##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the fiscal year ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 0-51838
 Global Traffic Network, Inc.
  Nevada
    
    33-1117834(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 880 Third Avenue, 6th Floor
New York, New York 10022
 (212) 896-1255
  Name of Each ExchangeTitle of Each Class:
    
    on which Registered:Common Stock, $.001 par value
    
    The Nasdaq Stock Market
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### 



TABLE OF CONTENTS
 Part I
    
    
    1Item. 1 Business
    
    
    1Item 1A. Risk Factors
    
    
    9Item 1B. Unresolved Staff Comments
    
    
    19Item 2. Properties
    
    
    19Item 3. Legal Proceedings
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Part II
    
    
    20Item 5. Market for Registrants Common Equity and Related Stockholder Matters
    
    
    20Item 6. Selected Financial Data
    
    
    22Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 7A. Qualitative and Quantitative Disclosures about Market Risk
    
    
    34Item 8. Financial Statements and Supplementary Data
    
    
    35Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    35Item 9A. Controls and Procedures
    
    
    35Item 9B. Other Information
    
    
    35Part III
    
    
    36Item 10. Directors and Executive Officers of the Registrant
    
    
    36Item 11. Executive Compensation
    
    
    38Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    50Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    51Item 14. Principal Accountant Fees and Services
    
    
    52Part IV
    
    
    53Item 15. Exhibits and Financial Statement Schedules
    
    
    53SIGNATURES
    
    
    55EXHIBIT INDEXForm of Specimen Stock CertificateInformation Report Supply Agreement dated June 24, 2008 by and between The Australia Traffic Network Pty Limited and Austereo Pty LimitedSubsidiariesConsent of BDO Kendalls NSW302 Certification of Chief Executive Officer302 Certification of Chief Financial OfficerSection 906 Certifications of CEO and CFOPress Release




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##### Table of Contents



Part I
 
 Item. 1 Business
 Our Company and Its Subsidiaries
    Overview of Our Business and Its History
  
    
    Australia Traffic Network.We began providing traffic reports to
radio stations in Australia in 1997 and we currently deliver
traffic reports to radio stations and traffic reports, video and
other services to television stations in Australia. We currently
deliver traffic information reports to 76 radio stations in 19
Australian markets. In July 2005, we began leveraging our radio
traffic reporting services as a platform to launch advertising
imbedded in news reports on radio stations in Australia, and we
currently obtain news advertising inventory from 22 radio stations
in seven Australian markets. We also provide traffic reports
and/or video services to 14 television stations in seven
Australian markets.According to AC Nielsen, our Australian information reports have a
weekly reach of approximately 7.5 million radio listeners (ages
ten and over), which represents over 94% of the commercial radio
listeners, and approximately 7.7 million television viewers (ages
14 and over), which represents over 62% of the commercial
television viewers, in each case throughout the five major
Australian markets.
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The number of Australian network affiliate stations from which we
receive advertising inventory and the number of Australian markets
in which we operate are set forth below:
 Number of
    
    Number ofAustralia
    
    Affiliate Stations
    
    MarketsRadio traffic reports
    
    
    76
    
    
    
    19Radio news reports
    
    
    22
    
    
    
    7TV reports
    
    
    14
    
    
    
    7
 We also provide traffic reports to approximately 14 stations on the
ABC radio network, which is the public, non-commercial radio network
in Australia. Although we are acknowledged as the source of the
traffic reports we provide to the ABC stations, the stations are not
included in the table above or any other analysis contained in this
report because we receive no advertising inventory from the ABC
stations due to the non-commercial nature of their broadcast
operations.We conduct our Australian business operations through Australia
Traffic Network, which became our wholly-owned subsidiary as a result
of the Share Exchange.
    
    Canadian Traffic Network.We began delivering traffic reports to radio
stations in Canada in December 2005 and we currently deliver traffic
and/or news information reports to approximately 74 radio stations and
five television stations. Effective April 2, 2007, we acquired
substantially all of the assets of Wise Broadcasting Network Inc.
after which we commenced providing news, weather, sports and business
information reports to radio stations on a limited basis. This
information is primarily aggregated from third parties. According to
BBM Canada, the Canadian industry consortium for audience ratings, our
Canadian information reports have a weekly reach of more than
7.5 million radio listeners (ages 18 and over), which represents over
29% of the commercial radio listeners, and a weekly reach of more than
1.7 million television viewers (ages 18 and over), which represents
approximately 7% of commercial television viewers, in Canada.The number of Canadian network affiliate stations from which we receive advertising inventory
and the number of Canadian markets in which we operate are set forth below:
 Number of
    
    Number ofCanada
    
    Affiliate Stations
    
    MarketsRadio traffic reports
    
    
    63
    
    
    
    7Radio news, sports, business and weather reports
    
    
    18
    
    
    
    3TV reports
    
    
    5
    
    
    
    5
 We intend to add TV reports in our remaining Canadian markets as our Canadian operations
expand and opportunities present themselves. Through our acquisition of Wise Broadcasting
Network Inc., we also began selling advertising and providing content for various digital
signage outlets in Canada, but we do not anticipate this becoming a material part of our
business.We conduct our Canadian business operations through Canadian Traffic Network, our indirect
wholly-owned subsidiary.
    
    UK Traffic Network.We recently started to explore opportunities for expansion into
several European markets and have formed a subsidiary in the United Kingdom (UK Traffic
Network) to operate our UK business. We currently provide radio traffic reporting services
to eleven stations in the United Kingdom, but did not generate any revenue during the year
ended June 30, 2008. In August 2008, the UK Traffic Network did generate a small amount of
revenue from our traffic reporting services. In addition, effective July 1, 2008, UK
Traffic Network began providing service under a Traffic Radio service contract with the
United Kingdoms Highways Agency, which is an executive agency of the United Kingdom
Department for Transport responsible for operating, maintaining and improving the strategic
trunk road network in England on behalf of the Secretary of State for Transport. Under the
terms of the agreement, the company will provide traffic radio reports via digital audio
broadcasting stations throughout England, with a possible expansion of the service to
Scotland, Wales and Northern Ireland. The initial annual revenue associated with the contract is
approximately £2.6 million (or approximately $5.2 million) and the maximum revenue associated with the contract,
assuming the expansion of service to all markets for the maximum contract period of 50
months is £14 million (or approximately $27.9 million). Although similar to our core
business in that it involves broadcasting traffic reports over radio stations, our contract
with the Highways Agency differs in that it is not advertising supported. Rather we are paid
a fee by the Highways Agency to provide our Traffic Radio service. We have put in place an
infrastructure to support our obligations under the Traffic Radio contract.
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On July 14, 2008 we have entered into a letter of intent to acquire the commercial division
of UBC Media Group plc. UBC Media Groups commercial division supplies traffic, news and
entertainment information to approximately 250 radio stations in the United Kingdom in
exchange for commercial airtime inventory that is then sold to advertisers. As contemplated
by the letter of intent, the Company will acquire the share capital of the UBC Media Group
subsidiary that conducts its commercial division operations for a closing date payment of
£11 million (approximately $21.9 million based on the exchange rates at June 30, 2008) and
additional contingent payments of up to £5.5 million (approximately $11 million) based upon
the acquired business achieving net revenue targets during the 12 month period following the
closing ranging from £11 million (approximately $21.9 million) to £13.6 million
(approximately $27.1 million). In connection with entering into the letter of intent, the
Company delivered an earnest money deposit
of £350,000 (approximately $0.7 million) that will be credited towards the purchase price
upon closing of the acquisition. The deposit remains refundable if either UBC Media Group
elects not to proceed with the transaction or if conditions specified in the letter of
intent are not satisfied and the Company elects not to proceed. The deposit will be
forfeited if the Company elects not to proceed with the transaction for other reasons.
Subject to specified exceptions, the Company has agreed not to solicit the customers of UBC
Media Groups commercial division for a period of six months following an election by the
Company not to proceed with the transaction for any reason. Among other things, the planned
acquisition is contingent upon completion of due diligence, negotiation of a mutually
acceptable purchase agreement and receipt of approval by the shareholders of UBC Media Group
plc. The letter of intent establishes an outside date of September 26, 2008 for entering
into a stock purchase agreement and contemplates a closing by October 20, 2008, subject to
satisfaction of certain conditions, some of which are not completely under the control of
either party.
   Industry Background and Trends
    Our Business Model, Products and Services
   3




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Preparation of Information Reports
      Delivery of Our Information Reports
   4




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Significant Network Affiliates
 Austereo Pty Limited (Austereo).
 Australian Radio Network Pty Limited (ARN).
  Corus Entertainment Inc. (Corus).
 Generating Revenue Through Advertising Sales
    Advertising on a Network Basis.
 Our Customer Base of Advertising Clients.
 Australia
    
    Canada Borders Bookstores
    
     Chrysler GIO Insurance
    
     Canadian Direct Insurance McDonalds
    
     General Motors New South Wales Lotteries
    
     HSBC Target Australia
    
     McDonalds Virgin Atlantic Airways
    
     Western Canada Lottery
   5




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Our Sales Force.
  Our Competitive Advantages
  
    
    Leading market share in our established markets.We are the largest
third-party provider of traffic reports to radio and television
stations in Australia and have a majority of the market. We have 76
affiliate stations in 19 markets for radio traffic reports and 14
affiliate stations in seven markets for TV reports. We also maintain
significant inventory of advertising embedded within radio news
reports with 22 affiliate stations in seven markets. Our market share
gives us the ability to offer an advertising platform that reaches a
larger audience than otherwise available to traditional radio and
television advertisers.
    
    Larger network audience for advertisers.We reach approximately
7.5 million radio listeners and approximately 7.7 million television
viewers in the five largest Australian markets on a weekly basis and
more than 7.5 million radio listeners and more than 1.7 million
television viewers in Canada on a weekly basis. Our business model
enables us to aggregate those respective radio and television
audiences and offer advertisers a critical mass of listeners and
viewers than can be reached with their marketing messages in a
cost-effective manner. Other advertising alternatives currently
available to advertisers to reach that same audience size typically
require significant resources for them to contact, negotiate, create
and deliver their advertising to many individual stations.
    
    Established relationships with leading global advertisers.We have
been selling our commercial airtime inventory to our advertising
clients, many of which are leading global companies, for more than ten
years in Australia and have consistently provided advertisers with a
broad-based, local, regional or national audience through a single
purchase of commercial advertising inventory. Since July 1, 2006, our
advertising customers have included nine of the top ten Australian
advertisers and 16 of the top 20 global advertisers, as published by
AdvertisingAge. We believe our strong relationships with global
advertisers will provide us with a significant advantage in
cross-selling our advertising inventory as we enter new markets.
    
    Leverageable operating structure.Our business model is leverageable
and offers a significant advantage because we derive incrementally
higher margins as we add network affiliates, provide additional types
of reports to network affiliates and sell more advertising inventory.
    
    Experienced management team.The members of our senior management team
have extensive experience in building operations to provide
information reports to broadcasters. Our senior management has
demonstrated the ability to successfully grow our business organically
through expansion into new geographic markets. As a group, our
executive officers have an average of over 20 years of experience in
the broadcast industry.
 Our Strategy
  
    
    Expand the geographic markets we serve.We began our operations in
Australia in 1997, commenced operations in Canada in December 2005 and
began broadcasting in the United Kingdom in October 2007, generating
our initial revenues in August 2008. We typically target markets that
have: (i) large population clusters in tight geographic areas; (ii) a
free market advertising culture similar to the United States; and
(iii) established information centers for traffic data. We intend to
leverage our existing customer base of global marketers to sell our
advertising inventory in the new markets that we enter, enabling
advertisers to efficiently, effectively and economically reach major
population centers.
 6




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
    
    Increase the number of network affiliates using our radio traffic
reports within existing markets.Although we currently operate in the
ten largest population centers in Australia and in seven of the
largest population centers in Canada, we believe that there are
substantial opportunities for continued growth in our radio networks.
As new radio licenses continue to be issued in Australia, we believe
that opportunities are available to increase market penetration by
establishing relationships with newly-established radio stations. We
are currently exploring and plan to enter the remaining large markets
in Canada that we find to be economically feasible. In addition,
because our operations in Canada are still at a relatively early
stage, there is significant opportunity for growth by adding network
affiliates in our existing markets.
    
