NameSilo Technologies Corp. (URL.CN)

Website
Yahoo Finance
Filing

Dec. 06, 2019
2019 Q3 Data
Price: $0.49 Shares:62m, Cap: $30m
1.Business Information
(1) History 
Originally the company was called NETCO ENERGY INC. which was a resource company that ceased operation before 2009. It carried around $19m in operational losses. In 2011, Paul Andreola joined the company as a director. He held around 2% of the shares at the time. In early 2013, he became the CEO of the company.

Later in 2013 the company raised around $500k and changed its name to Brisio Innovations Inc. The company started to acquire some mobile apps. It didn't work out and incurred losses from 2013 to 2015.

In 2015, the company raised another 200k and started to invest in public microcap stocks. In 2016, it gained a massive $1.9m in investment value. It also raised another $300k in stock. In 2017, it gained $700k in investment. Raised $1.1m in stock. However, in 2018, it lost $1.6m in investment.

In 2018, it raised 5m in stock and 11m in debt to acquire a domain hosting company called namesilo.

(2) Major business.
1. NameSilo: The web hosting business has been growing very well. As in Q3 2019, it generated $7.8m in revenue and around 900k in EBITDA. It has a growth rate of around 10% per quarter.

2. Microcap Investment: It did very well in 2016 and 2017, but lost in 2018 and 2019. Currently, it still has around $2.5m in stocks and around $1.3m in bitcoin.

(3) Debt and Credit Facility.
10m debt around 11% in interest.

(4) Employee numbers


(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Paul Andreola is a very known Canadian microcap investor. He is among the top-ranked in the microcap investor club. Also, he is the partner of the small-cap discoveries newsletter.

(2) Insider ownership & Compensation
At the end of 2018, Paul holds 6.5m shares, just around 10%. His compensation in 2018 is around $50k.

3. Financial data.


4. Valuation and comments
(1) Currently, the stock is traded above 10 times EV to forward EBITDA. Not really that cheap. It all depends on whether the Namesilo business can keep growing in profitability. It seems the name hosting business will continue to do very well in the future.

(2) Currently, it owns 900k of Atlas Engineered Products(AEP.V) stock which might do very well in the future.

5. Risk
(1) The current 10m debt at 11% is quite a burden to the company. Hopefully, it can pay down and refinance it with a lower interest in the future.

(2) The investment part is not doing very well currently. It is not very active now. It might get very active in the future. It seems like to hold investment too long while missing the selling opportunity.

(3) Its biggest investment position now is 2.5m shares of ImmunoPrecise(IPA.V) which worths around $1.3m. Not sure whether the company is good or not. Also, the bitcoin investment doesn't make sense to me.

(4) The domain business is been acquired for just one year. It is still possible not performing as expected.

6. Conclusion
The company's acquired business is doing very well. However, currently, the high-interest debt is quite a problem. The current price is not very cheap. I hope there is a better price or the debt problem been solved.

7.Links

https://smallcapdiscoveries.com/

WestBond Enterprises Corporation (WBE.V)

Website
Yahoo Finance
Filing

Nov. 25, 2019
2020 Q2 Data (Year-end: Mar 31)
Price: $0.18 Shares:34m, Cap: $6.1m
1. Business Information
(1) History 
This company found by Gennaro Magistrale and maybe some others around 1989 as a paper converter that creates disposable paper or fiber products for healthcare usages like the hospital, clinics,s and nursing homes.

By 1997, it reached sales of 1.5m and became profitable. By 2000, it generated $2.8m in sales and $250k in profit which is its highest income by then. Since 2002, it began producing personal hygiene products like hand towels and tissue, etc. By 2006, it reaches 6.3m in revenue with 2.7m in personal hygiene and 3.2m in health care. However, its profit topped 270k in 2004 with a gross margin of 30%. After that, both margin and profit are going down.

From 2006 to 2015, its margin decreases to around 20% and stay there. Profit usually stays around 100k/year. Revenue is kind of flat between 6m to 7m levels.

In 2015, it invested over 6m, mainly through debt, in a new machine to produce air-laid paper. This created the third product category for it. Also, it helped to increase the margin. By 2019, it reached a revenue of 11m with 3.4m in air-laid paper and each other category around 4m each. Gross margin creased to 21% and net profit around 400k with depreciation close to 690k which is higher than 360k in CapX.

In 2Q 2020, it reached 5.7m in sales with each category counting around 2m. The air-laid paper continued to grow and exceeded the other two categories in Q2 2020. Gross profit is around 22%. Net income is around 260k with the depreciation of 340k vs 340k in CapX.

Starting Sept 2018 which is Q2 2019, it started to pay 0.0025/share of dividend per quarter.

(2) Major business.
1. Hospital &Clinic & Nursery home product: This shows as two categories in its statement. But I think they would be better just as one segment. It has been very stable since the beginning. Now it has around 4m/y sales around 1/3 of the total revenue.

2. Personal hygiene product: Started in 2002, it grew pretty well to 2.7m in revenue in 2006. After that, it stays there until 2015 it exceeded 3m in revenue. Mainly because of the fall of CAD$ to USD$ starting at that time. Currently, it also counts for 1/3 of its revenue at around 4m/y sales.

3. Air-laid paper: Started in 2016. It grew very rapidly to over 3.4m in revenue in 2019. In 2020, it should be over 4m in sales. The growth seems slowed a little bit.


