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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3 ®
Quarterly Issue No. 3 | 2017
contents
Publisher Uptick Mail Inc. #317—1489 Marine Dr. West Vancouver, BC Canada V7T 1B8 1.604.202.7841 Group Publisher Terry Tremaine terryttremaine@gmail.com Editor in Chief James Black
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8 Tower One Wireless North America’s only microcap stock tapping the cellular tower build-out
company profiles
Published by Uptick Mail Inc. on behalf of the Canadian Securities Exchange. To receive your complimentary subscription, please visit www.thecse.com and complete the contact form.
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feature story
Graphic Design Vanessa Fryer Free Digital Subscription
CEO’s Message
12 Deveron UAS Helping agricultural efficiency reach new heights with data-gathering drones
15 Torino Power Solutions Unique approach for better power grid efficiency nears a turning point
18 Subscribe Technologies Helping small businesses with some big computing challenges
20 Victory Square Technologies The backing tech entrepreneurs dream of resides on Canada’s west coast
22 EnviroLeach Technologies Taking cyanide and acid out of the gold extraction process for mines, e-waste recyclers
25 How to Improve Your Recruiting Through Analytics
26 Are You Protected Against Cyber Security Attacks? 3 steps to secure the future success of your business
www.thecse.com @CSE_News
27 Interview with Tom Rossiter, Chief Executive Officer, RESAAS Services Inc.
www.thecse.com | 5
feature story
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Tower One Wireless
North America’s only microcap stock tapping the cellular tower build-out By Peter Murray
Originally published on Proactive Investors August 30, 2017.
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ften in the investment world, a long-term business trend is easy to identify, but finding the right stock to buy to take advantage of that trend is anything but. Fortunately, the choice is simple for microcap investors looking to hitch a ride on the rapidly expanding need for cellular network capacity by owning shares in a cellular tower company, as there is only one such stock in North America: Tower One Wireless (CSE:TO). Fortunately, too, the basics of the business are easy to understand. In many regions, mobile network operators don’t own the towers to which their antennas are fixed, but rather lease space on them. This approach essentially enables a carrier to share tower costs with other carriers serving the same area. For a tower company, then, owing the structure that wireless carriers need today, next year and into the foreseeable future can be a stable, and lucrative, proposition. “What makes this business interesting is that a tower costs between $50,000 and $70,000 to erect, but the monthly lease payments come in at $1,000 to $1,500, and that is just for one mobile network operator,” explains Alejandro Ochoa, Tower One Wireless Chief Executive Officer. “We sign 10-year lease contracts, with a 10-year option, but companies in the tower sector are valued
8 | www.thecse.com
highly because in essence use of the towers is perpetual. And if we add a second or third carrier to use the tower, there is no marginal cost to us.” Reflecting the Colombian-born Ochoa’s 18 years of investment banking experience in Latin America, Tower One Wireless is focusing its early building efforts in Argentina and Colombia, with Argentina expected to account for about 80% of activity. “Argentina went through some challenging times, but now the country has elected a new president and is back in business,” Ochoa says. “There will be demand for 10,000 new towers in Argentina.” Ochoa tells an impressive story of competing with a large pool of rivals for the Argentine business before winning a spot on a shortlist of 15 companies, and finally being among the four companies awarded the right to build towers. “We all got awarded the same number of towers, which is 100 to begin with,” he says. So far, the company has 20 towers up, and anticipates having the first 100 hundred built sometime around the end of 2017. The early exercise of warrants combined with a $5 million credit line will see the company through that planned construction. Key to understanding the risk side of the equation is that Tower One Wireless never builds a tower hoping that a carrier will need
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Alejandro Ochoa, CEO
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Every tower I build has a guaranteed tenant. My relationship with other carriers is my chance to add a second or third carrier to that tower. —ALEJANDRO OCHOA
it. “We don’t build towers on a spec basis, but rather on a build-to-suit basis,” Ochoa emphasizes. “Every tower I build has a guaranteed tenant. My relationship with other carriers is my chance to add a second or third carrier to that tower.” Once a site is agreed and permitted, construction takes 60-120 days, and some 30 days later payments begin to come in from the first carrier on the tower. It is thus an easy business to model, and Ochoa’s model suggests very good returns indeed. “With 100 towers we should have an EBITDA margin around 72%,” Ochoa says, adding that the company won’t see everyday expenses increase as it expands its tower pool further. “The majority of the work is outsourced, so I can move from 100 towers to 500 towers and manage it with the same 15-person team I have today.”
Ochoa describes his team of accountants and other professionals as hailing from major wireless companies and tower builders, including a legal unit entirely from telecommunications giant Telefonica. Ochoa has some interesting comments when asked why he chose to list the company on the public markets. “When you sit across from the wireless carriers and they ask what makes you better than your 15 competitors with many times the capital you have, it is that I am not structured to sell my towers back to American Tower. Every other company out there is modeled to build their towers and sell them as their natural exit. By being public, my investors have the embedded option of getting in and out of the company as they please.” He also talks about the dynamics of capital in South America, where among his
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banking achievements is leading the team that listed Facebook on Colombia’s stock exchange. Institutional investors in Colombia and other Latin American countries must observe foreign investment limits dictating that a substantial portion of any equity allocation ends up in domestic stocks. In some cases, this means a fund has fewer than 100 issuers to choose from. Ochoa would one day like to provide them an additional choice. “Canada has been very proactive in Latin America and is a market where investors understand the region through mining and oil and gas involvement,” Ochoa states. “The potential to access capital by listing in another market is also a reason we decided to go public.” The company Ochoa mentions absorbing other networks, American Tower, is listed www.thecse.com | 9
ompany snapshot
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Tower One Wireless Corp. (CSE:TO)
• Tower One Wireless is one of four publicly traded companies in North America building towers for lease to mobile telecommunications network operators. The others are listed in the US and have multi-billion-dollar market caps. • Argentina is the main market focus at present, where Tower One Wireless expects to have 100 towers built by the end of 2017. Business split in near term anticipated at 80% Argentina and 20% Colombia. • Market dynamics in Argentina suggest demand for approximately 10,000 towers nationwide to expand and improve the country’s cellular network. • Tower One expects its EBITDA margin to exceed 70% once its first 100 towers are built and in use. Towers are only built once a lessor has been determined, so cash flow begins approximately 30 days following completion of construction.
HEADQUARTERS
Vancouver, British Columbia, Canada
CEO
Alex Ochoa
WEBSITE www.toweronewireless.com
financial snapshot TRADING (as of 8/9/2017) Price $0.210 52 Week High $0.540 52 Week Low $0.170 Shares Outstanding 63,862,365 Market Cap $13,411,097 ADTV (3 months, June – August) 401,810 FINANCIAL (as of 6/30/2017) Cash $514,955 Current Assets $1,200,561 Current Liabilities $159,396 Working Capital $1,041,165 All figures in CAD unless otherwise stated.
Full company profiles at www.thecse.com 10 | www.thecse.com
on the New York Stock Exchange and sports a market capitalization of some US$60 billion. In 2017, it has outperformed the S&P 500 average at a triple-digit pace. Putting Tower One Wireless and its C$13 million market cap next to American Tower makes for a lopsided comparison to be sure, but it illustrates the potential for value expansion as the former’s tower network builds out. It also shows that demand for towers is nothing if not healthy. “I think looking at our company today makes sense because with the 100 towers we should finish over the next six months we’ll have positive operating cash flow,” Ochoa concludes. “On a discounted cash flow basis, every dollar you invest in a tower is worth three dollars the day you finish building. Our company is well-managed and the business is simple. And we are the only publicly listed entry point into the tower market at the microcap level.”
