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21
condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms,
which could result in a default on our debt obligations.
We have deferred a significant portion of revenues from customer transactions occurring prior to 2011 to subsequent
periods. The deferred revenues resulted in our reporting net income for the fiscal years 2012, 2013, 2014 and 2015.
However, as deferred revenues from periods prior to 2011 are amortized, there are no assurances that we will be able to
report net income in future periods.
As a result of the restatement of our September 30, 2012 and prior financial statements, which was completed in 2014, we have
deferred a significant portion of revenues from customer transactions occurring prior to 2011 to subsequent periods. The deferred
revenue resulted in our reporting net income of approximately $2 million in 2015, $15 million in 2014, and $21 million in 2013
and also adversely affected our stockholders’ equity and working capital for those periods. As this deferred revenue is amortized,
there are no assurances that we will be able to report net income in future periods. Our financial results and the impact of the
deferred revenue are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
Item 7 of this Form 10-K.
Our revenues and operating results are difficult to predict and may fluctuate from period to period.
Our results of operations have been and may continue to be subject to significant quarterly variation. Our results through 2016
will, in particular, be affected by the amortization of deferred revenues relating to periods prior to 2011. Our revenues and
operating results for any particular quarter may also vary due to a number of factors, including, but not limited to, those
enumerated under the section “Cautionary Note on Forward-Looking Statements,” appearing elsewhere in this Form 10-K and:
• the timing of large or enterprise-wide sales and our ability to recognize revenues from such sales;
• demand planning and logistics;
• reliance on third-party reseller and distribution channels;
• changes in operating expenses;
• price protections and provisions for inventory obsolescence extended to resellers and distributors;
• seasonal factors, such as higher consumer demand at year-end; and
• complex accounting rules for revenue recognition.
The occurrence and interaction of these variables may cause our revenues and operating results to fluctuate from period to period.
As a result, period-to-period comparisons of our revenues and operating results may not provide a good indication of our future
performance. We cannot be certain when, or if, our operations will be profitable in future periods.
Our revenue backlog estimates are based on certain assumptions and are subject to unexpected adjustments and
cancellations and backlog orders may not be timely converted to revenues in any particular fiscal period, if at all, or be
indicative of our actual operating results for any future period.
Our revenue backlog, as we define it, consists of firm orders received and includes both (i) orders where the customer has paid in
advance of our performance obligations being fulfilled, which are reflected as deferred revenues on our balance sheet, and (ii)
orders for future product deliveries or services that have not yet been invoiced by us. To the extent that our customers cancel their
orders with us or reduce their requirements during a particular period for any reason, we will not realize revenue or profit from the
associated revenue backlog. Even where a project proceeds as scheduled, it is possible that the customer may default and fail to
pay amounts owed to us. Material delays, payment defaults or cancellations could reduce the amount of revenue backlog
currently reported, and consequently, could inhibit the conversion of that backlog into revenues. Furthermore, orders included in
our revenue backlog may not be profitable. We may experience variances in the realization of our revenue backlog because of
project delays or cancellations resulting from external market factors and economic factors beyond our control. As a result, even if
we realize all of the revenue from the projects in our revenue backlog, if our expenses associated with these projects are higher
than expected, our results of operations and financial condition would be adversely affected.