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TELENAV, INC.
FORM 10-K
(Annual Report)
Filed 08/22/14 for the Period Ending 06/30/14
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 2014, 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 08/22/14 for the Period Ending 06/30/14 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
    ...number: 001-34720 TELENAV, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 77-0521800 (I.R.S. Employer Identification Number) 950 De Guigne Drive Sunnyvale, California 94085 (Address of principal executive offices...

  • Page 3
    ... because such persons may be deemed 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, 2014 was 39...

  • Page 4
    ... 60 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 59 59 59...

  • Page 5
    ... 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 of this Form 10-K. We file or furnish periodic reports...

  • Page 6
    ... mobile navigation solutions. We offer our map and navigation platform to end 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. Generally...

  • Page 7
    ... a navigation and guidance engine and tools allowing us to efficiently develop and deploy new applications to mobile phones and in cars. Our back-end cloud services technologies allow us to deliver real-time location-based data for users of our customers as well as to third party software developers...

  • Page 8
    ... were only available in high end vehicles and included every element required to provide turn by turn voice-guided navigation: video display, on-board content and software. Since that time the price point for these services has declined and the user experience has been significantly enhanced, but...

  • Page 9
    ...to use and connected navigation services to drivers at a low cost. We currently provide our on-board GPS navigation software for Ford's second-generation SYNCâ„¢ system in vehicles equipped with MyFord Touch and MyLincoln Touch. This product is enhanced by Ford with the delivery of real-time traffic...

  • Page 10
    ... delivered to mobile devices. Mobile advertising provides advertisers with a number of benefits over traditional advertising media and PC-based online advertising, such as anytime, anywhere access, personalization, location targeting and relevance. The development of the mobile advertising ecosystem...

  • Page 11
    ... data applications that leverage location information to provide mobile phone users with location specific and personalized features and functions. Mobile location services that incorporate location information include voice-guided turn by turn navigation, real time traffic status and local search...

  • Page 12
    Table of Contents and under the Telenav, Scout and skobbler brands. Our solutions use accurate, updated information to provide end users with a personalized navigation experience. Our Scout turn by turn navigation mobile applications benefit from Telenav-enhanced OSM-based services. We apply ...

  • Page 13
    ... the longer automotive product cycles. Mobile Navigation Services We distribute our navigation services to end users through mobile phone application stores, such as Apple's App Store and Google's Google Play, as well as through the distribution channels of our wireless carrier customers. Marketing...

  • Page 14
    ...We currently provide our navigation solutions to end users in North America, China, Europe, South America and Australia. End users may also subscribe to our navigation services from our application stores. We generate revenue from automobile manufacturers and OEMs for delivery of customized software...

  • Page 15
    ... to change the fee structure for map and POI data we use to provide our services for Sprint's bundled offerings. Pursuant to the amended agreement, we pay TomTom a percentage of fees we collect from Sprint for basic navigation services and our gross advertising revenue and a flat monthly fee per...

  • Page 16
    ... of Contents turn by turn GPS navigation service for mobile phones, Scout for Apps, through December 31, 2014. Effective January 30, 2014, we amended our TomTom agreement to extend the license period for TomTom map data for voice-guided turn by turn GPS navigation service for mobile phones (except...

  • Page 17
    .... HP Jin Michael Strambi Salman Dhanani Loren Hillberg Vincent Uttley Hassan Wahla 50 52 41 56 54 42 President, Chief Executive Officer and Chairman of the Board of Directors Chief Financial Officer and Treasurer Co-President, Automotive Business Unit General Counsel, Secretary and General Manager...

  • Page 18
    ... as a senior product manager at Nextel Communications, a wireless communications company that merged with Sprint. From February 2002 to April 2003, Mr. Wahla served as vice president of business development of Wireless Multimedia Solutions, a privately held wireless software platform company. From...

  • Page 19
    ...mobile phone based navigation services; impact of results of the offering of a premium upgrade on a basic version of our service that is offered for free; the ability of automobile manufacturer customers to sell automobiles equipped with our products; the introduction of competitive in-car platforms...

