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SRS LABS INC - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations
(Edgar Glimpses Via Acquire Media NewsEdge) Overview
We are the recognized global leader in the practical application of
psychoacoustics, the science behind how the human ear operates, and in the post
processing segment of the market for audio delivery. Our award-winning audio
enhancement technologies and solutions dramatically restore audio and voice to
its natural state, the way it was originally recorded, in both dimension and
clarity, thus providing a superior consumer experience for a wide variety of CE
devices such as televisions, personal computers and mobile phones.
Our mission is to be the dominant worldwide provider of audio and voice
solutions that allow consumers to effortlessly experience rich, natural sound,
the way their ears were meant to hear it. In 2010 and 2011, licensing revenue
from the home entertainment market represented 64% and 56%, respectively, of our
total revenues in such periods. In the home entertainment market, our
technologies have achieved broad market acceptance in the television sector. We
plan to continue to leverage our success in the television sector to expand our
audio technologies into a variety of other consumer electronic devices,
including PCs, mobile phones, portable media devices and automotive audio
systems, but our technologies to date have only been incorporated in products
representing only a small portion of the total consumer electronics market
opportunity. The consumer electronics market in general is characterized by
rapid technological changes, short product life cycles, seasonality, significant
price erosion and competition, any of which may impede our ability to gain broad
market acceptance for our technologies in other consumer electronic markets.
Nonetheless, we plan to continue to seek other opportunities where we can
continue to leverage our core technologies and expertise. If we are able to
successfully gain broad market share for our technologies in any other market,
it could significantly improve our revenues and brand name recognition.
Our operations are conducted through SRS Labs, Inc., the parent company, and its
wholly-owned subsidiaries, SRSWOWcast.com, Inc., Shenzhen Representative Office
of SRS Labs, Inc. (a Chinese company) Shanghai Representative Office of SRS
Labs, Inc (a Chinese company) and SRS Labs Japan, KK (a Japanese company). Our
business is focused on developing and licensing audio, voice and surround sound
technology solutions to many of the world's leading OEMs, software providers and
semiconductor companies, and limited sales and marketing of standalone software
and hardware products through the Internet.
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Our operations are conducted through SRS Labs, Inc., the parent company, and its
wholly-owned subsidiaries, SRSWOWcast.com, Inc., Shenzhen Representative Office
of SRS Labs, Inc. (a Chinese company) Shanghai Representative Office of SRS
Labs, Inc (a Chinese company) and SRS Labs Japan, KK (a Japanese company). Our
business is focused on developing and licensing audio, voice and surround sound
technology solutions to many of the world's leading OEMs, software providers and
semiconductor companies, and limited sales and marketing of standalone software
and hardware products through the Internet.
Critical Accounting Policies
Our discussion and analysis of our results of operations and liquidity and
capital resources are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP").
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and disclosure of contingent assets and liabilities. We base our
estimates on historical and anticipated results and trends and on various other
assumptions that we believe are reasonable under the circumstances, including
assumptions as to future events. These estimates form the basis for making
judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. By their nature, estimates are subject to
an inherent degree of uncertainty. Actual results may differ from our estimates.
The following represents a summary of our critical accounting policies, defined
as those policies that we believe: (a) are the most important to the portrayal
of our financial condition and results of operations, and (b) require
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about matters that are inherently uncertain. Our
most critical accounting estimates include (i) revenue recognition;
(ii) valuation of accounts receivable, which impacts operating expenses; (iii)
valuation of intangibles and long lived assets, which primarily impacts
operating expenses when we impair assets or accelerate their depreciation;
(iv) recognition and measurement of current and deferred income tax assets and
liabilities, which impacts our tax provision; and (v) share-based compensation,
which impacts operating expenses. Set forth below is a discussion of each of
these policies, as well as the estimates and judgments involved. We also have
other policies that we consider key accounting policies; however, these policies
do not meet the definition of critical accounting estimates, because they do not
generally require us to make estimates or judgments that are difficult or
subjective.
