EGAN is buying a lemon INFR the loser.INFERENCE CORP /CA/ (INFR)
December 13, 1999
Quarterly Report (SEC form 10-Q)
https://biz.yahoo.com/e/l/i/infr.html
Three months ended October 31, 1999 and October 31, 1998
* Total revenues decreased to $5,514,000 in the three months ended October 31, 1999 from $8,324,000 in the three months ended October 31, 1998. This 34% decrease was primarily attributable to a decrease in product revenue.
* Total revenues from the Americas operations decreased to $3,198,000 in the three months ended October 31, 1999 from $4,497,000 in the three months ended October 31, 1998, representing a 29% decrease. Total international revenues decreased to $2,316,000 in the three months ended October 31, 1999 from $3,827,000 in the three months ended October 31, 1998, representing a 39% decrease. Total international revenues for the three months ended October 31, 1999 and October 31, 1998 represented 42% and 46% of total revenues, respectively.
* Product revenue decreased to $2,294,000 in the three months ended October 31, 1999 from $4,912,000 in the three months ended October 31, 1998, representing a decrease of 53%.
* Product revenue from the Americas operations decreased to $1,245,000 in the three months ended October 31, 1999 from $2,617,000 in the three months ended October 31, 1998, representing a 52% decrease. International product revenue decreased to $1,049,000 in the three months ended October 31, 1999 from $2,295,000 in the three months ended October 31, 1998, representing a 54% decrease.
* Total service revenue decreased to $3,220,000 in the three months ended October 31,
1999 from $3,412,000 in the three months ended October 31, 1998, representing a 6% decrease.
* Service revenue from the Americas operations increased to $1,953,000 in the three months ended October 31, 1999 from $1,880,000 in the three months ended October 31, 1998, representing a 4% increase.
* International service revenue decreased to $1,267,000 in the three months ended October 31, 1999 from $1,532,000 in the three months ended October 31, 1998, representing a 17% decrease.
* Cost of product revenue, consisting primarily of the costs of product media and duplication, manuals, packaging materials, personnel-related costs, shipping expenses and royalties paid to partners and third-party vendors, increased to $339,000 in the three months ended October 31, 1999 from $233,000 in the three months ended October 31, 1998, representing a 45% increase.
* Cost of service revenue, consisting principally of personnel-related costs for consulting, training and technical support, decreased to $1,533,000 in the three months ended October 31, 1999 from $1,615,000 in the three months ended October 31, 1998, representing a 5% decrease.
* Product development expenses increased to $2,167,000 in the three months ended October 31, 1999 from $1,358,000 in the three months ended October 31, 1998, representing a 60% increase.
* Sales and marketing expenses increased to $4,546,000 in the three months ended October 31, 1999 from $3,807,000 in the three months ended October 31, 1998, representing a 19% increase.
* General and administrative expenses increased to $1,021,000 in the three months ended October 31, 1999 from $853,000 in the three months ended October 31, 1998, representing a 20% increase.
* In the quarter ended October 31, 1998, we recorded a restructuring charge of $282,000 related to severance costs associated with personnel changes in our executive management team, all of which was paid prior to the end of that quarter.
* Interest income and other expenses, net, primarily interest income, decreased to $205,000 in the three months ended October 31, 1999 from $337,000 in the three months ended October 31, 1998, representing a 39% decrease.
Nine months ended October 31, 1999 and October 31, 1998
* Total revenues decreased to $17,414,000 in the nine months ended October 31, 1999 from $22,185,000 in the nine months ended October 31, 1998, representing a 22% decrease, which was primarily attributable to a decrease in product revenue.
* Total revenues from the Americas operations decreased to $10,170,000 in the nine months ended October 31, 1999 from $12,457,000 in the nine months ended October 31, 1998, representing an 18% decrease. Total international revenues decreased to $7,244,000 in the nine months ended October 31, 1999 from $9,728,000 in the nine months ended October 31, 1998, representing a 26% decrease.
* Product revenue decreased to $7,503,000 in the nine months ended October 31, 1999 from $12,105,000 in the nine months ended October 31, 1998, representing a decrease of 38%.
* Product revenue from the Americas operations decreased to $3,969,000 in the nine months ended October 31, 1999 from $6,905,000 in the nine months ended October 31, 1998, representing a 43% decrease. International product revenue decreased to $3,534,000 in the nine months ended October 31, 1999 from $5,200,000 in the nine months ended October 31, 1998, representing a 32% decrease.
