Analyst: AMA's Ruts & Smooth Road to Profits

AeroMechanical Services Ltd. (TSX:V-AMA)
Basic Shares: 82.5 million
Fully Diluted:88 million ******************************

A corporation and marathon runner have a lot in common.

Both face the greatest difficulties coming into the home stretch.

A relatively young corporation like AeroMechanical, has to draw on all its smarts and heart now to go the final distance to its first major milestone - profitability.

Equally, it's all willpower, discipline and heart that get a marathon runner through that last gruelling third of the race.

In his latest update, Research Capital aviation analyst Jacques Kavafian eloquently laid out all the ruts he believes AMA must avoid and the even pavement it must stay on to reach that goal.

A goal Mr. Kavafian is counting on for next year.

Playing off AMA's first quarter report for 2009, filed here, Mr. Kavafian noted how the toxic combination of sky-high fuel prices in the early part of 2008, crashing stock markets and plummeting passenger lists in the latter half of the year and first quarter of this year, conspired to slow AMA's sales and all-important installations of its technology.

Most airlines simply shut down spending on anything but the absolute fundamentals, Mr. Kavafian noted.

But the situation appears to be turning around, he added.

First, there are encouraging reports from around the world that airline traffic has stabilized.

Second, a host of airlines hedged their fuel costs and are just now coming off paying relatively high locked-in prices - higher than today's fuel costs but lower than the crazy prices airlines were faced with when they hedged their fuel costs.

That will free up a lot of cash, he predicted.

But given how oil prices are on an upward march again, Mr. Kavafian wrote:
"High oil prices should help airlines re-engage into thinking of ways to reduce fuel burn. And that is good news for AeroMechanical's fuel management program," Mr. Kavafian said, noting AMA's program can show airlines how to slash up to $200,000 in annual fuel bills per plane.

The fear of a return to $100 per barrel oil prices "will make airlines take pre-emptive action to shield themselves in case of another oil shock," he predicted.

Mr. Kavafian also wrote that AMA's recent partnership with Sierra Nevada Corporation (SNC), will see SNC take over some of AMA's research and development costs and that will help AMA on the expense side.

Given all of the above, Mr. Kavafian wrote that he still believes, "the company should be able to meet its near-term working capital requirements."

In AeroMechanical's Q1/F09 filing, working capital stood at $934 thousand, compared to $1.3 million in the same quarter last year.

He did, however, caution that if the pace of installations did not pick up or if existing customers do not sign on for its fuel-management program, "AeroMechanical may need to raise more capital at the latest by September 2009."

Despite that bold-lettered warning, he recommended investors continue to buy AMA stock in the current range because he expects the stock to hit $0.65 cents, a 160 % return from a $0.25 cent share price.

Why?
Because he doesn't believe the ruts will be so bad that AMA will not reach the 2010 goal of profitability.

AeroMechanical applies a standard comment to any analyst's report, noting AMA doesn't necessarily share the analyst's views.

To read Mr. Kavafian's full report, please click here.

Underground Samples Hold More Golden Promise For Anglo Swiss

Anglo Swiss Resources Inc.(TSX-V: ASW) (OTCBB: ASWRF) (BERLIN: AMO)
Basic Shares 130.2 million
Fully Diluted 150 million

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There's a bit of buzzing at Anglo Swiss on the heels of new assay results from the underground sampling at the Kenville gold mine just outside of Nelson British Columbia. The assay results are saying that the company is on to something with reported results of up to 180.5 grams of gold per tonne (6.37 ounces) from another portion inside the mine adit known as the Yule Vein/Flat Stope.

Samples were taken from inside the mine where 85 meters of the Yule Vein was exposed. The Yule/Flat Stope is part of a four vein structure known as the Eagle Vein system which the company has been looking to define since it discovered it during its 2007-2008 exploration drilling.

The purpose of this underground exploration program is to re-establish a NI 43-101 compliant gold mineral resource on the main haulage level called the 257 level.

The Eagle Vein system has been established for at least 700 meters with ASW looking to add further definition to the size of the structure.

See full news release here........