    Accumulate additional advertising inventory by continuing to expand
the scope of our information reports.We intend to leverage our
established relationships with broadcasters in the Australian and
Canadian markets by continuing to expand the scope of our information
reports.
 Radio News Reports.We believe that consolidation in the radio industry may
increase the demand for our radio news reports as radio station owners are
likely to increase their outsourcing of various programming elements in order
to lower costs. We plan to focus on increasing the number of radio stations
broadcasting our radio news reports within our current markets,
either by providing the service ourselves or purchasing the radio stations embedded news advertising availabilities. We
believe this will in turn increase our commercial advertising inventory, expand our
audience reach and result in increased revenue from the sale of such inventory.TV Reports.We have developed an infrastructure of airborne video surveillance
and broadcast equipment. In addition, through agreements with various
governmental agencies, we have access to over 1,500 static mounted traffic
surveillance cameras in Australia and approximately 450 static mounted
surveillance cameras in Canada. We use this infrastructure to offer traffic and
breaking news reports to our television broadcasters and currently provide
service to 14 television stations in seven Australian markets and five
television stations in five Canadian markets. In many of our television
markets, we provide TV reports that include proprietary video coverage from our
helicopters that can cover news stories and traffic conditions at any time,
subject to weather conditions and air traffic control restrictions. In
addition, our access to strategically located fixed-position ground-based
camera systems offer network affiliates coverage of crucial traffic arteries
and allows us to provide panoramic views of the cities in which such cameras
are located. We intend to expand our TV reports to additional network
affiliates in our Australian and Canadian markets, which would provide us with
additional advertising inventory.
 
    
    Continue to strengthen marketing, sales and inventory management
operations.We continue to implement new operating strategies to
increase revenue growth and drive profitability. In order to increase
the percentage of our commercial advertising inventory sold, we have:
(i) increased our sales force and acquired extensive research and
sales and marketing materials; (ii) hired additional sales managers to
better manage the activities of our sales representatives; and
(iii) automated our commercial advertising inventory management system
to improve inventory control and pricing.
    
    Grow our business through strategic acquisitions.Historically, our
expansion strategy has focused on organic growth. Although we expect
that organic growth will continue to be a significant source of
expansion, we also intend to explore growth through the acquisition of
businesses that have strong relationships with broadcasters which we
can leverage. For example, in April 2007, our Canadian operations
acquired substantially all the assets of Wise Broadcasting Network
Inc. Currently, we have a letter of intent to purchase the commercial
division of UBC Media Group plc, which has approximately 250 radio
traffic, news and entertainment news affiliates throughout the United
Kingdom.
 Corporate Structure
    7




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Competition
    Environmental Regulation
  Intellectual Property
   Employees
   8




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Properties
  Legal Matters
  Available Information
 http://www.sec.gov
  
 Item 1A. Risk Factors
   
    
    our inability to compete successfully with current or future competitors within our industry;
    
    our inability to retain members of our executive management or other key employees;
    
    the termination or impairment of our relationships with key network affiliates;
    
    the termination or impairment of our advertiser relationships;
    
    our inability to manage our growth effectively;
    
    our inability to successfully expand into additional international markets;
    
    fluctuations in foreign currency exchange rates and the results of hedging transactions, if any;
    
    our inability to obtain additional debt or equity financing, if required; and
    
    unforeseen litigation.
  9




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Our past operating results may not be indicative of our future performance and we may be unable to
continue operating successfully in our existing markets or to establish successful operations in
additional markets.
  We have previously incurred operating losses in connection with the introduction of radio news
reports inventory in Australia and we may be unable to conduct our expanded operations profitably.
  We have incurred operating losses in connection with our expansion of operations into Canada and
may be unable to operate profitably in Canada.
  We have incurred operating losses in connection with our expansion of operations into the United
Kingdom and may be unable to operate profitably in the United Kingdom.
  10




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There is significant risk and uncertainty surrounding our potential acquisition of the commercial
division of UBC Media Group plc.
  We have incurred operating losses in connection with our formation of Mobile Traffic Network and
our contemplated expansion of its operations and may be unable to operate Mobile Traffic Network
profitably in the United States or elsewhere.
     11




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Our financial success depends on our ability to compete successfully in obtaining and maintaining
contracts with radio and television stations and we may be unable to acquire or renew such
contracts.
    Our financial success depends on our ability to compete successfully in selling commercial
advertising inventory to advertisers and we may be unable to sell such inventory.
   12




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Our ability to sell commercial advertising and generate revenues may be subject to economic and
industry fluctuations that are beyond our control.
   
    
    unfavorable economic conditions, both general and relative to radio
and television broadcasting and all related media industries, which
may cause companies to reduce their expenditures on advertising;
    
    unfavorable shifts in population and other demographics which may
cause our network affiliates to lose customers, viewers and listeners;
    
    an increased level of competition for advertising dollars, which may
lead to lower advertising rates as our network affiliates attempt to
retain customers or which may cause our network affiliates to lose
customers to their competitors who offer lower rates than our network
affiliates are able or willing to match;
    
    technological changes and innovations that our network affiliates are
unable to adopt or are late in adopting that offer more attractive
advertising, listening or viewing alternatives than what our network
affiliates currently offer, which may lead to a loss of advertising
customers or to lower advertising rates; and
    
    changes in governmental regulations and policies and actions of
federal regulatory bodies which could restrict the advertising media
which our network affiliates employ or restrict some or all of our
customers that operate in regulated areas from using certain
advertising media, or from advertising at all.
  Potential consolidation of radio and television stations in the markets in which we operate and
will operate in the future may result in reduction of our negotiating leverage for Affiliate
Contracts and, subsequently, may increase costs and risk of loss with respect to our Affiliate
Contracts.
  13




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The loss of Austereo Pty Limited or Australian Radio Network Pty Limited as one of our network
affiliates in Australia would significantly decrease the amount of our commercial advertising
inventory, which could have an adverse effect on our results of operations and our stock price.
  The loss of Corus Entertainment, Inc. as one of our network affiliates in Canada would
significantly decrease the amount of our commercial advertising inventory in Canada, which could
have an adverse effect on our results of operations and our stock price.
  Our business is subject to risks based on our compliance with multiple legal and regulatory regimes
due to our international operations.
  Our revenues may be adversely affected by fluctuations in currency exchange rates.
  14




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We intend to expand into additional international markets and our inexperience in those markets
increases the risk that our international expansion efforts will not be successful.
  
    
    Challenges caused by distance, language and cultural differences;
    
    increased labor costs as a result of the existence or prevalence of collective bargaining arrangements, prevailing
compensation structures and other employment-related matters;
    
    legal, legislative and regulatory restrictions;
    
    foreign exchange controls that might prevent us from repatriating cash earned in countries outside the United States;
    
    longer payment cycles in some countries;
    
    Potentially adverse tax consequences in the United States and in the foreign countries in which we operate;
    
    nationalization or seizure of private assets; and
    
    higher costs associated with doing business internationally.
  If we fail to secure adequate financing in the future, our continued growth and financial
performance may suffer.
  15




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If we fail to manage our growth effectively by investing in the necessary infrastructure, the
quality of our products and services may suffer, negatively impacting our Affiliate Contracts.
  If we fail to expand into new markets, we may be unable to increase our revenue and expand our
profits in the future.
  Aircraft operations involve risks that may not be covered by our insurance or may increase our
operating costs.
    The loss of the services of William L. Yde III, our Chairman, Chief Executive Officer and
President, or Scott E. Cody, our Chief Operating Officer and Chief Financial Officer, or other key
employees, or the failure to attract additional key individuals, could materially adversely affect
our business.
  16




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Our broadcasts are subject to regulatory bodies whose rules and regulations may adversely affect
our business.
  Because our operating subsidiaries are organized under the laws of foreign jurisdictions and
substantially all of our non-cash assets, as well as a significant portion of our cash assets, are
located outside of the United States, you may have difficulties collecting on judgments rendered
against us in United States courts.
  We have been, and will continue to be, required to implement additional finance and accounting
systems, procedures and controls in order to satisfy requirements under the Sarbanes-Oxley Act of
2002 and the listing requirements of the NASDAQ Global Market, which will increase our costs and
divert managements time and attention.
    17




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If an active trading market for shares of our common stock does not develop, the price
of our common stock may be subject to wide fluctuations and you may find it difficult to resell
shares of our common stock.
   
    
    variations in our operating results;
    
    addition or loss of significant network affiliates or advertisers;
    
    changes in the economies in which we provide our information services;
    
    the departure of the Chairman of our Board of Directors or other key executive officers;
    
    the level and quality of securities analysts coverage of our common stock;
    
    announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships,
joint ventures or capital commitments;
    
    entry into new international markets and the costs associated therewith;
    
    changes in the governmental regulations to which we will be subject in various countries;
    
    announcements by third parties of significant claims or proceedings against us;
    
    the availability of new media for delivery of traffic and news reporting services; and
    
    future sales of our common stock or other debt or equity securities, including sales by existing holders.
  The concentration of our common stock ownership by our current management will limit
your ability to influence corporate matters.
  18




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Our Board of Directors ability to issue blank check preferred stock and any anti-takeover
provisions we adopt may depress the value of our common stock.
  Our common stock could be delisted from the NASDAQ Global Market, which delisting could
hinder your ability to obtain accurate quotations on the price of our common stock, or dispose of
our common stock in the secondary market.
  Because we do not intend to pay dividends on our common stock, you must rely on stock
appreciation for any return on your investment.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  19




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Part II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters.
   High
    
    LowFiscal 2006Quarter Ended March 31, 2006
    
    $
    7.00
    
    
    $
    5.00Quarter Ended June 30, 2006
    
    $
    6.41
    
    
    $
    4.64Fiscal 2007Quarter Ended September 30, 2006
    
    $
    5.63
    
    
    $
    3.11Quarter Ended December 31, 2006
    
    $
    5.30
    
    
    $
    4.00Quarter Ended March 31, 2007
    
    $
    5.60
    
    
    $
    3.66Quarter Ended June 30, 2007
    
    $
    7.99
    
    
    $
    4.67Fiscal 2008Quarter Ended September 30, 2007
    
    $
    7.50
    
    
    $
    6.25Quarter Ended December 31, 2007
    
    $
    7.51
    
    
    $
    5.00Quarter Ended March 31, 2008
    
    $
    9.19
    
    
    $
    6.07Quarter Ended June 30, 2008
    
    $
    10.96
    
    
    $
    7.75
  STOCK PERFORMANCE GRAPH
    20




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COMPARISON OF 27 MONTH CUMULATIVE TOTAL RETURN *
 
 
 *
    
    $100 invested on 3/24/06 in stock or on 2/28/06 (the end of the month prior to our initial public offering) in index (including reinvestment of dividends). 
Fiscal year ending June 30. Dividends
   21




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Securities Authorized for Issuance under Equity Compensation Plans
   Number ofSecuritiesNumber of
    
    
    
    
    
    RemainingSecurities
    
    Weighted
    
    Availableto be Issued Upon
    
    Average
    
    for Future IssuanceExercise of
    
    Exercise Price
    
    Under EquityOutstanding
    
    of Outstanding
    
    CompensationPlan category
    
    Options
    
    Options
    
    PlansEquity compensation plans approved by security holders:2005 Stock Incentive Plan
    
    
    902,500
    
    
    $
    5.83
    
    
    
    184,166Total:
    
    
    902,500
    
    
    $
    5.83
    
    
    
    184,166Equity compensation plans not approved by stockholders:None
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
 Use of Proceeds
   
 Item 6. Selected Financial Data
    22




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In thousands except per share data
 2008
    
    2007
    
    2006
    
    2005
    
    2004Income statement data for the
year ended June 30:Revenues
    
    $
    50,953
    
    
    $
    31,699
    
    
    $
    19,502
    
    
    $
    15,380
    
    
    $
    11,154Operating expenses (exclusive
of depreciation and
amortization expense shown
separately below)
    
    
    30,456
    
    
    
    21,835
    
    
    
    15,309
    
    
    
    8,708
    
    
    
    7,871Selling, general and
administrative expenses
    
    
    15,214
    
    
    
    10,120
    
    
    
    6,415
    
    
    
    4,175
    
    
    
    2,750Depreciation and amortization
    
    
    1,500
    
    
    
    907
    
    
    
    587
    
    
    
    282
    
    
    
    205Net operating income (loss)
    
    
    3,783
    
    
    
    (1,163
    )
    
    
    (2,809
    )
    
    
    2,215
    
    
    
    328Interest expense
    
    
    90
    
    
    
