NETSILICON Quarterly Report (SEC form 10-Q)
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Our net sales increased to $5.8 million for the three months ended April 30, 1999 from $2.2 million in the three months ended April 30, 1998, representing an increase of 166.1%. The increase in net sales was due primarily to an increase in our OEM customers to which we shipped product from 11 in the three months ended April 30, 1998 to 26 the three months ended April 30, 1999. Net sales included maintenance and service revenue of $72,000, or 1.2%
of net sales in the three months ended April 30, 1999 compared to $79,000 or 3.6% of net sales in the three months ended April 30, 1998.
Gross profit increased to $2.7 million, or 46.3% of net sales, for the three months ended April 30, 1999 from $1.1 million, or 52.5% of net sales, in the three months ended April 30, 1998, representing an increase of 134.7%. Our gross margin percentage decrease in the three months ended April 30, 1999 was due primarily to a decline in our average sales prices.
Selling and marketing expenses increased to $1.3 million, or 22.8% of net sales, for the three months ended April 30, 1999 from $628,000, or 28.7% of net sales, in the three months ended April 30, 1998, representing an increase of 111.1%. This increase was the result of expenses incurred due to increased sales volume such as a $205,000 increase in commissions. We also incurred expenses of $106,000 attributable to the opening of our European sales office.
Engineering, research and development expenses increased from $502,000, or 8.6% of net sales, for the three months ended April 30, 1999 from $448,000, or 20.5% of net sales, in the three months ended April 30, 1998, representing an increase of 12.1%. This increase was due to the increased expenditures associated with the development of our NET+Works family of products. Software development costs of $315,000 and $163,000 in the three months ended April 30, 1999 and 1998, respectively, were capitalized and are being amortized over the products' useful lives estimated at three years. Amortization expenses related to capitalized software development costs for the three months ended April 30, 1999 and 1998 or $99,000 and $67,000, respectively.
General and administrative expenses increased to $613,000 or 10.5% of net sales, for the three months ended April 30, 1999 from $352,000 or 16.1% of net sales, and three months ended April 30, 1998, representing an increase of 74.1%. The increase in these expenses resulted from $73,000 of expenses attributable to a newly formed MIS group as well as other expenses resulting from increased sales. |
