First look at this $90M market cap that was receiving a lot of chatter around this time last year in microcap circles as they were doing the convention circuit. The company went 9x in the six month stretch of January to June last year, but then lost 48% of their value over the last three months.

ALUULA is a next-generation composite materials company manufacturing the world’s lightest, strongest, and fully recyclable composite fabric, embedded as the premium ingredient inside the world’s leading performance brands.

Their Q1 financials are about a month old now and the share price has stabilized over the past six weeks. Is this a good time to take another look at Aluula or do the financials suggest there is more downside ahead. Let’s find out.

This article will be re-released without a paywall on May 1st.

Aluula’s current ratio is (was) decent at 1.70 consisting of $2M in cash, $1.2M in receivables, $2.8M worth of inventory and $370k in other short term assets against $3.8M in liability commitments due over the next twelve months.

I always like to give a positive shoutout when a person is managing their A/R as well as this with 91% of their receivables listed as current.

The company has (had) $1.4M worth of debt, $400k with WD Canada, interest free with payments ending in March 2029, and a $1M related party loan through a numbered company at 12 points. The loan has been amended twice, most recently at the start of the year. Twelve points doesn’t sound like a great deal between friends.

While the current ratio is decent, the quick ratio is (was) a little lacking as their cash + A/R doesn’t (didn’t) offset their one year liability commitments.

Post financials they took advantage of all of that share appreciation and raised a whopping $14.1M through a LIFE offering at $3.30/share with a half warrant exercisable at $4.29 over two years. Those PP investors are currently down 12.1% however.

Aluula plans to utilize about $6.6M of that raised capital on expanding their manufacturing capacity.

That significantly changes the look of their balance sheet and liquidity. They also paid off that related party loan, and considering the twelve points, a wise decision.

Cash Flow:

Aluula burned just shy of $100k through their first quarter of ‘26, but that is a 36% improvement over the comparable quarter. They have not had a positive OCF quarter in their last six. Inventory levels rose by 37% in Q1 and that investment seems to be the biggest culprit contributing to their Q1 burn.

The company utilized $82k in asset purchases and added $164k of debt in the quarter which has now been fully extinguished.

That $2M in cash at the end of the quarter quickly increased to over $14M after commissions on the raise and debt payments.

Given their relatively small burn rate and $8M in additional general working capital available, they seem well positioned moving forward.

Share Capital:

• As of Jan 31, 26.3M shares outstanding with 5% dilution in the past year.

• Post financials the raise added 4.3M, bringing the total to 30.9M outstanding and dilution rate to 22% over the past five quarters.

• Goofy structured warrants. Stated amount of warrants outstanding is 26.25M outstanding which almost made me stop doing the review all together. The actual potential dilution on these should actually be 26.25/20 which is 1.3M. Some of these were exercised post financials

  

• 2.5M options, all ITM with the exception of 295k granted in the quarter at $3.30 under the company’s 10% rolling option plan

• Insider ownership of approximately 34% per investor deck

• Minor slaps on the open market in the past twelve months by insiders

Income Statement:

Very strong revenue headlines achieving $2.33M on the top line which is 85% more than they achieved last quarter. Margins did slip by 300 basis points in the quarter to 42%, and as a result delivered 73% more gross profit dollars.

Expenses jumped by 51% mainly via G&A expenses which exploded by 193%. That resulted in a slightly larger operational loss of $260k vs $251k. Not much worth noting below that so their net loss was also slightly up at $384k in the quarter vs $374k.

The margin decline is related to onboarding of staff, and the rationale for their G&A costs (highlighted below) is definitely on the weak side, as there is nothing to assure me that these near tripling of G&A costs are just a one time pain point.

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Overall:

On the surface it looks like a disappointment, having 85% more revenue turn into a slightly higher loss at the bottom of the P&L. I certainly would have liked to see a more detailed explanation within the MD&A on where the misses were to be able to forecast their spending moving forward.

On the other hand they went from a pre-revenue company in 2022, achieving $4M in 2023 with a now TTM number approaching $9M. Some growing pains and not all numbers making sense are to be somewhat expected.

They have a long list of partnerships with key brands in the sports and outdoors segment, and I would think this is a company that should be on people’s radar’s, even if you missed out on shares in the 50 cent range one year ago.

There is no better deep dive (very bullish case) than the following piece by Domum Capital. It’s six months old now but I suggest you start here if you are interested in learning more about them.