  • Page 20
    14

  • Page 21
    ... connected mobile navigation in other geographies. Delphi's new, connected infotainment system, which integrates white label versions of our Scout for Cars on-board automotive platform, was introduced in model year 2013 vehicles for North America by General Motors. During fiscal 2014, Scout for Cars...

  • Page 22
    ... the time the vehicle is purchased, we may not be successful in gaining traction with customers 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...

  • Page 23
    ...pay monthly recurring charges for mobile navigation products that were formerly bundled with other services and instead use free or freemium offerings. We have sought to develop other sources of revenue from our location-based platforms, including automotive navigation and location-based advertising...

  • Page 24
    ... targeted, highly relevant ads to consumers on their mobile connected devices. Our targeted advertising is highly dependent on the consumers allowing applications to have access to their location data. Users may elect not to allow location data sharing for a number of reasons, including personal...

  • Page 25
    ... navigation as part of its Google Maps product for mobile devices based on the Android operating system platform, and recently introduced a similar new product for the iOS platform. Apple offers proprietary maps and voice-guided turn by turn directions and Nokia, provides a download for its latest...

  • Page 26
    19

  • Page 27
    ... condition. If we are unable to integrate skobbler or future acquisitions successfully, our operating results and prospects could be harmed. We acquired skobbler, which has operations in Germany and Romania, in January 2014. In the future, we may make acquisitions to improve our navigation services...

  • Page 28

  • Page 29
    ... on our wireless carrier customers to bill subscribers and collect monthly fees for our mobile navigation services, either directly or through third party service providers. In addition, we rely on our automotive and OEM customers to provide us with reports on the number of vehicles they sell with...

  • Page 30
    ...and impair our ability to manage our business effectively. Our provisioning and reporting system that authenticates end users and tracks the number of end users and their use of our services is a proprietary and customized system that we developed internally. Although we believe that the flexibility...

  • Page 31
    ... our current navigation services platform and advertising services platforms and to continue to develop and introduce new navigation services, advertising services and other location-based product offerings and enhanced performance features and functionality on a timely basis at competitive prices...

  • Page 32
    ... of earnings and changes in tax rates; dependence on foreign wireless carriers with different pricing models; roaming charges to end users; availability of reliable mobile networks in those countries; requirements that we comply with local telecommunication regulations and automobile hands free laws...

  • Page 33
    24

  • Page 34
    ... and the acquisition of key technologies to support or expand our products and services. We rely on network infrastructures provided by our wireless carrier customers and mobile phones for the delivery of our mobile navigation services to end users. We generally provide our navigation services from...

  • Page 35
    ... affect our relationships with our current or future customers and other business partners; cause delays or stoppages in the shipment of Telenav enabled or preloaded mobile phones or vehicles, or cause us to modify or suspend the provision of our navigation services; cause us to incur significant...

  • Page 36
    ...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 of such use, privacy, taxation, content suitability, copyright and antitrust. Furthermore, the growth and...

  • Page 37
    ... award, our business, financial condition and results of operations could be adversely affected. Government regulation designed to protect end user privacy may make it difficult for us to provide our services or adopt advertising based revenue models. We transmit and store a large volume of personal...

  • Page 38
    ...open source software in the future. Use of open source software may subject our navigation services platform and client applications to general release or require us to reengineer our navigation services platform and client applications, which may cause harm to our business. From time to time, there...

  • Page 39
    ...significant technical innovations, relationship changes with key customers, acquisitions, strategic partnerships, joint ventures, capital raising activities or capital commitments; the public's response to our press releases or other public announcements, including our filings with the SEC; lawsuits...

  • Page 40
    ... São Paulo, Brazil for our sales, marketing and business development personnel located in those areas. In addition to our headquarters and other offices, we lease data center space in Sunnyvale and Santa Clara, California. We believe our current facilities will be adequate or that additional space...

  • Page 41
    ... of the asserted claims from those patents. At this time, all patent claims that EMSAT alleged to be infringed by the Telenav GPS Navigator product have been cancelled during reexamination. In the suits against T-Mobile, Alltel and Sprint, EMSAT has amended its allegations to remove allegations of...

  • Page 42
    ... potential indemnity payments and legal fees and expenses relating to our wireless carrier and other customers' indemnity demands with respect to pending litigation, could materially harm our business, operating results and financial condition. When we believe a loss or a cost of indemnification is...

