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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ÈANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2010
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-34720
TELENAV, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0521800
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
1130 Kifer Road
Sunnyvale, California 94086
(Address of principal executive offices) (Zip Code)
(408) 245-3800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.001 Par Value per Share The NASDAQ Global Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933,
as amended. Yes No È
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended. Yes No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ÈNo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. È
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.:
Large accelerated filer Accelerated filer
Non-accelerated filer È(Do not check if a smaller reporting company) Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act) Yes No È
As of December 31, 2009, the last business day of the registrant’s most recently completed second fiscal quarter, the
registrant’s common stock was not listed on any exchange or over-the-counter market. The registrant’s common stock began trading
on the NASDAQ Global Market on May 13, 2010. The aggregate market value of voting and non-voting common equity held by
non-affiliates of the registrant as of June 30, 2010 was approximately $141 million (based on a closing sale price of $8.39 per share
as reported for the NASDAQ Global Market on June 30, 2010). For purposes of this calculation, shares of common stock held by
officers and directors and shares of common stock held by persons who hold more than 10% of the outstanding common stock of the
registrant have been excluded from this calculation because such persons may be deemed to be affiliates. This determination of
executive officer or affiliate status is not necessarily a conclusive determination for other purposes.
The number of shares of the registrant’s Common Stock, $.001 par value per share, outstanding as of August 31, 2010 was
42,155,547.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement relating to its 2010 Annual Meeting of Stockholders are incorporated by
reference into Part III of this Form 10-K where indicated.

Table of contents

  • Page 1
    ... of incorporation or organization) (I.R.S. Employer Identification Number) TELENAV, INC. 1130 Kifer Road Sunnyvale, California 94086 (Address of principal executive offices) (Zip Code) (408) 245-3800 (Registrant's telephone number, including area code) Securities registered pursuant to...

  • Page 2
    TeleNav, Inc. Fiscal Year 2010 Form 10-K Annual Report TABLE OF CONTENTS Page PART I ITEM 1. ITEM 1A. ITEM 1B. ITEM 2. ITEM 3. ITEM 4. PART II MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ...ITEM 6. SELECTED FINANCIAL DATA ...ITEM 7. ...

  • Page 3
    ... 15, 2010. As the entity surviving the merger, upon completion of the merger, we changed our name to TeleNav, Inc. Our executive offices are located at 1130 Kifer Road, Sunnyvale, California 94086, and our telephone number is (408) 245-3800. Our website address is www.telenav.com. The information...

  • Page 4
    ... voice guided, real time, turn by turn mobile navigation service, which offers many innovative features such as real time traffic alerts, route planning and updated points of interest, or POIs. We leverage our LBS platform to provide easy to implement and cost effective Mobile Resource Management...

  • Page 5
    ... mobile Internet and data applications that leverage location information to provide mobile phone users with location specific, real time and personalized features and functions. LBS that incorporate location information include turn by turn navigation, route planning, real time traffic alerts...

  • Page 6
    ... and get personalized and targeted results based on the consumer's location and preferences. Once the consumer selects a restaurant, he or she can access services such as voice guided, real time, turn by turn navigation or third party reviews, or elect to receive a mobile coupon. As LBS applications...

  • Page 7
    ...download for its latest version Ovi Maps on its smart phone products to consumers free of charge. Microsoft also provides free turn by turn navigation software on its current Windows Mobile operating system. Although wireless carriers receive revenue from data networks used to provide these services...

  • Page 8
    ... solutions through our location based technology, applications and service delivery platform, or SDP, which are tightly integrated with a broad range of mobile phones, mobile phone operating systems and wireless network protocols. GPS Navigator is our flagship voice guided, real time, turn by turn...

  • Page 9
    ... workflow and flexible forms from their mobile phones. Key features and functions of our MRM solutions include voice guided, turn by turn directions to efficiently navigate workers to their destinations; real time and historical reports of the location of the mobile workforce and routes taken and...

  • Page 10
    ...location specific alerts, traffic alerts, searches along the route, gas prices and weather, as well as our proprietary account authentication system and other functionalities. Our SDP communicates with our client software in mobile phones or other devices over our wireless carrier partners' networks...

