QIS Update #13 2012 - April 27th 2012
Included in this update:
- Cobra Venture initiates share buyback program
- NTG Clarity Networks releases 2011 annual financial statements
- Virtutone Networks receives top ranking on Branham300 list
The Calgary Small-Cap Conference is quickly approaching and is just under two weeks away on May 10. It is free to attend and you can pre-register online at www.smallcapconference.ca/register.php.
QIS Capital Trading Summary is now almost 4 months through the year. The portfolio has achieved a gain of almost 14% so far this year while the TSX-Venture Exchange has fallen by about 3%. You can view the most recent trades and portfolio at: www.qiscapital.com/trade_summary.php .
One of our previous companies, BlueRush Media (BTV:TSX-V) has recently moved from $0.10 to $0.17 on heavy volume. This company was introduced to our readers in February 2010 at $0.095 and moved up to $0.24 in February 2011 before falling back to feature price following languishing financials. The company has a solid foundation and is hopefully embarking on new opportunities which is causing the share price increase.
Please feel free to email us anytime at firstname.lastname@example.org or call us at (250) 377-1182. We look forward to your comments, questions, and feedback.
Cobra Venture Corporation (CBV:TSX-V)
Current Price: $0.225 (coverage commenced May 22/07 - $0.205)
Cobra Venture Corporation has announced that it has filed with the TSX Venture Exchange a Notice of Intention to Make a Normal Course Issuer Bid which shall commence on April 24, 2012 and terminate on April 23, 2013 or the earlier of the date all of the shares which are subject to the Normal Course Issuer Bid are purchased.
In the opinion of the board of directors of Cobra, the market price of the common shares of the Corporation does not accurately reflect the value of those shares. As a result, Cobra's common shares may continue to become available for purchase at prices which make them an appropriate use of funds of the company.
Cobra Venture intends to attempt to acquire up to an aggregate of 795,187 of its common shares over the next 12 month period representing approximately 5% of the issued and outstanding common shares. There were 15,903,748 common shares issued and outstanding as of April 17, 2012.
Cobra has not purchased any of its common shares in the last 12 months, other than in connection with the sale of certain of the company's assets to Keystone Royalty Corp. on February 2, 2012, when it acquired 1,767,000 common shares at a deemed price of $0.30 per common share as partial satisfaction of the purchase price of such assets. The 1,767,000 common shares were subsequently cancelled. For additional information regarding this transaction, please see Cobra's press release of February 3, 2012.
Purchases subject to this Normal Course Issuer Bid will be carried out pursuant to open market transactions through the facilities of the TSX Venture Exchange by McIver Wealth Management Consulting Group, Richardson GMP Limited on behalf of Cobra. All common shares of the company purchased by Cobra under the Normal Course Issuer Bid will be returned to treasury and cancelled.
QIS Capital Comments:
Cobra has excess cash on hand as a result of the sale of its Saskatchewan assets effective January 1, 2012. The company’s shares are trading at about half of the underlying value of Cobra’s cash and land holdings and management is confident that using its excess cash to purchase and cancel a portion of its common shares is a prudent use of funds and will add meaningful value to existing shareholders. We will be watching for implementation of the normal course issuer bid.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.09 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has reported its annual financial results for the fiscal year ended December 31, 2011.
NTG Clarity had an exciting but challenging year in 2011. The company started the year working on several significant Letters of Intent earned in late 2010 which was the platform for growth in 2011. Unfortunately in the second half of 2011, NTG suffered two contract cancellations in the Middle East totaling US$8.4 million which undermined financial performance for the remainder of the year. As previously reported, the receivables due from the customers (approximately US$1.5 million) are insured by Export Development Canada and management is working with EDC on the claim.
2011 has been a year of change, particularly political and economic change in Egypt. In February 2011, the company's Egypt office was closed for approximately two weeks due to a political uprising. While this had some short-term impact, there has been no significant effect to the company's revenue stream or operations in the region. Egypt's revenue contribution remains approximately 10% (2010-9%%; 2009-11%) of the company's revenue. Management anticipates business as usual in the region going forward.
Revenues for the year ended December 31, 2011 were $5,172,176 versus $6,356,699 for 2010. The gross margin was 40% in 2011 compared to 49% in 2010. The company recorded a net income of $1,097 in 2011 as compared to $668,610 in 2010. The decrease in financial performance was due primarily to the loss of the two significant projects.
