Enom 2012 Annual Report Download - page 106

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F-23
Litigation
In April 2011, the Company and eleven other defendants were named in a patent infringement lawsuit filed in the U.S.
District Court, Eastern District of Texas. The plaintiff filed and served a complaint making several claims related to a method
for displaying advertising on the Internet. In May 2011, the Company filed its response to the complaint, denying all liability.
The Company is currently engaged in settlement discussions with the plaintiff to resolve this matter. Until this matter is
resolved, the Company intends to vigorously defend its position in this matter.
In addition, from time to time the Company is a party to other various litigation matters incidental to the conduct of its
business. There is no pending or threatened legal proceeding to which Company is a party that, in our belief, is likely to have a
material adverse effect on the Company’s future financial results.
Taxes
From time to time, various federal, state and other jurisdictional tax authorities undertake review of the Company and
its filings. In evaluating the exposure associated with various tax filing positions, the Company accrues charges for possible
exposures. The Company believes any adjustments that may ultimately be required as a result of any of these reviews will not
be material to its consolidated financial statements.
Domain Name Agreement
On April 1, 2011, the Company amended its existing agreement with a customer to provide domain name
registration services and manage certain domain names owned and operated by the customer over a twenty seven
month term ending June 30, 2013 (the "Amended Domain Agreement"). In conjunction with the Amended Domain
Agreement, the Company is committed to purchase at approximately $233 of expired domain names every calendar
quarter over the remaining term of the agreement. The contract can be terminated by either the Company or the
counter party within 60 days prior to the end of June 30, 2013 or at each annual renewal period thereafter.
Indemnifications
In its normal course of business, the Company has made certain indemnities, commitments and guarantees under
which it may be required to make payments in relation to certain transactions. Those indemnities include intellectual property
indemnities to the Company’s customers, indemnities to directors and officers of the Company to the maximum extent
permitted under the laws of the State of Delaware and indemnifications related to the Company’s lease agreements. In addition,
the Company’s advertiser and distribution partner agreements contain certain indemnification provisions which are generally
consistent with those prevalent in the Company’s industry. The Company has not incurred significant obligations under
indemnification provisions historically and does not expect to incur significant obligations in the future. Accordingly, the
Company has not recorded any liability for these indemnities, commitments and guarantees in the accompanying balance
sheets.
8. Income Taxes
Income/(loss) before income taxes for the years ended December 31, 2010, 2011 and 2012 consisted of the following:
2010 2011 2012
Domestic $ (1,530) $ (13,820) $ 9,405
Foreign 102 (527)(1,446)
Income (loss) before income taxes $ (1,428) $ (14,347) $ 7,959