    170
    
    
    
    319
    
    
    
    99
    
    
    
    93Other (income) expense
    
    
    (1,604
    )
    
    
    (546
    )
    
    
    (220
    )
    
    
    (18
    )
    
    
    29Net income (loss) before taxes
    
    
    5,297
    
    
    
    (787
    )
    
    
    (2,908
    )
    
    
    2,134
    
    
    
    206Income tax expense
    
    
    3,565
    
    
    
    1,230
    
    
    
    88
    
    
    
    698
    
    
    
    74Net income (loss)
    
    
    1,732
    
    
    
    (2,017
    )
    
    
    (2,996
    )
    
    
    1,436
    
    
    
    132Income (loss) per common share:Basic
    
    $
    0.10
    
    
    $
    (0.16
    )
    
    $
    (0.31
    )
    
    $
    0.17
    
    
    $
    0.02Diluted
    
    $
    0.10
    
    
    $
    (0.16
    )
    
    $
    (0.31
    )
    
    $
    0.17
    
    
    $
    0.02Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    233
    
    
    
    
    
    
    
    
 In thousands
 Balance sheet data at June 30:
 2008
    
    2007
    
    2006
    
    2005
    
    2004(unaudited)Cash and cash equivalents
    
    $
    37,541
    
    
    $
    7,278
    
    
    $
    14,649
    
    
    $
    51
    
    
    $
    318Total assets
    
    
    62,602
    
    
    
    23,840
    
    
    
    24,288
    
    
    
    6,616
    
    
    
    3,848Long-term obligations
    
    
    871
    
    
    
    1,161
    
    
    
    1,508
    
    
    
    1,911
    
    
    
    1,044Total liabilities
    
    
    13,876
    
    
    
    9,007
    
    
    
    8,680
    
    
    
    5,420
    
    
    
    3,535Stockholders equity
    
    
    48,726
    
    
    
    14,833
    
    
    
    15,608
    
    
    
    1,196
    
    
    
    313
 23




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 EXECUTIVE OVERVIEW
       The Services We Provide  Radio Traffic Reports, Radio News Reports and TV Reports.
  
    
    Radio traffic reports:Through our information-gathering
infrastructure and the use of external traffic information services,
we provide daily scheduled customized traffic reports to radio
stations that contract to receive our services.
    
    Radio news reports:In July 2005, we began building upon our radio
traffic reports platform by obtaining and selling advertising
inventory embedded within radio news reports.
    
    TV reports:In 2003, we began providing regularly scheduled video
traffic reports to television stations. In addition, because our
aircraft are often already in the air covering traffic conditions,
they are often first to arrive at the scene of a breaking news story.
In a strategic effort to expand our reach into the television markets,
we have been using this on-the-scene presence to compile video footage
of such breaking news, which we provide to certain television stations
that contract for our regularly scheduled TV reports in those markets
where we produce video.
 24




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##### Table of Contents



Our Sources of Revenue  Sale of Commercial Airtime Inventory
   Our Expenses
  Australia
    
    Canada
    
    United KingdomLeased
    
    Owned
    
    Leased
    
    Owned
    
    Leased
    
    OwnedFixed-wing aircraft
    
    
    3
    
    
    
    1
    
    
    
    1
    
    
    
    0
    
    
    
    0
    
    
    
    2Helicopters
    
    
    0
    
    
    
    4
    
    
    
    2
    
    
    
    6
    
    
    
    0
    
    
    
    0
  25




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##### Table of Contents



Basis of Presentation
  Australia
 Exchange
    
    BalanceIncome Statement Period
    
    Rate
    
    Sheet Date
    
    Exchange RateThree month period ended June 30, 2008
    
    
    0.9444
    
    
    June 30, 2008
    
    
    0.9586Three month period ended March 31, 2008
    
    
    0.9060Three month period ended December 31, 2007
    
    
    0.8890Three month period ended September 30, 2007
    
    
    0.8483Three month period ended June 30, 2007
    
    
    0.8314
    
    
    June 30, 2007
    
    
    0.8493Three month period ended March 31, 2007
    
    
    0.7863Three month period ended December 31, 2006
    
    
    0.7718Three month period ended September 30, 2006
    
    
    0.7541Three month period ended June 30, 2006
    
    
    0.7467Three month period ended March 31, 2006
    
    
    0.7394Three month period ended December 31, 2005
    
    
    0.7437Three month period ended September 30, 2005
    
    
    0.7593
 Canada
 Exchange
    
    BalanceIncome Statement Period
    
    Rate
    
    Sheet Date
    
    Exchange RateThree month period ended June 30, 2008
    
    
    0.9902
    
    
    June 30, 2008
    
    
    0.9790Three month period ended March 31, 2008
    
    
    0.9954Three month period ended December 31, 2007
    
    
    1.0189Three month period ended September 30, 2007
    
    
    0.9566Three month period ended June 30, 2007
    
    
    0.9103
    
    
    June 30, 2007
    
    
    0.9386Three month period ended March 31, 2007
    
    
    0.8534Three month period ended December 31, 2006
    
    
    0.8776Three month period ended September 30, 2006
    
    
    0.8922Three month period ended June 30, 2006
    
    
    0.8907Three month period ended March 31, 2006
    
    
    0.8693Three month period ended December 31, 2005
    
    
    0.8521Three month period ended September 30, 2005
    
    
    0.8315
 26




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##### Table of Contents



United Kingdom
 Exchange
    
    BalanceIncome Statement Period
    
    Rate
    
    Sheet Date
    
    Exchange RateThree month period ended June 30, 2008
    
    
    1.9718
    
    
    June 30, 2008
    
    
    1.9923Three month period ended March 31, 2008
    
    
    1.9783Three month period ended December 31, 2007
    
    
    2.0438Three month period ended September 30, 2007
    
    
    2.0217Three month period ended June 30, 2007
    
    
    1.9850
    
    
    June 30, 2007
    
    
    2.0088Three month period ended March 31, 2007
    
    
    1.9551Three month period ended December 31, 2006
    
    
    1.9174
  YearendedJune 30, 2008(in thousands)AustraliaNet revenue
    
    $
    5,488Operating expense
    
    
    2,762Sales, general & administrative expense
    
    
    1,216CanadaNet revenue
    
    
    720Operating expense
    
    
    730Sales, general & administrative expense
    
    
    247Canada & Australia combinedNet revenue
    
    
    6,208Operating expense
    
    
    3,492Sales, general & administrative expense
    
    
    1,463
  Seasonality of Business
  27




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##### Table of Contents



Results of Operations
 Year Ended June 30, 2008 Compared With Year Ended June 30, 2007
  Revenue.
 Operating expenses.
 Selling, general and administrative expenses.
 Depreciation and amortization expense.
 Interest expense.
 Other income.
 28




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##### Table of Contents



Income tax expense.
 Net income (loss).
 Changes in Key Operating Statistics in Local Currencies.
 Australia
 Year
    
    Year
    
    PercentageEnded
    
    Ended
    
    IncreaseKey operating statistic
    
    June 30, 2008
    
    June 30, 2007
    
    (Decrease)(In thousands)
    
    (In thousands)Revenue
    
    $
    49,323
    
    
    $
    36,038
    
    
    
    36.9
    %Operating expenses (exclusive of
depreciation and amortization shown
separately below)
    
    
    24,871
    
    
    
    20,964
    
    
    
    18.6
    %Selling, general and administrative expenses
    
    
    10,964
    
    
    
    8,941
    
    
    
    22.6
    %Depreciation and amortization expense
    
    
    903
    
    
    
    898
    
    
    
    0.6
    %Interest expense
    
    
    101
    
    
    
    169
    
    
    
    (40.2)
    %Other (income)
    
    
    (539
    )
    
    
    (62
    )
    
    
    769.4
    %Income tax expense
    
    
    3,932
    
    
    
    1,543
    
    
    
    154.8
    %Net income
    
    
    9,091
    
    
    
    3,585
    
    
    
    153.6
    %
 Canada
 Year
    
    Year
    
    PercentageEnded
    
    Ended
    
    IncreaseKey operating statistic
    
    June 30, 2008
    
    June 30, 2007
    
    (Decrease)(In thousands)
    
    (In thousands)Revenue
    
    $
    6,701
    
    
    $
    3,689
    
    
    
    81.6
    %Operating expenses (exclusive of
depreciation and amortization shown
separately below)
    
    
    6,880
    
    
    
    5,640
    
    
    
    22.0
    %Selling, general and administrative expenses
    
    
    2,279
    
    
    
    2,145
    
    
    
    6.2
    %Depreciation and amortization expense
    
    
    674
    
    
    
    228
    
    
    
    195.6
    %Interest expense
    
    
    
    
    
    
    43
    
    
    
    (100.0)
    %Other (income)
    
    
    (18
    )
    
    
    (75
    )
    
    
    (76.0)
    %Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    %Net loss
    
    
    (3,114
    )
    
    
    (4,292
    )
    
    
    (27.4)
    %
 29




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##### Table of Contents



Year Ended June 30, 2007 Compared With Year Ended June 30, 2006
  Revenue.
 Operating expenses.
 Selling, general and administrative expenses.
  Depreciation and amortization expense.
 30




---



##### Table of Contents



Interest expense.
 Other income.
 Income tax expense.
 Net loss.
 Changes in Key Operating Statistics in Local Currencies.
 Year
    
    Year
    
    PercentageEnded
    
    Ended
    
    IncreaseKey operating statistic
    
    June 30, 2007
    
    June 30, 2006
    
    (Decrease)(In thousands)
    
    (In thousands)Revenue
    
    $
    36,038
    
    
    $
    25,447
    
    
    
    41.6
    %Operating expenses (exclusive of
depreciation and amortization shown
separately below)
    
    
    20,964
    
    
    
    17,943
    
    
    
    16.8
    %Selling, general and administrative expenses
    
    
    8,941
    
    
    
    6,201
    
    
    
    44.2
    %Depreciation and amortization expense
    
    
    898
    
    
    
    711
    
    
    
    26.3
    %Interest expense
    
    
    169
    
    
    
    259
    
    
    
    (34.7
    %)Other (income)
    
    
    (62
    )
    
    
    (12
    )
    
    
    416.7
    %Income tax expense
    
    
    1,543
    
    
    
    122
    
    
    
    1,164.8
    %Net income
    
    
    3,585
    
    
    
    223
    
    
    
    1,507.6
    %
 Liquidity and Capital Resources
  Operating activities.
 31




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##### Table of Contents



Investing activities.
 Financing activities.
         32




---



##### Table of Contents



Income Taxes.
  Contractual Commitments
  Payments due by periodLess
    
    
    
    
    
    
    
    
    
    
    Morethan
    
    
    1-3
    
    
    4-5
    
    
    ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years(in thousands)Long-Term Debt Obligations
    
    $
    941
    
    
    $
    459
    
    
    $
    482
    
    
    $
    
    
    
    
    Interest on Long-Term Debt Obligations
    
    
    76
    
    
    
    53
    
    
    
    23
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    2,537
    
    
    
    570
    
    
    
    956
    
    
    
    688
    
    
    
    323Station Obligations
    
    
    70,356
    
    
    
    23,671
    
    
    
    31,904
    
    
    
    14,781
    
    
    
    Total
    
    $
    73,910
    
    
    $
    24,753
    
    
    $
    33,365
    
    
    $
    15,469
    
    
    $
    323
 Critical Accounting Policies
   Revenue recognition.
 Cash and cash equivalents.
 Accounts receivable.
 33




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##### Table of Contents



Income taxes.
  Recent Accounting Pronouncements
    
 Item 7A. Qualitative and Quantitative Disclosures about Market Risk
  Interest Rate Risk
  Foreign Currency Exchange Risk
  34




---



##### Table of Contents



Accounts Receivable
  Off-Balance Sheet Arrangements
  
 Item 8. Financial Statements and Supplementary Data
    
 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure controls and procedures
  Internal control over financial reporting
 Managements Report on Internal Control Over Financial Reporting
      Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information
 Results of Operations and Financial Condition.
   35




