I hope that 2015 will be the year for EFL. Happy New Year to everyone. Here is a positive spin for the company. A future outlook and a postive PE:

Focusing on the aquisition, the dilution of our shares are well worth the gain that could come from this aquistion. I was looking at the income statement and played with some of the numbers. This would hopefully be the worst case scenario if the new factory is purchased and the manufactoring efficiencies are in place (perhaps by next Christmas):

--37.5 million in revenue (7.5 from current factory and 30 frorm the aquisition)

-- Gross Margin is 38% (same costs of manufactoring in both factories)

--Estimating that Expenses would increase by 50%. [6,286 X1.5 (50% increase in expenses) = 9427 mill] Mostly General and Admin (General and administrative expenses include salaries and benefits for corporate personnel, insurance, professional fees, reserves for bad debts and facilities expenses. The Company’s corporate administrative staff includes its executive officers and employees engaged in business development, financial planning and control, legal affairs, human resources and information technology.)

--0.38 X 37.5 mill = 14.25mill(GrossMargin) - [9.427 (50% increase in expenses)] = 4.823 Profit before Amortization and Foreign Exchange (Currently cancelled out with the Foreign Exchange).

EPS = 4.823/85mill shares (Overestimate in shares outsanding) = 0.05 EPS

Without any extra contracts in the new factory, a PE ratio of 20X would equal to a 1$ share price. I am sure that given the capacity of this new factory and similar stocks, the PE ratio would be much higher along with the share price. At least EFL would now have one. I hope my calculations are correct here. I am ignoring all the initial costs of setting up the factory because I have no idea what the amounts would be.

I am hoping that the less than perfect news release is an indication that the Management team is busy trying to secure potential contracts for their new potential factory. Perhaps some licensing as well.