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QIS Update #20 2012 - August 14th 2012


QIS Update #20 - August 14, 2012  

Included in this update:

  • Blackbird Energy announces Letter of Intent for acquisition of Ruger Energy Inc.
  • NTG Clarity Networks awarded $1.9 million contract


The TSX Venture finally showed signs of bottoming in July, falling by just 7 points during the month. However, the TSX-V is down about 30% from March 1, 2012 and has fallen 40% from July 31, 2011. Volume on the TSX Venture continued its downward trend falling 8% from June 2012 and was down 34% compared to July 2011.


Albeit the markets have been challenging, we have had some great news and performance from several of the companies we follow. Virtutone (VFX:TSX-V) recently announced that they have secured additional contracts for an estimated 26.3 million minutes per month of wholesale long distance. This results in a total of approximately 44 million minutes per month since the inception of the wholesale division in April 2012. We should see the majority of the financial impact from this new division in the second half of the company’s fiscal year ending January 2013. Virtutone remains well ahead of expectations with regards to its new division.


Audiotech Healthcare (AUD:TSX-V) also announced a going private transaction at $0.35 per share. This was about a 75% premium to the trading price at the time of announcement. Management is currently completing an independent valuation of the company and will then have to call a special shareholder meeting to proceed. We expect to hear news of the valuation in the near future.


Dalmac Energy (DAL:TSX-V) should be announcing annual financial results for the year ended April 30th early next week. The company will likely be hosting a conference call in connection with the results and we invite our subscribers to participate in this call. Dalmac should have a solid fourth quarter and is poised to again achieve record results for fiscal 2013. The company continues to trade at only about 3 times trailing earnings.


Finally we have tentatively set dates for our upcoming Small-Cap Conferences in Calgary and Vancouver. We are planning on October 9th in Calgary and November 6th in Vancouver. We require 3-4 outside companies to participate in order to make these conferences successful. If anyone has referrals or knows of a quality company that is looking for quality exposure to investors, we would appreciate hearing from you.


Please feel free to email us anytime at or call us at (250) 377-1182. We look forward to your comments, questions, and feedback.


Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.12 (coverage commenced Aug 19/11 - $0.18)


Blackbird Energy Inc. has announced that it has entered into a non binding Letter of Intent (LOI) dated August 2, 2012 with Ruger Energy Inc. for the acquisition of Ruger by Blackbird. Ruger's assets consist of cash and oil and gas assets. The Acquisition will be subject to the approval of the TSX Venture Exchange. The acquisition is an arm's length transaction.


Ruger is a junior oil and gas exploration and development company in Alberta.


The Ruger Oil and Gas Assets


Ruger has a 100% working interest in 680 acres in Alsask area located on the Alberta/Saskatchewan border. The property has 3 producing Mannville oil wells and 1 Glauconite water disposal well. Present production is 20 bopd. The oil is 15 degree API. The Glauconite disposal well takes water on vacuum at 150 bwpd.


This Mannville pool is an outlier to the large Conoco Marengo pool 6 miles east. Other outlying pools have been discovered in the area as well. These wells have produced in excess of 230,000 barrels of oil to date. Proved and probable producing remaining reserves are 29,000 bbls. PVBT10 is $1,010,000.


Terms of the Transaction


If the Acquisition is completed pursuant to the terms of the LOI, Blackbird will acquire Ruger by issuing common shares of its capital stock (the Acquisition Shares) to Ruger at a deemed price per share of $0.12, based upon the net asset value of Ruger at closing. The net asset value of Ruger as determined at closing may not represent fair market value. The Acquisition is subject to a number of conditions precedent which include completion of due diligence reviews by the parties, successful negotiation of a definitive purchase agreement, and receipt of all required regulatory and Exchange approvals.


Directors and Insiders


As a result of the issuance of the Acquisition Shares, Ruger will become an insider of Blackbird.

It is expected that the board of directors and management of the Blackbird will have the following individuals added:


Murray Scalf - Director


Mr. Murray Scalf has over 25 years of experience in the oil and gas industry. Mr. Scalf is currently on the boards of Donnybrook Energy Inc. and Donnycreek Energy Inc. Most recently, Mr. Scalf was the President of Dorado Energy Inc., a private oil and gas exploration and production company acquired by Wildstream Exploration Inc. in January 2010. Mr. Scalf was formerly the President of Denim Exploration Corp., and prior thereto, President of Dorchester Energy Inc., both Calgary-based oil and gas companies which were ultimately acquired by senior Canadian producing oil and gas companies. Mr. Scalf is a member of the Canadian Association of Petroleum Landmen.