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
deveron uas Norm Lamothe, co-founder
Deveron UAS
Helping agricultural efficiency reach new heights with data-gathering drones By Giles Gwinnett
ew trends in technology are penetrating every conceivable part of our daily lives, and the food on our table is no exception. What many shoppers might not know, however, is that technology is now making a difference right at the very source of our food—the farmer’s field. The agricultural sector is experiencing a rapid digital revolution, with some farms these days run more like high-tech outdoor factories. Deveron UAS Corp. (CSE:DVR), an enterprise drone data provider targeting agriculture, would thus seem to be at the right place at the right time. This use of drones, or for the uninitiated, unmanned aerial vehicles, is a nascent industry, yet one where the potential rewards are enormous, explains Deveron’s co-founder and Chief Executive Officer David MacMillan. Put simply, the company’s pilots ‘fly’ farmers’ fields, mainly over mass crops like corn and soybeans, and provide follow-up analysis to help increase yields and reduce costs.
Services include thermal imaging, data analysis and drainage identification—in other words, Deveron’s technology is able to tell a farmer what is going on in his field, something that is oftentimes difficult to determine by working strictly at ground level. Macmillan says that in discussing Deveron with potential users, the emphasis must be on explaining the advantages of this new type of analysis, rather than trying to tell people that they’ve been farming the wrong way their whole lives. “Essentially, we’re trying to enable decision makers in agriculture to make more efficient choices,” he says. For farmers eager to embrace the concept, Deveron is one of just a handful of entities with a permit to fly drones across Canada. There are 15 pilots available as and when needed in eight of the country’s 10 provinces (having started in Ontario with just two). MacMillan explains that it makes more sense for farmers to hire Deveron than to buy their own drones at great expense, particularly www.thecse.com | 11
Originally published on Proactive Investors August 14, 2017.
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
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Our hope is to continue to show the investing public that there is a strong recurring revenue model here. Corn grows every year and the farmers need the data every year to make informed decisions.
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— D AV I D M a c M I L L A N
if field analysis is needed only a couple of times each year (as is often the case). The fact that farmers need to make key decisions on a variety of crop planning issues every year is a strong selling point, both for farmers who might use the service, as well as to investors considering whether to back Deveron with an equity purchase. “Our hope is to continue to show the investing public that there is a strong recurring revenue model here,” MacMillan says. “Corn grows every year and the farmers need the data every year to make informed decisions.” Currently, the group is targeting large agricultural operations as customers—those which might manage a million acres or more—as well as smaller outfits. At this point, it is all about encouraging a network to develop. While it is still early days, Deveron is already seeing engagement expand as bigger players increasingly sell its services ‘downstream’ to their customers. At present, there are around 30 such partnerships with big farm managers. Recent collaborations include the retail division of GROWMARK Inc., vegetable producer Bonduelle North America and major farming 12 | www.thecse.com
David MacMillan, CEO
services and grain retailer Thompsons Ltd. Everyone gains in the network, explains MacMillan, as the large entities get Deveron’s services at a discount, and then in turn make some money when they sell it down the line. “There are 400 million acres of farmland in North America so it’s a huge addressable market,” adds MacMillan. Some 88 million of those are in Deveron’s home Canadian market. What could that translate into in dollars and cents? At Deveron’s standard $3 an acre charge, 2-3 flights a year over 400 million acres, and an assumed adoption rate of 20-30%, that’s a potential annual market of $700 million, reckons MacMillan, and likely to increase in the future. For now, though, revenue and earnings are less important to the group than consolidating its first mover advantage by investing and scaling up the business. MacMillan’s background is in public venture capital and he came to research drones three or four years ago after looking to invest in new technology which could be supported by Canadian companies. Rather than obsessing over the ‘flying robot’ concept,
Deveron UAS Corp. (CSE:DVR)
• Scanning agricultural land using drone-mounted equipment gives farmers information that was previously unavailable. Resulting efficiency gains translate into higher yields and lower costs. • North America contains 400 million acres of farmland, 88 million acres of which is in Canada. • Direct sales are complemented by some 30 partnerships that see major farm managers sell Deveron UAS services downstream to their customers. he was interested in how data collected by the vehicles could be used intelligently, and agriculture was a good place to start. “Historically, network plays end up having very high IRRs (internal rates of return) for the first people in the space,” he explains. Behind all that, the idea that by 2050, with a global population of 10 billion people, the earth’s food security may be an issue if agricultural yields don’t increase only added to the drive to establish the company, he says. Business partner and co-founder Norm Lamothe is himself a farmer and manages 500 acres of land, so is ideally placed to know what famers need and want. If valuation is any guide, it would seem this combination has the company heading in the right direction. From around $2 million in 2016, Deveron is now worth nearer to $8 million, and recently raised $2 million, says MacMillan. The idea now is to continue to grow organically, scale up the business and gain credibility via more collaborations and partnerships. Canada is the focus for the time being, but to increase the amount of drone flights possible (they can’t fly fields in the snow) developing more of a presence south of the border is appealing, says MacMillan. There is also the possibility of news flow over the next year around further partnerships, new revenue streams, and intellectual property value related to the company’s analytics technologies. The seeds now planted, careful nurturing of Deveron’s business has the potential to yield robust returns for shareholders in the years ahead.
• Recent collaborations include the retail division of GROWMARK, vegetable producer Bonduelle North America and major farming services and grain retailer Thompsons. • Potential for intellectual property value related to technologies for data collection and analysis. HEADQUARTERS
Toronto, Ontario, Canada
CEO
David MacMillan
WEBSITE www.deveronuas.com
financial snapshot TRADING (as of 8/9/2017) Price $0.245 52 Week High $0.560 52 Week Low $0.200 Shares Outstanding 23,633,650 Market Cap $5,790,244 ADTV (3 months, June – August) 19,646 FINANCIAL (as at 3/31/2017) Cash $1,050,906 Total Assets $2,349,442 Current Liabilities $819,460 Working Capital $710,865 All figures in CAD unless otherwise stated.
Full company profiles at www.thecse.com
company snapshot
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
www.thecse.com | 13
torino power solutions
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Torino Power Solutions
Unique approach for better power grid efficiency nears a turning point By Peter Murray
Originally published on Proactive Investors August 29, 2017.
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here are more than a few companies worldwide selling equipment to monitor the transmission lines that deliver power to our offices and homes, but none has products like Torino Power Solutions (CSE:TPS). It should come as little surprise, then, that Torino CEO Rav Mlait speaks excitedly about the company’s outlook, fully understanding, as he does, the clever technology that makes its products so unique. Before getting to that technology, however, a revealing story about the electricity we use every day is in order. Power transmission is not nearly as efficient as the general public might think. From the time electricity leaves a power plant to the time it reaches its end user, it is common for somewhere between 6% and 15% of the power to be lost, and many estimates reach even higher. The losses occur for a variety of reasons. One of these is that the company managing the transmission system needs to make sure its power lines don’t run too hot. Not only can excessive heat damage equipment along the transmission pathway, but when lines get too hot they can damage power lines that are very expensive to install and maintain.
