Enom 2015 Annual Report Download - page 19

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mechanical automation of clicking; and other types of invalid clicks or click fraud. There is a risk that a certain amount
of low-quality traffic, or traffic that is deemed to be invalid by advertisers, will be delivered to advertisers on our online
properties. As a result, we may be required to credit future amounts owed to us by our advertising partners or repay them
for amounts previously received if such future amounts are insufficient. Furthermore, low-quality or invalid traffic may
be detrimental to our relationships with third-party advertisement distribution providers and online advertisers and could
adversely affect our revenue.
Risks Relating to our Company
We have a history of operating losses and may not be able to operate profitably or generate positive cash flow.
We were founded in 2006 and, except for the year ended December 31, 2012, when we generated net income, we
have had a net loss in every year from inception, including generating a net loss of $43.5 million for the year ended
December 31, 2015. As of December 31, 2015 we had an accumulated deficit of approximately $395.6 million and we
may incur net operating losses in the future. Moreover, our cash flows from operating activities do not currently cover all
of our operating expenses, and we may not generate sufficient cash to cover operating expenses for the foreseeable
future. Our ability to generate net income in the future will depend in large part on our ability to generate and sustain
substantially increased revenue levels, while continuing to control our expenses. We may incur significant operating
losses in the future for a number of reasons, including those discussed in other risk factors and factors that we cannot
foresee, and we may be unable to generate net income or sufficient positive cash flows.
We may not be able to obtain capital when desired on favorable terms, if at all, or without substantial dilution to our
stockholders, which may impact our ability to execute on our current or future business strategies.
We anticipate that our current cash, cash equivalents and cash provided by operating activities will be sufficient to
fund our operations for the next 12 months. It is possible, however, that we may not generate sufficient cash flow from
operations or otherwise have the capital resources to meet our future capital needs, including to invest in areas for
growth, and we do not currently have a line of credit in place if we need to borrow funds. If we do not generate sufficient
cash flow from operations or otherwise have sufficient capital resources available, we may need to enter into a new
financing arrangement or dispose of certain assets to execute on our current or future business strategies, including
developing new or investing in existing service offerings, maintaining our operating infrastructure, acquiring
complementary businesses, hiring additional personnel or otherwise responding to competitive pressures. We cannot
assure you that a new financing arrangement will be available to us on favorable terms, or at all. Furthermore, if we raise
additional funds through the issuance of convertible debt or equity securities, the percentage ownership of our
stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges
senior to those of existing stockholders. If adequate funds are not available or are not available on acceptable terms, if
and when needed, our ability to fund our operations, meet obligations in the normal course of business, take advantage
of strategic opportunities, or otherwise respond to competitive pressures would be significantly limited.
In connection with the Separation, our operational and financial profile changed and we entered into certain
arrangements with Rightside under which we may have indemnification obligations.
On August 1, 2014, we completed the Separation of Rightside from Demand Media. We may be unable to achieve
some or all of the strategic and financial benefits that we expected would result from the Separation of Demand Media
and Rightside, or such benefits may be delayed, which could materially and adversely affect our business, financial
condition and results of operations. Following the Separation, we are also a smaller company focused on our Content &
Media and Marketplaces businesses. This narrower business focus may leave us more vulnerable to changing market
conditions and the diminished diversification of revenue, costs, and cash flows could cause our results of operation, cash
flows, working capital and financing requirements to be subject to increased volatility. In addition, we entered into
various agreements with Rightside in connection with the Separation that governed our relationship with Rightside
subsequent to the Separation and contained certain indemnification obligations. If we are required to indemnify
Rightside for certain liabilities and related losses arising in connection with any of these agreements or if Rightside is
required to indemnify us for certain liabilities and related losses arising in connection with any of these agreements and