Cortex Business Solutions Inc. CTPNF

RE:RE:RE:RE:Fabrice Taylor on BNN Tomorrow

[mjc62]

Here is full email: President's Club REGULAR update Snipp Interactive (SPN.V; $0.79) increased its revenues by almost 1,000% in the first quarter. The company eked out a small profit thanks to a big non-operating gain on a market-to-market adjustment. Without this non-cash item the company would have posted a loss. Like some of you I was curious about an expense item called "campaign infrastructure” which, at $3.6 million U.S., almost equalled revenues. I expected the company’s business to show economies of scale but thanks to this large expense, it didn’t. I spoke to the CEO and he explained that in Q4 and Q1 Snipp conducted some “insured” promotional campaigns. What that means is that the company bears the cost of whatever incentive its customer is giving away to drive sales or loyalty. The CEO said that the company did this to coax customers into using its technology and to gain market share. He added that these are one-time costs that will not repeat. The company also announced the acquisition of Hip Digital Media. Hip appears to be nicely complementary to Snipp’s business. In fact Hip specializes in insured promotions. The purchase price was $8.5 million U.S. payable in shares. I like that the sellers took stock because they clearly see some upside. Snipp said Hip could add $10 million U.S. of profitable revenue next year. Two thirds of the shares issuable are subject to Hip meeting certain targets. It looks like Snipp could get to $20 million (U.S.) in revenue this year without the acquisition, and maybe $23 with. At a market cap (adjusting for these new shares) of about $90 million, it isn’t terribly expensive by tech stock standards. The stock sold off today but that was probably investors in the private placement selling early (the shares are off restriction on June 4 but because of three-day settlement some firms allow investors to sell early.) I expect more selling this week as more investors take profits on their 55 cent private placement but once it subsides we should see renewed buying. If Q2 shows more growth and the infrastructure costs fade, we should also see real profits. Klondex (KDX; $3.38) is hitting new highs almost every day and seems impervious to the gold price, which is what I hoped when I first recommended it a year ago. We are up almost 100% on this name and while it probably has more legs, the easy money has been made and I’m not adding to it. I prefer Meadow Bay (MAY; $0.24) which is much more speculative but has a potentially large resource in Nevada, which is the right jurisdiction today. I understand Loyalist (LOY; $0.37) will publish audited financials on Wednesday. Again, I don’t expect anything untoward. Nor do I expect amazing profits. I’m more interested in seeing management and even board changes. It’s pretty clear that the company needs help. The company has a market cap of $60 million and I think with good management it could earn $9 million a year in net income. I know the housing entity is ready to launch but obviously has to wait for the audited financials to be published. Housing could represent $20 million of value to Loyalist from the outset. I don’t blame anyone for selling Cortex (CBX; 5 cents) based on the company’s bizarre decision to announce a 50:1 reverse stock split. The stock had stabilized at around 7.5 cents as investors waited for the new CEO to put this amazing platform to better use. But the reverse split has alarmed some investors who, understandably, see the stock price falling after the split (see our last note for an explanation). I own a LOT and can afford to be patient but if you’re out, at least keep an eye on it because you can buy back when the sentiment changes (this reminds me that many investors hate buying a stock they’ve lost money on but that’s a mistake. Don’t be emotional. If you can make money buying it back, do it.) Warmest regards, Fabrice Taylor, CFA | Publisher