8x8 1998 Annual Report Download - page 43

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8X8, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
VidUs is engaged in the design of integrated camera and video compression solutions as well as ethernet interface cards. VidUs has been
consolidated in the Company's financial statements since inception.
During fiscal 1998, the Company paid a member of the Board of Directors approximately $50,000 for technical consulting services provided
on behalf of the Company.
NOTE 4 -- INCOME TAXES:
Income (loss) before income taxes includes $91,000, $74,000, and $51,000 of income of its foreign subsidiary for the fiscal years ended March
31, 1998, 1997 and 1996, respectively. The components of the consolidated (benefit) provision for income taxes consisted of the following (in
thousands):
Deferred tax assets are comprised of the following (in thousands):
Management believes that, based on a number of factors, the weight of objective available evidence indicates that it is more likely than not that
it will not be able to realize its deferred tax assets and thus a full valuation allowance has been recorded at March 31, 1998.
At March 31, 1998, the Company had approximately $5.4 million of federal net operating loss carryforwards for tax reporting purposes
available to offset future taxable income; such carryforwards expire at various dates beginning 2012. In addition, at March 31, 1998, the
Company had research and development credit carryforwards for federal and state tax reporting purposes of approximately $1.9 million which
begin expiring in 2009. Under the Tax Reform Act of 1986, the amounts of and benefits from net operating losses and credits that can be
carried forward may be impaired or limited in certain circumstances. Events which may cause limitations in the amount of net operating losses
that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three
year period. As of March 31, 1998, the net operating loss carry forwards of the Company were not subject to any material annual limitations.
38
YEAR ENDED MARCH 31,
-----------------------
1998 1997 1996
------- ---- ----
Current:
Federal............................................. $(1,018) $ -- $--
State............................................... -- -- --
Foreign............................................. 36 182 20
------- ---- ---
$ (982) $182 $20
======= ==== ===
MARCH 31,
-----------------
1998 1997
------ -------
Research and development credit carryforwards............. $1,920 $ 1,573
Net operating loss carryforwards.......................... 1,839 3,780
Inventory valuation....................................... 1,020 932
Reserves and allowances................................... 891 846
Other..................................................... 2,116 1,650
------ -------
7,786 8,781
Valuation allowance....................................... (7,786) (8,781)
------ -------
Total........................................... $ -- $ --
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