Tucows 2013 Annual Report Download - page 27

disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our
disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a decision to close a
facility without adequate notice or other unanticipated problems at our data centers could result in lengthy interruptions in
our service.
Our systems face security risks, and any compromise of the security of these systems could result in liability for damages
and in lost customers.
Our security systems may be vulnerable to unauthorized access by hackers or others, computer viruses and other
disruptive problems. Someone who is able to circumvent security measures could misappropriate customer or proprietary
information or cause interruptions in Internet operations. Internet and online resellers have in the past experienced, and may
in the future experience, interruptions in service because of the accidental or intentional actions of Internet users, current and
former employees or others.
We may need to expend significant capital and other resources to protect against the threat of security breaches or
alleviate problems caused by breaches. Eliminating computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to users accessing our websites and the web pages that deliver our content
services. An information technology systems security breach may lead to a material disruption of our systems and/or the loss
of business information, which may materially and adversely affect our business. Risks relating to such a security breach may
include, among other things: a material adverse impact on our business and future financial results due to the theft,
destruction, loss, misappropriation or release of confidential data, negative publicity resulting in reputation or brand damage
with our customers, vendors or peers due to the theft, destruction, loss, misappropriation or release of confidential
data, operational or business delays resulting from the disruption of information technology systems and subsequent clean-
up and mitigation activities and adverse effects on our compliance with regulatory laws and regulations. Repeated or
substantial interruptions could result in the loss of customers and reduced revenues.
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We may have difficulty scaling and adapting our existing architecture to accommodate increased traffic and technology
advances or changing business requirements, which could lead to the loss of customers and cause us to incur additional
expenses.
To be successful, our network infrastructure must perform well and be reliable. The greater the user traffic and the
greater the complexity of our services, the more computing power we will need. We have spent and expect to continue to
spend substantial amounts on the purchase of new equipment to upgrade our technology and network infrastructure to enable
it to handle increased traffic. This expansion is expensive and complex and could result in inefficiencies or operational
failures. If we do not expand successfully, or if we experience inefficiencies and operational failures, the quality of our
services and our customers’ experience could decline. This could damage our reputation and lead us to lose current and
potential customers. Cost increases, loss of traffic or failure to accommodate new technologies or changing business
requirements could harm our operating results and financial condition.
We rely on bandwidth providers, data centers and other vendors in providing services to our customers, and any failure or
interruption in the services provided by these third parties could harm our ability to operate our business and damage our
reputation.
We rely on vendors, including data center and bandwidth providers in providing services to our customers. Any
disruption in the network access or co-location services provided by these providers or any failure of these providers to
handle current or increased volumes of use could significantly harm our business. Any financial or other difficulties our
providers face may also have negative effects on our business. We exercise little control over these vendors, which increases
our vulnerability to problems with the services they provide. We license technology and related databases to facilitate certain
aspects of our data center and connectivity operations, including Internet traffic management services. We have experienced
and expect to continue to experience interruptions and delays in service and availability for such elements. Any errors,
failures, interruptions or delays in connection with these technologies and information services could harm our relationship
with customers, adversely affect our brand and expose us to liabilities.
New tax treatment of companies engaged in Internet commerce may adversely affect the demand for our marketing
services and our financial results.
Due to the global nature of the Internet, it is possible that, although our services and the Internet transmissions
related to them typically originate in Virginia, Toronto and Germany, governments of other states or foreign countries might
attempt to regulate our transmissions or levy sales, income or other taxes relating to our activities. Tax authorities at the