TeleNav 2011 Annual Report Download - page 103

Table of Contents
TELENAV, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of June 30, 2011 and 2010, there were a total of approximately 402,000 and 2.6 million shares, respectively, available for grant under
our stock option and equity incentive plans.
Stock-based compensation
The following table summarizes the stock-based compensation expense recorded for stock options issued to employees and nonemployees
(in thousands):
In May 2010, we recorded a stock-
based compensation charge in the amount of $2.8 million associated with options granted in 2006 to our
founders which vested upon the closing of our IPO.
Commencing in December 2006 until our IPO, we generally obtained contemporaneous valuation analyses prepared by an unrelated third
party valuation firm in order to assist us in determining the fair value of our common stock. Prior to the completion of our IPO, our board of
directors considered these reports when determining the fair value of our common stock and related exercise prices of option awards on the date
such awards were granted. We have also used these contemporaneous third party valuations for purposes of determining the Black-Scholes fair
value of our stock option awards and related stock-based compensation expense.
We use the Black-Scholes pricing model to determine the fair value of stock options. The determination of the fair value of stock-based
payment awards on the date of grant is affected by the stock price as well as assumptions regarding a number of complex and subjective
variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option
exercise behaviors, risk-free interest rates and expected dividends. The fair value of our stock options granted to employees was estimated using
the following weighted-average assumptions:
Dividend yield . We have never declared or paid any cash dividends on our common stock and 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 . Due to the limited historical public market trading data for our common stock, the expected volatility used is based on
the historical volatility of various comparable companies. In evaluating similarity, we considered factors such as industry, stage of a company’s
life cycle, revenue and market capitalization.
99
Fiscal Year Ended June 30,
2011 2010 2009
Cost of revenue
$
97
$
18
$
4
Research and development
1,965
2,604
237
Selling and marketing
1,003
516
155
General and administrative
1,072
1,789
111
Total stock
-
based compensation expense
$
4,137
$
4,927
$
507
Fiscal Year Ended June 30,
2011
2010
2009
Dividend yield
—
—
—
Expected volatility
56
%
74
%
72
%
Expected term (in years)
4.50
4.85
4.76
Risk
-
free interest rate
1.61
%
2.36
%
2.46
%
Weighted average fair value per share at grant date
$
3.51
$
4.75
$
2.04