Domum Capital

The Fabric of the Future: How Aluula Turns Light into Strength

Written in collaboration with MBB (@LockStockBarrl…

Read more

6 months ago · 18 likes · 9 comments · JB

The biggest question for me is the valuation sitting around $90M. That is about 10x TTM revenues for a non profitable company on the EBITDA or Net Income lines with six straight quarters of operational cash burn and a negative ROIC of -13%.

Their float management history is also questionable. They went from 150M shares in 2022, which ballooned to over 500M shares a little more than a year ago. They did a 1:20 reverse split in February 2025 and have experienced 23% dilution since.

They are definitely going to need to show me a little more to get interested at these levels. Now that their treasury is near full, let’s see how they manage that better looking balance sheet. The fact that their first move post financing closing was to hire an investor relations company makes me wonder.

Three star financials, less a quarter star for the 10x revenue valuation. 2.75 for those who can’t math.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from company’s I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

I feel like I set this one up on a tee for everyone. Back in February I gave Biorem the Wolf Seal of Approval citing big opportunities for some upward share price moves early in 2026. Many within the Wolf Den discord took note.

Biorem reported their annuals yesterday morning and the market rewarded them with a 16% increase, now giving them a 21% increase from the bottom of my February buy zone.

Let’s dive into the numbers.

Balance Sheet:

With deferred revenue removed, Biorem has a solid 2.6 current ratio consisting of $11.5M in cash, $12M of receivables, $1.4M worth of inventory and $5.7M in other short term assets against just $11.9M in liability commitments over their 2026 fiscal year.

To be polite, Biorem’s aging report is messy. We don’t know their terms, but one would assume their past due receivables to be at least 24%, and have $660k in allowances for doubtful accounts already booked.

Biorem has $1.85M in debt at an attractive 4% interest rate. They also have an unutilized $3M LOC at prime + .75%

Cash Flow:

Significant cash flow improvements in 2026 with $7.6M of operational cash flow, more than double (107%) the $3.7M achieved in 2025.

While very impressive it also may be slightly inflated, Payables grew by nearly $4M in Q4 alone and those bills will be coming due. Inventory levels were also significantly depleted in the back half of the year, so re investment there will be expected. Do not be surprised to see a bit of a hiccup in their OCF when the company reports their Q1 in four to five weeks.

The company made minor investments in equipment of $367k during the year, paid down $570k worth of debt and bought back a small amount of stock for $100k.

Overall, their cash position grew by 120% during 2025.

Share Capital:

• A very tight float of just 16.1M shares outstanding, with virtually no dilution last year

• 3.3M options outstanding, all well ITM with 2.3M expiring in early 2027. Only 50k new options were granted in 2025

• Announced an NCIB in June. Bought back a limited number of shares over a few week period in September. Not much of a commitment here - more like a game of just the tip to see how it feels.

• Limited insider ownership of just 2%. Minor insider buying last May

Income Statement:

Revenue for the year came in 13% higher at $42.4M vs $37.4M last year. Gross margins were over 300 basis points higher at 30.1% vs 26.9% delivering an impressive 27% more gross profit dollars on 13% more sales.

Total expenses grew by less than 10%, all in G&A expenses showing very good conversion on their revenue and gross margin gains. That all combines for a Wolf Trifecta for their 2025 year.

Earnings from operations were up by 49%, and after a small savings in finance costs and 37% more in income taxes, net income came in at $4.8M, 58% more than the $3M they delivered in 2024.

Much of their 2025 success was delivered in their most recent fourth quarter. At the end of the third quarter, revenue and earnings were down to last year. Q4 revenues were 82% higher for a quarterly record of $16.9M. Gross margin more than doubled from 17.1% to over 35% with gross profit dollars increasing by a factor of 3.7x from $1.6M to $5.9M. At the bottom they delivered a very impressive $2.68M of net income compared to just $200k last year.

They certainly ended 2025 with a bang.

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Conclusion:

After a mediocre at best first three quarters of the year, they really saved the year in Q4 with this record quarter on both the top and bottom lines.

If you were paying attention, much of this was telegraphed, hence why I awarded the company my first mid year pick of 2026 back in February. After having three pretty rough quarters of their last four, their order intake and backlog were increasing.

After Q3, the CEO reported $71M of backlog for which they anticipated 75% would be delivered over the next four quarters. That is $53.3M between Q4 of 2025 and Q3 of 2026. After delivering $16.9M in Q4, that leaves $25.4M over the next three quarters. That would represent a 43% revenue increase over the next nine months, while also setting up a very tough comp a year from now.

