Enom 2011 Annual Report Download - page 37

able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could result in
a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, if we fail to maintain effective
controls and procedures, we may be unable to provide the required financial information in a timely and reliable manner or otherwise comply with the
standards applicable to us as a public company. Any failure by us to provide the required financial information in a timely reliable manner could materially
and adversely impact our financial condition and the trading price of our securities. In addition, we may incur additional expenses and commitment of
management's time in connection with further assessments of our compliance with the requirements of Section 404, which could materially increase our
operating expenses and adversely impact our operating results.
If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our
business. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price
would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could
decrease, which might cause our stock price and trading volume to decline.
We do not anticipate paying cash dividends, and accordingly, stockholders must rely on stock appreciation for any return on their investment.
The terms of our credit agreement currently prohibit us from paying cash dividends on our common stock. In addition, we do not anticipate paying
cash dividends in the future. As a result, only appreciation of the price of our common stock, which may never occur, will provide a return to stockholders.
Investors seeking cash dividends should not invest in our common stock.
Our management has broad discretion over the use of the proceeds we received in our initial public offering and might not apply the proceeds in ways that
increase the value of our common stock.
Our management will continue to have broad discretion to use the net proceeds to us from our initial public offering. Our management might not
apply the net proceeds from our initial public offering in ways that increase the value of our common stock. We expect that we will use the net proceeds of
our initial public offering for investments in content, international expansion, working capital, product development, sales and marketing activities, general
and administrative matters and capital expenditures. We have not otherwise allocated the net proceeds from our initial public offering for any specific
purposes. In addition, as discussed under “—Risks Relating to our Company—We have made and may make additional acquisitions that could entail
significant execution, integration and operational risks,” we may consider making acquisitions in the future to increase the scope of our business domestically
and internationally. Until we use the net proceeds to us from our initial public offering, we have invested them, principally in marketable securities with
maturities of less than one year, including but not limited to commercial paper, money market instruments, and Treasury bills, and these investments may not
yield a favorable rate of return. If we do not invest or apply the net proceeds from our initial public offering in ways that enhance stockholder value, we may
fail to achieve expected financial results, which could cause our stock price to decline.
Certain provisions in our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could have the effect of delaying or
preventing changes in control or changes in our management without the consent of our board of directors, including, among other things:
• a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority
of our board of directors;
• no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
• the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares,
including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile
acquiror;
33