As for earnings momentum, it's a mystery to me, how many "bones' is IBM throwing the QCSC way??
From:
sec.yahoo.com
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
The Company's network revenues decreased by 29% to $149,146 for the first quarter of fiscal year 1999 ("Q1 99")
as compared to $209,971 for the first quarter of fiscal year 1998 ("Q1 98"). This decrease is primarily attributed
to the Company's lower sales of its full Lotus Notes-based supplier stations and the related installation and monthly
subscription fees. The loss of these revenues has not been compensated by revenues of Internet-based services. The
revenue associated with the Company's service agreement with IBM Corporation in Q1 99 was $98,144. In this
agreement with IBM, the Company provides sales, marketing and end-user support services to assist in marketing QCS
products. The combined network and consulting revenues of $247,290 for Q1 99 represent an 18% increase from
total revenues of $209,971 for Q1 98.
Cost of network revenues decreased by 59% to $61,172 for Q1 99 from $149,000 in Q1 98. Cost of network
revenues is calculated primarily as a percentage of network revenues in accordance to the IBM revenue sharing
arrangement. In Q1 98 cost of revenues included cost of purchasing network services, the cost of internal and external
labor to install and support customer sites, and third party software and hardware for the existing Lotus Notes based
product. Cost of consulting revenue in Q1 99 was $98,144, which represents the value of services sold to IBM at cost.
Selling, general and administrative expenses ("SG&A") consist primarily of personnel-related costs in the Company's
sales, marketing and general management organizations and other administrative support costs such as external legal
and financial services. SG&A expenses decreased 18% to $400,728 in Q1 99 from $490,915 in Q1 98. The decrease
was due in part to the aforementioned cost of sales, marketing and end-user support services, which are now invoiced
to IBM or covered by IBM directly. In Q1 99 the Company realized savings of approximately $35,000 in rents and
facility expenses compared to Q1 98, following the closure of two overseas offices. Research and development expenses
increased by $66,636 to $144,619 in Q1 99 compared to Q1 98. The increased expenditures were for internal labor
and consulting services for enhancements to the Company's Internet product.
As a result of the foregoing, the net loss decreased 26% to $371,587 for Q1 99 from $499,786 in Q1 98.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents at September 30, 1998 was $385,022, representing a $88,148 decrease
from June 30, 1998. Cash used in operating activities for the three months ended September 30, 1998 was
$450,600, compared to $459,167 for the three months ended September 30, 1997. The cash usage is primarily
attributed to the net losses that occurred in each of the periods. During the first quarter of fiscal 1999, the Company
raised $379,505 in net proceeds from the sale of 276,091 shares of Common Stock in a private placement.
As of November 11, 1998, the Company's cash on hand was approximately $215,000. With the capital currently on
hand, the Company has resources to fund its operations through approximately the end of calendar year 1998. As of
November 13, 1998, the Company has received and accepted executed subscription agreements whereby two investors
have agreed pay to the Company $300,000 for 400,000 shares of Common Stock and warrants to purchase an
additional 300,000 shares of Common Stock with an exercise price of $1.00 per share. The Company expects to
receive the proceeds from these subscriptions during the current fiscal quarter (Q2 99). The Company believes that
it will likely need to raise additional equity capital during the remainder of fiscal 1999. Furthermore, if the Company
continues to sustain significant losses, it will be required to obtain additional debt or equity funds in subsequent
periods. If such capital raising efforts should prove unsuccessful, the Company will need to reduce operating spending
significantly, which would materially and adversely affect the Company's business and raise substantial doubts about
its ability to continue as a going concern.
The Company currently does not have a bank credit line. The Company does not intend to pay cash dividends with
respect to Common Stock in the foreseeable future. |
