Enom 2014 Annual Report Download - page 21

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sustain substantially increased revenue levels, while continuing to control our expenses. We may incur significant operating losses in
the future for a number of reasons, including those discussed in other risk factors and factors that we cannot foresee, and we may be
unable to generate net income or sufficient positive cash flows.
We may not be able to obtain capital when desired on favorable terms, if at all, or without substantial dilution to our stockholders,
which may impact our ability to execute on our current or future business strategies.
We anticipate that our current cash, cash equivalents and cash provided by operating activities will be sufficient to fund our
operations for the next 12 months. It is possible, however, that we may not generate sufficient cash flow from operations or otherwise
have the capital resources to meet our future capital needs, including to invest in areas for growth, and we do not currently have a line
of credit in place if we need to borrow funds. If we do not generate sufficient cash flow from operations or otherwise have sufficient
capital resources available, we may need to enter into a new financing arrangement to execute on our current or future business
strategies, including developing new or investing in existing service offerings, maintaining our operating infrastructure, acquiring
complementary businesses, hiring additional personnel or otherwise responding to competitive pressures. We cannot assure you that a
new financing arrangement will be available to us on favorable terms, or at all. Furthermore, if we raise additional funds through the
issuance of convertible debt or equity securities, the percentage ownership of our stockholders could be significantly diluted, and these
newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. If adequate funds are not
available or are not available on acceptable terms, if and when needed, our ability to fund our operations, meet obligations in the
normal course of business, take advantage of strategic opportunities, or otherwise respond to competitive pressures would be
significantly limited.
The intangible assets on our balance sheet may be subject to impairment. If our intangible assets or goodwill become impaired we
may be required to record a significant non-cash charge to earnings which would have a material adverse effect on our results of
operations.
We carry a substantial amount of intangible assets on our balance sheet, primarily from the creation of our long-lived media
content. We also carry goodwill on our balance sheet from certain acquisitions we have made over the past several years. We assess
potential impairments to our intangible assets and goodwill when there is evidence that events or changes in circumstances indicate
that the carrying value of such intangible assets or goodwill may not be recoverable. In the third quarter of 2014, we experienced
unexpected revenue declines attributable to lower traffic and monetization yield on certain of our Content & Media websites that
caused us to lower our future cash flow expectations. Additionally, our market capitalization remained at a level below the book value
of our net assets for an extended period of time, including as of September 30, 2014. As a result of these factors, we performed an
interim assessment of impairment of the goodwill in our Content & Media reporting unit in the third quarter of 2014. In performing
the impairment assessment, we determined that the implied fair value of goodwill in the reporting unit was substantially lower than its
carrying value and recorded a $232.3 million pretax impairment charge in the third quarter of 2014. We performed our annual
impairment analysis in the fourth quarter of the year ended December 31, 2014, and based on the results of the annual impairment test
there were no additional goodwill impairment charges for the year ended December 31, 2014. Additional significant and sustained
declines in our stock price and market capitalization relative to our book value or our inability to generate sufficient revenue or cash
flows from our long-lived media content or the businesses that we have acquired may result in us having to take additional impairment
charges against certain of our intangible assets or goodwill. If we are required to record additional impairment charges in future
periods, it could have a material adverse effect on our results of operations and financial condition, particularly in the period such
charge is taken.
Our operating results may fluctuate on a quarterly and annual basis due to a number of factors, which may make it difficult to
predict our future performance.
Our revenue and operating results could fluctuate significantly from quarter-to-quarter and year-to-year due to a variety of
factors, many of which are outside of our control. Our revenue and operating results in the near term will also fluctuate as a result of
the Separation, including in connection with the public company costs to be borne by a smaller public company and the impact of cost
allocations between the two companies. Therefore, comparing our operating results on a period-to-period basis may not be
meaningful. In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and
annual results include:
• lower than anticipated levels of traffic to our owned and operated online properties and to our customers’ online
properties;
• seasonality of the revenue associated with our online marketplaces, including increased sales activity during the holiday
season;