Wednesday, 11 June 2008

Big Money In The Bank For AeroMechanical

AeroMechanical Services Ltd. (TSX:V-AMA)
Basic Shares: 81 million
Fully Diluted: 93 million

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What should have been regarded by the market as good news was today's (June 11th) announcement that AeroMechanical received a deposit of $626,500 (USD) from an African airline for its afirs tm technology. AMA explained that it is now standard practice to get deposits from its customers to encourage them to speed up the installation process. This contract already had an aggressive installation plan from the customer.

However, the stock price stayed fairly flat, which is likely a combination of the general sad state of the junior market and shareholders waiting for news on a final approval for the installation of AMA’s technologies in China. AMA states it is still on schedule to have those approvals as per the March telecast.

Through much of the day, shares hovered between $0.65 and $0.71, which is the level they have traded around for the past while.

AMA wasn't alone in receiving this kind of initial response to an otherwise positive news release. This year in particular has not been kind to the vast majority of micro/small cap stocks.

As this unidentified African airline installs the AFIRS technology, it will also pay AMA a monthly fee.

With the deposit and monthly fees for all 19 aircraft under this contract, AMA should earn just over $2.8 million in gross revenue.

There is also the possibility AMA could earn even more, given that the airline has reserved the right to include additional aircraft as it expands its fleet.

To view the full news release, please click here.