Tucows 2013 Annual Report Download - page 14

sufficient cash flow, we may still elect to sell additional equity or debt securities or obtain credit facilities for other reasons.
If we raise additional funds through further issuances of equity or convertible debt securities, our existing shareholders could
suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have
rights, preferences and privileges senior to those of holders of our common stock. Any debt financing secured by us in the
future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters,
which might make it more difficult for us to obtain additional capital, to pay dividends and to pursue business opportunities,
including potential acquisitions. In addition, if we decide to raise funds through debt or convertible debt financings, we may
be unable to meet our interest or principal payments.
Any of the foregoing or other factors could harm our ability to achieve anticipated levels of profitability from
acquired businesses or to realize other anticipated benefits of acquisitions. We may not be able to identify or consummate
any future acquisitions on favorable terms, or at all. If we do effect an acquisition, it is possible that the financial markets or
investors will view the acquisition negatively. Even if we successfully complete an acquisition, it could adversely affect our
business.
Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose
the innovation, creativity and teamwork fostered by our culture, and our business may be harmed.
We believe that a critical contributor to our success has been our corporate culture, which we believe fosters
innovation, creativity and teamwork. As our organization grows and we are required to implement more complex
organizational management structures, we may find it increasingly difficult to maintain the beneficial aspects of our
corporate culture. This could negatively impact our future success.
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Our business depends on a strong brand. If we are not able to maintain and enhance our brand, our ability to expand our
customer base will be impaired and our business and operating results will be harmed.
In recognition of the evolving nature of the internet services market and to make it easier to clearly differentiate
each service we offer from our competitors, we enhanced our branding by focusing our service offerings under four distinct
brands namely “OpenSRS”, “YummyNames”, “Hover” and “Ting”. We also believe that maintaining and enhancing the
“Tucows” corporate brand and our service brands is critical to expanding our customer base. We anticipate that, as our
market becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and
expensive. Maintaining and enhancing our brands will depend largely on our ability to be a technology leader providing high
quality products and services, which we may not do successfully. To date, we have engaged in relatively little direct brand
promotion activities. This enhances the risk that we may not successfully implement brand enhancement efforts in the future.
If we fail to protect our proprietary rights, the value of those rights could be diminished.
We rely upon copyright, trade secret and trademark law, confidentiality and nondisclosure agreements, invention
assignment agreements and work-for-hire agreements to protect our proprietary technology, all of which offer only limited
protection. We cannot ensure that our efforts to protect our proprietary information will be adequate to protect against
infringement and misappropriation by third parties, particularly in foreign countries where laws or law enforcement practices
may not protect proprietary rights as fully as in the United States of America and Canada.
We have licensed, and may in the future license, some of our trademarks and other proprietary rights to others.
Third parties may also reproduce or use our intellectual property rights without seeking a license and thus benefit from our
technology without paying for it. Third parties could also independently develop technology, processes or other intellectual
property that are similar to or superior to those used by us. Actions by licensees, misappropriation of the intellectual property
rights or independent development by others of similar or superior technology might diminish the value of our proprietary
rights or damage our reputation.
The unauthorized reproduction or other misappropriation of our intellectual property rights, including copying the
look, feel and functionality of our website could enable third parties to benefit from our technology without us receiving any
compensation. The enforcement of our intellectual property rights may depend on our taking legal action against these
infringing parties, and we cannot be sure that these actions will be successful.
Because of the global nature of the Internet, our websites can be viewed worldwide. However, we do not have
intellectual property protection in every jurisdiction. Furthermore, effective trademark, service mark, copyright and trade
secret protection may not be available in every country in which our services become available over the Internet. In addition,