Our Web sites, primarily for children, allow social interaction  between users. We currently obtain and retain personal information  about our Web site users, store shoppers and loyalty program  members. In addition, we obtain personal information about our  guests as part of their registration in our Find-A-Bear ®   identification  system. Federal, state and foreign governments have enacted or  may enact laws or regulations regarding the collection and use of  personal information, with particular emphasis on the collection  of information regarding minors. Such regulation may also include  enforcement and redress provisions.  While we believe that our security technology and processes are  adequate in preventing security breaches and in reducing cyber  security risks, given the ever-increasing abilities of those intent on  breaching cyber security measures and given our reliance on the  security and other efforts of third-party vendors, the total security  effort at any point in time may not be completely effective, and  any such security breaches and cyber incidents could adversely  affect our business. Failure of our systems, including failures due to  cyber-attacks that would prevent the ability of systems to function  as intended, could cause transaction errors, loss of customers and  sales, and could have negative consequences to us, our employees,  and those with whom we do business. Any security breach involving  the misappropriation, loss, or other unauthorized disclosure of  confidential information by us could also severely damage our  reputation, expose us to the risks of litigation and liability, and harm  our business. While we carry insurance that would mitigate the losses  to an extent, such insurance may be insufficient to compensate us for  potentially significant losses. We have a stringent, comprehensive privacy policy covering the  information we collect from our guests and have established security  features to protect our guest database and Web sites. While we  have implemented programs and procedures designed to protect  the privacy of people, including children, from whom we collect  information, and our Web sites are designed to be fully compliant  with the Federal Children’s Online Privacy Protection Act, there can  be no assurance that such programs will conform to all applicable  laws or regulations. If we fail to fully comply, we may be subjected  to liability and damage to our reputation. In addition, because our  guest database primarily includes personal information of young  children and young children frequently interact with our Web sites,  we are potentially vulnerable to charges from parents, children’s  organizations, governmental entities, and the media of engaging in  inappropriate collection, distribution or other use of data collected  from children. Additionally, while we have security features and chat  monitoring, our security measures may not protect users’ identities  and our online safety measures may be questioned which may result  in negative publicity or a decrease in visitors to our site. If site users  act inappropriately or seek unauthorized contact with other users of  the site, it could harm our reputation and, therefore, our business and  we could be subject to liability. Our strategy requires us to operate a significant number of stores  in the United States, Canada, the United Kingdom and Ireland, as  well as close, relocate and open store locations in these countries. If  we are not able to operate these stores or to effectively manage the  overall portfolio of our stores, it could adversely affect our ability to  grow and could significantly harm our profitability.  Our future results will largely depend on our ability to operate our  stores successfully in the United States, Canada, the United Kingdom  and Ireland and optimize store productivity and profitability by  closing select stores, relocating and downsizing other stores and  selectively upgrading stores with key features in conjunction with  lease renewals. In 2012, we announced a plan to reduce our store  count in North America. We closed 37 stores in 2013 in addition to  the 10 locations closed in 2012 and 12 locations closed in 2011. We  currently expect to close an additional 10 to 15 locations in 2014. Our  ability to manage our portfolio of stores in future years in desirable  locations and operate stores profitably, particularly in multi-store  markets, is a key factor in our ability to achieve sustainable profitable  growth. We cannot be certain when or whether desirable locations  will become available, the number of Build-A-Bear Workshop stores  that we can or will ultimately open, or whether any such new or  relocated stores can be profitably operated. We have not always  succeeded in identifying desirable locations or in operating our stores  successfully in those locations. We may decide to close other stores in  the future.  Our business involves the storage and transmission of customers’  personal information, such as consumer preferences and credit card  information. We invest in industry-standard security technology  to protect the Company’s data and business processes against the  risk of data security breaches and cyber-attacks. Our data security  management program includes identity, trust, vulnerability and  threat management business processes, as well as enforcement of  standard data protection policies such as Payment Card Industry  compliance. We measure our data security effectiveness through  industry accepted methods and remediate critical findings.  Additionally, we certify our major technology suppliers and any  outsourced services through accepted security certification  measures. We maintain and routinely test backup systems and  disaster recovery, along with external network security penetration  testing by an independent third party as part of our business  continuity preparedness. Internet privacy is a rapidly changing area  and we may be subject to future requirements and legislation that are  costly to implement and negatively impact our results. In July 2005, we opened a flagship store in New York City. Because this  store is much larger than our typical mall-based stores, it requires us  to generate revenues at a higher level to justify keeping the store open.  Closing this store could have an adverse impact on sales. Increased demands on our operational, managerial and  administrative resources as a result of our store strategy could cause  us to operate our business less effectively, which in turn could cause  2013 FORM 10-K 8  BUILD-A-BEAR WORKSHOP, INC. 