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QIS Update #5 2013 - March 4th 2013

Included in this update:

  • Blackbird Energy successfully completes workover at Flaxcombe property
  • Pennant Energy files second quarter financial statements
  • Virtutone Networks secures significant contracts for wholesale division



We are getting closer to our upcoming Small-Cap Conference to be held in Calgary on April 16. It appears that this conference will shape up to be one of our strongest events of the past few years. Some of the participants are already listed on the website. To view these companies and to pre-register to attend, please visit:


We are looking for an additional oil and gas producer as well as a mining company to round out the Calgary conference. We would appreciate hearing from you with any company suggestions.


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: $0.065 (coverage commenced Aug 19/11 - $0.18)


Blackbird Energy Inc. has announced that it has recompleted a well in its recently acquired Flaxcombe property which was originally completed as a Mannville gas well. At a cost of only $84,000, the Flaxcombe Sparky zone in the well, 21/16-13-29-27W3 was recompleted and the rig was released on February 23, 2013.


The Flaxcombe Sparky Well #4 was pump tested for approximately 20 hours resulting in an equivalent average daily rate of 60 barrels of oil per day with a 15% water cut. Production from the Flaxcombe Sparky Well #4 will commence upon installation of surface facilities and the regulatory approval for downspacing.


QIS Capital:


Blackbird Energy continues to develop its Flaxcombe play with low risk, low cost workovers and recompletions to boost production and improve cash flow. Since acquiring the property in January 2013 for $540,000 with 28 bopd ($19,285 per flowing barrel), the company announced a 25 bopd increase from a workover last week which cost $45,000, and now a 60 bopd production test from a recompletion with a price tag of just $84,000. Blackbird remains debt free (after payout of production loans) and still has a significant component of cash with which the company can pursue further development work or look at accretive acquisitions or purchases.


Pennant Energy Inc. (PEN:TSX-V)
Current Price: $0.04 (coverage commenced Dec 7/12 - $0.075)


Pennant Energy Inc. has announced its financial and operating results for the three and six months ended December 31, 2012.



(as at Dec. 31, 2012)
Current Assets $ 475,469
Total Assets 6,583,763
Current Liabilities 55,567
Long-Term Debt nil
Shareholders' Equity 6,365,806



  3 Mos. Ended Dec. 31 6 Mos. Ended Dec. 31
  2012 2011 2012 2011
Revenues $144 $69 $538 $295
Expenses 522 655 830 1,048
Gain on Prop. Sale - - 357 -
Cash Flow 177 (247) 258 (350)
      per share $0.003 ($0.005) $0.004 ($0.008)
Net Income (421) (592) 4 (1,246)
      per share ($0.006) ($0.022) $0.000 ($0.029)



QIS Capital:


The second quarter includes the period of the management transition (late November) so costs are still not reflective of current management and the reduced corporate cost structure. Cash flow was positive for the first half of f2013 and the balance sheet, while short on cash for future development and/or drilling, still showed positive working capital and no long-term debt. With the burn rate being reduced through cash management, Pennant does have the ability to seek new projects and/or opportunities and management is actively pursuing these channels to add shareholder value without excessive shareholder dilution.


Virtutone Networks Inc. (VFX:TSX-V)
Current Price: $0.15 (coverage commenced Sep. 9/11 - $0.10)


Virtutone Networks Inc. has announced that it has secured additional contracts for wholesale voice traffic. Gross revenue from this traffic has averaged approximately $850,000 per month over the past 3 months, and reached a high of over $1,300,000 for the month of February. Transition of this traffic to Virtutone is expected to start immediately and be complete by mid-March 2013.


This new block of business is a positive development for our wholesale division, and reflects the hard work and dedication of our team, said Colin Campbell, Chief Financial Officer of Virtutone. Traffic from these customers has grown substantially in a short amount of time with the previous carrier. We believe that this revenue is sustainable and will continue to grow. This increase in voice traffic will also give us more leverage with our suppliers, which should result in lower costs and higher margins. Our sales team continues to bring on new customers, and is currently working on several other deals which could have a significant positive impact on the Company's revenues.

The company looks forward to providing updates on future developments with new and existing business.


QIS Capital:


Prior to this announcement, Virtutone was reporting annual revenues of $2.5 to $3.0 million. If the company is successful at maintaining monthly revenues of $850,000 from today’s announcement, that would add annual sales of over $10 million, effectively tripling the company’s current revenue base. There was no mention of margins or earnings in the announcement and financial results from these additional contracts will only start to hit reported results in Q1 (Jan-Apr) which will likely be announced in late June 2013. This is an exciting development for Virtutone and we look forward to future updates as these additional contracts roll out.



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 351,500 shares and 450,000 options of Blackbird Energy Inc., 206,000 shares of Pennant Energy Inc. and 906,500 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 - 2013 QIS Capital Corporation.

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