QIS Update #15 2012 - May 31st 2012
Included in this update:
- Audiotech Healthcare (AUD) reports another solidly profitable quarter
- Cobra Venture (CBV) announces results of its AGM
- NTG Clarity Networks (NCI) has filed its first quarter financial statements
- Virtutone Networks (VFX) releases its fiscal 2012 annual financial results
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Audiotech Healthcare Corporation (AUD:TSX-V)
Current Price: $0.21 (coverage commenced Nov 8/04 - $0.14)
Audiotech is pleased to report another solidly profitable quarter.
Total revenues for the second quarter ended March 31, 2011, were $1,478,417, an increase of 14.8% over the sales posted during the same period a year earlier. Revenues from the Canadian operations posted an increase of 17.2%, rising from $935,547 during the second quarter of fiscal 2011 to $1,096,766 in the current quarter. Sales from the U.S. clinics during the second quarter were $381,651, an increase of 8.3% over the same quarter in the prior fiscal year. Total revenues for the 6 months ended March 31, 2012, were $2,838,501, an increase of 9.1% over the $2,600,740 reported during the first 6 months of the prior fiscal year.
Gross margins of 72.9% during the second quarter continued to exceed the long-term historical average and were slightly ahead of expectations for the quarter. This compares to 70.2% during the comparable quarter last year, 70.1% in fiscal 2011, and the long-term (5 year) average of 68.9%. Management expects gross margins to range from roughly 69% to 71% during the remainder of fiscal 2012.
Direct clinic costs, which include selling and advertising costs, rent and clinic overheads, clinic labour costs, and amortization of audiology equipment, increased by 15.4%, following roughly on par with the increase in sales. Sales growth during the quarter was driven by a substantial increase in selling and advertising costs which more than doubled from $49,921 to $116,250 as compared to the quarter ended March 31, 2011. This increase was driven by more aggressive marketing campaigns in certain markets and was also partially due to the lower than average marketing expenditures during the second quarter of 2011 due to the receipt of co-op marketing contributions from hearing aid manufacturers. A small reduction was achieved in rent, utilities and clinic overheads. Amortization of equipment rose 18.1% largely as a result of the adoption of IFRS depreciation policies. Salaries and benefits increased 7.1%. Direct clinic costs as a percentage of sales were 49.2%, a negligible increase from the 49.0% posted during the same quarter a year ago. The same pattern is evident in the operating results for the first 6 months of fiscal 2012, with direct clinic costs accounting for 49.3% of sales versus 48.2% of sales during the same period in fiscal 2011.
General and administrative expenses totaled $155,272 for the quarter, an increase of 8.3% from the $143,412 reported during the second quarter of fiscal 2011. The increase on a year-over-year basis was primarily due to a 59.4% increase in professional fees related to the conversion to International Financial Reporting Standards. Substantial reductions in interest costs (32.4%) and general and administrative expenses (9.4%) were realized. All other categories posted immaterial variances. G&A costs as a percentage of sales were 10.5% during the quarter, down from 11.1%. General and administrative costs for the 6 months ended March 31, 2012, largely followed the same trend.
Pre-tax net income was $194,394 for the second quarter, an increase of 50.0% on a year-over-year basis. Pre-tax net income for the 6 months ended March 31, 2012, was $311,217 compared to $291,590 during the first two quarters of fiscal 2011, an increase of 6.7%
A provision for income taxes of $52,448 was recorded during the second quarter as compared to a net tax recovery of $547 during the second quarter of fiscal 2011. For the 6 months ended March 31, 2012, the total tax provision was $89,816 as compared to $47,240 for the first 2 quarters of fiscal 2011.
The company is pleased to report net earnings of $141,946 or $0.0107 per share for the second quarter of fiscal 2012. This compares to earnings of $130,162 during the corresponding quarter in fiscal 2011. Net income for the first 2 quarters of fiscal 2012 totaled $221,401 or $0.0167 per share.
As at March 31, 2012, Audiotech had a cash balance of $955,138. Working capital totaled $1,005,232. Management is confident that the company has sufficient working capital to meet its short and long-term needs, and growth requirements for the foreseeable future.
A total reduction in long-term debt and long-term capital leases of $134,103 was achieved during the second quarter of fiscal 2012, bringing total debt repayment during the first two quarters of fiscal 2012 to $267,964. In light of the company’s increasing cash balances and operating cash flows, management has been accelerating the repayment of its long-term debt. Management plans to continue its program of accelerated debt repayment.
