TeleNav 2015 Annual Report Download - page 38

Table of Contents
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 continue to 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 companies” as such term is defined in the Jumpstart Our Business Act of 2012.
The expenses incurred by public companies for reporting and corporate governance purposes have increased dramatically over the past several
years. We expect these rules and regulations to continue to impact our legal and financial compliance costs substantially and to make some
activities more time consuming and costly. We are unable currently to estimate these costs with any degree of certainty. We also expect that,
over time, it may be more expensive for us to obtain director and officer liability insurance. As a result, it may be more difficult for us to attract
and retain qualified individuals to serve on our board of directors or as our executive officers if we cannot provide a level of insurance coverage
that they believe is adequate.
Regulations relating to offshore investment activities by residents of China may limit our ability to acquire Chinese companies and could
adversely affect our business.
In October 2005, SAFE, a Chinese government agency, promulgated “Relevant Issues Concerning Foreign Exchange Control on Domestic
Residents’ Corporate Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles,” or Circular 75, that states that if
Chinese residents use assets or equity interests in their Chinese entities as capital contributions to establish offshore companies or inject assets or
equity interests of their Chinese entities into offshore companies to raise capital overseas, they must register with local SAFE branches with
respect to their overseas investments in offshore companies. They must also file amendments to their registrations if their offshore companies
experience material events involving capital variation, such as changes in share capital, share transfers, mergers and acquisitions, spinoff
transactions, long term equity or debt investments or uses of assets in China to guarantee offshore obligations. Under this regulation, their failure
to comply with the registration procedures set forth in such regulation may result in restrictions being imposed on the foreign exchange activities
of the relevant Chinese entity, including restrictions on the payment of dividends and other distributions to its offshore parent, as well as
restrictions on the capital inflow from the offshore entity to the Chinese entity.
We attempt to comply, and attempt to ensure that our stockholders who are subject to Circular 75 and other related rules comply, with the
relevant requirements. However, we cannot provide any assurances that all of our stockholders who are Chinese residents have complied or will
comply with our request to make or obtain any applicable registrations or comply with other requirements required by Circular 75 or other
related rules. Any future failure by any of our stockholders who is a Chinese resident, or controlled by a Chinese resident, to comply with
relevant requirements under this regulation could subject us to fines or sanctions imposed by the Chinese government, including restrictions on
our Chinese subsidiary’s ability to pay dividends or make distributions to us.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of
our stock could decline.
We expect that the trading price for our common stock will be affected by any research or reports that industry or financial analysts publish
about us or our business. If one or more of the analysts who may elect to cover us downgrade their evaluations of our stock, the price of our
stock could decline. For example, in late July 2011, following our earnings release for the three months and fiscal year ended June 30, 2011,
several financial analysts published research reports lowering their price targets of our stock. After our announcement and the publication of
these reports, our stock price fell more than 40%. If one or more of these analysts cease coverage of our company, our stock may lose visibility
in the market, which in turn could cause its price to decline. As of June 30, 2015 , only three research analysts published reports regarding our
company. In addition, if our stock were to trade at prices below $5.00 per share in the future, financial analysts may terminate coverage of our
company due to internal policies within their investment banks, which could result in further stock price declines.
Our stock price has fluctuated significantly and may continue to fluctuate in the future.
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