TeleNav 2010 Annual Report Download - page 81

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TELENAV, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and significant accounting policies
Description of business
TeleNav, Inc., also referred to in this report as “we,” “our” or “us,” and our predecessor company were
incorporated in October 2009 and September 1999, respectively, in the State of Delaware. We are a leading
provider 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 our LBS to
efficiently navigate to their destinations and easily obtain relevant local information. We operate in a single
segment. We refer to the fiscal years ended June 30, 2010, 2009 and 2008 as fiscal 2010, fiscal 2009 and fiscal
2008, respectively.
Initial Public Offering
In May 2010, we completed our initial public offering, whereby 8,050,000 shares of common stock were
sold to the public at a price of $8.00 per share. We sold 6,550,000 shares of common stock and selling
stockholders sold 1,500,000 common shares. We received $44.6 million in net proceeds, comprised of gross
proceeds from shares issued by us in the initial public offering of $52.4 million, offset by underwriting discounts
of $3.7 million and total offering costs of $4.1 million. Upon the closing of the initial public offering, all shares
of convertible preferred stock outstanding automatically converted into 23,345,247 shares of common stock, and
we issued a stock dividend of 636,139 shares of common stock to holders of our Series E convertible preferred
stock upon the conversion of those preferred shares into common stock.
Accounting principles
The consolidated financial statements and accompanying notes have been prepared in accordance with
accounting principles generally accepted in the United States of America, or GAAP. The consolidated financial
statements include the accounts of TeleNav, Inc. and our wholly owned subsidiaries in China, the United
Kingdom and Brazil. All significant intercompany balances and transactions have been eliminated in
consolidation. Certain prior year balances have been reclassified to conform to the current year presentation.
Use of estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
Significant estimates and assumptions made by us include the determination of revenue recognition and deferred
revenue, the fair market value of certain warrants, the recoverability of accounts receivable, and the fair value of
stock awards issued. Actual results could differ from those estimates.
Revenue recognition
We derive our revenue primarily from subscriptions to access our LBS, which are generally provided
through wireless carrier partners that offer our services to their subscribers. Revenue is primarily comprised of
monthly subscription fees for the use of our LBS, as well as activation fees related to certain services. Our
wireless carrier partners pay us a monthly subscription fee per end user as a fixed fee or a percentage of the
revenue they charge to the subscriber, subject to a minimum fee per end user. We recognize revenue when
persuasive evidence of an arrangement exists, delivery of those services has occurred, the fee is fixed or
determinable, and collectability is reasonably assured.
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