PNWIF came out with its quarterly filing for the end of March yesterday. If this were a US company, they would have had to file these numbers by mid May- as a Canadian reporting company, they are allowed a bit more flexibility in the timing. I would prefer to see these numbers sooner, and I believe this is a minor problem this company needs to address if they are ever going to be taken seriously be institutional investors.

I liked the top line number, but was taken back a bit by the balance sheet. They delivered $3.25 million in revs, which was an admirable 147% increase in top line numbers over the $1.317 million they delivered in Q2 2007.

The company lost $2.6 million for the quarter. $1 million of the $2.6 million was amortization, so that is a non cash entry.  $1.8 million was R&D expenses associated with adding infrastructure to fill the pending demand from new contracts- specifically Sam’s Club US and Costco US, bringing the real operational losses down to a very manageable number.
The Costco service is supposed to be monsterous, and could add in the neighborhood of $10 to $15 million in annual revs to PNWIF. Service is supposed to kick off any day now.

I do have some concerns about cash levels on the balance sheet. PNWIF ended the quarter with $4.7 million in cash and receivables, but had $5.2 million in accounts payable and accrued liabilities. This suggest about a $1/2 million cash deficit. Time to get to the next level on revenues and gross profits- go Photo.
I’m not too concerned for several reasons- first and foremost, their fiscal Q2 is calender Q1, and it is traditionally their worst quarter of the year. Their Q1 is traditionally the best (holiday time). Therefore, gross profits will improve from here throughout the rest of the year, and costs should go down as they are pretty much done building out the Costco site and infrastructure.

Most importantly, the stock has given back a little of its gain to $4.20, but is still holding nicely above the $4 threshold, suggesting the hoped for NASDAQ listing is not going to be derailed by this quarterly report and a coincidental drop in the stock price.

Here’s the chart:

As you can see, the stock is coming back a little after last week’s beautiful surge. I would really like to see this $4 level hold. As it extends out along $4, and the volume quiets down, it becomes more and more attractive as a buy for higher levels.

Next we should learn the Costco service has started, and perhaps we’ll see another big surge.

Comments and questions are welcome.