TeleNav 2014 Annual Report Download - page 38

Table of Contents
result in competitors offering products that incorporate our most technologically advanced features, which could seriously reduce demand for our
navigation services. In addition, we may in the future need to initiate infringement claims or litigation. Litigation, whether we are a plaintiff or a
defendant, can be expensive, time consuming and may divert the efforts of our technical staff and managerial personnel, which could harm our
business, whether or not such litigation results in a determination favorable to us.
Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary
information.
We have devoted substantial resources to the development of our proprietary technology, including the proprietary software components of
our navigation services and related processes. In order to protect our proprietary technology and processes, we rely in part on confidentiality
agreements with our employees, licensees, independent contractors and other advisors. These agreements may not effectively prevent disclosure
of our confidential 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 navigation services platform and client applications and may use more open source software in the
future. Use of open source software may subject our navigation services platform and client applications to general release or require us to re-
engineer our navigation services platform and client applications, which may cause harm to our business. 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 navigation services
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 control over financial reporting. We may not always
complete our assessment of the effectiveness of our internal control over financial reporting in a timely manner, or such internal control 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 control over financial reporting and disclosure controls and procedures annually.
For example, as of June 30, 2014, we performed system and process evaluation and testing of our internal control over financial reporting to
allow management and our independent registered public accounting firm to report on the effectiveness of our internal control 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 control 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 Global Market, the SEC or other regulatory authorities, which would require significant additional financial and
management resources.
We will incur continued high costs and demands upon management as a result of complying with the laws and regulations affecting public
companies, which could harm our operating results.
As a public company, we incur significant legal, accounting, investor relations and other expenses, including costs associated with public
company reporting requirements. We also have incurred and will incur costs associated with current corporate governance requirements,
including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as rules implemented by the SEC and the
stock exchange on which our common stock is traded. We are generally not eligible to report under reduced disclosure requirements or benefit
from longer phase in periods for “emerging growth
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