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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (15555)	3/1/1999 12:32:00 AM
From: Jay Fisk	Respond to of 122087

OMGA -Following paragraphs ripped from latest 10Q, commentary in italics: The Company's total revenues were $21.2 million in the nine months ended September 30, 1998 compared to $22.9 million in the comparable period of 1997. At $2500 per product, that's only 30 unit sales per day ! Sales and marketing expenses as a percentage of licensing fees increased from 43% in the three months ended September 30, 1997 to 73% in the comparable period of 1998 as a result of the increased marketing expenses and decreased licensing fees. The Company expects the level of sales and marketing expenses, including advertising and promotional costs, to depend on the level of sales. Sales and marketing expenses are expected to increase in connection with the release of the next versions of the Company's products. Insane ! Even if sales overhead was 50% fully half of their gross revenues are sales costs/comissions ? The initial sale must be a tough one, keeping them sold is another issue: The Company performs periodic credit evaluations and maintains allowances for potential credit losses of approximately $3,652,000 and $3,229,000 at September 30, 1998 and December 31, 1997, respectively, and allowances for potential returns of approximately $5,300,000 and $4,150,000 at September 30, 1998 and December 31, 1997 respectively. Their sales / revenue model is completely unrealistic. As their unitary cost-of-goods is less than $50.00, they'd be ahead by selling their software at $499 per module via retailers, drop the direct sales staff. X-Station may have been useful in the pre-internet days for a TA fixated investor, don't see much net revenue upside unless they radically revise their whole sales approach. FAIR VALUE $3.00 TOPS.