QIS Update #7 - 2016 - Lingo Media reports distribution agreement and NTG Clarity annual results 2016 - April 12th 2016
Included in this update:
- Lingo Media enters into global distribution partnership with Gale, a part of Cengage Learning
- Newlox Gold to acquire assets of Columbian Au company and complete private placement
- NTG Clarity Networks announces year-end financial results
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Lingo Media Corporation (LM:TSX-V)
Current Price: $0.97 (coverage commenced March 22/16 - $0.76)
Gale, a leading provider of library resources and part of Cengage Learning, and ELL Technologies Ltd., a subsidiary of Lingo Media Corp., have entered into a commercial distribution partnership. Through the agreement, Gale will have exclusive international rights to market, sell and distribute ELL Technologies' Scholar English language training program to university and college libraries, public libraries, and private schools. The product will be co-branded as Gale Lingo and will be available in the second quarter of 2016.
"Gale's focus is to create products that incorporate content with global relevance and appeal from our vast network of partnerships with leading institutions around the world," said Terry Robinson, senior vice-president and managing director of Gale International. "Given that many advanced scholarly research pursuits in higher education today are conducted in English, there is an increasing global demand for students to learn English and, with this new distribution agreement, we are pleased to broaden our offering by bringing to the library market the innovative learning techniques that Scholar provides."
"This partnership with one of the largest and most established educational content, technology and services companies in the world is further validation of the efficacy of our software in improving learning outcomes," commented Gali Bar-Ziv, chief operating officer of Lingo Media.
Gale has been a leading provider of research and education resources to libraries for 60 years, and is committed to supporting the continued innovation and evolution of libraries and their users. As Gale rolls out the Scholar program in many new international markets, Lingo Media maintains the distribution rights in North America, Latin America, Vietnam and the Caribbean.
"Gale has a tremendous international distribution network including a multinational sales force spanning Asia, Australasia, Europe, Middle East, Africa and Latin America. This partnership with Gale holds great potential to expand the market for the Scholar program internationally and is a significant distribution milestone for Lingo Media," said Michael Kraft, president and chief executive officer of Lingo Media.
QIS Capital: This is the second major distribution agreement in the last two weeks for Lingo Media. The agreement with Gale is a distribution deal with a massive player in the educational content/technology/publishing industry. It will open up Lingo’s products to dozens of new countries. In addition, Gale has hundreds of sales individuals servicing existing relationships in over 25 countries and they will now add Lingo’s software to their offering. Due to the natural flow of new students to academic institutions annually, there will be a built-in recurring nature to the licensing revenues arising from this partnership.
Newlox Gold Ventures Corp. (LUX:CSE)
Current Price: $0.02 (coverage commenced March 31/14 - $0.05)
Newlox Gold Signs Agreement to Acquire Expansion Properties in Columbia, Intends to Raise Capital, and Proposes a Consolidation of Share Capital
Newlox Gold Ventures Corp. has signed a letter of intent for the acquisition of 100 per cent of the assets of Cordillera Gold Ltd., intends to seek approval for the consolidation of its share capital on the basis of one for 3.9024754, and is proposing a two-stage financing consisting of a $300,000 equity placing and a $2-million convertible gold participation debenture.
Cordillera Gold Ltd.
Cordillera Gold Ltd. ("Cordillera"), through its subsidiary, Cordillera Gold SAS, engages in the acquisition, exploration, and development of gold mineral resource properties in Colombia. Cordillera has rights to certain mineral concessions, access to historical artisanal tailings and toll milling opportunities in the Antioquia Batholith region of Colombia. Cordillera, a private company, is headquartered in Toronto, Canada.
Cordillera's principal property, the Rigo Project, is located in Segovia, north eastern Antioquia Department near Medellin. Rigo is well placed within the Frontino Gold Camp which has been in continuous production since 1852 and produced more than 5 million ounces of gold at an average grade of 9.7 g/t gold. Active high-grade mining is currently underway within the camp by artisanal and commercial miners (e.g. Gran Colombia Gold) and several high-grade veins have been sampled at Rigo.
The Rigo Project is not only well placed within a highly productive gold camp but is strategically located adjacent to Gran Colombia Gold's adjacent Frontino Gold Property which produced 74,500 ounces of gold in 2015 at an average grade of 12.56 g/t gold.
The 67 hectare Rigo Project has good access and infrastructure as well as a mining lease which will allow Newlox's reclamation processing system to be deployed rapidly. Active artisanal mining in the area is expected to support Newlox's tailor-made processing system.
Cordillera's second property in Colombia, located near the Rigo Property, offers similar opportunities and will provide Newlox with an additional opportunity for near-term expansion. When aggregated with Newlox's current expansion prospects in Central America, the acquisition of Cordillera's Colombia properties will allow Newlox to expand its tailor-made remediation and precious metals recovery model aggressively into South America.
