theScore, Inc. (SCR.V)

Website
Yahoo Finance
Filing

July 24, 2018
Q3 2018 Data, Year end: Aug. 31th
Price: $0.36, Shares: 296m, Cap: $107m
1.Basic Information
(1) History 
John Levy,  son of Cecil who owned a cable company at Hamilton in 1990,  found the sports media company which operates the Score sports TV channel. Later it was sold to Rogers for $167m at 2012. In the deal, it excluded theScore mobile App which later became the major product of theScore Inc. John Levy continues to build the new company and it was IPOed at that same year. It was able to grow the revenue to over $25m by 2017.

(2) Business-related.
Products:
1. TheScore App: This is the major sports app it offers. It generates most of the Ad revenue. Currently, it has around 4m active monthly users. The company creates its own media content for the app. Also, it allows the users to set their own preference so the content is more relevant to the user.

2. eSports: Computer gaming sports.

3. Online Sports Betting: Not quite sure whether it is legal to do so in the U.S.A. But the company seems very interested to get into this business.

It seems the first quarter(Nov. 30th) is its strongest quarter. While last quarter(Aug. 31th) is its lowest quarter. The other two quarters are close to the average number of this two quarters.

(3) Management.
John Levy: John successfully found the TV company and sold it to Rogers. He is very open-minded and always looking for changes. Previously when he sold the TV channel to Rogers. He intentionally excludes the mobile app from the deal. It is very impressive that how fast the company grows Ad revenue from this app.

Benjamin Levy: President and COO and John Levy's son. He seems to be the COO of the previous TV company.

(4) Debt and Credit Facility.
Currently, there is $11m debt outstanding. The interest rate is around 5% to 6%. Cash is around $5m.

(5) Insider holding, options, Insider trading info, share buyback.

John Levy: 62m shares, 20%.
Benjie Levy: 5m share. around 2%.

JOHN ALBRIGHT: Director, 51m shares,  Relay Venture. 

(6) Employee numbers


(7) Industry comparison.
ESPN: is its major competitor.
Yahoo Sports:


(8) Major events

2. Financial data.


3. Valuation
(1) Currently, the company generates no profit. May just close to cash even. It is hard to evaluate it based on profitability.

(2) If just based on revenue, it generates around 30m revenue currently. The current market cap is close to 4 times its annual revenue. Not really cheap.

4. Risk
(1) Generally, Ad revenue is very bad revenue source since its customer can easily cut back on marketing spending and also it can easily lose customers.

(2) It is hard to tell whether it can continue growing its user base. The competition in mobile apps in very tough. It is losing users on the Android platform.

5. Conclusion
The company was managed very well and grew very well. However,  it is still a very risky business and the current price is not cheap.

6.Links

H2O Innovation Inc. (HEO.V)

Website
Yahoo Finance
Filing

July 16, 2018
Q3 2018 Data
Price: $1.28, Shares: 40m. Cap: $51m
1.Basic Information
(1) History 
This is a Quebec company started in the 1990's. Originally it was called Hebron Fjord Resources which is a junior mining company. Guy Goulet(CEO at that time) and Frédéric Dugré(Current CEO) seems to be among the original owner. At 2000, it changed its name to H2O Innovations and started to invest in water treatment technologies. It IPO'ed 2001 at $0.50. The symbol is HOI and later changed to HEO at around 2015. It had a revenue of around $4m level at that time and with quite big losses every year. The revenue was down until 2007 it returns $7m level but still losing money. At 2008, Frédéric Dugré took over as CEO. Revenue increased to $10m but still in loss. In 2009, revenue tripled to $31m and cash positive. However, in 2010, revenue was down again and didn't recover until 2014. There was a big write off of $10m+ in goodwill and intangibles during this period.  The company achieved EBITDA positive since 2013. Revenue grew to $50m at 2015 and 2016 and to $80m at 2017. Revenue of 2018 expected to be close to $100m.

Originally the company was only doing the water treatment business. Lately, from 2009 to 2013, it added the maple syrup equipment business. At 2016, it added operation and maintenance business for wastewater facilities.  Now all three business accounts 1/3 of revenue for each.

(2) Business-related.
Water treatment: This is its old business. Most are project based which makes revenue fluctuating. Now it only accounts for 1/3 of its revenue. It seems a tough business and the company barely made any money from this business.

Maple syrup equipment: This business is more predictable and seems growing very well.

Operation and maintenance for water facilities: This is mainly a service. It is more ideal for its revenue is very consistent and it is capital light. However, currently, I don't know what is the margin like.

(3) Management.
Frédéric Dugré: He is the original SVP of the company since the beginning. Took over CEO role since 2008. During his time, the company did better in terms of reduced losses. Also, the company grew revenue from $30m level to $100m level currently. However, during his time, the company still incur losses. Also, issue shares quite loosely.

(4) Debt and Credit Facility.
Currently, there is $11m debt outstanding. The interest rate is around 5% to 6%. Cash is around $5m.

(5) Insider holding, options, Insider trading info, share buyback.

Frédéric Dugré:  850k Shares, only 2%. Overall his compensation is quite moderate. At 2017, the company issued close to 1.5m shares of options at $1.65 to him.

(6) Employee numbers


(7) Industry comparison.


(8) Major events

2. Financial data.


3. Valuation
(1) Current the company is just cash positive. It is not really cheap from profit aspect. However, It might be able to generate $5m/year cash in the future if it can improve profitability. Also, it might be able to continue growing its revenue.

(2) The CEO, CFO, COO holds 2.5m shares of options at a price of over $1.65 which is a good incentive for them to do well.

(3) Currently, the company is making a small profit or close to making a profit. The book value is also close to share price. It decreases the risk.

4. Risk
(1) The company never made any big profit and it might not make money even though the revenue is much higher.

(2) The management tends to issue shares very loosely and it might keep doing that.

(3) There are quite a lot wrote down of goodwill and intangibles during the past. Those acquisitions the company made seems not very good.

5. Conclusion
The company wasn't managed very well. However, the current price is acceptable as long as it can maintain cash positive.

6.Links