  • Page 11
    ...to address rapid growth in our end user base. For example, our SDP is able to support different applications and business models such as our GPS Navigator, our wireless carrier partners' white label navigation services, TeleNav Track, Whereboutz and location based mobile advertising. Client software...

  • Page 12
    ..., to address the needs of mobile phone users and the relatively small screens of mobile phones. We have developed a proprietary GIS, which provides fast route and map generation while optimizing the route based on current traffic conditions. Because our proprietary GIS uses less computing resources...

  • Page 13
    ...mobile phone operating systems and emerging wireless network technologies; and developing key technology and content to reduce third party costs. Our development strategy is to identify features, services and products that are, or are expected to be, needed or desired by our end users. We also work...

  • Page 14
    ...a bundle with other data or voice services. End users may also subscribe to our services directly from our website, but these customers represent a small minority of our end users. We currently provide our LBS to customers in North America, Asia, Europe and South America. As of June 30, 2010, we had...

  • Page 15
    ...to comply with applicable federal, state and local laws, rules and regulations. We do not use any end user data for direct marketing or promotions and do not store any user location information that is specifically identifiable with an end user except to deliver and support our services. We are also...

  • Page 16
    ... to ours for free. For example, Google offers free voice guided, turn by turn navigation as part of its release of Google Maps Navigation for mobile devices based on the Android 1.6 and higher operating system platform and Nokia provides a download for its latest version of Ovi Maps on its...

  • Page 17
    ...would likely cause harm to our business, operating results and financial condition. Employees As of August 31, 2010, we employed 942 people, including 725 in research and development, 106 in sales and marketing, 49 in customer support and data center operations and 62 in a general and administrative...

  • Page 18
    ... of engineering at LINCSS/Loral. Prior to that time, Dr. Rennard was a vice president of GPS Navigation Systems at Stanford Telecom, a telecommunications company acquired by ITT and Newbridge Networks Corporation, and an acquisition program manager for the U.S. Air Force. Dr. Rennard holds a B.S. in...

  • Page 19
    ... as a senior product manager at Nextel Communications, a wireless communications company that merged with Sprint. From February 2002 to April 2003, Mr. Wahla served as vice president of business development of Wireless Multimedia Solutions, a privately held wireless software platform company. From...

  • Page 20
    ... required to use commercially reasonable efforts to feature our navigation services more prominently than other navigation applications on handsets and to preload certain of our products on handsets. Sprint is entitled to expand the number of bundles in which our navigation services are offered. For...

  • Page 21
    ...Google offers free voice guided, turn by turn navigation as part of its Google Maps product for mobile devices based on the Android 1.6 and higher operating system platform and Nokia provides a download for its latest version of Ovi Maps on its smartphones which also provides turn by turn navigation...

  • Page 22
    ... wireless carrier partners were to eliminate our services from their unlimited data service plans, such as the Sprint Simply Everything plans, we could lose end users as they would be required to pay a separate monthly fee to continue to use our services. In addition, we could be required to change...

  • Page 23
    ... allow us to customize our services for their new devices. We typically deliver our services through client software that has been customized to work with a given mobile phone's operating system, features and form factors. Wireless carrier partners often insist that mobile phone manufacturers permit...

  • Page 24
    ... harm our business, operating results and financial condition. Although historically wireless carriers controlled provisioning and access to the applications that could be used on mobile phones connected to their networks, in recent years consumers have been able to download and provision...

  • Page 25
    ... and reporting system that authenticates end users and tracks the number of end users and their use of our services is a proprietary and customized system that we developed internally. Although we believe that the flexibility of this service to integrate tightly with wireless carriers' reporting and...

  • Page 26
    ... network operating environments. Development and delivery schedules for LBS are difficult to predict. We have in the past and may in the future fail to deliver new versions of our services in a timely fashion. If new releases of our LBS are delayed or our services are not preloaded on mobile phones...

  • Page 27
    ... fail to manage our growth effectively, our financial performance may suffer. We have substantially expanded our overall business, end user base, headcount and operations in recent periods. We increased our total number of full time employees from 332 at June 30, 2007 to 897 at June 30, 2010. During...

