Grant-
I'll take a stab at answering what I believe to be true.
The employee stock 401k plan is to be offered to employees beginning in January. Currently there is approximately $6 million in 401K savings. They will be allowed to designate Osicom stock as an investment vehicle in their 401K. I believe (I'll check to make sure)Osicom (or someone acting in Osicom's behalf) will be purchasing stock from time to time in the open market to meet these requirements.
The Net Arm is already being used in Osicom's products this quarter. There are currently 15 printer manufacturers that are designing Net Arm into their products according to the conference call. LanTronix has also decided to use their product in several of their products. Several companies are now looking at the Net Arm chip and I believe we will begin to see more design wins for this product in the very near future.
Selling and marketing expense totaled $4.4 million, or 19.0% of net sales for the quarter ended October 31, 1997. This compares to $4.2 million, or 12.5% of net sales for the quarter ended October 31, 1996. For the nine months ended October 31, 1997 selling and marketing expenses totaled $13.5 million, or 15.3% of net sales as compared to $9.9 million or 12.5% of net sales for the nine months ended October 31, 1996. Thee increase in the dollar amount of these
expenses resulted from marketing efforts related to the introduction of new products as well as efforts to expand the Company's domestic and international sales channels. The increase in these expenses as a percentage of net sales during the quarter ended October 31, 1997 reflects the reduced net sales during the period.
On a percentage basis, those expenses were high relative to sales. Remember, Q3 was abnormal due to the combination of a few OEM's that didn't take delivery of product. Also, they were spending some cash on rolling out the IQX-200, which didn't start selling until the last month in that qtr. In Q4, this qtr, that expense as it relates to revenues should be back to normal. I don't see a new trend going here.
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