Enom 2014 Annual Report Download - page 57

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54
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign
exchange, inflation, and concentration of credit risk. To reduce and manage these risks, we assess the financial condition of our large
advertising network providers, large direct advertisers and their agencies and other large customers when we enter into or amend
agreements with them and limit credit risk by collecting in advance when possible and setting and adjusting credit limits where we
deem appropriate. In addition, our recent investment strategy has been to invest in high credit quality financial instruments, which are
highly liquid, are readily convertible into cash and that mature within three months from the date of purchase.
Foreign Currency Exchange Risk
While relatively small, we have operations and generate revenue from sources outside the United States. We have foreign
currency risks related to our revenue being denominated in currencies other than the U.S. dollar, principally in the Euro and British
Pound Sterling and a relatively smaller percentage of our expenses being denominated in such currencies. We do not believe
movements in the foreign currencies in which we transact will significantly affect future net earnings or losses. Foreign currency risk
can be quantified by estimating the change in cash flows resulting from a hypothetical 10% adverse change in foreign exchange rates.
We believe such a change would not currently have a material impact on our results of operations. However, if our international
operations grow, our risks associated with fluctuation in currency rates would become greater, and we intend to continue to assess our
approach to managing this risk.
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our
costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price
increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
Concentrations of Credit Risk
As of December 31, 2014, our cash and cash equivalents were maintained primarily with six major U.S. financial institutions
and two foreign banks. We also maintained cash balances with two Internet payment processors. Deposits with these institutions at
times exceed the federally insured limits, which potentially subject us to concentration of credit risk. Historically, we have not
experienced any losses related to these balances and believe that there is minimal risk of expected future losses. However, there can be
no assurance that there will not be losses on these deposits.
Advertising network partners that accounted for more than 10% of our consolidated accounts receivable balance were as
follows:
Year ended
December 31,
2014 2013
Google .......................................................................................... 42 % 27%
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements and supplementary data required by Item 8 are contained in Item 7 and Item 15 of this
Annual Report on Form 10-K and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Definition and Limitations of Disclosure Controls and Procedures.
Our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) are designed to
reasonably ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is (i) recorded,
processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and
communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosures. A control system, no matter how well designed and operated, can provide only reasonable