  • Page 28
    ...the revenue model changes resulting from our recent contract amendment with Sprint; loss of subscribers by our wireless carrier partners or a reduction in the number of subscribers to plans that include our services; the timing and quality of information we receive from our wireless carrier partners...

  • Page 29
    ... models for valuing our common stock. As a result, our stock price could decline rapidly and we could face costly securities class action suits or other unanticipated issues. If a substantial number of end users change mobile phones or if our wireless carrier partners switch to subscription plans...

  • Page 30
    ... additional time and expenses to extend our services to those devices, which may cause us to incur unanticipated operating expenses and miss product launch windows. Because of short product life cycles in the wireless communications industry, if we fail to integrate our software on a mobile phone...

  • Page 31
    ... tax systems, restrictions on the repatriation of earnings and changes in tax rates; dependence on foreign wireless carriers with different pricing models; availability of reliable 2G, 3G and 4G mobile networks in those countries; requirements that we comply with local telecommunication regulations...

  • Page 32
    ..., our wireless carrier partners pay us fees that do not vary depending on whether or how often an end user uses our services. Historically, end users using certain mobile phones or under certain service plans tended to use our services more than other end users. We budget and operate our services by...

  • Page 33
    ... or defects occur in mobile phones or services offered by our wireless carrier partners, it could result in consumers terminating our services, damage to our reputation, increased customer service and support costs, warranty claims, lost revenue and diverted development resources, any of which could...

  • Page 34
    ...navigation services, including our GPS Navigator, infringe a patent owned by Vehicle IP, LLC. According to the patent, the invention generally relates to a navigation system that determines an expected time...for providing traffic information to a plurality of mobile users connected to a network. The ...

  • Page 35
    ... traffic information to a plurality of mobile users connected to a network....time consuming and costly to evaluate and defend and could adversely affect our relationships with our current or future wireless carrier partners; cause delays or stoppages in the shipment of TeleNav enabled mobile phones...

  • Page 36
    ... that could restrict the wireless communications industry, including laws and regulations regarding lawful interception of personal data, use of mobile phones while driving, privacy, taxation, content suitability, copyright and antitrust. Furthermore, the growth and development of electronic storage...

  • Page 37
    ... 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. As privacy and data protection have become more sensitive issues, we may...

  • Page 38
    ...end user's mobile phone (or vehicle, with respect to certain TeleNav Track services) to government authorities, which could result in public perception that we are providing the government with intelligence information and deter some end users from using our services. Any of these developments could...

  • Page 39
    ... to predict and quantify and the defense of such claims or actions can be costly. In addition to diverting financial and management resources and general business disruption, we may suffer from adverse publicity that could harm our brand or reputation, regardless of whether the allegations are valid...

  • Page 40
    ...internal controls in the future. If we fail to address material weaknesses in our internal control over financial reporting, our ability to operate our business may be adversely affected. We will incur increased costs and demands upon management as a result of complying with the laws and regulations...

  • Page 41
    ... For example, in late July 2010, we announced that we were in discussions with Sprint to renegotiate our agreement and several financial analysts published research reports downgrading our stock. After our announcement and the publication of these reports, our stock price fell almost 40% in a single...

  • Page 42
    ..., marketing and business development personnel located in those areas. In addition to our headquarters and other offices, we lease data center space in Sunnyvale, Sacramento and Santa Clara, California. We believe our current facilities will be adequate or that additional space will be available on...

  • Page 43
    ... first office action and confirmed seven of the 51 claims. On December 31, 2009, Vehicle IP, LLC filed a complaint against us in the U.S. District Court for the District of Delaware (Case No. 1:09-cv-01007-JJF). The suit alleges that certain of our navigation services, including our GPS Navigator...

  • Page 44
    ... our wireless carrier partners have requested that we indemnify them in connection with such cases: In 2008, Alltel, AT&T, Sprint and T-Mobile, each demanded that we indemnify and defend them against a lawsuit brought by Emsat Advanced Geo-Location Technology LLC and Location Based Services LLC...