14 | www.thecse.com
So, how do many electrical utilities gauge the temperature of their lines to optimize the amount of power flowing through at any given time? Would you believe by referring to historical weather pattern charts and ambient temperature readings? Despite the imprecision inherent in such an approach, Mlait confirms that the practice is common. Now, what if the utility were able to know what the temperature actually was along different sections of a long transmission system such that it did not have to underutilize its infrastructure? That’s the issue that Torino addresses. And with over $10 million spent on R&D, plus patents in place, the time to push for widespread adoption of the company’s solution is at hand. Torino’s “Powerline Monitoring System” is a combination of a hollow aluminum sensor placed on a power line, combined with a nearby “interrogator” that reads microwaves bouncing back from the sensor. The sensor expands and contracts according to the heat of the line, and an algorithm in the interrogator converts the signal to a temperature reading that is then relayed to the utility in real time. “As populations grow and distributed connection resources such
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Rav Mlait, CEO
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Part of the solution is better data, and it all ties into the industrial Internet of Things concept whereby realtime information enables system administrators to make better decisions. — R AV M L A I T
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as wind and solar gain prominence, it is putting the existing electrical infrastructure under more strain and causing wear and tear,” Mlait explains. “Part of the solution is better data, and it all ties into the industrial Internet of Things concept whereby real-time information enables system administrators to make better decisions.” Torino is not the only company to conclude that there must be a better solution for monitoring line temperatures, but it is the only one with a passive sensor. Mlait says that all competing line sensors require power sources, in the form either of batteries or the power lines themselves. “So, if a power line goes down, their sensors can go down with it. Ours won’t, and that is part of our competitive advantage.” Another advantage comes in the form of economics. Torino will deploy a system, which is comprised of three sensors and one interrogator, for between US$40,000 and US$50,000, or approximately half the cost of its rivals’ installations. “Having more data from more lines, and thus a richer data set, is a better way for utilities to manage their assets and conduct dynamic line ratings,” explains Mlait. “That is one of the reasons we priced our technology where we did, so that utilities can deploy more sensors for the same cost.” Mlait claims that utilities can quite easily recover up-front costs within 12 months, enabling the return on investment to stack up quickly. Consistent with the early stage of the product roll-out, Torino’s solution is being used by a single utility at present. Tri-State Generation and Distribution Association installed the system on a trial basis last year in eastern Colorado. In what can only be taken as a www.thecse.com | 15
ompany snapshot
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Torino Power Solutions Inc. (CSE:TPS)
• Torino Power Solutions’ unique sensor helps electrical utilities monitor and optimize transmission lines carrying electricity from power plants to power consumers.
• The company’s “Powerline Monitoring System” is in use at two locations in Colorado on a trial basis. Its hollow aluminum sensor requires no power source and transmits data to users in real time. • Installation costs are US$40,000 to US$50,000, or half what competing systems typically charge. • Potential customers have inquired about modifications to suit the monitoring system to urban and underground environments. Related development programs are underway. • Electricity lost as it travels along transmission infrastructure to its end user can exceed 10%.
HEADQUARTERS
Burnaby, British Columbia, Canada
CEO
Rav Mlait
WEBSITE www.torinopower.com
financial snapshot TRADING (as of 8/9/2017) Price $0.110 52 Week High $0.160 52 Week Low $0.015 Shares Outstanding 46,457,124 Market Cap $5,110,284 ADTV (3 months, June – August) 40,776 FINANCIAL (as of 6/30/2017) Cash $581,413 Current Assets $647,691 Total Assets $2,130,877 Current Liabilities $41,017 Working Capital $606,674 All figures in CAD unless otherwise stated.
Full company profiles at www.thecse.com
16 | www.thecse.com
good sign, it added to the trial in June of 2017 by moving a second system to a more critical location in western Colorado. “Utilities are conservative when it comes to adopting new technologies, and understandably so,” says Mlait. “They want to really examine new equipment before deploying it extensively throughout their expensive infrastructure.” Mlait says that he and his team are in discussions with a number of utilities both in North America and overseas, and while nothing has been finalized, observers shouldn’t be too surprised if additional installations make news before long. Another component of the marketing strategy is to potentially ally with distribution partners with reach into markets that Torino has yet to develop. “We are a relatively small company, so the idea of partnering with a large distributor is pretty significant,” Mlait says. Word is definitely getting out because Torino has started developing new products based on feedback from potential users. The company recently initiated development of a system for distribution lines, which are the smaller power lines operating inside urban areas. Urban power lines often heat up and sag, causing a host of challenges such as power outages and clearance issues, so a robust solution in this environment would be most welcome. The other development program announced recently involves underground sensors. Mlait says that potential clients have asked if products are possible for applications such as subways and other underground infrastructure. “People in cities such as New York, London and Toronto know that there are significant down times associated with underground systems, largely owing to deterioration of aging lines,” says Mlait. “We have heard about the need to better monitor these cables as they continue to deteriorate and are looking to provide a solution down the road.” With a cost/benefit ratio that makes sense and a need within a crucial industry that cannot be denied, the potential clearly exists for Torino’s sensors to gain broad acceptance. Installation of a mere 100 systems could bring in over C$5 million on the top line, and there is the possibility for ongoing revenue streams from installations as well. “It is not too often that you see new technology in this industry. We have something that is unique and some highly respected companies have suggested to us that we might have a game-changer on our hands,” according to Mlait. “From an investment standpoint, we have an advanced product starting to make headway, but a pretty small market cap. Throw in our ability to develop new products as well and we feel very positive about our future.”
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
subscribe technologies Paul Dickson, CEO
Subscribe Technologies
Helping small businesses with some big computing challenges By Peter Murray
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and functioning in the increasingly pervasive “cloud”. “It ties in perfectly with all of the AI (Artificial Intelligence) advancements taking place, where SAAS applications are being developed with AI in the back end that ups the ability to analyze client data,” Dickson explains. “Nobody is going to run software on their computers locally in the near future. It is all going to be in the cloud.” Established as a company less than a year ago (December 2016), Subscribe Technologies already has a set of product offerings ranging from accounting and sales software to a security platform for analyzing websites and an alternative to the famous Dropbox filing sharing service that Dickson says comes with fewer restrictions for users.
