DFNS 10k report

DFNS came out with there earnings last week. And they weren't late! Which was a surprise!

Here is the link to view the 10k

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6516523-914-325248&type=sect&TabIndex=2&companyid=74601&ppu=%252fdefault.aspx%253fcik%253d1069563

sales for Q4 were very good. They did $18+ million for the year which isn't much less then they did all last year.

They announced a new night vision product partnership which seems interesting. They of course did the buy out of company they co-owned at the end of the year and bought back 1 million shares of stock.

So now there is about 28 million shares outstanding. Of which the CEO owns about 19 million shares. He is 62 and maybe will want to retire in the future. Maybe a buyout possible in the next couple of years?

They still have a good amount of cash and a nice backlog of orders.

The problems are a couple fold.....
1. They are earning money but not much about .02 eps for the year (not including one time payments) Well at 10x PE that is .20 stock which is about where we are now. Even if they double it for 2009 not saying they will but if they did that is still a .40 stock which isn't bad return but that is if all things go right.

2. They have a $2.6 million lawsuit against them. Now they may win the lawsuit so they won't have to pay out the money. (If they lost it that is a MASSIVE hit to there cash) But even if they don't lose they will be paying some legal fees for fighting the lawsuit which is going to eat into profits that are already small.


The float is small (a few million shares) So if the stock rallied for any reason over.30 I would consider selling. I sold my stock that I bought a month ago at .18 and sold it at .21 last week for a 16% profit. The only stock I currently own of DFNS is for the stock doubling project.

I think at this point DFNS is more of a trading stock then a buy and hold stock. If DFNS came back to the mid teens or low teens I would consider purchasing. For a rally to low .20's. If DFNS gets above .30+ I will consider selling DFNS for the stock doubling project and moving on with a new stock.

Have a great day
Steve

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