  • Page 45
    ... brought by Alfred P. Levine, an individual, in the Eastern District of Texas (Case No. 2:09-cv-00372) alleging that Sprint and Samsung infringe U.S. Patent Nos. 6,243,030 and 6,140,943 in connection with providing wireless navigation systems, products and services. In March 2010, Sprint responded...

  • Page 46
    ...of August 31, 2010. We have never declared or paid dividends on our common stock and do not expect to pay dividends on our common stock for the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used for the operation and growth of our business. 43

  • Page 47
    ... performance. Data for the NASDAQ Composite Index and the Russell 3000 Index assume reinvestment of dividends. COMPARISON OF CUMULATIVE TOTAL RETURN* Among TeleNav, Inc. the NASDAQ Composite index and the Russell 3000 index $120 $110 $100 $90 $80 $70 $60 5/13/10 5/31/2010 6/30/2010 TeleNav, Inc...

  • Page 48
    ... directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates. We anticipate that we will use the net proceeds from the IPO for working capital and other general corporate...

  • Page 49
    ...Consolidated Statements of Operations Data: (in thousands, except per share data) 2010 2009 2008 2007 2006 Revenue ...$171,162 $110,880 $48,065 $ 27,716 $17,288 Cost of revenue ...29,481 20,250 11,359 7,965 3,599 Gross profit ...Operating expenses: Research and development(1) ...Sales and marketing...

  • Page 50
    ... including voice guided navigation, on mobile phones. Our LBS solutions provide consumers and enterprises with convenient and easy to use location specific, real time and personalized features and functions. By using an integral tool of their daily lives, their mobile phone, our end users can access...

  • Page 51
    ... monthly minimum fees per end user. To a much lesser extent, we also sell our services directly to consumers through our website and through application stores. Subscription fees from our wireless carrier partners represented substantially all of our revenue for fiscal 2010. In fiscal 2010, Sprint...

  • Page 52
    ... Navigator is our flagship voice guided real time, turn by turn, mobile navigation service. Our MRM solutions allow enterprises to monitor and manage mobile workforces and assets by using our LBS platform to track job status and the location of workers, field assets and equipment. We are developing...

  • Page 53
    ...promote our services to their subscribers, our sales and marketing expenses consist primarily of the cost of supporting our wireless carrier partners and attracting new wireless carrier partners to offer our LBS. We cooperate with our wireless carrier partners in marketing our LBS solutions to their...

  • Page 54
    ... ability to set the price charged to their subscribers for our service. Our wireless carrier partners have direct responsibility for billing and collecting those fees from their subscribers and we and our wireless carrier partners may offer subscribers a 30-day free trial for our service. In certain...

  • Page 55
    ... account for the costs of computer software we develop for internal use by capitalizing qualifying costs, which are incurred during the application development stage, and amortizing those costs over the application's estimated useful life, which generally ranges from 18 to 24 months depending on the...

  • Page 56
    ... fair value of options granted to employees using the Black-Scholes pricing model with the following weighted average assumptions: Fiscal Year Ended June 30, 2010 2009 2008 Dividend yield ...Expected volatility ...Expected term (in years) ...Risk-free interest rate ... - 74% 4.85 2.36% - 72% 4.76...

  • Page 57
    ...of $390,000 in fiscal 2010 from the release of the remaining U.S. federal and state valuation allowance. Through June 30, 2010 we have recorded a full valuation...enterprise's financial statements. The first step is to evaluate the tax position for recognition by determining if the weight of available ...

  • Page 58
    ... operations for fiscal 2008, 2009 and 2010, as well as a percentage that each line item represents of our revenue for those periods. The additional key metrics presented are used in addition to the financial measures reflected in the consolidated statements of income data to help us evaluate growth...

  • Page 59
    ... plans receive the right to use our LBS without additional charge. To benefit from increased numbers of end users, we agreed to provide Sprint with lower monthly per end user fees for these bundles compared to other plans with Sprint. In fiscal 2010, we further lowered pricing on bundled offerings...

  • Page 60
    ...% increase in customer support costs as well as increased costs of data center operations. In September 2010, we amended our agreement with Tele Atlas to change the fee structure for map and POI data we provide for Sprint's bundled offerings in order to align the manner in which we pay fees to Tele...

