Pioneering Technologies – 2020 Year End Update

TM Editors' Note: This article discusses a microcap penny stock. Such stocks are easily manipulated; do your own careful due diligence.

Pioneering Tech Corp. (PTEFF) issued full year financials after hours on January 28th 2021, and the results were entirely dependent on one’s frame of reference. If one were to compare full year results to fiscal 2019, they were astronomically better. If one were to compare them to Q1 or Q2 of this year, they were much worse. As the saying goes – is the glass half full or half empty? Or in the case of Pioneering, is the share price, like an unattended stove, going to ignite or not? Whatever the case, we are still attending to the proverbial “Pioneering stove”, as we are still long on the company, and with that being the case, we dissect the latest results, highlighting those areas that we believe are bullish, neutral, or bearish. 

Still scraping the bottom (neutral). Again, the chart is a questions of one’s perspective. If you have been looking to acquire Pioneering – cheaply – then this is the time. Unless there is more catastrophic news waiting in the wings, it is unlikely the shares will get much cheaper. Based on trading (post earnings), it would seem that the overall market expected “so-so” results, as no wave of sales (or purchases) have overwhelmed the price. So, for those looking for some “GameStop” action, it’s not to be found here. On the other hand, for those that are already long, the share price is a bit disappointing, as “long folks” were probably hoping for some post earnings uplift. In any case, if you are looking to accumulate cheaply, now is probably the time. If you have already done so, repeat the mantra, “patience is a virtue”…

The balance sheet remains a place of refuge (bullish). The good news is that the balance sheet remains a relatively safe haven. While it’s slightly worse than it was at Q3, the balance sheet remains solid with $0.16/share in total assets, of which $0.12 are current assets. These values are virtually unchanged when compared to Q3, and the only significant movement in the balance sheet (from Q3) is on the liability side, as short term liabilities (primarily payables) rose by approximately $500K, effectively reducing tangible book value by about $0.01/share, from $0.105/share to $0.093/share. Viewed over the span of the entire year, the most significant balance sheet changes are in payables (up ~ $700K) and the inclusion of lease liabilities ($1.6 MM) due to the lease accounting changes related to IFRS16.

Perhaps the key takeaway from the balance sheet is that the cash balance, while lower, still provides flexibility in the event that sales do not pick up as anticipated. Over the course of fiscal 2020, Pioneering managed their expenses to such a degree that they only burned $422K of cash (before changes in working capital) over the entire year, and if one includes changes in working capital, they were cash flow positive. With $2.1 MM in the bank as of year end, this suggests that even in this very challenging environment, Pioneering can still manage for the foreseeable future. Conceivably, if the company continued to burn through cash at the same rate, they could theoretically continue operating “on a shoestring” for almost 5 years.

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I/we are long on PTE / PTEFF.

Disclosure:I have no relationships with any of the companies profiled, other than normal communications with Investor Relations or Sr. Management of the companies ...

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