Haivision Systems Inc. (HAI)

Website
Yahoo Finance
Filing

Sept 20, 2022

July 31, 2022 Data (Year end: Oct. 31)

Price: $4.07. Shares: 28.8m,  Cap: $117m. 

1. Business
(1) History 

The company was founded in 2004 by Mirko Wicha. Through time it developed a low-latency video-encoding and transmission technology called SRT(Secure Reliable Transport) protocol. It is suitable for real-time video transmission like video monitoring, streaming, video broadcasting, etc. In 2017, it open-sourced the SRT protocol and created the SRT Alliance which is joined by Microsoft, Avid, Harmonic, etc. Now it has over 500 members. 

The company's main products are video-encoding-related hardware. By 2017, its revenue has grew to over $50m with around $2m in profit. It maintained around 15% organic growth from 2017 to 2020 with over $80 in revenue and $6m in profit in 2020. 

In Aug. 2013, the company temped to IPO through a reverse merger but the deal did not go through. In Dec. 2020, it got listed directly on TSX and raised around $30m at $6.00/share.  

After the IPO, the company acquired 2 more companies. In Q3 2021, it acquired CineMassive, a video wall provider. Later was named Haivision MCS. In Q2 2022, it acquired AVIWEST, a mobile streaming product company.  While its revenue has increased to around $120m on an annual basis, its employee number also raised to over 400 from 250 at the time of IPO.  Since Q4 2021, it encounters problems with low growth and higher cost. In Q3 2022(July 31, 2022), it became EBITDA negative. 

(2) Product & Business 

SRT protocol: The SRT protocol is a direct competitor of RTMP which is used by Youtube and Facebook. The main advantage of SRT is its low latency while also achieving relatively high video quality. However, it's not suitable for two-way conversation or content delivery to the end-user. Also, it's relatively inconvenient to set up. SRT protocol has become more popular lately but is still not yet widely adopted. 

50% of revenue is hardware related while the other 50% is software and services. However, only 30% of its revenue is considered to be recurring.  Typically Q1 is the weakest quarter which accounts for 20% of annual revenue while Q4 is its strongest quarter which accounts for 30% of annual revenue. 

It has 3 different customers, the government, the media company, and the enterprise. Each seems to account for around 1/3 of its revenue.  The CineMassive acquisition has contributed to its government and enterprise market while AVIWEST's customers are mainly media companies. 

I think its major strength is in the media and government sectors. As they most likely care more about the latency and quality of their real-time video streaming. 

(3) Industry

The streaming hardware industry seems highly competitive. In some applications, the encoder and decoder hardware are more like commodities. When searching for "SRT encoder" on Amazon, there are mostly unknown hardware brands made by Chinese manufacturers.

The SRT protocol is not supported by Youtube, Facebook, and Twitch. Currently, all three of them are using the RTMP protocol(Real-Time Messaging Protocol). When comparing RTMP to SRT, it is pretty obvious that SRT is better. However, there are also other newly created protocols to consider. 

Real-time video communication: Those are dominated by Zoom, etc. To achieve real-time video conferencing, the latency must be <200ms. While it is still very hard for SRT to achieve that, it might be possible in the future. Thus Haivision might be able to enter the real-time conferencing market. On the other side, there is no barrier for Zoom to enter the video streaming as well. 

2. Management

(1) Management

CEO Mirko Wicha: He was a salesperson and had over 20+ working experiences at different tech companies before creating the company. 

(2) Ownership and Compensation

Mirko Micha: 3.6m shares. 12.4%

Thomas Hecht: 3.3m shares. 11.3%. Major shareholder. Used to be a director of the company. 

All insiders hold shares: 31%.

3. Financial data

Notes: Debt and cash

As July 31, 2022, it has $9m in cash and $18m in debt. 

Notes: Share data

1. In 2020, before the IPO, it had around 245k shares outstanding. They became 20.8m shares after it did a 1 for 85 splits during the IPO process. The original price for each class of shares was from $0.79(class A) to $2.24(Class D). It issued 5.75m shares during IPO. After the IPO, it had around 26.5m shares outstanding. 