  • Page 61
    ...across a higher revenue base. We expect that our sales and marketing expenses will continue to increase in absolute dollars as we establish relationships with new wireless carrier partners, begin programs to market our services to their subscribers and support our efforts to market and promote other...

  • Page 62
    ... adoption of our services through our wireless carrier partners' bundled offerings, for which we receive lower monthly per end user fees. Growth in revenue and number of end users for the periods primarily reflects Sprint's decision to offer and promote a bundled strategy, and our support of this...

  • Page 63
    ... and, to a lesser extent, a 28% increase in customer support costs. The decline in cost of revenue as a percentage of revenue was primarily due to the increase in revenue from end users who receive our services as part of a bundle of services and who, to date, have had lower average usage rates than...

  • Page 64
    ... including our growth rate, the timing and extent of expenditures to support development efforts, the expansion of research and development and sales and marketing activities and headcount, the introduction of our new and enhanced service and product offerings and the growth in our end user base. We...

  • Page 65
    .... The cash was used primarily for purchases of property and equipment and internal software development costs. We expect to increase our capital expenditures in future periods as we continue to invest in the infrastructure needed to operate our services for an increasing end user base, as well...

  • Page 66
    ...other partners are negatively impacted or any of our wireless carrier or partner agreements is terminated, our business, operating results and financial condition could be materially harmed. To date, we have not incurred material costs and do not have material liabilities related to such obligations...

  • Page 67
    ... reporting. This report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by SEC rules applicable to newly public...

  • Page 68
    ... public accounting firm to attest, that our internal control over financial reporting is effective as of June 30, 2011. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the year ended June 30, 2010...

  • Page 69
    ... Item 10 relating to our executive officers is included under the caption "Executive Officers of the Registrant" in Part I of this Form 10-K. The other information required by this Item 10 is incorporated by reference to our Proxy Statement for the 2010 Annual Meeting of Stockholders (to be filed...

  • Page 70
    ... report and set forth on the page indicated: Page Report of Independent Registered Public Accounting...TeleNav, Inc. and certain holders of TeleNav, Inc.'s capital stock named therein. Form of Indemnification Agreement between Registrant and its directors and officers. 1999 Stock Option Plan and forms...

  • Page 71
    ... Real Estate Lease Agreement, dated as of April 28, 2009, by and between TeleNav Shanghai Inc. and Shanghai Dongfang Weijing Culture Development Co. Sprint Master Application and Services Agreement, dated as of January 30, 2009, by and between TeleNav, Inc. and Sprint United Management Company...

  • Page 72
    ... of March 12, 2010 to the Sprint Master Application and Services Agreement, dated as of January 30, 2009, by and between TeleNav, Inc. and Sprint United Management Company. License and Service Agreement, dated as of March 19, 2008, by and between TeleNav, Inc. and AT&T Mobility LLC. First Amendment...

  • Page 73
    ... as of March 1, 2010 to the License Agreement, dated as of July 1, 2009, by and between TeleNav, Inc. and Tele Atlas North America, Inc. Data License Agreement, dated as of December 1, 2002, by and between Televigation, Inc. and Navigation Technologies Corporation. Third Amendment dated December...

  • Page 74
    ...North America, LLC. Ninth Amendment dated February 25, 2010 to the Data License Agreement, dated as of December 1, 2002 by and between TeleNav, Inc. and NAVTEQ North America, LLC. Employment Offer Letter executed on June 28, 2010 from TeleNav, Inc. to Dariusz Paczuski First Year Executive Employment...

  • Page 75
    ... duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TELENAV, INC. Dated: September 24, 2010 By: /s/ H.P. JIN H.P. Jin President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears...

  • Page 76
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of TeleNav, Inc: We have audited the accompanying consolidated balance sheets of TeleNav, Inc. as of June 30, 2010 and 2009, and the related consolidated statements of income, convertible preferred ...

  • Page 77
    ... amounts) June 30, 2010 2009 Assets Current assets: Cash and cash equivalents ...Accounts receivable; net of allowances of $246 and $229 at June 30, 2010 and 2009, respectively ...Deferred income taxes, current ...Prepaid expenses and other current assets ...Total current assets ...Property and...

