Rosetta Stone 2014 Annual Report Download - page 14

Table of Contents
resulting in fewer consumers clicking through to our websites, our sales could suffer. If any free search engine on which we rely begins charging fees for
listing or placement, or if one or more of the search engines or other online sources on which we rely for purchased listings, modifies or terminates its
relationship with us, our expenses could rise, we could lose customers and traffic to our websites could decrease.
We dynamically adjust our mix of marketing programs to acquire new customers at a reasonable cost with the intention of achieving overall financial
goals. If we are unable to maintain or replace our sources of customers with similarly effective sources, or if the cost of our existing sources increases, our
customer levels and marketing expenses may be adversely affected.
Our international expansion may not succeed and imposes special risks.
Our business strategy contemplates stabilizing the losses we have experienced internationally in order to prepare for future international growth and
expansion. We are currently augmenting and optimizing certain of our website direct sales channels in Europe, Asia and Latin America. In addition, we are
continuing to selectively expand and optimize our indirect sales channels in Europe, Asia and Latin America through reseller and other arrangements with
third parties. If we are unable to stabilize losses in our international operations successfully and in a timely manner, our ability to subsequently pursue our
growth strategy will be impaired. Such stabilization and expansion may be more difficult or take longer than we anticipate, and we may not be able to
successfully market, sell, deliver and support our products and services internationally to the extent we expect.
Our international operations and our efforts to increase international sales are subject to a number of risks that are in addition to or different than those
affecting our U.S. operations, including:
• difficulty in staffing and managing geographically dispersed operations and culturally diverse work forces and increased travel, infrastructure and
legal compliance costs associated with multiple international locations;
• difficulty in effectively managing third-party resellers of our products and services;
• difficulty in establishing and maintaining financial and other internal controls over geographically dispersed operations;
• competition from local language-learning software providers and preferences for local products in some regions;
• expenses associated with customizing products, support services and websites for foreign countries;
• inability to register domain names in Country Code Top Level Domains in order to operate country specific websites to permit consumers to easily
locate our products in other countries due in large part to cybersquatting;
• difficulties with providing appropriate and appealing products to suit consumer preferences and capabilities, such as the potential need to customize
our English-based language-learning software solutions by country or region;
• difficulties with establishing successful sales channels;
• inability to successfully develop relationships with significant retailers and distributors;
• potential political and economic instability in some regions;
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