General and administration expenses were $854,371 in 2011 as compared to $935,944 in 2010. This decrease is due mainly to cost reductions. Selling and marketing expenses were $659,829 in 2011 as compared to $791,739 in 2010. Interest expense was $258,627 in 2011 as compared to $208,539 in 2010.
As at December 31, 2011, NTG Clarity had positive working capital of $829,186 and long-term debt of only $167,978.
|LATEST FINANCIAL RESULTS|
|3 Mos. Ended Dec. 31||Year Ended Dec. 31|
|Cost of Sales||370,076||404,311||3,107,324||3,235,898|
|Selling and G&A Exp.||577,912||499,099||1,514,200||1,727,683|
|Forex Loss (gain)||(132,354)||17,927||(102,989)||45,063|
(as at Dec. 31, 2011)
|Current Assets||$ 3,390,605|
In 2011, NTG Clarity continued the development phase to move its Operations Support System/Business Support System (OSS/BSS) product called NTS to a new technology platform and to add new and upgrade existing functionality. This development continues in 2012. Due to market demand, the company is evolving the legacy NTS system to incorporate the original NTS with new and expanded modules and functions. Management continues to aggressively market the company’s products and services in the international marketplace, which is viewed as an area of substantial growth due to the deregulation of the telecommunication sector and the licensing of new mobile operators.
The company will continue to market in the Middle East as it has large infrastructure and telecom projects. NTG Clarity's brand name is gaining increased recognition worldwide as a reliable, quality supplier to telecom and network service providers. This is an enormous market and the company will continue work on improving its market share through the enterprise and wireless areas of the business.
Management expects to achieve revenue growth throughout 2012 as NTG delivers on recently acquired contracts, service these contracts on an ongoing basis, and penetrate new market opportunities.
Management continues to feel that the underlying value of the business is not fully reflected in its share value and is committed to adding further shareholder value through revenue growth, cost control and effective investment promotion.
QIS Capital Comments:
We were waiting for the impact from the cancelled contracts and we saw the effects in the fourth quarter. We had a lengthy discussion with management regarding the results and they are confident that they will be able to get back on a growth phase in 2012. The company will have to prove this to the market starting with Q1 results which are due out in the next month. NTG Clarity announced a $1.6 million contract during the first quarter which should help in this respect. New contract announcements are needed to provide new revenue opportunities over the balance of 2012.
Virtutone Networks Inc. (VFX:TSX-V)
Current Price: $0.18 (coverage commenced Sep. 9/11 - $0.10)
Virtutone Networks Inc., a leading provider of Internet-based business telephony services, has announced that it has ranked #1 on the Branham300 list of Top 10 ICT Growth Companies and 298th on the Branham300 list of Top Information and Communications Technology (ICT) Companies in Canada for 2011.
We are pleased to have been recognized as the fastest growing ICT company in Canada last year by the Branham Group. Virtutone has enjoyed substantial growth over the past few years, and will strive to continue that growth in the years ahead, said Jason Allen, Virtutone's President and Chief Executive Officer.
About the Branham300
For nearly 20 years, the Branham300 has highlighted the top Canadian and Multinational ICT companies operating in Canada, as ranked by revenues. It illustrates the depth and breadth of innovative technologies developed in Canada and is widely considered to be a leading source of intelligence on Canada's ICT industry. The Branham300 list consists of the following major categories:
The Branham300 also recognizes the leaders within each of the sectors of the Canadian ICT industry:
The Branham300 is published annually on www.branham300.com, as well as in the April/May issue of Backbone Magazine (www.backbonemag.com). Keep up to date with the Branham300 and Branham Group on twitter at @branhamgroup, through Branham's Newsletter, or RSS feed.
QIS Capital Comments:
Congratulations to management for the impressive growth over the past 3 years. The company has grown from revenues of $439K in 2009, to $844K in 2010, and $2.0 million in 2011. With the significant wholesale agreement signed at the beginning of April 2012, Virtutone is expecting to again multiply its revenues and earnings this year as well. We are expecting 1 month of the agreement to be announced with Q1 results (released June 2012), and a full quarter of impact in Q1 (announced September 2012).
Disclaimer: This article is for informational purposes only. The information contained within this article should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The company profiled assumes no liability for the information presented. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author(s) owns directly or indirectly 408,000 shares of Cobra Venture Corporation, 403,000 shares of NTG Clarity Networks Inc. and 563,500 shares of Virtutone Networks Inc. QIS Capital may have a financial relationship with these companies and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2012 QIS Capital Corporation.