Quarterly report pursuant to Section 13 or 15(d)

CISCO AUDIT

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CISCO AUDIT
3 Months Ended
Mar. 31, 2014
Notes to Financial Statements  
NOTE F - CISCO AUDIT

In late December 2013 the Company exercised its right to audit the royalties paid to it by Cisco for the years 2012 and 2013 in accordance with its May 2011 license agreement with Cisco.  While the Cisco audit has not been completed, as a result of the work of the Company’s auditors to date the Company believes it is likely that Cisco has not included all licensed products in their quarterly royalty reports to the Company as required by the license agreement.  Accordingly, the Company believes there will be additional royalties due it for 2012 and 2013 as well as the three months ended March 31, 2014, although the Company cannot be certain of this because the audit is not complete.  The amount of such additional royalties cannot be determined at this time.  Notwithstanding the aforementioned, since the audit has not been completed the final results of the audit are uncertain and it is possible that the Company’s auditors may obtain information inconsistent or contrary to the information they have obtained to date.  In general, under the terms of the Company’s license agreement with Cisco adjustments to royalty revenue (including under - payments or over - payments) from Cisco will be included in the Company’s financial statements for the period in which we receive such adjustments.  In accordance with the terms of the license agreement with Cisco, any additional royalty revenue the Company receives from Cisco as a result of the audit is limited to the difference between the annual cap ($8.0 million) and the actual royalties previously paid to the Company by Cisco for each such year.