Jobs going at PEH provide a clue., page-33

With respect 8th wonder I think your conclusions do not convey the picture.

Briefly -
Sales - increased by 54% to 14. 8million. Sales can not be confused with an R&D tax incentive.

R&D Tax Incentive Tax - amount of $1.597 million (read note D of the audited financial results.)

Trade and Term receivables - have a look at the trade and term receivables of $3.811 million.

"Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date."

Typically subscription based sales are not going to be fully represented in a bottom line financial report because the outstanding receipts are, by definition, staged by the terms of the sales contract. Accounts are closed at a specific point in time.

Notably, the audited report notes no impairments in those receivables.
"No provision for impairment of receivables was considered necessary as at the end of the 2015 reporting period (2014:$20,000)."

I could go on but I think you might do well to read the whole report and not rely upon subtracting a R&D tax incentive from the bottom line when our company has $3.811 million of non impaired receivables outstanding.

Further, I think that it is worth noting that the provision for staff benefits and salaries is a big ticket item particularly when the company is investing heavily in R&D (people are needed to do the R&D and sales). An economy of scale will be reached when sales ramp up - that is standard stuff.

Oh and did I mention we have a PER of ~8.8 (assume a 11.5c share price divided by earnings per share of 1.3c) Rather low PER - in my opinion. Oh and a ridiculously low MC of ~15 million.

Not sure about you but those figures look very reasonable to me - I could be wrong but I have offered nothing more in this post than what can be found in the Annual Report.

Hope that makes sense. Lastly, to answer your question of, "is PEH an incredibly low quality earnings business?" No. I do not think so