Level 8 Systems Inc blames a second-quarter loss of $1.2m on its continuing transition to the Microsoft Corp MSMQ (FalconMQ) market where it has a development and support agreement for linking Windows and NT to legacy systems using Redmond’s flavor of middleware messaging software. It thinks the market is going to be a big earner going forward which is why it’s gradually cashing in its IBM Corp MQSeries chips in favor of FalconMQ. Its current development agreement with Microsoft ends with the calendar year but New York city-based Level 8 says it’ll be replaced with a much broader deal which will be significant to our future. Level 8, which used to focus on selling MQSeries license and consulting where it was up against the likes of Candle Corp and Boole & Babbage Inc is turning its message-oriented middleware into full FalconMQ products and says it’s getting 50 sales leads a week just for the 1.0 release of FalconMQ. It says it’s doubled its sales force to 15 to cope with the demand. It also says it will be able to provide FalconMQ products and services more cheaply than other ISVs. Second-quarter revenue increased 30% to $3.6m from $2.8m. The net loss was $1.2m compared with a profit of $320,000 last time. The company attributed much of the loss the rise in operating expenses due to product transition and the absorption of its recent acquisition of Momentum Software Corp (CI No 3,359), whose technology is used in gateways supporting connections between IBM Corp’s MQSeries and Falcon. Operating expenses increased to $3.3m from $1.2m. Research and development rose to $900,000; it’ll remain 12% to 16% of revenue. Gross margins were stable at 53%.