  • Page 43
    ... foreseeable future. Instead, we anticipate that all of our 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. STOCK PERFORMANCE GRAPH This performance graph shall not be deemed...

  • 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
    Table of Contents Consolidated Statements of Operations Data: (in thousands, except per share data) Fiscal Year Ended June 30, 2014 2013 2012 2011 2010 Revenue Cost of revenue Gross profit Operating expenses: Research and development Sales and marketing General and administrative Restructuring ...

  • Page 46
    ... location based services to developers, auto manufacturers and end users. We use our map and navigation platform as the basis for delivering enhanced mobile applications such as our industry leading mobile navigation. Our advertising delivery platform delivers highly targeted advertising services...

  • Page 47
    ...navigation services, based upon our map and navigation platform, through service subscriptions. 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...

  • Page 48
    ... of our core business. In addition, non-GAAP income (loss) from continuing operations, net of tax, and adjusted EBITDA are key financial measures used by the compensation committee of our board of directors in connection with the development of incentive-based compensation for our executive officers...

  • Page 49
    ...net of tax Adjustments: Legal settlement Restructuring costs Capitalized software and developed technology amortization Valuation allowance against deferred tax asset Stock-based compensation expense: Cost of revenue Research and development Sales and marketing General and administrative Total stock...

  • Page 50

  • Page 51
    ... 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 our services which can generate revenue through advertising supported...

  • Page 52
    ... to Ford. Our on-board solution consists of software, map and POI data loaded in the vehicle that provides voice-guided turn by turn navigation displayed on the vehicle screen. Our off-board connected solution enables a mobile device that is paired with the vehicle to activate in-vehicle text-based...

  • Page 53
    ... party content, third party exchange ad inventory, data center operations, customer support, amortization of capitalized software, stock-based compensation and amortization of developed technology that we incur in providing our navigation and advertising network services. We primarily provide mobile...

  • Page 54
    ... on-board and off-board navigation services at the time a vehicle is sold to their end customer. General and administrative . General and administrative expenses consist primarily of personnel costs for our executive, finance, legal, human resources and administrative personnel, legal, audit and tax...

  • Page 55
    ...who purchase our mobile navigation services through application stores, we utilize the application store billing process. We provide tiered pricing to certain of our wireless carrier customers based on the number of paying end users in a given month, which may result in a discounted fee per end user...

  • Page 56
    ... the following month. To date, actual amounts have not differed materially from our estimates. Software development costs . 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...

  • Page 57
    ... over an employee's requisite service period of each of these awards, net of estimated forfeitures. Our stock-based compensation expense was as follows: Fiscal Year Ended June 30, 2014 2013 (in thousands) 2012 Cost of revenue Research and development Selling and marketing General and administrative...

  • Page 58
    ... Statements of Operations Data 2014 2013 (in thousands) 2012 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...

  • Page 59
    ...our fixed fee revenue from Sprint for bundled users, lower subscription fees resulting from decreases in the number of paying subscribers for mobile navigation services provided through AT&T, T-Mobile and U.S. Cellular Corporation, or USCC, and a decrease in mobile navigation revenue internationally...

  • Page 60
    ... acquired from Thinknear and skobbler. As more of our mobile navigation subscribers use our freemium products, we do not recoup the costs of providing those services. Late in fiscal 2014 we released iPhone and Android versions of our Scout mobile navigation applications that use OSM for map data and...

  • Page 61
    ... and benefits of $0.8 million, increased stock compensation expense of $0.9 million and increased professional services fees of $0.8 million, partially offset by decreased legal costs of $1.4 million. The total number of general and administrative personnel decreased 7% to 66 at June 30, 2014 from...

  • Page 62
    ... number of paying subscribers for mobile navigation services provided through AT&T and T-Mobile. These decreases were partially offset by growth in revenue from monetization of freemium offerings through wireless carriers and application stores and growth in mobile navigation revenue internationally...

  • Page 63
    ... from our on-board automotive navigation solutions provided to Ford, which generally have higher associated content costs and resulting in lower gross margins than our mobile navigation services provided through our wireless carrier customers. However, the higher content costs of product revenue in...