Darrell G. Denney - Director and Chief Operating Officer


Mr. Denney is a Registered Engineering Technologist with 30 years of diversified oil and gas industry experience including production, exploitation, drilling and completions. Recently, Mr. Denney has been providing engineering consulting services for Donnybrook Energy Inc. Prior to that he was Vice President of Operations at Dorado Energy Inc. Before Dorado, Mr. Denney worked with the same management team at Denim Exploration Corp. He was Vice President of Operations at Invasion Energy Inc. from 1999 -2001. From 1996 - 1998 Mr. Denney was Manager of Operations for Merit Energy Ltd. During the period 1990 - 1995 Mr. Denney held managerial and supervisory positions with Winfield Energy Ltd., Tarragon Oil and Gas Ltd. and Opinac Exploration Ltd. Mr. Denney began his career in the petroleum industry working for Dome Petroleum Ltd. 1981-1987 and Phillips Petroleum Resources Ltd. 1987 - 1990.


Garth Braun, CEO of Blackbird stated, We are very pleased with the development of Blackbird and the addition of two very experienced operators to the team. We feel that adding this tremendous operational expertise will enhance shareholder value, as value achievement for our shareholders must be created both through the development of our existing project and also with the origination of new projects that are oil weighted. The business plan going forward will be to build on the strength of our Bigstone liquid rich deep basin gas play, and also focus on adding additional assets where Blackbird is the operator, which we are now in a position to capitalize on.

QIS Capital Comments:


We continue to receive a number of questions regarding this acquisition as details released to this point have been quite vague. We have spoken with management and have been assured that additional details will be announced once the due diligence has been completed. Some of the important points of this acquisition are that Blackbird is transitioning from a “one-play” company to a corporation with multiple opportunities in western Canada and the company also adds experienced management to its executive team which will drive the company forward on both a development and exploration platform.


NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.10 (coverage commenced Feb. 4/10 - $0.045)


NTG Clarity Networks Inc., has announced that the company received a PO from a leading mobile operator in the Gulf region to purchase unlimited licenses for NTG's Network Telecom System (NTS) and upgrade of the NTS system. The contract value is approximately $1.9 Million and NTG has begun the system upgrade, which will be completed in the next two months. This PO includes one year system support.


NTS is a fully integrated Operations/Business Support System (OSS/BSS) with a lower total cost of ownership and a significantly shorter deployment time than conventional OSS/BSS solutions. Designed to meet the needs of fast growing network operators and network service providers, NTS' functionality encompasses the full customer service cycle from the initial order request through network equipment configuration to implementation support, billing and maintenance.


We are very pleased about this project as it reflects the satisfaction and confidence of our customer in our products and its functionality. said Ashraf Zaghloul, NTG Clarity's Chairman & CEO. We believe we have one of the best in class value propositions for any network operator looking to implement or upgrade their OSS/BSS application infrastructure. We look forward to more NTS customers in the Middle East and other emerging international markets.

QIS Capital Comments:


This is an exciting new contract for NTG Clarity and one that should put the company back up on its feet and ready to move forward. NTG Clarity had some very challenging developments a year ago and has been working diligently to restore its financial strength. The company will be releasing its Q2 numbers near the end of August which should have been a fairly productive period for the company due to contracts announced earlier in 2012. The third quarter should continue the positive trend with results from today’s contract announcement. Management is confident that the company will return to its normal rate of quarterly earnings.


It is important to point out that QIS Capital commenced coverage of NTG Clarity as it was starting its previous growth phase. The market reacted going from $0.045 at feature to almost $0.25. The company as of last report had positive working capital of $672,000 ($0.03/share).


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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 669,500 shares of Audiotech Healthcare, 99,000 shares and 450,000 options of Blackbird Energy, 7,500 shares and 200,000 options of Dalmac Energy, 356,000 shares of NTG Clarity Networks, and 733,000 shares of Virtutone Networks. QIS Capital has 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.





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