Ongoing operating surpluses would be their operating cashflows....

Ongoing operating surpluses would be their operating cashflows. They've been producing positive operating cashflows for the last 3 quarters since they ramped up production - the last 2 quarters they've made $1.6m positive operating cashflow. Operating cashflow is similar EBITDA except it includes interest and excludes D&A, although D&A can be approximated easily enough.

The key for this company is expanding their operating cashflow/EBITDA margin as they build out production. At the moment, it's about 15%, which is too low (compared to LWB, which turns over operating cashflow & EBITDA margins of 22-24%). They've got a guaranteed distribution & product platform via Woolworths, financing in place through ANZ/Woolworths, and they are profitable at the moment.

The only question is whether or not their product is any good - they're selling into the premium market, so if it's not up to scratch, they won't make sales, which will probably lead to them dropping their prices with an impact to both margins and turnover. If the best case scenario comes to fruition (e.g. their product is well received, and they can maintain reasonable EBITDA margins in the order of 20% accepting the fact that Woolworths will probably screw them to some extent), then they are way undervalued at $0.06.

Lots of risk at this stage, but as i said, if their expansion plans pay off over the next few years, they will be trading at a market cap of a lot more than $20m.