TeleNav 2012 Annual Report Download - page 27

Table of Contents
We may be unable to secure the equity or debt funding necessary to finance future acquisitions on terms that are acceptable to us. If we finance
acquisitions by issuing equity or convertible debt securities, our existing stockholders will likely experience dilution, and if we finance future
acquisitions with debt funding, we will incur interest expense and may have to comply with financial covenants and secure that debt obligation with
our assets.
We may be required to recognize a significant charge to earnings if our goodwill or other intangible assets become impaired.
Goodwill and other intangible assets with indefinite lives are not amortized, but are reviewed for impairment annually or on an interim basis
whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Factors that may indicate that
the carrying value of our goodwill or other intangible assets may not be recoverable include a persistent decline in our stock price and market
capitalization, reduced future cash flow estimates and slower growth rates in our industry. We have recorded goodwill related to prior acquisitions,
and may do so in connection with any potential future acquisitions. We may be required to record a significant charge in our financial statements
during the period in which any impairment of our goodwill or other intangible assets is determined, which would adversely impact our results of
operations.
The success of our automotive navigation products may be affected by overall demand for new vehicles.
Our ability to succeed long term in the automotive industry depends on our ability to expand the number of models offered with our navigation
solution by our current automobile manufacturers. We are also dependent upon our ability to attract new automobile manufacturers and OEMs. For
automobile manufacturers with whom we have established relationships, such as Ford, our success depends on continued production and sale of new
vehicles with, and adoption by, end users of our products offered by such automobile manufacturers, when our product are not standard features. As
we move forward, our existing automobile manufacturers and OEMs may not include our solutions in future year vehicles or territories, which would
negatively affect our revenue from these products. Production and sale of new vehicles are subject to delay from forces outside of our control, such as
natural disasters, parts shortages and work stoppages, as well as general economic conditions.
Our wireless carrier customers may change the pricing and other terms by which they offer our mobile navigation services, which could result in
increased end user turnover, lower revenue and adverse effects on our business.
Our wireless carrier customers have significant flexibility as to the manner by which our mobile navigation services are distributed by them.
They may bundle the product with other applications or services such as unlimited data plans. Given their flexibility in the future they may reduce the
monthly fees per subscriber that they pay us if their subscribers do not use our services as often as the wireless carriers expect or for any other reason
in order to reduce their costs. Our wireless carrier customers may also decide to raise prices, impose usage caps or discontinue unlimited data service
plans, which could cause our end users who receive our services through those plans to move to a less expensive plan that does not include our
services or terminate their relationship with the wireless carrier. If imposed, these pricing changes or usage restrictions could make our mobile
navigation services less attractive and could result in current end users abandoning our mobile navigation services. If end user turnover increased, the
number of our end users and our revenue would decrease and our business would be harmed. We are also required to give AT&T certain most
favored customer pricing on specified products and in certain markets. In certain circumstances this may require us to reduce the price per end user
under the AT&T contract, which may adversely impact our revenue.
We are substantially dependent on our wireless carrier customers to market and distribute our mobile navigation services to end users and our
business may be harmed if our wireless carrier customers elect not to offer our services broadly.
We rely on our wireless carrier customers to introduce, market and promote our mobile navigation services to end users. Only one of our
wireless carrier customers is contractually obligated to continue to do so. If wireless carrier customers do not introduce, market and promote mobile
phones that are GPS enabled and on which our client software is preloaded, do not include our mobile navigation services in their bundles or do not
actively market our navigation services, our navigation services will not achieve broader acceptance and our revenue may not grow as fast as
anticipated, or may decline.
Wireless carriers, including those with which we have existing relationships, may decide not to offer our services and may enter into preferred
relationships with one or more of our competitors. While our navigation services may still be available to customers of those wireless carriers as
downloads from application stores, sales of our navigation services would likely be much more limited than if our navigation services were preloaded
as a white label service actively marketed by the carrier or were included as part of a bundle of services. For example, we believe that when Sprint
discontinues bundling of our mobile navigation services in its plans, our revenue from Sprint subscribers will decline substantially as we do not
expect most of those subscribers to purchase a subscription to our services through Sprint or an application store. Our inability to offer our navigation
services through a white label offering or as part of a bundle on popular mobile phones would harm our operating results and financial condition.
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