Yahoo Finance
Filing
It went public in early 2016 through a reverse merger. In 2016, revenue was still low and it used around $1.3m in cash.
In 2017, revenue grew to $1.8m but still used around $2m in cash.
In 2018, it started to sell the new cellular beacons. It uses the cell network to transfer data instead of relying on cellphones or other gateways. Revenue grew to $3.6m while still burning around $1.9m in cash.
In 2019, revenue was 6m and used $1.5m in cash.
In 2020, revenue grew to 7m while still using $0.5m in cash.
In the first 3Q of 2021, revenue was $6.4m vs $5.2m last year. It also achieves cash even for the first time. It started to roll out the smaller BIMINI beacon in Q3.
2) BeSol: Similar to BeTen but with a solar panel.
3) BEMINI: This is its new product, it is much smaller and lighter than BeTen. It also includes Bluetooth and WIFI. The battery is rechargeable. However, it seems would last much shorter than the BeTen version before needs to be recharged(500 pings).
2. Management
Filing
Dec. 30, 2021
Sept. 30, 2021 Data
Sept. 30, 2021 Data
Price: $0.26. Shares: 88m, Cap: $23m.
1. Business
(1) History
In 2014, Owen Moore and Chris Panczuk co-founded the company. Its main product is a Bluetooth beacon device that connects to tablets or cellphones. Then the tablet and cell will transfer data to the internet. The device is sold for $35/each and generates a $0.5/month service fee for the company. In 2015, it generated $100k in revenue but didn't have many costs.(1) History
It went public in early 2016 through a reverse merger. In 2016, revenue was still low and it used around $1.3m in cash.
In 2017, revenue grew to $1.8m but still used around $2m in cash.
In 2018, it started to sell the new cellular beacons. It uses the cell network to transfer data instead of relying on cellphones or other gateways. Revenue grew to $3.6m while still burning around $1.9m in cash.
In 2019, revenue was 6m and used $1.5m in cash.
In 2020, revenue grew to 7m while still using $0.5m in cash.
In the first 3Q of 2021, revenue was $6.4m vs $5.2m last year. It also achieves cash even for the first time. It started to roll out the smaller BIMINI beacon in Q3.
(2) Major business
1) BeTen: a LTE-M based cellular beacon device. It can send GPS and other data collected by sensors to the internet through the cellular network. It used 2 AA batteries and can last up to 10 years before needs to change the battery(3400 pings). This should be its major product. 2) BeSol: Similar to BeTen but with a solar panel.
3) BEMINI: This is its new product, it is much smaller and lighter than BeTen. It also includes Bluetooth and WIFI. The battery is rechargeable. However, it seems would last much shorter than the BeTen version before needs to be recharged(500 pings).
It sells its device through major distributors including Bell Canada, T-Mobile, AT&T, and some fleet management companies, etc. In Q3 2021, it sold over 23,000 devices at around $1.68m which indicated a $73 average unit price. From 2018 to Q3 2021, it had sold around $15m in hardware which is estimated to be around 200k units or less. Usually, the margin of the hardware is very low. I guess < 10%.
For each of the devices it sells, it collects $0.5 to $3 fees per month. However, it only happens after the end-user activated the device. It also collects the wireless fee on behalf of the wireless provider. By average it should collect around $1.5 per unit per month. The service fee should have a much higher margin (>50%).
It has 12 employees currently and 7 of them are engineers.
(3) Industry
(1) Management
CEO Owen Moore:
In 1994, Andrew Moore and Owen Moore co-founded Grey Island Systems International in 1998. It provides an internet-based vehicle location service. Later they took it public in 2002 through a reverse merger. In 2009, the company was able to generate $24m in revenue and it was merged with WebTech Wireless through stock for stock exchange and was valued at around $44m($0.49/share x 90m shares). At the time of sale, both Andrew and Owen holds around 5m shares. Both were exchanged to around 1.9m shares of WebTech.Owen joined WebTech as COO and Andrew as CTO. But both of them left WebTech in Mar. 2011. In 2015, WebTech was merged to BSM technology also through stock for stock exchange.
In 2019, BSM technology was acquired by Geotab for $117m. At that time, it generates around $60m in revenue and $2.5m in FCF.
From 2012 to 2014, Owen was with BSM technology as EVP of sales.
COO Chris Panczuk:
Chris was working for BSM from 1998 to 2014, at the time of his departure, he was the VP of Enterprise Sales.
(2) Ownership and compensation
In 2015, at the time of IPO each of them holds around 8.5m shares which were issued to them for free. They account for over 40% of the total 40m shares after the IPO. They still hold those amounts of shares now. Also, Bell Canada holds around 6m to 7m shares.
Management compensation is very modest.
3. Financial data
Notes:
Notes:
Previously it invoices its largest distributor the full-service fee that the end customer paid to them which is around $0.5 to $3/month/device. That includes pass-through fees which it needs to return to its distributor later. In Mar. 2021, the distributor starts to pre-deduct the data fee from the service fee. Thus it only invoices the net fee as its recurring revenue. As a result, its recurring revenue in the first 3Q is down compared to last year. In fact, it should be up if using the same revenue recognition standard.
Notes: Debt and cash
As of Sept. 2021, 2.7m in cash and no debt.
Notes: Share information
At the time of IPO, it has 28m shares which are issued at around $0.
It raised $2m at $0.15/share at the time of IPO. Later 2016, it raised another $1.3m at the same price. Total shares are around 50m at end of 2016.
In 2017, it raised $4.5m by issuing 15m shares at around $0.30/share. Total shares are around 65m at end of 2017.
In 2018, it only raised 300k by warrant exercise.
In 2019, it raised again $4m by issuing 20m shares at $0.20/share. Total shares raised to around 88m. It is likely that Bell Canada's participated in this round and got 6m to 7m shares.
Currently, it has around 900k warrants at $0.19/share. 10m warrants at $0.35/share. 1m options at price < 0.20. 2m options at price > 0.28.
4. Valuation and comments
(1) Currently the company is selling around 2.5 times of its annual revenue with no profit. It is not really cheap. However, given the strong growth it had achieved in the past and the very high margin recurring service revenue, it could be very profitable once it continues to sell more products and collects more monthly service fees.
(1) Currently the company is selling around 2.5 times of its annual revenue with no profit. It is not really cheap. However, given the strong growth it had achieved in the past and the very high margin recurring service revenue, it could be very profitable once it continues to sell more products and collects more monthly service fees.
5. Risk
(1) It is relying on several major distributors which might affect its business a lot if sales to any of them go wrong.
(1) It is relying on several major distributors which might affect its business a lot if sales to any of them go wrong.
(2) The IoT space is very competitive. Don't really know how its devices compare to others.
6. Conclusion
Overall, the company had been doing very well and starting to be profitable. The growth potential is quite good. The current price is not very cheap but acceptable if the growth trend will continue.