The downside with Biorem is quarterly results have been lumpier than a bad bowl of oatmeal, but they have delivered a 19% CAGR over their last three years of earnings when you smooth those results out. Their TTM by the end of Q4 looks like it will surpass $50M with improving margins, and they have a proven history of being great operators with excellent float management.

From a valuation perspective, after yesterday’s gains they sit just shy of a 10 P/E, and much more attractive from a cash flow perspective at 6x, and under 6 EV/EBITDA.

Now take into consideration their next three comp quarters starting with a rather dismal $4.7M when the company reports Q1 in four or five weeks. Given what the CEO said at the end of Q3 we should expect a beat over the next three quarters by 43%.

Backlog now sits at $65.3M. After their record Q4 that is down from $71M but 16% higher than they ended 2024 with. As usual the company commentary is cautiously optimistic with caveats on the current geopolitical climate.

Biorem is currently sitting about 50 cents shy of their ATH from last January. Are they a better looking company today than they were then? I would say yes which makes me feel that there is still some room to grow, particularly with these soft upcoming quarters.

If order intake in future quarters continues to be shy of their revenue, that could change resulting in future earnings becoming a sell the news event.

For now, I’m awarding them a half star upgrade to 3.75.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from company’s I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

Frequent readers of mine know the story here. First selected as a 2024 Wolf Pick in mid December of 2023 at $0.61 with an original position of $0.58. Today on the morning of their 2025 annual financials it sits at $8.45 for a near 14 bagger and has traded as high as 17.5x.

If you were a little late on that one you still could have more than tripled your money over the past year with the stock returning 264%.

I had planned to cover Kraken in my my monthly earnings preview (What’s Wolf Watching) this weekend, but the company released earnings a couple of weeks before the deadline - usually a positive sign.

I’ve taken plenty of profit off the table with only about 25% of my original position remaining, the latest at $9 generating a 1451% return, but my current holdings are still more than 3x of my cost basis. Kraken has been very kind to me.

In terms of these financials, I’d say my expectations are low. I don’t anticipate them living up to the current $2.6B market cap. A long way from the $125M market cap when they were selected as a Wolf Pick less than two and a half years ago. We’re also more than a quarter into 2026 by the time these financials are released, and a lot has occurred with Kraken since their year end. Most notably of course was their $615M acquisition of Covelya Group consisting of $480M in cash and $135M worth of stock. To fund this the company raised over $402M, and the deal hasn’t officially closed yet.

How does their guidance look for 2026 and beyond and how much to they still need to grow into this valuation. Let’s dig in to ensure they are on the right track.

Balance Sheet:

Given the post financials acquisition and subsequent raise, I’ll try to be brief here.

At the end of December, Kraken’s current ratio was 5.5 consisting of $120.5M in cash, $34.7M worth of inventory, $27.3M in A/R and $27M of other current assets against $37.9M in liabilities due over the next year.

They had $22.7M of long term debt spread across six separate loans. Post financials they amended their revolving credit facility from $35M to $150M. They will surely need to tap into that given the $480M in cash they plan to utilize for the Covelya acquisition.

Kraken’s aging report is a little suspect with $1.7 in anticipated losses and that’s on top of over 25% of invoices past due. 86% of their A/R is concentrated within four customers.

Overall, their balance sheet looked great at year end with just their cash position covering all of their 2026 liability commitments by over 3x. Given the acquisition and adjoining raise of capital occurred in March, it will need to be re-evaluated with Q1’s financials that investors will see by the end of May.

Cash Flow:

Just $1.5M of operating cash flow was generated in 2025 compared to an operational cash burn of $11.6M in 2024.

As is usually the cash with Kraken, their OCF was heavily influenced by working capital changes, most notably was the inventory ramp up in 2025 - a strategic decision to have more on hand available to sell. It was partly the reason for the raise earlier in the year. Therefore one could conclude their cash flow is better than it looks.

Covelya wasn’t the only acquisition in the last year as they also acquired 3D at Depth last April for $23.8M and spent another $26.5M on capex, mainly for their new N.S. facility to expand capacity which is now completed.

Kraken raised nearly $110M in capital through dilutive measure in 2025 and added $9.4M in net debt.

Overall they more than doubled their cash position in 2025 to $120.5M. Of course this will look much different at the end of Q1.

