Rosetta Stone 2015 Annual Report Download - page 10

Table of Contents
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This Annual Report on Form 10-K, along with our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), are available free of charge through our website
as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC"). Our
website address is www.rosettastone.com. The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that
file electronically with the SEC. These materials may be obtained electronically by accessing the SEC's website at www.sec.gov.
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The following description of risk factors includes any material changes to, and supersedes the description of, risk factors associated with our business
previously disclosed in our Quarterly Report on Form 10-Q filed on November 4, 2015 with the SEC for the period ended September 30, 2015. An investment
in our common stock involves a substantial risk of loss. Investors should carefully consider these risk factors, together with all of the other information
included herewith, before deciding to purchase shares of our common stock. If any of the following risks actually occur, our business, financial condition, or
results of operations could be materially adversely affected. In such case, the market price of our common stock could decline and all or part of an investment
may be lost.
The risks described below are not the only ones facing us. Our business is also subject to the risks that affect many other companies, such as general
economic conditions and geopolitical events. Further, additional risks not currently known to us or that we currently believe are immaterial could have a
material adverse effect on our business, financial condition, cash flows and results of operations. In addition to the other information set forth in this annual
report on Form 10-K, you should carefully consider the risk factors discussed below and in other documents we file with the SEC that could materially affect
our business, financial condition, cash flows or future results.
Our business could be impacted as a result of actions by activist shareholders or others.
We may be subject, from time to time, to legal and business challenges in the operation of our company due to proxy contests, shareholder proposals,
media campaigns and other such actions instituted by activist shareholders or others. Responding to such actions could be costly and time-consuming,
disrupt our operations, may not align with our business strategies and could divert the attention of our Board of Directors and senior management from the
pursuit of current business strategies. Perceived uncertainties as to our future direction as a result of shareholder activism or potential changes to the
composition of the Board of Directors may lead to the perception of a change in the direction of the business or other instability that may make it more
difficult to attract and retain qualified personnel and business partners, and could have a materially adverse effect on the Company’s stock price.
We might not be successful in executing our strategy of focusing on the Enterprise & Education segment and on more passionate language learners in the
Consumer segment, and our company reorganization and realignment might not produce the desired results.
We are continuing to undertake a strategic reorganization and realignment of our business to maximize profitable growth in our Enterprise & Education
segment by serving the needs of corporate and K-12 language learners, and prioritizing those who wish to speak and read English. In addition, we are now
focusing on the needs of more passionate language learners in our Consumer segment, rather than addressing the needs of the mass marketplace. If we do not
successfully execute our strategy, our revenue and profitability could decline. Our recent strategy changes include actions to reduce headcount, exit
unprofitable geographies, and other cost reductions. These cost reduction efforts could harm our business and results of operations by distracting
management and employees, causing difficulty in hiring, motivating, and retaining talented and skilled personnel, and creating uncertainty among our
customers and vendors that could lead to delays or unexpected costs. Also, our ability to achieve anticipated cost savings and other benefits from these
efforts is subject to many estimates and assumptions, which are subject to significant economic, competitive and other uncertainties, some of which are
beyond our control. If these estimates and assumptions are incorrect, or if other unforeseen events occur, our business and financial results could be adversely
affected.
Our actual operating results may differ significantly from our guidance.
Historically, our practice has been to release guidance regarding our future performance that represents management's estimates as of the date of release.
This guidance, which includes forward-looking statements, is based on projections prepared by management. These projections are not prepared with a view
toward compliance with published guidelines of the American Institute of Certified Public Accountants, and neither our registered public accountants nor
any other independent expert or
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