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obtain and use information that we regard as proprietary. In addition, it is possible that others could independently develop substantially
equivalent intellectual property. If we do not effectively protect our intellectual property we could lose our competitive position.
Our intellectual property may be subject to even greater risk in foreign jurisdictions, as the laws of many countries do not protect
proprietary rights to the same extent as the laws of the United States. If we cannot adequately protect our intellectual property our competitive
position in markets abroad may suffer.
Risks Related to Our Industry
Intense competition in the wireline and broadband, merchant and wireless markets could prevent us from increasing distribution of
our services in those markets or cause us to lose market share.
Our current business model depends on distribution of our products and application services into the wireline and broadband, merchant
and wireless markets, all of which are extremely competitive and rapidly changing. Many of our current and prospective competitors have
substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, more developed
infrastructures, greater name recognition and/or more established relationships in the industry than we have. Our competitors may be able to
adopt more aggressive pricing policies than we can, develop and expand their service offerings more rapidly, adapt to new or emerging
technologies and changes in customer requirements more quickly, take advantage of acquisitions and other opportunities more readily, achieve
greater economies of scale, and devote greater resources to the marketing and sale of their services. Because of these competitive factors and
due to our relatively small size and financial resources we may be unable to compete successfully.
Some of the companies we compete with are currently customers of ours, the loss of which could harm our business. Many of our current
customers have established relationships with some of our current and potential future competitors. If these competitors develop Internet
software and application services that compete with ours, we could lose market share and our revenues would decrease.
We could be subject to liability due to security risks both to users of our merchant services and to the uninterrupted operation of our
Security and privacy concerns of users of online commerce services such as our merchant services may inhibit the growth of the Internet
and other online services, especially as a means of conducting commercial transactions. We rely on secure socket layer technology, public key
cryptography and digital certificate technology to provide the security and authentication necessary for secure transmission of confidential
information. Various regulatory and export restrictions may prohibit us from using the strongest and most secure cryptographic protection
available and thereby expose us to a risk of data interception. Because some of our activities involve the storage and transmission of
confidential personal or proprietary information, such as credit card numbers, security breaches and fraud schemes could damage our reputation
and expose us to a risk of loss or litigation and possible liability. In addition, our payment transaction services may be susceptible to credit card
and other payment fraud schemes perpetrated by hackers or other criminals. If such fraud schemes become widespread or otherwise cause
merchants to lose confidence in our services in particular, or in Internet payments systems generally, our business could suffer.
Additionally, our wireless and wireline networks 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 our proprietary information or cause
interruptions in our operations. We may need to expend significant capital or other resources protecting against the threat of security breaches
or alleviating problems caused by breaches. Although we intend to continue to implement and improve our security measures, persons may be
able to circumvent the measures that we implement in the future. Eliminating computer viruses and alleviating other security problems may
require interruptions, delays or cessation of service to users accessing Web pages that deliver our services, any of which could harm our