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TELENAV, INC.
FORM 10-K
(Annual Report)
Filed 08/24/15 for the Period Ending 06/30/15
Address 950 DE GUIGNE DRIVE
SUNNYVALE, CA 94085
Telephone (408) 245-3800
CIK 0001474439
Symbol TNAV
SIC Code 3812 - Search, Detection, Navigation, Guidance, Aeronautical, and Nautical Systems and Instruments
Industry Communications Services
Sector Services
Fiscal Year 06/30
http://www.edgar-online.com
© Copyright 2015, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    TELENAV, INC. FORM 10-K (Annual Report) Filed 08/24/15 for the Period Ending 06/30/15 Address 950 DE GUIGNE DRIVE SUNNYVALE, CA 94085 Telephone (408) 245-3800 CIK 0001474439 Symbol TNAV SIC Code 3812 - Search, Detection, Navigation, Guidance, Aeronautical, and Nautical Systems and Instruments ...

  • Page 2
    ... or organization) 77-0521800 (I.R.S. Employer Identification Number) 950 De Guigne Drive Sunnyvale, California 94085 (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...

  • Page 3
    ... 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 June 30, 2015 was 40,536,912. DOCUMENTS INCORPORATED...

  • Page 4
    ... 61 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE EXECUTIVE COMPENSATION SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE PRINCIPAL ACCOUNTANT FEES AND SERVICES 60 60 60...

  • Page 5
    ... November 2012, we changed our name to Telenav, Inc. Our executive offices are located at 950 De Guigne Drive, Sunnyvale, California 94085, and our telephone number is (408) 245-3800. Our website address is www.telenav.com. The information on, or that can be accessed through, our website is not part...

  • Page 6
    ... includes our mobile phone-based wireless connectivity, or brought-in, services for vehicles. In January 2015, GM launched the new version of its OnStar RemoteLink® mobile application powered by our location-based services platform, which includes mapping and one-box search. In July 2015, we and...

  • Page 7
    ... our map and navigation platform to mobile phone users in a number of ways. We distribute our services through our wireless carrier partners, including AT&T Mobility LLC, or AT&T, and directly to consumers through mobile application stores and marketplaces. We distribute our premium services under...

  • Page 8
    ... voice capabilities with wireless network connectivity to deliver real time location services, such as traffic, weather information and other connected data. Automotive navigation systems are typically on-board or brought-in. On-board services are the traditional service type with all key navigation...

  • Page 9
    ... services for vehicles. In January 2015, GM launched the new version of its OnStar RemoteLink® mobile application powered by our location-based services platform, which includes mapping and one-box search. Under the terms of the GM agreement, we expect our embedded and connected services to support...

  • Page 10
    ... data is a key competitive advantage in the rapidly shifting mobile advertising space. Because of our ability to identify real-time and historical location data, as well as our ability to ingest contextual targeting data, we can focus our ads on specified demographics and advertiser defined customer...

  • Page 11
    ... capabilities. Our current research and development efforts are focused on improving and expanding features, functionality and performance of our existing services; developing applications, services and products for new mobile phones, mobile phone operating systems and emerging wireless network...

  • Page 12
    ... automotive navigation solutions. In addition, we earn royalties from brought-in services for vehicle applications powered by our location-based services platform. We typically enter into long term supply arrangements with our auto customers to provide our solutions across multiple car models in...

  • Page 13
    ...â„¢, Telenav Connected Serviceâ„¢, Telenav DRIVEâ„¢, Telenav GPS Navigatorâ„¢, Telenav Navigatorâ„¢, Telenav Scoutâ„¢, Telenav Shotgunâ„¢, and TrueDeltaâ„¢. We endeavor to enter into agreements with our employees and contractors and with parties with which we do business in order to limit access to...

  • Page 14
    ... of the then-current term for each supported application. We most recently amended our TomTom agreement effective January 30, 2014 to extend the license period for TomTom map data for voice-guided turn by turn GPS navigation service for mobile phones (except for Sprint's bundled offering, automotive...

  • Page 15
    ... Dr. HP Jin Michael Strambi Rohan Chandran Salman Dhanani Loren Hillberg Hassan Wahla 51 53 40 42 57 43 President, Chief Executive Officer and Chairman of the Board of Directors Chief Financial Officer and Treasurer Vice President and General Manager, Mobile Business Unit Co-President, Automotive...

  • Page 16
    ... president and general counsel at Force10 Networks, a privately held communications and networks company. From April 2005 to May 2007, Mr. Hillberg held various management positions, including executive vice president and general counsel at Macrovision Corporation (now Rovi Corporation), a publicly...

  • Page 17
    ... offerings into which our navigation solutions are integrated resulting in limited uptake of navigation options by car buyers; loss of subscribers by our wireless carrier customers or a reduction in the number of subscribers to plans that include our services; the timing and quality of information...

  • Page 18
    12

  • Page 19
    ... recognize royalties earned from our on-board solutions generally as the software is reproduced for installation in vehicles. We have limited experience managing, supporting and retaining automobile manufacturers and OEMs as customers and if we are not able to maintain Ford as a customer our revenue...

  • Page 20
    ... to provide services and charge ongoing monthly or annual fees outside of the traditional on-board navigation service model. Our map, POI and other content costs for our automobile navigation solutions are higher than those we have historically paid for our mobile phone-based navigation services and...

