iRobot 2015 Annual Report Download - page 103

Form 10-K
20
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. Following closing of the sale of our defense and security business unit, we will be subject to certain of these
regulations only as they pertain to matters related to our operation of the defense and security business unit prior to the sale.
Among the most significant regulations currently 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 reimbursement
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 effectiveness 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 our international distributors, we may assist
with such compliance and in certain cases may be liable if a distributor fails to comply.
We must comply with U.S. laws regulating the export of our products. In addition, we are required to obtain a license
from the U.S. federal government to export our PackBot, Kobra and SUGV lines of defense and security robots. We cannot be
sure of our ability to obtain any licenses required to export our products or to receive authorization from the U.S. federal
government for international sales or domestic sales to foreign persons. Moreover, the export regimes and the governing
policies applicable to our business are subject to change. We cannot assure you of the extent that such export authorizations will
be available to us, if at all, in the future. In some cases where we act as a subcontractor, we rely upon the compliance activities
of our prime contractors, and we cannot assure you that they have taken or will take all measures necessary to comply with
applicable export laws. If we or our prime contractor partners cannot obtain required government approvals under applicable
regulations in a timely manner or at all, we would be delayed or prevented from selling our products in international
jurisdictions, which could materially harm our business, operating results and ability to generate revenue.