Revenue Recognition
Our license agreements typically have multi-year or automatic renewal terms, and
either require: (a) per-unit royalty payments for all products implementing our
technologies and/or solutions; (b) fixed annual or quarterly royalty payments;
or (c) a minimum fixed annual or quarterly royalty payment, which allows the
licensee to ship up to a pre-determined number of units during the specified
time period, with additional per-unit royalty payments thereafter. Royalties
for per-unit arrangements are reported in the quarter following shipment of the
consumer electronics device and are therefore recognized by us one quarter
following shipment by the OEM. Revenues associated with fixed royalty payments
are recognized ratably over the term of the agreement. We also sell some of our
products and solutions via the Internet. Revenues associated with those sales
are recognized upon shipment and are not material.
Accounts Receivable
We perform ongoing credit evaluations of our customers and adjust credit limits
based upon payment history, the customer's current credit worthiness and various
other factors, as determined by our review of their current credit information.
We continuously monitor collections and payments from our customers and maintain
allowances for doubtful accounts based upon specific customer circumstances,
current economic trends, historical experience and the age of past due
receivables. While such credit losses have historically been within our
expectations and the provisions established, we cannot guarantee that we will
continue to experience the same credit loss rates that we have in the past.
Unanticipated changes in the liquidity or financial position of our customers
may require additional provisions for doubtful accounts.
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Intangible Assets and Impairment of Long-Lived Assets
Costs paid by the Company related to the establishment and purchase of patents,
primarily legal costs, are capitalized and amortized, depending on the estimated
life of the technology patented. These assets are being amortized over ten
years. The Company evaluates the recoverability of long-lived assets with finite
lives. We assess potential impairments to our long-lived assets when there
is evidence that events or changes in circumstances indicate that the carrying
amount of an asset may not be recovered. An impairment loss is recognized when
the carrying amount of the long-lived asset is not recoverable and exceeds its
fair value. The carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset. Any required impairment loss is measured
as the amount by which the carrying amount of a long-lived asset exceeds its
fair value and is recorded as a reduction in the carrying value of the related
asset and a charge to operating results. Based upon the most recent assessment
as of December 31, 2011, we have determined there was no impairment in the value
of long-lived assets.
Income Taxes
In preparing our consolidated financial statements, we estimate our income taxes
in each of the countries in which we operate. The process used to make these
estimates includes an assessment of the current tax expense, the results from
tax examinations and the effects of temporary differences resulting from the
different treatment of transactions for tax and financial accounting purposes.
These differences result in deferred tax assets and liabilities, which are
included in our consolidated balance sheets. The Company accounts for deferred
income taxes utilizing an asset and liability method, whereby deferred tax
assets and liabilities are recognized based on the tax effects of temporary
differences between the financial statements and the tax bases of assets and
liabilities, as measured by current enacted tax rates. Deferred tax assets are
reduced by a valuation allowance if it is more likely than not that some portion
or all of the deferred tax asset will not be realized. We evaluate the
realizability of our deferred tax assets by assessing our valuation allowance
and by adjusting the amount of such allowance, if necessary. At December 31,
2011, we had net deferred tax assets primarily resulting from temporary
differences between the book and tax bases of assets and liabilities, and loss
and credit carry forwards. We continue to provide a valuation allowance on our
deferred tax assets based on an assessment of the likelihood of their
realization. In reaching our conclusion, we evaluated certain relevant criteria
including deferred tax liabilities that can be used to offset deferred tax
assets, estimates of future taxable income of appropriate character within the
carry-forward period available under the tax laws, and tax planning strategies.
Our judgments regarding future taxable income may change due to market
conditions, changes in U.S. or international tax laws, the Company's business
and results of operations, and other factors. These changes, if any, may require
material adjustments to these deferred tax assets, resulting either in a tax
benefit, if it is estimated that future taxable income is likely, or a reduction
in the value of the deferred tax assets, if it is determined that their value is
impaired, resulting in a reduction in net income or an increase in net loss in
the period when such determinations are made.
Our income tax provision is based on calculations and assumptions that will be
subject to examination by the taxing authorities in the jurisdictions in which
we operate. Tax law and rate changes are reflected in the income tax provision
in the period in which such changes are enacted.
Share-Based Compensation
We account for share-based compensation awards using the fair-value method and
records such expense in the consolidated financial statements over the requisite
service period. In 2011, 2010 and 2009, we recorded share-based compensation
expense of $2,495,630, $2,253,730 and $1,956,057, respectively.
