We anticipate facing risks associated with the international marketing, distribution and sale of our products, and if we are unable to effectively manage these risks, it could impair our ability to develop and expand our business.
We expect that significant resources will be required to develop successfully our international sales channels. In addition, the manufacturing, marketing, distribution and sale of our products outside the United States expose us to a number of markets in which we have limited experience. If we are unable to manage effectively these risks, it could impair our ability to grow our business abroad. These risks include:
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difficulty in recruiting and retaining individuals skilled in international business operations;
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the difficulty of managing and staffing international offices and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;
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our executive officers’ lack of proximity to the international activities being managed and the inherent limitations of cross-border information flow;
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the management of our relationships with distributors outside the United States, whose sales and lead generation activities are very important to our international operations;
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difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;
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tariffs and trade barriers and other regulatory limitations on our ability to sell our products in certain foreign markets;
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increased exposure to foreign currency exchange rate risk;
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potential exposure to adverse tax consequences;
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shortages in component parts and raw materials;
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import and export and trade regulation changes that could erode our profit margins or restrict our ability to transport our products;
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the burden and cost of complying with foreign and U.S. laws governing corporate conduct outside the U.S.;
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potential restrictions on the transfer of funds between countries;
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import and export duties and value-added taxes;
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natural disasters, including earthquakes, typhoons and tsunamis;
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increased exposure to possible violations of U.S. laws regulating the export of our products, and to other U.S. and foreign laws affecting the conduct of business globally such as product certification, environmental and waste management and data privacy laws;
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reduced protection for intellectual property rights in some countries; and
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political and economic instability.
International operations may also result in greater shipping costs and additional expenses to conform our products to the requirements of local laws or local product specifications. As we develop our international business, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations, reduce or delay our international sales, result in fines and penalties and have a material adverse effect on our business, prospects, liquidity and results of operations.
Our success in the future may depend on our ability to establish and maintain strategic alliances, and any failure on our part to establish and maintain such relationships could adversely affect our market penetration and revenue growth.
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