  • Page 21
    ... 2015 and 2014, respectively. In October 2012, we acquired Thinknear, a privately held California-based hyper-local mobile advertising company. To date, the margins of our advertising business have been well below those we experience in our automotive navigation and mobile navigation businesses...

  • Page 22
    ...convert "free" users to paid users. We provide freemium personalized navigation applications on the Apple App Store, the Google Play marketplace, Microsoft Windows Marketplace and through other marketplaces and our wireless carrier partners. Freemium offerings are free basic navigation services that...

  • Page 23
    ... Google Maps product for mobile devices, including those based on the Android and iOS operating system platforms, and Apple offers proprietary maps and voice-guided turn by turn directions. Microsoft also provides a free voice-guided turn by turn navigation solution on its Windows Mobile and Windows...

  • Page 24
    17

  • Page 25
    ... in an impairment of the goodwill and intangibles assigned to this reporting unit. Based on the results of our annual goodwill impairment test as of April 1, 2015, the estimated fair value of our mobile navigation business exceeded its carrying value by 22%. We have not recognized any impairment...

  • Page 26

  • Page 27
    ... on the number of vehicles they sell with our on-board and brought-in navigation services included and to remit royalties for those sales to us. We also rely on our wireless carrier customers to bill subscribers and collect monthly fees for our mobile navigation services, either directly or through...

  • Page 28
    ... license period for TomTom map data for voice-guided turn by turn GPS navigation service for mobile phones (except for Sprint's bundled offering, automotive navigation products) through December 31, 2015. Our agreement with HERE was automatically renewed under its existing terms through January 31...

  • Page 29
    ... and bandwidth capacity, we may be unable to efficiently and effectively scale our business to manage the addition of new wireless carrier customers, increases in the number of our end users or increases in data traffic. AWS hosting services are potentially vulnerable to damage or interruption...

  • Page 30
    ... to the distribution of our embedded and connected navigation solutions in vehicles under this agreement until certain model year 2017 vehicles come to market. While we may launch brought-in services, such as GM's OnStar RemoteLink application and Toyota's Scout GPS Link, more quickly, we may not be...

  • Page 31
    22

  • Page 32
    ...our wireless carrier customers, mobile phones and in-car wireless connections for the delivery of our navigation services to end users. We generally provide our navigation services from third party hosted servers, which require close integration with the wireless carriers' networks. We may be unable...

  • Page 33
    ... continue to use more OSM-based maps and no longer purchase maps from those suppliers, we may be unable to purchase other data that is integral to our navigation products from our existing map suppliers. Changes in business direction and market conditions could lead to charges related to structural...

  • Page 34
    ... Court cases and other litigation have addressed issues relating to providing information regarding the location of a vehicle or mobile device to law enforcement agencies without a warrant. Other laws related to mobile phones and integrated GPS tracking in a vehicle remains unsettled and we may be...

  • Page 35

  • Page 36
    ... 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...

  • Page 37
    ... our competitive business position. We use open source software in our navigation services platform and client applications and may use more open source software in the future. Use of open source software may subject our navigation services platform and client applications to general release or...

  • Page 38
    .... 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...

  • Page 39
    ... to obtain control, even if that change of control would benefit our other stockholders. ITEM 1B. None. UNRESOLVED STAFF COMMENTS ITEM 2. Facilities PROPERTIES Our corporate headquarters are located at 950 De Guigne Drive, Sunnyvale, California in an office consisting of approximately 175,000...

  • Page 40

  • Page 41
    ... a new complaint against AT&T Mobility, AT&T Services, Inc. and Telenav, Inc. in the same court, alleging that the AT&T Navigator, Telenav GPS Plus, Telenav GPS Navigator, and Telenav Scout Mobile applications as well as AT&T Store Locator and the myAT&T Mobile Application infringe the same four...

  • Page 42
    ... claims from those patents. All patent claims that EMSAT alleged to be infringed by the Telenav GPS Navigator product were cancelled during reexamination. In the suits against T-Mobile, Alltel and Sprint, EMSAT amended its allegations to remove allegations of infringement of the patent claims that...

  • Page 43
    ...prices of our common stock for the periods indicated: Year ended June 30, 2015... 2015. A substantially greater number of...earnings in the foreseeable future will be used for the operation and growth of our business. Unregistered Sales of Equity Securities and Use of Proceeds. Not applicable...of Telenav, ...

  • Page 44
    ...in this Form 10-K. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The results of operations of our enterprise business, which were previously presented as a component of our consolidated operating results, have been...

  • Page 45
    ... income (loss) Weighted average shares used in computing net income (loss) per share applicable to common stockholders: Basic Diluted $ 160,239 78,784 ... Balance Sheets Data: (in thousands) June 30, 2015 2014 2013 2012 2011 Cash, cash equivalents and short-term investments Working capital Total ...

  • Page 46
    ... new version of its OnStar RemoteLink® mobile application powered by our location-based services platform, which includes mapping and one-box search. In July 2015, we and Toyota announced a partnership for brought-in navigation services where our Scout GPS Link will be available first in the model...

