Me either, but the method they are using to book S/W revenue and to defer revenue seems nuts. I guess they are licenses where fees fall in a predictable calander sequence. That's cool but they are taking all the hits for the R&D costs and service costs up front. I may have it wrong but this is a front end loaded spending model which looks like if you can stay in business long enough all you do is count money eventually. This defered revenue thing looks wacky.
I'd say sales and net revenues were flat taking into account R&D along with discounting. I don't believe the changes you highlighted on the balance sheet are relevant long-term.
However, some analysis of the deferred revenue and costs would be very important. If XATANET is the future of the company, are you satisfied with the adoption rate of the technology considering the R&D expense going into it? Deferred net revenue increased $1,573,000 and will contribute net income of $143,000/qt or $572,000/yr assuming a 3 year amortization.
What expenses aren't in the cost of deferred revenue that need to be considered in order to recognize the deferred net revenue over the next three years? Leases? Salaries? Product maintenance? Pick a dollar amount.
Do you believe the incremental deferred revenue number momentum is impressive and warrants future speculation on an increase in stock price? Is there a window of opportunity that is closing on gaining market share? Is 3 years enough time to make a decision as to whether the technology will dominate and offer a significant upside potential? I'd feel more confident seeing appreciation in a market index or playing roulette red/black in Vegas until quarterly results show a strong trend in net deferred revenue with an additional reduction for the cost to administer the recognition of the deferred revenue.
I agree, booking defered revenue as they have and not doing anything to amortize/capitalize the cost of producing the revenue is very dubious. Eventually, when revenue is taken, life will be wonderful but what if we don't live that long?