Tucows 2012 Annual Report Download - page 13

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customers purchase our services online, execution of our agreements by resellers occurs electronically or, in the case of
our terms of use, is deemed to occur because of a user’s continued use of the website following notice of those terms.
We believe that our reliance on these agreements is consistent with the practices in our industry, but if a domestic,
foreign or international court were to find that either one of these methods of execution is invalid or that key provisions
of our services agreements are unenforceable, we could be subject to liability that has a material adverse effect on our
business or we could be required to change our business practices in a way that increases our cost of doing business.
Regulation could reduce the value of Internet domain names or negatively impact the Internet domain acquisition
process, which could significantly impair the value attributable to our acquisitions of Internet domain names.
The acquisition of expiring domain names for parked page commercialization, the sale of names or acquisition
of names for other uses involves the registration of thousands of Internet domain names, both in the United States and
internationally. We have and intend to continue to acquire previously-owned Internet domain names that have expired
and have, following the period of permitted reclamation by their prior owners, been made available for sale. The
acquisition of Internet domain names generally is governed by federal or international regulatory bodies. The regulation
of Internet domain names in the United States and in foreign countries is subject to change. Regulatory bodies could
establish additional requirements for previously-owned Internet domain names or modify the requirements for holding
Internet domain names. As a result, we might not acquire or maintain names that contribute to our financial results in the
same manner as we currently do. Because certain Internet domain names are important assets, a failure to acquire or
maintain such Internet domain names could adversely affect our financial results and our growth. Any impairment in the
value of these important assets could cause our stock price to decline.
We have presence in the hosted messaging and email market, which is a volatile business.
Factors that are likely to contribute to fluctuations in our operating results from provisioning hosted email
services include:
• the demand for outsourced email services;
• our ability to attract and retain customers and provide customer satisfaction;
• the ability to upgrade, develop and maintain our systems and infrastructure and to effectively respond to the
rapid technological changes in the email market;
• the budgeting and payment cycles of our existing and potential customers;
• the amount and timing of operating costs and capital expenditures relating to expansion of the email service;
and
• the introduction of new or enhanced services by competitors.
In order to succeed in the hosted email business, our email product must remain competitive. We believe that
some of the competitive factors affecting the market for hosted email services include:
•
b
readth of platform features and functionality of our offering and the sophistication and innovation of our
competitors;
• scalability, reliability, performance and ease of expansion and upgrade;
• ease of integration with customers’ existing systems; and
• flexibility to enable customers to manage certain aspects of their systems and leverage outsourced services in
other cases when resources, costs and time to market reasons favor an outsourced offering.
We believe competition will continue to be strong and further increase as our market attracts new competition,
current competitors aggressively pursue customers, increase the sophistication of their offerings and as new participants
enter the market. Many of our current and potential competitors have longer operating histories, larger customer bases,
greater brand recognition in the business and greater financial, marketing and other resources than we do. Any delay in