To determine the expected term of our employee stock options granted in fiscal
year 2011, we examined the historical term for our stock options and those of
our peers. To determine the risk-free interest rate, we utilized an average
interest rate based on U.S. Treasury instruments whose term was consistent with
the expected term of our awards. To determine the expected stock price
volatility, we examined the historical volatilities for our common stock and
those of our peers. See Note 6 ("Stockholders' Equity and Share-Based
Compensation") of our Notes to Consolidated Financial Statements for further
discussion.
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Results of Operations
The following table sets forth certain consolidated operating data as a
percentage of revenues for the years ended December 31, 2011, 2010 and 2009:
Percentage of Total Revenue
Years Ended December 31,
2011 2010 2009
Revenues 100 % 100 % 100 %
Cost of sales 2 1 1
Gross margin 98 99 99
Operating expenses:
Sales and marketing 45 43 46
Research and development 27 26 23
General and administrative 23 21 22
Total operating expenses 95 90 91
Operating income 3 9 8
Other income 0 1 1
Income before income taxes 3 10 9
Income taxes 0 0 0
Net income 3 % 10 % 9 %
Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
Revenues
Total revenues for the year ended December 31, 2011 were $ 32,870,159 compared
to $31,220,389 in the year ended December 31, 2010, an increase of $1,649,770 or
5 %. This increase was primarily attributable to increases in royalties related
to higher unit sales of mobile devices containing our technologies by our
licensees. In the personal telecommunications market, revenues increased
$3,310,850 from 2010 to 2011. This increase was primarily due to increased
royalties from higher volumes from new and existing customers, such as Samsung,
HTC and Huawei. Revenues in the personal computer market increased $80,562 from
2010 to 2011. This increase was primarily due to increased volume from our
existing customers, including Hewlett Packard. Revenues in the automotive
market decreased by $192,966 in 2011 as compared to 2010 primarily due to lower
revenues due to the March 2011 tsunami in Japan, which severely impacted the
Japanese automotive market and supply chain. The home entertainment segment
includes royalties related to sales of flat panel televisions, monitors, and set
top boxes. Excluding royalty recoveries and the prior year one time settlement
of $900,000 related to a patent dispute, revenues from the home entertainment
segment were flat on a year over year basis. Approximately $390,000 of
previously underreported royalties was recorded in 2011 compared to $987,000 in
2010 in the home entertainment market. Overall, we have not experienced a
material change in our per unit license rates in the current periods other than
volume pricing discounts provided pursuant to existing contractual obligations.
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The following table represents our mix of revenues by market source:
Years Ended December 31,
2011 2010
Home entertainment (TV, set-top boxes) 56 % 64 %
Personal telecommunications (mobile phones,
tablets) 20 10
PC (software, hardware) 15 16
Automotive 6 7
Portable media devices (digital media players,
headphones) 3 3
100 % 100 %
Sales and Marketing
Sales and marketing expenses consist primarily of employee salaries, sales
consultants' fees and related expenses, sales commissions, tradeshow costs and
costs associated with branding activities. Sales and marketing expenses were
$14,929,976 for 2011, as compared to $13,470,852 for 2010. Overall sales and
marketing expenses were $1,459,124, or 11%, higher in 2011. This increase was
primarily attributable to higher payroll and related costs associated with
increasing the size of our sales and marketing staff by approximately 13% in
2011. The increase is also attributable in part to increased participation in
global co-branding and advertising opportunities. We recorded $939,139 in
share-based compensation expense for sales and marketing personnel during 2011
as compared to $703,875 in 2010. As a percentage of total revenues, sales and
marketing expenses increased from 43% for 2010 to 45% for 2011.
Research and Development
Research and development expenses consist of salaries and related costs of
employees engaged in ongoing research, design and development activities and
costs for engineering materials and supplies. Research and development expenses
were $8,849,119 for 2011, as compared to $8,060,246 for 2010. The overall
increase in research and development expenses of $788,873, or 10%, was primarily
attributable to increasing the size of our research and development staff by
approximately 15% in 2011 due to the expansion of our Shanghai engineering
facility and increase in worldwide field application engineers. The increase is
also attributable to the continued research and development of object-oriented
multi-dimensional audio technologies beyond the existing channel-based
alternatives. We recorded $580,331 in share-based compensation expense for
engineering personnel during 2011 as compared to $551,934 in 2010. As a
percentage of total revenues, research and development expenses increased from
26% for 2010 to 27% for 2010.
