QIS Update #15 2015 - November 30th 2015
Included in this update:
- Newlox Gold Ventures closes debenture financing
- NTG Clarity announces Q3 financial results; Signs new contract agreement
- Quattro Exploration & Production reports third quarter results; Completes acquisition
We recently posted our Small-Cap Conference summary from the November 10th event in Vancouver. The corporate presentations are now available on our website at www.smallcaps.ca/conferences.
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Newlox Gold Ventures Corp. (LUX:CSE)
Current Price: $0.045 (coverage commenced March 31/14 - $0.05)
Newlox Gold Ventures Corp. has closed a financing according to which the company will issue unsecured convertible/redeemable debentures for proceeds of $54,393.23.
The convertible debentures carry a 12 percent annual simple interest rate, payable quarterly, in Canadian dollars. If not converted or redeemed, the principal of the loan shall be payable on April 30, 2017.
The convertible debentures are convertible at the option of the holder into common shares of the company on or prior to the maturity date at a conversion price of $0.05 per share. The company reserved for issuance 1,087,865 common shares with respect to the potential conversion of the debentures. Newlox may prepay the principal and interest of the convertible debentures at any time.
The convertible debentures have been sold pursuant to exemptions from prospectus requirements to purchasers in Canada and will not be listed on the Canadian Securities Exchange. The common shares issuable upon conversion will be listed on the CSE and will be subject to a hold period as required by securities regulation.
Newlox, together with its advisers, has engineered and deployed its remediation facilities over the past eight months. It has accomplished a great deal in this time frame with very limited resources. The company will provide further news as it continues to prove its operational model and focus on its longer-term objective: to establish a dividend-paying enterprise, which will allow its shareholders to participate in equity value growth, share in profits and contribute to environmental cleanup while setting a high standard of social responsibility.
Qualified person: This news release has been prepared under the supervision of Jim Miller-Tait, PGeo, who serves as the qualified person under National Instrument 43-101.
QIS Capital: Newlox received much needed capital through this small financing which has allowed the company to complete the installation of equipment required to complete the concentration and beneficiation facilities. Should the operational process be proven in the next few months, Newlox management has indicated that it would have no immediate need for further capital.
QIS Capital management recently traveled to Costa Rica to view the concentration and beneficiation facilities. This was a very beneficial trip as we were able to view in person the entire process. We are hoping to publish a full update from this due diligence trip later this week.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.20 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has announced that the company has signed a Frame Agreement with a Telecom service provider in the Gulf area. Under the agreement, NTG will provide products and services including software, hardware, and professional services.
NTG has also received the first purchase orders under this agreement to provide, and implement the company’s ADM (Advanced Dealer Management software). NTG will also provide hardware and support personnel. The value of the current purchase orders is approximately $500,000.
Phase 1 work under the original purchase orders will be completed in December 2015. NTG expects to receive further orders for the support, maintenance and enhancements to the ADM products in early 2016.
ADM are modules which form part of the NTS family of products that provide Telecom operators with a competitive advantage by managing their dealers and enabling the operator to provide incentives to their dealers to sell more of the company’s products. ADM is in high demand with operators as they are focusing on increasing their margins and improving their edge in a highly competitive market.
“During 2015, we have been working hard to diversify and expand our customer base and to establish NTG as a leading provider of quality Telecom software products and services in the Gulf region. The signing of this contract with this prestigious customer substantially expands our revenue base and reflects the increasing satisfaction and confidence of our customers with regards to our extensive expertise in telecom systems and operator requirements” said Ashraf Zaghloul, NTG Clarity’s Chairman and CEO.
NTG Clarity Networks Inc. has announced its financial results for the three and nine months ended September 30, 2015. The company reported third quarter year to date 2015 revenues of $11,660,121, as compared to $11,386,745 in 2014, a 2% increase (All amounts in Canadian dollars). Some of the main highlights from Q3 2015 include:
- In September 2015, we announced three projects with global telecom operators/equipment manufacturers valued at over $1 million.
- NTG was selected to participate in the Canadian Technology Accelerator Program in Silicon Valley. We currently have space in the Plug and Play Tech Center in Sunnyvale, California, where the Stage EM product will be launched. We also participated in the official CTA Fall Program launched in September 2015.
- Continuing efforts, through Qatar, Kuwait and Oman, to expand our sales reach in those countries.
- Finalizing the setup of an NTG office in Oman.
For the nine months ended September 30, 2015, the company recorded net income of $1,143,019 or $0.03 per share as compared to $1,546,897 or $0.04 per share for the same period in 2014. The lower net income in 2015 was due to the following:
- Significant increase in sales and marketing activities, particularly in Egypt, to maintain and increase growth. Activities resulted in a 31% increase in year to date revenue for Egypt in 2015.
- Increase in amortization and depreciation for capital expenditures incurred for the new offices in Qatar, Kuwait and Oman.
- Increased G&A costs related to the new and expanded offices in KSA, Qatar, Kuwait and Oman.
- Slightly increased share based payments. As older share options expire and new, more expensive options are issued.
As at September 30, 2015, NTG Clarity had positive working capital of $6,325,586 ($0.18 per share) and no long-term debt.
|LATEST FINANCIAL RESULTS|
|3 Mos. Ended Sept. 30||9 Mos. Ended Sept. 30|
|Cost of Sales||2,056,247||2,374,706||7,124,131||6,075,169|
|Selling and G&A||798,895||723,826||2,714,110||2,326,225|
|Forex Loss (gain)||148,878||126,491||(412,231)||(102,307)|
|Income Tax Exp.||200,000||390,000||300,000||740,000|
(as at Sept. 30, 2015)
|Current Assets||$ 12,303,235|
In September 2015, NTG Clarity announced the launch of Stage EM, a goal-focused integrated software solution that improves organizational efficiency by integrating strategic planning, business planning, demand and capacity management, operation optimization, portfolio project management and analytics. This software is expected to have a more meaningful financial contribution starting in the fourth quarter of 2015.The company also continued its increased sales and marketing efforts in Qatar, Kuwait and Oman to open new markets and increase and diversify revenue sources.
