TeleNav 2013 Annual Report Download - page 31

Table of Contents
changes and advances in the industry, including providing for the continued compatibility of our navigation services platform with evolving industry
standards and protocols and competitive network operating environments.
Development and delivery schedules for navigation services and products are difficult to predict. We have in the past failed and may in the
future fail to deliver new versions of our services in a timely fashion. If new releases of our services or products are delayed or our services are not
preloaded on mobile phones upon their initial commercial release, our wireless carrier customers may curtail their efforts to market and promote our
navigation services and end users may switch to competing services, any of which would result in a delay or loss of revenue and could harm our
business. In addition, we cannot assure you that the technologies and related services that we develop will be brought to market by our wireless
carrier customers as quickly as anticipated or that they will achieve broad acceptance among wireless carriers or consumers.
Our lengthy sales cycle makes it difficult for us to predict when we will generate revenue from wireless carrier and automobile manufacturer and
OEM customers.
We have a lengthy and complex sales process for our mobile navigation and automotive navigation services. The integration and testing of our
navigation services platform with a prospective wireless carrier requires substantial time and expense before launching our navigation services with
that wireless carrier. In new geographic markets, our sales cycles are typically longer and may involve more challenges such as language or
government regulation/compliance requirements. Even after a wireless carrier decides to launch our navigation services, the integration of our
services platform with a wireless carrier’s network and billing systems generally requires several months to complete. Moreover, launch of our
navigation services by a wireless carrier typically may be timed to coincide with a new mobile phone launch, over which we have no control.
In addition, being selected to participate and being designed into new vehicle models is a lengthy and time consuming process and our
navigation services platform may not be included for factors beyond our control if we are participating in the vehicle design with an OEM. Because
of these lengthy cycles, we may experience delays from the time we begin the sales process and incur increased costs and expenses to obtain a
partner as a customer and integrate our navigation services platform until the time we generate revenue from such wireless carrier, OEM or
automobile manufacturer. These delays may make it difficult to predict when we will generate revenue from new customers.
A large percentage of our research and development operations are conducted in China and our ability to introduce new services and support our
existing services cost effectively depends on our ability to manage those remote development sites successfully.
Our success depends on our ability to enhance our current services and develop new services and products rapidly and cost effectively. We
currently have a majority of our research and development personnel in China. Although we have sought to retain certain key personnel by
transferring them to our other locations, we may be unable to retain them over the long-term. In addition, we have been experiencing significant
increases in compensation costs in China due to competitive market conditions for qualified staff, as well as higher risk of employee turnover in
certain China markets.
We also expect that we may continue to consolidate certain of our operations or reduce our workforce if we are unable to sustain our current
revenue due to the decline in wireless carrier revenue. These reorganizations or reductions in force could result in unexpected costs or delays in
product development that could impair our ability to meet market windows or cause us to forego certain new product opportunities.
Because our long term success depends on our ability to increase the number of end users located outside of the United States, our business will
be susceptible to risks associated with international operations.
As of June 30, 2013 , we had international operations in China, Mexico and Brazil. Our experience with wireless carriers and automobile
manufacturers and OEMs outside the United States is limited. Our revenue from the United States comprised 95% , 94% and 92% of our total
revenue for fiscal 2011 , 2012 and 2013 , respectively. Our limited experience in operating our business outside the United States increases the risk
that our current and future international expansion efforts may not be successful. In particular, our business model may not be successful in particular
countries or regions outside the United States for reasons that we currently do not anticipate. In addition, conducting international operations subjects
us to risks that we have not generally faced in the United States. These include:
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fluctuations in currency exchange rates;
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unexpected changes in foreign regulatory requirements;
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difficulties in managing the staffing of remote operations;
• potentially adverse tax consequences, including the complexities of foreign value added tax systems, restrictions on the repatriation of
earnings and changes in tax rates;
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dependence on foreign wireless carriers with different pricing models;