TeleNav 2011 Annual Report Download - page 40

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information and may not provide an adequate remedy in the event of unauthorized disclosure of our confidential information. In addition, others
may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such
parties. Costly and time consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to
obtain or maintain trade secret protection could adversely affect our competitive business position.
We use open source software in our LBS platform and client applications that may subject our LBS platform and client applications to
general release or require us to re-
engineer our LBS platform and client applications, which may cause harm to our business. We use open source
software in our LBS platform and client applications and may use more open source software in the future. From time to time, there have been
claims challenging the ownership of open source software against companies that incorporate open source software into their products. As a
result, we could be subject to suits by parties claiming ownership of what we believe to be open source software. Some open source licenses
contain requirements that we make available source code for modifications or derivative works we create based upon the open source software
and that we license such modifications or derivative works under the terms of a particular open source license or other license granting third
parties certain rights of further use. If we combine our proprietary software products with open source software in a certain manner, we could,
under certain of the open source licenses, be required to release our proprietary source code. In addition to risks related to license requirements,
usage of open source software can lead to greater risks than use of third party commercial software, as open source licensors generally do not
provide warranties or controls on origin of the software. Open source license terms may be ambiguous and many of the risks associated with
usage of open source cannot be eliminated, and could, if not properly addressed, negatively affect our business. If we were found to have
inappropriately used open source software, we may be required to release our proprietary source code, re-engineer our LBS platform and client
applications, discontinue the sale of our service in the event re-engineering cannot be accomplished on a timely basis or take other remedial
action that may divert resources away from our development efforts, any of which could adversely affect our business, operating results and
financial condition.
Risks related to being a publicly traded company and holding our common stock
As a public company, we are obligated to develop and maintain effective internal controls over financial reporting. We may not complete our
analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective,
which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
The Sarbanes-Oxley Act requires that we test our internal controls over financial reporting and disclosure controls and procedures. In
particular, for the fiscal year ended June 30, 2011, we performed system and process evaluation and testing of our internal controls over financial
reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal controls over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our compliance with Section 404 requires that we incur substantial
expense and expend significant management time on compliance-related issues. Moreover, if we are not able to comply with the requirements of
Section 404 in the future, or if we or our independent registered public accounting firm identify deficiencies in our internal controls over
financial reporting that are deemed to be material weaknesses, the market price of our stock may decline and we could be subject to sanctions or
investigations by the NASDAQ Stock Market’s Global Market, the SEC or other regulatory authorities, which would require significant
additional financial and management resources.
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