(3) Debt and Credit Facility.
In Q2 2020, it has 2.7m in debt, down from the peak 5m level in 2016 which was used to purchase the new air-laid machine.  The interest expense is around 100k/year.

(4) Employee numbers


(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Gennaro Magistrale is still the CEO. There is not much information about him.

(2) Insider ownership & Compensation
Gennaro Magistrale owns over 7m shares. around 22% of total shares. In 2019 he earned 250k in compensation.


3. Financial data.


4. Valuation and comments
(1) The company is truly a nano-cap. It took over 20 years to reach 10m+ in revenue. However, it is was doing quite well through different periods. For most years, it remains profitable. The 2009 financial crisis seems not affecting it that much. It seems very recession-resistant.

(2) Currently, it is trading around 12 P/E which is quite a fair price if a stable business. However, the air-laid paper product is still growing very well. It has very good potential. Assuming it reaches 15m in sales by 2022, it might be able to generate $1m/year in profit. The share would likely be double by then.

(3) It started to pay a dividend last year which never happened before. It shows some confidence from the management. Currently, it yields over 5% until the share price exceeds 0.20/share.

(4) The new air-laid machine investment seems a success. It increases its margin and makes it more competitive.

5. Risk
(1) The low CAD$ to USD$ rate definitely helps its business. If CAD$ rises again, it will hurt its business. From 2005 to 2015, the CAD was generally much higher than now which coincidently the company was not doing very well.

(2) The paper-laid product might not grow as expected in the future.

(3) Generally, it is a commodity business that is very sensitive to price and the competition is tough.

6. Conclusion
Overall, the company is well-managed. Although historically it is very slow, it might be able to do well in the coming years. The current price is very reasonable.

7. Links

Update

Nov. 25, 2022

Q2 2023 data

Price: $0.25. Shares: 35.6. Cap: $8.9m

(1) The past 3 years turns out quite dramatic for this company. During the pandemic, the company invested around $2m into a new wet-wipe product line and secured a big government contract(Aug. 20 to Jan. 21) for around $6m. At the same time, because of the restaurant's closure, its air-laid paper product sales drop from $4m in fiscal 2020 to just $1.8m in fiscal 2021. Overall, the company still made over $2.6m in fiscal 2021. As a result, the stock skyrocketed to over $1.3 at one point. 

(2) However, in fiscal 2022, almost everything reverts back to pre-pandemic. The wet-wipe sales disappeared and the air-laid paper sales recovered and grew to $5.1m. Overall, the company made a similar profit of around $800k in 2022 which is comparable to 2020. 

(3) In the first 2Q of fiscal 2023, the company's air-laid paper sales raised to $3.5m. OC is over $1.5m. CapX $200k. Leasing&Interest $200k. It generated over $700k in real earnings in total. It also indicated a labor shortage in Q2 which has been eased lately. The demand for its product remains strong. 

(4) Currently, the company is paying $0.005/share dividend/quarter which is 8% based on a $0.25 share price. It also paid down most debt with little debt remaining (<$1m). 

(5) Currently, the company is trading less than 10 P/E based on the TTM number. The air-laid product line continues to grow and remains strong. The current price is very attractive and comparable to the $0.18 level it was traded at 3 years ago. 

Risk:

(1) The top 2 customers account for around over 50% of its sales. The loss of any of these customers will affect the company.  

(2) As indicated by the company, the labor shortage has affected the company's results greatly. It is not certain whether this could be solved in the short future. 

(3) The air-laid product line might not perform as good I expected. 

Atlas Engineered Products Ltd. (AEP.V)

Website
Yahoo Finance
Filing

Oct. 01, 2019
2019 Q2 Data
Price: $0.44 Shares:46m, Cap: $20m, 3.3m options at $0.43. 5.2m warrants at $0.60 
1.Business Information
(1) History 
The company was founded by Hadi Abassi in 1999 as a roof truss manufacturer in BC. Like many others, roof truss manufacturers are small companies scattered across the country because it is uneconomic to transport to long distances over 500km away.

In 2017, the company achieved $8m in revenue and close to $1m in income. Also, as many owners looking for retirement lately, Abassi saw the opportunity to consolidate those small businesses. So he took the company public in late 2017 and started acquiring others.

By now, it had acquired 5 different small truss and window manufacturers all across Canada and had an annual run rate close to $50m in revenue.

In late 2018, the company hired Dirk Maritz who had previously managed bigger scaled companies as the new CEO. Abassi now is EVP and still seems very actively involved.

(2) Major business.
Roof trusses: Roof truss is mainly used in residential houses. Its size is relatively large and uneasy to transport. The manufacturing of roof truss is not fully automatic. There is quite some labor involved and there is room to reduce cost and improve efficiency. Currently, roof truss counts 75% of its total revenue.

Floor truss, wall panel & windows etc: 25% of total revenue.

Generally, the company's Q1 revenue is the lowest and Q3 revenue is the strongest.

(3) Debt and Credit Facility.
Around $9m in debt and $500k in annual interest expense which is 5% to 6%.

(4) Employee numbers


(5) Industry comparison.
The structured building components industry is not very large. In the US, there are some big players. In Canada, there are mainly small companies that generate an average of $3m in revenue.