  • Page 78
    ... amounts) Fiscal Year Ended June 30, 2010 2009 2008 Revenue ...Cost of revenue ...Gross profit ...Operating expenses: Research and development ...Sales and marketing ...General and administrative ...Total operating expenses ...Income from operations ...Interest income ...Other income (expense), net...

  • Page 79
    ... ...Issuance of common stock in initial public offering ...Stock-based compensation expense ...Excess tax benefit from employee stock option plans ...Comprehensive income: Currency translation adjustment ...Net income ...Comprehensive income ...Balance at June 30, 2010 ...23,073 11 23,084 23...

  • Page 80
    ... provided by (used in) operating activities ...Investing activities Capital expenditures ...Additions to capitalized software ...Net cash used in investing activities ...Financing activities Proceeds from exercise of stock options ...Proceeds from initial public offering, net of costs ...Proceeds...

  • Page 81
    ... of location based services, or LBS, including voice guided navigation, on mobile phones. Our LBS solutions provide consumers and enterprises with convenient and easy to use location specific, real time and personalized features and functions. By using their mobile phones, our end users can access...

  • Page 82
    ...such as map, points of interest, traffic, gas price and weather data, and voice recognition technology that we use in providing our LBS. Our cost of revenue also includes expenses associated with data center operations, customer support, the amortization of capitalized software development costs and...

  • Page 83
    ...may impair a specific wireless carrier partner's ability to meet its financial obligations to us. Revenue related to services provided through Sprint Nextel Corporation, or Sprint, comprised 55%, 61% and 62% of revenue for fiscal 2010, 2009 and 2008, respectively. Receivables due from Sprint were 49...

  • Page 84
    ... arrangements based on the grant-date fair value, and recognize the costs in the financial statements over the employees' requisite service period. We recognize compensation expense for the fair value of these awards with time-based vesting on a straight-line basis over the employee's requisite...

  • Page 85
    ... results of operations. 2. Net income per share In May 2010, all of our outstanding convertible preferred stock converted into common stock in connection with our initial public offering. Prior to our initial public offering, basic and diluted net income per share applicable to common stockholders...

  • Page 86
    ... stock options and warrants using the treasury-stock method. As a result of the completion of our initial public offering during the fourth quarter of fiscal 2010, we allocated income between the preferred and common stockholders on a pro-rata basis over the number of days of the respective...

  • Page 87
    TELENAV, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following outstanding ... located in Sunnyvale, California, and Shanghai, Beijing and Xi'an, China, and are leased under noncancelable operating lease arrangements. Future minimum operating lease payments as of June 30, 2010 ...

  • Page 88
    ..., we have received demands for indemnification related to our services from certain of our wireless carrier partners with respect to litigation to which they are a party. In 2008, Alltel, AT&T, Sprint and T-Mobile, each demanded that we indemnify and defend them against a lawsuit brought by Emsat...

  • Page 89
    ...condition, results of operations or cash flows. On December 31, 2009, Vehicle IP, LLC filed a complaint against us in the U.S. District Court for the District of Delaware (Case No. 1:09-cv-01007-JJF). The suit alleges that certain of our navigation services, including TeleNav GPS Navigator, infringe...

  • Page 90
    TELENAV, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) and Samsung infringe U.S. Patent Nos. 6,243,030 and 6,140,943 in connection with providing wireless navigation systems, products and services. In March 2010, Sprint responded to the allegations, filing an answer that the patents-in...

  • Page 91
    ...summarizes the related charge to other income (expense), net and the assumptions used to determine the fair value of the warrants at each balance sheet date (dollars in thousands, except per share amounts): Black-Scholes pricing model Remaining contractual Expected Risk-free term volatility interest...

  • Page 92
    ...time to time at the discretion of our board of directors. As of June 30, 2010... exercise price of $3.30 per share. In connection with our initial public offering in May 2010, the...fiscal year, the number of shares available and reserved for issuance under the 2009 Plan will be annually increased by an...