---



##### Table of Contents



Part III
 
 Item 10. Directors and Executive Officers of the Registrant
  IndependentName
    
    Age
    
    Position
    
    DirectorDirectors and Executive OfficersWilliam L. Yde III
    
    55
    
    Chairman, Chief Executive Officer and President
    
    NoScott E. Cody
    
    42
    
    Chief Operating Officer and Chief Financial Officer
    
    Dale C. Arfman
    
    55
    
    Treasurer, Secretary and Director
    
    NoIvan N. Shulman
    
    46
    
    Senior Vice President and Director
of International Sales
    
    Gary O. Benson
    
    64
    
    Director
    
    YesShane E. Coppola
    
    42
    
    Director
    
    YesStuart R. Romenesko
    
    45
    
    Director
    
    YesGary L. Worobow
    
    43
    
    Director
    
    YesOther Key EmployeesB. William Pezzimenti
    
    58
    
    President and Director of Australia Traffic Network
    
    
  William L. Yde III
 Scott E. Cody
 Dale C. Arfman
 Ivan N. Shulman
 Gary O. Benson
 Shane E. Coppola
 36




---



##### Table of Contents



Stuart R. Romenesko
 Gary L. Worobow
 B. William Pezzimenti
 Compliance with Section 16(a) of the Exchange Act
  Corporate Governance, Ethics and Business Conduct
    Audit Committee of the Board of Directors
  37




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##### Table of Contents



Item 11. Executive Compensation
 Compensation Discussion and Analysis
  Overview of Compensation Program
  
    
    Base salary;
    
    Annual cash incentive compensation (bonus);
    
    Non-equity incentive plan compensation (sales commissions); and
    
    Stock options and/or restricted stock.
     38




---



##### Table of Contents



Role of our Compensation Committee
     Elements of 2008 Executive Compensation
 Base Salary.
 Annual Bonus.
 39




---



##### Table of Contents



Long Term Incentive Program.
    Non-Equity Incentive Plan Compensation  Sales Commissions and Bonuses.
 40




---



##### Table of Contents



Severance and Other Benefits Upon Termination of Employment
   Tax Deductibility of Compensation
  Summary Compensation Table
  Fiscal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non- EquityName and
    
    Year
    
    
    
    
    
    
    
    
    
    Stock
    
    Option
    
    Incentive PlanPrincipal
    
    Ended
    
    
    
    
    
    
    
    
    
    Awards
    
    Awards
    
    Compensation
    
    All OtherPosition
    
    June 30
    
    Salary ($)
    
    Bonus ($)
    
    ($)(1)
    
    ($)(1)
    
    ($)
    
    Compensation ($)
    
    Total ($)William L. Yde III
    
    
    2008
    
    
    $
    412,000
    
    
    $
    200,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    612,000President and Chief
    
    
    2007
    
    
    $
    366,500
    
    
    $
    50,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    416,500Executive OfficerScott E. Cody
    
    
    2008
    
    
    $
    312,000
    
    
    $
    100,000
    
    
    $
    10,363
    
    
    $
    193,110
    
    
    $
    0
    
    
    $
    0
    
    
    $
    615,473Chief Financial Officer and
    
    
    2007
    
    
    $
    229,769
    
    
    $
    0
    
    
    $
    0
    
    
    $
    95,125
    
    
    $
    0
    
    
    $
    6,504
    (2)
    
    $
    331,398Chief Operating OfficerDale C. Arfman
    
    
    2008
    
    
    $
    187,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    187,000Treasurer and Secretary
    
    
    2007
    
    
    $
    179,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    179,000Ivan N. Shulman
    
    
    2008
    
    
    $
    319,765
    
    
    $
    0
    
    
    $
    10,363
    
    
    $
    164,367
    
    
    $
    175,596
    (7)
    
    $
    0
    
    
    $
    670,091Senior Vice President and
    
    
    2007
    
    
    $
    261,386
    
    
    $
    100,000
    
    
    $
    0
    
    
    $
    81,540
    
    
    $
    0
    
    
    $
    0
    
    
    $
    442,926Director of International
SalesB. William Pezzimenti(3)
    
    
    2008
    
    
    $
    430,520
    
    
    $
    0
    
    
    $
    0
    
    
    $
    71,032
    
    
    $
    188,353
    (6)
    
    $
    24,608
    (5)
    
    $
    714,513President and Director of
    
    
    2007
    
    
    $
    282,930
    
    
    $
    0
    
    
    $
    0
    
    
    $
    34,433
    
    
    $
    206,062
    (4)
    
    $
    21,562
    (5)
    
    $
    544,987Australia Traffic Network
 
 (1)
    
    Amounts shown reflect the dollar amount recognized for financial statement
reporting purposes for fiscal 2008 and 2007 in accordance with FAS 123(R).
Assumptions used in calculating this amount are included in Note 12 to our
audited financial statements for the fiscal year ended June 30, 2008, which
are included elsewhere in this report. 41




---



##### Table of Contents



(2)
    
    Consists of reimbursement for health benefit premiums paid by the employee.(3)
    
    Mr. Pezzimenti is paid in Australian dollars. For the purposes of this table,
his compensation has been converted to United States dollars utilizing the
average monthly exchange rate for the fiscal years ended June 30, 2008 and
June 30, 2007.(4)
    
    Consists of non-equity incentive plan compensation in the form of monthly
sales-based commissions. Our Chief Executive Officer established monthly
sales targets for The Australia Traffic Network for the fiscal year ended
June 30, 2007. If The Australia Traffic Network achieved at least 100% of its
sales target for a particular month, Mr. Pezzimenti was entitled to receive a
commission payment equal to the amount by which 2% of that months net sales
exceeded his monthly base salary. If Australia Traffic Network achieved at
least 95% but less than 100% of its sales target for the month,
Mr. Pezzimenti was entitled to receive a commission payment equal to the
amount by which 1.5% of that months net sales exceeded his monthly base
salary. Mr. Pezzimenti was not entitled to receive commissions for any month
in which Australia Traffic Network failed to achieve at least 95% of its
sales target. However, we agreed to true-up the commission payments to Mr.
Pezzimenti on a quarterly basis such that Mr. Pezzimenti was entitled to
received the entire 2% or 1.5% of net sales, as applicable, if Australian
Traffic Network failed to achieve 100% or 95% of its sales target for a
particular month but achieved the applicable threshold percentage of the
cumulative sales targets for the entire three month period.(5)
    
    Consists of automobile related costs incurred for the benefit of the employee.(6)
    
    Represents non-equity incentive plan compensation the form of monthly sales
bonuses. Our Chief Executive Officer established monthly sales targets for
Australia Traffic Network for the fiscal year ended June 30, 2008 and
provided monthly incentives of approximately $11,000 and $5,000 based on
these sales targets. The targets roughly approximate the 95% and 100% of
Australia Traffic Networks sales budget for fiscal year 2008. During the
fiscal year ended June 30, 2008, Mr. Pezzimenti achieved 100% of both of his
monthly sales targets for all twelve months of the year. In the aggregate,
Australia Traffic Network achieved approximately 108% of its cumulative
monthly sales targets for fiscal 2008.(7)
    
    Represents non-equity incentive plan compensation the form of monthly sales
commissions. Mr. Shulman is entitled to receive monthly cash commissions
equal to a percentage of Canada Traffic Networks monthly net revenues
provided that such net revenues exceed certain thresholds. The applicable
commission percentage is 1% if net revenues for the month exceed $400,000, 2%
if net revenues for the month exceed $500,000, 3% if net revenues for the
month exceed $600,000, 4% if net revenues for the month exceed $700,000 or
4.5% if net revenues exceed $800,000. The thresholds are all measured in
Canadian dollars, which is the functional currency of Canadian Traffic
Network and the commissions earned are then converted into U.S. dollars for
payment to Mr. Shulman. Compensation of Named Executive Officers
   42




---



##### Table of Contents



Description of Employment Agreements, Salary, and Bonus Amounts
 Employment Agreement with William L. Yde III
 Salary and Bonus.
 Confidentiality, Non-competition and Non-solicitation.
 
    
    Providing services to any of our competitors anywhere outside of the
United States similar to those provided to us during his employment;
    
    soliciting or attempting to induce any of our customers, suppliers,
licensees, licensors or other business relations to cease doing
business with us; or
    
    soliciting or attempting to induce any of our employees to leave our
employ, or to work for, render services or provide advice to or supply
our confidential business information or trade secrets to any third
person or entity.
 Employment Agreement with Scott E. Cody
 Salary and Bonus.
 43




---



##### Table of Contents



Equity-based Incentives.
 Confidentiality, Non-competition and Non-solicitation.
 
    
    providing services to any of our competitors anywhere outside of the
United States similar to those provided to us during his employment;
    
    soliciting or attempting to induce any of our customers, suppliers,
licensees, licensors or other business relations to cease doing
business with us; or
    
    soliciting or attempting to induce any of our employees to leave our
employ, or to work for, render services or provide advice to or supply
our confidential business information or trade secrets to any third
person or entity.
 Employment Agreement with Dale C. Arfman
 Salary and Bonus.
 Confidentiality, Non-competition and Non-solicitation.
 
    
    providing services to any of our competitors anywhere outside of the
United States similar to those provided to us during his employment;
    
    soliciting or attempting to induce any of our customers, suppliers,
licensees, licensors or other business relations to cease doing
business with us; or
    
    soliciting or attempting to induce any of our employees to leave our
employ, or to work for, render services or provide advice to or supply
our confidential business information or trade secrets to any third
person or entity.
 Employment Arrangement with Ivan N. Shulman
 Salary and Bonus.
 Equity-based Incentives.
 Confidentiality, Non-competition and Non-solicitation.
 44




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##### Table of Contents



Employment Arrangement with B. William Pezzimenti
 Salary and Bonus. B.
 Equity-based Incentives.
 Confidentiality, Non-competition and Non-solicitation Agreement with William Pezzimenti
  Grants of Plan-Based Awards in Fiscal 2008
  Option Awards:Stock Awards:
    
    Number ofNumber of
    
    Securities
    
    Exercise or
    
    Grant DateShares of
    
    Underlying
    
    Base
    
    Fair Value ofStock
    
    Options
    
    Price of Option
    
    Stock and OptionName
    
    Grant Date
    
    (#)
    
    (#)
    
    Awards ($/Sh)
    
    Awards (6)William L. Yde III
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Scott E. Cody
    
    March 12, 2008
    
    
    
    
    
    
    50,000
    (1)
    
    $
    6.80
    
    
    $
    189,500Scott E. Cody
    
    March 12, 2008
    
    
    15,000
    (2)
    
    
    
    
    
    
    
    
    
    $
    102,000Dale C. Arfman
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ivan N. Shulman
    
    March 12, 2008
    
    
    15,000
    (3)
    
    
    
    
    
    
    
    
    
    $
    102,000B, William Pezzimenti
    
    March 12, 2008
    
    
    
    
    
    
    100,000
    (4)
    
    $
    6.80
    
    
    $
    392,100B. William Pezzimenti
    
    October 24, 2007
    
    
    
    
    
    
    10,000
    (5)
    
    $
    6.68
    
    
    $
    38,250
 
 (1)
    
    Represents a discretionary option grant that vests with respect to
16,666 shares on March 12, 2009 and 16,667 shares on each of March 12,
2010 and March 12, 2011. The option has an exercise price equal to the
fair market value of our common stock on the date of grant.(2)
    
    Represents a discretionary restricted stock grant subject to transfer
and forfeiture restrictions that lapse in three equal annual
installments of 5,000 shares each on March 12, 2009, 2010 and 2011 45




---



##### Table of Contents



(3)
    
    Represents a discretionary restricted stock grant
subject to transfer and forfeiture restrictions that
lapse in three equal annual installments of 5,000
shares each on March 12, 2009, 2010 and 2011(4)
    
    Represents a discretionary option grant that vests with respect to
20,000 shares on each of March 12, 2009, March 12, 2010, March 12,
2011, March 12, 2012 and March 12, 2013. The option has an exercise
price equal to the fair market value of our common stock on the date
of grant.(5)
    
    Represents a discretionary option grant that vests with respect to
3,334 shares on October 24, 2008 and 3,333 shares on each of October
24, 2009 and October 24, 2010. The option has an exercise price equal
to the fair market value of our common stock on the date of grant.(6)
    
    Amounts shown reflect the dollar amount recognized for financial
statement reporting purposes for fiscal 2008 and 2007 in accordance
with FAS 123(R). Assumptions used in calculating this amount are
included in Note 12 to our audited financial statements for the fiscal
year ended June 30, 2008, which are included elsewhere in this report. 46




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##### Table of Contents



Global Traffic Network, Inc. 2005 Stock Incentive Plan
   Outstanding Equity Awards at 2008 Fiscal Year-End
  Option Awards
    