Share Capital:

• 306.6M shares as of Dec 31 - 17% dilution in 2025 and 48% over two years

• 13.7M options, all ITM, earliest expiry May of 2027

• Insider ownership around 3% and getting lighter post financials. I wonder if the CEO wants the 800k in shares back that he sold at $2.98 ten months ago

• 47.4M subscription receipts which will convert to common shares upon Covelya closing

• Approx 15-16M shares to Covelya as part of the acquisition

• Fully diluted float approximately 382M shares

Income Statement:

On the year, Kraken drove a modest 12% increase in revenue to $102.2M. Much more impressive were gross margins with increased by 1300 basis points from 49% to 62%, and that helped to drive 42% more gross profit dollars on just 12% more sales. This was achieved through strong demand for batteries and synthetic aperture sonar (SAS) products, and robust growth in subsea services.

Unfortunately there was no operational leverage obtained in 2025 with operating expenses growth of 78%, significantly above their rate of revenue increasese (12%) and GP dollars (42%).

While non cash burning depreciation and SBC costs rose dramatically, cash burning Admin costs were up by 85% while R&D rose by 26%. Headcount in Q4 was 53% higher on a YoY basis contributing to much of the variance.

Therefore after generating 42% more GP dollars in 2025, their operating income was down by 38% YoY to $8.6M.

After an $8M net income tax recovery in 2025, they experienced $3.3M in income tax expense , so net income for the year decreased by 86% to $2.9M vs $20.1M.

On a quarterly basis, it looks quite similar. A very slim revenue increase of 1% with a dramatic improvement in margin to 70% vs 48% to grow gross profit dollars by 48%.

Cash burning expenses grew by 74% with most of the negative impact of their previously mentioned tax bogey to last year occurring in Q4 resulting in a just better than break even net income of $54k vs $13.7M.

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Overall:

If you’ve got this far, let me tell you that almost everything above is pretty much meaningless, and that makes me question my own sanity for writing it in the first place. The following is much more important.

That $2.6B market cap I referred to in the opening effectively turns into a $3.4B market cap at the current $9+ share price given the dilutionary measures that will take place on the acquisition of Covelya closing - that should take place sometime in Q2. That means investors won’t see any combined results until mid to late August, and fully blended for a whole quarter until November.

The guidance for 2026 for Kraken Robotics which doesn’t include the acquisition is in itself quite encouraging. Revenue at their mid point of $170M would represent a 66% increase. The company has already received $87M worth of orders as of yesterday - 50% of their annual guidance with more than two thirds of the year to go. Therefore this guidance could be a little sandbagged.

Unfortunately AEBITDA is the only profitability metric they provided guidance on and that is expected between $40-$50M. I say unfortunately as their historical AEBITDA to cash flow conversion has been very weak. They achieved $25M of AEBITDA in 2025 and only delivered $1.5M in operational cash flow. I anticipate 2026 to have significant restructuring and acquisition expenses, therefore I assume similar poor AEBITDA to cash flow conversion this year.

We know that this guidance will be updated when the acquisition has been finalized, and those could generate some very eyepopping numbers. Covelya was expected to deliver between $250-$275M last year and if you tack on their CAGR of 24%, that delivers $310M in 2026 on the low end. According to the recent earnings release, Covelya has already received $135M worth of orders putting them on track for that $310M figure. Therefore upon closing the deal, annualized total revenue of a half billion dollars looks like a near certainty, but with a lot of questions on what happens underneath the revenue line.

That is where I have some concerns with the acquisition. The $615M price tag is reportedly an approximate 10x AEBITDA - that metric once again that I despise so much. 10x net income or cash flow I would usually consider a good deal at the top end, particularly given a 24% CAGR in a very attractive sector. 10x EBITDA or AEBITDA can potentially become an overpay very quickly, particularly if Covelya’s cash conversion from AEBITDA is similar to Kraken’s. They are going to need to grow both at significant rates and generate some considerable synergies to make this look attractive a few years down the road. How much of this transaction will be made up of goodwill and intangibles will be very interesting to look at eventually.

Unfortunately it won’t be until November until we see a full quarter results of the combined businesses, and likely another year from then to see any results of synergies and operational efficiencies. Until then the stock will continue to trade on speculation, news, and the strength of the defence sector. I do like this $3.4B implied valuation of the combined businesses more than I did the $1.6B valuation of Kraken’s business the last time their financials were reviewed, but that’s not saying much.

If you want to continue to nerd out on Kraken, I’ve attached two decks. The first is more about the Covelya acquisition itself, the second is their latest investor deck just recently updated.

Given their Q1 results next month will not have combined results, I’ll probably pass on another review and wait until August for Q2. Until then, I’m maintaining the 3.25 stars.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

This review comes via request through the Wolf Den discord. These financials are about six weeks old so this isn’t typically a request I would agree to. Then I looked at the chart.

