I would otherwise agree with your calculations and conclusions, but three items would lead me to be skeptical:
1. If I am remembering correctly, in May the interest expense on the new debt (which has been described upthread as "toxic") will kick in. At 10% on an eventual loan of $1.6 million, that would be $160,000 per year or $40,000 per quarter - almost enough by itself to offset the current level of quarterly net income. Alternatively, if the debt converts to equity, the per-share earnings will still plummet.
2. Again, if I am remembering correctly from SEC documents, Kyle is taking a below-market salary of 48K per year. When he plays catch-up, "that will leave a mark."
3. There is an integrity problem with the company. Most of us had gotten the "pump and dump" literature this past spring, and we also had the very quick resignation of Mr. Birnbaum. Now we have gotten to read in the SEC filing that the company has self-identified a material weakness in internal controls. That would be laudable, except that the CPA firm retained to consult in the matter in Winther & Co. That doesn't quite pass the smell test.
For these reasons, I would believe that the stock would not merit even the 15X price-earnings ratio you ascribe as even being conservative. On a more technical basis regarding the stock, the next few weeks, I believe, will see many of the victims of the pump and dump scheme unload their shares for tax purposes.
Full disclosure: I'm not an investor nor a short-seller in the stock. I started following it when the pumping e-mails and phone calls started to come and was curious how long it would take for the crash and burn to inevitably come. After it did, I've remained curious and have also enjoyed the fellowship of the message board.