2. In 2019, the company bought back 30k(2.5m after split) shares for $7.7m in total( around $3/share after split). At the time of IPO, the stated share capital is around $21m. However, the company's presentations have mentioned that invested capital is only $8.25m pre-IPO. Even with removing the $7.7m from the $21m, the numbers do not match. 

4. Valuation and comments
(1) Currently the company is traded under 1 time of its annualized revenue which is very cheap. However, it is very scary that its profitability is disappearing very fast post the IPO and the latest two acquisitions. I think this is a short-term issue if its revenue continues to grow or it can simply cut back its spending.   

(2) Its R&D spending as a percentage of its revenue has raised from 20% to over 25% lately which is very impressive. 

(3) If any of the major streaming platforms adopted the SRT protocol, it would be a major boost for the company. 

5. Risk
(1) Currently the company is experiencing a glitch in its profitability. It might take quite a while for it to become profitable again, or might not even be able to achieve that. 

(2) The hardware might become more commoditized as the SRT is open-sourced. It might have trouble keeping its high margin in the future. It must keep spending heavily on R&D to keep its leading position. 

(3) As the Internet speed is getting faster, its technology might become less useful, thus it might never gain major adoption by the industry. 

(4) Its organic growth rate is just around 15% lately which is not that high. As the pandemic ends, there might be some pressure on revenue as well as some customers might cut back on spending.  

6. Conclusion

Overall, The company seems to be managed well. It is a leading innovator in a niche technology area. Although it is quite risky at this moment, it is worth investing some in it as the potential return could be very high too. The price is very acceptable on a price-to-sales basis. 

7. Links

https://mikesmoneytalks.ca/video/small-cap-group-1-workshop-3/

https://www.youtube.com/watch?v=bZcPqJxwk5c

Pivotree Inc. (PVT.V)

Website

Yahoo Finance
Filing

July 22, 2022

Mar. 31, 2022 Data

Price: $3.5. Shares: 25.3m,  Cap: $94m. 

1. Business
(1) History 

It was founded in 1998 by Brain Shepard and was called Canada Web Hosting at the beginning. Brian Shepard was the CEO since 2002.  In 2009 it was changed to Tenzing Managed IT Services reflecting it was more than just a web hosting company. 

In 2010, it received $4.6m funding from Eventi Capital. In 2015, the Company completed a $5 million Eventi Capital-led buyout of its founder. Brian Shepard was succeeded by Bill Di Nardo who is a partner of Eventi as CEO of the Company.

In February 2018, the Company acquired ThinkWrap, a professional services firm, and Spark::Red, a managed application service provider for around $10m in cash. The company raised around $9.1m in preferred D shares and issued $6m debt in 2018. In September 2019, the company was rebranded as Pivotree Inc. 

The integration of these two companies went pretty well. In 2018 and 2019, it generated 50m and 60m in revenue respectively, and also made cash flow even. 

In Nov. 2020, it IPOed on the TSX venture with a raising of around $65m at $8.5/share. Since IPO, the company experienced some setbacks mainly from the churn of its legacy Oracle ATG services. In 2020, its revenue grew a little bit but was still cash positive. However, in 2021, it burned around $8m in cash. 

In Sept. 2021, it acquired Bridge Solutions for $8m + $5m earnout. Bridge Solutions is a supply chain service provider. In 2021, it had sales of $10m and $600k profit. In Apr. 2022, PVT paid a $2.6m earnout to the previous bridge owner.

In Nov. 2021, it acquired Codifyd for $18m+$4

m earnout. Codifyd Inc. is a Data Services and Master Data Management firm. For 2021, total revenue of Codifyd was $19,283,036 and net income was $6,469,637.

In Q1 2022, it had a record revenue of $25m with a $1.1k cash burn. $8m of the revenue is from new acquisitions and organic growth is around 10%. 

(2) Product & Business 

Managed Service: Under the subsidiary Spark:Red. Services are recurring in nature. Around $10m/quarter in last 2 years. It has profit margin around 50%.  ATG Oracle Commerce is a major part of it. Since Q1 2021, it has incurred some churn in this legacy service. I estimated around $6m in revenue loss from the churn in 2021. Lately, the churn has been slowed down. However, according to the company, it will still lose around 5%( $5m?) of its annual revenue from this.

