Classmates.com 2007 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 2007 Classmates.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 153

  • 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
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153

billing support services or other vendors will be adequate. In addition to potential legal liability, these activities may adversely impact our
reputation or our revenues and may interfere with our ability to provide our services, all of which could adversely impact our business.
Harmful software programs such as viruses could disrupt our business.
Our business is dependent on the continued acceptance of the Internet as an effective medium. Damaging software programs, such as
computer viruses, worms and Trojan horses, have from time to time been disseminated through the Internet and have caused significant
disruption to Internet users. Certain of these programs have disabled the ability of computers to access the Internet, requiring users to obtain
technical support in order to gain access to the Internet. Other programs have had the potential to damage or delete computer programs. The
development and widespread dissemination of harmful programs has the potential to seriously disrupt Internet usage. If Internet usage is
significantly disrupted for an extended period of time, or if the prevalence of these programs results in decreased residential Internet usage, our
business could be materially and adversely impacted. In addition, actions taken by us or our telecommunications providers to attempt to
minimize the spread of harmful programs could adversely impact our users' ability to utilize our services.
Our failure to protect our proprietary rights could harm our business.
Our trademarks, patents, copyrights, domain names, and trade secrets are important to the success of our business. We principally rely upon
patent, trademark, copyright, trade secret, and contract laws to protect our proprietary technology, all of which provide only limited protection.
The protection of our proprietary rights may require the expenditure of significant financial and internal resources. We cannot assure you that we
have taken adequate steps to prevent misappropriation of our proprietary rights. Our failure to adequately protect our proprietary rights could
adversely affect our brands and could harm our business.
Legal actions, particularly those associated with proprietary rights, could subject us to substantial liability and expense and require us
to change our business practices.
We are currently, and have been in the past, party to various legal actions. These actions include, without limitation, claims by private
parties in connection with consumer protection and other laws, claims that we infringe third-party patents, claims in connection with
employment practices, securities laws claims, breach of contract claims, and other business-related claims. The nature of our business could
subject us to additional claims for similar matters, as well as a wide variety of other claims including, without limitation, claims for defamation,
negligence, trademark infringement, copyright infringement, and privacy matters. Various governmental agencies may also assert claims or
institute legal actions, inquiries or investigations relating to our business practices, such as our marketing, billing, customer retention, renewal,
cancellation, refund, or disclosure practices.
Defending against lawsuits, inquiries and investigations involves significant expense and diversion of management's attention and resources
from other matters. We may not prevail in existing claims or claims that may be made in the future. The failure to successfully defend against
certain types of claims, including claims based on infringement of proprietary rights, could require us to change our business practices or obtain
licenses from third-parties, which licenses may not be available on acceptable terms, if at all. Lawsuits, inquiries and investigations also involve
the risk of significant settlements or judgments against us. Both the cost of defending claims, as well as the effect of settlements and judgments,
could cause our results of operations to fluctuate significantly from period to period and could materially and adversely affect our business,
financial position, results of operations, and cash flows.
26