TeleNav 2015 Annual Report Download - page 25

Table of Contents
mergers and acquisitions we complete may not be successful. Future mergers and acquisitions we may pursue would involve, numerous risks,
including the following:
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.
We have recorded goodwill related to our prior acquisitions, and may do so in connection with any potential future acquisitions. 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 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. Furthermore, in fiscal 2015 we began to report results in three business segments, which requires the
allocation of goodwill and intangibles to each of these segments. As a result, our impairment review each year or on an interim basis shall be
conducted by reporting unit, which can result in a different outcome than if assessed on an overall consolidated basis. Revenue from our mobile
navigation business has been declining substantially over the last few years and continued deterioration of this revenue base can result in an
impairment of the goodwill and intangibles assigned to this reporting unit. Based on the results of our annual goodwill impairment test as of
April 1, 2015, the estimated fair value of our mobile navigation business exceeded its carrying value by 22%. We have not recognized any
impairment of goodwill in the three year period ended June 30, 2015 .
We may be required to recognize a significant charge to earnings if our strategic private equity investments become impaired .
We have in the past and may in the future enter into investments in businesses in order to complement or expand our current business or
enter into new markets. Private equity investments are inherently risky and subject to factors outside of our control and no assurance can be
given that our previous or future investments will be successful, will deliver the intended benefits, and will not materially harm our business,
operating results or financial condition. We may be required to record a significant charge in our financial statements during the period in which
any impairment of our private equity investments is determined, which could adversely impact our results of operations. We recorded
impairment charges of $0.5 million and $0.3 million for cost-basis investments during fiscal 2015 and 2014, respectively.
In connection with the investments we made in fiscal 2015 in the form of convertible notes to two entities in connection with the spin off of
product lines developed by our Shanghai, China and Xian, China teams, we may be forced to recognize additional impairment on the value of
our investments in those entities, if they are unable to raise additional capital. As of June 30, 2015, we recorded an impairment charge of $0.8
million to write off our remaining investment balance in the Shanghai entity. Current unfavorable macroeconomic conditions in China may
affect the Xian entity's ability to raise additional capital and we may be required to record an impairment if the Xian entity is unable to continue
operations or repay our note as a result. As of June 30, 2015, our investment balance in the Xian entity was $0.7 million.
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• difficulties in integrating and managing the operations, technologies and products of the companies we acquire including skobbler,
which is geographically remote from our existing operations;
• diversion of our management’
s attention from normal daily operation of our business;
• our inability to maintain the key business relationships and the reputations of the businesses we acquire, such as the European
automobile manufacturer and OEM relationships of skobbler;
•
our inability to retain key personnel of the acquired company;
• uncertainty of entry into markets in which we have limited or no prior experience and in which competitors have stronger market
positions;
•
our dependence on unfamiliar affiliates and customers of the companies we acquire;
•
insufficient revenue to offset our increased expenses associated with acquisitions;
•
our responsibility for the liabilities of the businesses we acquire, including those which we may not anticipate; and
•
our inability to maintain internal standards, controls, procedures and policies.