General and Administrative
General and administrative expenses consist primarily of employee-related
expenses, legal costs associated with the administration of intellectual
property, facilities costs, insurance, legal and accounting professional fees
related to public company reporting and compliance, and depreciation and
amortization. General and administrative expenses were $7,395,327 for 2011 as
compared to $6,526,171 for 2010. The overall increase of $869,156 or 13%, was
primarily attributable to an increase in legal and accounting professional fees
and depreciation and amortization expenses as we continue to expand our
operations. We recorded $976,160 in share-based compensation expense during
2011 as compared to $997,920 in 2010. As a percentage of total revenues,
general and administrative expenses increased from 21% for 2010 to 23% for 2011.
Other Income
Other income, which primarily consists of interest income, was $209,921 for
2011, compared to $245,127 for 2010, a decrease of $35,206, or 14%. We continue
to monitor our cash assets to maximize our interest income while maintaining an
acceptable level of risk. During 2011 and 2010, the Company did not incur any
losses related to our cash and investments.
Provision for Income Taxes
The income tax provision for 2011 was $10,725 compared to $52,153 for 2010. The
current and prior year provision consists primarily of estimated taxes payable
to the state of California and estimated taxes payable to Japan.
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We had federal and state net operating loss carryforwards at December 31, 2011
of $2,016,278 and $5,598,942, respectively. The net operating loss carryforwards
begin to expire in 2014 and will continue through 2027. In addition, we had
federal foreign tax credit carryforwards of approximately $13,294,856 at
December 31, 2011, which begin to expire in 2014. As of December 31, 2011, we
continued to have a valuation allowance of $5,337,296 against our deferred tax
assets, which was established primarily due to our cumulative losses in recent
years and was based on our assessment of our future ability to realize certain
deferred tax assets.
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Revenues
Total revenues for the year ended December 31, 2010 were $31,220,389 compared to
$24,964,577 in the year ended December 31, 2009, an increase of $6,255,812 or
25%. This increase was primarily attributable to increases in royalties related
to higher unit sales of televisions, personal computers, automotives, and mobile
devices containing our technologies by our licensees. In the home entertainment
segment, royalty revenues increased $3,096,266 from 2009 primarily from
royalties related to sales of flat panel televisions and monitors. The revenue
growth was primarily due to volume increases from certain existing licensees
such as Samsung, increased demand for flat panel televisions and, to a lesser
extent, due to new license agreements with Top Victory and LG. The increase in
revenues in 2010 was offset by a decrease in set top box revenues in the current
year. Included in the home entertainment market revenue was a $900,000 patent
dispute settlement payment received in 2010. Additionally, we recognized
approximately $987,000 of previously under reported royalties in 2010 compared
to $1,200,000 of royalties recovered in 2009 from certain customers in the home
entertainment market. The increase in revenues in the personal computer market
from 2009 to 2010 was $1,901,910. This increase was primarily due to increased
volume from our existing customers, including Dell and AsusTek and revenues
generated from Elitegroup Computer Systems, a new licensee. Revenues in the
automotive market increased by $974,153 in 2010 as compared to 2009 primarily
due to higher revenues due to volume increases from our Japanese customers who
provide line install, dealer option and aftermarket automotive audio systems to
many of the significant Japanese automotive manufacturers. In the personal
telecommunications market, revenues increased $418,785 from 2009 to 2010. This
increase was primarily due to increased royalties from higher volumes from
Samsung. Revenues in the portable media devices market decreased by $160,301 in
2010 as compared to 2009 due to decreased volumes from MP3/MP4 players.