A year ago the stock traded at $0.115. Just two weeks ago at the end of March, it was trading at the exact same figure. But since the beginning of the month, the stock has more than tripled, up 217%. For a stock that went many days throughout 2026 with no shares exchanging hands, suddenly had significant volume.

Nepra released their financials mid-day on Feb 27th. For the entire next month, 282k shares were traded. In the past two weeks during this 3x rip, 3.6M shares. The company had zero press releases between their Q3 financials press release and preliminary Q4 numbers on April 10th. So why did the volume and price action begin ten days earlier. Feels a little suspicious right?

Let’s see what we can find. I have yet to open these financials, so you’ll be getting my “live” reaction as you read along.

Balance Sheet:

Insert cringe emoji here. At a minimum, you would like to see a current ratio above one where current assets at least offset their current liabilities. Nepra Foods ended Q3 with a ratio of .33. That consisted of just $25k in cash, $527k of accounts receivable, $1.07M worth of inventory and about $100k in other current assets overtop of $5.3M of liability commitments due over the next twelve months.

It didn’t take very long to get to our first red flag. Receivables.

First issue is anticipated credit losses. $108k doesn’t sound like a big figure but it makes up 18% of their total. We are less than two years removed from the company taking $211k in recorded losses ($76k was recovered last year).

Given the details in their aging report, one would assume their credit terms are 60 days, and are not expecting to receive payment for amounts past due.

Then we come upon something that I’ve only seen once in the last six years of performing financial reviews - a company entering into a factoring arrangement for their receivables. Companies enter into these agreements when facing liquidity challenges, and with under $25k in cash on the books and a .33 current ratio that highly qualifies. In a nutshell, Gateway Funding advances cash for their receivables in exchange for interest and fees, but Nepra Foods still maintains the risk if those receivables are not eventually paid. This poses a myriad of problems:

1. It’s expensive. For example lets use a $100k invoice that takes 60 days to receive payment. Gateway would give (lend) Nepra $77,600 (80% of the $100k less the 2.4% fee). When the customer pays in 60 days, they would get the additional $20k less interest and additional fees. The total cost of that borrowing is approximately 3.6% for 60 days, annualized between 21-23%. For customers taking longer than 60 days would get significantly more expensive as the discount fee escalates as well as an additional .04% added per day.

2. They maintain all the credit risk while paying this significant premium. Should the customer default on payments, they still have to pay Gateway back.

3. This effectively inflates that already poor current ratio. That $266k in receivables under “factoring” needs to be shown in current assets even though funds are already received due to IFRS accounting rules. Therefore that .33 ratio is more like .29.

Nepra Foods has just shy of $2.5M worth of debt. It doesn’t sound like a high dollar amount but their note 12 which covers this in their financial statements covers nearly seven pages and ten different debt instruments. Post financials there was additional activity. Most of the outstanding debt is owed to related parties.

(We have reached the stage where I regret starting this review)

$1.14M of debt owned by the COO and CFO was amended post financials to be paid in a lump sum prior to the end of 2027 at 6%.

$669k in a loan owned by the CEO by way of a promissory note was settled post financials on Feb 11th via stock at 10 cents per share. A little more than a month later those shares are worth over $2.5M.

What a mess. Let’s move on.

Cash Flow:

On a more positive note, Nepra is a little better than cash flow neutral YTD generating $57k of operational cash flow, and that compares to burning nearly $1M at this stage last year.

Nepra had zero investing activities so far this fiscal year, but has reduced their net debt by $700k and received $929k via various financing activities, the majority of which through a private placement that took 4 months to close over three tranches at 8.2 cents CAD. Investors in that PP have nearly 4.5x’d their money since.

Their $25k cash on hand is 44% less than what they began the year with ($44,700).

Share Capital:

• As of Dec 31, 113.6M shares outstanding representing 9% dilution YTD but 46% over two years

• 1.4M options outstanding none expiring before 2031. Only the 500k granted this year are ITM at 13 cents

• 22M warrants outstanding, all ITM ranging from $0.10 to $0.17. Post financials 5.2M at ten cents were exercised with 8.5M expiring unexercised. Ouch, those 8.5M warrants could have resulted in $2.25M worth of profit at today’s share price

• Insider ownership is a moving target. Yahoo Finance has it at 43%. It’s likely higher with the CEO Billy Hogan owning 33% after the shares for debt transaction mentioned earlier after financials

• No insider activity on the open market

• Current float at approx 125.5M representing 20% dilution YoY and 61% over two years

Income Statement

Revenue in 2025 has been quite good, coming in just shy of $6M on a YTD basis representing a 50% increase over last year. Margins came in at 31%, a substantial 800 basis points above last years 23%, therefore gross profit dollars more than doubled against 2024 through three quarters.

