THREE MONTHS ENDED SEPTEMBER 30, 2005 VS. SEPTEMBER 30, 2004 REVENUE
Total revenues were $380,594 for the three months ended September 30, 2005 compared to $179,163 for the three months ended September 30, 2004. The increase was primarily attributable to a decreased demand of the Company's POTS Splitter product line and a sale to its IPOTS-1 product.
COST OF REVENUES
Cost of sales were $337,973 for the three months ended September 30, 2005 as compared to $129,781 in the prior period, representing 88% of gross revenues for the quarter ended September 30, 2005 and 72.0% for the quarter ended September 30, 2004, respectively. Our margins have contracted dramatically over the past four years as spending among the telecommunications providers has contracted, coupled with downward pressures related to the supply and demand of telecommunications products. Margins for the quarter ended September 30, 2005 increased by 16% over the margins for the same period ended September 30, 2004. We are unable to determine whether such margins will continue for the remainder of fiscal year 2006.
NET LOSS
The Company recorded a net loss of $2,957,536 for the three months ended September 30, 2005 as compared to a loss of $1,831,862 for the three months ended September 30, 2004. This represents a loss per common share of $.02 for the three month period ended September 30, 2005 as compared to a loss per common share of $.02 for the three months ending September 30, 2004; based upon weighted average common shares outstanding of 89,719,962 and 152,291,645 during the periods ending September 30, 2004 and 2005, respectively.
The Company believes the initial major deployments and the resultant revenues of its TV+ solution are not expected until the third quarter of fiscal year 2006, which along with any upturn of spending in the telephone industry will also increase sales and improve the Company's margins and provide the Company with the opportunities to attain profitability.
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