Professional Services: Projected-based services. Around $5m/quarter before the 2 latest acquisitions.  Lately, in Q1 2022, it has been raised to $15m. Its margin is around 40%. The service includes e-commence implementation such as Oracle ATG, SAP Hybris, Shopify, etc. It also provides Master Data Management(MDM), Supply chain management, etc. 

(3) Industry

2. Management

(1) Management

CEO Bill Di Nardo: Previously he was the co-founder of Grocery Gateway, a online grocery delivery service in 1997. He left the company in 2002. Later in 2004 the company was acquired by Longo's.  In 2002, he co-founded Eventi Capital Partners which is a VC firm. Eventi provided major initial funding for Pivotree. Since 2015, he become the CEO of then called Tenzing Managed IT Services. 

(2) Ownership and Compensation

Bill Di Nardo: CEO. Director since 2007. 1.9m shares. Compensation in 2021 360k, no options. 

Scott Bryan: Director since 2007, Co-founder of Eventi. 1.9m shares. 

Vernon Lobo: Director since 2015, from Mosaic Capital. 1.4m shares.

Brian O'Neil: Director since 2025. from  A Faire Aujourd'hui Inc. 1.8m. shares.

All insiders hold 7.1m shares. 28%.

3. Financial data

Notes: Margin

Since 2020, it started to use public cloud instead of its own cloud. As a result, its expense is up which caused the margin to down while CapX is down. The amount might be around $2m which could cause the margin down by 3%. 

Notes: SR&ED

SR&ED in 2020 might be $430k. No SR&ED in 2021. 

Notes: CEWS & PPP

The company received $700k CEWS and USD$1m PPP in 2020. No such benefit in 2021. 

Notes: Debt and cash

As of Mar. 2022, $20m cash. No debt. Earnouts liability is around $9.0m

Notes: Share data

1. The original $5m capital was converted to 7m shares after IPO which indicated a price of $0.7/share

2. The total $13.6m preferred shares (A, B, C, D) were converted to 8.3m shares for a price of $0, $1.27, $1.21, and $2.55 per share respectively. 

3. Issued 7m shares at IPO at $8.5/share. Raised $65m

4. In Mar. 2022, total shares outstanding 25.3m. Total paid-in capital is around $90m. The average cost is $3.6/share. 1.5m options outstanding, average price $1.88.

4. Valuation and comments
(1) Currently the company is traded less than 1 time of its annualized sales. Although only 40% of its revenue is recurring. It is still quite cheap at 2.5 times of recurring revenue. However, on a profit basis, it is not generating positive cash flow yet. 

(2) The losses in 2021 vs 2020 are mainly from less government assistance ($2m), higher marketing expense(3.5m), and higher R&D(1.5m). Offset by lower interest expense, etc. 

(3) Current management seems to do well integrating previously acquired businesses. However, the margin was down since 2020. It's related to the Oracle churn, shifting to the public cloud, and more revenue weight on the lower margin professional service.

(4) Overall the market for digital transformation and e-commerce should be good for the near future. Although in a short term, the demand might vary. 

5. Risk
(1) The churn from Oracle-related business still has a negative effect on its business. However, as the total revenue is getting higher. This will be less of a concern.  The recurring revenue is growing somewhat, but the growth barely is able to offset the churn of Oracle.

(3) The company is still not profitable yet. There is still quite some money to be paid for the previous acquisitions. It might need to raise additional capital in the future. 

(4) Don't really understand its products and the whole industry it is in. 

6. Conclusion

Overall, the company has grown both organically and by acquisition. On a price-to-sales basis, it has been valued as relatively cheap. It is also very close to cash even. However, the Oracle churn is still a concern. Should invest cautiously. 

7. Links

 

Wishpond Technologies Ltd. (WISH)

Website
Yahoo Finance
Filing

June. 12, 2022

Mar. 31, 2022 Data

Price: $0.72. Shares: 52m,  Cap: $37m. 

1. Business
(1) History 

The company was founded in 2009 by Ali Tajskandar and was mainly funded by Hossein Malek. Originally it developed a product search engine company allowing customers to find niche products sold by local retailers. It didn't do very well. In 2012, it started to develop a contest app for marketing and later added the landing page, email marketing, website popups, appointments, etc. 

