To OTC Journal Members: 
 

Options Media (OTC BB: OPMG): The Marvelous Margins

Options Media released its Q1 numbers this morning, and there's is boatloads to be optimistic about in this release. Based on these numbers, I believe shareholders from current depressed levels could make a lot of money with a position in this stock. OPMG is probably one or two quarters away from being, in the vernacular of Tony Soprano, a "Big Earner".

This is a high margin business, and OPMG will likely rack up the "EPS" in 2010 if they stay on their current path.

Here's a quick review: The top line number came in at $2.2 million. As I stated, they were generating $1 million per month in revenues from zero one year ago. That's a pretty fast start. 

Here's the number I love: 70%- not 7%- 70%. That's a great business. The gross margins on their services are 70%, which is a huge number in the corporate world. Here's how it works. You generate $1 in revenue, pay for the underlying costs, and you have $.70 left to cover your ongoing corporate overhead- rent, salaries, etc. 

Those are nearly Pharmaceutical and software type margins, and generally associated with very profitable businesses once they get past their start up phase.

OPMG delivered $2.2 million in revenues- yielding $1.54 million in gross profits(70%). OPMG reported a net loss of $1.4 million. They listed $2.7 million as total operating expenses.

However, as I go through the numbers, I add up almost $600,000 in non cash expenses- employee stock options and the like. Therefore, their real, out of pocket hard losses were more like $560,000.

With their margins, another $1 million in revenues would equate to $700k in gross profits, and based on the numbers I'm seeing here would make the company cash flow positive on an ongoing basis, and make the stock worth far more than the current $.30 level on which it is camped. They could use a little more cash, but they're managing that side of the business quite well.

$3.3 million in all of 2008. $2.2 million in Q1 '09. That's an annualized growth rate of 166%. 

The best news of all is the trading level of the stock. It's anemic at best, and an awesome opportunity to accumulate at these levels. There was an initial surge of interest, a big pullback, and the stock has entered a phase of consolidation on much lighter volume. 

If you can see this company getting to $1 million more in quarterly revenues, it's easy to see a cash flow positive scenario. From there, greatly reduced risk, and EPS will be a quarter or two behind. 

2009 price target for OPMG is $1- about a $55 million valuation. From today's level I would put my SSL at $.25. Tripling your money vs a 20% loss. Seems like pretty good math for the low priced end of your portfolio. Take advantage of the weakness.
 

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About a year ago I asked my techies if there was any way we could get ideas to investors with text messaging to cell phones. I was prepared to spend some money as I saw this as the easiest way to quickly notify investors of important events.

The folks at TWITTER did it for me, and it's all free. Worth waiting for. Set up your TWITTER account (free), and become a follower of the OTC Journal. I'll use it for quick updates and coming events.

Just go to www.twitter.com, and enroll. From there, adding to your Twitter network is a little tricky, and there's a learning curve. Then, go to the home page at www.otcjournal.com, and click on the "Follow" button on the Twitter box. Or, go directly to http://twitter.com/otcjournal.

Sign up today, join as a follower, and I'll start using it to everyone's benefit. Tell your friends to sign up as well.

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