  • Page 93
    ...average average remaining exercise price contractual life per share (years) Shares available for grant Number of shares Aggregate intrinsic ...in thousands): Fiscal year ended June 30, 2010 2009 2008 Cost of revenue ...Research and development ...Selling and marketing ...General and administrative ...

  • Page 94
    ... do not plan to pay cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the valuation model. Expected volatility. Because we were a private entity with no historical data regarding the volatility of our common stock until our initial public offering and...

  • Page 95
    TELENAV, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Shares reserved for future issuance Common stock reserved for future issuance was as follows (in thousands): June 30, 2010 Stock options outstanding ...Stock options available for future grants ...Total common shares reserved for ...

  • Page 96
    ...of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our net deferred tax assets were as follows (in thousands): June 30, 2010 2009 Deferred tax assets: Federal, state and foreign net operating losses ...Federal and state...

  • Page 97
    ... attributes that are not available due to the limitations under Section 382. Our ability to use our net operating loss carryforwards may be subject to further substantial annual limitation due to future ownership changes. As of June 30, 2010, we also have foreign net operating loss carryforwards of...

  • Page 98
    ... their employment, at the beginning of each calendar month. Employees may contribute up to the lesser of 100% of their current compensation to the 401(k) Plan or an amount up to a statutorily prescribed annual limit. We pay the direct expenses of the 401(k) Plan and beginning in July 2006, we began...

  • Page 99
    ... Court for the Northern District of California (Case No. 3:10-CV-03942-SC) against us, certain of our officers and directors, and certain of our underwriters for our May 13, 2010 initial public offering, or IPO. The complaint purports to be brought on behalf of all persons who acquired shares of our...

  • Page 100
    ...In September 2010, we entered into an amendment to our agreement with our largest customer, Sprint. Under the terms of the agreement, we will receive an annual fixed fee from Sprint for navigation applications sold to subscribers in bundles with other Sprint services. The annual fee will change from...

  • Page 101
    ... QUALIFYING ACCOUNTS (in thousands) Beginning Balance Additions (Recoveries) Write-offs Ending Balance Trade Receivable Allowances: Year Ended June 30, 2008 ...Year Ended June 30, 2009 ...Year Ended June 30, 2010 ... $ 5 $ 17 $ $ (2) (30) $ 20 $229 $246 $ 20 $229 $ 239 $1,685 $(1,668) 98

  • Page 102
    ...Rights Agreement, dated April 14, 2009, between TeleNav, Inc. and certain holders of TeleNav, Inc.'s capital stock named therein. Form of Indemnification Agreement between Registrant and its directors and officers. 1999 Stock Option Plan and forms of agreement thereunder. 2002 Executive Stock Option...

  • Page 103
    ... of March 12, 2010 to the Sprint Master Application and Services Agreement, dated as of January 30, 2009, by and between TeleNav, Inc. and Sprint United Management Company. License and Service Agreement, dated as of March 19, 2008, by and between TeleNav, Inc. and AT&T Mobility LLC. First Amendment...

  • Page 104
    ... Incorporated by Reference From Form Incorporated by Reference From Exhibit Number Date Filed 10.14.7* Ninth Amendment effective as of April 13, 2010 to the License and Service Agreement, dated as of March 19, 2008, by and between TeleNav, Inc. and AT&T Mobility LLC. License Agreement effective...

  • Page 105
    ...North America, LLC. Ninth Amendment dated February 25, 2010 to the Data License Agreement, dated as of December 1, 2002 by and between TeleNav, Inc. and NAVTEQ North America, LLC. Employment Offer Letter executed on June 28, 2010 from TeleNav, Inc. to Dariusz Paczuski First Year Executive Employment...

  • Page 106
    ... CERTIFICATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, H.P. Jin, certify that: 1. 2. I have reviewed this annual report on Form 10-K of TeleNav, Inc.; Based...

  • Page 107
    ....2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Douglas Miller, certify that: 1. 2. I have reviewed this annual report on Form 10-K of TeleNav, Inc.; Based on my...

  • Page 108
    ... executive officer of TeleNav, Inc. (the "Company"), certify for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, (i) the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 2010...

  • Page 109
    ... financial officer of TeleNav, Inc. (the "Company"), certify for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, (i) the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 2010...