iRobot 2010 Annual Report Download - page 66

If we fail to enhance our brand, our ability to expand our customer base will be impaired and our
operating results may suffer.
We believe that developing and maintaining awareness of the iRobot brand is critical to achieving widespread
acceptance of our existing and future products and is an important element in attracting new customers. Further-
more, we expect the importance of global brand recognition to increase as competition develops. If customers do
not perceive our products to be of high quality, our brand and reputation could be harmed, which could adversely
impact our financial results. In addition, brand promotion efforts may not yield significant revenue or increased
revenue sufficient to offset the additional expenses incurred in building our brand.
We depend on the experience and expertise of our senior management team and key technical employees,
and the loss of any key employee may impair our ability to operate effectively.
Our success depends upon the continued services of our senior management team and key technical
employees, such as our project management personnel and senior engineers. Moreover, we often must comply
with provisions in government contracts that require employment of persons with specified levels of education and
work experience. Each of our executive officers, key technical personnel and other employees could terminate his or
her relationship with us at any time. The loss of any member of our senior management team might significantly
delay or prevent the achievement of our business objectives and could materially harm our business and customer
relationships. In addition, because of the highly technical nature of our robots, the loss of any significant number of
our existing engineering and project management personnel could have a material adverse effect on our business
and operating results.
We are subject to extensive U.S. federal government regulation, and our failure to comply with applicable
regulations could subject us to penalties that may restrict our ability to conduct our business.
As a contractor and subcontractor to the U.S. federal government, we are subject to and must comply with
various government regulations that impact our operating costs, profit margins and the internal organization and
operation of our business. Among the most significant regulations affecting our business are:
• the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate
the formation and administration of, and performance under government contracts;
• the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in
connection with contract negotiations;
• the Cost Accounting Standards, which impose accounting requirements that govern our right to reimburse-
ment under cost-based government contracts;
• the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a
foreign official to help obtain, retain or direct business, or obtain any unfair advantage;
• the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments made
on the basis of false facts provided to the government, and impose penalties on the basis of false statements,
even if they do not result in a payment;
• laws, regulations and executive orders restricting the use and dissemination of information classified for
national security purposes and the exportation of certain products and technical data;
• Certain contracts from the U.S. federal government may require us to maintain certain certifications
including but not limited to AS9100 and CMMI;
• Contractor Purchasing Systems review (CPSR) requirements, which evaluate the efficiency and effective-
ness with which we spend U.S. Government funds; and
• The sale of our products in countries outside the United States is regulated by the governments of those
countries. While compliance with such regulation will generally be undertaken by international distributors,
we may assist with such compliance and in certain cases may be liable if a distributor fails to comply.
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