  • Page 47
    ... subscriptions to our mobile navigation services. End users with subscriptions for our services are generally billed for our services through their wireless carrier or through mobile application stores and marketplaces. Our wireless carrier customers pay us based on several different revenue models...

  • Page 48
    ... our revenue base derived from automotive navigation solutions and advertising network services, which generally have higher associated third party content costs and third party display ad inventory costs, respectively, than our navigation offerings provided through wireless carriers. Non-GAAP gross...

  • Page 49
    ... software and developed technology amortization Non-GAAP gross margin 1% 46% -% 51% -% 46% 9% 44% 15% 55% (31)% 5% 1% 74% 2% 76% (3)% 73 % 2% 53% 2% 62% 1% 65% 45% 2014 51% 2013 46% Advertising Fiscal Year Ended June 30, 2015 35% 2014 40% 2013 36 % Mobile Navigation Fiscal Year Ended June 30, 2015...

  • Page 50
    ...tax assets Benefit for income taxes due to changes in tax accounting method and amended tax returns Restructuring costs Capitalized software and developed technology amortization Stock-based compensation expense: Cost of revenue Research and development Sales and marketing General and administrative...

  • Page 51
    ... solution enables a mobile device that is paired with the vehicle to activate in-vehicle text-based and voice-guided turn by turn navigation. We recognize revenue from our brought-in connected solutions monthly based on annual subscriptions, which are subject to a maximum annual fee with Ford...

  • Page 52
    ... of mobile data or voice services than if an end user subscribes to our mobile navigation services on a standalone basis. We also offer our applications directly to end users through application stores such as the Apple App Store and the Google Play marketplace. Finally, we provide free versions of...

  • Page 53
    ... advertising inventory which we acquire from advertising exchanges. Our search ad inventory is generated from our user base of paid and freemium users of our Scout and Telenav branded and carrier branded mobile navigation solutions. Other notable costs of our advertising business are the cost of ad...

  • Page 54
    ... activities supporting our automotive navigation solutions include the costs of our business development efforts. Our automotive manufacturer partners and OEMs also provide primary marketing for our onboard and brought-in navigation solutions at the time a vehicle is sold to their end customer...

  • Page 55
    ... annual fee. This revenue represented less than 5% of overall automotive navigation solutions revenue. In January 2015, GM launched the new version of its OnStar RemoteLink® mobile application powered by our location-based services platform. We earn a one-time royalty for each new vehicle owner...

  • Page 56
    ... of our annual goodwill impairment test as of April 1, 2015, the estimated fair value of our mobile navigation business exceeded its carrying value by 22%. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and...

  • Page 57
    ... units, net of estimated forfeitures, over the vesting term. The estimated stock-based compensation cost is based on the fair value of our common stock on the date of grant. Provision (benefit) for income taxes . We use the liability method of accounting for income taxes. Under this method, income...

  • Page 58
    ...of continuing operations. Fiscal Year Ended June 30, Consolidated Statements of Operations Data 2015 2014 (in thousands) 2013 Revenue: Product Services Total revenue Cost of revenue: Product Services Total cost of revenue Gross profit Operating expenses: Research and development Sales and marketing...

  • Page 59
    ... 30, 2013 2015 2014 (as a percentage of revenue) 2013 Revenue: Product Services Total revenue Cost of revenue: Product Services Total cost of revenue Gross profit Operating expenses: Research and development Sales and marketing General and administrative Restructuring costs Total operating expenses...

  • Page 60
    ... was due primarily to lower subscription fees resulting from decreases in the number of paying subscribers for mobile navigation services, partially offset by an increase in advertising revenue. Our cost of product revenue increased 50% to $55.3 million in fiscal 2015 from $36.8 million in fiscal...

  • Page 61
    ... customized software and map content revenue of $4.7 million and $5.1 million in fiscal 2015 and 2014 , respectively. In addition, during fiscal 2015 , we billed $5.3 million in royalties earned from new vehicle owner downloads of GM's OnStar RemoteLink® mobile application powered by our location...

  • Page 62
    ... as we add sales personnel to support our advertising business. . General and administrative . Our general and administrative expenses decreased 10% to $23.6 million in fiscal 2015 from $26.2 million in fiscal 2014 . The decrease was primarily due to decreases in compensation and benefits expense of...

  • Page 63
    ... million in fiscal 2013. The decrease in services revenue was due primarily to lower subscription fees resulting from decreases in the number of paying subscribers for mobile navigation services, partially offset by an increase in advertising revenue. Our cost of product revenue decreased 4% to $36...

  • Page 64
    ...our fixed fee revenue from Sprint for bundled users, lower subscription revenue resulting from decreases in the number of paying subscribers for mobile navigation services provided through AT&T, T-Mobile and USCC, and a decrease in mobile navigation revenue internationally. Mobile navigation revenue...

  • Page 65
    ... plan consisting of reductions of approximately 108 full-time positions in the U.S. and China and we recorded restructuring charges of $2.4 million related to severance and benefits for the positions eliminated. In addition, we closed our Boston office and consolidated our Sunnyvale headquarters...

  • Page 66
    ... growth areas of automotive and advertising, while also leveraging the benefits of hosted environments for which we no longer have to make large upfront capital expenditure investments. Net cash used in financing activities . During fiscal 2015 , 2014 and 2013 , we used cash in our financing...

