Really, the company does what most companies do, they shine the news in the best light, and a lot of the quarters numbers were impressive. They had fantastic revenue growth and they had a much improved gross margin. But with the apparent level of fixed expenses they actually had a bit of an operating loss. So then with nearly 2m in "change of fair value of derivative liabilities" it got them over into net income.
That's great but the market ask if net income is sustainable yet. Even more, if you project out revenues, apply the gross margin, and fixed expenses and give it a P/E of your choice where should the share price be? Do your own math if you like but just based on this one snapshot in time I think they have to be 55-60m in revenues to nail that net income down. Then once they get past that the share price could escalate accordingly with revenue growth.
If you assume that the 11m this qtr is locked in business then you can see 44m in a full year, which is close to company guidance. So just for hypothetical we will say they are at 44m revenue rate now. That's what is difficult, Etelix history can be studied, but these new subsidiaries are harder to predict, and the revenue growth even surprised the company.
If we say we are at 44m rate now and this revenue growth continues to expand as it has maybe soon we could see a company with consistent net income, and the more income, the more ability to pay debts, decrease costs, and avoid diluting. I don't know what the company has in it, maybe they don't fully know either but with 5G, iOT, etc its interesting. If they can get into 100m plus revenue and more there is potential for real good gains.
So if they want to attract more investors the barrage of news releases is fine I guess, but limit the dilution, negotiate better interest rates as soon as you can (a lot at 12% now), and work hard on keeping fixed costs down and importantly, get that gross margin higher and higher each quarter. And otherwise grow the company as the opportunities arise. Also, if they can somehow achieve net income again next quarter and hereafter I think the market would be there for them.
They know all this. I (and you) can project what the stock price should be at any given level, unfortunately this company is so new we only have this one quarter to evaluate it and need more reports to make it more clear. But a lot will change and that's how it goes.
Sorry for the long post, but to me that's why the stock is not exploding as some expect, but it is also how and why it potentially can explode. The management just needs to get it right, and I could wonder sometimes about their intentions, but right now I am of the belief that they are trying to make this a solid company, struggled with it some, had a few setbacks, but are delivering on the revenue and maybe just can make this great if all goes well. It's risky though, and I would never suggest anyone put a dollar in this or anything based on anything other than their own research and conclusions.