TiVo 2004 Annual Report Download - page 49

Table of Contents
Index to Financial Statements
• loss of subscriptions to the TiVo service; and
• general economic conditions.
Because our expenses precede associated revenues, unanticipated shortfalls in revenues could adversely affect our results of operations for any given
period and cause the market price of our common stock to fall.
Seasonal trends may cause our quarterly operating results to fluctuate and our inability to forecast these trends may adversely affect the
market price of our common stock.
Consumer electronic product sales have traditionally been much higher during the holiday shopping season than during other times of the year.
Although predicting consumer demand for our products is very difficult, we have experienced that sales of DVRs and new subscriptions to the TiVo service
have been disproportionately high during the holiday shopping season when compared to other times of the year. If we are unable to accurately forecast and
respond to consumer demand for our products, our reputation and brand will suffer and the market price of our common stock would likely fall.
We expect that a portion of our future revenues will come from targeted commercials and other forms of television advertising enabled by the TiVo
service. Expenditures by advertisers tend to be seasonal and cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. A
decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers' spending priorities or increase the
time it takes to close a sale with our advertisers, which could cause our revenues from advertisements to decline significantly in any given period.
If we are unable to raise additional capital on acceptable terms, our ability to effectively manage growth and build a strong brand could be
harmed.
We expect that our existing capital resources will be sufficient to meet our cash requirements through the next twelve months. However, as we continue
to grow our business, we may need to raise additional capital, which may not be available on acceptable terms or at all. If we cannot raise necessary additional
capital on acceptable terms, we may not be able to develop or enhance our products and services, take advantage of future opportunities or respond to
competitive pressures or unanticipated requirements.
If additional capital is raised through the issuance of equity securities, the percentage ownership of our existing stockholders will decline, stockholders
may experience dilution in net book value per share, or these equity securities may have rights, preferences or privileges senior to those of the holders of our
common stock. Any debt financing, if available, may involve covenants limiting, or restricting our operations or future opportunities.
The large number of shares available for future sale could adversely affect the market price for our stock.
Sales of a substantial number of shares of our common stock in the public market or the perception that such sales might occur could adversely affect
the market price of our common stock. Several of our stockholders own a substantial number of our shares.
In August 2001, we issued five year warrants to convertible noteholders and bankers to purchase a total of 2,536,766 shares 145,834 shares of TiVo
common stock, at an exercise price of $7.85 per share. The warrants expire in 2006.
As of January 31, 2005, options to purchase a total of 15,567,273 shares were outstanding under our option and equity incentive plans, and there were
15,734,490 shares available for future grants. We have filed registration statements with respect to the shares of common stock issuable under our option and
equity incentive plans.
Future sales of the shares of the common stock, or the registration for sale of such common stock, or the issuance of common stock to satisfy our
current or future cash payment obligations or to acquire technology, property, or other businesses, could cause immediate dilution and adversely affect the
market price of our common stock. The sale or issuance of such stock, as well as the existence of outstanding options and shares of common stock reserved
for issuance under our option and equity incentive plans, as well as the shares issuable upon conversion or exercise of our outstanding convertible notes and
warrants, also may adversely affect the terms upon which we are able to obtain additional capital through the sale of equity securities.
46