    Stock AwardsNumber of
    
    Number ofSecurities
    
    SecuritiesUnderlying
    
    UnderlyingUnexercised
    
    Unexercised
    
    
    
    
    
    
    
    
    
    Market ValueOptions
    
    Options
    
    Option
    
    Option
    
    Number of Shares
    
    of Shares(#)
    
    (#)
    
    Exercise
    
    Expiration
    
    of Stock that have not Vested
    
    of Stock that have not VestedName
    
    Exercisable
    
    Unexercisable
    
    Price ($)
    
    Date
    
    (#)
    
    ($)(11)William L. Yde III
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Scott E. Cody
    
    
    66,667
    
    
    
    33,333
    (1)
    
    $
    5.00
    
    
    March 23, 2016
    
    
    
    
    
    
    Scott E. Cody
    
    
    33,333
    
    
    
    66,667
    (2)
    
    $
    5.25
    
    
    March 29, 2017
   
   
   
   
   
   
   Scott E. Cody
    
    
    0
    
    
    
    50,000
    (3)
    
    $
    6.80
    
    
    March 12, 2018
   
   
   
   
   
   
   Scott E.
Cody
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    15,000
    (10)
    
    $
    134,100Dale C. Arfman
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    
    
   
   
   
   
   
   
   Ivan N. Shulman
    
    
    33,334
    
    
    
    16,666
    (4)
    
    $
    6.28
    
    
    May 8, 2016
   
   
   
   
   
   
   Ivan N. Shulman
    
    
    16,667
    
    
    
    33,333
    (5)
    
    $
    4.66
    
    
    December 8, 2016
   
   
   
   
   
   
   Ivan N. Shulman
    
    
    16,667
    
    
    
    33,333
    (6)
    
    $
    7.05
    
    
    May 8, 2017
   
   
   
   
   
   
   Ivan N. Shulman
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    15,000
    (10)
    
    $
    134,100William Pezzimenti
    
    
    33,334
    
    
    
    16,666
    (7)
    
    $
    5.00
    
    
    March 23, 2016
   
   
   
   
   
   
   William Pezzimenti
    
    
    0
    
    
    
    10,000
    (8)
    
    $
    6.68
    
    
    October 24, 2017
   
   
   
   
   
   
   William Pezzimenti
    
    
    0
    
    
    
    100,000
    (9)
    
    $
    6.80
    
    
    March 12, 2018
   
   
   
   
   
   
   
 
 (1)
    
    Vests with respect to 33,333 shares on March 23, 2009.(2)
    
    Vests with respect to 33,333 shares on March 29, 2009 and with respect to 33,334 shares on March
29, 2010.(3)
    
    Vests with respect to 16,666 shares on March 12, 2009 and with respect to 16,667 shares on March 12, 2010 and March
12, 2011.(4)
    
    Vests with respect to 16,666 shares on May 8, 2009.(5)
    
    Vests with respect to 16,667 shares on December 8, 2008 and with respect to 16,666 shares on
December 8, 2009.(6)
    
    Vests with respect to 16,667 shares on May 8, 2009 and with respect to 16,666 shares on May 8, 2010.(7)
    
    Vests with respect to 16,666 shares on March 23, 2009.(8)
    
    Vests with respect to 3,334 shares on October 24, 2008 and with respect to 3,333 shares on each of
October 24, 2009 and October 24, 2010. 47




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##### Table of Contents



(9)
    
    Vests with respect to 20,000 shares on each of March 12, 2009, March 12, 2010, March 12, 2011,
March 12, 2012 and March 12, 2013.(10)
    
    Vests with respect to 5,000 shares on each of March
12, 2009. March 12, 2010 and March 23, 2011. Market
value based on $8.94 per share, the closing price
of our common stock on June 30, 2008, the last day
of our fiscal year.(11)
    
    Based on $8.94 per share, which was the closing price on June 30, 2008, the last day of our fiscal year. Potential Payments Upon Termination or Change-in-Control
   48




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##### Table of Contents



Director Compensation  Fiscal 2008
 Stock
    
    Option
    
    All OtherFees Earned or
    
    Awards
    
    Awards
    
    All OtherName
    
    Paid in Cash ($)
    
    ($)(1)
    
    ($)(1)
    
    ($)
    
    Total ($)Gary O. Benson(2)(3)
    
    $
    
    
    
    $
    17,195
    
    
    $
    34,433
    
    
    
    
    
    
    $
    51,628Shane Coppola(2)(3)
    
    $
    
    
    
    $
    17,195
    
    
    $
    35,700
    
    
    
    
    
    
    $
    52,895Robert L. Johander(4)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    Stuart R. Romenesko(2)(3)
    
    $
    
    
    
    $
    17,195
    
    
    $
    41,550
    
    
    
    
    
    
    $
    58,745Gary L. Worobow(2)(3)
    
    $
    
    
    
    $
    17,195
    
    
    $
    49,300
    
    
    
    
    
    
    $
    66,495
 
 (1)
    
    Amounts shown reflect the dollar amount
recognized for financial statement
reporting purposes for fiscal 2008 in
accordance with FAS 123(R). Assumptions
used in calculating this amount are
included in Note 12 to our audited
financial statements for the fiscal year
ended June 30, 2008, which are included
elsewhere in this report.(2)
    
    As of June 30, 2008, the director held
stock options to purchase up to a total of
50,000 shares of our common stock.(3)
    
    As of June 30, 2008, the director held 20,000 restricted shares of our common stock.(4)
    
    Mr. Johander passed away November 26, 2007.  Compensation Committee Interlocks and Insider Participation
  49




---



##### Table of Contents



Limitation of Liability and Indemnification of Officers and Directors; Commission Position on
Indemnification for Securities Act Liabilities
   
    
    any breach of his or her duty of loyalty to us or our stockholders;
    
    acts or omissions not in good faith which involve intentional misconduct or a knowing violation of law;
    
    the payment of dividends or the redemption or purchase of stock in violation of Delaware law; or
    
    any transaction from which the director derived an improper personal benefit.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Shares
    
    Percentage ofName and Address of Beneficial Owner
    
    Beneficially Owned
    
    TotalWilliam L. Yde III
    
    
    3,545,786
    (1)
    
    
    19.53
    %Dale C. Arfman
    
    
    2,303,417
    
    
    
    12.69
    %Scott E. Cody
    
    
    115,000
    (2)(6)
    
    
    *Ivan N. Shulman
    
    
    81,668
    (3)(6)
    
    
    *William Pezzimenti
    
    
    36,668
    (10)
    
    
    *Gary O. Benson
    
    
    103,334
    (4)(7)(8)
    
    
    *Shane E. Coppola
    
    
    53,334
    (7)(8)
    
    
    *Stuart R. Romenesko
    
    
    36,667
    (7)(9)
    
    
    *Gary L. Worobow
    
    
    36,667
    (7)(9)
    
    
    *All Directors and Named Executive Officers as a group (11 people)
    
    
    6,312,541
    (5)
    
    
    34.20
    %Gruber & McBaine Capital Management LLC (10)
50 Osgood Place Penthouse Suite
San Francisco, CA 94133
    
    
    1,335,950
    
    
    
    7.36
    %T. Rowe Price Associates, Inc. (11)
100 East Pratt Street 10th Floor
Baltimore, MD 21202-1009
    
    
    2,309,161
    
    
    
    12.72
    %
 
 *
    
    Less than 1% 50




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##### Table of Contents



(1)
    
    Includes 2,541,747 shares that have been pledged as security for a
loan. Also includes an aggregate of 1,004,039 shares held by third
parties which Mr. Yde has the power to vote under separate voting
agreements.(2)
    
    Includes 100,000 shares issuable upon the exercise of options that are
currently exercisable or will become exercisable within the next 60
days.(3)
    
    Includes 66,668 shares issuable upon the exercise of options are that
are currently exercisable or will become exercisable within the next
60 days.(4)
    
    Includes 50,000 shares held by Goben Enterprises LP, a limited partnership of which Mr. Benson is a General Partner.(5)
    
    Include 303,338 shares issuable upon the exercise of options are that are currently exercisable or will become
exercisable within the next 60 days.(6)
    
    Includes 15,000 shares of restricted common stock.(7)
    
    Includes 20,000 shares of restricted common stock.(8)
    
    Includes 33,334 shares issuable upon the exercise of options that are currently exercisable or will become
exercisable within the next 60 days.(9)
    
    Includes 16,667 shares issuable upon the exercise of options that are currently exercisable or will become
exercisable within the next 60 days.(10)
    
    Includes 36,668 shares issuable upon exercise of options that are currently exercisable or will
become exercisable within the next 60 days.(11)
    
    Based on the most recent report filed pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, or
the most recent Schedule 13D, 13F or 13G filed with the securities and Exchange Commission, as applicable. 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
 Certain Relationships and Related Transactions
    Director Independence
  51




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##### Table of Contents



Item 14. Principal Accountant Fees and Services
 Fees billed to Company by Its Independent Registered Public Accounting Firm
  Fiscal Year
    
    
    Fiscal YearEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007Audit Fees (1)
    
    $
    314,109
    
    
    $
    370,501Audit-Related
Fees (2)
    
    
    0
    
    
    
    0Tax Fees
(3)
    
    
    0
    
    
    
    0All Other
Fees (4)
    
    
    0
    
    
    
    0Total Fees
    
    $
    314,109
    
    
    $
    370,501
 
 (1)
    
    Audit Fees consist of fees for professional services rendered for the audit of the Companys
consolidated annual financial statements and review of the interim consolidated financial
statements included in quarterly reports and services that are normally provided in connection
with statutory and regulatory filings or engagements. Included in the fees are $117,232 for the
fiscal year ended June 30, 2007 associated with the filing of our Registration Statement on
Form S-1 filed in connection with the follow-on offering of our common stock that closed on
July 31, 2007.(2)
    
    Audit-Related Fees consist principally of assurance and related services that are reasonably
related to the performance of the audit or review of the Companys financial statements but not
reported under the caption Audit Fees above.(3)
    
    Tax Fees consist of fees for tax compliance, tax advice, and tax planning.(4)
    
    All Other Fees typically consist of fees for permitted non-audit products and services provided.  Pre-Approval Policy
   52




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##### Table of Contents



Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
 Documents filed as part of this Form 10-K:
 
 Financial Statement Schedule:
  Exhibits:
 ExhibitNo.
    
    Description3.1
    
    Articles of Incorporation of Global Traffic Network, Inc., a
Nevada corporation (incorporated by reference to Exhibit 3.1 to
the Current Report on Form 8-K filed February 26, 2008).3.2
    
    Bylaws of Global Traffic Network, Inc., a Nevada corporation
(incorporated by reference to Exhibit 3.2 to the Current Report on
Form 8-K filed February 26, 2008).4.1
    
    Form of Specimen Stock Certificate.4.2
    
    Underwriters Warrant Agreement dated March 29, 2006 between
Global Traffic Network, Inc. and Feltl and Company, Inc. and
related Warrant Certificate. (incorporated by reference to
Appendix A of Exhibit 1.1 to the Form S-l registration statement
of the registrant (File No. 333-130417)).10.1
    
    Mutual Sales Representation Agreement dated November 9, 2005 by
and between Metro Networks Communications, Limited Partnership and
Canadian Traffic Network ULC (incorporated by reference to Exhibit
10.6 to the Form S-l registration statement of the registrant
(File No. 333-130417)).10.2
    
    Traffic Data Agreement dated November 9, 2005 by and between Metro
Networks Communications, Limited Partnership and Canadian Traffic
Network ULC (incorporated by reference to Exhibit 10.7 to the Form
S-l registration statement of the registrant (File No.
333-130417)).10.3
    
    Aircraft Traffic Report Supply Agreement dated October 21, 2005 by
and between Canadian Traffic Network ULC and Corus Entertainment
Inc. (incorporated by reference to Exhibit 10.8 to the Form S-l
registration statement of the registrant (File No. 333-130417)).10.4
    
    Information Report Supply Agreement dated June 24, 2008 by and
between The Australia Traffic Network Pty Limited and Austereo Pty
Limited.10.5
    
    Employment Agreement dated November 18, 2005 by and between Global
Traffic Network, Inc. and William L. Yde III (incorporated by
reference to Exhibit 10.12 to the Form S-l registration statement
of the registrant (File No. 333-130417)).10.6
    
    Amendment No. 1 to Employment Agreement dated July 1, 2008 between
Global Traffic Network, Inc. and William L. Yde III (incorporated
by reference to Exhibit 10.1 to the Current Report on Form 8-K
filed July 3, 2008).10.7
    
    Employment Agreement dated November 18, 2005 by and between Global
Traffic Network, Inc. and Dale C. Arfman (incorporated by
reference to Exhibit 10.13 to the Form S-l registration statement
of the registrant (File No. 333-130417)).10.8
    
    Employment Agreement dated February 14, 2006 by and between Global
Traffic Network, Inc. and Scott E. Cody (incorporated by reference
to Exhibit 10.16 to the Form S-l registration statement of the
registrant (File No. 333-130417)).10.9
    
    Amendment No. 1 to Employment Agreement dated April 4, 2007 by and
between Global Traffic Network, Inc. and Scott E. Cody
(incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed April 4, 2007).10.10
    
    Amendment No. 2 to Employment Agreement dated July 1, 2008 between
Global Traffic Network, Inc. and Scott E. Cody (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K filed
July 3, 2008).
 53




---



##### Table of Contents



ExhibitNo.
    