Total expenses are also down, and significantly by 18% with savings across their two major spending buckets. G&A costs are down 18% with payroll down 19%.

Even with that Wolf Trifecta (double digit revenue, margin improvement and operational leverage achieved) they still lost $353k on the operating income line, and tack on $623k of finance costs (30% higher than LY) on a relatively small amount of debt results in a net income loss of $1.04M, a $300k improvement over 2024.

The third quarter itself had a 54% increase in revenue to $2.23M. Margins were up by 110 basis points to 28.5% and operational spending was 10% less. Nepra delivered $85k in net profit in Q3, but that is mainly due to a $424k gain in change in fair value of their warrants. Without this, they would have had a net loss of $340k compared to $560k last year. Now that the share price has appreciated so much this will turn into a much larger loss for warrants still outstanding.

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Overall:

Using the updated share count, Nepra has an approximate market cap of around $46M. That feels outrageous for a company who has done $8.3M in TTM revenue with negative TTM EBITDA and treading water from an operational cash flow perspective.

That is all before taking into consideration the horrible state of their balance sheet, which to be kind is a mess with serious liquidity issues.

I went through their investor deck, and attached it below for your perusal. WTF kind of pose is the Chairman of the Board doing here? The guy sporting the tee shirt is Co-Founder, former CEO, and now Chief Visionary Officer, CTO and Master Baker.

To be honest all I had to see is this one slide to know I’d never invest in them. Chief Visionary Officer and Master Baker. You might as well just add Douche Canoe to the list of titles.

I’ll also attach a recent brief interview they did with Stock Box Media. They appear to have most of their content around mining shitco’s, which would explain why I’ve never heard of them.

I'll be honest, the P&L really doesn’t look so bad. Revenue growth is quite impressive, and they are doing so with improved margins. The problem is much of the impact in those margins is being eaten up by the way they are handling receivables. If you sell customers something at 31 points of margin, and then enter into a factoring scheme for advancement of those funds which come with a hefty VIG, you erase all and more of that margin improvement.

They also have customer concentration issues - 85% of their Q3 business came from three customers. When we go back to their A/R aging report, there is a strong statistical likelihood that one of their top three customers doesn’t like paying their bills on time - or maybe at all.

The market cap for what they are achieving is just highly overvalued in my opinion. This two week stretch of share price appreciation looks very unusual and I don’t trust it. This stock barely has a mention in social media and bulletin board circles and there were no worthy news items from April 1-10th. That April 10th NR cited preliminary revenue numbers showing a 15% revenue increase YoY. That is typically quite good, but also the worst revenue improvement they achieved in the last seven quarters.

Interestingly enough, the stock is down 20% today since I began this review. IDK but my pump/raise radar is off the charts with this one.

Two stars.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

I needed a hiatus from cannabis stocks over the past few months. I’m not quite back to the abhorrent disdain that I had on the industry as a whole a few years back, but my current sentiment is lukewarm at best.

Selecting HASH as a Wolf Pick will do that to stock picker, as have subsequent positions (since exited) on more encouraging and better performing businesses such as LOVE and ROMJ. Thankfully, and pardon the pun, many of the poorly run businesses in the cannabis space have been weeded out.

Several microcaps in this space have proven to be better operators. While each has their own warts, the previously mentioned Cannara Biotech and Rubicon Organics fall into that category as do others such as Auxly Cannabis. Glow Lifetech has been trying to join that group, although their model is slightly different than the others.

My first and only review of Glow was last June after their first quarter which received a below average two stars. The stock is down 17% since then. A large reason for that sub par review was their float management and share based compensation. Just two days ago I penned an article on the value destruction of Canada’s microcap drone industry. I could have easily written the same article using microcap cannabis stocks as an example.

During the review I noted not only did Glow experience 3x dilution over a five quarter span, but they had 60M ITM warrants expiring over the next nine months. In multiple subsequent conversations on the stock, I stated that five cents was going to be a continual magnet until they expired. I may have also coined the phrase “nickel humper”. You’ll never guess where the price sits today, a day after posting their 2025 annual financial statements.