It had grown rapidly through the years with around 30% annual revenue growth for several years. By 2019, it has invested around $5m in total and reached a revenue of 6m and cash even. In 2020, it achieved $7.9m in revenue and 500k in adjusted EBITDA. 

It IPOed in Dec. 2020 through a reverse merger. It converted the $4.5m debt it owns into shares and raised $6m at $0.75/share. In early 2021, it raised another $7m at $1.75/share.

After IPO, it acquired 4 small businesses for around $5m in cash and issued some shares. There is also $2.5m earn-out liability which can be paid with cash or the company's shares. The integration of these businesses seems to work out well. 

In 2021, it achieved $14.8m in revenue which is over 80% growth vs 2020's revenue. Around half of the growth is organic, and another half is from the acquisitions. Adjusted EBITDA is around $0. However, real income in 2021 is around $-1.8m.

At the end of 2021, the leasing of its main office in Vancouver had expired. It decided to let its employee continue to stay work from home. This could save the company around $350k every year. In 2020, it has 12 salespeople, it doubled the number to 25 in 2021, and is expected to employ 45 salespeople by 2022. 

(2) Product & Business 

All in one online marketing tools: including landing page, contest, email marketing, etc. The core product should be the contest product which is one of its old products. 

Its customers can choose to be a DIY style that just uses its software and manage their marketing content by themselves. The company charges monthly fee's from $50 to $150. They can also hire the company to manage their marketing campaigns. They might be paying $500 and up. By 2020, both DIY customers and full-service customers count around 50% of revenue each. Full-service revenue tends to grow faster. 

By each individual product line, its product seems less polished than its competitors, but as a whole, its product is fairly good and the price is very affordable. This is its major competitiveness. 

Margin: Its margin varies from 65% to 70%. Usually, the Q1 margin will be lower while Q4 will be higher.

R&D: From 2017 to 2019, it spent around $500k each year on R&D and capitalized around $200k. In 2020 and 2021, it capitalized $300k and $800k in R&D while the real spending is unknown. 

Revenue concentration: It has around 3000+ customers and is pretty diversified. Around 25% of its 2021 revenue is from agents, among which 18% is from one customer. Around 25% of 2021's revenue is from B2B customers. 

Cyclical nature: Usually the first quarter is the weakest quarter of the year. Within Q2 and Q3, its revenue will pick up and reach its peak in Q4. 

Geographic: Around 80% of its revenue is from the US and the rest is from Canada and other places. Since a big part of its cost is inside Canada, a stronger USD vs CAD will benefit the company and vice versa. 

(3) Industry

The online marketing tool market is very competitive. There are main players. 

HubSpot: A US-based public company with around $1.3B in sales in 2021 and $15B in market cap. 

https://thedigitalmerchant.com/sales-funnels/wishpond-vs-hubspot/

2. Management

(1) Management

CEO Ali Tajskandar: He is the founder from the beginning. Before that, he is a software programmer for many years. Previously, he had worked for SoundLogic, a company founded by Hossein Malek. His major at university is computer science and he obtained an MBA from UBC after that. 

(2) Ownership and compensation

Hossein Malek: around 11.5m shares including 6m shares that were issued by converting $4.5m no interest debt provided by him to the company.  In 2000, Mr. Malek successfully sold one of his companies, SoundLogic, to Lucent Technologies for an undisclosed amount. 

Ali Tajskandar: 5.5m shares. He also holds voting control over 3m shares held by Malek.

Jordan Gutierre: COO, holds 2m shares.

Nicholas Steeves: Chief Product Officer, holds 2m shares.

Nasim Arianpoo: CEO of LeanTechnique Ltd., holds 5.1m shares.

Golnaz Navabi: A Software developer, who holds 4.1m shares.

Management compensation is very modest. In total, all insiders hold over 40% of total shares. 

3. Financial data

Notes: 

Notes: Debt and cash

As of Mar. 2022, $4.5m cash, $1.7m in contingent liability. 

Notes: Share data

Before the IPO, there are 26m shares outstanding with no capital invested, but there is a $4.5m debt due to Hossein Malek. It was converted to 6m shares at the price of $0.75/share. It also issued around 6m private placement at the same price; 5m options were exercised; 2.7m shares were issued to the shell company. After IPO, there are 46m shares outstanding. 

