eOn Communications Corp. (EONC, Financial) filed Quarterly Report for the period ended 2009-10-31.
eOn Communications Corporation designs, develops and markets next-generation Linux-based communications servers and software that integrate and manage voice, e-mail and Internet communications for customer contactcenters and general business applications. The company also offers the Millennium digital switching platform for small-and medium-sized installations. eOn Communications Corporation helps enterprises communicate more effectively with customers, convert inquiries into sales, and increase customer satisfaction and loyalty. Eon Communications Corp. has a market cap of $7.5 million; its shares were traded at around $2.7501 with and P/S ratio of 0.7.
Selling, general and administrative expense consists primarily of salaries and benefit costs, marketing costs, and facilities and other overhead expenses incurred to support our business. Selling, general and administrative expenses increased approximately 51% to $1,155,000 for the three months ended October 31, 2009, from $767,000 for the same period of the previous year. The increase primarily reflects Cortelco expenses of approximately $613,000, partially offset by lower compensation related expenses of approximately $139,000, and lower bad debt expense of approximately $56,000.
Research and development expense consists primarily of personnel and related facility costs for our engineering staff. Research and development expenses decreased approximately 55% to $137,000 for the three months ended October 31, 2009 from $305,000 for the same period of the previous year. The decrease reflects a decrease of approximately $22,000 in rent, depreciation and facility costs. In addition, in the three months ended October 31, 2009, the Company capitalized approximately $129,000 of internal software development labor related to a new IP PBX. Amortization of the capitalized costs is projected to begin in the third fiscal quarter of 2010 when the product is available for general release to customers.
Our investing activities resulted in a net cash outflow of $153,000 for the three months ended October 31, 2009 compared to a net cash outflow of $200,000 for the same period of the previous year. Cash used in investing activities for the three months ended October 31, 2009 was a result of net cash used for purchases of property and equipment. Cash used in investing activities for the same period of the previous year was a result of an investment of approximately $58,000 in a joint venture in TaiCang, China, an investment in Hangzhou, China of approximately $138,000 and purchases of property and equipment.
Our financing activities resulted in a cash outflow of $631,000 for the three months ended October 31, 2009 compared to a cash inflow of $59,000 for the same period of the previous year. Cash used in financing activities in the current period reflects payments on the Cortelco Note partially offset by purchases under the Employee Stock Purchase Plan. Cash provided by financial activities in the prior period were due to approximately $58,000 in proceeds from a note payable, partially offset by purchases under the Employee Stock Purchase Plan.
The Company had income from operations of $410,000 for the three months ended October 31, 2009 versus a loss from operations of $145,000 for the same period in the prior year. As of October 31, 2009, the Company had $3,282,000 in cash and cash equivalents available to fund operations, of which $109,000 was held in international bank accounts.
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eOn Communications Corporation designs, develops and markets next-generation Linux-based communications servers and software that integrate and manage voice, e-mail and Internet communications for customer contactcenters and general business applications. The company also offers the Millennium digital switching platform for small-and medium-sized installations. eOn Communications Corporation helps enterprises communicate more effectively with customers, convert inquiries into sales, and increase customer satisfaction and loyalty. Eon Communications Corp. has a market cap of $7.5 million; its shares were traded at around $2.7501 with and P/S ratio of 0.7.
Highlight of Business Operations:
On April 1, 2009, the Company acquired Cortelco for up to $11,000,000 in cash. Cortelco merged with a newly formed wholly-owned subsidiary of eOn and is now a wholly-owned subsidiary of eOn. In exchange for all of the outstanding shares of Cortelco stock, Cortelco shareholders received an initial aggregate payment of $500,000. The Company executed a note payable to Cortelcos former shareholders for $10,500,000 (the Cortelco Note). The Cortelco Note is non-interest bearing and is to be repaid based primarily upon the level of Cortelco earnings after closing and all Cortelco shareholders are eligible to receive quarterly payments thereunder in cash until the full consideration has been paid. The fair value of the Cortelco Note payable obligation assumed on the April 1, 2009 acquisition date was estimated using a discounted cash flow method, and together with approximately $124,000 in acquisition costs, resulted in a total purchase price of $5,054,000. David Lee, Chairman of eOn, was the Chairman and the controlling shareholder of Cortelco at the date of acquisition.Selling, general and administrative expense consists primarily of salaries and benefit costs, marketing costs, and facilities and other overhead expenses incurred to support our business. Selling, general and administrative expenses increased approximately 51% to $1,155,000 for the three months ended October 31, 2009, from $767,000 for the same period of the previous year. The increase primarily reflects Cortelco expenses of approximately $613,000, partially offset by lower compensation related expenses of approximately $139,000, and lower bad debt expense of approximately $56,000.
Research and development expense consists primarily of personnel and related facility costs for our engineering staff. Research and development expenses decreased approximately 55% to $137,000 for the three months ended October 31, 2009 from $305,000 for the same period of the previous year. The decrease reflects a decrease of approximately $22,000 in rent, depreciation and facility costs. In addition, in the three months ended October 31, 2009, the Company capitalized approximately $129,000 of internal software development labor related to a new IP PBX. Amortization of the capitalized costs is projected to begin in the third fiscal quarter of 2010 when the product is available for general release to customers.
Our investing activities resulted in a net cash outflow of $153,000 for the three months ended October 31, 2009 compared to a net cash outflow of $200,000 for the same period of the previous year. Cash used in investing activities for the three months ended October 31, 2009 was a result of net cash used for purchases of property and equipment. Cash used in investing activities for the same period of the previous year was a result of an investment of approximately $58,000 in a joint venture in TaiCang, China, an investment in Hangzhou, China of approximately $138,000 and purchases of property and equipment.
Our financing activities resulted in a cash outflow of $631,000 for the three months ended October 31, 2009 compared to a cash inflow of $59,000 for the same period of the previous year. Cash used in financing activities in the current period reflects payments on the Cortelco Note partially offset by purchases under the Employee Stock Purchase Plan. Cash provided by financial activities in the prior period were due to approximately $58,000 in proceeds from a note payable, partially offset by purchases under the Employee Stock Purchase Plan.
The Company had income from operations of $410,000 for the three months ended October 31, 2009 versus a loss from operations of $145,000 for the same period in the prior year. As of October 31, 2009, the Company had $3,282,000 in cash and cash equivalents available to fund operations, of which $109,000 was held in international bank accounts.
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