And that concept is the key to understanding how Subscribe Technologies intends to prosper over time. The idea is not to take on Microsoft or Amazon on their home turf, but to offer alternative software to businesses and businesspeople who find that incumbent products don’t fit the bill for them, often because they are too restrictive. Maintaining high functionality at a reasonable cost is the other pillar of the strategy. As reflected in the company’s name, the cost side of the equation from a customer perspective involves subscribing to use the software and paying a monthly fee. Dickson says that because the targeted customer base is small- to medium-sized entities the monthly cost starts around $10.00, thus hardly requiring a potential www.thecse.com | 17
Originally published on Proactive Investors August 29, 2017.
aaS tools, malware, platform integration—businesses in today’s world need to stay on top of a dizzying array of technologies, all of which develop new functionality at such a pace it makes you wonder how small enterprises can possibly keep up. Subscribe Technologies (CSE:SAAS) is fully aware of that challenge and has an answer in the form of a cost-effective services suite that covers pretty much every digital need a small- to medium-sized firm could have. Subscribe Technologies is headed by public markets veteran Paul Dickson, a perfect fit given his background in software development spanning some 30 years. Dickson believes that Software-as-a-Service is just getting underway and that all software programs will soon run independently of our personal computer hardware, residing
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
“
There is a great deal of business out there, and because there are others in the space capitalizing on this opportunity as well, that’s why we are establishing Subscribe as a multi-faceted SaaS company. — PA U L D I C K S O N
user to engage in a make-or-break decision from a financial commitment standpoint. Working with the company’s chief engineer in Victoria, British Columbia, and supported by a team of software developers in India, Dickson has developed, or acquired and refined, a number of products that were made available for subscription in the past few months. The first to hit the market was bContact.com, a CRM (Customer Relationship Management) platform featuring both accounting and sales functionality. “bContact.com is a fully integrated SaaS platform that performs invoicing, collections, reporting, billing and other functions so 18 | www.thecse.com
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customers can essentially run their entire small business from any web browser,” Dickson says. “bContact.com is really the ultimate tool for managing your entire business back-end.” The aforementioned Dropbox alternative comes in the form of a product named FileQ.com. “With FileQ we wanted to offer a service that had fewer restrictions, as some of the most popular file sharing systems force users to sign up in order to access certain features,” says Dickson. “FileQ allows the user to share files freely with anyone and even plays video files with its integrated media player. Instead of paying a flat fee each month, the uploader of the files pays according to how much storage they require.”
The service most recently debuted is SiteSafe.io, which helps system administrators reduce the chance of having their website infected with malicious code. “SiteSafe is something we came up with to address issues that individual websites are having, as the hacking going on is relentless these days,” states Dickson. “It is definitely good practice to scan your own website for malware, or if you host other websites then you should scan the client websites.” Sitesafe looks for viruses, worms, trojans and other malware, liaising with a third-party database that is constantly updated to both detect and eliminate programs designed to steal information, interfere with website performance, or worse. In the spirit of keeping things affordable, SiteSafe can be accessed to monitor a site for a monthly price of between $5.95 and $19.95. Subscribe has other product offerings available as well, and Dickson says that there are more on the way. From a valuation standpoint, the company aims over time to build a reasonable base of recurring revenue and, eventually, profit. But given the value ascribed to some software programs these days, there is also the possibility that a Subscribe product gets hot and hits it out of the park. As the products available to date have only just been introduced, marketing efforts have thus far been modest, and Subscribe is currently formulating a full-fledged marketing program that will utilize both keyword advertising and affiliate marketing, the latter enabling customers to earn money by referring others to use Subscribe services. “Pretty much every SaaS company now has a referral program that pays people credits or cash for helping to obtain registered users,” Dickson explains. “The cost of acquisition can be high with online ads, where you are paying and hoping that people click. These days you do some of that, but also recruit others to market your product.” One can’t deny that Subscribe has positioned itself to go after a huge market. Forecasts for the future size of the SaaS space begin in the tens of billions of dollars and run into the hundreds of billions. To settle on a particular number would be to miss the point—business spending on SaaS is big and getting bigger, and Subscribe need only capture a small piece to make a big difference to its bottom line. “All we are trying to do is pick up a portion of the people who don’t want to use Dropbox, Salesforce, and the like,” says Dickson. “There is a great deal of business out there, and because there are others in the space capitalizing on this opportunity as well, that’s why we are establishing Subscribe as a multi-faceted SaaS company. In the months ahead, you’ll be seeing us meet a lot of our user targets and bringing new products to market.”
Subscribe Technologies Inc. (CSE:SAAS) • Subscribe Technologies offers an impressive line of SaaS products for website security, customer relationship management and file sharing, with more on the way. • Target customers are businesses looking for cost-effective software alternatives that fit their operations better than offerings from the majors. • The Subscribe Technologies team features highly experienced software developers from the C-suite through to overseas talent. This keeps development costs under control and enables the company to accurately assess possible acquisitions. • Forecasts of SaaS industry potential run north of $100 billion per annum.
HEADQUARTERS
Vancouver, British Columbia, Canada
CEO
Paul Dickson
WEBSITE www.subscribetech.com
financial snapshot TRADING (as of 8/9/2017) Price $0.050 52 Week High $0.130 52 Week Low $0.020 Shares Outstanding 27,877,670 Market Cap $1,393,884 ADTV (3 months, June – August) 14,507 FINANCIAL (as of 3/31/2017) Cash $222,086 Total Assets $293,665 Current Liabilities $14,402 Working Capital $218,263 All figures in CAD unless otherwise stated.
company snapshot
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Full company profiles at www.thecse.com
www.thecse.com | 19
victory square technologies
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Victory Square Technologies The backing tech entrepreneurs dream of resides on Canada’s west coast By John Harrington
Originally published on Proactive Investors August 21, 2017.
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oung entrepreneurs are typically long on ideas, short on business experience and lack capital resources. Incubator fund Victory Square Technologies (CSE:VST) is a potential answer to their prayers. Victory Square not only invests in innovative entrepreneurs, but provides them a network of mentors, distribution partners, education programs, access to over 80 accelerators globally, and various other resources. “We believe tech has become commoditized, which makes distribution and acquisition so important,” says Victory Square Chief Executive Officer Shafin Tejani. The Canadian company might be better known to some investors as Fantasy 6 Sports, which listed on the Canadian Securities Exchange in May 2016. In June of this year, it changed its name 20 | www.thecse.com
Shafin Tejani, CEO
to formally reflect the switch in business model to a venture builder that creates, funds and empowers entrepreneurs predominantly focused on blockchain technology, virtual reality, artificial intelligence, personalized health, gaming and film. “Our vision is to continue to build a profitable portfolio of technology companies by giving them access to our resources that help accelerate growth,” says Tejani. The genesis of Victory Square goes back further than 2016, however. In 2007, Tejani founded Victory Square Labs, and built a successful track record funding seed-stage tech companies with exceptional entrepreneurs and high growth potential. Successes included BTL Group; Tantalus Labs; V2 Games; a Film Fund deal with Unified Pictures; and partnerships with Launch Academy, Foxwoods Casino, BC
Diabetes, and others. “Given our record of successful results, we decided to create a public portfolio to scale faster. The first company the public vehicle targeted was Fantasy 6 Sports due to its high growth potential and the fact that sports and mobile gaming is global, it transcends geography, language, culture, etc.,” Tejani explains. The fantasy sports company was, if you like, the advance guard for the rest of the Victory Square army. “The entrepreneurs, IP [intellectual property], experience, talent, customers and partnerships that we established in these diverse verticals laid the solid foundation for the current and future portfolio of companies in Victory Square Technologies,” Tejani says. Key to the company’s business proposition is the management team, which has
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
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Our vision is to continue to build a profitable portfolio of technology companies by giving them access to our resources that help accelerate growth. —SHAFIN TEJANI
a broad range of experience that matches the company’s areas of specialization. The team includes former executives in professional sports, entertainment, video, media and film, along with leaders in technology, immersive sports, casinos, horse racing and gaming. Tejani has successfully launched more than 40 start-ups in 21 countries, employing hundreds of people and generating more than US$100 million in annual revenues. He’s been there, done it, and he’s not only bought the T-shirt but probably knows the people who designed it and the creators of the technology they used to produce it. The executive team includes seasoned entrepreneurs and FansUnite co-founders Darius Eghdami and Duncan McIntyre, a chartered accountant and lawyer respectively, who focus on corporate development and operations. Director Howard Blank has been an executive of the gaming and entertainment sector for more than 30 years, most recently serving as Vice President of Media, Entertainment and Responsible Gaming for the Great Canadian Gaming Corporation. Fellow director Tom Mayenknecht’s career spans journalism, television, professional tennis, executive management leadership with both the Toronto Raptors and Vancouver Grizzlies of the National Basketball Association, and the start-up of what is now Rogers Arena. He’s probably not the guy to challenge to a game of tennis at the office party. Peter Smyrniotis, another director, is described as a “technologist”, as well as an entrepreneur and commercialization and growth professional based in Vancouver. Tejani is adding to the depth of the team as his portfolio grows and expects to announce some pedigree additions in the near term. The team also leans heavily on thought leaders at the companies it funds, both privately and through the company. The expertise these executives bring has proven invaluable in analyzing business opportunities. Since its metamorphosis into an incubator fund in June, the company has made two major moves.
