Tucows 2014 Annual Report Download - page 37

Impairment of goodwill and other intangible assets would result in a decrease in earnings.
Current accounting rules require that goodwill and other intangible assets with indefinite useful lives may no
longer be amortized, but instead must be tested for impairment at least annually. These rules also require that intangible
assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual
values, and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. To the extent such evaluation indicates that the useful lives of intangible assets are different
than originally estimated, the amortization period is reduced or extended and, accordingly, the quarterly amortization
expense is increased or decreased. We have substantial goodwill and other intangible assets, and we would be required to
record a significant charge to earnings in our financial statements during the period in which any impairment of our
goodwill or intangible assets is determined. Any impairment charges or changes to the estimated amortization periods
could have a material adverse effect on our financial results.
We could suffer uninsured losses.
Although we maintain general liability insurance, claims could exceed the coverage obtained or might not be covered by
our insurance. While we typically obtain representations from our technology and content providers and contractual
partners concerning the ownership of licensed technology and informational content and obtain indemnification to cover
any breach of these representations, we still may not receive accurate representations or adequate compensation for any
breach of these representations. We may have to pay a substantial amount of money for claims that are not covered by
insurance or indemnification or for claims where the existing scope or adequacy of insurance or indemnification is
disputed or insufficient.
Difficult economic and financial conditions could have a material adverse effect on us.
The financial results of our business are both directly and indirectly dependent upon economic conditions
throughout the world, which in turn can be impacted by conditions in the global financial markets. Uncertainty about
global economic conditions may lead businesses to postpone spending in response to tighter credit and reductions in
income or asset values. Weak economic activity may lead government customers to cut back on services. Factors such as
interest rates, availability of credit, inflation rates, changes in laws (including laws relating to taxation), trade barriers,
currency exchange rates and controls, and national and international political circumstances (including wars, terrorist acts
or security operations) could have a material adverse effect on our business and investments, which could reduce our
revenue, profitability and value of our assets. These factors may also adversely affect the business, liquidity and financial
condition of our customers. In addition, periods of poor economic conditions could increase our ongoing exposure to
credit risks on our accounts receivable balances. This could have a material adverse effect on our business, financial
condition and results of operations.
Our quarterly and annual operating results may fluctuate and our future revenues and profitability are uncertain.
Our quarterly and annual operating results may fluctuate significantly in the future as a result of a variety of
factors, many of which are outside of our control. Our quarterly and annual operating results may be adversely affected
by a wide variety of factors, including:
• our ability to maintain revenue growth at current levels or anticipate a decline in revenue from any of our
services;
• our ability to identify and develop new technologies or services and to commercialize those technologies into
new services in a timely manner;
• the mix of our services sold during the quarter or year;
• our ability to make appropriate decisions which will position us to achieve further growth;
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