TeleNav 2015 Annual Report Download - page 36

Table of Contents
the government with intelligence information and deter some end users from using our services. Any of these developments could harm our
business.
Changes in government regulation of the wireless communications, the automobile and mobile advertising industries may adversely affect
our business.
It is possible that a number of laws and regulations may be adopted in the United States and elsewhere that could restrict the wireless
communications industry, further regulate the automobile industry or impair the mobile advertising industry, including laws and regulations
regarding lawful interception of personal data, hands free use of mobile phones or navigation services within autos or the control of such use,
privacy, taxation, content suitability, copyright and antitrust. Furthermore, the growth and development of electronic storage of personal
information may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies such as ours that
store personal information. We anticipate that regulation of the industries in which our products and services are used will increase and that we
will be required to devote legal and other resources to address this regulation. Changes in current laws or regulations or the imposition of new
laws and regulations in the United States or elsewhere regarding the wireless communications or automobile industries may make operation
more costly, and may materially reduce our ability to increase or maintain sales of our products and services.
Warranty claims, product liability claims and product recalls could subject us to significant costs and adversely affect our financial results.
We warrant our automotive navigation products to be free from defects in materials, workmanship and design for periods ranging from
three months to seven years. If our navigation services or products contain defects, there are errors in the maps supplied by third party map
providers or if our end users do not heed our warnings about the proper use of these products, collisions or accidents could occur resulting in
property damage, personal injury or death. If any of these events occurs, we could be subject to significant liability for personal injury and
property damage and under certain circumstances could be subject to a judgment for punitive damages. In addition, if any of our designed
products are defective or are alleged to be defective, we may be required to participate in a recall campaign. Warranty claims, a successful
product liability claim or a requirement that we participate in a product recall campaign may adversely affect our results of operations and
financial condition.
We maintain limited insurance against accident related risks involving our products. However, we cannot assure you that this insurance
would be sufficient to cover the cost of damages to others or will continue to be available at commercially reasonable rates. In addition, we may
be named as a defendant in litigation by consumers individually or on behalf of a class if their handsets or automobiles suffer problems from
software downloads from our customers. If we are unable to obtain indemnification from our customer for any damages or legal fees we may
incur in connection with such complaints, our financial position may be adversely impacted. In addition, insurance coverage generally will not
cover awards of punitive damages and may not cover the cost of associated legal fees and defense costs. If we are unable to maintain sufficient
insurance to cover product liability costs or if our insurance coverage does not cover an award, our business, financial condition and results of
operations could be adversely affected.
Government regulation designed to protect end user privacy may make it difficult for us to provide our services or adopt advertising based
revenue models.
We transmit and store a large volume of personal information in the course of providing our products and services. This information is
increasingly subject to legislation and regulations in numerous jurisdictions around the world. This government action is typically intended to
protect the privacy and security of personal information that is collected, stored and transmitted in or from the governing jurisdiction.
Legislation may also be adopted in various jurisdictions that prohibits use of personal information and search histories to target end users
with tailored advertising, or provide advertising at all. Although our advertising revenue to date is not significant, we anticipate we will continue
to grow advertising revenue in the future to improve average revenue per user in certain markets.
We could be adversely affected if domestic or international legislation or regulations are expanded to require changes in our business
practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business. For
example, the USA PATRIOT Act provides certain rights to U.S. law enforcement authorities to obtain personal information in the control of
U.S. persons and entities without notifying the affected individuals. If we are required to allocate significant resources to modify the delivery of
our services to enable enhanced legal interception of the personal information that we transmit and store, our results of operations and financial
condition may be adversely affected.
In addition, because various foreign jurisdictions have different laws and regulations concerning the storage and transmission of personal
information, we may face unknown requirements that pose compliance challenges in new international markets that we seek to enter. Such
variation could subject us to costs, delayed service launches, liabilities or negative publicity that could impair our ability to expand our
operations into some countries and therefore limit our future growth.
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