Voss Capital Sends Letter to Rosetta Stone Board of Directors

Voss Capital, LLC ("Voss"), a significant shareholder of Rosetta Stone ("NYSE: RST" or the "Company") today issued a public letter to the Company's Board of Directors ("the Board"). The full text of the letter is below:

July 21, 2020
Rosetta Stone Board of Directors
1621 N. Kent Street
Arlington, VA 22209

Dear Members of the Board:

As you know, Voss Capital, LLC ("Voss") has been a shareholder of Rosetta Stone ("NYSE: RST" or the "Company") for many years. More recently we have made clear to management and the Board of Directors ("the Board") that we believe the Company has been meaningfully undervalued in the public markets, and that the best way to maximize value for shareholders is through a sale of the Language and Literacy segments separately, or the entire company.

We have appreciated your willingness to engage with us, yet at the same time we have been disappointed by what we perceived as a lack of urgency around pursuing a true strategic review. Given the high valuations of recent comparable transactions, the increasingly prominent role of the education technology sector against the backdrop of the Covid-19 pandemic, and the strong growth in bookings the Lexia business has been experiencing, it is clear to us that now is the time to capitalize on the incredible value of Rosetta Stone. It is also clear that a failure to take advantage of these favorable dynamics could represent a missed opportunity for your shareholders.

Therefore, we were encouraged to read the July 17^th Bloomberg story reporting that you have retained financial advisors to explore a sale of part or all of the Company. The report noted that you were "gauging interest" from both financial and strategic buyers. We are confident there are several suitors who would be interested in a transaction. Hopefully, as part of this strategic review process, each of them is getting a chance to convey to you and your advisors what the dollar value of that interest might be.

We know that several other shareholders have previously expressed to you that a transaction is the best path forward for the Company. The stock closing 25% higher on the day of the publication of the strategic review news demonstrates that this viewpoint is widely held among the investment community.

With all of this said, last week's story also reported that you may "choose to remain independent." While we know that to some degree maintaining this optionality is a box companies must check when exploring alternatives, we hope that is all it is.

Given Rosetta Stone's track record over the past few years, we feel it would be highly disappointing ? and could destroy any remaining confidence shareholders have in the Board ? if the decision were ultimately made to maintain the status quo. This would be particularly perplexing given that we believe the market agrees with us that there are numerous buyers out there willing to pay fair value in a transaction.

We are currently operating under the belief that you have every intention of acting in the best interests of all shareholders and conducting this process with integrity and urgency. However, should we be proven wrong, either by you failing to explore all viable and available transactions, or by agreeing to one that drastically discounts the value of Rosetta Stone, we ? and, we believe, our fellow shareholders ? will not hesitate to hold you accountable.

We look forward to a positive outcome of this strategic review and a brighter future for Rosetta Stone.  

Sincerely,
Travis Cocke
Chief Investment Officer
Voss Capital