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volume fluctuations in response to market and other factors, including the other factors discussed in these risk factors; variations in
our quarterly operating results from our expectations or those of securities analysts or investors; downward revisions in securities
analysts’ estimates; and announcement by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or
capital commitments.
A significant percentage of our common stock is beneficially owned by our President, Chief Executive Officer and Chairman
of the Board, and he can exert significant influence over us.
We have two classes of common stock: Class A common stock and Class B common stock. Holders of Class A common stock
generally have the same rights as holders of Class B common stock, except that holders of Class A common stock have one vote per
share while holders of Class B common stock have three votes per share. As of December 31, 2013, Maurice B. Tosé, our President,
Chief Executive Officer and Chairman of the Board, beneficially owned 4,997,769 shares of our Class B common stock and 3,113,335
shares of our Class A common stock. Therefore, as of that date, in the aggregate, Mr. Tosé beneficially owned shares representing
approximately 26% of our total voting power, assuming no conversion or exercise of issued and outstanding convertible or
exchangeable securities held by our other shareholders or holders of the notes. Mr. Tosé can exert significant influence over us
through his ability to influence the outcome of elections of directors, amendments to our charter and by-laws and other actions
requiring shareholder action, including mergers, going private transactions and other extraordinary transactions. Mr. Tosé may also be
able to deter or prevent a change of control regardless of whether holders of Class A common stock might benefit financially from
such a transaction.
If our business does not generate sufficient cash to fund our operations and we are unable to obtain additional capital when
needed, we may not be able to continue to grow our business.
We believe that our cash and cash equivalents, and our bank line of credit, coupled with the funds anticipated to be generated
from operations will be sufficient to finance our operations for at least the next twelve months. However, unanticipated events could
cause us to fall short of our capital requirements. In addition, such unanticipated events could cause us to violate our bank credit
covenants, enabling bank remedies provided in their agreement with us making it necessary for us to return to the public markets or to
establish new credit facilities or raise capital in private transactions in order to meet our capital requirements. We cannot assure you
that we will be able to raise additional capital in the future on terms acceptable to us, or at all.
Our bank credit facility contains covenants requiring us to maintain fixed charge coverage and leverage ratios; as well as other
restrictive covenants. The agreement also provides subjective events of default based upon (i) no material adverse change in the
business, operations, or condition (financial or otherwise) of our Company occur, or (ii) no material impairment of the prospect of
repayment of the Company’s obligations under the bank credit agreement; or (iii) no material impairment of perfection or priority of
the lenders security interests in the collateral under the bank credit agreement. If our performance does not result in compliance with
any of the restrictive covenants, and our lenders exercise their rights under the subjective acceleration clause referred to above, we
would seek to further modify our financing arrangements, but there can be no assurance that our debt holders would not exercise their
rights and remedies under their agreements with us, including declaring all outstanding debt due and payable. If we are not in
compliance with one or more of our covenants which if not complied with could result in an event of default under our line of credit or
term loan, there can be no assurance that our lenders would waive such non-compliance. In such an event, we would be prohibited
from drawing funds against the line of credit and our indebtedness under the line of credit and term loan could be accelerated. This
could have a material adverse effect on our business, financial condition, results of operation, liquidity, or stock price.
Our short-term investments are subject to market fluctuations which may affect our liquidity.
Although we have not experienced any material losses on our cash, cash equivalents, and short-term investments, declines in the
market values of these investments in the future could have an adverse impact on our financial condition and operating results.
Historically, we have invested in AAA rated money market funds meeting certain criteria. These investments are subject to general
credit, liquidity, market, and interest rate risks, which may be directly or indirectly impacted by the U.S. sub-prime mortgage defaults
that have affected various sectors of the financial markets causing credit and liquidity issues. If an issuer defaults on its obligations, or
its credit ratings are negatively affected by liquidity, losses or other factors, the impact on liquidity could decline and could have a
material adverse effect on our business, financial position, results of operations or cash flows.
Variations in quarterly operating results due to factors such as changes in demand for our products and changes in our mix
of revenues and costs may cause our Class A common stock price to decline.
Our revenue and operating results are difficult to predict and are likely to fluctuate from quarter-to-quarter. For example, 2013
systems revenue was lower in the fourth quarter of the year compared to 2012 systems revenue was lower in the first quarter. We
generally derive a significant portion of wireless carrier systems revenue in our Commercial Segment from initial license fees. The
initial license fees that we receive in a particular quarter may vary significantly. As systems projects begin and end, quarterly results
may vary. We therefore believe that quarter-to-quarter comparisons of our operating results may not be a good indication of our future
