eOn Communications Corp. (EONC, Financial) filed Quarterly Report for the period ended 2010-04-30.
Eon Communications Corp. has a market cap of $5.6 million; its shares were traded at around $2.05 with a P/E ratio of 15.8 and P/S ratio of 0.5. EONC is in the portfolios of Jim Simons of Renaissance Technologies LLC.
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 increased approximately 20% to $1,326,000 for the three months ended April 30, 2010 from $1,109,000 for the same period of the previous year, reflecting an increase of $445,000 in Cortelco gross profit due to the inclusion of Cortelco activity for the full three months and an increase of $74,000 in Millennium gross profit. The increases were partially offset by declines in eQueue and maintenance gross profit when compared to the same period of the previous year. Gross margin % decreased to approximately 37% for the three months ended April 30, 2010 compared with gross margin of approximately 45% for the same period of the previous year, primarily the result of product mix. The margin percentage on Cortelco revenue is significantly less than the historical margins for both the Millennium and eQueue products.
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 24% to $1,058,000 for the three months ended April 30, 2010, from $852,000 for the same period of the previous year. The increase primarily reflects increases in Cortelco expenses of approximately $327,000 due to the inclusion of a full quarters expenses and increases in contract services of $42,000, partially offset by lower compensation related expenses of approximately $120,000, and lower professional expenses of approximately $21,000. Expenses in both the current and prior periods include approximately $21,000 in amortization related to technology that the Company plans to amortize through 2011. The Company expects to continue to sell products utilizing this technology through 2011 and beyond.
current period also reflects higher subcontract expenses of approximately $144,000, partially offset by lower compensation related expenses of approximately $406,000, lower depreciation and facility costs of approximately $110,000, and lower bad debt expense of approximately $67,000. Expenses in both the current and prior periods include approximately $63,000 in amortization related to technology that the Company plans to amortize through 2011. The Company expects to continue to sell products utilizing this technology through 2011 and beyond.
Our investing activities resulted in a net cash outflow of $438,000 for the nine months ended April 30, 2010 compared to a net cash outflow of $356,000 for the same period of the previous year. Cash used in investing activities for the nine months ended April 30, 2010 was a result of net cash used for capitalized software costs of approximately $424,000 and purchases of property and equipment. Cash used in investing activities for the same period of the previous year was a result of net cash used in the acquisition of Cortelco of $400,000, net disposals of marketable securities, an investment of approximately $136,000 in a joint venture in Hangzhou, China, net cash used for capitalized software costs of approximately $107,000, and purchases of property and equipment.
The Company had income from operations of $513,000 for the nine months ended April 30, 2010 versus a loss from operations of $464,000 for the same period in the prior year. As of April 30, 2010, the Company had $2,536,000 in cash and cash equivalents available to fund operations, of which $197,000 was held in international bank accounts.
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Eon Communications Corp. has a market cap of $5.6 million; its shares were traded at around $2.05 with a P/E ratio of 15.8 and P/S ratio of 0.5. EONC is in the portfolios of Jim Simons of Renaissance Technologies LLC.
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. As of April 30, 2010, the Company has made payments of approximately $1,681,000 to former Cortelco shareholders for the acquisition, including the initial aggregate payment of $500,000. David Lee, Chairman of eOn, was the Chairman and the controlling shareholder of Cortelco at the date of acquisition.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 increased approximately 20% to $1,326,000 for the three months ended April 30, 2010 from $1,109,000 for the same period of the previous year, reflecting an increase of $445,000 in Cortelco gross profit due to the inclusion of Cortelco activity for the full three months and an increase of $74,000 in Millennium gross profit. The increases were partially offset by declines in eQueue and maintenance gross profit when compared to the same period of the previous year. Gross margin % decreased to approximately 37% for the three months ended April 30, 2010 compared with gross margin of approximately 45% for the same period of the previous year, primarily the result of product mix. The margin percentage on Cortelco revenue is significantly less than the historical margins for both the Millennium and eQueue products.
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 24% to $1,058,000 for the three months ended April 30, 2010, from $852,000 for the same period of the previous year. The increase primarily reflects increases in Cortelco expenses of approximately $327,000 due to the inclusion of a full quarters expenses and increases in contract services of $42,000, partially offset by lower compensation related expenses of approximately $120,000, and lower professional expenses of approximately $21,000. Expenses in both the current and prior periods include approximately $21,000 in amortization related to technology that the Company plans to amortize through 2011. The Company expects to continue to sell products utilizing this technology through 2011 and beyond.
current period also reflects higher subcontract expenses of approximately $144,000, partially offset by lower compensation related expenses of approximately $406,000, lower depreciation and facility costs of approximately $110,000, and lower bad debt expense of approximately $67,000. Expenses in both the current and prior periods include approximately $63,000 in amortization related to technology that the Company plans to amortize through 2011. The Company expects to continue to sell products utilizing this technology through 2011 and beyond.
Our investing activities resulted in a net cash outflow of $438,000 for the nine months ended April 30, 2010 compared to a net cash outflow of $356,000 for the same period of the previous year. Cash used in investing activities for the nine months ended April 30, 2010 was a result of net cash used for capitalized software costs of approximately $424,000 and purchases of property and equipment. Cash used in investing activities for the same period of the previous year was a result of net cash used in the acquisition of Cortelco of $400,000, net disposals of marketable securities, an investment of approximately $136,000 in a joint venture in Hangzhou, China, net cash used for capitalized software costs of approximately $107,000, and purchases of property and equipment.
The Company had income from operations of $513,000 for the nine months ended April 30, 2010 versus a loss from operations of $464,000 for the same period in the prior year. As of April 30, 2010, the Company had $2,536,000 in cash and cash equivalents available to fund operations, of which $197,000 was held in international bank accounts.
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