Jim Roumell Goes Activist on Rosetta Stone Too

We were pleased to learn that the company does not view Fit Brains as core to its mission. Given that Fit Brains’ revenue has grown from $2 million to $5 million, it is our belief that selling it for at least its $12 million purchase price should be attainable and provide a nice cash infusion.

In summary, we are very pleased with the Management team’s renewed focus on returning RST to growth and profitability. We also reiterate our patient approach to investing and allowing management time to execute their strategy. However, ultimately Management and the Board of course have a duty to maximize shareholder value and that includes the timely analysis and consideration of all offers to purchase the company at a fair price. We can certainly see a scenario where the combination into a larger organization would create massive value. As such, we believe private equity or a strategic buyer would pay a price at a substantial premium to today’s value. We strongly encourage Management and the Board to address all existing acquisition inquiries. Moreover, we believe an investment banking firm should be immediately engaged to run an independent process and communicate the results of that process back to shareholders in a timely fashion and certainly within 90 days.

We appreciate the significant effort extended by the Board and Management team. We look forward to supporting the success of RST.

Sincerely,

Roumell Asset Management, LLC

We will keep closely following this story.