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The first was to acquire a 40% interest in Unified Film Fund II, an entity that will be producing three major films in 2017 and 2018. Two of the three could garner worldwide distribution right receipts of around US$14.4 million given estimates projected by talent agency William Morris Endeavor Entertainment and other sources. Victory Square acquired its stake in the fund by issuing 5 million shares at an assumed price of $0.85, so essentially the stake cost C$4.25 million. Shortly after strengthening its presence in the film and entertainment arena, it created a new venture, Victory Square Health, to oversee companies in its portfolio working on personalized health technologies. Victory Square Health’s initial mission will be focused on management and prevention of the modern scourge that is diabetes. Victory Square Health will make some introductions and provide technical development capabilities to its chosen projects. Tejani believes personalized health is the future of medicine and that the team and partnerships Victory Square Health has established will allow it to be at the forefront of the rapidly growing health tech industry. Through strategic resources and technical development capabilities, Victory Square Health will utilize its relationships with seasoned industry experts, including Dr. Bruce McManus and Dr. Pieter Cullis, institutions such as the University of British Columbia and Simon Fraser University, and organizations such as BC Diabetes with leading endocrinologist Dr. Tom Elliott. Some might expect Tejani to be carrying out this sort of activity in California’s Silicon Valley, but in fact British Columbia is awash with technology companies. “British Columbia is a great place to build a tech company,” Tejani asserts. “There is exceptional talent in B.C. and Canada as well as strong government support through funding and tax credits. B.C. has become a great place to build a tech company and Victory www.thecse.com | 21
ompany snapshot
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Victory Square Technologies Inc. (CSE:VST)
• Victory Square invests in and mentors young technology companies in blockchain, virtual reality, artificial intelligence, personalized health, gaming and films. • CEO Shafin Tejani is a successful entrepreneur with over 40 start-ups in 21 countries to his credit (combined annual revenue over US$100 million).
• Success stories at predecessor Victory Square Labs include BTL Group, Tantalus Labs, V2 Games and partnerships with Launch Academy, Foxwoods Casino and BC Diabetes. • Management believes building a portfolio in a publicly listed vehicle will enable the group to scale faster, and that being based in Canada brings distinct advantages to young technology companies. HEADQUARTERS
Vancouver, British Columbia, Canada
CEO
Shafin Diamond Tejani
WEBSITE www.victorysquare.vc
financial snapshot TRADING (as of 8/9/2017) Price $0.550 52 Week High $1.880 52 Week Low $0.480 Shares Outstanding 55,636,266 Market Cap $30,599,946 ADTV (3 months, June – August) 7,858 FINANCIAL (as of 6/30/2017) Cash $87,802 Total Assets $2,225,162 Total Liabilities $358,631 Working Capital $(205,281) All figures in CAD unless otherwise stated.
Full company profiles at www.thecse.com
22 | www.thecse.com
Square is looking to fill the gap by helping to fund promising early-stage companies.” So, there are plenty of great candidates to go under Victory Square’s microscope, and better still, they won’t be expecting California-style levels of financial backing. “We take great pride in being based out of Canada, and British Columbia specifically. Both the federal and provincial governments have made it a goal to continue to foster innovation, which can be clearly seen by the provision of integral grants and credits,” says Tejani. “Victory Square has fostered relationships with these bodies to utilize financial opportunities and continue innovation… we have a ton of support from the provincial government and other groups like the BCTIA and the Vancouver Economic Commission.” Victory Square’s current market capitalisation is around C$37 million and the group is focused on building businesses with positive cash flow and exponential growth potential. Which brings us to the subject of valuing Victory Square. It is the nature of incubators that they fly below the radar for long periods, investing money for little return until they cash in, perhaps through a trade sale or stock market flotation. It’s at that point that the value is crystallized; otherwise, analysts must make their best guess at the worth of the portfolio, based on values of similar companies. Having said that, the company is not plowing its cash into money pits. “We build businesses that generate positive cash flow and continue to grow,” Tejani declares. If 2017 is earmarked as the year the company scales up, then next year should be the one where it strides toward profitability, powered by revenue from its film investments and personalized health initiatives. Tejani is motivated to find liquidity events along the way which will allow companies in the portfolio to find new funding sources and grow their investor bases. Few can deny that tech, leisure and healthcare are markets with massive growth potential. “Tech is exponential and our first goal is to build or acquire businesses we can continue to scale. These profitable companies provide us with the option to take them to the public markets, or exit to a larger player. For example, a healthcare company we have funded will have the potential to be acquired by bigger players in the pharmaceutical space.” In the meantime, it is just a matter of sitting tight and trusting the skills and judgement of a team that collectively has more than 100 years of award-winning entrepreneurial experience.
enviroleach technologies
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
EnviroLeach Technologies
Taking cyanide and acid out of the gold extraction process for mines, e-waste recyclers By Renae Dyer
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Duane Nelson, CEO
Everybody that we talk to is very excited by this technology. In the mining sector, there’s been such a lack of innovation. This is the most exciting innovation since the advent of cyanide.
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—DUANE NELSON
www.thecse.com | 23
Originally published on Proactive Investors August 23, 2017.
nviroLeach Technologies (CSE:ETI) is shaking up the mining industry by offering an environmentally friendly alternative to widely used toxic methods of extracting gold from ores and electronic waste. Many miners rely on cyanide and acid based leaching to recover precious metals from ores, concentrates and electronic waste. More than 76% of all gold is produced via hydrometallurgical extraction that utilizes cyanide. While cyanide is an effective extraction medium due to its high gold recoveries and low cost, it is also potentially deadly to humans as well as fish, birds and other wildlife if used incorrectly. EnviroLeach is trying to change this by producing a non-cyanide, non-acid based formula that is not only eco-friendly but actually contains food-grade additives that are fit for human consumption as nutritional supplements and medicines, including the treatment of some cancers. Chief Executive Officer Duane Nelson says the formula is mixed with tap water so you can “effectively drink it” before the solution is chemically altered using electrical currents passing through diamond based electrodes supplied by De Beers. “We’re really the only company that offers any type of environmentally friendly solution for the recovery of metals for both the mining and e-waste sectors,” Nelson says. EnviroLeach has proven in recent tests that its formula is not only better for the environment, it is also just as effective as cyanide leaching for ores and concentrates, and hot acid solutions for e-waste. During seven months of extensive hydrometallurgical tests of its formula on electronic waste, the company achieved gold recoveries of over 90% in periods of less than two hours. Electronic waste, or e-waste, includes devices such as mobile phones, TVs and computer components that are thought to contain as much as 7% of the world’s gold. EnviroLeach found that when it tested its formula on e-waste—specifically printed circuit board assemblies (PCBA) used in electronic devices—it provided similar leach kinetics to conventional acid based extraction methods. In contrast to current cyanide and acid based extraction, the study found the EnviroLeach reagent was safer to handle and functioned just as effectively at low temperatures and near neutral pH levels. The formula is also cost-effective because it can be reused. “Not only does it offer an environmentally friendly solution but it offers a sustainable solution,” Nelson says. The company has caught the attention of more than 140 mining firms, manufacturers and recyclers of electronics in more than 17 different countries.
