Enom 2011 Annual Report Download - page 32

In addition, various federal, state and foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy matters.
Recent developments related to “instant personalization” and similar technologies potentially allow us and other publishers access to even broader and more
detailed information about users. These developments have led to greater scrutiny of industry data collection practices by regulators and privacy advocates.
New laws may be enacted, new industry self-regulation may be promulgated, or existing laws may be amended or re-interpreted, in a manner which limits our
ability to analyze user data. If our access to user data is limited through legislation or any industry development, we may be unable to provide effective
technologies and services to customers and we may lose customers and revenue.
We depend on key personnel to operate our business, and if we are unable to retain our current personnel or hire additional personnel, our ability to
develop and successfully market our business could be harmed.
We believe that our future success is highly dependent on the contributions of our executive officers, in particular the contributions of our
Chairman and Chief Executive Officer, Richard M. Rosenblatt, as well as our ability to attract and retain highly skilled managerial, sales, technical,
engineering and finance personnel. We do not maintain “key person” life insurance policies for our Chief Executive Officer or any of our executive officers.
Qualified individuals, including engineers, are in high demand, and we may incur significant costs to attract and retain them. All of our officers and other
employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business
and industry would be extremely difficult to replace. If we are unable to attract and retain our executive officers and key employees, our business, operating
results and financial condition will be harmed.
Volatility or lack of performance in our stock price may also affect our ability to attract employees and retain our key employees. Our executive
officers have become, or will soon become, vested in a substantial amount of stock or stock options. Employees may be more likely to leave us if the shares
they own have significantly appreciated in value relative to the original purchase prices of the shares or if the exercise prices of the stock options that they
hold are significantly above the market price of our common stock. In addition, employees may be more inclined to leave us if the exercise prices on their
stock options that they hold are significantly below the market price of our common stock.
Impairment in the carrying value of goodwill or long-lived assets, including our media content, could negatively impact our consolidated results of
operations and net worth.
Goodwill represents the excess of cost of an acquired entity over the fair value of the acquired net assets. Goodwill is not amortized, but is reviewed
for impairment at least annually or more frequently if impairment indicators are present. In general, long-lived assets, including our media content, are only
reviewed for impairment if impairment indicators are present. In assessing goodwill and long-lived assets for impairment, we make significant estimates and
assumptions, including estimates and assumptions about market penetration, anticipated growth rates and risk-adjusted discount rates based on our budgets,
business plans, economic projections, anticipated future cash flows and industry data. Some of the estimates and assumptions used by management have a
high degree of subjectivity and require significant judgment on the part of management. Changes in estimates and assumptions in the context of our
impairment testing may have a material impact on us, and any potential impairment charges could substantially affect our financial results in the periods of
such charges.
New tax treatment of companies engaged in Internet commerce may adversely affect the commercial use of our marketing services and our financial
results.
Due to the global nature of the Internet, it is possible that, although our services and the Internet transmissions related to them typically originate in
California, Texas, Illinois, Virginia and the Netherlands, governments of other states or foreign countries might attempt to regulate our transmissions or levy
sales, income or other taxes relating to our activities. Tax authorities at the international, federal, state and local levels are currently reviewing the appropriate
treatment of companies engaged in Internet commerce. New or revised international, federal, state or local tax regulations may subject us or our customers to
additional sales, income and other taxes. We cannot predict the effect of current attempts to impose sales, income or other taxes on commerce over the
Internet. New or revised taxes and, in particular, sales taxes, would likely increase the cost of doing business online and decrease the attractiveness of
advertising and selling goods and services over the Internet. New taxes could also create significant increases in internal costs necessary to capture data, and
collect and remit taxes. Any of these events could have an adverse effect on our business and results of operations.
Third parties may sue us for intellectual property infringement or misappropriation which, if successful, could require us to pay significant damages or
curtail our offerings.
We cannot be certain that our internally-developed or acquired systems and technologies do not and will not infringe the intellectual property rights of
others. In addition, we license content, software and other intellectual property rights from
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