TeleNav 2011 Annual Report Download - page 85

Table of Contents
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 personalized navigation and location based services, or
LBS, that help on-the-go people make daily decisions about “where to go, how to get there, what to do, and even when to go” —and we make it
possible across mobile devices, mobile applications, wireless carriers, automobiles, and enterprises, both domestically and abroad. We operate in
a single segment. We refer to the fiscal years ended June 30, 2011, 2010 and 2009 as fiscal 2011, fiscal 2010 and fiscal 2009, respectively.
Initial Public Offering
In May 2010, we completed our initial public offering, or IPO, 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 IPO 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 IPO, 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.
Basis of presentation
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.
Our consolidated financial statements also include the financial results of Shanghai Jitu Software Development Ltd., or Jitu, located in
China. Based on our contractual arrangements with the shareholders of Jitu, we have determined that Jitu is a variable interest entity, or VIE, for
which we are the primary beneficiary and are required to consolidate in accordance with Accounting Standards Codification subtopic 810-10, or
ASC 810-10, Consolidation: Overall . Despite our lack of technical ownership, there exists a parent-subsidiary relationship between TeleNav,
Inc. and Jitu, whereby through contractual arrangement, the equity holders of Jitu have effectively assigned all of their voting rights underlying
their equity interest in Jitu to us. In addition, through the aforementioned agreements, we demonstrate our ability and intention to continue to
exercise the ability to absorb all of the expected losses and profits of Jitu.
The results of Jitu did not have a material impact on the Company’s overall operating results for fiscal 2011.
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 are used for
revenue recognition and deferred revenue, the fair value of certain warrants, the recoverability of accounts receivable, stock-
based compensation,
litigation, income taxes and deferred income tax assets and associated valuation allowances. Actual results could differ from those estimates.
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