(As at March 31, 2012)
|Current Assets||$ 1,667,641|
|3 months ended Mar. 31||6 months ended Mar. 31|
|Direct Clinic Costs||727,892||630,683||1,399,135||1,254,679|
|Income before Tax||194,394||129,615||311,217||291,590|
QIS Capital Comments:
Q2 was a record quarter for revenues for Audiotech and was the second best quarter for net income (record earnings before tax). The company continued its debt repayment and has reduced long-term debt by 25% in the past year. The only significant negative for financials recently has been the extra cost of implementing the IFRS. Congratulations to Audiotech for superior performance. The company is presently trading at less than 6 times trailing earnings and at less than half of one year revenues.
Cobra Venture Corporation (CBV:TSX-V)
Current Price: $0.24 (coverage commenced May 22/07 - $0.205)
Cobra Venture Corporation has released its financial and operating results for the first quarter ended February 29, 2012.
The following is a summary of the significant events and transactions that occurred during the period ended February 29, 2012:
- Sold all of its remaining freehold petroleum and natural gas royalty interest in the Viewfield area and recorded a gain of $5,145,294.
- Received and cancelled 1,767,000 common shares of the company for a fair value of $530,100 in connection with the sale of the company’s interests in the Viewfield area.
- Cancelled 70,000 common shares of the company for $17,884.
Oil and Gas revenue for the period ended February 29, 2012 was $155,673 compared to $448,999 in 2011. The decrease is a result the company no longer owning royalty interests in the Viewfield area.
Direct costs of production for the period ended February 29, 2012 were $33,819 compared to $50,555 in 2011. The decrease is primarily of a result of decreased depletion costs.
Administrative expenses for the period ended February 29, 2012 were $260,493 compared to $163,137 in 2011. The increase is mainly a result of increased consulting and professional fees.
As at February 29, 2012, Cobra had working capital of $6,007,629 compared to working capital of $2,563,812 as at February 28, 2011. As at February 29, 2012, the company had cash and cash equivalents of $7,046,573 compared to $2,809,270 as at February 29, 2011.
|LATEST FINANCIAL RESULTS|
|First Quarter Ended Feb 29|
|Gain on Sale||5,145,294||-|
|Income Tax Expense||1,234,437||59,622|
(As at February 29, 2012)
|Current Assets||$ 7,174,830|
Copies of the company’s complete financial statements may be obtained electronically from the SEDAR system at www.sedar.com.
Cobra Venture Corporation has announced the results arising from its annual and special meeting of shareholders held on May 24, 2012, at which the shareholders of the Corporation approved all resolutions presented at the meeting including the re-election of the current directors, the re-appointment of Mackay LLP as Cobra's auditor and an amendment to the company’s stock option plan to increase the number of common shares reserved for issuance under the plan.
Appointment of Independent Director
In addition, immediately following the meeting, the directors have appointed S. Reid MacDonald to the board of directors. Mr. MacDonald is considered to be an independent director for the purposes of applicable securities regulations and the policies of the TSX Venture Exchange Inc. Mr. MacDonald's appointment is subject to review and approval by the TSX-V.
Mr. MacDonald was the President of GASFRAC Energy Services Inc. from October 2010 to November 2011 and Chief Operating Officer of GASFRAC from April 2010 to November 2011. Mr. MacDonald has over 35 years experience in the oilfield services industry. From January 2006 to March 2010, Mr. MacDonald was Vice-President and General Manager of Nabors Blue Sky, a subsidiary of Nabors Industries, an oilfield service company listed on the New York Stock Exchange. From September 2002 to December 2005, Mr. MacDonald was Vice-President of Airborne Energy Solutions, an air transportation company in the energy field. Mr. MacDonald was also Vice- President Marketing for Crown Energy Technologies from 1998 to 2002, President of Maritime Hydraulics (Canada) from 1996 to 1998, and prior thereto he worked with Nowsco Well Service where all worldwide pumping services reported to him.
