Question-and-Answer Session
Operator
[Operator Instructions] Your first question comes from Un Kwon with Pacific Growth Equities.
Un Kwon – Pacific Growth Equities
I was wondering, could you talk a little bit about your cash flow break even or profitability goals going into ’08?
Ron Andrews
Sure, as we talked in the past, our goal obviously is to capitalize on the improvement in our gross margins to continue to manage our expenses like we have the variable expenses we have over the previous year and now with the understanding that we have from our billing debacle that we went through in fourth quarter that we now dialed into this years plan. We believe we’ll have significant trajectory towards reaching our goals of cash flow break even and even profitability as we continue to grow the business this year and dial that through this year’s financials.
We have not, as you know, in the past given guidance about when we will be profitable but I think as you see us now take into account the knowledge we have from the learning we gained from fourth quarter and we reevaluate our projections going forward that in future quarters we’ll be addressing the goals of becoming cash flow break even and certainly profitable as our continue growth trajectory goes forward.
Un Kwon – Pacific Growth Equities
Is there something that we should anticipate this year as far as breaking even on the cash flow line?
Jim Agnello
Our challenge is on getting to true cash flow break even is funding working capital in an environment where we are growing as fast as we are. We believe after the experience over the last few months that the transition to a new billing service and new billing capability in-house will give us more control over our own collections but until we get better data on what that implementation of that really provides for us we really are looking at our own current cash flow capability and looking at our growth and obviously in our growth we need equipment, we need agents, we need other items and that working capital in the growing environment increases our requirements.
Although we will be much closer to cash flow break even as the year goes on, as we continue to grow as Ron mentioned earlier getting the full cash flow break even will be a function of how well we implement this new billing capability and how quickly we can moderate things going forward. Obviously, as we mentioned earlier our gross profits continue to grow, our gross margins passed 52% we certainly think we can get those in the mid 50’s in 2008 and so that’s going a long way to get us the cash flow break even.
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