  • Page 67
    ...substantial payments, our relationships with our customers are negatively impacted, or any of our customer agreements is terminated, our business, operating results and financial condition could be materially harmed. As of June 30, 2015 , any costs in connection with such indemnity demands which are...

  • Page 68
    ... disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The updated standard will replace most existing...

  • Page 69
    ... assessment, management has concluded that our internal control over financial reporting was effective as of June 30, 2015 . Grant Thornton LLP, an independent registered public accounting firm, has issued a report on our internal control over financial reporting, which is included below. Changes in...

  • Page 70
    Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Telenav, Inc. We have audited the internal control over financial reporting of Telenav, Inc. (a Delaware corporation) and subsidiaries (the "Company") as of June 30, 2015, based on criteria...

  • Page 71
    ... end) under the headings "Corporate Governance" and "Certain Relationships and Related Party Transactions." ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item 14 is incorporated by reference to our Proxy Statement for the 2015 Annual Meeting of Stockholders (to be...

  • Page 72
    ... officers. 1999 Stock Option Plan and forms of agreement thereunder. 2002 Executive Stock Option Plan and forms of agreement thereunder. 2009 Equity Incentive Plan, as amended. Forms of agreement under the 2009 Equity Incentive Plan. Employment Agreement, dated as of April 20, 2006, between TeleNav...

  • Page 73
    ...2005, between TeleNav, Inc. and Hassan Wahla. Employment Agreement, dated October 28, 2009, between TeleNav, Inc. and H.P. Jin. Form of Employment Agreement between TeleNav, Inc. and each of Y.C. Chao, Salman Dhanani, Robert Rennard and Hassan Wahla. Severance Agreement and General Release, dated as...

  • Page 74
    ...the Sprint Master Application and Services Agreement, dated as of January 30, 2009, as amended, by and between Telenav, Inc. and Sprint United Management Company, effective as of April 15, 2013. License and Service Agreement, dated as of March 19, 2008, by and between TeleNav, Inc. and AT&T Mobility...

  • Page 75
    ...as amended, by and between Telenav, Inc. and TomTom 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 22, 2004 to the Data License Agreement, dated as of December 1, 2002...

  • Page 76
    ... NAVTEQ North America, LLC) (formerly Navigation Technologies Corporation) and Telenav, Inc. Territory License No. 9, dated February 1, 2014 by and between HERE North America, LLC, HERE Europe B.V., NAVTEQ Korea Co. Ltd, and Telenav, Inc. General License Agreement, dated February 10, 2014 by and...

  • Page 77
    ... 10.26.9†First Year Executive Employment Agreement dated June 28, 2010 by and between TeleNav, Inc. and Dariusz Paczuski. Office Lease, dated as of June 28, 2011 and executed on June 30, 2011, by and between TeleNav, Inc. and CA-Sunnyvale Business Center Limited Partnership. Employment Offer...

  • Page 78
    ... January 1, 2015 to the SYNC Generation 2 OnBoard Navigation Agreement dated October 12, 2009, as amended, by and between Telenav, Inc. and Ford Motor Company Consulting Agreement effective August 29, 2012 between TeleNav, Inc. and Marc Aronson. Summary of Nonemployee Director Compensation. Amended...

  • Page 79
    ...Management contracts or compensation plans or arrangements in which directors or executive officers...Release No. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports... Business Reporting ...

  • Page 80
    ..., the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TELENAV, INC. Dated: August 24, 2015 By: /s/ Dr. HP J IN Dr. HP Jin Chairman of the Board of Directors, President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY...

  • Page 81
    69

  • Page 82
    ... Contents FINANCIAL STATEMENTS. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF TELENAV, INC. Page Report of Independent Registered Public Accounting Firm Grant Thornton LLP Report of Independent Registered Public Accounting Firm Ernst & Young LLP Consolidated Balance Sheets Consolidated Statements...

  • Page 83
    Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Telenav, Inc. We have audited the accompanying consolidated balance sheet of Telenav, Inc. (a Delaware corporation) and subsidiaries (the "Company") as of June 30, 2015, and the related ...

  • Page 84
    ... financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as...

  • Page 85
    Table of Contents TELENAV, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) June 30, 2015 June 30, 2014 Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net of allowances of $211 and $206 at June 30, 2015 and 2014, respectively ...

  • Page 86
    ...TELENAV, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Fiscal Year Ended June 30, 2015 2014 2013 Revenue: Product Services Total revenue Cost of revenue: Product Services Total cost... average shares used in computing income (loss) per share: Basic Diluted $ ...

  • Page 87
    Table of Contents TELENAV, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Fiscal Year Ended June 30, 2015 2014 2013 Net income (loss) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of tax Available for sale securities: ...

  • Page 88
    ... of common stock upon exercise of stock options Release of restricted stock units Issuance of common stock in connection with acquisition Repurchases of common stock Stock-based compensation expense Excess tax benefit from employee stock options Foreign currency translation adjustment, net of...

  • Page 89
    ... of premium, net on short-term investments Stock-based compensation expense Valuation allowance on deferred tax assets Bad debt expense Write-off of long-term investments Write-off due to impairment of capitalized software Loss on disposal of property and equipment Excess tax benefits from employee...