Stark Truss: A eastern us truss company that has 12 locations currently. Founded in 1964. It might have around $150m in revenue.

There are some machine and plate suppliers to this industry:
Mitek: Major supplier of truss manufacturing equipment, plate, roof truss design software, etc. Its design software seems most famous. The company is partnering with Mitek to improve its efficiency.

Alpine: Blongs to ITW (Illinois Tool Works). A Fortune 500 company.

Randek: The company developed some more automatic systems. However, it doesn't seem been widely used.

(6) Major events

2. Management
(1) Key person
Dirk Maritz: current CEO. Previously he worked for SMS equipment for 6 years. There is not much about his previous experience, but it was told that he was managing 2000+ employees. Overall, he seems pretty energetic and genuinely intelligent.  He seems did quite a good job consolidating all the manufactures.

Hadi Abassi: Founder and current executive VP. He seems still actively involved in certain aspects of the business.

(2) Insider ownership & Compensation
On Dec. 2018, Founder Abassi holds around 7.4m shares which were 17% of total shares by then.
CEO Maritz didn't hold any shares at the end of 2018 since he is new.

Insiders own 16m shares in total. Around 35%.

3. Financial data.
As of Q2 2019, the company generated $9m in revenue and around $1.5m in EBITDA. It generated a small profit in Q2 and the first half of 2019.

4. Valuation and comments
(1) For the full year 2019,  it is expected to generate around $40-$45m in revenue and around $5m to $6m in EBITDA.

(2) Assume by 2022, it can achieve $100m in revenue and $17m in EBITDA. Assuming $20m in debt, 100m shares, $170m EV. It can support a $1.5 share price by then.

5. Risk
(1) The slow down of the housing market will likely have big impact on the company's revenue.

(2) The consolidation of new companies that been acquired might not going well.

(3) The debt used for acquisition might cause issues if not controlled well.

6. Conclusion
The company was managed quite well so far. It does have very good potential to grow very well. However, it is still very early and it remains to see whether the management can deliver their promises. The current price is very acceptable as long as the company can remain profitable.

7.Links

AgJunction Inc. (AJX.TO)

Website
Yahoo Finance
Filing

Sept. 19, 2019
2019 Q2 Data
Price: $0.50 Shares:120m, Cap: $60m
1.Business Information
(1) History 
The company was found in 1990 in Alberta. Originally it was called Communication Systems International. Its main product is an enhanced GPS receiver which improves the accuracy of GPS.  In 1997 it IPOed on TSE. At 1999, it acquired Satloc, a precision guidance system for aircraft.

At 2000, it acquired a location-based wireless company and later changed its name to CSI wireless. It carried both the GPS and wireless business for several years.

In 2005, it acquired Outback from RHS Inc which was found by Richard Heiniger. Outback is a GPS guidance system for agriculture which was manufactured by CSI for RHS by then. Richard joined CSI as director after the transaction. In 2006 the company sold the wireless business and change name to Hemisphere GPS in 2007. It continued to develop Outback and Satloc products for several years.

At the end of 2012, the CEO resigned and Richard Heiniger became the new CEO. At early 2013, it sold all non-agriculture business to a China company called UniStrong and changed its name again to Agjunction.

At the end of 2015, it merged with a private company called Novariant which is an auto steer tech company. Dave Vaughn, who is Novariant's CEO became Agjunction's new CEO since then.

At 2018, it created a new aftermarket auto-steering product called Wheelman which is basically Novariant's product. It has a sub $4000 price tag and aiming the smaller farmers which have less than 1000 acre of farm.  Later it sold its Outback product line to the sub-company acquired by UniStrong and sold its Satloc product line as well.

(2) Major business.
Currently, its major products include Wheelman pro and Wheelman flex. Both are aftermarket autosteering products.  It is a low-end auto-steering product which uses WAAS which offers 6-inch accuracy instead of RTK which offers centimeter accuracy. Also, it uses mechanic steering which is cheaper and easy to install. Also, it uses iPad and android tablet as monitor which is very innovative and easy to upgrade. The Wheelman flex is the same but offers sharing auto-steering between tractors. The steering gear can be easily detached from one tractor and attached to another tractor.

The wheelman product line is fairly new and has been received well by farmers. They have been growing at a 20%+ rate year over year. However, their sales might be very low since it is still new.

The company also try to sell to OEMs and VARs(value-added resaler). It also works will OEMs to created autosteering for them. Currently, it is working with Mahindra, an India tractor company. It received a $55m bulk order in 2018 from an EU VAR. The order will be finished in Q3 2019.

Before merging with Novariant. Novariant was supplying product to Ag Leader and combined with Ag Leader's own display. The product is called Ontrac3. It is more costly than Wheelman product.

The company also hold several autosteering related patents. It does receive licenses at least from 2 companies including Raven Industries, one of its major competitors. Currently, the company has ongoing patent litigation against Kubota.

(3) Debt and Credit Facility.
Currently, the company has $19m in cash and no debt.

(4) Employee numbers
By the end of 2018, it had 106 employees including 43 in R&D.