In 2021, it issued around other 6m shares for around $8m from a bought deal and acquisitions, etc..  By end of 2021, the total paid capital is around $19m. The shares outstanding are 52m. 

At Mar. 2022, there are 3.9m options outstanding. However, very little(<500k) is priced below the current market price. 

4. Valuation and comments
(1) Currently the company is trading at less than 2 times its projected 2022 revenue. It is quite cheap compared to its peers. However, on the bottom line, it is still losing money last year. It intentionally pursuits growth over profitability. So far, it has been used around $15m in cash while achieving a $20m+ revenue running rate. 

(2) Since 2020, it has aggressively invested in marketing. Sales and marketing expenses have raised from $0.7m to over $2m in 2021. It could be profitable by simply cutting sales and marketing expenses.

(3) Going forward, it is very likely to continue to grow its revenue. But it is hard to tell when it will start to make money. Eventually, the valuation of the company should be based on its profitability. Unfortunately, it is hard to estimate how profitable it will be in the future. 

5. Risk
(1) Since it operates in the online advertising industry, an economic downturn most likely will affect the advertising market seriously. However, because it has over 3000 customers and also the majority of its customers are SMBs. I believe the risk to their revenue is not as bad as the whole ad market. 

(2) It has a big agent-customer which still accounts for 18% of its revenue in 2021. Loss of the customer might have quite a big effect on its revenue. 

(3) It is a relatively new IPO. There is limited information about the company. 

6. Conclusion

Overall, the company has grown very well in the past. It is also managed very well.  The growth potential is very high. The current price is cheap compared to its peers. However, it is not making any profit yet. Should not be heavily invested and should be monitored closely. 

7. Links

 

Givex Information Technology Group Limited (GIVX.TO)

Website

Yahoo Finance
Filing

Apr. 26, 2022
Dec. 31, 2021 Data

Price: $0.73. Shares: 115m,  Cap: $86m. 

1. Business
(1) History 

The company was founded in 1999 by Don Gray and his wife Debra Demeza. Originally it was a gift card system for business. Later it added a loyalty system. Both are aiming at the small business markets. Around 2009, it creates its own POS system which utilizes the tablet as a terminal. Through the years, it added payment, restaurant menu, ordering kiosk, kitchen display, online order, data analytics functions, etc. By 2020, it had reached around $50m in annual revenue and accumulated $15m in earnings after paying some dividends through the years (amount unknown). 

In December 2021, it IPOed through a reverse merger and raised around $22m at $1/share. After that, it has 115m shares outstanding. 

In Jan. 2022, it acquired Kalex Equipment Services for $2.5m($0.5m in shares). Kalex provides POS installation and maintenance services to around 15,000 client locations. It generates around $4.5m in annual revenue. 

In Feb. 2022, it acquired U.S.-based company Loyalty Lane. Loyalty Lane is a digital coupon delivery company. It generates around US$4.5m in 2021.  

(2) Major business 

1) Gift card & Loyalty Card: These are their original business that still accounts for the majority of its revenue. It has been integrated into over 1000 different POS systems which are its major strength. 

2) GiveX Pos system: It has been relatively new and faces tough competition. It is considered to be the new generation of Internet-enabled POS systems which is mainly aimed to replace the old standalone POS systems. The major advantage is that its Gift card, Royalty Card, and POS all share the same system which is much easier to use. It also has a unified version that will auto-update 4 times a year. 

The company's revenue is very diversified with no customer accounting for over 2% of its revenue. It also has a very low churn rate of just 1%. 

Its customers include chain restaurants, hotels, small retail, sports, etc. In Brazil, it partners with iFood to provide cash cards that can be used as a replacement for the debit card. 

Currently, it has 113,000 client locations.

(3) Industry

The POS industry is very fragmented with billions in market size. There is plenty of room for the company to grow. 

Competitors: Toast,  Square,  Lightspeed. They all provide new generation POS systems. 

Don't know much about the Cash Card & Loyalty program provider. 

2. Management

(1) Management

CEO Don Gray: He is the founder from the beginning. He is an entrepreneur who dropped off college to start his own business. Although GiveX is his first company that went public. 

(2) Ownership and compensation

Total shares outstanding is 115m. Before the IPO, the number of the total shares is around 90m. The total equity raised is just $3.6m. That indicated around just $4c/share average original share price. 

