Redbox 2014 Annual Report Download - page 19

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Acquisitions and investments involve risks that could harm our business and impair our ability to realize potential
benefits from such acquisitions and investments.
As part of our business strategy, we have in the past sought, and may in the future seek, to acquire or invest in
businesses, products or technologies that we feel could complement or expand our business. For example, in July 2013, we
acquired ecoATM. However, we may be unable to adequately address the financial, legal and operational risks raised by such
acquisitions or investments and may not successfully integrate these acquisitions or investments, which could harm our
business and prevent us from realizing the projected benefits of the acquisitions and investments. In addition, we may not have
the right or power to direct the management or policies of companies we have invested in. Further, the evaluation and
negotiation of potential acquisitions and investments, as well as the integration of acquired businesses, divert management time
and other resources. Accordingly, we cannot assure you that any particular transaction, even if successfully completed, will
ultimately benefit our business. Certain financial and operational risks related to acquisitions and investments that may have a
material impact on our business are:
• the assumption of known and unknown liabilities of an acquired company, including employee and intellectual
property claims and other violations of applicable law;
• losses related to acquisitions and investments;
• managing relationships with other investors and the companies in which we have made investments, including, in
some cases, as minority partner;
• reduced liquidity, including through the use of cash resources and incurrence of debt and contingent liabilities in
funding acquisitions and investments;
• entrance into markets in which we have no direct prior experience, , and where we face competition from many
other companies, including those having more experience, better financing, or better relationships with others in the
industry than we have;
• impairment of goodwill and acquired intangible assets arising from our arrangements and investments;
• difficulties and expenses in assimilating the operations, products, technology, information systems or personnel of
an acquired company, acquired assets or joint ventures;
• inability to efficiently divest unsuccessful acquisitions and investments;
• stockholder dilution if an acquisition is consummated through an issuance of our securities;
• imposition of restrictive covenants and increased debt service obligations that provide us less flexibility in how we
operate our business to the extent we borrow to finance an acquisition or investment;
• amortization expenses related to acquired intangible assets and other adverse accounting consequences;
• costs incurred in identifying and performing due diligence on potential targets and negotiating agreements that may
or may not be successful, including payment of break-up fees if transactions are not closed; and
• impairment of relationships with employees, retailers and affiliates of our business and the acquired business.
We depend upon third-party manufacturers, suppliers and service providers for key components and substantial
support for our kiosks.
We conduct limited manufacturing operations and depend on outside parties to manufacture key components of our
kiosks. We intend to continue to expand our installed base of kiosks. Such expansion may be limited by the manufacturing
capacity of our third-party manufacturers and suppliers. Third-party manufacturers may not be able to meet our manufacturing
needs in a satisfactory and timely manner. If there is an unanticipated increase in demand for our kiosks or our manufacturing
needs are not met in a timely and satisfactory manner, we may be unable to meet demand due to manufacturing limitations.
Some key hardware components used in our kiosks are obtained from a limited number of suppliers. We may be
unable to continue to obtain an adequate supply of these components from our suppliers in a timely manner or, if necessary,
from alternative sources. If we are unable to obtain sufficient quantities of components from our current suppliers or locate
alternative sources of supply on a timely basis, we may experience delays in installing or maintaining our kiosks, either of
which could seriously harm our business, financial condition and results of operations.