Enom 2012 Annual Report Download - page 33

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The interruption or failure of our information technology and communications systems, or those of third parties that we
rely upon, may adversely affect our business, operating results and financial condition.
The availability of our products and services depends on the continuing operation of our information technology and
communications systems. Any damage to or failure of our systems, or those of third parties that we rely upon (e.g. co-location
providers for data servers, storage devices, and network access) could result in interruptions in our service, which could reduce
our revenue and profits, and damage our brand. Our systems are also vulnerable to damage or interruption from earthquakes,
terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses or other attempts to harm our systems.
We, and in particular our Registrar service, have experienced an increasing number of computer distributed denial of service
attacks which have forced us to shut down certain of our websites, including eNom.com. We have implemented certain
defenses against these attacks, but we may continue to be subject to such attacks, and future denial of service attacks may cause
all or portions of our websites to become unavailable. In addition, some of our data centers are located in areas with a high risk
of major earthquakes. Our data centers are also subject to break-ins, sabotage and intentional acts of vandalism, and to potential
disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our
disaster recovery planning is currently underdeveloped and does not account for all eventualities. The occurrence of a natural
disaster, a decision to close a facility we are using without adequate notice for financial reasons or other unanticipated problems
at our data centers could result in lengthy interruptions in our service.
Furthermore, service providers may experience an interruption in operations or cease operations for any reason.
If we are unable to agree on satisfactory terms for continued data center hosting relationships, we would be forced to enter into
a relationship with other service providers or assume hosting responsibilities ourselves. If we are forced to switch hosting
facilities, we may not be successful in finding an alternative service provider on acceptable terms or in hosting the computer
servers ourselves. We may also be limited in our remedies against these providers in the event of a failure of service. We also
rely on providers for components of our technology platform, such as hardware and software providers. A failure or
limitation of service or available capacity by any of these providers could adversely affect our business, revenue,
financial condition and results of operations.
Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such
laws, could diminish the value of our services and cause us to lose customers and revenue.
When a user visits our websites or certain pages of our customers' websites, we use technologies, including “cookies,” to
collect information related to the user, such as the user's Internet Protocol, or IP, address, demographic information, and history
of the user's interactions with content or advertisements previously delivered by us. The information that we collect about users
helps us deliver appropriate content and targeted advertising to the user. A variety of federal, state and international laws and
regulations govern the collection, use, retention, sharing and security of data that we receive from and about our users. The
existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations. We post privacy
policies on all of our owned and operated websites which set forth our policies and practices related to the collection and use of
consumer data. Any failure, or perceived failure, by us to comply with our posted privacy policies or with industry standards or
laws or regulations could result in a loss of consumer confidence in us, or result in actions against us by governmental entities
or others, all of which could potentially cause us to lose consumers and revenues.
In addition, various federal, state and foreign legislative and regulatory bodies may expand current or enact new laws
regarding privacy matters. Recent developments related to “instant personalization” and similar technologies potentially allow
us and other publishers access to even broader and more detailed information about users. These developments have led to
greater scrutiny of industry data collection practices by regulators and privacy advocates. New laws may be enacted, new
industry self-regulation may be promulgated, or existing laws may be amended or re-interpreted, in a manner which limits our
ability to analyze user data. If our access to user data is limited through legislation or any industry development, we may be
unable to provide effective technologies and services to customers and we may lose customers and revenue.
We depend on key personnel to operate our business, and if we are unable to retain our current personnel or hire additional
personnel, our ability to develop and successfully market our business could be harmed.
We believe that our future success is highly dependent on the contributions of our executive officers, in particular the
contributions of our Chairman and Chief Executive Officer, Richard M. Rosenblatt, as well as our ability to attract and retain
highly skilled managerial, sales, technical, engineering and finance personnel. We do not maintain “key person” life insurance
policies for our Chief Executive Officer or any of our executive officers. Qualified individuals, including engineers, are in high
demand, and we may incur significant costs to attract and retain them. All of our officers and other employees are at-will
employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our