TeleNav 2015 Annual Report Download - page 22

Table of Contents
Our experience has been that subscribers do not opt to pay monthly recurring charges for mobile navigation products that were formerly
bundled with other services and instead use free or freemium offerings. We have sought to develop other sources of revenue from our location-
based platforms, including automotive navigation and location-based advertising, but those sources of revenue have substantially lower margins
than wireless carrier mobile navigation revenue and, as a result, we would have to generate substantially more revenue from those services to
replace the declining wireless carrier revenue. Our other sources of revenue have only recently begun to grow as fast as the declines in mobile
wireless carrier revenue and we cannot assure you that this recent growth will continue. As a result of the lower margins on automobile
navigation and advertising revenue, we anticipate that we will continue to incur net losses in fiscal 2016 and possibly future periods. If we are
unable to demonstrate to investors that we have developed stable, long-term revenue streams, the trading prices of our common stock may
decline further and the trading volumes for our common stock may be low, adding to price volatility.
We provide freemium navigation to compete with free offerings and we may not be successful with these new products or convert “free”
users to paid users.
We provide freemium personalized navigation applications on the Apple App Store, the Google Play marketplace, Microsoft Windows
Marketplace and through other marketplaces and our wireless carrier partners. Freemium offerings are free basic navigation services that are
monetized through paid upgrades to premium products, as well as through advertising. We may not achieve substantial end user acceptance of
these products, and even if end users download and use the freemium products, we may not be successful in converting those “free” users into
paid users, particularly since we have begun to offer voice-guided navigation in our freemium offerings. Our freemium offerings provide
planning features and other features unrelated to pure navigation that we do not have substantial experience in designing or marketing. These
features may deter users who are looking for a pure navigation offering. We have limited experience in marketing our products and services
directly to end users or generating advertising revenue through our mobile navigation users. To the extent that our number of active subscribers
is low, we may not be able to fulfill sufficient advertising orders to generate meaningful advertising revenue from a freemium model. Bad
reviews from end users may dissuade other end users from downloading our freemium offerings or converting to paid users. We may not be
successful in gaining visibility among end users without incurring significant expenses to market our products and services to those users. In
addition, we do not have experience in converting users of free applications to paid users or in generating revenue from full featured products
solely through advertising revenue. If we are unable to achieve high visibility among end users on a cost effective basis or fail to convince those
end users to convert to paid products and revenue producing services, we may be unable to sustain our revenue and we may incur losses in the
future.
Mobile connected device users may choose not to allow tracking of their location information and therefore local advertising on their
devices.
The growth of our advertising revenue will depend on our ability to deliver location targeted, highly relevant ads to consumers on their
mobile connected devices. Our targeted advertising is highly dependent on the consumers allowing applications to have access to their location
data. Users may elect not to allow location data sharing for a number of reasons, including personal privacy concerns. Mobile operating systems
vendors and application developers are also promoting features that allow device users to disable device functionality that consumers may elect
to invoke. In addition, companies may develop products that enable users to prevent ads from appearing on their mobile device screens. If any of
these developments were to become widely used by consumers, our ability to deliver effective advertising campaigns on behalf of our advertiser
clients would suffer, which could hurt our ability to generate advertising revenue.
Our business practices with respect to data could give rise to liabilities or reputational harm as a result of governmental regulation, legal
requirements or industry standards relating to consumer privacy and data protection.
Our advertising services depend on our ability to collect, store and use information related to mobile devices and the ads we place,
including a device's geographic location for the purpose of targeting ads to the user of the device. Federal, state and international laws and
regulations govern the collection, use, retention, sharing and security of data that we collect across our mobile advertising platform. We strive to
comply with all applicable laws, regulations, policies and legal obligations relating to privacy and data protection. However, it is possible that
these requirements may be interpreted and applied in a manner that is inconsistent with our practices. Any failure, or perceived failure, by us to
comply with such laws could result in proceedings or actions against us by governmental entities, consumers or others. Such proceedings or
actions could hurt our reputation, force us to spend significant amounts to defend ourselves, distract our management, increase our costs of doing
business, require us to change our advertising services or disclosures, adversely affect the demand for our services and ultimately result in the
imposition of monetary liability. We may also be contractually liable to indemnify and hold harmless our clients from the costs or consequences
of inadvertent or unauthorized disclosure of data that we store or handle as part of providing our services.
The regulatory framework for privacy issues worldwide is evolving, and various government and consumer agencies and public advocacy
groups have called for new regulation and changes in industry practices, including some directed at the mobile and advertising industries in
particular. It is possible that new laws, regulations, standards, recommendations, best practices or requirements will be adopted that would affect
our business, particularly with regard to location-based services, collection or
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