CompUSA 2015 Annual Report Download - page 12

Table of Contents
Ourgrossmarginsarealsodependentonthemixofproductswesellandcouldbeadverselyaffectedbyacontinuationofourcustomers’shifttolower-
pricedproducts.
·Sales tax laws may be changed or interpreted differently which could result in ecommerce and direct mail retailers having to collect sales taxes in
states where the current laws do not require us to do so. This could reduce demand for our products in such states and could result in us having
substantial tax liabilities for past sales.
OurUnitedStatessubsidiariescollectandremitsalestaxinstatesinwhichthesubsidiarieshavephysicalpresenceorinwhichwebelievesufficient
nexusexistswhichobligatesustocollectsalestax.Otherstatesmay,fromtimetotime,claimthatwehavestate-relatedactivitiesconstitutingphysical
nexustorequiresuch collection.Additionally, manyotherstates seektoimpose salestaxcollection orreportingobligations oncompaniesthat sell
goods to customers in their state, or directly to thestate and its political subdivisions, regardless of physical presence.  Such efforts by states have
increasedrecently, as statesseektoraise revenueswithoutincreasingtheincome taxburdenonresidents.WerelyonUnitedStatesSupremeCourt
decisionswhichholdthat,withoutCongressionalauthority,astatemaynotenforceasalestaxcollectionobligationonacompanythathasnophysical
presenceinthestateandwhoseonlycontactswiththestatearethroughtheuseofinterstatecommercesuchasthemailingofcatalogsintothestateand
thedeliveryofgoodsbymailorcommoncarrier.Wecannot predictwhetherthenatureorlevelofcontactswehavewithaparticular statewillbe
deemed enough to require us to collect sales tax in that state nor can we be assured that Congress or individual states will not approve legislation
authorizingstatestoimposetaxcollectionorreportingobligationsonalle-commerceand/ordirectmailtransactions.Asuccessfulassertionbyoneor
morestatesthatweshouldcollectsalestaxonthesaleofmerchandisecouldresultinsubstantialtaxliabilitiesrelatedtopastsalesandwouldresultin
considerableadministrativeburdensandcostsforusandmayreducedemandforourproductsfromcustomersinsuchstateswhenwechargecustomers
forsuchtaxes.SeeLegal Proceedings.
·Events such as acts of war or terrorism, natural disasters, changes in law, or large losses could adversely affect our insurance coverage and insurance
expense, resulting in an adverse affect on our profitability and financial condition.
Weinsureforcertainpropertyandcasualtyrisksconsistingprimarilyofphysicallosstoproperty,businessinterruptionsresultingfrompropertylosses,
worker’s compensation, comprehensive general liability, and auto liability.  Insurance coverage is obtained for catastrophic property and casualty
exposuresaswellasthoserisksrequiredtobeinsuredbylaworcontract.Althoughwebelievethatourinsurancecoverageisreasonable,significant
eventssuchasactsofwarandterrorism,economicconditions,judicialdecisions,legislation,naturaldisastersandlargelossescouldmateriallyaffect
ourinsuranceobligationsandfutureexpense.
Risks Related to Our Company
·We rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our failure to properly
evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems and websites, could have an adverse
effect on our results of operations.
Werelyonavarietyofinformation andtelecommunications systemsinouroperations.Oursuccessisdependentinlargepartontheaccuracyand
properuseofourinformationsystems,includingourtelecommunicationssystems.Tomanageourgrowth,wecontinuallyevaluatetheadequacyofour
existingsystemsandprocedures,andwehavebeenengagedintransitioningkeyfeaturesofourcurrentinformationandoperatingsystemstoanew
platformwehavedevelopedspecificallyforourneeds;delaysoroperationalproblemsineffectivelyimplementingthetransitioncouldhaveamaterial
adverseeffectonouroperations.WehaveexperiencedsomedelaysandoperationalproblemsinimplementingnewITsystemswhichhaveimpacted
timelytransitiontothenewplatform.Weanticipatethatwewillregularlyneedtomakecapitalexpenditurestoupgradeandmodifyourmanagement
information systems, including software and hardware, as we grow and the needs of our business change.  The occurrence of a significant system
failure,electricalortelecommunicationsoutagesorourfailuretoexpandorsuccessfullyimplementnewsystemscouldhaveamaterialadverseeffect
onourresultsofoperations.
Ourinformationsystemsnetworks,includingourwebsites,andapplicationscouldbeadverselyaffectedbyvirusesorwormsandmaybevulnerableto
maliciousactssuchashacking.Theavailabilityandefficiencyofsalesviaourwebsitescouldalsobeadverselyaffectedby“denialofservice”attacks
andotherunfaircompetitivepractices.Althoughwetakepreventivemeasures,theseproceduresmaynotbesufficienttoavoidharmtoouroperations,
whichcouldhaveanadverseeffectonourresultsofoperations.
·We have exited our NATG business and could incur costs in excess of our estimated exit expenses.
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