1366246--3/31/2008--GLU_MOBILE

related topics

{product, market, service}

{customer, product, revenue}

{operation, international, foreign}

{system, service, information}

{property, intellectual, protect}

{acquisition, growth, future}

{competitive, industry, competition}

{capital, credit, financial}

{personnel, key, retain}

{stock, price, operating}

{regulation, change, law}

{investment, property, distribution}

{control, financial, internal}

{regulation, government, change}

{loan, real, estate}

Our financial results could vary significantly from quarter to quarter and are difficult to predict. The markets in which we operate are highly competitive, and many of our competitors have significantly greater resources than we do. Failure to renew our existing brand and content licenses on favorable terms or at all and to obtain additional licenses would impair our ability to introduce new mobile games or to continue to offer our current games based on third-party content. We currently rely on wireless carriers to market and distribute our games and thus to generate our revenues. In particular, subscribers of Verizon Wireless represented 23.0% of our revenues in 2007. The loss of or a change in any significant carrier relationships could cause us to lose access to their subscribers and thus materially reduce our revenues. Acquisitions could result in operating difficulties, dilution and other harmful consequences. End user tastes are continually changing and are often unpredictable; if we fail to develop and publish new mobile games that achieve market acceptance, our sales would suffer. Inferior deck placement would likely adversely impact our revenues and thus our operating results and financial condition. We have depended on no more than ten mobile games for a majority of our revenues in recent fiscal periods. If we are unsuccessful in establishing and increasing awareness of our brand and recognition of our mobile games or if we incur excessive expenses promoting and maintaining our brand or our games, our potential revenues could be limited, our costs could increase and our operating results and financial condition could be harmed. Our business and growth may suffer if we are unable to hire and retain key personnel, who are in high demand. Growth may place significant demands on our management and our infrastructure. We face added business, political, regulatory, operational, financial and economic risks as a result of our international operations and distribution, any of which could increase our costs and hinder our growth. If we fail to deliver our games at the same time as new mobile handset models are commercially introduced, our sales may suffer. Wireless carriers generally control the price charged for our mobile games and the billing and collection for sales of our mobile games and could make decisions detrimental to us. We may be unable to develop and introduce in a timely way new mobile games, and our games may have defects, which could harm our brand. If we fail to maintain and enhance our capabilities for porting games to a broad array of mobile handsets, our attractiveness to wireless carriers and branded content owners will be impaired, and our sales could suffer. If our independent, third-party developers cease development of new games for us and we are unable to find comparable replacements, we may have to reduce the number of games that we intend to introduce, delay the introduction of some games or increase our internal development staff, which would be a time-consuming and potentially costly process, and, as a result, our competitive position may be adversely impacted. If one or more of our games were found to contain hidden, objectionable content, our reputation and operating results could suffer. If we fail to maintain an effective system of internal controls, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which could negatively impact the price of our stock. If we do not adequately protect our intellectual property rights, it may be possible for third parties to obtain and improperly use our intellectual property and our competitive position may be adversely affected. Third parties may sue us for intellectual property infringement, which, if successful, may disrupt our business and could require us to pay significant damage awards. Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, damages caused by malicious software and other losses. As a result of a substantial portion of our revenues currently being derived from Verizon Wireless and three other wireless carriers, if Verizon Wireless or any other significant carrier were unable to fulfill its payment obligations, our financial condition and results of operations would suffer. We invest in securities that are subject to market risk and fluctuations in interest rates and the recent issues in the financial markets could adversely affect the value of our assets. We may need to raise additional capital to grow our business, and we may not be able to raise capital on terms acceptable to us or at all. Changes in foreign exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results. Our business in countries with a history of corruption and transactions with foreign governments, including with government owned or controlled wireless carriers, increase the risks associated with our international activities. Changes to financial accounting standards and new exchange rules could make it more expensive to issue stock options to employees, which would increase compensation costs and might cause us to change our business practices. Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management s attention and affect our ability to attract and retain qualified members for our board of directors. Risks Relating to Our Industry Wireless communications technologies are changing rapidly, and we may not be successful in working with these new technologies. The complexity of and incompatibilities among mobile handsets may require us to use additional resources for the development of our games. If wireless subscribers do not continue to use their mobile handsets to access games and other applications, our business growth and future revenues may be adversely affected. Our industry is subject to risks generally associated with the entertainment industry, any of which could significantly harm our operating results. A shift of technology platform by wireless carriers and mobile handset manufacturers could lengthen the development period for our games, increase our costs and cause our games to be of lower quality or to be published later than anticipated. System or network failures could reduce our sales, increase costs or result in a loss of end users of our games. The market for mobile games is seasonal, and our results may vary significantly from period to period. Our business depends on the growth and maintenance of wireless communications infrastructure. Future mobile handsets may significantly reduce or eliminate wireless carriers control over delivery of our games and force us to rely further on alternative sales channels, which, if not successful, could require us to increase our sales and marketing expenses significantly. Actual or perceived security vulnerabilities in mobile handsets or wireless networks could adversely affect our revenues. If a substantial number of the end users that purchase our games by subscription change mobile handsets or if wireless carriers switch to subscription plans that require active monthly renewal by subscribers, our sales could suffer. Changes in government regulation of the media and wireless communications industries may adversely affect our business.

Full 10-K form ▸

1366246--3/31/2008--GLU_MOBILE_INC