The Proposed Transaction
The acquisition (the "Acquisition") by Newlox of 100% of the assets of Cordillera Gold Ltd. is targeted for completion by May 31, 2016. Newlox will effect a consolidation of its shares on a 3.9024754:1 basis or secure such a consolidation by Lock-Up Agreement ("Lock-Up") to be ratified at Newlox's next Annual General Meeting ("AGM") or Extraordinary General Meeting ("EGM").
Newlox will issue 11,520,000 post-consolidation shares as consideration for its acquisition of Cordillera. Current Cordillera shareholders will receive an in species dividend of these shares based on each investors' pro-rata ownership in Cordillera. Further, in order to enhance the assets and provide feedstock for near term processing Cordillera has acquired additional assets near its Rigo Property which make up part of the issuance from Newlox to Cordillera.
Up to $300,000 will be raised through a Private Placement and up to an additional $2,000,000 by way of a proposed convertible Gold Participation Debenture. Completion of the Acquisition is also conditional on the execution of a definitive asset purchase agreement among the parties, the satisfactory completion of due diligence, and approval of the Acquisition by the directors of Cordillera.
The Acquisition has an expected closing date of no later than June 30, 2016.
NEWLOX Capital Structure and Financing
A proposed private placement (the "Private Placement") will raise up to $300,000 (the "Working Capital Financing") through the issuance of up to 6,000,000 pre-consolidated (1,537,486 post-consolidated) Newlox Shares at a price of $0.05 per pre-consolidated share ($0.20 per post-consolidated share) and 6,000,000 share purchase warrants ("Warrants") prior to closing of the Acquisition.
Each Warrant shall be non-transferrable and entitle the holder to purchase an additional pre-consolidated Newlox common share for $0.05 in the first 12 months, $0.10 between month 13 and 24 and $0.15 between months 25 and 36 ($0.20, $0.40, and $0.60 respectively post-consolidation). All unexercised warrants shall expire after a term of 3 years.
The Working Capital Financing will draw support from both Newlox and Cordillera shareholders with Cordillera shareholders expected to participate in at least half of the financing. The proceeds will be split between Newlox and Cordillera. Newlox will advance funds to Cordillera by way of a loan. The loan is expected to be forgiven upon closing of the asset acquisition.
The proceeds from this financing will be used to keep Cordillera's Rigo Property in good standing and to finance the investigative process necessary to identify sources of mill feed including artisanal gold miners and tailings/historic stockpiles on and around the Rigo Property. The funds will also allow Newlox to complete the commercialization of its, fully-built, processing facility in Costa Rica as well as support G&A and the completion of the necessary legal and accounting requirements for the Acquisition by Newlox.
Newlox and Cordillera plan to close the Working Capital Financing in tranches by April 30, 2016.
Up to an additional $2,000,000 will be raised by way of a convertible Gold Participation Debenture (the "Gold Participation Debenture"), concurrent with closing of the Acquisition (the "Concurrent Financing"). The proposed Concurrent Financing is convertible at $0.30 per post-consolidation share, which would result in the issuance of up to 6,666,667 post-consolidated Newlox shares.
The proceeds from the proposed Gold Participation Debenture will be used to advance Newlox's expansion plans in Central America and the newly acquired Cordillera projects in Colombia.
Immediately prior to the Private Placement, there were 48,702,893 Newlox common shares and warrants to purchase 17,035,982 Newlox common shares at between $0.10 and $0.15 each for a period of approximately 2 years. There were also options to purchase an additional 1,413,446 shares at a price of $0.20 for a period of approximately 5 years.
Kingsdale Capital Markets Inc. will act as the agent for the Private Placement and the proposed Gold Participation Debenture. Rob Fia, Managing Director and a director of Cordillera, is Co-Head, Corporate Finance of Kingsdale Capital Markets Inc. (http://www.kingsdalecapital.com/).
Cordillera Capital Structure and Financing
Immediately prior to the Private Placement, there were 56,400,000 Cordillera common shares and warrants to purchase 14,000,000 Cordillera common shares at $0.15 each for a period of approximately 2 years. There were also options to purchase 5,800,000 common shares at an exercise price of $0.10 for a period of approximately 5 years. Up to an additional 4,500,000 Cordillera common shares will be issued to insiders as per the terms of the recent debt settlement.
Newlox Gold Capital Structure
Shares in issue post consolidation, equity financing and acquisition of Cordillera are estimated to be 32 - 35 Million.