I have also felt that Glow could be an interesting swing opportunity once the last of those warrants expired, even referring to them in my annual Wolf Pick article in December. I felt that there were at least three potential catalysts to potentially push the stock in a northern direction between late March and late May. First was the expiration of those final 40M or so warrants and then their two sets of financials ending with their Q1 of 2026 sometime next month. Well, two of those potential catalysts are now in the rear view mirror, and the stock is still hanging on to that five cent figure.

Did Q4 disappoint? Let’s find out.

Balance Sheet:

While the figures are small, the overall state of their balance sheet is solid. They have a current ratio of 2.2 that consists of $1.4M in cash, $444k in A/R, $430k worth of inventory and $250k in other short term assets against just $1.2M in liabilities due over the next twelve months with no debt and just $11k in long term liability commitments.

Unfortunately the company does not provide any details surrounding the state of their receivables but the good news is their current cash position covers their one year liabilities.

Cash Flow:

Let’s call Glow operationally cash flow neutral with just $15k worth of cash burn in 2025, quite the improvement over the $1.35M burned in 2024. They also improved throughout the year with positive OCF over their last two quarters totaling $174k after burning nearly $200k in the front half of 2025.

During the year they also received $560k into the treasury from warrants and options, eliminated all of their $326k of debt and made $100k in asset investments.

Overall, they modestly improved their cash position by 6% during the year.

Share Capital:

• 181.3M shares outstanding with 7% dilution during 2025

• 16.3M options, none ITM with 4.5M at today’s price. 5M would have already expired post financials on March 3

• At Dec 31, 49.9M warrants WERE outstanding. As of today, that figure is 9M. 10.9M were exercised post financials with a little over 30M expiring unexercised

• 31% insider ownership with the majority of that owned by their strategic partner, Swiss PharmaCan

• No activity on the open market, and multiple insiders chose to pass on exercising those 5 cent warrants

Income Statement:

Glow hit a milestone in 2025 eclipsing the two million mark in annual revenue finishing with $2.05M, a 146% increase over 2024. A pretty impressive mark considering they were pretty much a pre-revenue company for the front half of 2023.

While margins were strong at 66.3%, it was a 440 basis point decline over the 70.6% they achieved last year. So on 146% more revenue, that delivered 131% more gross profit dollars.

Total operating expenses actually came in lower than 2024 by 1.6% and that may be a bigger highlight than their revenue performance. When non-cash burning expenses are stripped out (amortization, deprecation and SBC), operational costs did rise by 40%. The biggest savings was from a 65% ($300k) reduction in share based compensation. That shouldn’t take away from the excellent operational leverage they did get within G&A (4.6%) and Manufacturing costs (3.3%). Selling and distribution expenses from commissions and advertising did rise significantly (161%) but overall there is reason for encouragement with only 40% more cash based spending on a 146% revenue increase.

Overall, they were able to halve their operational loss from a year ago, $727k vs $1.53M.

Like their cash flow performance, things look much improved in the back half of the year as well, losing $184k in the final six months compared to $559k in the first six with a quarterly best $78k loss in Q4.

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Overall:

As a whole, I think anyone would have to concede that Glow Lifetech had a fairly successful year with many achievements. The revenue jumps out clearly, but they also eliminated what remained of their debt, achieved positive cash flow in both quarters down the stretch, significantly shrunk losses as the year progressed and had a much cleaner outlook on their float as they entered 2026.

But.

One can’t ignore their QoQ performance which was down by over 19% from Q3. Perhaps I have not read everything that the company has put out since their financials were released, but if they addressed this, I’ve missed it. Distributing to retail will undoubtedly create some revenue lumpiness (Q2 was lower than Q1 too) but 19% does feel rather significant. That upcoming Q1 which we expect to see next month that initially looked like a slam dunk - perhaps now not so much.

I still sense that overall Glow is headed in a very good direction however as we could see a similar rebound like earlier in the year. They have over 2000 more distribution points (stores x sku’s) heading into ‘26 than they did in ‘25, increased their presence post financials in two provinces and had their first entry into the Canadian medical channel.

So we have a $9M market cap here trading at a 4.5x annual revenue but not yet there to introduce any profitability metrics. How much are they worth? I’m not sure I have a number in mind, but I’ll end with this. One year ago on April 9th, the stock traded as high as 7 cents, and are currently at 5 If you liked them then, you should like them a lot more today as they are a much better looking company at a 29% discount from a year ago.

I’m upgrading them. I want to give them three stars but holding back. Maybe next month’s Q1 with continued progress. Swing play at the very least seems very much in play.

