Carbonite 2011 Annual Report Download - page 29

Table of Contents
addition, although we own the Carbonite domain name under various global top level domains such as .com and .net, as well as under various country-
specific domains, we might not be able to, or may choose not to, acquire or maintain other country-specific versions of the Carbonite domain name or
other potentially similar URLs. Domain names similar to ours have already been registered in the U.S. and elsewhere, and our competitors or other third
parties could capitalize on our brand recognition by using domain names similar to ours. The regulation of domain names in the U.S. and elsewhere is
generally conducted by internet regulatory bodies and is subject to change. If we lose the ability to use a domain name in a particular country, we may
be forced to either incur significant additional expenses to market our solutions within that country, including the development of a new brand and the
creation of new promotional materials, or elect not to sell our solutions in that country. Either result could substantially harm our business and operating
results. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars, or modify the requirements for
holding domain names. As a result, we may not be able to acquire or maintain the domain names that utilize the name Carbonite in all of the countries in
which we currently conduct or intend to conduct business. Further, the relationship between regulations governing domain names and laws protecting
trademarks and similar proprietary rights varies among jurisdictions and is unclear in some jurisdictions. We may be unable to prevent third parties from
acquiring and using domain names that infringe, are similar to, or otherwise decrease the value of, our brand or our trademarks. Protecting and enforcing
our rights in our domain names and determining the rights of others may require litigation, which could result in substantial costs, divert management
attention, and not be decided favorably to us.
Material defects or errors in our software could harm our reputation, result in significant costs to us, and impair our ability to sell our solutions.
The software applications underlying our solutions are inherently complex and may contain material defects or errors, particularly when first
introduced or when new versions or enhancements are released. We have from time to time found defects or errors in our solutions, and new defects or
errors in our existing solutions may be detected in the future by us or our customers. The costs incurred in correcting such defects or errors may be
substantial and could harm our operating results. In addition, we rely on hardware purchased or leased and software licensed from third parties to offer
our solutions. Any defects in, or unavailability of, our or third party software or hardware that cause interruptions to the availability of our solutions
could, among other things:
Risks Related to Ownership of our Common Stock
Our stock price may be volatile due to fluctuations in our operating results and other factors, each of which could cause our stock price to decline.
Shares of our common stock were sold in our initial public offering in August 2011 at a price of $10.00 per shares, and our common stock has
subsequently traded as high as $21.10 and as low as $8.21. An active, liquid, and orderly market for our common stock may not be developed or
sustained, which could depress the trading price of our common stock. The market price for shares of our common stock could be subject to
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cause a reduction in revenue or delay in market acceptance of our solutions;
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require us to issue refunds to our customers or expose us to claims for damages;
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cause us to lose existing customers and make it more difficult to attract new customers;
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divert our development resources or require us to make extensive changes to our solutions or software, which would increase our expenses;
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increase our technical support costs; and
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harm our reputation and brand.