(5) Industry comparison.
Trimble Agriculture: It belongs to Trimble Inc, a Nasdaq $9B cap company. Trimble has two products called Trimble EZ-steer and EZ-pilot which are similar to Wheelman.  EZ-steer is using similar mechanic steering but it is not as good as Wheelman. EZ-pilot is almost the same as the wheelman except it need a Trimble display. It also has a higher-priced auto-pilot system which uses RTK instead of WAAS. It also supports hydraulic steering in addition to mechanic steering. Previously in 2002, Trimble had sued the company for patent infringement. It was settled in 2007 with a neutral result.

Raven Industry: a US $1.2B cap company. Its product is called Smartrex, it is very similar to Wheelman. It offers both hydraulic and mechanic steering. Back in 2011, they are co-developing auto-steering solutions. Later, they broke up and in 2018 it filed a lawsuit against Raven and signed a license agreement.

Ag Leader: Ontrac3: Ag Leader's auto-steer product. It uses the mechanic steering as well. Basically, just Novariant's product using Ag Leader's monitor.

(6) Major events

2. Management
(1) Key person
Dave Vaughn: He is the former CEO from Novarient. During the last 3+ years, he brought quite some changes to the business. The sale of outback seems not a great decision. Now it seems just old Novarient business is left.  It is still hard to tell whether he can turn the company around.

Also, the whole management team is very unwilling to share information to investors which are not very desired.

The relationship between the company and OEMs seems not very good. It never is able to land into any tractor manufacturer.

(2) Insider ownership & Compensation 
The CEO is only holding around 2%. All insiders hold around 30%.

3. Financial data.
In the past few years, the company didn't make much money. All the cash it has now is mainly from the devesting of its business. Currently, it has around a $15m quarterly rev. But they are mainly from the EU bulk order received last year.

In the US, the company lastest customer counts around $10m in revenue in 2018. I think it might be Ag Leader. For the first 2Q of 2019, US total sales were only 7.7m which should include this customer and the license fees plus Wheelman product sales.

4. Valuation and Comments
(1) The wheelman product seems pretty promising and has a big potential doing well on the aftermarket. However, currently, it is still very low volume and it takes time to generate meaningful revenue. Also, it is in direct competition with Ag Leader's auto-steering product. It will offset some revenue from Ag Leader.

(2) Currently, the EU OEM & VAR revenue is not stable. After the ending of the $55m bulk order in Q3 2019, the company might suffer big drop in revenue and profitability.

(3) On an ongoing basis, the company spends $2.5m in R&D, $1.2m in marketing, $2m in G&A. However, it can only generate $5m in gross margin based on current $15m revenue level. It barely makes even now. Once the bulk order ends in Q3, it is very likely will suffer drop in revenue and incur losses. The company has around $20m in cash which will enable it no need to raise money in the near future even it incurs some losses.

(4) Currently, the company has ongoing litigation against Kubota. It might incur quite some legal cost. However, it might also generate license revenue if it goes well.

5. Risk
(1) EU bulk order ending might cause the company to become non-profitable again.

6. Conclusion
The company had a pretty mess history and struggled through the years. Its technology and product do have some potential. However, execution is critical. The management is not doing very well in my opinion. It is uninvestable currently unless there is a real trend that the company has turned around.

7.Links

Vitreous Glass Inc. (VCI.V)

Website
Yahoo Finance
Filing

July. 10, 2019
2019 Q1 Data
Price: $4 Shares:6.3m, Cap: $25m
1.Business Information
(1) History 
The company was founded by Patrick Cashion and Irvin Thomas in 11995 to catch the opportunity that the Alberta province needs to process recycling glasses. It creates the manufacturing factory to crash recycled glasses and sell to fiberglass insulation manufacturers. By the year 1998, it had reached revenue of over $5m and a small profit. In 2001, the company acquired a cabinet manufacturing business which brings around $5m revenue from 2002 to 2005 but never been profitable.

In 2006, the company got rid of the cabinet business and at the same time the glasses business also getting better which generates $7.6m in revenue and $1.4m in profit. Since then its revenue stays around $7m and profit was around $1.3m to $1.5m to the year 2013.

From 2014 to 2018, its revenue had increased to $8m and profit is above $2m.

(2) Major business.
The business is quite simple with around 50% gross margin since 2014. I guess the raw material cost should be really low while transportation might cost more than it.

It has 3 major customers which the first 2 made most of its revenue.
Johns Manville: Sub-company of Berkshire Hathaway. Its revenue might be around $1B on insulation product in 2016.

Owens-Corning: US public company. Its revenue of insulation product might be $1.3B in 2016.

Both companies have multiple plants over US and Canda. VCI only supply raw material to the plants that close its manufacturing facility. Also, it seems VCI supply the majority of raw material for these tow plants. It seems that in the last several years, VCI can't keep up the demand it customers need.

It looks like the company's business is tied to real estate development activity. However, from 2009 to 2013, it doesn't suffer any revenue and profit losses.

The company paid out almost all of its profit in dividend which yields over 10% for most of the time.

(3) Debt and Credit Facility.
The company is in net cash for a very long time.

(4) Employee numbers


(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Patrick Cashion is the main person who is running the business. There is not much public information can be found from the internet about him

(2) Insider ownership & Compensation
At 1996, it had around 44m shares outstanding. In 1998, it did a 10 for 1 merge which reduced shares to around 4.6m. At that time, Patrick only owns 260k shares while Irvin owns 730k.