Annual AMA Meeting: Opportunities & Challenges

AeroMechanical Services Ltd. (TSX:V-AMA)
Basic Shares: 82.5 million
Fully Diluted:88 million



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A surprise speaker at AeroMechanical’s May 21st annual meeting summed up the company’s future prospects best.

Hugh Cleland, a co-founder and portfolio manager at Northern Rivers Funds – which owns about 10% of AMA stock – asked one question of the roughly 30 shareholders present:

“What airline wouldn’t look at the chance to save $100,000 to $200,000 per aircraft (in annual fuel bills) when they don’t have to spend significant capital?”

Mr. Cleland wasn’t on the roster to speak at the annual meeting.

But he’d arrived in Calgary the day before and wanted to tell investors how his faith in AMA had hit new heights after peppering AMA executives and AMA’s latest partner – Sierra Nevada Corporation, the U.S. private company with rumoured annual sales of $1 billion through sales of state-of-the-art avionics equipment to the military – about the near and far-term future of AMA.

Mr. Cleland’s question revolved around AMA’s fuel management initiative, which can save airlines roughly 3% of the fuel a typical jet aircraft burns every year.

When dealing with hundreds of aircraft in a typical large airline’s fleet, that 3% quickly soars into the multi millions of savings every year.

And all an airline needs to do to start the fuel-management program is lay out a relatively small sum for consulting and acquiring AMA’s technology – the afirs box , or bluebox as it is informally called.

The fuel management software and expertise that AMA offers is a “game changer” AMA President Richard Hayden told the annual meeting.

“This (fuel-management system) moves the sales prospect from a nice-to-have technology to a must have,” Mr. Hayden said.

However, here’s the irony:

At no time before in AeroMechanical’s history have the financials – recurring revenue, cash coming in the door and costs of sales – looked so good.

But the one dominant question on the minds of shareholders was how the company was going to bring in some extra cash to work on some interesting improvements to its technology without issuing more shares.

Investors heard more funding is needed to further develop and get regulatory approval for the next generation technology or bluebox that AMA has been working on for two years.

Some of the compelling reasons for building this next afirs box are two new standards being imposed on the airline industry by the European Economic Community (EEC).

First is the Emissions Trading Scheme that will soon tax airlines for all of an aircraft’s carbon emissions while flying in EEC airspace.

Second are a suite of requirements that automate the communication between an aircraft and air traffic control as well as other aircraft. The European rules are captured under a set of proposed regulations called Link 200+ and implementation requirements are only a couple of years away.

The corresponding activity in North America is called NextGen that has a different timetable but the same end result.

On the first issue, AMA’s bluebox and the fuel management system gives airline executives the ability to monitor each of their aircraft’s fuel burn in real time in an effort to trim fuel usage and thus minimize any taxes on that aircraft’s carbon emissions.

A constant electronic signal that identifies aircraft can also easily be built into an AMA bluebox. But it costs a lot to complete the research and development and garner international aviation regulatory approvals to put this next generation bluebox– formally called the afirs 228 – on an aircraft.

Neither AMA Chairman and CEO, Bill Tempany,or Mr. Hayden, told the annual meeting what the cash requirement is.

But both repeatedly said rather than dilute shares any further with a public financing, the focus is first and foremost on living within AMA’s budget and raising any extra funding by way of loan instruments and/or federal government grants.

AMA only has payable loans of $257 thousand as of the first quarter in 2009.

Mr. Cleland said he was especially encouraged on the financing front after spending a lot of time with some Sierra Nevada Corporation (SNC) executives.

Investors heard that SNC executives are spending about 30% of their time promoting AMA’s technology to the U.S. Air Force and other military concerns.

Cleland said that and the fact that funding negotiations are going on with SNC covers off one of four reasons why he is sticking with his AMA shareholdings.

“I’m either going down with this ship or taking off with it,” Mr. Cleland jokingly told investors. Mr. Cleland said he didn’t come to his conclusion to stick with AMA lightly. He told the annual meeting he asked AMA executives and AMA’s current and prospective clients a lot of probing questions before reaching his conclusion.

