Thursday, June 22, 2017 2:48:36 PM
Check the last paragraph that is a 3.5 Times or 250% increase in Gross Profit and the report explains why, reductions in cost, in other words it is sustainable as opposed to a lucky big order. Sales up 14% yet gross profit up 250% shows that margins greatly improved. In fact costs of net revenue dropping 30% from 86% to 56% is a huge improvement in margins.
I just grabbed a little more at .012, tried lower and got none.
https://www.last10k.com/sec-filings/0001166708/0001493152-17-006796.htm#fullReport
Results of Operations for the Three Months Ended March 31, 2017, as Compared to the Three Months Ended March 31, 2016
Net revenues. For the three months ended March 31, 2017, we had net revenues of $446,240 as compared to net revenues of $391,373 for the three months ended March 31, 2016, an increase of $54,867 or 14% The increase is primarily attributable to an increase in Tankfill and Nitrox sales to related parties, which increased from $110,012 to $158,423 between the periods. Sales of our hookah systems and related products to non-related parties remained relatively flat between periods. This change in sales and customer mix is not believed to be attributable to any particular sales trend or competitive pressures but rather normal fluctuations in market demand.
Cost of net revenues. Cost of net revenues declined during the first quarter 2017 compared to the first quarter 2016 representing, 56% of total net revenues compared to 86% for the prior year. This decline reflects the company’s cost cutting efforts implemented in 2016 including a 34% reduction in direct factory labor costs and modified raw materials purchasing procedures further reducing direct manufacturing costs. Due to technical advances, we are now purchasing less expensive and high quality and efficient motors. Furthermore, we have also implemented “blanket purchase order” procedures. Despite the fact we operating in a seasonal industry, we are committing to strategic, larger purchase orders, which enables us to purchase at a discount, while increasing inventory. We are also purchasing certain materials from new vendors under better terms. The main product categories of our business, Brownie’s Third Lung and Brownie’s Tankfill, are seasonal in nature. The peak season for Brownie’s Third Lung’s products is the second and third quarters of the year. The peak season for Brownie’s Tankfill’s products is the fourth and first quarters of the year. Since the seasons complement one another, we are able to shift cross-trained factory and warehouse personnel between the two product categories as needed. Thus, the Company is able to avoid the down time normally associated with seasonal business.
Gross profit. For the three months ended March 31, 2017, we had a gross profit of $196,219 as compared to gross profit of $56,434 for the three months ended March 31, 2016, an increase of $139,785. This increase resulted from the 14% increase in total net revenues coupled with the reduction in cost of revenues as described above.
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