ompany snapshot
EnviroLeach Technologies Inc.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
(CSE:ETI)
• More than 76% of gold is produced via hydrometallurgical extraction using cyanide. The EnviroLeach Technologies extraction approach removes cyanide and acid from the ore processing equation. • Tests indicate the technology is also highly effective for processing electronic waste (e-waste), which is thought to contain as much as 7% of the world’s gold.
• Construction of 10 tonne per day e-waste processing plant with Mineworx Technologies expected to be complete by end of 2017. Initial annual capacity of 2,500 tonnes would make it the largest, most environmentally friendly chemistry-based e-waste processing facility in North America. • EnviroLeach Technologies is marketing its technology to mining companies, manufacturers and recyclers in over 17 countries.
HEADQUARTERS
Burnaby, British Columbia, Canada
CEO
Duane Nelson
WEBSITE www.enviroleach.com
financial snapshot TRADING (as of 8/9/2017) Price $0.690 52 Week High $1.000 52 Week Low $0.210 Shares Outstanding 51,000,000 Market Cap $35,190,000 ADTV (3 months, June – August) 53,161 FINANCIAL (as of 6/30/2017) Cash $1,635,312 Total Assets $11,804,072 Current Liabilities $814,976 Total Liabilities $2,843,527 Working Capital $940,380 All figures in CAD unless otherwise stated.
Full company profiles at www.thecse.com
24 | www.thecse.com
While he wouldn’t name any names, Nelson states the group is in talks with some large clients in mining and some of the biggest manufacturers in e-waste. “Everybody that we talk to is very excited by this technology,” he says. “In the mining sector, there’s been such a lack of innovation. This is the most exciting innovation since the advent of cyanide.” EnviroLeach, spun out of Iberian Minerals in December 2016, has started construction of a 10 tonne per day e-waste processing plant with Mineworx Technologies. It will have initial annual capacity of 2,500 tonnes of PCBAs, making it the largest and most environmentally friendly chemistry-based e-waste processing facility in North America. The plant, which is expected to be completed by the end of Q4 2017, will handle all aspects of the e-waste recycling process, including material pre-treatment, shredding, grinding, leaching and metal extraction. Operating costs, capital costs, development timelines and permitting procedures are expected to be much lower than those associated with a typical mining project. EnviroLeach believes e-waste recycling will play a significant role in the coming decade as the volume of electronic products going into landfills continues to grow at a worrying rate. “Apple, Microsoft, DELL, CISCO and others are all looking for environmentally responsible recycling alternatives for their components,” Nelson says. The company sees a continued rise in demand for gold in electronics as the number of mines is limited, the costs are higher, and the mines are often located in challenging political and geographic locations. Nelson says that by using the company’s formula, miners will also be able to set up shop in areas that are prohibited from using cyanide. He also believes urban mining provides tremendous opportunity. “Previously, the only way to get gold out of e-waste was to put it into a smelter or use hot acid solutions, which is not cost effective. It’s not sustainable, and not healthy for the environment,” Nelson explains. In 2014, some 41.8 million tonnes of e-waste was generated around the world, according to a report prepared by the United Nations. The estimated value of iron, copper, gold and other discarded materials it contained? Try CDN$71.2 billion at current exchange rates. Our world clearly needs solutions to the e-waste crisis, and it is also clear that there is money to be made in providing them.
tpd
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
How to Improve Your Recruiting Through Analytics By Matthew Loughran
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e are living in an age of big data and analytics. It has never been easier to collect and analyze information to optimize your organization’s business processes. Recruiting is no exception. Doing this will not only offer you fresh insights into how successful your existing recruitment efforts are but also provide clarity on how to make them more efficient to achieve better results. Establishing and using analytics is a great way to figure out how to make your recruitment efforts as effective as possible. You can uncover that you’re spending hundreds or even thousands on resources that are not leading to the desired candidate pools where you wind up hiring from. Smart organizations leverage HR technology to gather the proper data points required for c-suite decisions for funds allocation and business process effectiveness. There are lots of ways to capture data about your recruiting process. One of the easiest is to use an applicant tracking system that will automatically collect that data for you and display it back in an easy-to-understand dashboard. But, no matter how you collect your recruiting data, make sure that you focus in on a few key metrics: Time to hire—is the amount of time to it takes from when a job is posted until a candidate accepts your job offer. While time to hire can vary dramatically depending on the industry you are in and the role you’re recruiting for, the longer the procedure takes, the more expensive it becomes. Cost to hire—is how much it costs to fill a position, to calculate this you factor in advertising the position on paid job boards, paying for various other tools, and time spent on recruiting, vetting, and onboarding candidates. Source quality—is the cost-effectiveness of the different sources you’re using to attract candidates. An easy way to calculate this is to divide the cost of each source (job boards, ads, etc.) by the number of successful hires for the desired time frame in question (quarterly, annually).
Matthew Loughran
Together, these metrics will give you a fantastic initial understanding of how efficient and cost-effective your recruiting is. Once you’ve established some benchmarks for yourself or your recruiting partner like TPD, (i.e., how long it typically takes you to fulfill a job, how much doing so typically costs on average, and how cost-effective your distinct sources are), you can then get to work to optimize your recruiting efforts to get better results. When you have clarity through attribution analytics on your top candidate sources by job type, you can effectively build a case to increase ad budget for that job board platform and reduce spending on underperforming job boards. There are many ways to leverage applicant tracking systems during the recruiting and onboarding. When done right this pivotal step in candidate experience becomes the stepping stone for your employer brand and the start of your new hire’s journey with you. TPD provides end to end solutions for organizations looking to improve their recruiting process internally or take over the entire function with total transparency into all of the analytics mentioned. Anytime that you have data-driven analytics and metrics, you can use them to gain insights into everything you’re doing. If your time to employ is long and your cost per hire is low, then you should make some tweaks to your procedure, such as spending a bit more on advertising. A small investment can easily pay for itself if you are getting to better candidates faster, but you need to know your numbers to justify the action. It may not be easy, but using analytics is a great way to figure out how to make your recruiting efforts as efficient as possible. For that reason alone, it’s worth taking a closer look at them.