His listed three other reasons for gaining renewed confidence:

1. The appointment this year of Mr. Hayden, a former vice-president of Meggitt PLC, a multi-billion dollar, U.K.-based aviation firm, as AMA’s President;
2. The appointment of Jack Olcott, an aeronautical engineer and former head of the National Business Aviation Association as an active member of AMA’s Board of Directors;
3. The appointment of Matt Bradley, a former Canadian Air Force pilot and commercial pilot as AMA’s Vice President of Operations.

Mr. Cleland said the extraordinary skills of all three will be critical to bringing AMA to profitability.

The other topic investors repeatedly raised was China.

Mr. Hayden said while he doesn’t fully understand the politics of that vast and complex country, he is encouraged by the continuing interest Chinese aviation officials have in fulfilling AMA’s contract to put its blueboxes on board 515 aircraft there.

To date, only Shanghai Airlines has installed two blueboxes and Mr. Hayden said the airline is pleased with the technology’s performance.

“In my view, we are seeing enough legitimate activity (from China) to hang in there,” Mr. Hayden concluded.

Despite that assurance, another investor asked if it wasn’t time to stop spending any more money in China.

But Mr. Tempany said he, too, was encouraged by the steady progress that Michael Fang, AMA’s Vice President of China, is making there.

“I’m nowhere close to throwing the baby out with the bathwater,” Mr.Tempany said.

AMA also filed its first quarter results on SEDAR that highlights the accomplishments and challenges the company faces.

On the one hand, cash coming in the front door is steadily and dramatically rising, moving from $608 thousand in Q1/08 to stand at $2.8 million in Q1/09.

The all-important recurring revenue increased from $270 thousand in Q1/08 to $904 thousand in Q1/09.

All revenue, including recurring revenue, increased from $398 thousand in Q1/08 to $1.2 million in Q1/09.

Salaries and benefits dropped, not something you often see.

General and administration costs rose only slightly, research and development for the first quarter of ’09 was up sharply due to the next-generation bluebox but marketing costs for the quarter compared to last year’s quarter dropped by over one half.

The net loss also dropped sharply for the quarter. It stood at $1.2 million – nearly half of the $2 million net loss in the same quarter in 2008.

Unearned revenue – monies paid to AMA but not eligible under accounting rules to be brought into revenue yet – sharply increased in Q1/09 rising to $1.8 million from $812 thousand in the same quarter last year.

At the same time, though, working capital dropped to $934 thousand in Q1/09 from $1.3 million in Q1/08.

To view the full first quarter results please click here.

NXT Announces $2.3 Million Columbian Contract

NXT Energy Solutions Inc.
TSX-V : SFD / OTCBB : NSFDF / Frankfurt : EFW


Basic Shares - 30.6 Million
Fully Diluted - 42.7 Million



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In what can be considered a huge step forward for NXT Energy, the company announced today that it has signed a survey contract with a Canadian-based international oil and gas company. What has been described by management as an excellent “beach head” opportunity, the Columbian contract is valued at $2.3 Million (USD) and will take NXT approximately 45 days to complete.

Management has publically acknowledged that this could be just the tip of the iceberg when it comes to the potential business opportunity in Columbia. Two weeks ago, Murray Christie NXT COO stated in the company’s conference call with investors that Columbia could be worth $10-$20 million (USD) to the company.

NXT also used today’s news release to announce an aircraft charter agreement with Air Partners Corp. A perfect fit for the company as it possesses a fleet of Cessna Citation 560’s, the aircraft of choice for NXT’s Stress Field Detection (SFD) technology. Click here to view Air Partners’ website.

All things considered, this announcement is significant as it represents the beginning of NXT’s full market launch and its first contract outside of its “Alpha client list”, which includes Pengrowth Energy Trust, Black Goose, Nexstar Energy, etc. According to NXT’s corporate presentation – Nov. 2008, the period between 2006 and 2008 was considered the company’s Alpha Client stage. During that time NXT didn’t actively market the SFD technology and used a select group of companies to build testimonials and success stories, while pulling in a profit.

To read the full release, please click here

Click here for investor relations professional disclaimer

IWG’s Second Quarter Results Show Impressive Results in Troubled Times

International Water-Guard (TSX-V: IWG)
Basic Shares: 39.3 million
Fully Diluted: 46.5 million
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Despite the stormy economic clouds, International Water Guard (IWG) posted healthy returns at the close of its Fiscal 2009 second quarter ending March 31st.

