Nutrisystem 2014 Annual Report Download - page 21

• the risk that the new products or services we may introduce or begin offering, whether as a result of
internal expansion or business acquisitions, will not gain acceptance among consumers and existing
customers;
• the risk that new efforts may have a detrimental effect on our brand;
• the risk that we will face competition from established or larger competitors in the new markets we
may enter, which could adversely affect the financial performance of any businesses we might acquire
or start; and
• the risk that the anticipated benefits of any acquisition or of the commencement of any new business
may not be realized, in which event we will not be able to achieve any return on our investment in that
new business.
Consummating these transactions could also result in the incurrence of additional debt and related interest
expense, as well as unforeseen contingent liabilities, all of which could have a material adverse effect on our
business, financial condition or results of operations. We may also issue additional equity in connection with
these transactions, which would dilute our existing stockholders.
If we do not continue to receive referrals from existing customers, our customer acquisition cost may
increase.
We rely on word-of-mouth advertising for a portion of our new customers. If our brand suffers or the number of
customers acquired through referrals drops due to other circumstances, our costs associated with acquiring new
customers and generating revenue will increase, which will, in turn, have an adverse affect on our profitability.
We use third-party marketing vendors to promote our products. If the spokespersons affiliated with the
third-party marketing vendors suffer adverse publicity, our revenue could be adversely affected.
Our marketing strategy depends in part on celebrity spokespersons, as well as customer spokespersons, to
promote our weight management program. Any of these spokespersons may become the subject of adverse news
reports, negative publicity or otherwise be alienated from a segment of our customer base, whether weight loss
related or not. If so, such events may reduce the effectiveness of his or her endorsement and, in turn, adversely
affect our revenue and results of operations.
Third parties may infringe on our brand, trademarks and other intellectual property rights, which may
have an adverse impact on our business.
We currently rely on a combination of trademark and other intellectual property laws and confidentiality
procedures to establish and protect our proprietary rights, including our brand. If we fail to successfully enforce
our intellectual property rights, the value of our brand, services and products could be diminished and our
business may suffer. Our precautions may not prevent misappropriation of our intellectual property. Any legal
action that we may bring to protect our brand and other intellectual property could be unsuccessful and expensive
and could divert management’s attention from other business concerns. In addition, legal standards relating to the
validity, enforceability and scope of protection of intellectual property, especially in Internet-related businesses,
are uncertain and evolving. We cannot assure you that these evolving legal standards will sufficiently protect our
intellectual property rights in the future.
We may in the future be subject to intellectual property rights claims.
Third parties may in the future make claims against us alleging infringement of their intellectual property rights.
Any intellectual property claims, regardless of merit, could be time-consuming and expensive to litigate or settle
and could significantly divert management’s attention from other business concerns. In addition, if we were
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