About TPD TPD® is an international Workforce and HR Solutions company that partners with our clients and talent pool to help people succeed and help organizations perform. Founded in 1980, TPD works with people, for people, and about people; providing scalable HR solutions that are backed by the best-proven practices in the industry.
www.thecse.com | 25
mnp
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Are You Protected Against Cyber Security Attacks? 3 steps to secure the future success of your business By Danny Timmins
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o one thinks it’s going to be them. Until it is. According to the movies, cybercriminals operate out of abandoned warehouses, target carefully selected conglomerates and use things like “worms” and “keys” to gain access. The reality, however, is that cybercriminals, using scattergun techniques like phishing, are not out for world domination but rather a more familiar motive: money. In 2016, 24% of breaches targeted financial organizations, 15% healthcare, 12% public sector entities and 15% targeted retail and accommodations*. Whether it’s design plans, medical records or good, old-fashioned payment card details—someone, somewhere will see it as their meal ticket. Organizations need to build a strong security posture by implementing strategies that address internal and external threats across the entire chain. It is critical to start from the premise that systems will be breached. This perspective enhances the effectiveness of decision making related to preventing, mitigating and recovering from a breach. Another recent development makes this a pressing imperative. Canada’s new Digital Privacy Act has introduced mandatory breach notification. In 2017 organizations will be required to notify the Office of the Privacy Commissioner, as well as the individuals affected, if the organization experiences the loss or theft of personal identifiable information that puts these people at “real risk of significant harm.” Failing to do so could result in fines of up to $100,000 per offence. This comes as part The Digital Privacy Act (formerly referred to as Bill S-4) that was put into effect in June 2015. On January 19, 2017, the Canadian Securities Administrators (CSA) published Multilateral Staff Notice 11-332, stating that they expect issuers to provide risk disclosure that is as detailed and entity specific as possible, should they determine that a cyber security risk is a material risk. In order to determine materiality, the cyber security incident requires analyzing and the probability of a breach occurring and the anticipated magnitude of its effect needs to be determined. The CSA expects issuers to disclose specific risks, rather than generic risks common to all issuers, and they expect issuers to tailor their disclosure of cyber security risks to the particular circumstance. Underestimating risks leaves enterprises highly vulnerable. Poor security can lead to painful, even catastrophic, financial and reputational losses. Moreover, data breaches and other security incidents put not just individual companies, but entire supply chains, at risk. The following are three steps to build a robust security posture that will support the goals and resilience of your organization, and assist you in determining your cyber security risk.
26 | www.thecse.com
Danny Timmins
1. Conduct a health check of your organization’s cyber security maturity. A health check is an assessment of an organization’s controls, security risks and threats, to define its current security posture and highlight gaps. The health check assesses current risks to your industry and business and evaluates the strengths and weaknesses of your organization’s existing security controls. The health check determines the impact a breach could have on your organization: operations, productivity, information assets, infrastructure, reputation, materiality of the cyber security risks and brand. 2. Develop a clear security roadmap. The health check will guide an organization by providing a clear map of priority risks and practical direction regarding where to most effectively focus cyber security budget and resources. 3. Test your organization’s vulnerability to cyber-attack. It’s essential to supplement planning with robust testing to determine your organization’s vulnerability to cyber breaches. Intellectual property, personal information, plant systems, computer servers, and mobile devices, could all be targets for attacks. Seek objective, trusted third party cyber security expertise to assess potential weaknesses through vulnerability assessments and penetration testing of your internal and external networks and applications. Without adequate protection, cyber security threats can put your organizations’ operations, reputation—even its existence—at risk. Vigilant assessment, planning and testing are critical to protect the bottom line. For more information on how you can better protect your business from cyber-attacks, contact Danny Timmins, CISSP, National Cyber Security Leader at (905) 607-9777 or email danny.timmins@mnp.ca
About MNP MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-for-profit sectors. Through partnerled engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world. *Sources: 2017 Verizon Data Breach Investigations Report Canadian Securities Administrators Multilateral Staff Notice 51-347—Disclosure of cyber security risks and incidents Canadian Parliament: Digital Privacy Act (Bill S-4) Government of Canada: For Discussion—Data Breach Notification and Reporting Regulations
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Interview with Tom Rossiter, Chief Executive Officer, RESAAS Services Inc. By Peter Murray
Tom Rossiter, CEO
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Peter Murray (PM) RESAAS offers unique services to the residential real estate industry, a massive market if there ever was one. Can you begin by walking us through what the company does at a high level, and given all the pivots that seem to take place at technology companies, has your mission changed along the way? Tom Rossiter (TR) Our mission hasn’t changed along the way, it has evolved. If we rewind to the beginning of RESAAS (Real Estate Software as a Service), we set out to create an online platform that aids the existing practices of the real estate industry. We all know
that real estate agents are social professionals—maybe the most social group of professionals that exist. When you are together with them in real life it is amazing to see the knowledge sharing, the education, the tips and tricks, and the deals that get done. We thought that should be supplemented digitally so the value of a professional circle could transcend a local market and put an agent or organization on the map not just locally but nationally, and maybe even overseas. You can think of RESAAS as an online destination for real estate professionals to act as they do in real life. Eventually, the networking effect kicked in, which means the bigger the network, the greater the value to those in it. Word got out about all the great content, and data, and deals, and leads, and listings that were happening inside RESAAS amongst the agents using it. Leading organizations with extensive footprints in terms of agent count and office locations began to catch wind of what was going on and thought, “Wow, we have this large physical presence. www.thecse.com | 27
Originally published on the CSE Blog August 17, 2017.