Additionally, Newlox will benefit from Management and Advisory Appointments, post-closing of the Transaction:
Dr. Scott Jobin-Bevans joins the team as Vice President, Geology
Dr. Jobin-Bevans has more than 25 years of experience in the mineral exploration industry and is currently Chairman and CEO of Caracle Creek International Consulting. Scott brings to the Newlox team a strong background in economic geology with international experience in a variety of deposit types and commodities including magmatic sulphides (Ni-Cu), precious metals (platinum group, gold and silver) and base metals (Cu-Pb-Zn). Scott has numerous years of experience in the public markets and is currently on the board of a number of TSX-V listed companies and has held past positions as a technical advisor, officer and director of public (TSX and TSX-V) and private companies. Dr. Jobin-Bevans is a Past President and director of the Prospectors and Developers Association of Canada (PDAC) and received his Ph.D. from the University of Western Ontario.
Mr. Rob Fia and Mr. Tim Peterson to join Dr. Marcello Veiga as Advisors to the Company
Rob Fia is Co-Head Corporate Finance of Kingsdale Capital Markets Inc., an investment dealer. Mr. Fia has over 14 years' experience in the investment business, including both equity research and corporate finance. Mr. Fia has been involved in several multi-million dollar financings and advisory transactions in mining, oil and gas, alternative energy, technology and health care. He also helped co-found several new companies focused on gold exploration and oil and gas in Africa, Canada, Chile, and Colombia. Mr. Fia received his Bachelor's of Commerce from the I.H. Asper School of Business at the University of Manitoba and holds the Chartered Financial Analyst designation.
Mr. A. Timothy Peterson has over 35 years of executive experience managing private and public companies. From 2003 to 2007, Mr. Peterson served as a Member of the Provincial Parliament of Ontario of Mississauga South. Board positions have included Nordex Explosives Ltd. (President and Chairman), Augen Gold Corp., Trelawney Mining and Exploration Inc., and Trelawney Augen Acquisition Corp. Mr. Peterson holds a BA in Economics from the University of Western Ontario.
Dr. Marcello Veiga has worked for the past thirty-one years, as a metallurgical engineer and environmental geochemist for mining and consulting companies in Brazil, Canada, US, Venezuela, Chile and Peru. Dr. Veiga has been an associate professor of the Norman B. Keevil Institute of Mining Engineering at the University of British Columbia since 1997 and has conducted extensive research on artisanal and small scale mining. Dr. Veiga served as an expert and Chief Technical Advisor for the United Nations' GEF/UNDP/UNIDO Global Mercury Project in Vienna between 2002 and 2008. During this time, he spearheaded the implementation of a program to assess and address mercury contamination's social and environmental effects in Asia, Africa and South America. His extensive work in the field has made Dr. Veiga the premier expert in matters of artisanal and small-scale mining.
Completion of the transaction is subject to a number of conditions, including but not limited to, requirements, majority of the minority shareholders' approval. Where applicable, the transaction cannot formally close until the required shareholder approval is obtained. All of the numbers presented in the schedules are subject to confirmation in the formal agreement.
Scott Jobin-Bevans, Ph.D., P.Geo., is a "Qualified Person" within the meaning of National Instrument 43-101, and has reviewed the contents of this News Release.
QIS Capital: Newlox management has been working incredibly hard lately to secure this acquisition and to put together the necessary financing to add much needed working capital to the Costa Rican operations as well as the new acquisition. The company is planning to complete this financing in just 3 weeks. If Newlox is able to complete the financing and the acquisition, it should breathe some life back into an undercapitalized company which has been under working capital constraints as has much of the junior resource sector. Anyone interested in the financing should contact Newlox directly or you can contact QIS Capital to receive more information.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.135 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has released its year-end results for the fiscal year ended Dec. 31, 2015.
Annual and quarterly highlights:
The following are some of the key achievements in 2015 that will enable the company to achieve its success and growth objectives in the coming years:
Two thousand fifteen has been an exciting and challenging year in terms of new projects, customers, products and senior management. Though revenue stayed steady at $15.5-million, the company ended the year in much stronger position, and it looks forward to capitalizing on these positive factors in 2016 and beyond. At the same time, the company's net income was impacted as cost of sales increased by 14 per cent, and selling and general and administrative costs increased by 33 per cent and 40 per cent, respectively, due to expenses for the company's new offices in the U.S., Egypt, Oman and Kuwait. In 2016 the company will continue to work on balancing between growth and expenses to help generate higher margins.
During the year, the company continued delivering NTS -- its operations support system/business support system (OSS/BSS) product -- and the associated consulting services and training to implement the product. NTS continues to generate substantial revenue and is expected to generate positive net cash inflows into the foreseeable future.
