TeleNav 2010 Annual Report Download - page 67

Foreign currency risk. Substantially all of our revenue has been generated to date from our end users in the
United States and, as such, our revenue has not been substantially exposed to fluctuations in currency exchange
rates. However, most of our contracts with our wireless carrier partners outside of the United States are
denominated in currencies other than the U.S. dollar and therefore expose us to foreign currency risk. Should the
revenue generated outside of the United States grow in absolute amounts and as a percentage of our revenue, we
will increasingly be exposed to foreign currency exchange risks. In addition, a substantial portion of our
operating expenses are incurred outside the United States and are denominated in foreign currencies and are
subject to changes in foreign currency exchange rates, particularly the Chinese RMB. Additionally, changes in
foreign currency exchange rates may cause us to recognize transaction gains and losses in our statement of
operations. The effect of an immediate 10% adverse change in exchange rates on foreign denominated
receivables as of June 30, 2009 and June 30, 2010 would result in a loss of $71,000 and $135,000, respectively.
To date, we have not used any foreign exchange forward contracts or similar instruments to attempt to
mitigate our exposure to changes in foreign currency rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this Form 10-K. See Part IV, Item 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2010. The term “disclosure
controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls
and other procedures of a company that are designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required to be disclosed
by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the company’s management, including its principal executive and principal financial officers, as appropriate to
allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls
and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2010, our Chief
Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and
procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control Over Financial Reporting
The SEC, as required by Section 404 of the Sarbanes-Oxley Act, adopted rules requiring every company
that files reports with the SEC to include a management report on such company’s internal control over financial
reporting in its annual report. In addition, our independent registered public accounting firm must attest to our
internal control over financial 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
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