The following table represents our mix of revenues by market source:
Years Ended
December 31,
2010 2009
Home entertainment (TV, set-top box) 64 % 68 %
PC (software, hardware) 16 12
Personal telecommunications (mobile phone, PDA) 10 11
Automotive 7 5
Portable media devices (digital media player, headphone) 3 4
100 % 100 %
Sales and Marketing
Sales and marketing expenses were $13,470,852 for 2010, as compared to
$11,415,115 for 2009. Overall sales and marketing expenses were $2,055,737, or
18%, higher in 2010. This increase was primarily attributable to higher payroll
and related costs associated with increasing the size of our sales and marketing
staff by approximately 26% in 2010. In addition to increasing the sales and
marketing personnel, we have also increased our branding efforts by creating new
marketing assets, through both direct and co-marketing activities, and increased
our participation in trade show activities. We recorded $703,875 in share-based
compensation expense for sales and marketing personnel during 2010 as compared
to $511,301 in 2009. As a percentage of total revenues, sales and marketing
expenses decreased from 46% for 2009 to 43% for 2010.
Research and Development
Research and development expenses were $8,060,246 for 2010, as compared to
$5,721,195 for 2009. The overall increase in research and development expenses
of $2,339,051, or 41%, was primarily attributable to increasing the size of our
research and development staff by approximately 24% in 2010 due to the expansion
of our Shanghai engineering facility and increase in worldwide field application
engineers and quality assurance personnel. The increase is also attributable to
the creation in 2010 of the state-of-the-art Advanced Rendering Lab, which has
been exclusively designed and constructed to accelerate research and development
of object-oriented multi-dimensional audio technologies beyond the existing
channel-based alternatives. In addition, the Company founded the
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3D Audio Alliance ("3DAA"), which is a new, industry alliance committed to the
development of open, royalty-free standards for the transmission of 3D audio.
We recorded $551,934 in share-based compensation expense for engineering
personnel during 2010 as compared to $457,464 in 2009. As a percentage of total
revenues, research and development expenses increased from 23% for 2009 to 26%
for 2010.
General and Administrative
General and administrative expenses were $6,526,171 for 2010 as compared to
$5,656,616 for 2009. The overall increase of $869,555 or 15%, was primarily
attributable to an increase in professional fees, increase in royalty compliance
review fees, increase in payroll fees due to the addition of a new hire, and
depreciation and amortization expenses as we continue to expand our operations.
We recorded $997,920 in share-based compensation expense during 2010 as compared
to $987,292 in 2009. As a percentage of total revenues, general and
administrative expenses decreased from 22% for 2009 to 21% for 2010.
Other Income
Other income, which primarily consists of interest income, was $245,127 for
2010, compared to $347,528 for 2009, a decrease of $102,401, or 29%. Our goal
during 2010 was to focus on asset protection of our cash, and as such we
invested our cash in low-risk, high liquidity investments such as fully insured
certificates of deposits and assets backed by the United States Treasury. We
continue to monitor our cash assets to maximize our interest income while
maintaining an acceptable level of risk. During 2010 and 2009, the Company did
not incur any losses related to our cash and investments.
Provision for Income Taxes
The income tax provision for 2010 was $52,153 compared to $98,006 for 2009,
representing a decrease of $45,853, or 47%. The current and prior year provision
consists primarily of estimated taxes payable to the state of California and
estimated taxes payable to Japan and China.
We had federal and state net operating loss carryforwards at December 31, 2010
of $4,456,821 and $5,598,943, respectively. The net operating loss carryforwards
begin to expire in 2014 and should continue through 2027. In addition, we had
federal foreign tax credit carryforwards of approximately $10,270,431 at
December 31, 2010, which begin to expire in 2014, and federal and state tax
capital loss carryforwards of approximately $16,219,585, which begin to expire
in 2011. As of December 31, 2010, we continued to have a valuation allowance of
$12,605,203 against our deferred tax assets, which was established primarily due
to our cumulative losses in recent years and was based on our assessment of our
future ability to realize certain deferred tax assets.
Selected Quarterly Operating Results
The following table sets forth certain quarterly summary consolidated financial
data for the eight quarters in the period ended December 31, 2011. The quarterly
information is based upon financial statements prepared by us on a basis
consistent with our audited consolidated financial statements and, in
management's opinion, includes all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of the information for
the periods presented. This information should be read in conjunction with our
audited consolidated financial statements and notes thereto appearing elsewhere
in this Report. Our quarterly operating results have varied significantly in the
past and are expected to vary significantly in the future. Due to rounding
differences, the quarters in a given year may not add precisely to the annual
numbers for that year.