    Description10.11
    
    Global Traffic Network, Inc. 2005 Stock Incentive Plan
(incorporated by reference to Exhibit 10.1 to the Form S-l
registration statement of the registrant (File No. 333-130417)).10.12
    
    Form of Global Traffic Network, Inc. Stock Option Agreement (2005
Stock Incentive Plan  Employee Non-Qualified) (incorporated by
reference to Exhibit 10.14 to the Form S-l registration statement
of the registrant (File No. 333-130417)).10.13
    
    Form of Global Traffic Network, Inc. Stock Option Agreement (2005
Stock Incentive Plan  Director) (incorporated by reference to
Exhibit 10.15 to the Form S-l registration statement of the
registrant (File No. 333-130417)).10.14
    
    Form of Global Traffic Network, Inc. Restricted Stock Agreement
(2005 Stock Incentive Plan) (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed April 11, 2008).21.1
    
    Subsidiaries of Global Traffic Network, Inc.23.1
    
    Consent of BDO Kendalls (NSW) (formerly BDO).31.1
    
    Certification of Chief Executive Officer pursuant to Securities
Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Securities
Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.99.1
    
    Press release dated September 9, 2008.
 
 
    
    Confidential treatment has been granted as to certain portions of this
exhibit pursuant to Rule 406 of the Securities Act and/or Rule 24b-2
of the Exchange Act.
    
    Confidential treatment has been requested for certain portions of this
exhibit pursuant to Rule 24b-2 of the Exchange Act. 54




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##### Table of Contents



SIGNATURES
  GLOBAL TRAFFIC NETWORK, INC.Date: September 9, 2008
    By:
    /s/ Scott E. CodyScott E. CodyChief Financial Officer and
Chief Operating Officer  Signature
    
    Title
    
    Date/s/ William L. Yde III
    
    Chairman of the Board,
    
    September 9, 2008William L. Yde III
    
    Chief
Executive Officerand President (PrincipalExecutive Officer) and Director/s/ Scott E. Cody
    
    Chief Financial Officer and
    
    September 9, 2008Scott E. Cody
    
    Chief
Operating Officer(Principal Financial Officer andPrincipal Accounting Officer)/s/ Dale C. Arfman
    
    Treasurer, Secretary and Director
    
    September 9, 2008Dale C. Arfman/s/ Gary O. Benson
    
    Director
    
    September 9, 2008Gary O. Benson/s/ Shane E. Coppola
    
    Director
    
    September 9, 2008Shane E. Coppola/s/ Stuart R. Romenesko
    
    Director
    
    September 9, 2008Stuart R. Romenesko/s/ Gary L. Worobow
    
    Director
    
    September 9, 2008Gary L. Worobow
 55




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##### Table of Contents



Global Traffic Network, Inc.
Index to Consolidated Financial Statements
And Financial Statement Schedule
 1. Consolidated Financial Statements
 PageReports of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets at June 30, 2008 and 2007
    
    
    F-3Consolidated Statements of Income for the years ended June 30, 2008, 2007 and 2006
    
    
    F-4Consolidated Statements of Shareholders Equity for the years ended June 30, 2008, 2007 and 2006
    
    
    F-5Consolidated Statements of Cash Flows for the years ended June 30, 2008, 2007 and 2006
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 2. Financial Statement Schedules:




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal
ControlIntegrated Framework
 BDO Kendalls (NSW)
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated Framework
      BDO
Kendalls (NSW)
 F-2




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##### Table of Contents



GLOBAL TRAFFIC NETWORK, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands except share amounts)
 June 30,
    
    
    June 30,2008
    
    
    2007ASSETS:Current Assets:Cash and cash equivalents
    
    $
    37,541
    
    
    $
    7,278Accounts receivable net of allowance for doubtful
accounts of $292 and $93 at June 30, 2008 and
June 30, 2007
    
    
    13,355
    
    
    
    8,482Prepaids and other current assets
    
    
    961
    
    
    
    462Deferred tax assets
    
    
    262
    
    
    
    173Total current assets
    
    
    52,119
    
    
    
    16,395Property and equipment, net
    
    
    8,964
    
    
    
    6,568Intangibles
    
    
    418
    
    
    
    354Deferred offering costs
    
    
    
    
    
    
    258Deferred tax assets
    
    
    141
    
    
    
    139Other assets
    
    
    960
    
    
    
    126Total assets
    
    $
    62,602
    
    
    $
    23,840LIABILITIES AND SHAREHOLDERS EQUITY:Current Liabilities:Accounts payable and accrued expenses
    
    $
    8,067
    
    
    $
    6,032Deferred revenue
    
    
    1,293
    
    
    
    25Income taxes payable
    
    
    3,186
    
    
    
    1,121Current portion of long term debt
    
    
    459
    
    
    
    668Total current liabilities
    
    
    13,005
    
    
    
    7,846Long term debt, less current portion
    
    
    482
    
    
    
    822Other liabilities
    
    
    389
    
    
    
    339Total liabilities
    
    
    13,876
    
    
    
    9,007Common stock, $.001 par value; 100,000,000 shares
authorized; 18,156,133 and 12,870,000 shares
issued and outstanding as of June 30, 2008 and
2007
    
    
    18
    
    
    
    13Preferred stock, $.001 par value; 10,000,000
authorized; 0 issued and outstanding as of June
30, 2008 and 2007
    
    
    
    
    
    
    Additional paid in capital
    
    
    49,015
    
    
    
    18,527Accumulated other comprehensive income
    
    
    2,866
    
    
    
    1,198Accumulated deficit
    
    
    (3,173
    )
    
    
    (4,905
    )Total shareholders equity
    
    
    48,726
    
    
    
    14,833Total liabilities and shareholders equity
    
    $
    62,602
    
    
    $
    23,840
  F-3




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##### Table of Contents



GLOBAL TRAFFIC NETWORK, INC.

CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share amounts)
 Year Ended June 30,2008
    
    
    2007
    
    
    2006Revenues
    
    $
    50,953
    
    
    $
    31,699
    
    
    $
    19,502Operating expenses (exclusive of
depreciation and amortization expense shown
separately below)
    
    
    30,456
    
    
    
    21,835
    
    
    
    15,309Selling, general and administrative expenses
    
    
    15,214
    
    
    
    10,120
    
    
    
    6,415Depreciation and amortization expense
    
    
    1,500
    
    
    
    907
    
    
    
    587Net operating income (loss)
    
    
    3,783
    
    
    
    (1,163
    )
    
    
    (2,809
    )Interest expense
    
    
    90
    
    
    
    170
    
    
    
    319Other (income) (including interest income of
$1,600, $471, and $189 for the years ended
June 30, 2008, 2007 and 2006)
    
    
    (1,617
    )
    
    
    (554
    )
    
    
    (256
    )Other expense
    
    
    13
    
    
    
    8
    
    
    
    36Net income (loss) before income taxes
    
    
    5,297
    
    
    
    (787
    )
    
    
    (2,908
    )Income tax expense
    
    
    3,565
    
    
    
    1,230
    
    
    
    88Net income (loss)
    
    $
    1,732
    
    
    $
    (2,017
    )
    
    $
    (2,996
    )Income (loss) per common share:Basic
    
    $
    0.10
    
    
    $
    (0.16
    )
    
    $
    (0.31
    )Diluted
    
    $
    0.10
    
    
    $
    (0.16
    )
    
    $
    (0.31
    )Weighted average common shares outstanding:Basic
    
    
    17,648,410
    
    
    
    12,870,000
    
    
    
    9,621,260Diluted
    
    
    17,831,855
    
    
    
    12,870,000
    
    
    
    9,621,260
  F-4




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##### Table of Contents



GLOBAL TRAFFIC NETWORK, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 For the years ended June 30, 2008, 2007 and 2006
 (Amounts in thousands except share amounts)
 Retained
    
    
    AccumulatedAdditional
    
    
    Earnings
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    Income (Loss)
    
    
    Income (Loss)
    
    
    TotalBalance, June 30, 2005
    
    
    8,500,000
    
    
    $
    4
    
    
    $
    531
    
    
    $
    341
    
    
    $
    320
    
    
    
    
    
    
    $
    1,196Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,996
    )
    
    
    
    
    
    
    (2,996
    )
    
    
    (2,996
    )Share subscriptions received
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Issuance of shareholder notes payable
    
    
    
    
    
    
    
    
    
    
    (1,400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,400
    )Initial public offering of stock
    
    
    4,370,000
    
    
    
    5
    
    
    
    18,985
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,990Stock option compensation
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (233
    )
    
    
    
    
    
    
    
    
    
    
    (233
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )
    
    
    (6
    )Comprehensive net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,002
    )
    
    
    Balance, June 30, 2006
    
    
    12,870,000
    
    
    
    13
    
    
    
    18,169
    
    
    
    (2,888
    )
    
    
    314
    
    
    
    
    
    
    
    15,608Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,017
    )
    
    
    
    
    
    
    (2,017
    )
    
    
    (2,017
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    358Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    884
    
    
    
    884
    
    
    
    884Comprehensive net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,133
    )
    
    
    Balance, June 30, 2007
    
    
    12,870,000
    
    
    
    13
    
    
    
    18,527
    
    
    
    (4,905
    )
    
    
    1,198
    
    
    
    
    
    
    
    14,833Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,732
    
    
    
    
    
    
    
    1,732
    
    
    
    1,732Follow-on offering of common stock
    
    
    5,175,000
    
    
    
    5
    
    
    
    29,706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,711Exercise of stock options
    
    
    3,334
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Repurchase and retire shares
    
    
    (2,201
    )
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )Stock based compensation
    
    
    110,000
    
    
    
    
    
    
    
    782
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    782Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,668
    
    
    
    1,668
    
    
    
    1,668Comprehensive net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,400
    
    
    
    Balance, June 30, 2008
    
    
    18,156,133
    
    
    $
    18
    
    
    $
    49,015
    
    
    $
    (3,173
    )
    
    $
    2,866
    
    
    
    
    
    
    $
    48,726
  F-5




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##### Table of Contents



GLOBAL TRAFFIC NETWORK, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts in thousands)
 Year ended June 30,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    1,732
    
    
    $
    (2,017
    )
    
    $
    (2,996
    )Adjustments to reconcile net income (loss) to net cash provided by operating
activities:Depreciation and amortization
    
    
    1,500
    
    
    
    907
    
    
    
    587Allowance for doubtful accounts
    
    
    199
    
    
    
    82
    
    
    
    11Non-cash compensation expense
    
    
    782
    
    
    
    358
    
    
    
    53Gain on disposal of assets
    
    
    
    
    
    
    (66
    )
    
    
    Changes in assets and liabilities (net of effects from acquisition of business):Accounts receivable
    
    
    (4,044
    )
    
    
    (2,942
    )
    
    
    (1,335
    )Deferred taxes, net
    
    
    (48
    )
    
    
    (54
    )
    
    
    (36
    )Prepaid and other current assets and other assets
    
    
    (602
    )
    
    
    (200
    )
    
    
    (276
    )Accounts payable and accrued expenses and other liabilities
    
    
    1,615
    
    
    
    1,429
    
    
    
    1,451Deferred revenue
    
    
    1,216
    
    
    
    6
    
    
    
    (111
    )Income tax refund
    
    
    
    
    
    
    28
    
    
    
    Income taxes payable
    
    
    1,796
    
    
    
    899
    
    
    
