QIS Update #32 2014 - November 7th 2014
Included in this update:
- Blackbird Energy publishes monthly Executive Letter
- NTG Clarity Networks assumes an US$800,000 contract
- Quinsam Capital reports Q3 earnings of $0.03/share and provides October update
- Virtutone Networks provides corporate update, Q3 revenues
The Take Stock Alberta Conference will be held on November 5th in Calgary: www.takestockab.com. As a sponsor of the event, we have some free lunch passes available for this event, so anyone who will be attending Take Stock AB and would like a free lunch, please contact us asap! First come, first served.
The Vancouver Small-Cap Conference is just two days away on Nov. 6 at the Vancouver Convention Centre. We are very excited about this conference as we have several great fundamental companies coming to speak from a variety of industries. Companies speaking at our conference one year ago have produced an average return of 33% (and that includes some resource companies). Not bad given the state of the markets this past year. Attendance is free and you can pre-register now at:
The complete conference schedule can be viewed at: www.smallcapconference.ca/vancouver1114.php
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Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.36 (coverage commenced Aug 19/11 - $0.18)
Going forward, Blackbird Energy Inc. intends to issue a monthly Executive Letter to update shareholders and individuals interested in the continued progress of the company. The November letter is available on the Blackbird website at:
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.30 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has announced that the company has signed a contract with its Canadian partner to assume the remaining portion of the contract announced on December 19, 2013, valued at an additional $800,000 USD. Pursuant to the original contract agreement, NTG Clarity was to supply its NTS Asset Management and Discovery Modules to a new customer in a new market. The company will now be responsible for providing the total solution to the end customer without third party involvement. This project is expected to be completed by April 2015.
With the assumption of the total contract, NTG Clarity’s contract value is expected to be $2.2 million USD, up from the $1.4 million USD original contract value. NTG Clarity, the Canadian Partner, and the end customer have signed a three way agreement to formalize the assumption of the contract by NTG Clarity.
"We are very pleased with NTG Clarity’s additional involvement in this contract as it increases our revenue in a new market and provides the Company with improved flexibility in completing the project. The additional contract also highlights the increased trust of our customers in our products and services." said Ashraf Zaghloul, NTG Clarity’s Chairman and CEO.
QIS Capital: NTG Clarity has announced $4.1 million in new contracts/LOIs over the past month. The company announced revenues of $6.8 million for the 6 months ended June 30, 2014 and appears to be well on track to surpass projections of $14 million this year. Management is working hard to deliver but is running into a very tough market for its shares. NTG Clarity is currently trading at about 5 times trailing earnings and has positive working of $0.15 per share and no debt.
Quinsam Capital Corporation (QCA:CSE)
Current Price: $0.155
Quinsam Capital Corp. has announced results for the third quarter ending September 30, 2014.
In the third quarter of 2014, Quinsam earned $0.03 per share versus $0.00 in the preceding year. Revenue increased from nil to $690,950. Roger Dent said "We are very pleased to have registered very robust earnings of $0.03 of EPS in the third quarter despite volatile market conditions." Important drivers of performance in Q3 were strong performance by investments in EnerDynamic Hybrid Technologies Corp. and Nuvo Research Inc.
"Operating expenses came in as anticipated at only $19,209, which includes $6,194 in non-cash costs related to stock-based compensation. We are working diligently to manage our expenses tightly for the benefit of shareholders."
Subsequent to quarter end, Quinsam announced its first dividend in the amount of $0.001 per share, payable on November 7, 2014.
Full quarterly results are available on SEDAR.
Quinsam completed the purchase of two investments of particular note in October: Solarvest BioEnergy Inc. and Commercial Royalty Capital Corp.
The company invested as part of a small group to provide commercialization capital to Solarvest. Solarvest has developed an algae-based method for the production of vegan, organic Omega-3 fatty acids. "We see this as a very interesting product with large revenue potential" said Roger Dent. Subsequent to making its investment, Quinsam was engaged as a financial advisor to Solarvest. This was the first of what Quinsam hopes will be several financial advisory contracts, which will help reduce Quinsam's operating costs even further.
Commercial Royalty is a new private company that intends to enter the royalty finance business. Royalty companies have recently met with good success on Canadian stock markets. QCA was able to acquire a position in the company's seed financing round at what management feels was a very attractive valuation. Management also likes the fact that Quinsam co-invested with a number of other institutional investors who can help contribute to the success of Commercial Royalty.
The company closed October with a total portfolio of $2.4 million. As at the end of the preceding month, the unaudited total value of the Quinsam's cash and equity investments was approximately $2.6 million. "October, like September, was a very difficult market for Canadian small cap stocks. The general negative market tone was exacerbated, we think, by signs of year-end tax-loss selling" said Roger Dent. "While tax loss selling at this time of the year is a recurring factor, it can often be followed by a strong rebound in company’s shares in late December and the early part of the new year."
An important component of QCA’s business strategy is the accumulation of purchase warrants at little or no cost. Quinsam now holds approximately 2.1 million warrants with an aggregate basic exercise value of approximately $1.1 million. The exercise value is not an indication of the economic value of the warrants; management provides it to investors so they can understand the amount of upside leverage that Quinsam is accumulating through its warrant portfolio. Quinsam values unlisted warrants at intrinsic value, which management sees as being a conservative approach.
QIS Capital: Quinsam continues to perform even in uncertain market conditions. The company is nearing its one year mark of active operations and has increased shareholders’ equity by more than 10X and instituted a quarterly dividend during this time.
Virtutone Networks Inc. (VFX:TSX-V)
Current Price: $0.185 (coverage commenced Sep. 9/11 - $0.10)
Virtutone Networks Inc. has recently update the financial community with the following:
Virtutone will release quarterly statements and discontinue its previous approach of issuing monthly fiscal updates. In its continued objective to improve communication with the financial community the company believes that quarterly releases will provide improved context in which to make wise investment decisions. Stockholders can anticipate the next quarterly financial statements to be released by the end of December of this year.
With continued focus on insured sales, the company expects to deliver recurring results and create shareholder value. Currently 94 % of Virtutone’s sales are insured, an increase of roughly 25% since July of this year. This strategy was and will remain a key objective as the insurable revenues, will reduce the risk profile of the company’s core business.
Virtutone is well positioned for future growth with the addition of key positions and a stronger organization structure. Sales numbers are responding positively to these changes, generating approximately $39.9-million in revenue this quarter.
QIS Capital: While August had lower revenues at $11.4 million, the last two months had much stronger revenues with a total of $28.5 million for a quarterly total of $39.9 million. This represents a decline of 8% from a very strong Q2 but an increase of 41% over Q1. Virtutone remains on pace to generate more than $150 million in revenues for this fiscal year compared to $48.8 million last year.
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 179,000 shares, 350,000 options, and 706,348 warrants of Blackbird Energy Inc., 1,547,500 shares and 100,000 options of NTG Clarity Networks Inc., 895,000 shares of Quinsam Capital Corporation, and 466,500 shares and 212,500 warrants 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 - 2014 QIS Capital Corporation.