Enom 2015 Annual Report Download - page 28

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technologies to calculate, collect and remit such taxes, may materially and adversely affect our business, financial
condition and operating results.
The costs of compliance with these regulations may increase in the future as a result of changes in the regulations
or the interpretation of them. Further, if we fail to comply with applicable laws and regulations, we could be exposed to
claims for damages, financial penalties, reputational harm, incarceration of our employees or restrictions on our
operations, which could increase our costs of operations, reduce our profits or cause us to forgo opportunities that would
otherwise support our growth.
Changes in state, federal or international taxation laws and regulations may adversely affect our business.
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 Nevada and California, 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 also 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, VAT and other taxes. We cannot predict the effect of current attempts to impose
sales, income, VAT or other taxes on commerce over the Internet. New or revised taxes and, in particular, additional
sales taxes or VAT, 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.
We may not succeed in expanding our businesses internationally, which may limit our future growth, and operating
internationally exposes us to certain additional risks and operating costs.
One potential area of growth for our business is internationally. The artwork and designs sold through our art and
design marketplaces are created by a global community of artists and sold to customers around the world. We are also
exploring translating and localizing our Society6 marketplace site into certain foreign languages. We have an eHow site
in the United Kingdom, as well as eHow en Español, Livestrong.com en Español and eHow Brasil (Spanish and
Portuguese language sites that target both the U.S. and the worldwide Spanish/Portuguese-speaking markets). We cannot
be certain that we will be successful in introducing beyond the markets we currently serve or marketing our products and
services internationally or that our products and services will gain market acceptance. If we are unable to expand and
market our products and services internationally, it could have a negative effect on our future growth prospects. There
are also risks inherent in conducting business in international markets, including the need to localize our products and
services to foreign customers’ preferences and customs, difficulties in managing operations due to language barriers,
distance, staffing and cultural differences, application of foreign laws and regulations to us, tariffs and other trade
barriers, fluctuations in currency exchange rates, establishing management and financial systems and infrastructures,
reduced protection for intellectual property rights in some countries, changes in foreign political and economic
conditions, and potentially adverse tax consequences. Operating internationally, where we have limited experience,
exposes us to additional risks and operating costs that may outweigh the financial and other benefits of operating in such
markets.
A reclassification by tax authorities of any freelance professionals we currently or have previously contracted with
from independent contractors to employees could require us to pay retroactive taxes and penalties and significantly
increase our cost of operations.
We previously contracted with freelance professionals to create the substantial majority of the content for our online
properties and we continue to contract with freelance professionals for various purposes, including to develop, create and
edit content, and otherwise contribute to the content creation process, for our and our content channel customers’ online
properties. Because we consider the freelance professionals who we contract with or have contracted with to be independent
contractors, as opposed to employees, we do not withhold federal or state income or other employment related taxes, make
federal or state unemployment tax or Federal Insurance Contributions Act payments, or provide workers’ compensation
insurance with respect to such freelance professionals. Our contracts with freelance professionals that are classified as