The company's mobile application division developed and launched several initiatives into the marketplace, including Budget Eye, a simplified version of the company's new product StageEM, built for consumers. It allows you to manage, track and control you and your family's budget, income and expenses, and is updated in real time.
|LATEST FINANCIAL RESULTS|
|Year Ended Dec. 31||3 Mths Ended Dec. 31|
|Cost of Sales||10,654,373||9,353,075||3,530,242||3,277,906|
|Selling and G&A Exp.||3,716,504||2,697,018||1,002,394||370,793|
|Forex Loss (gain)||(299,278)||(86,222)||112,953||16,085|
(as at Dec. 31, 2015)
|Current Assets||$ 11,887,900|
Revenues for the three months ended Dec. 31, 2015, were $3,872,393, a decrease of 6 per cent compared with the same period in 2014. The decrease was due to the delay in closing new customer projects. For the fourth quarter of 2015, revenue consisted of 41 per cent professional services, 48 per cent product sales and 11 per cent field services. Gross margin for the three months was 9 per cent (2014: 20 per cent). Initial project set-up expenses in Kuwait and cost of travel for staff for new projects in Oman and KSA contributed significantly to the higher cost of sales for the period compared with 2014.
Selling expenses increased by 41 per cent in the fourth quarter of 2015 to $362,666 due to increased selling efforts to increase and diversify the company's customer base. Amortization and depreciation increased by 83 per cent compared with 2014 as the company added depreciation of its new intangible asset (StageEM) and continued to depreciate equipment and computers purchased for new professional service staff placed at customer sites in Egypt. Bad debts during the fourth quarter decreased by 86 per cent as the company was advised to write off some receivables at the end of 2014. NTG reported a net loss of $774,576 in the fourth quarter of 2015 compared with a net loss of $304,973 in the fourth quarter of 2014. The loss is due primarily to the investment in new offices in the U.S., Kuwait, Egypt and Canada.
For the year ended Dec. 31, 2015, revenues were $15,532,514, just higher than 2014 revenues of $15,503,201. Revenues for the year consisted of 65 per cent in professional services, 33 per cent in product sales and 3 per cent in field services. The company expects professional services to remain strong and software sales to increase with the introduction of the company's new product, StageEM. Gross margin for the year was 31 per cent (2014: 40 per cent), which was due to the timing of new projects and increased cost of sales. As the company's product sales increase, realistic margins are between 40 and 50 per cent based on the product mix.
Selling expenses for 2015 increased by 33 per cent to $1,305,303. The company's selling efforts are increasing as it expands into new markets and work to diversify its customer base. General and administration costs increased to $2,411,201 from $1,717,775 in 2014 due to an increase in salary and wages, new branches, and increased consulting and professional fees. Amortization and depreciation also increased to $568,107 compared with $440,693 in 2014.
Net income for the year ended Dec. 31, 2015, was $368,443 compared with $1,241,923 in 2014. The reduction in earnings is due primarily to the significant increase in the cost of sales, selling and G&A, and the delay in closing new projects. As the company opened up new offices and put an emphasis on business development in new areas, it incurred additional costs. The company will monitor these expenses to ensure levels are optimized in future periods.
Looking toward the future, the company remains committed to its growth strategy and continues to focus on growing organic operations, expanding its marketing reach geographically and enhancing its product offering. The company is also looking to increase its scope through acquisitions and/or partnerships with global system integrators.
In addition to existing customers and projects, in 2016 the company will also continue to focus on developing business for its new offices in the U.S., Oman and Kuwait. The company will be aggressively looking for an acquisition to increase its customer base, revenue and geographical presence.
Two thousand fifteen turned out to be a year in which the company focused on diversifying its revenue base and building new projects and branches to drive future growth. While the company's overall growth rate moderated in 2015, it is excited about the scope of new opportunities that lie ahead as it has worked hard to lay the foundation for several years to come.
QIS Capital: NTG Clarity had a very successful year in diversifying its revenue base and opening up new international markets; however, Q4 results in particular came in well under expectations. Margins were significantly curtailed due to increased costs in planning and establishing some of the new Kuwait contracts as well as cost of travel for projects in Oman and KSA. Management has indicated that normalized margins should be in the 40% to 50% range. Revenues for the year were another annual record but came in just over 2015 sales and well below management’s forecast of $20 million for the year.
Work on the $11 million contract announced in December 2015 started in January and will have an impact on Q1 results which are scheduled to be released next month. As at December 31, 2015, NTG Clarity had positive working capital of $4.7 million or $0.13 per share, no long-term debt, and book value of $0.26 per share.
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 4,500 shares of Lingo Media Corporation, 3,366,000 shares and $64,780 in convertible debentures of Newlox Gold Corp., and 1,058,000 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 - 2016 QIS Capital Corporation.