Rosetta Stone 2012 Annual Report Download - page 17
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Table of Contents
•difficulties with providing appropriate and appealing products to suit consumer preferences and capabilities in these markets, such as the
potential need to customize English language software solutions for local markets;
•difficulties with establishing successful sales channels;
•inability to successfully develop relationships with significant retailers and distributors;
•potential political and economic instability in some regions;
•potential unpredictable changes in foreign government regulations;
•legal and cultural differences in the conduct of business;
•import and export license requirements, tariffs, taxes and other trade barriers;
•inflation and fluctuations in currency exchange rates;
•potentially adverse tax consequences;
•difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;
•the burden and difficulties of complying with a wide variety of U.S. and foreign laws, regulations, trade standards, treaties and technical
standards, including the Foreign Corrupt Practices Act;
•difficulty in protecting our intellectual property and the high incidence of software piracy in some regions;
•costs and delays in downsizing foreign work forces as a result of differing employment and other laws;
•protectionist laws and business practices that favor local competitors; and
•uncertainty regarding liability for information retrieved and replicated in foreign countries.
The effects of any of the risks described above could reduce our future revenue from our international operations and could harm our overall
business, revenue and financial results.
Our success depends in part upon the continued adoption by institutions and potential customers of technology-based education initiatives. Some
academics and educators oppose online education in principle and have expressed concerns regarding the perceived loss of control over the education
process that can result from offering courses online. If the acceptance of technology-based education does not continue to grow, our ability to continue
to grow our institutional business could be impaired.
Many of our institutional customers are colleges, universities, primary and secondary schools, other education providers, armed forces and
government agencies that depend substantially on government funding. Accordingly, any general decrease, delay or change in federal, state or local
funding for colleges, universities, primary and secondary schools, or other education providers or government agencies that use our products and
services could cause our current and potential customers to reduce their purchases of our products and services, to exercise their right to terminate
licenses, or to decide not to renew licenses, any of which could cause us to lose revenue. In addition, a specific reduction in