  • Page 64
    ... by growth in our end user base and increases in our operating costs. In fiscal 2014 , cash used in operating activities was driven principally by a net loss of $29.5 million and a $23.0 million change in our operating assets and liabilities, partially offset by non-cash charges for depreciation...

  • Page 65
    ...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, 2014 , any costs in connection with such indemnity demands which are...

  • Page 66
    ... the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (ASU No. 201409), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace...

  • Page 67
    ...-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 the effectiveness of our...

  • Page 68
    Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Telenav, Inc. We have audited Telenav, Inc.'s internal control over financial reporting as of June 30, 2014, based on criteria established in Internal Control - Integrated Framework ...

  • Page 69
    ...(to be filed with the Securities and Exchange Commission within 120 days of our June 30, 2014 fiscal year end) under the headings "Corporate Governance," "Executive Compensation," and "Compensation Committee Report." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED...

  • Page 70
    ... Number Exhibit Number Description Incorporated by Reference From Form Date Filed 2.1 3.1 3.1.1 3.2 4.1 4.2 10.1 10.2# 10.3# 10.4# 10.4.1# 10.5# 10.5.1# 10.6# 10.6.1# Amended and Restated Asset Purchase Agreement, dated April 16, 2013, by and between Telenav, Inc. and FleetCor Technologies...

  • Page 71
    ...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 72
    ... 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 LLC. First Amendment effective as of November 13, 2008 to...

  • Page 73
    ...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 74
    ... 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 between HERE...

  • Page 75
    ...dated July 30, 2012 between TeleNav, Inc. and Ken Xie. SYNC Generation 2 On-Board Navigation Agreement dated October 12, 2009 by and between TeleNav, Inc. and Ford Motor Company. Amendment No. 1 effective August 10, 2010 to the SYNC Generation 2 OnBoard Navigation Agreement dated October 12, 2009 by...

  • Page 76
    ... and Grant Plan. Employment Offer Letter dated April 8, 2014 from Telenav, Inc. to Vincent Uttley Vincent Uttley Employment Agreement dated April 11, 2014 by and between Telenav, Inc. and Vincent Uttley Subsidiaries of the registrant. Consent of Independent Registered Public Accounting Firm. Power...

  • Page 77
    ... Form Incorporated by Reference From Exhibit Number Date Filed 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith # + †~ Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate. Portions of...

  • Page 78
    ... the undersigned, thereunto duly authorized. TELENAV, INC. Dated: August 22, 2014 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 THESE PRESENTS, that each person whose signature appears below constitutes...

  • Page 79
    68

  • Page 80
    Table of Contents FINANCIAL STATEMENTS. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF TELENAV, INC. Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated ...

  • Page 81
    ... audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Telenav, Inc.'s internal control over financial reporting as of June 30, 2014, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring...

  • Page 82
    Table of Contents TELENAV, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) June 30, 2014 June 30, 2013 Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net of allowances of $206 and $241 at June 30, 2014 and 2013, respectively ...

  • Page 83
    ...Contents TELENAV, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Fiscal Year Ended June 30, 2014 2013 2012 Revenue: Product Services Total revenue Cost of revenue: Product Services Total cost of revenue Gross profit Operating expenses: Research and development...

  • Page 84
    Table of Contents TELENAV, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Fiscal Year Ended June 30, 2014 2013 2012 Net income (loss) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of tax Available for sale securities: ...

  • Page 85
    ...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...896 (1,570) 4,609 (4,075) 11,535 (310) - - - 129,278 Retained Earnings $ 72,823 - (7,980) - - - - 32,408 $ 97,251 - ...

  • Page 86
    ...-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 stock options Changes...

  • Page 87
    Supplemental disclosure of cash flow information Income taxes paid, net $ 1,002 $ 2,893 $ 11,288 See accompanying Notes to Consolidated Financial Statements. F-7

  • Page 88
    ... services to their subscribers or through application stores. Our wireless carrier customers pay us based on several different revenue models, including (1) a revenue sharing arrangement that may include a minimum fee per end user, (2) a monthly or annual subscription fee per end user, or (3) based...

  • Page 89
    ...who purchase our mobile navigation services through application stores, we utilize the application store billing process. We provide tiered pricing to certain of our wireless carrier customers based on the number of paying end users in a given month, which may result in a discounted fee per end user...

