Glad to see some explanation for the spike in COGS.
Not quite enough data to know for sure, but making a few assumptions we could estimate the change in margins.
In 2018 they reported a gross margin of ~60%, but part of that was due to reporting sales & admin expenses below the line, so if we move the $1.1M as they have this year, the 2018 margin would have been about 30%; which looks a lot more realistic.
Next step requires some guess work; assuming their hardware sales were on a margin of 15%, then the $1.5M increase in COGS would have reflected about $1.8M of hardware revenue. Backing that out gives $5.94M in software revenue and a COGS of $4M; at a margin of 32%.
Obviously a few assumptions in there but it shows that the margin on their services probably hasn't changed much year-on-year.
On the flip-side, adding the $1.1M back to operating expenses shows that those have actually increased by 5% instead of falling by 9%; although that's to be expected and I'd be more than happy if they can keep expense growth anywhere under double figures while they're growing.
End result is that they're probably going to need north of $20M in revenue before they're cash flow positive ($20M at 35% margin = $7M which would roughly offset operating expenses).
EVS Price at posting:
11.5¢ Sentiment: Hold Disclosure: Held
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