TeleNav 2010 Annual Report Download - page 40

insurance coverage for any claims, or our obligations to indemnify the underwriters and the individual
defendants, could materially and adversely affect our financial condition, results of operations and cash flows.
In the past, we identified a material weakness in our internal control over financial reporting, and if in the
future we identify material weaknesses our ability to operate our business may be adversely affected.
In the past, we identified a material weakness in our internal control over financial reporting which we have
remediated. We may in the future identify additional material weaknesses. Implementing any appropriate
changes to our internal controls to address such a material weakness may distract our officers and employees,
entail substantial costs to modify our existing processes and add necessary personnel as well as take significant
time to complete. These changes may not, however, be effective in achieving or maintaining the adequacy of our
internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial
statements on a timely basis, could increase our operating costs and harm our business. We cannot assure you
that there will not be material weaknesses in our internal controls in the future. If we fail to address material
weaknesses in our internal control over financial reporting, our ability to operate our business may be adversely
affected.
We will incur increased costs and demands upon management as a result of complying with the laws and
regulations affecting public companies, which could harm our operating results.
As a public company, we will incur significant legal, accounting, investor relations and other expenses that
we did not incur as a private company, including costs associated with public company reporting requirements.
We also have incurred and will incur costs associated with current corporate governance requirements, including
requirements under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as rules implemented by
the SEC and the stock exchange on which our common stock is traded. The expenses incurred by public
companies for reporting and corporate governance purposes have increased dramatically over the past several
years. We expect these rules and regulations to increase our legal and financial compliance costs substantially
and to make some activities more time consuming and costly. We are unable currently to estimate these costs
with any degree of certainty. We also expect that, as a public company, it will be more expensive for us to obtain
director and officer liability insurance. As a result, it may be more difficult for us to attract and retain qualified
individuals to serve on our board of directors or as our executive officers.
Regulations relating to offshore investment activities by residents of China may limit our ability to acquire
Chinese companies and could adversely affect our business.
In October 2005, SAFE, a Chinese government agency, promulgated “Relevant Issues Concerning Foreign
Exchange Control on Domestic Residents’ Corporate Financing and Roundtrip Investment Through Offshore
Special Purpose Vehicles,” or Circular 75, that states that if Chinese residents use assets or equity interests in
their Chinese entities as capital contributions to establish offshore companies or inject assets or equity interests
of their Chinese entities into offshore companies to raise capital overseas, they must register with local SAFE
branches with respect to their overseas investments in offshore companies. They must also file amendments to
their registrations if their offshore companies experience material events involving capital variation, such as
changes in share capital, share transfers, mergers and acquisitions, spinoff transactions, long term equity or debt
investments or uses of assets in China to guarantee offshore obligations. Under this regulation, their failure to
comply with the registration procedures set forth in such regulation may result in restrictions being imposed on
the foreign exchange activities of the relevant Chinese entity, including restrictions on the payment of dividends
and other distributions to its offshore parent, as well as restrictions on the capital inflow from the offshore entity
to the Chinese entity.
We attempt to comply, and attempt to ensure that our stockholders who are subject to Circular 75 and other
related rules comply, with the relevant requirements. However, we cannot provide any assurances that all of our
stockholders who are Chinese residents have complied or will comply with our request to make or obtain any
applicable registrations or comply with other requirements required by Circular 75 or other related rules. Any
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