19
operations because they require management to make particularly subjective or complex judgments about matters that are inherently
uncertain and because of the likelihood that materially different amounts would be recorded under different conditions or using
different assumptions For example, we assess goodwill for impairment in the fourth quarter of each fiscal year, or sooner should there
be an indicator of impairment. We periodically analyze whether any such indicators of impairment exist, such as a sustained
significant decline in our stock price and market capitalization, a decline in our expected future cash flows, a significant adverse
change in legal factors or in the business climate, unanticipated competition, and/or slower growth rate, among others. The
impairment test is based on several factors requiring judgments determined as of that date. Changes in market conditions may indicate
a potential future impairment of recorded goodwill. If goodwill becomes impaired, we would record a significant charge to earnings in
our financial statements during the period in which any impairment of our goodwill is determined, which may significantly reduce or
eliminate our profits.
Because of the uncertainty of the estimates, judgments and assumptions associated with our accounting policies, we cannot
provide any assurances that we will not make subsequent significant adjustments to our consolidated financial statements.
Industry Risks
Because the wireless data industry is a rapidly evolving market, our product and service offerings could become obsolete
unless we respond effectively and on a timely basis to rapid technological changes.
The successful execution of our business strategy is contingent upon wireless network operators launching and maintaining
mobile location services, our ability to maintain a technically skilled development and engineering team, our ability to create new
network software products and adapt our existing products to rapidly changing technologies, industry standards and customer needs.
As a result of the complexities inherent in our product offerings, new technologies may require long development and testing periods.
Additionally, new products may not achieve market acceptance or our competitors could develop alternative technologies that gain
broader market acceptance than our products. If we are unable to develop and introduce technologically advanced products that
respond to evolving industry standards and customer needs, or if we are unable to complete the development and introduction of these
products on a timely and cost effective basis, it could have a material adverse effect on our business, financial position, results of
operations or cash flows or could result in our technology becoming obsolete.
Wireless network operator consolidating, future business combinations could result in a loss of revenue for our business.
The telecommunications industry generally is currently undergoing a consolidation phase. Many of our customers, specifically
wireless carrier customers of our Commercial Segment, have or may become the target of acquisitions. If the number of our customers
is significantly reduced as a result of this consolidation trend, or if the resulting companies do not utilize our product offerings, our
business, financial position, results of operations or cash flows could be adversely affected.
Concerns about personal privacy and commercial solicitation may limit the growth of mobile location-based services and
change the business models appropriate for service delivery, affecting our business opportunities.
In order for mobile location products and services to function properly, wireless carriers must locate their subscribers and store
information on each subscriber’s location. Although data regarding the location of the wireless user resides only on the wireless
carrier’s systems, users may not feel comfortable with the idea that the wireless carrier knows and can track their location. Carriers
will need to obtain subscribers’ permission to gather and use the subscribers’ personal information, or they may not be able to provide
customized mobile location services which those subscribers might otherwise desire. If subscribers view mobile location services as
an annoyance or a threat to their privacy, that could reduce demand for our products and services and have an adverse effect on our
business, financial position, results of operations or cash flows.
Technology Risks
Because our software may contain defects or errors, and our hardware products may incorporate defective components, our
sales could decrease if these defects or errors adversely affect our reputation or delays shipments of our products.
The software products that we develop are complex and must meet the stringent technical requirements of our customers. Our
hardware products are equally complex and integrate a wide variety of components from different vendors. We must quickly develop
new products and product enhancements to keep pace with the rapidly changing software and telecommunications markets in which
we operate. Products as complex as ours are likely to contain undetected errors or defects, especially when first introduced or when
new versions are released. Our products may not be error or defect free after delivery to customers, which could damage our
reputation, cause revenue losses, result in the rejection of our products or services, divert development resources and increase service
and warranty costs, each of which could have a serious harmful effect on our business, financial position, results of operations or cash
flows.