* Total service revenue decreased to $9,911,000 in the nine months ended October 31, 1999 from $10,080,000 in the nine months ended October 31, 1998, representing a decrease of 2%.
* Service revenue from the Americas operations increased to $6,201,000 in the nine months ended October 31, 1999 from $5,552,000 in the nine months ended October 31, 1998, representing a 12% increase.
* International service revenue decreased to $3,710,000 in the nine months ended October 31, 1999 from $4,528,000 in the nine months ended October 31, 1998, representing an 18% decrease.
* Cost of product revenue increased to $744,000 in the nine months ended October 31, 1999 from $611,000 in the nine months ended October 31, 1998, representing a 22% increase.
* Cost of service revenue decreased to $4,915,000 in the nine months ended October 31, 1999 from $5,177,000 in the nine months ended October 31, 1998, representing a 5% decrease.
* Product development expenses increased to $5,556,000 in the nine months ended October 31, 1999 from $3,860,000 in the nine months ended October 31, 1998, representing a 44% increase.
* Sales and marketing expenses increased to $12,008,000 in the nine months ended October 31, 1999 from $11,278,000 in the nine months ended October 31, 1998, representing an increase of 6%.
* General and administrative expenses decreased to $2,796,000 in the nine months ended October 31, 1999 from $3,100,000 in the nine months ended October 31, 1998, representing a 10% decrease.
* Interest income and other expenses, net, primarily interest income, decreased to $718,000 in the nine months ended October 31, 1999 from $953,000 in the nine months ended October 31, 1998, representing a 25% decrease.
* Cash and cash equivalents at October 31, 1999 were $18,813,000, a decrease of $6,948,000 since January 31, 1999. Working capital at October 31, 1999 was $14,921,000.
* We believe that existing cash balances, taking into consideration the anticipated effect of cash flows from operations, will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months.
WE HAVE RECENTLY EXPERIENCED QUARTERLY LOSSES, WE EXPECT TO INCUR LOSSES IN THE NEAR FUTURE AND WE MAY NOT EVER BECOME PROFITABLE
* We have now experienced losses in four of the last six quarters. As of October 31, 1999, we had an accumulated deficit of approximately $30 million.
Because our software products are complex, they often contain errors or +bugs+ that can be detected at any point in a product's life cycle. While we continually test our products for errors and work with customers through our customer support services to identify and correct bugs in our software, we expect that errors in our products will continue to be found in the future. Although many of these errors may prove to be immaterial, certain of these errors could be significant. Detection of any significant errors may result in, among other things, loss of, or delay in, market acceptance and sales of our products, diversion of development resources, injury to our reputation, or increased service and warranty costs. These problems could materially adversely affect our business and future quarterly and annual operating results.
WE ARE EXPOSED TO MARKET RATE RISK FOR CHANGES IN INTEREST RATES
Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We currently do not use derivative financial instruments. We invest, by policy, our excess cash balances in money market accounts, debt instruments of the U.S. Government and its agencies, and in high-quality corporate issuers, and limit the amount of credit exposure to any one issuer. As of October 31, 1999, our investments consisted primarily of funds contained in money market accounts. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates.
* * * INFR has cash flow problem with $30 million deficit and $14.921 million working capital. Existing cash will be sufficient for at least twelve months.
* * * Interest rate increased will cause problem to INFR.
* * * INFR software products contain errors or bugs. REASON REVENUE DROP
The question is will EGAN have sufficient cash to back INFR up on INFR development after twelve months. To raise more cash, EGAN may have to sell shares. This can cause a major sell-off.
https://biz.yahoo.com/p/i/infr.html
INFR market capital: $57 million
INFR cash: $14.921 million according to the latest 10Q
INFR deficit: approximately $30 million
FOCUS-EGain to buy Inference in deal valued at $78.6 mln
https://biz.yahoo.com/rf/000316/85.html
INFR net worth $57+$14.921-$30=$41.921 million
EGAN is losing $36.679 million
INFR shareholders got themselves a bargain.
Institions are dumping INFR and EGAN is buying INFR.
https://www.insidertrader.com/freestuff/ticker_summary.asp?search=1&criteria=infr&Submit1=GO