Enom 2010 Annual Report Download - page 80

Table of Contents
Seasonality of Quarterly Results
In general, Internet usage and online commerce and advertising are seasonally strongest in the fourth quarter and generally slower during the summer
months. While we believe that these seasonal trends have affected and will continue to affect our quarterly results, our rapid growth in operations may have
overshadowed these effects to date. We believe that our business may become more seasonal in the future.
Liquidity and Capital Resources
As of December 31, 2010, our principal sources of liquidity were our cash and cash equivalents in the amount of $32.3 million, which primarily are
invested in money market funds, and our $100 million revolving credit facility with a syndicate of commercial banks. Subsequent to our year end, we
completed our initial public offering on January 31, 2011 and received proceeds, net of underwriting discounts but before deducting offering expenses, of
$81.8 million from the issuance of 5.2 million shares of common stock.
Historically, we have principally financed our operations from the issuance of convertible preferred stock, net cash provided by our operating activities
and borrowings under our $100 million revolving credit facility. Our cash flows from operating activities are significantly affected by our cash-based
investments in operations, including working capital, and corporate infrastructure to support our ability to generate revenue and conduct operations through
cost of services, product development, sales and marketing and general and administrative activities. Cash used in investing activities has historically been,
and is expected to be, significantly impacted by our upfront investments in content and also reflects our ongoing investments in our platform, company
infrastructure and equipment for both service offerings and the net sales and purchases of our marketable securities. Since our inception through March 2008,
we also used significant cash to make strategic acquisitions to further grow our business and may do so again in the future.
On May 25, 2007, we entered into a five-year $100 million revolving credit facility with a syndicate of commercial banks. The agreement contains
customary events of default and certain financial covenants, such as a minimum fixed charge ratio and a maximum net senior funded leverage ratio. As of
December 31, 2010, no balance was outstanding on the credit agreement, $93 million was available for borrowing and we were in compliance with all
covenants. In the future, we may utilize commercial financings, lines of credit and term loans with our syndicate of commercial banks or other bank
syndicates for general corporate purposes, including acquisitions and investing in our content, platform and technologies.
We expect that the proceeds of our initial public offering, our $100 million revolving credit facility and our cash flows from operating activities together
with our cash on hand, will be sufficient to fund our operations for at least the next 24 months. However, we may need to raise additional funds through the
issuance of equity, equity-related or debt securities or through additional credit facilities to fund our growing operations, invest in content and make potential
acquisitions.
The following table sets forth our major sources and (uses) of cash for the each period as set forth below:
Year ended December 31,
2008 2009 2010
(in thousands)
Net cash provided by operating activities $ 35,942 $ 39,231 $ 61,624
Net cash used in investing activities (78,862) (22,791) (66,296)
Net cash provided by (used in) financing activities 86,144 (54,990) (10,537)
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