Nautilus 2001 Annual Report Download - page 32

We believe our existing cash balances, combined with our line of credit, will be sufficient to meet our capital requirements for at least the next
12 months.
INFLATION AND PRICE INCREASES
Although we cannot accurately anticipate the effect of inflation on our operations, we do not believe that inflation has had, or is likely in the
foreseeable future to have, a material adverse effect on our results of operations, cash flows or our financial position. However, increases in
inflation over historical levels or uncertainty in the general economy could decrease discretionary consumer spending for products like ours.
Very little of our revenue growth is attributable to price increases.
RISKS AND UNCERTAINTIES
While management is optimistic about the Company's long-term prospects, the following issues and uncertainties, among others, should be
considered in evaluating our growth outlook.
A SIGNIFICANT DECLINE IN CONSUMER INTEREST IN BOWFLEX PRODUCTS WOULD SHARPLY DIMINISH OUR
SALES AND PROFITABILITY.
Our financial performance depends significantly on sales of our Bowflex line of home fitness equipment. During 2001, approximately 68% of
our net sales were attributable to our Bowflex products. Accordingly, any significant decline in consumer interest in our Bowflex products
could significantly reduce our sales and profitability. Sales of our Bowflex line could significantly decline if, for example, a competing product
were effectively marketed and resulted in significant consumer purchases or if the market demand for our Bowflex line were to become
saturated. Although we are working to diversify our revenue base, we anticipate that sales of our Bowflex product line will continue to account
for a substantial portion of our net sales for the foreseeable future.
OUR SALES COULD DECLINE SIGNIFICANTLY UPON THE EXPIRATION OF THE PRINCIPAL PATENT ON OUR
BOWFLEX POWER RODS ON APRIL 27, 2004.
Although our Bowflex trademark is protected as long as we continuously use the trademark, the patent on our Bowflex Power Rods, a key
component of our Bowflex products, expires on April 27, 2004. This patent expiration could trigger the introduction of similar products by
competitors and result in a significant decline in our sales and revenues.
NEW PRODUCT DEVELOPMENT IS AN ESSENTIAL COMPONENT OF OUR GROWTH STRATEGY; AN INABILITY TO
SUCCESSFULLY DEVELOP NEW PRODUCTS COULD NEGATIVELY IMPACT OUR FUTURE PROFITABILITY.
Our future success depends on our ability to develop or acquire the rights to, and then effectively market and sell, new products that create and
respond to new and evolving consumer demands. Accordingly, our net sales and profitability may be harmed if we are unable to develop, or
acquire the rights to, new and different products that satisfy our marketing criteria. In addition, any new products that we market may not
generate sufficient net sales or profits to recoup their development or acquisition cost.
We also may not be able to successfully acquire intellectual property rights or potentially prevent others from claiming that we have violated
their proprietary right when we launch new products. We could incur substantial costs in defending against such claims, even if they are without
basis, and we could become subject to judgments requiring us to pay substantial damages.
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2002. EDGAR Online, Inc.