In my opinion.....
Q over Q margins looks very good and the balance sheet looks much stronger after the debt conversion. If they keep the burn rate down as they did in the 4Q it should stay strong for the foreseeable future.
I have only one concern and that is that up until 3Q they didn't have a Cost of Goods sold. All revs dropped straight through to Gross Income. For the FY07 they now show $171,007 (up from $0 in FY06 and the first 3 Q's of FY07). This would indicate it was incurred in the 4Q. Revenues for the 4Q were $380,970. That means the operating margin for the Q was 55.9% aka Cost of Goods sold was 44.1% so net revenues were really $216,963 (still a 165% increase over Q3). So my question is, moving forward is COG going to continue as a signifigant portion of total revs or will it go back to 0%. If it remains at 55% they will have to make twice as much in rev to get the same Gross Income as previously.
Due to a successful cost constraints in Operating Expenses, Net Margins at -139.7 % still ended up better than any Q in FY06 or FY07 and a 900% improvement over FY06. At current margins critical mass for revenues appears to be at about $1MM - 1.2MM a quarter. That would allow them to break even or go slightly positive on the bottom line (assuming full tax loss carryover).
Also of note: approxiametly $1MM disappeared from the Asset side of the balance sheet w/ roughly half ($480K) of it represented as a reduction in intangible assets (either a reduction and or amortization of Goodwill) and the other half coming from the absence of $500K in Pre-Paid Expenses. Still the critical number for a company at this stage, Working Captial, is looking good at over $3.3MM. ..and lest we forget the retirement of 30MM shares in FY07. Everybody's piece of the pie got a little bigger (by 20% initially).
The numbers are definetly moving in the right direction and all and all a 'very' promising report (...and I believe a lot better than most expected especially with some of the pps performance we have seen since mid-June).
Other Stats at $0.30/shr:
LT. Debt-to-Equity 0%
Debt-to-Total Cap: 0.2%
Working Captial $3.3MM
Current Ratio: 28.9
Price-to-Book: 14.2
Market Cap: $48.6MM (*fyi: At $0.618/shr EFSF = $100MM Market Cap. )
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