business. In addition, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or NASDAQ. Any such actions could affect investor perceptions of the company and result in an adverse reaction in the


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financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline or limit our access to capital.
 
Prolonged
economic weakness causes a decline in spending for information
technology, adversely affecting our financial results.






Our revenue and profitability depend on the overall demand for
our products and services and continued growth in the use of
technology in business by our customers, their customers, and
suppliers. In challenging economic environments, our customers
may reduce or defer their spending on new technologies. At the
same time, many companies have already invested substantial
resources in their current technological resources, and they may
be reluctant or slow to adopt new approaches that could disrupt
existing personnel, processes and infrastructures. Delays or
reductions in demand for information technology by end users
could have a material adverse effect on the demand for our
products and services. In the last year, we have experienced
weakening in the demand for our products and services. If the
markets for our products and services continue to soften, our
business, results of operations or financial condition could be
materially adversely affected.


 




If we fail to
maintain an effective system of internal controls or discover
material weaknesses in our internal controls over financial
reporting, we may not be able to report our financial results
accurately or timely or detect fraud, which could have a
material adverse effect on our business. While we believe that
our plans to remediate our 2009 material weakness in internal
controls over financial reporting, discussed in Item 9A of
this report, will return us to the status of having adequate
internal controls over financial reporting, we continue to be
exposed to risks that those internal controls may be inadequate
and we may have difficulty accurately reporting our financial
results on a timely basis.






An effective internal control environment is necessary for the
company to produce reliable financial reports and is an
important part of its effort to prevent financial fraud.
Section 404 of the Sarbanes-Oxley Act of 2002 requires our
management to report on, and our independent registered public
accounting firm to attest to, the effectiveness of our internal
control structure and procedures for financial reporting. We
have an ongoing program to perform the system and process
evaluation and testing necessary to comply with these
requirements and to remediate internal control deficiencies and
material weaknesses.





While management evaluates the effectiveness of the
company’s internal controls on a regular basis, these
controls may not always be effective. There are inherent
limitations on the effectiveness of internal controls, including
collusion, management override, and failure in human judgment.
In addition, control procedures are designed to reduce rather
than eliminate business risks. In the event that our chief
executive officer, chief financial officer or independent
registered public accounting firm determines that our internal
controls over financial reporting are not effective as defined
under Section 404, we may be unable to produce reliable
financial reports or prevent fraud, which could materially
adversely affect our business. In addition, we may be subject to
sanctions or investigation by regulatory authorities, such as
the SEC or NASDAQ. Any such actions could affect investor
perceptions of the company and result in an adverse reaction in
the





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financial markets due to a loss of confidence in the reliability
of our financial statements, which could cause the market price
of our common stock to decline or limit our access to capital.


 




EXCERPTS ON THIS PAGE:

10-K (2 sections)
Jun 9, 2009
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