In 2009, the company bought the build and the land which is leased from Irvin Thomas's company for $1m. At that time he has 1.1m shares in the company. Since 2010, he started to reduce his holding. At around 2013, Irvin reduced his holding to less than 10% and left the company at 2014 while Patrick increased his share to 2.8m by 2014 which is around 44% of the company.

At 2018, Patrick and his wife own 2.4m shares which are 38% of total shares.

Patrick's compensation was over 600k since 2006 and was 900k in 2018. It is quite generous compared to the net profit the company generates each year.


3. Financial data.


4. Valuation
(1) The business is very stable almost since the beginning. It was able to grow revenue and profit over the years. However, it only happened in 2006 and 2014. Most of the years it just stay flat in both revenue and profit.

(2) Currently, the company is traded around 12 P/E which is not expensive. However, it was traded like this for a long time and sometimes even cheaper.

(3) The dividend payout is very high.

5. Risk
(1) The company is relying on limited customers and limited supply. Any change on each side will heavily affect its business.

(2) It is unknown how it is tied to the real estate market.

(3) The CEO was paid very generously and it seems he has no intention to grow the business since all profit is been paid out as dividends.

6. Conclusion
The company is very stable and the current price is acceptable. However, there is not much growth outlook. Also, it should be monitored closely since it is very concentrated both on the revenue side and the supply side.

7.Links

Nova Leap Health Corp. (NLH.V)

Website
Yahoo Finance
Filing

Jun. 10, 2019
2019 Q1 Data
Price: $0.27 Shares:61m, Cap: $16m
1.Business Information
(1) History 
The company was founded by Chris Dobbin in 2015 and IPOed in 2016. It started as a small PSW homecare service company. By 2 acquisition in 2017 and 5 in 2018, it rapidly grew revenue from $1m in 2017 to $10m in 2018 while limiting the loss to less than $1m. Currently, at Q1 2019, it has a revenue run rate more than $16m while achieved around $150k in operating cash.

(2) Major business.
It operates several PSW service provider at several locations in the north-east US and Nova Scotia Canada. Usually, its customers pay by an hourly rate of around $25/hour. The majority of its customer paid by themselves. The business has around 30%+ margin rate. It is a very capital-lite business.

Currently, the company is still pursuing acquisitions. It usually offers the seller cash plus some debt from the company.

(3) Debt and Credit Facility.
By Q1 2019, it has $3.5m in demanding loan + $800k in notes. It has to pay down around $450k in each quarter.

(4) Employee numbers


(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Christopher Dobbin: He has some banking experience. Previously he was working for BMO from 2004 to 2009 and then found Precipice Capital in 2009 till now. I think his main expertise is on corporate financing.

(2) Insider ownership & Compensation
10m warrants at $0.35/share. 5m options at ave $0.30/share.
Christopher Dobbin 7.3m shares. All insiders hold around 38%. The original 10m shares were issued at $0.05/share. The IPO price is $0.10. Later a lot at $0.20/share and some at $0.35/share.
Early 2019, insiders exercised over 1m options at a price of $0.35 which is higher than the market price then.

3. Financial data.
(Financial in US$, share in CAD$)


4. Valuation
(1) Currently, the company is still not profitable. In Q1 2019 it actually generated around $150k in cash. It seems the trend will continue.

(2) Assuming by 2021, it can generate $30m in revenue, $10m in gross profit. $7m SG&A. $3 in real income $60m cap. 100m shares. It can support a share price of $0.60(CAD$0.80) by then.

5. Risk
(1)It seems the company actually created an account on stockhouse.com to promote its stock which is really rare.

(2)Currently, it has not generated enough cash to pay down the debt it needs to pay each quarter. Also, it needs cash to fuel future acquisition.

(3)Its gross profit is growing each quarter, however, its SG&A is also growing. It is hard to tell the SG&A growth will not exceed the gross profit it generates.

(4) It seems not much to improve efficiency when combining those new locations together.

6. Conclusion
The company is in the right industry and has a lot of potentials. However, it still needs some cash injection to fuel future acquisitions. The current price is acceptable if the company can generate profit as the current trend shows.

7.Links

https://www.youtube.com/watch?v=5W48cyBAbto

Richmond Club

Wow Unlimited Media Inc. (WOW.V)

Website
Yahoo Finance
Filing


May 13, 2019
2018 Data
Price: $0.99 Shares:32, Cap: $32m
1.Business Information
(1) History 
The company was originally called Rainmaker Entertainment Inc. Its main business is animation movies and series. From 2012 to 2016 the company was in trouble somehow.  At Oct. 2016, the company combined with Frederator Networks and changed its name to WOW Unlimited Media.  Also, Michael Hirsh, a very known animation person joined the combination and served as the new CEO.

It is an animation company mainly for kids and youth. Now it has 3 studios and a video distribution network on Youtube. In the middle of 2018, it acquired the Comedy Gold channel from Bell by issuing shares. It plans to convert the channel into a kids channel. However, progress seems slow.

(2) Major business.
Rainmaker Studio & Mainframe Studio: Full-service production animation. Mainly making films and series for 3rd party.

Frederator Studio: Mainly creates short animation series.

Studios have two types of work. One is hiring for work which it creates animation for clients. The other one is its own IP creation for licensing to Netflix and Amazon etc.  Currently, the studio business counts around 1/3 of the total revenue and is profitable.

