QIS Update #9 - 2018 - NTG Clarity Networks files Q1 2018 results while Deer Horn Capital releases more news - May 29th 2018
- Included in this update:
- - NTG Clarity releases Q1 financial and operating results
- Deer Horn Capital comments on tellurium in waste-to-energy process
We are nearing the end of the first quarter reporting period and results from the companies we follow have been mixed as expected. NTG Clarity's numbers continued to show improvement, yet lack the "WOW" factor that companies like XPEL Technologies (DAP.U:TSX-V) generated with their outstanding financial performance. Good numbers were also recently announced by Questor Technology (QST:TSX-V) but the valuation on a p/e basis is so high that it's hard to get excited. Meanwhile Pioneering Technologies (PTE:TSX-V) numbers were well below expectations and Lingo Media (LM:TSX-V) announced another disastrous quarter and we will no longer be following this company.
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NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.06 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has released its first quarter results for the period ended March 31, 2018.
The first quarter of 2018 saw continued financial improvement as cost-cutting measures implemented over the past 18 months were gradually realized. Management is committed to balancing expenses with revenue generation and returning the company to stable profitability, and this was accomplished in the first quarter of this year.
Consolidated revenue for the three months ended March 31, 2018, increased 34 per cent to $4,049,061, compared with $3,007,929 for the same period in 2017, and is made up of product-related revenue, professional services and a small amount for hardware/office supplies. Professional service revenue continues to be a major source of revenue for NTG Clarity given its recurring nature (86 per cent). The contribution of product-related revenue was lower in Q1 2018; however, the company anticipates this to increase going forward as it works to make product sales a more balanced part of NTG's revenue stream.
Gross margin for Q1 2018 was $1,547,831, or 38 per cent of revenue, compared with $584,070, or 19 per cent of revenue, for the same period in 2017. NTG Clarity continues to work in all regions to optimize the cost of sales for the company's revenue growth, which resulted in a return to historical margins during the first quarter of 2018.
The company's operating expenses were reduced by 21 per cent in Q1 2018 to $1,053,459, compared with $1,327,924 in the same period last year. The reduction in operating expenses was a direct result of optimizing staff, salary, selling and travel expenses to be in line with revenues.
General and administrative expenses for the three months ended March 31, 2018, were $621,086, compared with $735,076 in Q1 2017. This 16-per-cent reduction was due to the continued reduction of salaries as the company reduces staff and salaries as contracts allow.
For Q1 2018, the company recorded positive net income of $160,482, or 0.3 cent per share, as compared with a net loss of $752,579, or 1.8 cents per share, in Q1 2017. Net income in the first quarter included an exchange loss of $88,997 arising on translation of foreign operations.
Working capital as at March 31, 2018, was negative $4,739,878, compared with negative $4,990,696 at Dec. 31, 2017. The company continues to address its working capital deficiency with cost reductions and improving cash flow and continues to make all necessary payments under its current credit facility demands.
The outlook for NTG Clarity is promising with increasing revenues, new sales opportunities, a lower cost structure and improving economic conditions. The Saudi Arabia (KSA) economy is rebounding with the increase in the price of oil, and, though some recently announced work has been slower than expected to start, recurring revenue is steady.
Subsequent to quarter-end, in May, 2018, the company was awarded a $963,400 grant to develop an autonomous vehicle user interface. The two-year software project will work with cutting-edge technology. This and a small amount of work being done with a new Canadian customer set the path back to work in North America.
The first quarter of 2018 marks the most profitable quarter for the company since Q1 2015. This is a testament to the cost-cutting measures implemented in the last half of 2016 and throughout 2017 as well as the hard work and dedication of all of the company's employees. Management remains confident that financial and operating results will continue to improve as a resurgence in economic growth in the company's key operating markets is driving opportunities in both existing and new sales channels.
QIS CAPITAL: The first quarter of 2018 continued the positive trend of improving financial results which started in 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. The balance sheet is still a concern and management is open to various forms of financing but is focused on continuing to improve the financial stability of the company. The autonomous vehicle user interface grant is an interesting new market that could prove to be very beneficial for NTG Clarity but is likely a few years out if realized. NTG Clarity is currently trading at about 5 times annualized earnings and at less than 20% of annualized sales
Deer Horn Capital Inc. (DHC:CSE)
Current Price: $0.26 (coverage commenced Apr. 10/18 - $0.17)
NEW APPLICATION FOR TELLURIUM DISPLAYS AN UNPRECEDENTED PERFORMANCE FOR TURNING WASTE HEAT INTO ELECTRICITY
Deer Horn Capital Inc. has noted that scientists in Bangalore claim to have synthesized a novel thermoelectric material that displays unprecedented performance in turning waste heat into electricity. According to a recent story in The Telegraph daily newspaper out of Calcutta, this new material, made from silver, copper and tellurium, shows high levels of thermoelectric performance that scientists hope may be harnessed to extract electricity from the waste heat of chemical, thermal or steel power plants.
Kanishka Biswas, assistant professor at the Jawaharlal Nehru Centre for Advanced Scientific Research in Bangalore, told The Telegraph: "An ideal thermoelectric material would have the lowest-possible heat conductivity of glass and the highest-possible electrical conductivity of metal. The silver-copper-telluride material we've fabricated is close to such a hybrid."
Tyrone Docherty, president and chief executive officer of Deer Horn Capital, stated: "More and more, we're seeing how the properties of silver and tellurium are being applied to important advances like these in technology. This is a key reason why we're so excited about the prospects of our Deer Horn silver-gold-tellurium property, which also contains copper."
The Deer Horn polymetallic property in north-central British Columbia contains one of the few known resources of silver-gold-tellurium that has been National Instrument 43-101 certified, along with copper, tungsten, bismuth and molybdenum. "The Deer Horn property is quite rare, if not unique, in Canada," said Mr. Docherty. "We believe it could become an important supplier of these green metals that are contributing to cleaner energy, more efficient transportation and many other uses for a greener planet."
As reported last week, Deer Horn expects to have an updated preliminary economic assessment (PEA) completed for the Deer Horn silver-gold-tellurium property by the end of May. The updated PEA, prepared by Moose Mountain Technical Services of Cranbrook, B.C., will be based on current metal prices and will include other revised parameters.
QIS CAPITAL: It is exciting to see all of the new potential uses of tellurium coming to light in our technologically advancing world. Each announcement only strengthen the prospects of Deer Horn's silver-gold-tellurium property. We are awaiting Deer Horn's preliminary economic assessment which should be released later this week.
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.