QIS Update #25 2014 - August 20th 2014
Included in this update:
- Cobra Venture Corporation – update on recent land sale transactions
- NTG Clarity Networks announces record second quarter financials
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Cobra Venture Corporation (CBV:TSX-V)
Current Price: $0.14
Though we don’t officially cover Cobra Venture Corporation any longer, we are still shareholders as are many QIS Capital readers. The company has issued a pair of news releases recently regarding their real estate holdings in Alberta. Back in 2012, the company acquired 15.78 acres of land in the municipal district of Rocky View No.44, Alberta for $3,975,000.
July 30, 2014
Further to its News Release of March 4, 2014, Cobra Venture Corporation has completed the sale of approximately 12.84 acres of undeveloped lands located in the Municipal District of Rocky View No. 44, in the Province of Alberta for an aggregate purchase price of $4,365,600. The company has retained ownership of approximately 3 acres of the 15.8 acres of undeveloped land that was originally acquired in October 2012. Proceeds from the sale of the Lands will be used to pay out loans previously advanced by certain directors, for working capital and for the potential acquisition of other oil and gas or resource property interests.
August 18, 2014
Further to its News Release of July 30, 2014, Cobra Venture Corporation has announced that it has entered into an offer to purchase and interim agreement with an arm’s length private Alberta corporation related to the proposed sale of approximately 3 acres of undeveloped lands located in the Municipal District of Rocky View No. 44, in the Province of Alberta for an aggregate purchase price of $1,470,000. The Lands represent the last remaining portion of the 15.78 acres of undeveloped land originally acquired by the company in October, 2012.
Pursuant to the terms of the Offer to Purchase, the corporation has received a $50,000 deposit in trust, which shall be applied to the Purchase Price upon closing of the transaction, with the balance of $1,420,000 payable on the closing date. It is anticipated that the transaction will close on October 31, 2014, or such other earlier date as mutually agreed upon. Proceeds from the sale of the Lands will be used for working capital and for the potential acquisition of other oil and gas or resource property interests.
QIS Capital: To summarize, within approximately two years (pending final closing), Cobra was able to sell its Rocky View lands for a combined $5,835,600. The agreed upon sale prices represent a gain of about $1.86 million or 47% over the initial acquisition cost. Following the sale of these land holdings, Cobra will have a cash balance, prior to any debt repayments or other ongoing expenses, of approximately $5.5-6.0 million or $0.35-$0.37 per share. The stock is currently trading (when it trades) at $0.14.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.30 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has announced record second quarter 2014 revenues of $3,895,196 as compared to $2,149,380 in the same period last year, an 81% increase. Year to date revenues are $6,828,945 compared to $3,636,252 in 2013, an 88% increase (All amounts in Canadian dollars).
The company reported net income for the three months ended June 30, 2014 of $910,222 before taxes or $631,722 after taxes, compared to a net income of $829,403 (no taxes) for the comparable period last year. For the six month period, pre-tax earnings were $1,184,224 or $0.03 per share this year compared to $1,031,467 or $0.03 per share last year. The company booked income taxes of $350,000 for YTD 2014 resulting in net after tax income of $834,224.
As at June 30, 2014, NTG Clarity had positive working capital of $5,434,931 ($0.15 per share) and no long-term debt.
|LATEST FINANCIAL RESULTS|
|3 Mos. Ended Jun. 30||6 Mos. Ended Jun. 30|
|Cost of Sales||2,054,493||793,825||3,700,464||1,581,150|
|Selling and G&A Exp.||602,240||473,381||1,602,398||862,131|
|Forex Loss (gain)||32,098||(173,248)||(228,798)||(203,388)|
|Income Tax Exp.||278,500||-||350,000||-|
(as at June 30, 2014)
|Current Assets||$ 9,923,561|
The first half of 2014 has been a record period for NTG Clarity with revenues remaining on pace with management’s projections. Net income has been more challenging with the company now being subject to full income taxes due to significant positive earnings over the past two years. Management is working diligently to improve margins and is seeking accretive acquisitions to reduce taxes payable.
NTG Clarity also recorded additional expenses this year due to the opening of new offices in Qatar and Kuwait, which is expected to lead to increased sales going forward. Share based payments, general & administrative expenses, selling and marketing expenses, depreciation & amortization, and foreign income taxes showed increases over the prior period, while interest expenses declined due to the more favourable interest rates on the company’s new line of credit. Overall, total expenses as a percentage of revenues for the three month period dropped to 23% compared to 33% in the prior year, while 6 month expenses totaled 32% of sales in 2014 compared to 34% of sales in 2013.
One of the reasons for NTG Clarity’s strong growth that continues in 2014 has been a renewed international focus on state-of-the-art technology and networking capabilities. Mobile applications have been the fastest growing technology trend with NTG’s mobile application development being increasingly chosen as a leading product in these markets.
QIS Capital: Everyone we have spoken with following the release of NTG Clarity’s numbers has been quite impressed and were pleased with the significant increase in revenues and the solid earnings. This was echoed by Global Maxfin’s updated research report which boosted its revenue forecast and maintained its $1.00 price target. Anyone wishing to get a copy of Global’s update can request a copy by sending us an email. NTG Clarity remains on pace to achieve management’s forecast of $14 million this year which represents a 40% increase over last year and more than a 180% increase over the last 2 years. Net income is trending toward $0.06 eps after tax on an annualized basis. The company is presently trading at 5 times expected earnings before taking into account working capital, and at only 2.5 times earnings after taking into NTG Clarity’s strong working capital position.
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 481,500 shares of Cobra Venture Corporation, and 1,581,500 shares and 100,000 options of NTG Clarity 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 - 2014 QIS Capital Corporation.