n late July, Peter Murray sat down with Tom Rossiter, Chief Executive Officer of CSE-listed RESAAS Services Inc. (CSE:RSS) to discuss his perspective on opportunities in the real estate sector and RESAAS’s unique platform. Below is the transcript of their discussion.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
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We provide a white-labeled platform so they can give their agents a way to interact digitally, and ultimately do more business. —TOM ROSSITER
What would happen if we embraced this RESAAS model to be our digital complement?” A big part of our business now is working with these larger brands and organizations and supplying our technology and services to their networks. We provide a white-labeled platform so they can give their agents a way to interact digitally, and ultimately do more business. (PM) 2. What tools are you providing and what makes them unique? (TR) The tools are really just an extension of what the agents are already doing. Every agent either has listings or wants to find listings for buyers, so we provide an easy system for listing sharing amongst agents. Buyer needs is a particularly important aspect. In hot markets, there is less inventory and more demand. Where listings are scarce we provide a buyer needs experience so that agents can signal they have a buyer and detail that buyer’s requirements. While RESAAS works very well across buyer’s markets, seller’s markets and neutral markets, we’ve become particularly popular in seller’s markets, where there is that supply issue. What we have been able to do is to create a new way for the industry at large to organize and visualize listings. The way the industry works is that it can take up to five days between the time an agent signs a listing agreement and the time a property is listed on the MLS with pictures and other information. During that period, agents might communicate the listing to others and transactions can thus occur pre-market. And those that do are outside of the MLS. For local organizations charged with governing their respective local real estate markets, this is a big problem because they need to know everything about the market so their database, their analytics and their comparables are accurate. Last year in the US about 22% of properties that sold never got to the point of having an MLS listing. And in hot markets, that can reach 40%. To bring that back to RESAAS, we have created a way to capture listing data pre-market that is structured, organized, clear and compliant. Agents love it because it levels the playing field. But even more important is that our clients, the local real estate associations and boards, can finally visualize and track activity in its pre-MLS phase. 28 | www.thecse.com
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Because of varying regulations and bylaws in individual markets, RESAAS sometimes has data for days, or even weeks, before any other destination online has it. Ours is the first platform of its kind and has been termed extremely disruptive. We are marching out across the US and activating different markets every week. (PM) 3. Would you say that locating senior management and most of the technology team in Canada has been the right decision for RESAAS? (TR) We are fortunate to be based in Vancouver, which has become what I consider to be the Silicon Valley of the north. It is a thriving destination for technology companies to base an office in or establish their headquarters. I have been here for 10 years and watched the city transform from a technology reception standpoint such that there is now an understanding of how a company like ours needs to be supported, financed and communicated. There is an amazing community in Vancouver amongst technology companies. Even though companies might compete with each other, there is collaboration and innovation. And given the variety of companies that exists here—private, public, start-up, emerging, well-established, large and small—there are so many industries serviced by them that the thought-leadership and mentorship opportunities are tremendous. Importantly, Vancouver has a buoyant investor scene that supports and understands technology companies. As a public technology company on the CSE, we could not be more grateful to be in such a dynamic environment. (PM) 4. Take us inside the RESAAS strategy. How did you develop your game plan, and what are the keys to executing effectively? (TR) RESAAS started as a freemium platform. We opened the gates to a network we had built and did so without putting up a paywall. We wanted to minimize the barriers for busy professionals to use and believe in our platform. The strategy all along was to build a critical mass of users and analyze what they did—what they talked about, what they wanted and how they used what we had created. We didn’t put a timeline on it. Our approach was to launch the platform and once we felt we had enough information, analytics and patterns to understand the behavior, then we’d be informed enough to build solutions
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
capital, and we have spent time, capital and resources to build something that has longevity and scalability. And the product is in high demand now that we are selling it. During the early days, people got excited because when you assemble a brilliant team trying to tackle a problem in an industry as large as real estate, it is natural for people to dream big. During the development/ pre-revenue phase, people get excited and imagined the blue sky. But when you turn on the revenue, that aspect of the business is beginning from a cold start. What can happen is that people start to look at you from a current revenue standpoint and forget about the blue sky. It happens to a lot of companies in Silicon Valley, too. We are in that phase where we must push revenue growth month-after-month, quarter-after-quarter, geared around a recurring revenue model. We know where we are going with this, we know how big the market is, we know how many customer types there are, and we have created a model that enables us to monetize a single agent multiple times. That, combined with the intrinsic value of the data we are gathering, puts us in a strong position for robust valuation in the near term.
that we could sell. As a result, everything we are doing now and everything we have created is based on industry activity and demand. Really, it is consistent execution of the game plan. Run something for free, analyze the patterns and data, build solutions that represent what people are crying out for, then monetize it at scale to an industry in need. We are now in the last phase of that four-pronged strategy. By spending time up front to understand exactly what different facets of the industry require, when we build a solution and take it to market the reception is fantastic from the get-go. We are not finding our way or having to pivot on the fly because we have gone to market
with a polished solution we know is in high demand. (PM) 5. Some technology companies become profitable early on but others achieve very high valuations with hardly any revenue at all. What is your take on this, and where is RESAAS on the earnings versus valuation continuum? (TR) We view RESAAS as similar to a Silicon Valley company mentality. By that I mean that the process is to assemble a team and raise capital, build a product and run it for free, and then based on the data you subsequently monetize it. We have chosen to do that in Canada, we have chosen to use the CSE as our vehicle to raise our
(PM) 6. Tell us about the technology and user base you have built to date. What comes next? How does it grow in new ways and monetize from here? (TR) RESAAS attracted almost half a million agents in the first 24 months of operations. From that we learned, through analytics and behavioral analysis, what we felt different groups in the industry needed and would buy, and we built those solutions. We started taking our solutions to market in 2016 and are already working with some of the biggest brands in the space. The top two global real estate franchises are RESAAS customers and run on our technology. In 2017, we judged that the role of the free network for real estate agents had played its part. As I’ve already mentioned, the years we spent gathering data and analyzing behavior formed the basis for the products we subsequently created. We have thus decided to add a paywall to RESAAS, which means the free version www.thecse.com | 29
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
is no longer available. Going forward, all users will be paid for either by the brokerage they belong to, their local association, or by themselves. It will mean a reduction in the number of users we have but the revenue per user will increase dramatically. This is a tactical part of our strategy that we began executing this year and we are very happy with the early conversion numbers. (PM) 7. You have raised over $30 million since debuting on the CSE in February 2011. What types of investors back a company like RESAAS and what can you tell us about your relationship with shareholders? (TR) RESAAS is fortunate to have an enlightened, supportive and loyal group of shareholders who have invested from our IPO in 2011 all the way up to our most recent financing. That is a tremendous asset for our company and something we are very grateful for. It has allowed us the time, bandwidth and resources to build the company we envisioned, to take the time to professionally execute on our vision, and to take our strategic plan to market in exactly the way we wanted. The result is that we have come to market with a product and set of services the industry has never seen before and clients are calling out for. The entire process has been made a lot easier by being listed on an exchange like the CSE. It provided a tremendous amount of assets, tools, resources and connections outside the network we have within our own company. The CSE has proven to be a fantastic capital markets partner and facilitated the timeframe we needed to build a world class technology company here in Vancouver. (PM) 8. Looking at life in the public markets, what are some of the positives, and what has been your biggest challenge? (TR) RESAAS has found the public markets, on balance, to be extremely advantageous for our company’s growth. They provided a vehicle to raise a tremendous amount of capital. They provided us an avenue through which to meet influential, informed and intelligent investors across Canada, and they furnished our company with enough capital to execute our vision. We have been able to build a better business because of this. Going public pre-product is somewhat unconventional in North America and definitely made us refine our communication style. We communicate corporate updates clearly and more regularly than is perhaps the norm, to give investors insight into the direction the company is heading. Typically, a company would be private and build something and would go to market. They would have all the right components in 30 | www.thecse.com
terms of revenue growth and then they would IPO. RESAAS chose to IPO early and use that time to build a product from nothing, but having spent the hours and airmiles to understand industry needs. We were fortunate enough to have a shareholder base that believed in our vision and supported our direction. And here we are six years after our IPO in a position where all of our early shareholders are still supporting the company. They are extremely happy with what we’ve created, and they are over the moon with the opportunity before us. We could not be happier or more fortunate to have such a supportive group of investors behind the company. (PM) 9. What would you tell the next generation of growth companies about going public? (TR) As an emerging tech company, a listing on the public markets provides a proven platform to raise capital, whilst retaining more control than perhaps the alternative of remaining private would allow. In addition to the financial benefits that a public listing can bring there is greater awareness, credibility, investor confidence and use as a sales tool. I have to say that the public markets have been fantastic. (PM) 10. Finally, can you speak about the achievements investors can look forward to in the coming 12 months. Why should people be excited about RESAAS? (TR) Well, I would say that 2017 is RESAAS’s breakout year. It’s the year we finally recognize the effort our company has put in over the last six years to monetize our solutions. We already work with national brokerages and franchises. We already work with major and progressive real estate associations and boards across North America. And most excitingly for this year, we launch our newest solution aimed at the brokerage network, targeting over 120,000 independent brokerage firms across North America with a solution we spent more than a year building based solely on input from the people who run those brokerages. This is the year that RESAAS becomes “SAAS-ified” and we could not be more excited about the direction the company is heading, our growth potential, and ensuring that we remain number one in this industry from a B-to-B technology standpoint.
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