  • Page 90
    ... through Sprint Nextel Corporation, or Sprint, comprised less than 10% , 16% and 36% of revenue for fiscal 2014 , 2013 and 2012 , respectively. No other customer represented 10% of our revenue or 10% of our receivables for any period presented. Our licensed map, points of interest and traffic data...

  • Page 91
    ... valuations are based on quoted prices in active markets for identical assets or liabilities. Level 2 valuations are based on inputs that are observable, either directly or indirectly, other than quoted prices included within Level 1. Such inputs used in determining fair value for Level 2 valuations...

  • Page 92
    ... and development costs as incurred. 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 amortize those costs over the application's estimated useful life which generally ranges...

  • Page 93
    ...of Contents TELENAV, INC. Notes to Consolidated Financial Statements-(Continued) deferred until the related revenue is recognized. We deferred $943,000 , $1.3 million and $2.4 million of software development costs during fiscal 2014 , 2013 and 2012 , respectively. Development costs expensed to cost...

  • Page 94
    ...net income (loss) per share: Basic: Weighted average common shares used in computing basic net income (loss) per share Diluted: Weighted average common shares used in computing basic net income (loss) per share Add weighted average effect of dilutive securities: Stock options Restricted common stock...

  • Page 95
    ... 165,898 191,685 $ $ $ $ The following table summarizes the cost and estimated fair value of short-term fixed income securities classified as short-term investments based on stated maturities as of June 30, 2014 (in thousands): Amortized Cost Estimated Fair Value Due within one year Due within...

  • Page 96

  • Page 97
    ... 3,391 12,511 165,898 165,898 $ $ $ $ $ Accretion of premium, net of discounts, on short-term investments totaled $3.5 million and $4.4 million in fiscal 2014 and 2013 , respectively. Where applicable, we use quoted prices in active markets for identical assets to determine fair value of...

  • Page 98
    F-16

  • Page 99
    ...): June 30, 2014 2013 Computers and equipment Computer software Furniture and fixtures Automobiles...developed technology is amortized on a straight-line basis over the expected useful life. Amortization expense related to intangibles was $2.6 million , $1.6 million and $171,000 for fiscal 2014...

  • Page 100
    ... and has demanded that we indemnify and defend Verizon against Vehicle IP. At this time, we have not agreed to defend or indemnify Verizon. AT&T was also named as a co-defendant in the Vehicle IP litigation based on the AT&T Navigator and Telenav Track products. AT&T has tendered the defense of the...

  • Page 101
    ... of the asserted claims from those patents. At this time, all patent claims that EMSAT alleged to be infringed by the Telenav GPS Navigator product have been cancelled during reexamination. In the suits against T-Mobile, Alltel and Sprint, EMSAT has amended its allegations to remove allegations of...

  • Page 102
    Table of Contents indemnification is unlimited. We have a directors and officers insurance policy that limits our potential exposure. We believe that any financial exposure related to these indemnification agreements is not material. F-20

  • Page 103
    ... our stock repurchase programs depends on market conditions and other considerations. We use the par value method of accounting for our stock repurchases. Under the par value method, common stock is first charged with the par value of the shares involved. The excess of the cost of shares acquired...

  • Page 104
    ... through the acquisition of ThinkNear. As of June 30, 2014 and 2013 , there were a total of approximately 605,000 and 852,000 shares available for grant under our stock option and equity incentive plans, respectively. The following table summarizes the stock-based compensation expense recorded...

  • Page 105
    ...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 stock-based compensation cost is based on the fair value of our common stock on the date of grant. At June 30, 2014...

  • Page 106
    ... common stock issued in connection with our acquisition of ThinkNear was $506,000 and will be amortized over a weighted average period of 0.3 years . Shares reserved for future issuance Common stock reserved for future issuance was as follows (in thousands): June 30, 2014 Stock options outstanding...

  • Page 107
    ... Non-deductible expenses Research and development credits Section 199 deduction Foreign income taxed at different rates Stock-based compensation expense Tax benefit from California tax ruling Transfer pricing adjustment Tax exempt income Change in valuation allowance - federal Other Total provision...

