as in a gross loss, as in the cost of goods sold was greater than the net dollars in sales received.
It's the equivalent of a widget business that buys its widgets for $1 and then turns around and sells it for $0.87. Net result, a gross loss of $0.13.
Gross doesn't factor into operating costs which, at NEOM in 2006, represented 89.7% of all costs excluding one-time items and financing related costs .. just for gavitect and qode.
In 2006 NEOM recorded $15.8 million in costs related to operating activities for qode and gavitec. The unit generated $1.6 million in annual sales at a gross margin of (negative) -13%.
In 2006 the more "qode" NEOM sold the more money it lost. Not a workable model, obviously. Qode should be / needs to be operating at 50%+ gross margins while growing at a 25% quarter over quarter rate not -13% gross margins and 10% annualized growth rates.
Assuming that operating costs remain static at $16 million per year, at a 50% gross margin and 25% QoQ growth rate, NEOM will achieve a profit on a operating basis of $780,000 by Q3 2010.
At a 33% QoQ growth rate and 50% gross margin, operating profitability would be reached by Q4 2009 .. 50% Q1 2009 .. 66% Q4 2008.
As you can see management's stated goal of reaching "break even", which is a nebulous statement in and of itself ( break even on what line gross, operating, net?), by Q1 2008 seems unlikely if not impossible unless the company dramatically slashes operating costs.