Message: The Numbers
eVU product sales activity has been slow during the last two years due to airline industry economics and industry credit concerns resulting in airlines curtailing expansion and new projects. We had backlog at March 31, 2010 of $265,000 compared to $164,000 at prior year end with the increase reflecting recent new orders. We are pursuing new eVU business and targeting new patent licensees but our results will continue to be dependent on the timing and quantity of eVU orders and the timing and amount of future patent licensing arrangements, if any. While our service revenues increased in the last year, future levels depend on the number of customers that continue to utilize our product for IFE. Loss of customers for which we provide content or maintenance and service revenue, generally without long-term agreements, would negatively impact future service revenues.
Last years numbers, for perspective...
Revenues
Revenues for the year ended March 31, 2010 included $1,600,000 of one-time non-recurring patent license revenue and $953,869 of eVU product and service revenues. Our product revenues declined in part as a result of airline industry economics resulting in reduced IFE activity. While our backlog shows an increase in recent activity, this business is expected to continue to be sporadic in future quarters.Our service revenues increased as a result of both increased content related services from year over year increases in aggregate customers and from increased repair and maintenance revenues as prior year customers are using products no longer under warranty.
Revenues for the year ended March 31, 2009 included $10,115,350 of one-time non-recurring patent license revenue and $940,382 of eVU product and service revenues.
Gross Profit
Gross profit for fiscal 2010 was $1,312,094 or 51% of revenues. The gross profit on product and service revenues was 34% and the gross profit on patent licensing fees was 62% of license revenues. Gross profit for fiscal 2009 was $6,543,951 or 59% of revenues. The gross profit on product and service revenues was 44% and the gross profit on patent licensing fees was 61% of license revenues. The reduction in product and service gross profit in the current year was impacted by a $65,459 market adjustment to reduce inventory values to the lower-of-cost or market primarily due to competitive conditions in the IFE industry affecting planned future pricing on certain products.License revenue costs of revenues consists primarily of contingency legal and other direct costs associated with patent licensing.Gross profit margins are highly dependent on revenue mix, prices charged, volume of orders, contingency patent legal fees and costs.Management does not believe historical gross profits percentages can be relied on as an indicator of results from future revenues
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