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QIS Update #6 - 2018 - NTG Clarity Networks files 2017 results while Deer Horn Capital releases several news releases - May 3rd 2018

Included in this update:

- NTG Clarity releases year-end financial and operating results

- Deer Horn Capital applies for exploration permit, completes financing, and hires IR firm

There have been a lot of annual financial results posted over the last week or two.  A summary of NTG Clarity's latest financial and operating results is posted below. We were quite disappointed with the financial results of Lingo Media (LM:TSX-V) and Siyata Mobile (SIM:TSX-V), both companies which we have mentioned in past editions. Lingo Media continues to suffer from very low revenue numbers and dramatically higher costs associated with its recent merger. Siyata Mobile posted good revenue growth but the bottom line continues to be elusive despite numerous assurances of upcoming profitability. At the same time, a company we have been following for the last two months and were hoping to feature, Wellness Lifestyles Inc. (WELL:TSX-V), suddenly shot up from $0.30 to over $0.70 when the company announced a well known and influential new investor in the business. Such is the small-cap market!


The small-cap markets in Canada continue to be underfollowed and the TSX Venture Exchange is sliding back down toward a 2-year low. We continue to be challenged to find quality, undervalued companies as those producing solid financial results are already trading at extremely high multiples of earnings. We have used "continued" a lot in our introduction because, well, the small-cap market continues to be going along the path we have been on for the past decade. Best of luck to all of our investors.


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


NTG Clarity Networks Inc. (NCI:TSX-V) 


Current Price: $0.07 (coverage commenced Feb. 4/10 - $0.045)


NTG Clarity Networks Announces 2017 Year-End Financial Results


Toronto, ON / TNW-Accesswire / April 30, 2018 / NTG Clarity Networks Inc. (TSX.V:NCI) reports its year end results for the fiscal year ended December 31, 2017. (all figures in Canadian Dollars).


NTG Clarity made great strides in 2017 as we worked to optimize costs and increase cash flow, while increasing our revenue by 26% over last year. The aggressive cost reduction strategy initiated by management in Q3 2016, began to show results in the second half of 2017, and the focus on collections has helped to steady our cash flow. We anticipate that these measures will continue to lead to improvement throughout 2018.


Consolidated revenues for the three months ended December 31, 2017 was $3,893,502 compared to $599,251 for the same period in 2016. Revenue for the year increased by 26% to $14,359,523 compared to $11,372,455 reported in the prior year and is primarily made up of product-related revenue, professional services and hardware sales.


The Corporation’s operating expenses decreased by 28% in 2017 to $5,364,665 compared to $7,401,310 in the prior fiscal year.


G&A expenses for the three months and year ended December 31, 2017 were $819,940 and $3,170,997 respectively, compared to $637,528 and $4,488,100 in 2016. Year to date, G&A costs were 29% lower than in 2016 as we reduced staff, salaries and consultants in Canada and KSA. We also reduced the occupancy costs in Kuwait.


Gross margin for Q4 2017 was 34% or $1,320,427, compared to ($2,394,476) in 2016. Gross margin for the year ended December 31, 2017 was 35% compared to 17% in 2016. Margins are stronger based on our continuing efforts to optimize costs with our revenue stream. Realistic margins are anticipated to be between 35-40%, based on the current product mix.


For Q4 2017, the Corporation recorded a net loss of ($409,372) compared to ($8,649,235) for the same period in 2016. For the year ending December 31, 2017, the Corporation recorded a net loss of ($1,116,183) compared to ($12,526,486) in 2016.


NCI 2017 results


In September, 2017 the bank extended the Facility 4 repayment deadline to March 1, 2018 and required NTG Clarity to pay down $50,000 per month from the principal. Subsequent to year end, in February 2018, the bank extended the repayment deadline to September 1, 2018 and requires NTG to pay down $60,000 per month from the principal. The Company continues to meet these obligations.