Rounding all figures out, sales rose to $1.3 million, compared to $856 thousand for the same quarter in the previous year.

That is a 55% increase.

Net earnings for the second quarter were $39 thousand, compared to a net loss of $102 thousand in the prior year’s same quarter.

The six-month results were equally impressive.


Six-month sales to March 31st were $2.5 million, compared to $1.7 million for the same period last year.


Six-month net earnings were $99 thousand, compared to a loss of $183 thousand a year earlier. Net earnings would have been even higher, had the company not devoted so many resources to new product development and marketing.


IWG President and CEO, David Fox, said in the news release that while some major customers have reported a slow down, IWG is working in other “complimentary aviation markets,” to mitigate any negative impacts.


As a result, Mr. Fox concluded that, “we are maintaining our long term growth initiatives.”


The second quarter results seen another way, amounted to a $0.3 cents per share in net earnings for the first six months.


There was a net loss of $0.5 cents per share in the same period last year.Going from losses in net earnings per share to gains – in these troubled economic times – with money in the bank and no long term debt to speak of would normally translate into a higher share price than the May 12th close of $0.065 cents.


To view the full news release, please click here.

Pure Nickel Kicks Off (Fully Funded) 2009 Drill Program in MAN, Alaska

Pure Nickel (TSX: NIC)(OTCBB: PNCKF)

Basic Shares: 67.8 million

Fully Diluted: 75.5

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In a news release distributed Wednesday morning, Pure Nickel announced that recently the company and its project partner, Japan based ITOCHU Corporation finalized a $4.4 million (USD) budget for the MAN project in Alaska.

As per the release, the majority of the budget will be allocated to and in support of a 5,700 metre drill program. Initial drill targets have been selected on Alpha complex with further targets identified elsewhere on the project pending initial drilling results. At time of writing, hole depths are anticipated to range from 200 to 1,000 metres.

Camp mobilization and preparation is set to begin in mid May and the company will finish up in the latter part of September.

The release also makes mention of different technologies that will be utilized on the property over the next few months. They include the following:

- Geotech Ltd. will complete an airborne Z Axis Tipper Electromagnetic system (ZTEM) survey over much of its MAN property. To read more about the ZTEM technology, click here.
- Pure Nickel will use a Niton XRF Analyzer to provide real time analysis of metal contents in rock and in drill cores. Click here to learn more.
- Other technologies will include a walk magnetic survey and a ground electromagnetic (EM) survey along with extensive prospecting and mapping programs.

As of this writing the stock is trading in the $0.15 to $0.18 range, which is a little more than cash on hand of $7 million or $0.10/share. The money being spent on the high potential MAN property is ITOCHU’s commitment as part of the Joint Venture. Pure Nickel also receives a project fee for coordinating and managing the work program

To view the full release, please click here.

Brainhunter Gets Vocal About Recent Contract Wins

Brainhunter (TSX: BH)

Basic Shares Issued: 43.958 million

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Historically, Brainhunter management has been relatively quiet about closing new business but as of late there’s a new face emerging. Over the past week the company announced that it has signed:

· $26.5 million in new and renewal business with the Federal Government, and

· A two year $35 million per year contract through the Company’s Engineering Division with automatic one year extensions upon renewal.

In regards to the Federal Government deal, BH stated it covered more than 20 departments and with backlog and expected renewals, the tally exceeds $50 million in business. Brainhunter used both announcements to emphasize that its backlog and expected renewals to the end of Fiscal 2010 (Sept. 30) was approximately $327 million with $100 million of that in the current fiscal year.

As a professional staffing and services group, the Company counts government and large organizations in its client base. In Fiscal 2008, BH reported revenues of slightly more than $234 million and a net loss of $12.3 million.

Since the news the market has moved up slightly from the $0.10 range to the $0.15 to $0.20 range. As management has not provided guidance for Fiscal 2009, the market has no perspective on EBITDA, cash flow or earnings expectations. The Company is on the record as saying it would like to find a partner to either provide additional capital or preferably to buy Brainhunter.

Click here to view the news release