Frederator Network: Youtube network of animations and etc. 3 Billion monthly views over 3k youtube channels. Also operates VRV channel. The network segment has a very high growth but it is still not profitable and expects to lose in 2019 as well.

(3) Debt and Credit Facility.
It has $4m in convertible debt at 8% and convertible at $2.00/share. Due at Dec. 2020.  $15m interim production financing at prime rate+1% to 1.75%. Also has $1.3 on-demand loan.

(4) Employee numbers
100 full time + 266 fixed-term + contractors.

(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Michael Hirsh: A well-known person in the Canadian animation industry. Often regard the Walt Disney of Canada. Previously he co-founded Nelvana at 1971 and sold it at 2000 for $540m. Since 2004, he was leading Cookie Jar Entertainment until 2012 it was bought by DHX media and stayed with DHX until 2015.

Frederick Seibert: He is the first creative director of MTV.  Later he turned Nickelodeon from the worsed rated network to first place in 6 months. At 2007, he founded Next View Network which mainly focuses on online media. It generated 200m/month views on Youtube by 2010 and been acquired by Youtube in 2011. He found Frederator Network which includes Frederator Studio.

Craig Graham: He was CEO of Rainmaker from 2012 to 2016. Francis Chou has praised his work at Rainmaker. Now he is still a director of the company. But his involvement seems low.

(2) Insider ownership & Compensation
Michael Hirsh: 3.3m shares. 12%.
Frederick Seibert: 4.5m shares. 16%.
Bell: 3.6m share. 13%.
Franklin Templeton Investments: 3.4m shares. 12%.

3. Financial data.


4. Valuation
(1)The most valuable potential is actually the management team. Both Michael and Fred have very good tracking record of been creating successful businesses. It is very likely that they can create something similar again.

(2) The original cost of capital is well above the current $1.00 level. Currently, the company still burning several million of cash each year. It estimates to be EBITDA positive in 2019. It is really hard to evaluate the company based on earnings. If the company indeed can turn a profit. It will be worth way more than the current $30m cap giving the high growth it has.

5. Risk
(1) Currently, the company still needs to raise several million in capital each year which sucks given the low share price. It is very hard to tell when it can turn cash positive.

(2) Although the management team is very strong. It doesn't mean they can work together very well. Also, the old rainmaker part was doing quite bad before the acquisition.

6. Conclusion
The company's management is strong and the potential is huge. The current price is cheap but there is some risk since it is not profitable. Should watch closely. 

7.Links
Video - BNN

Potential deals pile up in media space - Video - BNN

(1) BNN (12/19/16): Wow! Unlimited shares begin trading - YouTube

https://www.youtube.com/watch?v=ilULgME_JTA

https://www.youtube.com/watch?v=hyu_i1H04VU

https://www.youtube.com/watch?v=icy0M-A_M7g

The Western Investment Company Of Canada Limited (WI.V)

Website
Yahoo Finance
Filing
Western Financial Filing

Apr. 15, 2019
2018 Q3 Data
Price: $0.365 Shares:30m, Cap: $11.2m
1.Business Information
(1) History 
The company was founded by Scott Tannas in late 2015. Previously he was the founder of Western Financial Group(WFG) in 1996 as an insurance brokerage. Later entered insurance and banking.  He took it public and creates which was a successful investment company which is sold to Desjardins for $440m. It was an 11-bagger for the original investor after 15 years.

The company IPO'ed at 2016 with a $50c offering. Later it issued more at a higher price. Totally it had raised around $16m in total with 30m shares outstanding. All the $16m has been used to invest in 4 business from 2016 to 2018. It had used something similar to the leveraged buyout approach which raised debt in each of the business it acquired.

(2) Major business.
1)Glassmasters: Car glass repair and wholesale. Seems generates 20m revenue and $1m net come normally.

2) Golden health: Four nurse homes, one 30% owned by WI, rest are 25%.

3) Ocean sales: Demo sales in Costco etc.

4) Foothills Creamy: Icecream and butter brand.

(3) Debt and Credit Facility.
As of Q3 2018, there is $1.5m in debt. Early 2019, it added another $4m convertible debt for the new Fortress acquisition.

(4) Employee numbers
Currently only 3.

(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Scott Tannas build the WFG from scratch and running it for over 15 years. It did very well. It remained profitable even at the 2008 financial crisis. Also, his compensation is quite low. However, he seems not very interested to own many shares of the company he creates. At the sell of the previous company, he only holds 510k shares which gave him just over $2m in value.

(2) Insider ownership

Scott holds around 1m shares, just around 3.4% of the total shares.

3. Financial data.


4. Valuation
(1) Currently, the 4 investments create over $1m/year income for the company. However, since all of them acquire a significant amount of debt at the acquisition, it will take several years for the company to be able to receive cash from those investments. Also the book value over $15m which is higher than the $11m market price.

(2) The company generates over $200k in management fees in 2008 from its investments which will be able to cover its daily expenses which are nice.

(3) As indicated in an interview in 2018, it will continue to acquire 10 to 15 businesses in the next few years. I estimate it will issue 20m shares and raise $15m cash. Also might issue some debt or preferred shares.

(4) Assuming by 2021, its book value is $30m; 50m shares. $3m annual income; it might support a share price of $1.

5. Risk
(1) There is some significant debt in each of the investments. Although it doesn't guaranty these debts, those businesses might still go bad.