In 2017, management has worked diligently to optimize costs in keeping with the current revenue stream. Focused collection activities have resulted in a more balanced cash flow, though legacy debt remains a challenge. These activities, along with new customers in Kuwait and KSA, and expanded projects in Egypt, have contributed toward returning the Corporation to profitability.  


Looking towards the future, we remain committed to bringing NTG back to profitability and providing additional growth in 2018. We are currently working on a number of new initiatives which we expect will build on our business model and open up new revenue streams in the second half of this year. We will also focus on capitalizing on the goodwill we have with our existing customers to expand our business and increase our margins. We will concentrate on marketing our products; NTS, StageEM and Voice Over WiFi, which are currently in high demand and have higher margins.


In an unrelated matter, the Company announced that 100,000 share options each will be issued for Mr. Nick Hamilton-Piercy, Mr. Zafar Farooqui, Mr. Ashraf Zaghloul, Mr. Adel Zaghloul and Ms. Kristine Lewis, as members of the Board of Directors for the Company. An additional 100,000 options will be issued to Mr. Ashraf Zaghloul and 50,000 options will be issued to each of Mr. Adel Zaghloul and Ms. Kristine Lewis, as management, All options will be exercisable at a price of $0.10 per share and will be to replace expired options.


QIS Capital: 2017 was a year of rebuilding for NTG Clarity as the cost cutting measured implemented in the last half of 2016 took shape during 2017. The benefit of the cost reductions should continue to improve financials throughout 2018 as the full impact will be felt for the entire calendar year. Q1 results should be out in about 3 weeks and management has indicated that it will return the company to solid profitability this year. Q1 results should give a good indication whether this target can be met.




Deer Horn Capital Inc. (DHC:CSE) 


Current Price: $0.235 (coverage commenced Apr. 10/18 - $0.17)


Deer Horn Capital has had four recent press releases:


Deer Horn Capital Inc. has applied for a multiyear exploration permit on its Deer Horn property in anticipation of a summer 2018 work program.


Deer Horn Capital Inc. has closed the second and final tranche of its private placement previously announced March 8, 2018, and has issued 500,000 common shares at a price of 10 cents per share for total proceeds of $50,000. No finder's fee was paid with respect to this second tranche closing.




Deer Horn Capital Inc. and certain insiders and consultants of the company have agreed to cancel an aggregate of 325,000 stock options held by the optionees.


Under the company's rolling 10-per-cent stock option plan, the company may grant up to an aggregate of 1,348,931 stock options. Upon completion of the cancellation, the company will have 970,000 stock options outstanding under the plan, of which there are 120,000 stock options exercisable at a price of 25 cents per common share expiring on June 16, 2021, and 850,000 stock options exercisable at a price of 14 cents per common share expiring on April 5, 2028.




Deer Horn Capital Inc. has engaged Doc's Consulting Ltd. to provide investor relations advisory services pursuant to an investor relations consulting agreement dated April 25, 2018.


The consulting agreement has an initial 12-month term and is renewable at the mutual agreement of both parties, and can be cancelled upon 30 days notice by either party. Doc's will be paid a monthly fee of $5,000 plus applicable taxes from the company and is being granted stock options to acquire up to 134,000 common shares in the capital of the company at an exercise price of 25 cents per share. Twenty-five per cent of the options vest three months from the date of grant, with a further 25 per cent vesting every three-month period thereafter. The options are exercisable for a period of five years from the date of grant.


Services under the consulting agreement will be provided by Craig Doctor. Mr. Doctor currently holds 22,000 shares of the company and has no other direct or indirect interests in the company.


Doc's will assist the company with enhancing awareness by managing corporate communications and marketing strategy and activities to increase efficiency of information flows between the company and its shareholders and the investment community.



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 1,609,000 shares of NTG Clarity Networks Inc. and 200,000 shares of Deer Horn Capital 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 - 2018 QIS Capital Corporation.


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