Nautilus 2013 Annual Report Download - page 15

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part, or efforts conducted by us or third-
parties to prevent or respond to system interruptions in a timely manner are ineffective, our ability to
conduct operations would be significantly affected. If we do not consider the potential impact of critical decisions related to systems or process
design and implementation, this could lead to operational challenges and increased costs. Any of the aforementioned factors could have a
material adverse affect on our operating results, financial position and cash flows.
Our current primary enterprise resource planning system is highly customized to our business and we may experience difficulties as we
transition to new systems during 2014. Difficulties or delays in implementing our new information systems or significant system failures could
disrupt our operations and have a material adverse effect on our operating results, financial position and cash flows.
System Security Risks, Data Protection Breaches and Cyber Attacks Could Disrupt Our Operations.
We manage and store various proprietary information and sensitive or confidential data relating to our business, including sensitive and
personally identifiable information. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination
of proprietary
information or sensitive or confidential data about us, or our customers, including the potential loss or disclosure of such
information or data as a result of fraud, trickery or other forms of deception, could expose us, our customers or the individuals affected to a risk
of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our
business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.
Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our
confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be
able to develop and deploy viruses, worms and other malicious software programs that attack or otherwise exploit any security vulnerabilities of
our systems. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain
defects in design or manufacture, including "bugs" and other problems that could unexpectedly interfere with the operation of the system. The
costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security
vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays,
cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.
Item 1B. Unresolved Staff Comments
None.
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