  • Page 90
    Cash and cash equivalents, at end of period Supplemental disclosure of cash flow information Income taxes paid (received), net $ $ 18,721 $ 14,534 1,002 $ $ 25,787 2,893 (10,754) $ See accompanying Notes to Consolidated Financial Statements. F-8

  • Page 91
    ... mobile navigation platform and our advertising delivery platform. Our auto and mobile navigation platform allows Telenav to deliver enhanced location-based services to auto manufacturers, developers, and end users through various distribution channels, including wireless carriers. Our advertising...

  • Page 92
    ... navigation solutions revenue. In January 2015 General Motors Corporation, or GM, launched the new version of its OnStar RemoteLink® mobile application powered by our location-based services platform. We earn a one-time royalty for each new vehicle owner who downloads the RemoteLink® application...

  • Page 93
    ... benefit allocated to each component of accumulated other comprehensive income (loss) was not material for fiscal 2015 and 2014. Cash equivalents and short-term investments Cash equivalents consist of highly liquid fixed-income investments with original maturities of three months or less at the time...

  • Page 94
    ...to services provided through Sprint Nextel Corporation, or Sprint, comprised less than 10% of revenue for fiscal 2015 and 2014 , and 16% of revenue for fiscal 2013 . No other customer represented 10% of our revenue or 10% of our receivables for any period presented. Our licensed map, POI and traffic...

  • Page 95
    ... note to zero as of June 30, 2015. In June 2015, we also entered into an agreement to spin off a product line developed by our Xian, China team, including certain assets and technology as well as the transfer of 12 employees, and we agreed to invest $800,000 in the form of a convertible note...

  • Page 96
    .... We 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...

  • Page 97
    ... disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The updated standard will replace most existing...

  • Page 98
    ...used in computing income (loss) per share: Basic: Weighted average shares used in computing basic income (loss) per share Diluted: Weighted average shares used in computing basic income (loss) per share Add... thousands): Fiscal Year Ended June 30, 2015 2014 2013 Stock options Restricted common stock...

  • Page 99
    ...cost and estimated fair value of short-term fixed income securities classified as short-term investments based on stated maturities as of June 30, 2015 (in thousands): Amortized Cost...a period of time sufficient to allow for any anticipated recovery in fair market value. As of June 30, 2015 and 2014 ,...

  • Page 100
    F-17

  • Page 101
    ... 999 24,468 122,315 123,315 $ $ $ $ $ Accretion of premium, net of discounts, on short-term investments totaled $1.3 million and $3.5 million in fiscal 2015 and 2014 , respectively. Where applicable, we use quoted prices in active markets for identical assets to determine fair value short...

  • Page 102
    F-18

  • Page 103
    ... fiscal 2020 and $0.7 million thereafter. Goodwill by reportable segment and activity for fiscal 2015 and 2014 was as follows (in thousands): June 30, 2013 Acquisitions June 30, 2014 Acquisitions June 30, 2015 Automotive Advertising Mobile Navigation Goodwill Goodwill impairment $ $ - 14,343 78...

  • Page 104
    ... assessing the reasonableness of the financial projections used to determine the fair value of each reporting unit. Based on the results of our annual goodwill impairment test as of April 1, 2015, the estimated fair value of our mobile navigation business exceeded its carrying value by 22% . Other...

  • Page 105
    ... complaint against AT&T Mobility, AT&T Services, Inc. and Telenav, Inc. in the same court, alleging that the AT&T Navigator, Telenav GPS Plus, Telenav GPS Navigator, and Telenav Scout Mobile applications as well as AT&T Store Locator and the myAT&T Mobile Application infringe the same 4 U.S. patents...

  • Page 106
    ... we may experience in connection with this case. Accordingly, we are unable at this time to estimate the overall effects on our financial condition, results of operations, or cash flows. 7. Guarantees and indemnifications Our agreements with our customers generally include certain provisions for...

  • Page 107
    ...value of the shares involved. The excess of the cost of shares acquired over the par value is allocated to additional paid-in capital, or APIC, based on an estimated average sales price per issued share with the excess amounts charged to retained earnings. As a result of our stock repurchases during...

  • Page 108
    ... management's certification of the level of achievement. As of June 30, 2015, we had granted 106,000 RSUs under the 2015 Program and no RSUs had been earned or canceled. At June 30, 2015, based upon our closing stock price the total unrecognized stock-based compensation cost related to RSUs issued...

  • Page 109
    ... options, RSUs and restricted common stock issued to employees and nonemployees (in thousands): Fiscal Year Ended June 30, 2015 2014 2013 Cost of revenue Research and development Selling and marketing General and administrative Total stock-based compensation expense $ $ 98 5,275 2,943 3,112 11...

  • Page 110

  • Page 111
    ... do not plan to pay cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the valuation model. We recognize the estimated stock-based compensation cost of RSUs and restricted common stock, net of estimated forfeitures, over the vesting term. The estimated...

  • Page 112
    ... Section 199 deduction Foreign income taxed at different rates Stock-based compensation expense Transfer pricing adjustment Tax exempt income Change in valuation allowance - federal Change in tax accounting method FIN 48 release Other Total provision (benefit) for income taxes $ $ (12,624) $ (893...