(2) It does not control the day to day running of those businesses. The owners of those businesses will have less incentive to operate their business for good since they sold the majority of their shares.

(3) Scott Tannas doesn't own too many shares of the company just likes he was with the previous company.

6. Conclusion
Scott Tannas had done very well in managing the previous company. I feel he is very likely able to achieve a similar result. The current price is quite cheap.

7.Links

Circa Enterprises Inc. (CTO.V)

Website
Yahoo Finance
Filing

Feb. 25, 2019
2018 Q3 Data
Price: $1.20 Shares:10m, Cap: $12m
1.Business Information
(1) History 
The company was founded by at 1985 and IPOed at 1988. Ivan Smith is among the original founder.

In the beginning, the company's major business is the surge protection product for telecom equipment. This is still its major business today. It was growing quite well in the 1990s and reached $24m in sales and close to $2m in profit by the year 2000.

At 2002, it started a new metal fabrication facility in Ontario.  In 2003 Ivan sold his 20% share of the company to Jerry Zucker, a billionaire business person who is famous for taking over HBC company of Canada. Jerry acquired 46% of the company in total and installed two of his person on the board: Robert Johnston and Brice Sweatt. Ivan stepped down from the CEO role but remained on the board. Rick Schmidt who is the previous CFO took the new CEO role.

During the decade of the 2000s, the company's revenue continued growing but up and down a bit. It was profitable until 2007 and  2008, it suffered some losses.

At 2009, Ivan resumed the CEO role and did a restructuring of the company. Revenue down from $30m level to middle $20m level but became profitable again since 2010.

At 2013, Ivan resigned again from the CEO role again and Grant Reeves who is from Jerry's company took over as the new CEO. Later in 2015, Ivan quit the director role as well. I guess he left the company.

At July 2017, the company acquired Guardian Telecom for $3.5m. Guardian is also a telecom equipment maker, has around $5 to $6m in annual revenue. After one year of the acquisition, the acquisition seems worked pretty well.

(2) Major business.
1) Surge protection: This is its original business which is located in Calgary. Currently counts on around 40% of total sales.

2) Metal fabrication: 60% of sales.

(3) Debt and Credit Facility.
As of Q3 2018, there is $1m in debt.

(4) Employee numbers


(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Ivan Smith: He did a quite good job grow the company and later turn the company around in a difficult time.

Grant Reeves: He is the current CEO since 2013. Overall, the company managed well since then.


(2) Insider ownership
Jerry Zucker bought over 40% of the company at around 2004 and passed it to his wife after he dies. Now the shares are under his wife's name Anita Zucker. She is also a very active business person who was involved in HBC's management. However, she doesn't seem to involved with Circa. Maybe the company is too small for her.

Grant Reeves: Very few shares.


3. Financial data.


4. Valuation
(1) Currently, the company was traded less than 10 P/E. Just for the first 3Q, it generated around $1.4m in real income.

(2) The company paid a 5c dividend for several years and this year, it increased to 6c.

5. Risk
(1) It revenue relies on the telecom industry.

(2) The management owns very few shares although the Zucker family holds lots of shares.

6. Conclusion
The company is quite profitable through the years and the new acquisition worked well. Current price is quite cheap if it can remain current profitability.

7.Links

Reko International Group Inc. (REKO.V)

Website
Yahoo Finance
Filing

Feb. 11, 2019
2019 Q1 Data
Price: $2.97 Shares:6.5m, Cap: $19m
1.Business Information
(1) History 
The company was founded by Steve Reko in 1976 as a tool and mould company. Gradually grow the business and took it public in 1994. At that time, it already generates $25m in revenue. Its main customer is the big 3 US automakers. After that till 1999, it grew very well and reached $79m peak revenue in 1999 and $7.7m in profit. After that its revenue was down in 2000 and 2001 to $50m but rebounded to $60m to $70m level from 2002 to 2006. The profit remains low or even unprofitable. Since 2007 to 2009, revenue down to $50m level with some losses. Also at 2007, Steve Reko passed away and his daughter Diane took over the CEO role. At 2010, revenue down to $40 and lost several million.

At 2011, the company was getting almost bankrupted. Luckily it consolidated several factories to only 2 and sold the other buildings and paid down its debt. From 2012 to 2018, its revenue was up and down but remained at $40m to $50m level. It became more profitable. At 2016, it achieved again $7.6m profit on $50m revenue. However, in the last two years, its revenue was down to $40m level again profit down to $2m level.

At 2017 to 2018, it opens a new 40k sqft automation facility adjacent to its current building.

(2) Major business.
1) Tool and Mould: This is making the mold for the automaker to make the plastic parts of its vehicle. It is very tight related to the new model release number and also the auto sales number. Usually, one mold could cost $0.5m in cost and could be used to stamp 1m units.

2) Precision Machining: Also mainly used to build part of the machine for the automaker.

3) Automation: Supply automation hardware like robotics and related services to other manufacturers.

(3) Debt and Credit Facility.
By Q1 2019, it has around $11m in debt. Among which around $10m is mortgage at around 4% -5% in interest.

(4) Employee numbers


(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Diane Reko: Steve Reko's eldest daughter. He was a director of the company since 1984. She took over Steve's position after his death and lead the company through the 2009-2011 recession. The company's consolidation in 2011 was a great move and saved the company. Overall, she did a great job turning the company around and improves the profitability of the company.

