1042173--3/11/2008--SCIENTIFIC_LEARNING

related topics

{property, intellectual, protect}

{system, service, information}

{stock, price, operating}

{control, financial, internal}

{stock, price, share}

{competitive, industry, competition}

{regulation, government, change}

{customer, product, revenue}

{product, candidate, development}

{personnel, key, retain}

{cost, operation, labor}

{product, market, service}

{debt, indebtedness, cash}

To grow our business, we need to increase acceptance of our products among K-12 education purchasers. Failure to do so would materially and adversely impact our revenue, profitability and growth prospects. Our sales cycle tends to be long and somewhat unpredictable, which may result in delayed or lost revenue, which could materially and adversely impact our revenue and profitability. It is difficult to accurately forecast our future financial results. This may cause us to fail to achieve the financial performance anticipated by investors and financial analysts, which could cause the price of our stock to decline. We may not achieve the benefits we expect from our acquisition of the Reading Assistant product, which could have a material adverse effect on our business, financial and operating results. We rely on studies of student performance results to demonstrate the effectiveness of our products. If the validity of these studies or the conclusions that we draw from them are challenged, our reputation could be harmed and our business prospects and financial results could be materially and adversely affected. If our products contain errors or if customer access to our web-delivered products is disrupted, we could lose new sales and be subject to significant liability claims. We will be required to comply with the auditors attestation requirement of Sarbanes-Oxley Section 404 starting in fiscal 2008 or fiscal 2009. If we or our auditors determine that our internal controls over financial reporting are not effective or if we are unable to comply with the auditors attestation requirement when we are required to do so, such ineffective controls or non-compliance could have a materially adverse effect on us. Claims relating to data collection from our user base may subject us to liabilities and additional expense. Sales of our products depend on the availability of government funding for public school reading intervention purchases, which is variable and outside the control of both us and our direct customers. If such funding becomes less available, our public school customers may be unable to purchase our products and services on a scale or at prices that we anticipate, which would materially and adversely impact our revenue and net income. We compete for sales with companies that have longer histories and greater resources than we do. We may not be able to compete effectively in the education market. If we lose key personnel or are unable to hire additional qualified personnel as necessary, we may not be able to achieve our business goals, which could materially and adversely affect our financial results and share price. Our current liquidity resources may not be sufficient to meet our needs. If we are unable to maintain our access to the intellectual property rights that we license from third parties, our sales and net income will be materially and adversely affected. If we are unable to adequately protect our intellectual property rights or if we infringe on the rights of others, we could become subject to significant liabilities, need to seek licenses or lose our rights to sell our products. Our common stock is thinly traded and its price is volatile. The ownership of our common stock is concentrated.

Full 10-K form ▸

1042173--3/11/2008--SCIENTIFIC_LEARNING_CORP