QS Energy Inc (QSEP)

[Myrka]

These are AISI numbers posted 21 March 2014

Post # 7351

I don't think I have articulated strongly enough just how important our first glimpse of profit margins really is.

Talk of CGS and SG&A is something only accountants would love. However, for every holder of STWA stock that is wondering if we really can see our stock price soar, this type of gross profit margin is an enormous stride toward an affirmative yes.

Here is a very simple hypothetical example why:

Assume selling price skid of four AOTs - $4,300,000
Assume cost of goods sold per skid - $1,200,000
Gross margin is (4,300,000 - 1,200,000)/4,300,000 = 72%

If 25 AOT skids of four were ordered the gross profit would be
25 x $4,300,000 = $107,500,000 x .72 = $77,400,000

If gross margins were only 30% or even 50% you can see what a huge difference that would make to gross profit.

At this point I can only guess what net profits would be for the above example, but gross margins this high or higher are very promising. The expense side would include payment of royalties to Temple University, SG&A, and taxes.

To the extent that STWA can bring down the manufacturing costs with a larger production run and/or increase the sales price of the AOT, margins will expand. Taxes probably won't be a problem for awhile as we should have plenty of tax loss carry forwards.

Now all we need is for the Midstream AOT to fulfill it's promising outlook.

As a point of reference the gross profit margin of the S&P 500 is approx. 38%. The net profit margin of the S&P 500 is approx. 8.5%.