Chegg 2015 Annual Report Download - page 70

Table of Contents
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We depend in part on colleges to provide their students with access to the Internet. If colleges modify their policies in
ways that are detrimental to the growth of our student user base or in ways that make it harder for students to use our website,
or if our competitors’ are able to reach more students than us, the overall growth in our student user base would slow, student
engagement would decrease and we would lose revenues. Any reduction in the number of students directed to our website
would harm our business and operating results.
In addition to our U.S. operations, we currently offer our college and university matching service in China. The
Chinese government may seek to restrict access to the Internet or to our website specifically and our content and services could
be suspended, blocked (in whole or in part) or otherwise adversely impacted in China. Any restrictions on the use of our
website by students could lead to the loss or slowing of growth in the number of students who use our platform or the level of
student engagement.
Our operations are susceptible to earthquakes, floods, rolling blackouts and other types of power loss. If these or other
natural or man-made disasters were to occur, our operations and operating results would be adversely affected.
Our business and operations could be materially adversely affected in the event of earthquakes, blackouts or other
power losses, floods, fires, telecommunications failures, break-ins, acts of terrorism, inclement weather, shelving accidents or
similar events. Our executive offices are located in the San Francisco Bay Area, an earthquake-sensitive area. In the recent past,
California has experienced deficiencies in its power supply, resulting in occasional rolling blackouts. If floods, fire, inclement
weather including extreme rain, wind, heat or cold or accidents due to human error were to occur and cause damage to a
warehouse of Ingram or its textbook library, Ingram's ability to fulfill orders for textbook rental and sales transactions would be
materially and adversely affected and our results of operations would suffer, especially if such events were to occur during peak
periods. We may not be able to effectively shift our operations due to disruptions arising from the occurrence of such events,
and our business could be affected adversely as a result. Moreover, damage to or total destruction of our executive offices
resulting from earthquakes may not be covered in whole or in part by any insurance we may have.
If we are unable to implement and maintain effective internal control over financial reporting in the future, the accuracy,
and timeliness of our financial reporting may be adversely affected.
The Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) requires, among other things, that we assess the
effectiveness of our internal control over financial reporting annually and the effectiveness of our disclosure controls and
procedures quarterly. If we are not able to comply with the requirements of the Sarbanes-Oxley Act in a timely manner, the
market price of our stock could decline and we could be subject to sanctions or investigations by the New York Stock
Exchange, the SEC or other regulatory authorities, which would require additional financial and management resources.
If we conclude in future periods that our internal control over financial reporting is not effective, we may be required to expend
significant time and resources to correct the deficiency and could be subject to one or more investigations or enforcement
actions by state or federal regulatory agencies, stockholder lawsuits or other adverse actions requiring us to incur defense costs,
pay fines, settlements or judgments and causing investor perceptions to be adversely affected and potentially resulting in a
decline in the market price of our stock.
In addition, we are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012
(JOBS Act), and as such we have elected to avail ourselves of the exemption from the requirement that our independent
registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley
Act until we cease to be an “emerging growth company.” See “—We are an “emerging growth company,” and we cannot be
certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less
attractive to investors.” for additional risks relating to our “emerging growth company” status.
If we are unable to maintain effective internal control over financial reporting to meet the demands placed upon us as a
public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial
results, or report them within the timeframes required by law or exchange regulations.