Don Gray owns 37.7m shares through Krane & Company Inc. 

Frank Toskan: 18.6m shares through Inter.Act Venture Fund Inc. He might be the founder of MAC Cosmetics which was a famous Canadian makeup brand that was later acquired by Estée Lauder.

3. Financial data

Notes: 

Notes: Debt and cash

As of Dec. 2021, $37m cash and $4.4m loan

Notes: Share data

Currently, it has 115m shares outstanding. 6.8m options at $1.0. 11m warrants at $1.25. 

4. Valuation and comments
(1) Currently the company is trading at just around 1.5-time revenue despite it having over 30m in net cash which is quite cheap. On an EBITDA basis, it has been down lately but it should achieve a similar EBITDA margin pre-pandemic. Guided by the CEO, 2022's revenue should be around the $65m to $70m levels given the new acquisitions it made. 

(2) I feel the major strength of the Company is its Gift Card and loyalty business while POS is still not a big part of the revenue yet. Its customers mainly are those smaller chain stores it makes more sense to create a cash card or loyalty program. 

(3) The past two years had been really bad for a lot of restaurants and hotels. Yet the company still did fairly well with revenue growing by some. Very impressive. 

(4) Things to watch: Revenue/Locations. Revenue composition. SG&A percentage. 

5. Risk
(1) Don't know how the revenue for each segment (Gift Card, Loyalty, POS) is. 

(2) Don't know who are its major competitors in Gift Card and Loyalty programs. 

(3) The competition in the POS business seems pretty tough. Although it is easy to tell that they all better than the old offline POS. Yet it is hard to tell how it is compared to its competitors. 

(4) Although the company has existed for 20+ years, it is still a new IPO. There is limited information about the company. 

6. Conclusion

Overall, the company is managed very well. It is a good growth company with a lot of potential. The current price is very acceptable. 

7. Link

https://www.youtube.com/watch?v=s9Ol6NtmO2Q

 

Issuer Direct Corporation (ISDR)

Website
Yahoo Finance

Filing

Feb. 28, 2022
Sept. 30, 2021 Data

Price: $28.3. Shares: 3.8m,  Cap: $107m. 

1. Business
(1) History 

The company was founded in 2006 by Brian Balbirnie and James Learish. Originally it was called My EDGAR. Its main product is a filing service with SEC website. Its main focus is to help clients to comply with SEC requirements and provide easier filing tools.

It IPOed in 2007 through a reverse merger. During the year,  it added the printing and fulfillment service which prints and distributes shareholder documents for its clients. In 2008 and 2009, both lines of business did well and both generated around 700k to 800k revenue. It started to generate some small profits in both years. 

From 2010 to 2012, helped by a one-time printing & distributing project and SEC's new XBRL filing requirements, it had grown revenue to around $4m in 2012. Profit is still very small.

In Aug. 2013, it acquired PrecisionIR for $5m. PrecisionIR is a web-based investor relations company. Its major product is called Annual Report Services(ARS). It sends companies' annual reports to shareholders by mail or email.  It also has a webcasting & teleconference service. At the time, PrecisionIR is generating around $14m annual revenue, and the revenue was declining. As a result, in 2013, ISDR's revenue doubled from $4m to $8m and it generated $1.7m operating cash. 

In the first quarter of 2014, the company uplisted to NYSE. In Oct. 2014, the company acquired the Accesswire press release business line for $1.8m. From 2014 to 2017, its revenue from the ARS was declining which is expected. Also, the printing and filing business is also not growing as well. The ACCESSWIRE business is picking up but relatively small. As a result, its revenues for those years were flat at around $12m/year level, and operating cash is around $2m/year. It paid a $590k(0.2/share) dividend in 2017. 

In late 2017, it acquired Interwest Stock Transfer for around $3m. It is a corporate stock transfer business with over 300 clients. In early 2019, it acquired the VisualWebcaster Platform from Onstream Media Corporation for $2.8 million. VWP is a cloud-based webcasting & webinar system. 

From 2018 to 2020, the two new acquisitions and the continued growth of ACCESSWIRE had more than offset the decline of the ARS business. In 2020, the pandemic also pushed its customers to use more online services like virtual AGM, virtual conferences, etc. As a result, it had grown revenue around $2m/year to $18.5m in 2020 with over $4m in operating cash.  