Grant of Stock Options
In connection with Mr. MacDonald's appointment, Cobra Venture is granting 200,000 stock options to Mr. MacDonald. In addition, the company is granting 25,000 stock options to Michael J. Perkins, Cobra’s corporate secretary. The options permit each holder to purchase common shares of the company at an exercise price of $0.24 per share, a price which equals the close of market trading price on May 24, 2012, for a period of five years from the date of issuance. One quarter of the options granted to each of the foregoing persons will vest immediately, with a further one quarter to vest on the six, twelve and eighteen month anniversary of the granting of the options.
Appointment of CFO
Cobra has also announced that Cyrus H. Driver has been appointed as the Chief Financial Officer of the company. Mr. Driver is a chartered accountant and is a partner with Davidson & Company LLP, Chartered Accountants. Mr. Driver has been a director of Cobra since November 1998. Daniel B. Evans remains the President and Chief Executive Officer of Cobra.
Changes to Board Committees
Finally, the company has announced that it has re-constituted its Audit Committee and Compensation Committee to ensure that each has a majority of independent directors. Accordingly the members of both the Audit Committee and the Compensation Committee are Daniel B. Evans, W. Murray Rodgers and S. Reid MacDonald.
QIS Capital Comments:
Cobra continues to transition from the sale of its Viewfield assets and is reconstituting its Board and focusing on its ongoing oil and gas operations and land holdings. The company continues to trade at a significant discount to its cash and working capital.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.095 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has reported its first quarter 2012 revenues of $1,060,471 as compared to $1,764,760 in the same period last year (All amounts in Canadian dollars). This decrease in revenue was due to the ending of completed projects and the ramping up of new projects.
The company reported a net loss for the three months ended March 31, 2012 of $59,430, compared to a net income of $277,886 for the comparable period last year. The loss was due to reduced revenues while the company maintained its skilled staff for new projects.
As at March 31, 2012, NTG Clarity had positive working capital of $672,283 and long-term debt of only $147,232.
|LATEST FINANCIAL RESULTS|
|3 Months Ended Mar. 31|
|Cost of Sales||651,081||1,060,822|
|Selling and G&A Exp.||311,723||276,716|
|Forex Loss (gain)||38,647||77,654|
|Deprec. & Amort.||58,782||5,961|
(as at March 31, 2012)
|Current Assets||$ 3,823,597|
QIS Capital Comments:
NTG Clarity continues to feel the fallout of loss of revenues and earnings following the loss of two major contracts in the Fall of 2011. The company signed one larger contract during the first quarter of 2012 which it hopes to expand throughout the year, and management is currently working on a number of other potential agreements.
Virtutone Networks Inc. (VFX:TSX-V)
Current Price: $0.21 (coverage commenced Sep. 9/11 - $0.10)
Virtutone Networks Inc. has reported its financial and operating results for the year ended January 31, 2012. Highlights include:
- Net income of $236,880 versus a loss of $150,313 in the previous year
- Earnings Per Share (EPS) of $0.02
- Profitable for 6 consecutive quarters
- Increase in assets from $675,000 to over $1,300,000
This year has been an important one for Virtutone said Colin Campbell, Virtutone's Chief Financial Officer. Not only have we completed a significant upgrade to our infrastructure, which has allowed us to automate most of our processes, but we have done so while remaining profitable. We take great pride that our customers have chosen Virtutone for their telephony needs. With the addition of our wholesale division, we expect continued growth in the future.
Working capital as at January 31, 2012 was $183,921 ($0.01 per share), as compared to a working capital deficiency of $11,093 as at January 31, 2011. The company’s January 31, 2012 working capital includes accounts receivable in the amount of $549,906, which are due from various companies. Management diligently monitors these accounts receivable amounts and reacts accordingly when the aging of such receivables becomes too old.
As at May 25, 2012, the company has 18,088,755 common shares outstanding.
|LATEST FINANCIAL RESULTS|
|3 Months Ended Jan. 31||Year Ended Jan. 31|
|Cost of Sales||382,838||527,641||1,453,093||1,727,984|
(as at January 31, 2012)
|Current Assets||$ 682,418|
QIS Capital Comments:
As mentioned in our previous correspondence, the fourth quarter did not include any revenues from the recently announced new Wholesale Division. Revenues from this division are expected to have a significant impact going forward and will start to show up in the next two quarters. Virtutone retained its profitability during the fourth quarter despite the large equipment purchases for the Wholesale Division which started in April 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 377,500 shares of Cobra Venture Corporation, 402,000 shares of NTG Clarity Networks Inc. and 546,000 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.