  • Page 113
    ... of deferred tax assets is dependent upon future taxable earnings and losses, the timing of which is uncertain. Due to losses in fiscal 2014 and 2015, and expected losses in fiscal 2016 and potentially future years in the U.S., we maintained a full valuation allowance on deferred tax assets in the...

  • Page 114
    .... We believe the acquisition of skobbler will enable us to combine its OSMbased GPS navigation technology with our existing mobile navigation solutions. The transaction has been accounted for under the acquisition method of accounting. We recorded the assets acquired and liabilities assumed at their...

  • Page 115
    ... enabled us to combine its location ad targeting technology with our existing advertising solution to create a new mobile local advertising platform. The transaction has been accounted for under the acquisition method of accounting. We recorded the assets acquired and liabilities assumed at their...

  • Page 116
    ... plan consisting of the elimination of 108 full-time positions in the U.S. and China and we recorded restructuring charges of $2.4 million related to severance and benefits for the positions eliminated. Earlier in fiscal 2014, we commenced our consolidation of our Sunnyvale, California headquarters...

  • Page 117
    ...-off of certain assets that were no longer useful to us based upon the changes in our business. Total restructuring charges related to this plan were $1.7 million . The activity related to the restructuring liabilities established during fiscal 2014 and 2015 is presented in the following table (in...

  • Page 118
    ... through connection to data services for additional real time capabilities such as maps, POI, or traffic. We also provide a mobile phone-based navigation solution utilizing wireless connectivity, or brought-in, that allows OEMs to project the phone's screen to an in-car display unit. Advertising...

  • Page 119
    ... to participate following the start of their employment. 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 to...

  • Page 120
    ... share data): Three Months Ended Consolidated statements of operations data (in thousands) Sept. 30, 2013 Dec. 31, 2013 Mar. 31, 2014 June 30, 2014 Sept. 30, 2014 Dec. 31, 2014 Mar. 31, 2015 June 30, 2015 (unaudited) Revenue Gross profit Net income (loss) Net income (loss) per share: Basic Diluted...

  • Page 121
    Table of Contents SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (in thousands) Beginning Balance Chargeback Additions Chargeback Reductions Ending Balance Trade Receivable Allowances: Year Ended June 30, 2013 Year Ended June 30, 2014 Year Ended June 30, 2015 $ $ $ 314 241 206 $ $ $ 2,935 1,812...

  • Page 122
    ...2005, between TeleNav, Inc. and Hassan Wahla. Employment Agreement, dated October 28, 2009, between TeleNav, Inc. and H.P. Jin. Form of Employment Agreement between TeleNav, Inc. and each of Y.C. Chao, Salman Dhanani, Robert Rennard and Hassan Wahla. Severance Agreement and General Release, dated as...

  • Page 123
    ...the Sprint Master Application and Services Agreement, dated as of January 30, 2009, as amended, by and between Telenav, Inc. and Sprint United Management Company, effective as of April 15, 2013. License and Service Agreement, dated as of March 19, 2008, by and between TeleNav, Inc. and AT&T Mobility...

  • Page 124
    ..., dated as of July 1, 2009, as amended, by and between Telenav, Inc. and TomTom North America, Inc. Data License Agreement, dated as of December 1, 2002, by and between Televigation, Inc. and Navigation Technologies Corporation. 3 S-1 10.14.3 10/30/2009 S-1 10.14.4 10/30/2009 S-1/A 10...

  • Page 125
    ... December 15, 2008 to the Data License Agreement, dated as of December 1, 2002, by and between TeleNav, Inc. and NAVTEQ North America, LLC. Territory License No. 1, dated as of December 1, 2002, by and between Televigation, Inc. and Navigation Technologies Corporation. Territory License No. 2, dated...

  • Page 126
    ..., 2010 from TeleNav, Inc. to Dariusz Paczuski. First Year Executive Employment Agreement dated June 28, 2010 by and between TeleNav, Inc. and Dariusz Paczuski. Office Lease, dated as of June 28, 2011 and executed on June 30, 2011, by and between TeleNav, Inc. and CA-Sunnyvale Business Center Limited...

  • Page 127
    ... No. 1 effective August 10, 2010 to the SYNC Generation 2 OnBoard Navigation Agreement dated October 12, 2009 by and between TeleNav, Inc. and Ford Motor Company. Amendment No. 2 effective February 3, 2011 to the SYNC Generation 2 OnBoard Navigation Agreement dated October 12, 2009, as amended, by...

  • Page 128
    ... January 1, 2015 to the SYNC Generation 2 OnBoard Navigation Agreement dated October 12, 2009, as amended, by and between Telenav, Inc. and Ford Motor Company Consulting Agreement effective August 29, 2012 between TeleNav, Inc. and Marc Aronson. Summary of Nonemployee Director Compensation. Amended...

  • Page 129
    ...Management contracts or compensation plans or arrangements in which directors or executive officers...Release No. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports... Business Reporting ...

  • Page 130
    ... Title: [*****] Route Guidance Applications (for [*****]) Pursuant to the Data License Agreement between HERE and Client dated as of the effective date identified therein and reiterated below (" Agreement "), HERE and Client hereby agree to the following additional terms and conditions. For purposes...