QIS Capital: NTG Clarity continued to show modest revenue growth during challenging global uncertainties, particularly for micro-cap companies. The company’s new product offerings are starting to gain some traction and management has indicated that it hopes to issue a number of new contracts during the fourth quarter.
NTG Clarity’s share value continues to be very depressed trading at approximately equal to its positive working capital position of $0.19 per share (no long-term debt). The company has also maintained its profitability and is presenting trading at around 6 times trailing earnings.
Quattro Exploration and Production Ltd. (QXP:TSX-V)
Current Price: $0.19 (coverage commenced Sep. 3/15 - $0.18)
Quattro Exploration and Production Ltd. has announce the filing of its third quarter 2015 financial statements, reporting net earnings of CDN $0.01 per share.
During the 3 months ended September 30, 2015, Quattro's cash-flow from operations was $908,778 and the company's EBITDA (earnings before interest, taxes, depreciation and amortization) was $1,082,788. Although a non IFRS accounting term, management believes EBITDA provides further guidance of funds flowing from operations for Quattro, and provides investors an opportunity to understand the company's capacity to fund its operations and ability to continue to grow during times of volatility.
Production averaged 1,476 boe per day on a continuing restricted rate due to Quattro being required to shut-in for periods from 5 to 7 days in British Columbia and Alberta, with the exit rate at September 30 recovering to 1,580 boe per day. In the second quarter, the corporation continued to reduce costs, with operating costs averaging $13.09 per boe compared to $14.54 per boe in the second quarter, a 9% reduction during the quarter despite production being restricted.
"In the 3rd quarter we continued to focus on improving our operating performance," stated Leonard B. Van Betuw, President and CEO of Quattro. "The company continued to transition from consulting services to full-time employees, with a goal of solidifying our corporate foundation and harnessing the resulting economies of scale anticipated in 2016."
The company's operating budget remains on track within what is anticipated to be a volatile period of 2 years for commodity prices, expecting trading to be in a range from WTI US $40/bbl. to $50/bbl. and natural gas prices of AECO CDN $2.50/mcf to $3.50/mcf until June of 2017. Quattro's targets being: a corporate revenue stream averaging $22.50/boe, operating costs of $8/boe, G&A of $1.50/boe and financing cost of $0.50 per boe, collectively driven to generate corporate netbacks of $12.50/boe, based on a continuing cost control initiative and the realization of additional economies through the increased utilization of company owned and operated gathering and processing facilities.
|Financial Results (in 000s)|
|3 Mos Ended Sept. 30||9 Mos Ended Sept. 30|
|Oil & NGLs (boe/d)||305||290||297||297|
|Natural Gas (boe/d)||1,133||1,143||1,086||1,091|
|Total boepd (6:1)||1,476||1,480||1,419||1,434|
(as at September 30, 2015)
Quattro Exploration and Production Ltd. has reported that it has closed its previously announced purchase oil and gas production, facilities and lands in British Columbia from two Alberta-based private oil and gas exploration and production companies (the Acquisitions).
The purchase price for the Acquisitions was $1,944,180, paid through the issuance of 10,625 non-voting, Class C, series 3 preferred shares at a deemed price of $100 per share (Preferred Shares) and $881,680 in cash, paid from working capital assumed by Quattro in the Acquisitions. The properties are located in northeast British Columbia, geologically trending complementary to Quattro's current exploration and production in the company's core region, (the Properties).
The Preferred Shares are priced at $100 per share and pay an annual preferred dividend of $3.50 per share. The holder will have the right on the anniversary of the 2nd year of issuance to convert the Preferred Shares into Class A common shares at a ratio of 40 Class A shares for each Preferred Share converted, valuing the Quattro Class A common shares received at a deemed price $2.50 per share.
The Acquisitions include the transfer of working capital in the form of cash deposits, a 100% interest in 102 boe/d of production (currently shut-in due to government restrictions being imposed on the seller that will be resolved as a condition of closing) and developed and undeveloped land totaling 10,036 (net) acres prospective in the Halfway and Baldonnel formations. The reactivation of production included in these Acquisitions was previously producing at an average rate of approximately 102 boe/d (net), a combination of 550 mcf/d of natural gas and 10 barrels per day of condensate.
QIS Capital: Quattro Exploration continues to defy the rest of the small-cap oil and gas sector by posting positive cash flow even in a depressed pricing environment due to the company’s low operating costs. Cash flow for the 9 months was $2.9 million or $0.07 per share and the company appears to be on track to exceed $0.09 per share in cash flow as production has improved since the end of Q3. This would put the company trading at just 2X trailing cash flow. Quattro further indicated at The Small-Cap Conference that the company would exit 2015 at over 3,000 boe/d and exit 2016 at over 6,000 boe/d. While this does appear to be aggressive, it also provides a very positive outlook for potential explosive growth.
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 3,618,000 shares, 2,000,000 warrants, and $64,471 in convertible debentures of Newlox Gold Ventures Corp., 1,135,000 shares and 100,000 options of NTG Clarity Networks Inc. and 108,000 shares of Quattro Exploration and Production Ltd. 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 - 2015 QIS Capital Corporation.