(2) Insider ownership
The Reko family always holds 50% to 60% shares over the years.

3. Financial data.
(2018 data is not correct)


4. Valuation
(1) Currently, the company was traded around 10 P/E multiples. Also, its book value is more than double the current price. The main reason is that currently there is an expectation of the downturn of the auto industry.

(2) The automation division might generate good growth.

5. Risk
(1) Historically the company wants to shift away from too rely on the auto industry. However, it couldn't diversify its business even now. Any downturn of the auto industry will still have a big impact on the company. But I think now the company is much stronger than the 2010-2011 period, also, it is not likely that the big 3 will have the same trouble as then.

(2) The company's new automation facility might not generate profit.

6. Conclusion
Diane Reko did an impressive job turning the company around in the 2010 period. The company was in much better shape after that and is being managed well. The price is quite cheap as long as the company can remain profitable. Also, there is growth potential in the automation division.

7.Links

Nov. 22, 2019
Price 3.45. Shares 6.3m. Cap 22m. 
Full-year ends July 31, 2019
1. Revenue up to $48m vs $42m. last year.  Net income $1.5m including 0.4m in currency loss and $3.7m in depreciation vs $1.8m in CapX. Using Normal CapX of $3m, real income should be $2.6m. Real income in 2018 might be 1.5m. Debt $10.3m, cash $5.4m.

Unisync Corp. (UNI.TO)

Website
Yahoo Finance
Filing

Jan. 25, 2019
2018 Data
Price: $3.56 Shares:17.5m, Cap: $62m
1.Business Information
(1) History 
The company originally was the combination of 2 mining business and 1 EV motorcycle business. All 3 was pretty bad and had accumulated $35m in losses. At 2010, the company purchased Winnipeg-based Peerless Garments with $14.4m in cash. It took $10m in debt and issues $6m in stock. Peerless is the uniform manufacturer for the Canadian military. It turns out a pretty good purchase. For the next 3 years, it had generated $5m, $5m, $3m in cash. However, in 2013, revenue was down to $2m from 2012 to $27m. For 10 months ending Sept. 2014, revenue down further by over $3m, but it still generates $2m in cash including some contribution from Unisync. From 2014 to 2018, its revenue remains low except for a temporary hike in 2017.

At 2014, it acquired Unisync Group Limited in Ontario for $4.3m cash, also consumed around $10m in debt. Unisync is also a uniform producer which is mainly aiming the corporate market like Air Canada etc. The company changed its name to Unisync after the acquisition. After the acquisition, the revenue from this segment starts to pick up and doubled at the fiscal 2018 year. However, it was losing money until 2018, it made over $7m in profit.

At Sept 2018, it acquired Montreal based Utility Garments Inc for $11.5m plus 1.3m shares at $3.35/share. The company also consumed around $7m in debt for it. The company also issued 3m shares at $3.8/share. The business expected to be generating $20m annual revenue and be profitable.

(2) Major business.
1) Peerless Garments: The is the first business and has a long history since 1950. It generates $25m - $30m in revenue at the time of acquisition. Overall it is very profitable.  However, revenue was down to $15m level for the last several years. It states that revenue will back to normal at Q2 2019.

2) UGL: Corporation uniforms. It wasn't very profitable for several years. Now it did very well and it also signed several new customers. It expected to be growing going forward.
Air Canada: 30000 employees. Uniform roll out in 2017 and 2018.
WestJet: Roll out uniforms for 11,000 employees starting early 2021.
Alaska Airline: Will roll out uniforms for 19,000 at early 2020.
It seems the UGL will receive prepaid revenue for the contracts signed. There is a hike in prepaid revenue before 2018.


3) Utility Garments: Also corporate uniforms. Estimated revenue $20m/year. It is hard to tell right now how profitable it will be.

(3) Debt and Credit Facility.
At the year-end of 2018, it has $13.5m in debt. However, after the new acquisitions, the new debt level should be over $20m. Interest is prime+0.5% to 1.25%.

(4) Employee numbers


(5) Industry comparison.


(6) Major events

2. Management
(1) Key person
Douglas Good: Current CEO. His was with the company since 2005 which is before the Peerless acquisition. He seems did quite well with the first acquisition. However, the UGL acquisition wasn't that great as the first one at the first several years.

(2) Insider ownership
Douglas Good: 750k shares at end of 2017.
Michael O Brian: 1.8m shares at end of 2018.
All insider holds around 29% of all shares at end of 2017.

3. Financial data.


4. Valuation
(1) Based on recent earning of over $7m/year, the company is quite cheap. However, 2018 is a very unusual year with the UGL segment almost doubled its revenue. On the other hand, the Peerless segment is below the normal level. Overall, it is possible to achieve $5-$6m annual profit.

(2) The company still has a big net loss in the book. It didn't pay much tax for passing years.

5. Risk
(1) Revenue in the UGL segment is very likely to be pulled back for the short term. Also Peerless won't get back to normal for a while.

(2) The business is kind of contract based in nature. Revenue will vary greatly from quarter to quarter, or from year to year.

(3) The new acquisition might incur losses and will increase the debt level.

6. Conclusion
The company was doing quite well for the past two acquisition. Although there might be short term problems. It might be doing quite well in the future. Current price is quite acceptable.

7.Links