In the first 3Q of 2022, revenue is 16.2m vs 13.8m last year. Operating cash is 3.7m vs 3.2m last year. 

(2) Major business 

1) Communications: include newswire, webcasting, virtual conference, virtual AGM, IR website, etc. It has grown very well since the company acquired ACCESSWIRE. Now it accounts for around 65% of total revenue. The growth rate of this segment is at least 30% for the past several years and it continues to grow at that rate. 

2) Compliance: includes the old SEC filing, ARS, Stock transfer,  printing and distribution services, etc. The ARS and printing services have been in steady decline for several years. For the last 3 quarters of 2021, total revenue from compliance actually has increased by 15%. However, it seems because of some temporary printing projects. 

(3) Industry

Competitors: Business Wire, PR Newswire, Global Newswire.

https://www.g2.com/compare/accesswire-vs-cision-pr-newswire-vs-business-wire-vs-globenewswire

2. Management

(1) Management

CEO Brian Balbirnie: He founded My-EGDAR at around 35. Before that, there is very little information about him. 

(2) Ownership and compensation

Total shares outstanding is 3.8m. Brian holds 610k. 17%. All insiders hold around 20%.

Brian's salary in 2020 is just $200k which is very modest. 

3. Financial data

Notes: 

Notes: Debt and cash

As of Sept. 2021,  22m in cash and no debt. 

Notes: Share history

At IPO, 16m shares are outstanding. CEO Brian Balbirnie 5.7m shares(33%). CAO James Learish 4.8m shares (28%). 

In Jan. 2009. James Learish resigned from the company and sold 4.5m of his shares at just $13.5k. Half of the shares were sold back to the company and got canceled. The other half of the shares were sold to James Michael, one of the management of the company. In 2010, he sold his remaining 425k shares as well. Those 4.8m shares could be worth over $12m today. James Michael kept those 2.3m shares until 2020 when he no more appeared as a 5% owner.

In 2011, the company did a 1 for 10 reverse split. Total shares outstanding are 1.75m after the conversion. Brain held 610k of them which is 32%. Shares outstanding at the end of 2013 is 2m. The increase is mainly from options, etc. Brian holds 640k shares 31%.

In 2014 in connection with the acquisition of PrecisionIR, it issued a $2.5m 8% debt which can be converted into the common shares at $4/share. In 2014 and 2015, the debt was converted into around 600k shares. After the conversation, by end of 2015, there are 2.8m shares outstanding. Brian holds 630k shares(22%) while the debt owner David Sandberg holds 660k shares(23%). In 2016, David Sandberg left the board and sold his shares. 

In 2018, the company issued 800k shares at $15.5/share for $13.3m. Later, the company repurchased 200k from a fund at $12.25/share. Total shares outstanding is 3.8m at end of 2018. Brian holds 620k. Those numbers stay roughly the same till now. 

4. Valuation and comments
(1) Currently the company is trading at 5 times of revenue and 35 times P/E which seems very expensive. However, its real cash generation rate is above $4m/year. That gives it a $25 times P/E. If considering the $22m cash on the balance sheet. It is not really that expensive. 

(2) Despite the high growth in the past, the company's share of the total newswire market is still very low.  The company has a very strong potential to continue doing very well. Currently, the majority of its customers are small companies. It is possible to penetrate the newswire business of bigger companies. 

(3) The product development was very good during the past. The company is constantly working on newer products while improving the existing ones. However, the marketing part seems not so strong. The company currently is putting more resourcess on marketing. 

(4)The company has a pretty good working culture. It has a low employee turnover rate as it takes care of its employees pretty well. 

5. Risk
(1) Some of the growth during the last two years was caused by the pandemic. Once the pandemic is over, the demand for those products might decline. 

(2) Generally the company will benefit from a bull market while hurt from a bear market. If the stock market is in a deep recession, it could affect its business. 

(3) The continuing growth needs lots of investment in marketing and R&D etc. It might experience short-term higher expenses in the future. 

6. Conclusion

Overall, the company is managed very well. It is a good growth company with a lot of potentials. The current price is a little high but still acceptable. Should seeking buying opportunities.