    (277
    )Net cash provided by (used in) operating activities
    
    
    4,146
    
    
    
    (1,570
    )
    
    
    (2,929
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (3,287
    )
    
    
    (3,114
    )
    
    
    (1,988
    )Acquisition of business
    
    
    
    
    
    
    (355
    )
    
    
    Deposit on acquisition of business
    
    
    (697
    )
    
    
    
    
    
    
    Net proceeds from disposal of equipment
    
    
    
    
    
    
    632
    
    
    
    Purchase of intangibles
    
    
    (120
    )
    
    
    
    
    
    
    (8
    )Net cash used in investing activities
    
    
    (4,104
    )
    
    
    (2,837
    )
    
    
    (1,996
    )Cash flows from financing activities:Repayment of long term debt
    
    
    (693
    )
    
    
    (577
    )
    
    
    (549
    )Net proceeds (repayments) of bank overdraft line of credit
    
    
    
    
    
    
    (611
    )
    
    
    702Repayment of shareholder notes payable
    
    
    
    
    
    
    (2,000
    )
    
    
    (22
    )Borrowings from shareholders
    
    
    
    
    
    
    
    
    
    
    2,000Dividends paid
    
    
    
    
    
    
    
    
    
    
    (275
    )Repayment of shareholder promissory notes
    
    
    
    
    
    
    
    
    
    
    (1,400
    )Proceeds from issuance of stock
    
    
    
    
    
    
    
    
    
    
    4Proceeds from public offerings of stock, net
    
    
    29,711
    
    
    
    
    
    
    
    19,073Due (from) to related parties, net
    
    
    
    
    
    
    
    
    
    
    (4
    )Net cash provide by (used in) financing activities
    
    
    29,018
    
    
    
    (3,188
    )
    
    
    19,529Effect of exchange rate changes on cash and cash equivalents
    
    
    1,203
    
    
    
    224
    
    
    
    (6
    )Net increase (decrease) in cash and cash equivalents
    
    
    30,263
    
    
    
    (7,371
    )
    
    
    14,598Cash and cash equivalents at beginning of fiscal year
    
    
    7,278
    
    
    
    14,649
    
    
    
    51Cash and cash equivalents at end of fiscal year
    
    $
    37,541
    
    
    $
    7,278
    
    
    $
    14,649Supplemental disclosures of cash flow information:Cash paid during fiscal year for:Interest
    
    $
    90
    
    
    $
    170
    
    
    $
    274Income taxes
    
    $
    1,813
    
    
    $
    385
    
    
    $
    396Non-cash financing and investing activities:Property acquired under long-term debt
    
    $
    
    
    
    $
    
    
    
    $
    63Property acquired other than for cash
    
    $
    
    
    
    $
    75
    
    
    $
    
  F-6




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##### Table of Contents



GLOBAL TRAFFIC NETWORK, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts in thousands except share and per share amounts)
 NOTE 1  Description of the Companys Business
   NOTE 2  Basis of Presentation
   NOTE 3  Summary of Significant Accounting Policies
 a) Use of Estimates
  b) Revenue recognition
  F-7




---



##### Table of Contents



c) Operating expenses
  d) Station compensation and reimbursement
   June 30,2008Year 1
    
    $
    23,671Year 2
    
    
    16,953Year 3
    
    
    14,951Year 4
    
    
    14,781Year 5
    
    
    Thereafter
    
    
    
 e) Cash and cash equivalents
  Year ended
    
    
    Year endedJune 30,
    
    
    June 30,2008
    
    
    2007Cash and cash equivalents consist of the following:Domestic
    
    $
    22,435
    
    
    $
    3,704Foreign
    
    
    15,106
    
    
    
    3,574Total cash and cash equivalents
    
    $
    37,541
    
    
    $
    7,278
 f) Accounts Receivable
   F-8




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##### Table of Contents



Allowance for Doubtful Accounts
 Additions
    
    DeductionsBalance at
    
    
    
    
    
    
    
    
    
    Balance atbeginning of
    
    
    
    
    
    end ofyear
    
    Expense
    
    Write-offs
    
    YearYear ended June 30, 2008
    
    $
    93
    
    
    $
    270
    
    
    $
    (71
    )
    
    $
    292Year ended June 30, 2007
    
    $
    11
    
    
    $
    111
    
    
    $
    (29
    )
    
    $
    93Year ended June 30, 2006
    
    $
    
    
    
    $
    63
    
    
    $
    (52
    )
    
    $
    11
 g) Property and Equipment
  Recording, broadcasting and studio equipment
    
    5 yearsFurniture, and equipment and other
    
    5 yearsMotor vehicles
    
    7 yearsHelicopters and fixed wing aircraft
    
    8 yearsHelicopter engine rebuilds
    
    3 yearsComputer equipment and software
    
    3-5 years
  h) Intangible assets
  Weighted AverageAmortizationPeriod(Years)
    

June 30, 2008
    
    June 30, 2007Station contracts
    
    5 years
    
    $
    261
    
    
    $
    321Mobile phone intellectual property
    
    
    N/A
    
    
    
    120
    
    
    
    Aircraft license acquisition costs
    
    
    N/A
    
    
    
    37
    
    
    
    33Total intangible assets
    
    
    N/A
    
    
    $
    418
    
    
    $
    354
  F-9




---



##### Table of Contents



Acquired intangible assets
 As of June 30, 2008
    
    As of June 30, 2007Gross
    
    
    
    
    
    GrossCarrying
    
    Accumulated
    
    Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Amount
    
    AmortizationAmortized intangible assetsStation contracts
    
    $
    353
    
    
    $
    92
    
    
    $
    338
    
    
    $
    17
 Estimated amortization expense relating to station contractsFor the year ended June 30, 2009
    $
    71For the year ended June 30, 2010
    
    71For the year ended June 30, 2011
    
    71For the year ended June 30, 2012
    
    48
 i) Income taxes
   j) Per share data
  Year ended
    
    Year ended
    
    Year endedJune 30, 2008
    
    June 30, 2007
    
    June 30, 2006Basic Shares Outstanding
    
    
    17,648,410
    
    
    
    12,870,000
    
    
    
    9,621,260Stock Options & Warrants
    
    
    183,445
    
    
    
    
    
    
    
    Diluted Shares Outstanding
    
    
    17,831,855
    
    
    
    12,870,000
    
    
    
    9,621,260
 F-10




---



##### Table of Contents



k) Fair value of financial instruments
  l) Foreign currency translation
  m) Recent Accounting Pronouncements
    n) Concentration of Credit Risk
  o) Major Suppliers
    F-11




---



##### Table of Contents



p) Deferred offering costs
  NOTE 4  Related Party Transactions
     NOTE 5  Property and Equipment, Net
  Year
    
    
    YearEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007Helicopters and fixed wing aircraft
    
    $
    9,010
    
    
    $
    6,319Recording, broadcasting and studio equipment
    
    
    2,508
    
    
    
    1,727Furniture and equipment and other
    
    
    1,586
    
    
    
    955Less: Accumulated depreciation and amortization
    
    
    4,140
    
    
    
    2,433Property and equipment, net
    
    $
    8,964
    
    
    $
    6,568Plant and equipment held as security under specific loans:
    
    $
    2,066
    
    
    $
    1,956
 Year ended
    
    
    Year endedJune 30,
    
    
    June 30,2008
    
    
    2007Net property and equipment consists of the following:Domestic
    
    $
    39
    
    
    $
    Foreign
    
    
    8,925
    
    
    
    6,568Property and equipment, net
    
    $
    8,964
    
    
    $
    6,568
 F-12




---



##### Table of Contents



NOTE 6  Accounts Payable and Accrued Expenses
  June 30,
    
    
    June 30,2008
    
    
    2007Trade payables
    
    $
    5,118
    
    
    $
    3,793Accrued payroll expenses
    
    
    1,772
    
    
    
    1,302Accrued expenses and other liabilities
    
    
    1,177
    
    
    
    937Total
    
    $
    8,067
    
    
    $
    6,032
 NOTE 7  Long Term Debt
  June 30,
    
    
    June 30,2008
    
    
    2007Term loan with bank, bearing variable interest rate of ANZ Mortgage Index rate plus .33%
(10.4% at June 30, 2008), monthly principal and interest payments of $17 secured by all
ATN assets, matures on July 1, 2008
    
    $
    17
    
    
    $
    184Financial leases with financing company, bearing fixed interest of 7.67% and 6.99%,
monthly principal and interest payments of $2 and $2, secured by automobiles, matures
August 25, 2010 and repaid November 1, 2007
    
    
    50
    
    
    
    82Note payable to bank, bearing fixed interest of 8.43%, monthly principal and interest
payments of $15, secured by a Helicopter, matures November 6, 2008
    
    
    58
    
    
    
    197Notes payable to bank bearing fixed interest of 6.97%, Monthly principal and interest
payments of $34, secured by 2 helicopters, matures September 6, 2010
    
    
    816
    
    
    
    1,022Financial lease with financing company, secured by computer equipment, repaid June 12, 2008
    
    
    
    
    
    
    5941
    
    
    
    1,490Less current portion
    
    
    459
    
    
    
    668Long term debt less current portion
    
    
    482
    
    
    
    822
   June 30,2008Year 1
    
    $
    459Year 2
    
    
    413Year 3
    
    
    69Year 4
    
    
    Year 5
    
    
    
 NOTE 8  Shareholder Notes Payable
    F-13




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##### Table of Contents



NOTE 9  Income Taxes
  Year ended
    
    Year endedJune 30, 2008
    
    June 30, 2007Domestic
    
    Foreign
    
    Total
    
    Domestic
    
    Foreign
    
    TotalNet (loss) income before
taxes
    
    
    (1,610
    )
    
    
    6,907
    
    
    
    5,297
    
    
    
    (352
    )
    
    
    (435
    )
    
    
    (787
    )Income tax provision
    
    $
    25
    
    
    $
    3,631
    
    
    $
    3,656
    
    
    $
    115
    
    
    $
    1,321
    
    
    $
    1,436Current deferred tax
asset (liability), net
    
    
    (25
    )
    
    
    (110
    )
    
    
    (135
    )
    
    
    (3
    )
    
    
    (32
    )
    
    
    (35
    )Non-current deferred tax
asset (liability), net
    
    
    (262
    )
    
    
    123
    
    
    
    (139
    )
    
    
    (122
    )
    
    
    (126
    )
    
    
    (248
    )Tax carried forward losses
    
    
    (327
    )
    
    
    (937
    )
    
    
    (1,264
    )
    
    
    
    
    
    
    (1,559
    )
    
    
    (1,559
    )Less: Valuation allowance
    
    
    614
    
    
    
    833
    
    
    
    1,447
    
    
    
    10
    
    
    
    1,626
    
    
    
    1,636Income tax expense
    
    $
    25
    
    
    $
    3,540
    
    
    $
    3,565
    
    
    $
    
    
    
    $
    1,230
    
    
    $
    1,230
 F-14




---



##### Table of Contents



Year ended
    
    
    Year endedJune 30,
    
    
    June 30,2008
    
    
    2007Deferred tax assets:Depreciation
    
    $
    19
    
    
    $
    131Deferred rent
    
    
    53
    
    
    
    49Capital losses
    
    
    5
    
    
    
    4Foreign tax credit
    
    
    132
    
    
    
    132Stock option expense
    
    
    408
    
    
    
    146Accrued expenses and other
    
    
    327
    
    
    
    228Tax carried forward losses
    
    
    3,862
    
    
    
    2,598Total deferred tax assets
    
    
    4,806
    
    
    
    3,288Deferred tax liabilitiesPrepaid expenses
    
    
    40
    
    
    
    60Total deferred tax liabilities
    
    
    40
    
    
    
    60Net deferred tax assets before valuation allowance
    
    
    4,766
    
    
    
    3,228Valuation allowance
    
    
    (4,363
    )
    
    
    (2,916
    )Net deferred tax assets
    
    
    403
    
    
    
    312
 Year ended
    
    Year ended
    
    Year endedJune 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Income tax expense consists of the following:Domestic
    
    $
    25
    
    
    $
    
    
    
    $
    Foreign
    
    
    3,540
    
    
    
    1,230
    
    
    
    88Income tax expense
    
    $
    3,565
    
    
    $
    1,230
    
    
    $
    88
  Year ended
    
    Year ended
    
    Year endedJune 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State taxes net of federal benefit
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.2Differences between U.S. and foreign tax rates
    
    
    (5.5
    )
    