2.75 stars. Let your Soul Glo.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

I have not reviewed Volatus in almost three years. Since I reviewed one of their competitors (Draganfly) less than two weeks ago, it felt appropriate to take another look at them too. I’ll attach that review below for comparison purposes. I didn’t win many friends with that review and my instinct tells me that will be true here also.

At the end of 2022, I liked Volatus enough to award them with three stars, but changed my tune six months later by downgrading them. That was my last official review of the company. Much has changed since then including the merger with serial underperformer Drone Delivery Canada back in May of 2024. More notably, the sector has been red hot.

Volatus has rewarded shareholders handsomely in the past twelve months with a return of well over 4x, from $0.17 per share to $0.73 today while reaching a high of $0.97 in late July.

The longer term five year chart isn’t so kind however showing a decrease of 50%, although that significantly outperforms the 97% erosion in share price value that Draganfly experienced during the same time span.

Once again, I’ll pose the question - is there anything here other than an exciting theme play? Let’s try to find out.

Balance Sheet:

Volatus has a healthy and liquid looking balance sheet with a current ratio of 3.8 that consists of $41.1M in cash, $3.4M in receivables, $3.3M worth of inventory and $1.8M in prepaids over top of just $13.1M in current liabilities. Their cash position alone is 3x their current one year financial commitments.

The quality of their receivables could look a lot better with more than 45% over 30 days, although there is no indication of what Volatus’ credit terms are.

Volatus has over $19.5M worth of debt, $7.9M of those in convertible debentures with the balance in more traditional debt across seven different loans and notes. Nearly 75% or $8.65M is due in within 2026.

A good portion of this debt are under what I’d refer to as non-friendly rates and the company’s disclosure and details are severely lacking as well, only telling us the following:

• Aircraft loans bear interest at rates ranging between 8.05 to 12% with expiries between July 2027 and Aug 2030.

• Vehicle loans bear interest at rates ranging between 9.3% and 14% with expiries between August 2026 and June 2032

• Promissory notes bear interest at rates ranging between 0% and 15.50% with an expiry in 2026 and 2029 (note 14 provides no further detail)

• Other loans consist of loans maturing within the next 12 months and have an interest rate between 9% and 12%

The $7.9M of debentures have a rate of 12.5% and expire in October of 2029, and convert the principal at $0.202/share

Cash Flow:

Volatus burned $7.5M in operational cash flow during 2025, nearly a $5M improvement over 2024 when they burned $12.4M.

They also spent $1.67M on asset additions, but were much busier in the financing activities, paying down $6.9M of debt, raising $44.8M through several equity raises, received $9.2M from warrants and stock options, and an additional $2.8M from convertible debentures. I sense the next section will be busy as well.

Share Capital:

• 668.2M in what has become an increasingly bloated float with 43% dilution alone in the past year

• 16M options all ITM

• 9.6M RSU’s - 9.95M awarded and 382k forfeited in 2025

• 51.1M warrants - 36.3M ITM with the remainder at $0.76

• Approx 37M in future dilutionary measures attributable to convertible debentures (principal only)

• Fully diluted float including ITM items approx 767M with an implied MC of $560M

• 20% insider ownership, 6% institutional (per SimplyWallSt)

• No insider activity on the open market in the past year

Income Statement:

Volatus achieved $34.2M in revenue in 2025, an increase of 26% over last year. Gross margin suffered on those additional sales with 270 basis points of erosion from 35.2% in 2024 to 32.5% last year. On 26% more revenue, they only delivered 16% of that to the gross profit line.

Total operating expenses grew by 27%. Cash burning expenses (depreciation, amortization and SBC removed) rose by 22%, or $3.4M. This all combined for a worsening of operating losses by 36% or $4M compared to 2024.

Financing costs relating to their debt soared by 77% YoY and after a few other one time items net losses totaled $22M in 2025, $8.7M or 65% worse than losses suffered in 2024.

When solely looking at the quarter alone, it’s worse that the total year in all aspects. Revenue was up by 7% but with gross profit erosion of 500 basis points to 33%, they delivered 7% less in gross profit dollars.

With even greater increases in operational spending and finance costs, losses from operations worsened by 165% and net losses by 107%.

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Overall:

Fundamentally, choosing between the previously reviewed Draganfly and Volatus is akin to choosing between Cinderella’s step sisters - ugly or really ugly. But if I were forced to choose, FLT would come out ahead due to better margins and a slightly better history of spending and cash burn. Unfortunately those variations come at twice the market cap valuation, and Volatus is saddled with debt at higher than market rates.

Volatus has increased in market value to just shy of $500M. You get all that for a company who has $73M in net losses and over $40M in cash burn in the past five years. