Total Telcom Inc. (fka TTZ.V)

[JonnyRBuck12]

Another great quarter by TTZ. Profits continue to build up the cash position. Fair value based on the last several years of earnings and tight float should put the price around $0.30 or between $7-7.5 million market cap. 2X Net asset value for an EPS stock is the average for a growing micro cap, but should be higher. Screenshots below can be found on Sedar.

TTZ Balance sheet: https://cdn-ceo-ca.s3.amazonaws.com/1gq0got-TTZ%20Balance%20Sheet%20Q1%202021.jpg

TTZ Q1 Revenue: https://cdn-ceo-ca.s3.amazonaws.com/1gq0gpb-TTZ%20Q1%202021%20Revenue.jpg

[JonnyRBuck12]

Total Telecom Inc. DD Report

TSXV: TTZ
Price: $0.165
Common Shares: 25,315,014
Options: 1,430,000 @ $0.10 - $0.15
Insider Holdings: 7,195,836 or 28.4%
Market Cap: $4.18 million
Website: www.romcomm.com

Company Description: The Company, through its wholly owned subsidiary ROM Communications Inc. (ROM) is a leading developer and provider of remote asset monitoring and tracking products and services throughout North America. ROM specializes in the development of innovative wireless communications that provide low cost, high tech monitoring, tracking and remote control solutions for commercial, industrial and consumer applications. ROM is uniquely positioned and qualified to deliver complete web to wireless solutions that enable companies and organizations to remotely monitor, track and control their fixed and mobile assets with a web browser from any Internet enabled PC. Products and services are based on ROM’s web to wireless technology and proprietary 2nd generation hardware & software marketed as TextAnywhere, ROM Controllers, ROMTraX, MotoTraX, TraX, DataTraX, WaterTraX, SiteTraX, CamTraX and AlarmTraX. These modules are wireless modems that utilize microcomputers integrated with sensors, GPS engines and various inputs and outputs (I/Os) and interfaced by the user through the Internet. ROM is an authorized airtime reseller and hardware developer for satellite, cellular and wireless IP Networks.

Audited Results (Announced October 26th, 2021) – Available on Sedar

ASSETS
Cash & Equivalents: $1,791,631 – $0.071c per share
Trade & Other Receivables: $166,829
Inventories: $149,943
Prepaid Expenses: $6,213
Race Management Equipment: $77,833
Property & Equipment: $224,258
Product Development: $974,848
Deferred Income Tax Asset: $524,000
Total Assets: $3,915,000

LIABILITIES
Trade & Other Payables: $131,550
Deferred Revenue: $63,095
Current Portion of Lease Liability: $74,342
Remaining Lease Liability: $177,932
Long Term Debt: $40,000
Total Liabilities: $486,919

Sales Performance From 2018 to 2021: *Note* Q1 2022 Results Will Be Out In November.
Year Revenue Profit/(-Loss) Assets Liabilities EPS
2017 $1,741,556 $300,227 $1,730,249 $151,959 0.012
2018 $1,781,474 $476,028 $2,315,379 $193,561 0.019
2019 $1,438,390 $301,615 $2,622,889 $199,456 0.012
2020 $1,506,798 $321,438 $3,256,331 $511,460 0.013
2021 $1,736,500 $608,315 $3,915,555 $486,919 0.024

MD&A Highlights From 2021

Overall Performance

Revenues for the year increased by approximately $230,000 compared to 2020. This increase was a result of the Company continuing to see increasing hardware sales from new product developments that have been completed over the past couple years. In addition, there was increased race management revenue as the Company managed more races in 2021 and more racers participated in the races this year compared to the prior year.

The Company saw an increase in its net income of approximately $287,000. This increase was primarily a result of the Company recognizing a deferred income tax recovery of $524,000. This income tax recovery represents the income tax benefits that the Company expects to be able to realize on its unused income tax losses carried forward as management determined the Company operations have reached a level where the Company will probably be able to use a portion of the unused income tax losses against future taxable income.

Income from operations decreased by about $134,000. The increased sales and a resulting increase in gross profits generated of $194,000. This increase was offset by a $254,000 impairment allowance taken to write off product development costs for projects showing impairment indicators at June 30, 2021. In addition, the Company reported $40,450 of non-cash share based compensation resulting from stock options issued during the year and a $12,000 increase in amortization of product development costs as more products reached the commercialization stage during the year. The Company also saw an increase in other general and administrative costs of about $25,000.

The Company reported a $95,000 foreign exchange loss for the year compared to a $25,000 foreign exchange gain reported in 2020. The Company holds significant resources in US dollars, which weakened compared to the Canadian dollar over the past fiscal year.

The Company saw an increase in its cash of just under $357,000 in 2021 with working capital only increasing by approximately $282,000. The Company generated $644,000 in positive cash flows from operations, but reinvested $293,000 of this cash on its product development initiatives for the year. The increased working capital was primarily related to the increased cash held by the Company but was offset somewhat by lower receivable and inventory levels.

Total assets increased by approximately $659,000 in 2021 and total liabilities decreased by approximately $25,000. The increase in the assets is primarily attributed to recognition of the $524,000 deferred income tax asset. The decrease in liabilities is primarily attributed to the $30,000 decrease in the lease liability resulting from payments made during the year.

The Company’s working capital increased by approximately $282,000 from 2020. This is a result of increased cash resources that are offset somewhat by decreases in accounts receivable and inventory levels at year end. The Company generated $660,000 positive cash flow from operations. $296,000 of this cash flow was invested into new product development during the year. The Company also used $9,000 in cash resources on its financing activities as $82,000 in lease liability payments were made but offset by $18,000 in government rent subsidies received, $20,000 in government loans received and $35,000 received from the exercise of stock options during the year. The Company’s primary cash requirements are for the continued implementation of its marketing strategy to bring its new products to full commercialization. The Company will continue to invest resources in the development of new product and services for specific applications identified for potential new customers. In addition, the Company could have short term cash requirements in order to purchase inventory should larger sales opportunities be realized. The Company has sufficient cash resources to fund these initiatives and does not anticipate any immediate financing requirements.

Outlook

Over the past year, the Company saw continued growth in market acceptance of the DataTraX product with significant new sales occurring in the forestry industry. Management expects to see this growth continue as the value of the product is being proven to customers resulting in increased demand for additional DataTraX units.

The expertise developed around large data package transmission from DataTrax has allowed the Company to develop a remote satellite camera (CamTraX) application. There has been significant interest from government agencies for the use of this product in remote environmental monitoring applications. By then end of fiscal 2021 development and testing of a beta product had been substantially completed and field testing commenced. Management hopes to complete development of the commercial version of this product by the end of the second quarter to allow for commercial deployment to start in 2022.

The Company also saw increased customer interest in the Remote Motor Controller, SiteTraX and TextAnyWhere Aviation products and development of these products was completed in 2020. However, full commercial deployment of these products in 2021 was slower than hoped for, as the customer bases are primarily larger organizations that take longer to integrate new products into their sales distribution channels. In addition, the travel restrictions and work from home mandates for these customers resulting from the Covid 19 pandemic further slowed the Company’s ability to effectively market and distribute these new products. Management is still confident these products will gain market acceptance and continues to work with specific customers on the distribution of these products. However, management expects this process will likely take two to three years before the Company sees significant increases in the sales of these products.