We need (net) profit -
I agree, that's why getting their gross margins higher is so important right now.
This (below) is rough, and not all inclusive, but based largely on the Apr-June time frame shown on the last 10-Q. The company has been providing monthly revenue figures so I am showing somewhat what it looks like if you look at the performance on a monthly basis. This ignores what appears to be extra-ordinary income and expenses, and ignores debt repayments. Also, taxes are not considered.
Revenue 4,400,000 (press release)
Cost of Revenue 4,109,600 (.066 over last three months)
General & Admin. 301,672 (last 3 months dived by 3)
Non control int. 56,010 (Income to non controlling interest)
==========
Net -67,282 Per month
To me, this is how close they are to break-even. Now more revenue helps, and that is said to be coming with the new carrier agreements. It would certainly help if they could shave a little off of Gen. & Admin, but mainly if they can bring up the gross margin it makes all the difference.
Etelix had a quarter last year at 10.46% gross margin. Let's project all the same figures from above at a 10% gross margin.
Revenue 4,400,000 (press release)
Cost of Revenue 3.960,000 (.10 if they can)
General & Admin. 301,672 (last 3 months dived by 3)
Non control int. 56,010 (Income to non controlling interest)
==========
Net 82,318 Profit Per month (approximate EBITA)
Then this, if China Mobile and Telefonica brings revenue up to 6.4m per month, and they can do 10% gross margin and without it raising Gen. & Admn, or non-controlling - although non controlling probably would rise somewhat, but not drastically.
Revenue 6,400,000 (press release)
Cost of Revenue 5.760,000 (.10 if they can)
General & Admin. 301,672 (last 3 months dived by 3)
Non control int. 56,010 (Income to non controlling interest)
==========
Net 282,318 Profit Per month (approximate EBITA)
Just giving some room for fluctuations, you can see maybe $500-$750 hundred thousand every quarter potentially available to pay off debts, or whatever in this last scenario.
I wish we could say this seems like a very likely scenario, but they haven't achieved those margins lately. Still, this new revenue is just that - new subsidiaries coming online, and I think it is reasonable to achieve better gross margins in the future. Maybe not up to 10% right off, but better than 10% could also be possible. And as far as the revenue goes we know where they are now, and we know they are very excited about what China Mobile and Telefonica will bring, with some guidance on it doubling the QGlobal customer base. And then there are new products coming online, such as phone number portability, blockchain, and IOT Smart Gas/IOT LAbs which I hope are high value added products.
These are not predictions - the coming 10-Q's will tell the story, but merely to demonstrate what an effect the higher gross margins could have for this company. Show me a company doing $ 280,000 net income a month, or over $3 million net income a year with a $5 million market cap!
Wish we could say that is exactly our situation, if it was it would be hard to imagine the current share price, and as along as the dilutions have gotten under control. But the thing is these projections are not impossible to imagine. Can they actually do it? Don't know, but it seems plausible to me that they could do this, or do a little better than this, or a little short of this, and in any event, net income may be in their grasp if they really watch those expenses.
Only the company knows what they can do there, but if they really believe the path leads to a higher market exchange like Nasdaq, then I have to think something like the last couple of scenario's shown above would have to be a big part of making there. Not a prediction, just some uneducated observations with a bit of wishful thinking thrown in.
