TeleNav 2013 Annual Report Download - page 20

Table of Contents
We operate in a rapidly changing environment that involves numerous uncertainties and risks. The following risks and uncertainties may have
a material and adverse effect on our business, financial condition or results of operations. You should consider these risks and uncertainties
carefully, together with all of the other information included or incorporated by reference in this Form 10-K before you decide whether to purchase
any of our securities. If any of the risks or uncertainties we face were to occur, the trading price of our securities could decline, and you may lose all
or part of your investment.
Risk related to our business
We are dependent on Ford for a substantial and increasing portion of our revenue and our business, financial condition and results of operations
will be harmed if our revenue from Ford does not continue to grow or declines.
Our first automobile navigation products were introduced in fiscal 2009, and a second generation of products were introduced in fiscal 2010 in
a limited number of vehicles and just recently reached a broader model portfolio at a single automobile manufacturer, Ford. Ford represented
approximately 13% and 36% of our revenue in the year ended June 30, 2012 and 2013 , respectively. We expect that Ford and other OEMs will
account for an increasing portion of our revenue, as our revenue from paid wireless carrier provided navigation declines and our other sources of
revenue, such as advertising, have not become material. In addition, our revenue could decline if Ford increased the cost to consumers of our
navigation product or reduced the number of vehicles or the geographies in which vehicles with our product as an option are sold. Our contract with
Ford expires in May 2014, and may be renewed for successive 12-month periods if either party provides notice of renewal at least 45 days prior to
the expiration of the applicable term and the other party agrees to such renewal. Our agreement with Ford also allows either party to terminate the
agreement if the other party is insolvent or materially breaches its obligations and fails to cure such breach. In the event that Ford does not elect to
renew our contract after May 2014, or chooses to renegotiate our contract on less favorable terms, our revenue may decline and our business
operating results and financial condition could be harmed.
We may not successfully increase our revenue from Ford in the medium-term and long-term if our products are replaced within vehicles by
Ford with our competitors' products or from price competition from third parties. Although we have attempted to mitigate our dependence on Ford by
establishing relationships with other automobile OEMs, these relationships with OEMs, such as Delphi Automotive Systems LLC, or Delphi, may
not produce significant revenue if they launch limited models or due to competition from third parties. Our ability to attract automobile
manufacturers may also be limited by OEMs which provide the solutions of which we are a part, if those OEMs have existing relationships with
other navigation vendors or provide their own solutions. Some automobile manufacturers or OEMs may be reluctant to select our products for their
worldwide platform due to the concentration of our mobile navigation business in North America and our relative lack of experience with connected
mobile navigation in other geographies. For example, Ford recently began offering vehicles with our solutions in China and if the look and feel of our
navigation solutions is inconsistent with what Chinese customers expect, Ford may not introduce vehicles with our solutions in other geographies.
Our current relationships with Ford and Delphi provide for a different revenue model than has historically been associated with our wireless
carrier business, and for on-board automotive navigation, we recognize revenue as the related customized software is delivered to and accepted by
our customers. In addition we recognize royalties earned from our on-board solutions generally as the software is reproduced for installation in
vehicles. We have little experience managing, supporting and retaining automobile manufacturers and OEMs as customers and if we are not able to
maintain Ford and Delphi as customers our revenue will decline. Delphi's new, connected infotainment system, which integrates white label versions
of our Scout for Cars on-board automotive platform, was introduced in model year 2013 vehicles for North America by General Motors, which plans
to introduce the system in other markets worldwide in model year 2014. Delphi also plans to distribute our product in China with a major Chinese
auto manufacturer in the coming fiscal year. Even if we retain Delphi as a customer, automobile manufacturers may not elect to purchase Delphi's
navigation offerings that include our software and/or services for reasons unrelated to performance of our software or services. If so, we may be
unable to build a direct relationship with a given automobile manufacturer or with a different OEM.
Our automotive navigation products are an important part of our effort to expand outside of mobile device navigation to other platforms and we
may not be successful in our efforts to attract and retain automobile manufacturers and OEMs, implement profitable and high quality products
or achieve end customer acceptance of our services and fee model.
In fiscal 2009, we began offering our first off-
board connected automotive navigation products and prior to that time, we had limited experience
in the automotive navigation market. In fiscal 2010, we began offering our first on-board automotive navigation products. Our on-board solutions
may not satisfy automotive manufacturers’ or end customers’
expectations for those solutions. If automobile manufacturers and OEMs do not believe
that our services meet their customers’ needs, our products and services may not be designed in to future model year vehicles.
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