  • Page 131
    ... Bellows Title: Director Date: 4/1/15 HERE EUROPE B.V. By: /s/ P.W.A.M. van Hutzen Name: P.W.A.M. van Hutzen Title: Sr. Mgr. Product Release Date: 2 APR 2015 HERE EUROPE B.V. By: /s/ F.M. van Haaren Name: F.M. van Haaren Title: Managing Director 2 APR 2015 Telenav, Inc. By: /s/ Michael Strambi Name...

  • Page 132
    ... to Client the Data for those countries in the Territory that have been generally released by HERE as of the Effective Date of this TL as well as updated versions of the Data made available by HERE during the TL Term for use in the type of Applications authorized hereunder. Data for certain regions...

  • Page 133
    documentation provided by HERE as the "Base Map" for that country or portion thereof. [*****] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been ...

  • Page 134
    ...the then-current Attribute Overview and Usage Guide (or equivalent document) made available to Client as part of the Customer Technical Reference Guide. HERE may update the list of features and attributes included in "Base Map Data" but shall not reclassify any "Base" attributes as "Premium". In the...

  • Page 135

  • Page 136
    ... and storing the same directly onto physical storage media that is included in [*****]), solely for the End-Users' own internal business and personal use with the Application. Client shall use commercially reasonable efforts to enforce the terms and conditions of its distribution agreement with...

  • Page 137

  • Page 138
    ...TL, an End-User's right to use a Copy of the Compiled Data with the Application under the Agreement and this TL shall continue so long as such End-User's use of the Application is in compliance with all terms and conditions of Client's then current end user license agreement for the Application. VII...

  • Page 139
    ... and Customer Technical Reference Guide " means the technical product specifications and documentation that make up the Customer technical Reference Guide that is made available to Client through the HERE B2B Download Center. " HERE B2B Download Center " means the on-line data delivery service made...

  • Page 140
    EX 10.16.31+ EXHIBIT A PRICING I. License Fees per Copy for Route Guidance Applications . Client shall pay HERE the License Fee per Copy in connection with Route Guidance Applications set forth in the applicable table below for each Copy of the Data distributed hereunder containing all or any ...

  • Page 141
    ... Fuel Types HERE Traffic Patterns Voice Phonetic Transcriptions HERE Voice for Traffic Speed Limits FC 1-5 Content Signs, Signals and Warnings Basic 3D City Models 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map LICENSE FEE PER COPY [*****] [*****] Certain...

  • Page 142
    ... POIs Supplemental Listings Fuel Types HERE Traffic Patterns Voice Phonetic Transcriptions HERE Voice for Traffic Speed Limits FC 1-5 Content Signs, Signals and Warnings 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map LICENSE FEE PER COPY [*****] NORTH AMERICA...

  • Page 143
    ... Content Extended Lanes FC 1-5 Content Extended Listings Core POIs Supplemental Listings HERE Traffic Patterns HERE Voice for Traffic Voice Phonetic Transcriptions Speed Limits FC 1-5 Content World Map [*****] LICENSE FEE PER COPY [*****] Certain portions denoted with an asterisk have been omitted...

  • Page 144
    ... Core POIs Supplemental Listings HERE Traffic Patterns HERE Voice for Traffic Voice Phonetic Transcriptions Speed Limits FC 1-5 Content Basic 3D City Models 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map LICENSE FEE PER COPY [*****] [*****] Certain portions...

  • Page 145
    ...Content Extended Listings Core POIs Supplemental Listings HERE Traffic Patterns HERE Voice for Traffic Voice Phonetic Transcriptions Speed Limits FC 1-5 Content 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map LICENSE FEE PER COPY [*****] CENTRAL AND SOUTH AMERICA...

  • Page 146
    ... Icons Environmental Zones Content Extended Lanes FC 1-5 Content Extended Listings Core POIs Supplemental Listings Voice Phonetic Transcriptions Speed Limits FC 1-5 Content Basic 3D City Models 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues LICENSE FEE PER COPY [*****]

  • Page 147
    World Map [*****] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. PAGE 14 OF 14

  • Page 148
    ...Content Extended Lanes FC 1-5 Content Extended Listings Core POIs Supplemental Listings Voice Phonetic Transcriptions Speed Limits FC 1-5 Content 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map LICENSE FEE PER COPY [*****] MIDDLE EAST TERRITORY Additional Content...

  • Page 149
    ...Types 2D Junction Visuals HERE Traffic Patterns Voice Phonetic Transcriptions Postal Code Points Content for Great Britain Postal Code Points Content for The Netherlands Speed Limits FC 1-5 Content Taxi Stand Point POIs Signs, Signals and Warnings World Map [*****] LICENSE FEE PER COPY IN US DOLLARS...

  • Page 150
    ... HERE Traffic Patterns Voice Phonetic Transcriptions Postal Code Points Content for Great Britain Postal Code Points Content for The Netherlands Speed Limits FC 1-5 Content Taxi Stand Point POIs Signs, Signals and Warnings Basic 3D City Models 2D Junction Visuals Point Addressing Extended Navigation...

  • Page 151
    ... FC 1-5 Content Taxi Stand Point POIs Signs, Signals and Warnings 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map LICENSE FEE PER COPY [*****] EUROPE TERRITORY Additional Content Fee Truck Attributes ADDITIONAL LICENSE FEE PER COPY $ [*****] * *For sake of...