  • Page 108

  • Page 109
    ...390) - 4,431 At June 30, 2014, 2013 and 2012, there were $5.5 million , $4.8 million and $3.6 million of unrecognized tax benefits that if recognized would affect the annual effective tax rate. We file income tax returns in the U.S. federal jurisdiction, California, various states, and foreign tax...

  • Page 110
    ... and signed. We have recorded a tax benefit for the federal research and development credit through December 31, 2013. 10. Acquisitions skobbler GmbH On January 29, 2014, we completed our acquisition of all of the shares of privately held skobbler GmbH, or skobbler, a navigation company based in...

  • Page 111
    ... assumed stock options. The acquisition of ThinkNear 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...

  • Page 112
    ...one principal business activity, the provision of location-based platform services, and there are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Accordingly, we operate in a single reporting segment...

  • Page 113
    ... 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 114
    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, 2012 Year Ended June 30, 2013 Year Ended June 30, 2014 $ $ $ 356 314 241 $ $ $ 3,941 2,935...

  • Page 115
    ...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 116
    ... 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 LLC. First Amendment effective as of November 13, 2008 to...

  • Page 117
    ..., 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 118
    ... 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 119
    ... 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 between HERE...

  • Page 120
    ... 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 121
    ... and Grant Plan. Employment Offer Letter dated April 8, 2014 from Telenav, Inc. to Vincent Uttley Vincent Uttley Employment Agreement dated April 11, 2014 by and between Telenav, Inc. and Vincent Uttley Subsidiaries of the registrant. Consent of Independent Registered Public Accounting Firm. Power...

  • Page 122
    ...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... by reference. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a ...

  • Page 123
    ... the terms and conditions of the Agreement with this Nineteenth Amendment as follows: 1. Amendment Term . The term of this Nineteenth Amendment ("Nineteenth Amendment Term") shall continue for a period of nine (9) months. 2. [*****] and [*****] Rights . Section VII of TL 8 is hereby amended to add...

  • Page 124
    ..., LLC By: /s/ Gregory Drescher Name: Gregory Drescher Title: CFO Date: 5/1/2014 Title: Senior Counsel, Legal and IP Date: 5/20/2014 Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been...

  • Page 125
    ... therein. B. Subsection (iv) of the definition of "Excluded Applications" is hereby amended to add "except for personal use by an End User in a rental vehicle" after "other rental situations". C. Subsection (iv) of the definition of "Map & Route Only Functionality" is hereby deleted in its entirety...

  • Page 126

  • Page 127
    ..., 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 128
    ...: April 3, 2014 Re: Offer of Employment Dear Vincent: Telenav, Inc. ("The Company" of "Telenav") is very pleased to offer you the position of Senior Vice President of Engineering, reporting to HP Jin, on the following terms. Your base salary compensation shall be $29,166.67 per month, less payroll...

  • Page 129
    ... at will relationship cannot be changed except in writing signed by the Company CEO. Please note that, in compliance with the Immigration Reform Act of 1986, all new employees are required to submit proof of U.S. Citizenship or legal alien status within three business days of employment. Enclosed is...

  • Page 130
    Exhibit 10.30# If you wish to accept employment at Telenav under the terms described above, please sign and date this letter, and return it to the Company by the close of business, Monday, April 7, 2014. Your first day of employment with Telenav will be determined upon acceptance of this offer. We ...

  • Page 131
    ...those parties; pricing information and policies; employee compensation records; business and marketing plans and strategies; forecasts and any other business information; inventions; discoveries; formulas; product and other ideas; works of authorship; processes; technology; computer programs; source...

  • Page 132
    ... personnel. During the term of my employment and thereafter, I will not solicit business for myself or for the benefit of any third party based upon information regarding the Company's customers or other parties doing business with the Company who I become aware of during, and in connection with, my...

  • Page 133
    ... assistance or cooperation in legal proceedings. I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agents and attorneys1in1fact to act for and on my behalf and instead of me, to execute and file any applications or related filings and to do all...

  • Page 134
    ... time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer. (b) To the extent a provision in an employment agreement...

  • Page 135
    Exhibit 10.30# Exhibit B Telenav, Inc. 950 DeGuine Drive Sunnyvale, CA. 94085 Ladies and Gentlemen: 1. The following is ... remove from the operation of the Company's Proprietary Information and Inventions Agreement. __ X _ ____ No inventions or improvements. See below: ____ Additional sheets attached....

