Another factor Captain
Is how are they going to finance the receivable and inventory growth, especially when sales go from $8M to $136M?
We have a good idea on how WNBD is managing their growth and relationship with a 3rd party to "factor" if you will receivables so that it can pay vendors, etc.
Also the 3rd party has good idea on the customers WNBD sells to and their "credit worthiness". It was increased once from 250k - 500k, and may potentialy be again to $1M (given NA, etc.)
$136M in E**O case is about an average of $12M a MONTH. Yes the WoW guys are basically collecting monthly cash (some goes to E), but it is going to take a LOT of cash to operate at that level (pump out inventory and carry growing receivables). I don't see vendors to E getting too excited to extend too much (who are the AP bagholders right now?)
Why did E do a minor buyback when they need all the cash they can get to full their "monster rapid forecasted" machine. Will they surprise with major dilution to fund these "foreign deals"?
From my experience WNBD is nearing stage of being "bankable" given their customers (major retailers and distributors) - I can't say same for E. However, E's enzymes work (to my knowledge from reliable persons). I just don't know if management, structure, relationships can make it all happen and how tight the LOI or contracts are. In brutal business world (a penny) with SIGNIFICANT eggs in one or two baskets is VERY VERY risky. A customer can dump you at any moment with "an out". Surely if E can't afford (or doesn't want) to hire reputable CPAs to vouch (audit) those quarterlies, I highly doubt they've hired top notch legal as well. It looks like a potentially big OUCHIE. Be very careful too many warning lights went on for me.......highly advise to get to "free/house" shares as quickly as possible. Let some or all them ride, may be a lottery ticket you can cash at some later date....because I'm not sure the foundation is strong enough to withstand a major negative event (bad foreign deals, WoW has an out, etc.)..one could start dominos (house of cards) that not able to recover from.
WNBD structure (although didn't get NA in Apr 2008), was still able to churn forward and on a course, soon it will be at a point where if it loses an outlet (retailer/market,etc.) it is survivable. Yea it's slow, but roots and foundation being built are so so much stronger. E chose a "faster" route, it could work, or it could crash.