    
    (5.5
    )
    
    
    1.1Permanent differences between book and tax income
    
    
    10.0
    
    
    
    21.6
    
    
    
    2.8Impact of valuation allowance
    
    
    27.3
    
    
    
    (207.9
    )
    
    
    (42.1
    )Effective tax rate
    
    
    67.3
    %
    
    
    (156.3
    )%
    
    
    (3.0
    )%
  F-15




---



##### Table of Contents



As of
    
    As ofJune 30,
    
    June 30,2008
    
    2007Domestic
    
    $
    502
    
    
    $
    175Foreign
    
    
    3,360
    
    
    
    2,423Total
    
    $
    3,862
    
    
    $
    2,598
    NOTE 10  Commitments and Contingencies
  June 30,2008Year 1
    
    $
    570Year 2
    
    
    529Year 3
    
    
    427Year 4
    
    
    367Year 5
    
    
    321Thereafter
    
    
    323Total
    
    $
    2,537
   Vacation of premises prior to:September 8, 2008
    
    $
    85September 8, 2009
    
    $
    53September 8, 2010
    
    $
    21
  F-16




---



##### Table of Contents



NOTE 11  Capital Stock
    NOTE 12  Stock based compensation
  As of
    
    As ofJune 30,
    
    June 30,2008
    
    2007Shares authorized under plan
    
    
    1,200,000
    
    
    
    1,200,000Stock options outstanding
    
    
    (902,500
    )
    
    
    (695,000
    )Stock options exercised
    
    
    (3,334
    )
    
    
    Restricted shares issued
    
    
    (110,000
    )
    
    
    Shares available for issuance under plan
    
    
    184,166
    
    
    
    505,000
 Stock Options
  June 30,
    
    June 30,2008
    
    2007Risk-free interest rate
    
    
    2.49-3.99
    %
    
    
    4.53-4.71
    %Volatility factor
    
    
    57.23-57.98
    %
    
    
    60.35-65.89
    %Weighted volatility
    
    
    57.84
    %
    
    
    62.71
    %Dividend yield
    
    
    
    
    
    
    Option price
    
    $
    6.68-8.70
    
    
    $
    7.05-4.05Weighted average expected life of options
    
    6.28 years
    
    6 yearsWeighted average grant date fair value per share
    
    $
    3.92
    
    
    $
    3.08
 F-17




---



##### Table of Contents



WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    Aggregate
    
    AggregateExercise
    
    Contractual
    
    Fair
    
    IntrinsicShares
    
    Price
    
    Term
    
    Value
    
    ValueBalance, June 30, 2007
    
    
    695,000
    
    
    $
    5.11
    
    
    
    Grants
    
    
    230,000
    
    
    $
    6.86
    
    
    
    
    
    
    $
    899Exercised
    
    
    (3,334
    )
    
    $
    4.35
    
    
    
    
    
    
    
    
    
    
    
    15Forfeitures/expirations
    
    
    (19,166
    )
    
    $
    5.61
    
    
    
    
    
    
    
    (63
    )Balance, June 30, 2008
    
    
    902,500
    
    
    $
    5.83
    
    
    8.92 years
    
    $
    2,703
    
    
    $
    3,062Exercisable, June 30, 2008
    
    
    327,510
    
    
    $
    4.89
    
    
    7.78 years
    
    $
    828
    
    
    $
    1,240
    Restricted Stock
  F-18




---



##### Table of Contents



WeightedAverage GrantDate Fair ValueShares
    
    Per ShareUnvested, June 30, 2007
    
    
    
    
    
    
    Grants
    
    
    110,000
    
    
    $
    8.57Converted to common stock
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Unvested, June 30, 2008
    
    
    110,000
    
    
    $
    8.57
  NOTE 13  Warrant
  NOTE 14  Segment Reporting
  Year ended
    
    Year ended
    
    Year endedAustralia
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Revenues
    
    
    44,296
    
    
    
    28,425
    
    
    
    19,007Interest expense
    
    
    90
    
    
    
    132
    
    
    
    193Interest revenue
    
    
    488
    
    
    
    36
    
    
    
    Depreciation & amortization expense
    
    
    810
    
    
    
    706
    
    
    
    530Income tax expense
    
    
    3,540
    
    
    
    1,230
    
    
    
    88Segment profit
    
    
    8,188
    
    
    
    2,864
    
    
    
    165Expenditure for property and equipment
    
    
    382
    
    
    
    498
    
    
    
    1,023Expenditure for intangible assets
    
    
    
    
    
    
    
    
    
    
    
 June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Segment assets
    
    
    29,012
    
    
    
    14,036
    
    
    
    8,037Current assets
    
    
    25,115
    
    
    
    10,137
    
    
    
    4,540Property & equipment (net)
    
    
    3,572
    
    
    
    3,610
    
    
    
    3,280Deferred tax assets, net
    
    
    403
    
    
    
    312
    
    
    
    221Segment liabilities
    
    
    11,508
    
    
    
    7,638
    
    
    
    6,002
 F-19




---



##### Table of Contents



Year ended
    
    Year ended
    
    Year endedCanada
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Revenues
    
    
    6,657
    
    
    
    3,274
    
    
    
    495Interest expense
    
    
    
    
    
    
    38
    
    
    
    126Interest revenue
    
    
    8
    
    
    
    2
    
    
    
    6Depreciation & amortization expense
    
    
    668
    
    
    
    201
    
    
    
    57Income tax expense
    
    
    
    
    
    
    
    
    
    
    Segment loss
    
    
    (3,064
    )
    
    
    (3,756
    )
    
    
    (2,601
    )Expenditure for property and equipment
    
    
    2,027
    
    
    
    2,616
    
    
    
    965Expenditure for intangible assets
    
    
    
    
    
    
    
    
    
    
    
 June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Segment assets
    
    
    7,928
    
    
    
    5,528
    
    
    
    1,597Current assets
    
    
    3,128
    
    
    
    2,240
    
    
    
    680Property & equipment (net)
    
    
    4,529
    
    
    
    2,958
    
    
    
    908Deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    Segment liabilities
    
    
    970
    
    
    
    789
    
    
    
    2,528
 Year ended
    
    Year ended
    
    Year endedUnited Kingdom
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Revenues
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    
    
    
    
    
    
    
    
    Interest revenue
    
    
    3
    
    
    
    
    
    
    
    Depreciation & amortization expense
    
    
    20
    
    
    
    
    
    
    
    Income tax expense
    
    
    
    
    
    
    
    
    
    
    Segment loss
    
    
    (1,757
    )
    
    
    (773
    )
    
    
    Expenditure for property and equipment
    
    
    837
    
    
    
    
    
    
    
    Expenditure for intangible assets
    
    
    
    
    
    
    
    
    
    
    
 June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Segment assets
    
    
    2,952
    
    
    
    145
    
    
    
    Current assets
    
    
    1,325
    
    
    
    145
    
    
    
    Property & equipment (net)
    
    
    824
    
    
    
    
    
    
    
    Deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    Segment liabilities
    
    
    1,065
    
    
    
    96
    
    
    
    
 F-20




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##### Table of Contents



Year ended
    
    Year ended
    
    Year endedAll Other
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Revenues
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    
    
    
    
    
    
    
    
    Interest revenue
    
    
    1,101
    
    
    
    433
    
    
    
    183Depreciation & amortization expense
    
    
    2
    
    
    
    
    
    
    
    Income tax expense
    
    
    25
    
    
    
    
    
    
    
    Segment loss
    
    
    (1,635
    )
    
    
    (352
    )
    
    
    (560
    )Expenditure for property and equipment
    
    
    41
    
    
    
    
    
    
    
    Expenditure for intangible assets
    
    
    120
    
    
    
    
    
    
    
    
 June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Segment assets
    
    
    22,710
    
    
    
    4,131
    
    
    
    14,654Current assets
    
    
    22,551
    
    
    
    3,873
    
    
    
    14,654Property & equipment (net)
    
    
    39
    
    
    
    
    
    
    
    Deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    Segment liabilities
    
    
    333
    
    
    
    484
    
    
    
    150
 Year ended
    
    Year ended
    
    Year endedTotal
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Revenues
    
    
    50,953
    
    
    
    31,699
    
    
    
    19,502Interest expense
    
    
    90
    
    
    
    170
    
    
    
    319Interest revenue
    
    
    1,600
    
    
    
    471
    
    
    
    189Depreciation & amortization expense
    
    
    1,500
    
    
    
    907
    
    
    
    587Income tax expense
    
    
    3,565
    
    
    
    1,230
    
    
    
    88Segment profit (loss)
    
    
    1,732
    
    
    
    (2,017
    )
    
    
    (2,996
    )Expenditure for property and equipment
    
    
    3,287
    
    
    
    3,114
    
    
    
    1,988Expenditure for intangible assets
    
    
    120
    
    
    
    
    
    
    
    
 June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2006Total assets
    
    
    62,602
    
    
    
    23,840
    
    
    
    24,288Current assets
    
    
    52,119
    
    
    
    16,395
    
    
    
    19,874Property & equipment (net)
    
    
    8,964
    
    
    
    6,568
    
    
    
    4,188Deferred tax assets, net
    
    
    403
    
    
    
    312
    
    
    
    221Total liabilities
    
    
    13,876
    
    
    
    9,007
    
    
    
    8,680
  Traffic
    
News
    
Television
    
TotalYear ended June 30, 2008
    
    $
    38,951
    
    
    $
    7,385
    
    
    $
    4,617
    
    
    $
    50,953Year ended June 30, 2007
    
    $
    24,637
    
    
    $
    4,427
    
    
    $
    2,635
    
    
    $
    31,699Year ended June 30, 2006
    
    $
    16,708
    
    
    $
    2,290
    
    
    $
    504
    
    
    $
    19,502
 F-21




---



##### Table of Contents



NOTE 15  Asset Disposal Outside the Ordinary Course
   NOTE 16  Quarterly Results of Operations (unaudited)
 Year ended June 30, 2008
 First
    
    Second
    
    Third
    
    Fourth
    
    For theQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    YearRevenues
    
    $
    10,981
    
    
    $
    13,160
    
    
    $
    12,216
    
    
    $
    14,596
    
    
    $
    50,953Net operating income
    
    
    252
    
    
    
    1,709
    
    
    
    179
    
    
    
    1,643
    
    
    
    3,783Net (loss) income
    
    
    (89
    )
    
    
    1,109
    
    
    
    (224
    )
    
    
    936
    
    
    
    1,732Net (loss) income per share:Basic
    
    $
    (0.01
    )
    
    $
    0.06
    
    
    $
    (0.01
    )
    
    $
    0.05
    
    
    $
    0.10Diluted
    
    $
    (0.01
    )
    
    $
    0.06
    
    
    $
    (0.01
    )
    
    $
    0.05
    
    
    $
    0.10
 Year ended June 30, 2007
 First
    
    Second
    
    Third
    
    Fourth
    
    For theQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    YearRevenues
    
    $
    6,108
    
    
    $
    8,222
    
    
    $
    7,609
    
    
    $
    9,760
    
    
    $
    31,699Net operating (loss) income
    
    
    (855
    )
    
    
    425
    
    
    
    (1,288
    )
    
    
    555
    
    
    
    (1,163
    )Net (loss) income
    
    
    (815
    )
    
    
    44
    
    
    
    (1,309
    )
    
    
    63
    
    
    
    (2,017
    )Net (loss) income per share:Basic and diluted
    
    $
    (0.06
    )
    
    $
    0.00
    
    
    $
    (0.10
    )
    
    $
    0.00
    
    
    $
    (0.16
    )
 NOTE 17  Acquisition of Business
  Current assets
    
    $
    56Fixed assets
    
    
    11Intangibles
    
    
    338Assumed liabilities
    
    
    (50
    )Purchase price
    
    $
    355
 NOTE 18  Subsequent Events
  F-22




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##### Table of Contents



F-23




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description4.1
    
    Form of Specimen Stock Certificate.10.4
    
    Information Report Supply Agreement dated June 24, 2008 by and between The Australia Traffic Network Pty Limited and Austereo
Pty Limited.21.1
    
    Subsidiaries of Global Traffic Network, Inc.23.1
    
    Consent of BDO Kendalls (NSW) (formerly BDO).31.1
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
    
    Press Release dated September 9, 2008.
 
 
    
    Confidential treatment has been requested for certain portions of this exhibit pursuant to Rule 24b-2 of the Exchange Act.