Tucows 2015 Annual Report Download - page 31

We currently license many third party technologies and may need to license further technologies which could delay and
increase the cost of product and service developments.
We currently license certain technologies from third parties and incorporate them into certain of our services
including email, anti-spam and anti-virus. The Internet services market is evolving and we may need to license additional
technologies to remain competitive. We may not be able to license these technologies on commercially reasonable terms or
at all. To the extent we cannot license necessary solutions, we may have to devote our resources to development of such
technologies, which could delay and increase the cost of product and service developments overall.
In addition, we may fail to successfully integrate licensed technology into our services. These third party licenses
may expose us to increased risks, including risks related to the integration of new technology and potential intellectual
property infringement claims. In addition, an inability to obtain needed licenses could delay product and service
development until equivalent technology can be identified, licensed and integrated. Any delays in services or integration
problems could hinder our ability to attract and retain customers and cause our business and operating results to suffer.
Our advertising revenues may be subject to fluctuations.
We believe that Internet advertising spending, as in traditional media, fluctuates significantly with economic
cycles and during any calendar year, with spending being weighted towards the end of the year to reflect trends in the retail
industry. Our advertisers can generally terminate their contracts with us at any time. Advertising spending is particularly
sensitive to changes in general economic conditions and typically decreases when economic conditions are not favorable.
A decrease in demand for Internet advertising could have a material adverse effect on our business, financial condition and
results of operations.
We may acquire companies or make investments in, or enter into licensing arrangements with, other companies with
technologies that are complementary to our business and these acquisitions or arrangements could disrupt our
business, cause us to require additional financing and dilute your holdings in our company.
We may acquire companies, assets or the rights to technologies in the future in order to develop new services or
enhance existing services, to enhance our operating infrastructure, to fund expansion, to respond to competitive pressures
or to acquire complementary businesses. Entering into these types of arrangements entails many risks, any of which could
materially harm our business, including:
• the diversion of management’s attention from other business concerns;
• the failure to effectively integrate the acquired technology or company into our business;
• the incurring of significant acquisition costs;
• the loss of key employees from either our current business or the acquired business; and
• the assumption of significant liabilities of the acquired company.
In addition, absent sufficient cash flows from operations, we may need to engage in equity or debt financings to
secure additional funds to meet our operating and capital needs. We may not be able to secure additional debt or equity
financing on favorable terms, or at all, at the time when we need that funding. In addition, even though we may have
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
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