Carol, et al.,
Lesson 1:
Emotions and equities don't mix.
The quality of earnings issue referenced in my prior post is something the more agile-minded among us have been aware of for months. We're, after all, not talking MSFT here.
Everything in life being relative.
It behooving one to bear in mind the fact of the typical OTC startup hosting a numbers situation inclusive of massive loss carryovers. No shortage of same far in advance of $25m. Multi-year histories with no sign of worthwhile operations. Empty revenues. The ugly rest of it.
SPNG management having made the situation clear. The fact of synergies and economies of scale seeing gross margin numbers grow significantly. Just a matter of continuing to push the company's products out the door.
And with that in mind we've already been apprised of the intent to significantly increase the fiscal '10 marketing budget. To the approx. $20m area. And we know that marketing costs represent, by far, the company's greatest operating expense. Additionally knowing that significant equity has been applied in covering same to a large degree. Resulting in the quality of earnings issue. An understandable circumstance as talked about. Fitting.
And, so, can we expect said quality issue to contract or expand in line with the budget increase?
Well, let's start with what else the June 15th PR tells us...
'The Company is also in the process of launching additional important new products that should drive strong revenue and earnings growth during FY '10 and beyond.'
And, so, does management anticipate that fiscal '10 will see cash flows from ongoing operations sufficient to dismiss all obligations? No need of application of equity? Synergies and economies of scale kicking in?
And we'll know when we know. But it does make sense. Applying equity initially. Until ongoing operations reach self-sustaining levels. With fiscal '09 audited numbers on the way.
The central point being that the numbers, as we currently know them to be, spell out an operational reality to totally smile about. Entirely in line with company business plan and model. The timeline excellence.
So, no complaints.
Audited numbers on the way. Painting a telling picture.
And let's assume that the self-serving antics of 'black' Friday hadn't transpired. That natural forces of supply and demand had continued to prevail. And would we be witnessing cases of emotional overload?
The underlying venue being what it is. And had the manipulation not seen the light of day and market level was, say, at a stable $0.55?
And, again, everything in life being relative.
Sidelining emotions.
Achieving the senior listing being the key. Quick. Simple. Cost-effective. Our knowing that M&A is an option 'always on the table'. With continuing operational growth/expansion making a buyout overture(s) ever more likely.
None of it being rocket science.
The plain and simple reality.
Management knowing well what it is they do.
Bringing value.
No shortage of the longs, yours truly inclusive, sitting on very significant paper gains as of this writing. So, indeed, no complaints.
SPNG is as good as it ever gets at basement level. Risk/reward.
With upstairs waiting.
Onward and upward in more ways than one.
With industrial strength formal word on the way.
The serious upside.
And thanks.
AI
