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