  • Page 136
    ...") and Telenav, Inc. (the "Company"), effective as of April 11, 2014 (the "Effective Date"). 1. Duties and Scope of Employment. (a) Position and Duties . Executive will serve as the Company's Senior Vice President of Engineering . Executive will render such business and professional services in...

  • Page 137
    ... the terms of any applicable plan or arrangement that may be in effect from time to time. 5. Employee Benefits. Executive will continue to be entitled to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of...

  • Page 138
    ... Committee acting in good faith). (ii) Continued Employee Benefits. Executive will receive Company-paid coverage for the cost of continuation coverage for Executive and Executive's eligible dependents under the Company's Benefit Plans until the earlier of (i) a period of twelve (12) months from the...

  • Page 139
    ... or severance pay other than those benefits expressly set forth in this Section 8. 9. Conditions to Receipt of Severance; No Duty to Mitigate. (a) Separation Agreement and Release of Claims. The receipt of any severance pursuant to Section 8(a) or (b) will be subject to Executive signing and not...

  • Page 140
    ... in this Agreement, if Executive is a "specified employee" within the meaning of Section 409A at the time of Executive's termination (other than due to death), then the Deferred Payments that are payable within the first six (6) months following Executive's separation from service, will become...

  • Page 141
    ...under a separate plan or plans providing coverage that is no less favorable. (b) Cause . For purposes of this Agreement, "Cause" is defined as: (i) any material act of personal dishonesty made by Executive m connection with Executive's responsibilities as an employee; (ii) Executive's conviction of...

  • Page 142
    ... to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company), ("Person") that becomes the owner, directly or indirectly, of securities of the Company representing more than...

  • Page 143
    ... of this Agreement, "Section 409A Limit" will mean two (2) times the lesser of: (i) Executive's annualized compensation based upon the annual rate of pay paid to Executive during the Executive's taxable year preceding the Executive's taxable year of his or her separation from service as determined...

  • Page 144
    ... parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing. If to the Company: Telenav, Inc. 950 De Guigne Drive Sunnyvale, CA 94085 Attn : General Counsel If to Executive: at the last residential address known by the Company. 14...

  • Page 145
    ... shall be in writing. Any arbitration under this Agreement shall be conducted in Santa Clara County, California. (d) Remedy. Except as provided by the Act, arbitration shall be the sole, exclusive, and final remedy for any dispute between Executive and the Company. Accordingly, except as provided by...

  • Page 146
    ... in the applicable award agreement. This Agreement may be modified only by agreement of the parties by a written instrument executed by the parties that is designated as an amendment to this Agreement. (e) Governing Law . This Agreement will be governed by the laws of the State of California (with...

  • Page 147
    ... WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below. COMPANY TELENAV, INC. By: /s/ Loren Hillberg _____ Title: General Counsel Date: 4/11/2014 EXECUTIVE Vincent G. Uttley By: /s/ Vincent Uttley...

  • Page 148
    Exhibit 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.) Local Merchant Services Inc. (Delaware)

  • Page 149
    ...-166780) pertaining to Non-Plan Inducement Restricted Stock Unit Award Agreement, Amended and Restated 2011 Stock Option and Grant Plan, 2009 Equity Incentive Plan, 2002 Executive Stock Option Plan, and 1999 Stock Option Plan of Telenav, Inc. of our reports dated August 22, 2014, with respect to the...

  • Page 150
    ... 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 22, 2014 By: /s/ Dr. HP JIN DR. HP Jin Chairman of the Board of Directors, President and Chief Executive Officer

  • Page 151
    ... report financial information; and Any 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 22, 2014 By: /s/ MICHAEL STRAMBI Michael Strambi Chief Financial Officer

  • Page 152
    ..., 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 22, 2014 By: /s/ Dr. HP JIN Dr. HP Jin Chairman of the Board of Directors, President and Chief Executive Officer

  • Page 153
    ... of the Securities Exchange Act of 1934, 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 22, 2014 By: /s/ MICHAEL STRAMBI Michael Strambi Chief Financial Officer