Etsy 2015 Annual Report Download - page 33

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We are an emerging growth company as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we intend to take advantage
of some of the exemptions from the reporting requirements applicable to other public companies. For example, we intend to take advantage of the exemption
from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and the exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and stockholder approval of any golden parachute payments. It is possible that investors will find our common stock less
attractive as a result of our reliance on these exemptions. If so, there may be a less active trading market for our common stock and our stock price may be
more volatile.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) in 2020, which will follow the fifth anniversary of the
completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.0 billion or (c) in which we become a large accelerated
filer, which means that we have been a public company for at least 12 months, have filed at least one annual report and the market value of our common stock
that is held by non-affiliates exceeds $700 million as of the last business day of our then most recently completed second fiscal quarter, and (2) the date on
which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
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As a public company, we incur substantial legal, accounting and other expenses that we did not incur as a private company. For example, we are subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act
and the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations of the Securities and Exchange Commission, or the SEC.
The rules and regulations of Nasdaq also apply to us. As part of these requirements, we have established and maintained effective disclosure and financial
controls and made changes to our corporate governance practices. We expect that continued compliance with these requirements will increase our legal and
financial compliance costs and will make some activities more time-consuming.
Most of our management and other personnel have little experience managing a public company and preparing public filings. In addition, our management
and other personnel divert attention from other business matters to devote substantial time to the reporting and other requirements of being a public
company. In particular, we expect to incur significant expense and devote substantial management effort to complying with the requirements of Section 404
of the Sarbanes-Oxley Act. We will need to continue to hire additional accounting and financial staff with appropriate public company experience and
technical accounting knowledge.
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As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting. Beginning
with our annual report for the year ended December 31, 2016, we will be required to provide a management report on internal control over financial reporting.
In preparation of being able to provide such a report, we continue to make progress in documenting, assessing and testing our internal control over financial
reporting. When we are no longer an emerging growth company, our management report on internal control over financial reporting will need to be attested
to by our independent registered public accounting firm. We do not expect to have our independent registered public accounting firm attest to our
management report on internal control over financial reporting while we are an emerging growth company.
As described in Part II, Item 9A. "Controls and Procedures," we previously identified two material weaknesses in our internal control over financial reporting,
which we remediated as of December 31, 2015.
If we have a material weakness in our internal control over financial reporting, in the future, we may not detect errors on a timely basis. In addition, material
weaknesses could harm our operating results, cause us to fail to meet our SEC reporting obligations or Nasdaq listing requirements on a timely basis,
adversely affect our reputation, cause our stock price to decline or result in inaccurate financial reporting or material misstatements in our annual or interim
financial statements. Further, if there are material weaknesses or failures in our ability to meet any of the requirements related to the maintenance and
reporting of
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