Epic Data (EKD.V) – bottom fishing opportunity?

[Tara]

Epic Data 2008 results (EKD.v)

This is a potential turnaround situation, in my opinion only. I’m not a broker, promoter, director, manager or employee of the aforementioned company, simply a shareholder. Do your own due diligence.
 

Earnings per share
• Q4= +570k, EPS +.04$/share
• Q3= +451k, EPS +.03$/share
• Q2= -287k, EPS -.02$/share
• Q1= -343k, EPS -.03$/share

• 2008 profits +391k or EPS +.03$/share (includes 100k received for sale of Ticket Manager, a non-recurring event).


Other relevant items and metrics
• 1.2M$ cash (.09$/share)
• Working cap -560k (because of 1M$ deferred revenues)
• Gross margin of 51% on 11.2M$ of revenues
• Free cash flow positive
• 12.9M shares outstanding
• Lowest option price is 10 cents
• Last insider trade at 28 cents in june 2008
• 33 years of history with 55 employees

Why I'm interested in EKD.v
• In the past 2 quarters, they revealed +7 cents EPS (Q4=+.04, Q3=+.03);
• On june 30th, they publicly announced having a backlog of 5.2M$, as per the following link:
C:\SEDAR\DOCS\EPIC\2008\nr08Aug2008.pdf
• Q4 showed 3.8M$ of revenues, thus leaving 1.4M$ going forward
• january 2009, they announced signing over 1M$ in renewals


Based on the above, it seems they have enough to declare at least +.01$/share in Q1, knowing their average gross margin is superior to 50%

After an extended series of losses, Epic is perhaps turning the ship around with impressive net earnings in Q4/Q3. June 2008 welcomed a new CEO, and VP sales with contacts in sought potential markets. Gross margins above 50% are enticing and should contribute to reduce the working capital deficit. The situation is not perfect, neither are the market conditions, but the recent profitability, combined with current backlog perhaps provide an attractive entry point for bottom fishers. Can it be a takeover target at current market cap? The aforementioned is my interpretation only of course.