  • Page 152
    ... Actual Address Range Brand Icons Extended Lanes FC1-5 Extended Listings Core POIs Supplemental Listings Fuel Types HERE Traffic Patterns Safety Camera Alerts Signs, Signals and Warnings Speed Limits FC 1-5 Content [*****] Voice Phonetic Transcriptions Hook Turns World Map [*****] [*****] Certain...

  • Page 153
    ...Listings Fuel Types HERE Traffic Patterns Safety Camera Alerts Signs, Signals and Warnings Speed Limits FC 1-5 Content [*****] Voice Phonetic Transcriptions Basic 3D City Models 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues Hook Turns World Map [*****] LICENSE FEE PER COPY...

  • Page 154
    ... Fuel Types HERE Traffic Patterns Safety Camera Alerts Signs, Signals and Warnings Speed Limits FC 1-5 Content [*****] Voice Phonetic Transcriptions 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues Hook Turns World Map [*****] LICENSE FEE PER COPY [*****] [*****] Certain...

  • Page 155
    ... will be applied to the per Copy License Fees set forth above for use of Truck Attributes Additional Content in a Route Guidance Application. 6. License Fees for Turkey . LICENSE FEE PER COPY IN US DOLLARS TURKEY TERRITORY CONTENT BUNDLE A Base Map Data 2D Footprints Content 2D Junction Visuals 3D...

  • Page 156
    ... Fuel Types Generalized Junction Visuals HERE Traffic Patterns Voice Phonetic Transcriptions Speed Limits FC 1-5 Content Taxi Stand Point POIs Signs, Signals and Warnings Basic 3D City Models 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map LICENSE FEE PER COPY...

  • Page 157
    ... Fuel Types Generalized Junction Visuals HERE Traffic Patterns Voice Phonetic Transcriptions Speed Limits FC 1-5 Content Taxi Stand Point POIs Signs, Signals and Warnings 2D Junction Visuals Point Addressing Extended Navigation [*****] Venues World Map TURKEY TERRITORY Additional Content Fee Truck...

  • Page 158
    ... this Exhibit A shall apply for use of the specified Data in the table below for Route Guidance Applications for the Territories specified in the table below. The License Fees per Copy shall include the [*****] for use of the [*****], subject to the terms and conditions of that [*****], made by and...

  • Page 159
    ... 10.16.31+ Content Additional License Fee Per Copy for [*****] Route Guidance Applications (with [*****] ) Central and North America Middle East Turkey South America Europe Territory Territory Territory Territory Australia/New Zealand [*****] Additional Content plus one of the following "Content...

  • Page 160
    ... for the remaining annual periods during the TL Term. For example, the License Fee per Copy for Route Guidance Applications using [*****] in the [*****] is as follows: [*****] By way of further example, the License Fee per Copy for Route Guidance Applications with [*****] using [*****] for the...

  • Page 161
    ..., capable of vehicle navigation, positioning, dispatch, real time route guidance, fleet management or similar applications; or (b) with or in communication with any positioning devices or any mobile or wireless-connected electronic or computer devices, including without limitation cellular phones...

  • Page 162
    ... State of Illinois [insert "The Netherlands" where European HERE Data is used] for any and all disputes, claims and actions arising from or in connection with the Data provided to you hereunder. Government End Users . If the Data is being acquired by or on behalf of the United States government or...

  • Page 163
    ... the requirements and restrictions imposed on licensees of Data (including Additional Content) as required by third party suppliers or by governmental or regulatory authorities is provided through the link made available through the HERE B2B Download Center. [*****] Certain portions denoted with an...

  • Page 164
    ... 21.1 SUBSIDIARIES OF TELENAV, INC. TeleNav Shanghai Inc. (PRC) TeleNav Xi'an Software Limited (PRC) TeleNav Hong Kong, Limited (Hong Kong) TELENAV DO BRASIL SERVIÇOS DE LOCALIZAÇÃO LTDA (Brazil) TeleNav UK Limited (U.K.) Thinknear, Inc. (Delaware) Telenav GmbH Telenav Software SRL Telenav G.K.

  • Page 165
    ...Registered Public Accounting Firm We have issued our reports dated August 24, 2015, with respect to the consolidated financial statements, financial statement schedule, and internal control over financial reporting included in the Annual Report of Telenav... LLP San Jose, California August 24, 2015

  • Page 166
    ... Restricted Stock Unit Award Agreement, Amended and Restated 2011 Stock Option and Grant Plan, 2002 Executive Stock Option Plan, and 1999 Stock Option Plan of Telenav, Inc. of our report dated August 22, 2014 (except for Notes 5 and 13, as to which the date is August 24, 2015) with respect to the...

  • Page 167
    ... fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b. Date: August 24, 2015 By: /s/ Dr. HP JIN DR. HP Jin Chairman of the Board of Directors, President and Chief Executive Officer

  • Page 168
    ... 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, Michael Strambi, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Telenav, Inc.; Based on my...

  • Page 169
    ..., as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 24, 2015 By: /s/ Dr. HP JIN Dr. HP Jin Chairman of the Board of Directors, President and Chief Executive Officer

  • Page 170
    ... 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, 2015...