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eOn Communications Corp. Reports Operating Results (10-Q)

March 13, 2009 | About:

eOn Communications Corp. (EONC) filed Quarterly Report for the period ended 2009-01-31.

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. (PRESS RELEASE) eOn Communications Corp. has a market cap of $1.1 million; its shares were traded at around $0.42 with and P/S ratio of 0.2.

Highlight of Business Operations:

Cost of revenue is primarily comprised of purchases from our contract manufacturers and other suppliers and costs incurred for final assembly of our systems. Gross profit decreased approximately 27% to $604,000 for the three months ended January 31, 2009 from $824,000 for the same period of the previous year, reflecting declines in both eQueue and Millennium margins. Gross profit for eQueue and Millennium sales decreased for the three months ended January 31, 2009, reflecting lower system sales over the same period of the previous year. Maintenance contract revenues declined compared to the same period of the previous year. Gross margin % decreased to approximately 46% for the three months ended January 31, 2009 compared with gross margin of approximately 56% for the same period of the previous year, primarily the result of product mix. The margin on related party revenue is significantly less than the historical margins for both the Millennium and eQueue products.

Cost of revenue is primarily comprised of purchases from our contract manufacturers and other suppliers and costs incurred for final assembly of our systems. Gross profit decreased approximately 29% to $1,575,000 for the six months ended January 31, 2009 from $2,208,000 for the same period of the previous year, reflecting declines in both eQueue and Millennium margins. Gross profit for eQueue and Millennium sales decreased for the six months ended January 31, 2009, reflecting lower system sales over the same period of the previous year. Maintenance contract revenues declined compared to the same period of the previous year. Gross margin % decreased to approximately 51% for the six months ended January 31, 2009 compared with gross margin of approximately 57% for the same period of the previous year, primarily the result of product mix. The margin on related party revenue is significantly less than the historical margins for both the Millennium and eQueue products.

As of January 31, 2009, we had cash and cash equivalents of $1,383,000 and $1,000,000 in short-term marketable securities, and working capital of $4,031,000. Our short-term marketable securities are invested in liquid treasury securities.

Our investing activities resulted in a net cash outflow of $149,000 for the six months ended January 31, 2009 compared to a net cash inflow of $476,000 for the same period of the previous year. Cash used in investing activities for the six months ended January 31, 2009 was a result of an investment of approximately $136,000 in a joint venture in Hangzhou, China and purchases of property and equipment. Cash provided by investing activities for the same period of the previous year was a result of disposal of marketable securities partially offset by the $900,000 investment in Symbio Group and purchases of property and equipment.

The Company has incurred substantial net operating losses since inception and has had negative cash flows from operating activities through July 31, 2008; resulting in an accumulated deficit of $48,517,000. During the six months ended January 31, 2009, cash and cash equivalents and short-term marketable securities decreased to $2,383,000 from $2,545,000, primarily as a result of funding operating losses during the period.

The Company had a loss from continuing operations of $510,000 for the six months ended January 31, 2009 versus a loss from continuing operations of $1,333,000 for the same period in the prior year. As of January 31, 2009, the Company had $2,383,000 in cash and cash equivalents and short-term marketable securities available to fund operations, of which $47,000 was held in international bank accounts.

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