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Three Months Ended
Mar 31, June 30, Sep 30, Dec 31, Mar 31, June 30, Sep 30, Dec 31,
2011 2011 2011 2011 2010 2010 2010 2010
(In thousands except per share amounts)
Revenues $ 8,181 $ 7,602 $ 8,422 $ 8,665 $ 8,385 $ 7,161 $ 8,609 $ 7,065
Gross profit 8,034 7,410 8,311 8,338 8,321 7,061 8,545 6,944
Operating expenses 7,784 7,999 7,748 7,643 6,876 6,479 7,220 7,482
Net income (loss) $ 292 $ (538 ) $ 623 $ 741 $ 1,466 $ 630 $ 1,340 $ (431 )
Net income (loss)
per common share:
Basic $ 0.02 $ (0.04 ) $ 0.04 $ 0.05 $ 0.10 $ 0.04 $ 0.09 $ (0.03 )
Diluted $ 0.02 $ (0.04 ) $ 0.04 $ 0.05 $ 0.10 $ 0.04 $ 0.09 $ (0.03 )
Liquidity and Capital Resources
At December 31, 2011, cash and cash equivalents, and short and long-term
investments were $38,313,987 compared to $43,053,827 as of December 31, 2010, a
decrease of $4,739,840. Our cash and cash equivalents were $5,850,224 as of
December 31, 2011, a decrease of $4,847,603 from cash and cash equivalents of
$10,697,827 held at December 31, 2010. The decrease in cash and cash equivalents
in the current year was primarily a result of the purchase of short and
long-term investments and repurchase of treasury stock of $5,905,422, partially
offset by positive cash flow generated by operating activities. Cash and cash
equivalents generally consist of cash, certificates of deposits, and money
market funds with original maturities of three months or less. The money market
funds are primarily invested in U.S. government obligations. The cash and
certificates of deposit are FDIC insured. As of December 31, 2011, we held
$27,837,000 in short-term investments and $4,626,763 in long-term investments.
Short-term investments generally consist of certificates of deposit and treasury
bills. Long-term investments primarily consist of certificates of deposit with
maturities greater than 12 months. In fiscal years 2011, 2010 and 2009, our
operations were funded primarily from cash generated from operating activities.
Net cash provided by operating activities was $1,015,432 and $1,522,995 for 2011
and 2010, respectively. The $507,563 decrease in net cash provided by operating
activities in 2011, compared to 2010, was primarily a result of an increase in
prepaid expenses and other current assets balance largely due to an increase in
prepaid services and an increase in inventory of iWOW 3D retail product, which
was launched in 2011. In addition, the increase in our accounts receivable
balance year over year decreased from $1,012,733 for December 31, 2010 to
$273,228 in December 31, 2011.
Net cash used in investing activities was $1,556,861 and $19,952,386 in 2011 and
2010, respectively. The $18,395,525 decrease in cash used in investing
activities in 2011, compared to 2010, was primarily due to the decrease in
purchases of short and long-term investments offset by an increase in capital
expenditures primarily related to the expansion of our corporate headquarters.
Net cash used in financing activities were $4,306,174 in 2011 and net cash
provided by financing activities were $1,139,054 in 2010. The $5,445,228
increase in net cash used in financing activities in fiscal year 2011, compared
to fiscal year 2010, was primarily a result of repurchases of treasury stock.
We believe our existing cash, cash equivalents, short and long-term investment
balances together with cash generated from operating activities will be
sufficient to meet our anticipated cash needs for at least the next twelve
months. Our future capital requirements will depend on many factors, including
our level of revenues, the timing and extent of spending to support product
development efforts, the expansion of sales and marketing activities, the timing
of introductions of new products, the continuing market acceptance of our
products and the amount of stock we are able to repurchase in 2012.
Contractual Cash Obligations and Contingent Liabilities and Commitments
We have contractual obligations and commitments with regards to operating lease
arrangements. The following table quantifies our expected contractual
obligations and commitments subsequent to December 31, 2011:
Payments due by period
Less than More than
Contractual obligations Total 1 year 1-3 years 3 years
Operating lease obligations $ 1,288,434 $ 570,930 $ 692,232 $ 25,272
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