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=hyu_i1H04VU
https://www.youtube.com/watch?v=icy0M-A_M7g
