HRBN - Possible, but seems quite unlikely, in my opinion. It might be reasonable that such expenses might go down over a period of several quarters or years, but not in one quarter. And especially not the first quarter after you get your first contracts. It's not like expenses for a new venture are a one-shot deal. Plus, if that were the case, the company would/should have explained that. They didn't. If anything, it would make more sense if SG&A expenses had gone up faster than sales.
The company only has two major customers. Seems very unlikely that they wouldn't be going after more.
In my experience, it's best not to contrive scenarios that "could have happened" on behalf of the company. It's best to listen to what the company says and not make excuses for them. Some of my biggest losses have come from times when I started saying to myself, "well, they could have had labor problems this quarter, or they could have had salesmen quit," etc., etc. I started making up all these excuses for why sales were down or expenses were down, etc. The company wasn't saying any of those things, I was making excuses for them.
In this case, Management should have explained (in writing) how it is that sales can be up substantially and expenses can be down even more substantially. They didn't. Those are the facts. It doesn't necessarily have to mean anything terrible, but it is flaky looking . . . and it shouldn't be that way.
Another negative is that the company will have to start paying taxes next year. That's not factored in to current earnings either.
I'm not trying to be overly negative, but it looks a little flaky, and I don't think earnings are nearly as good as they appear.
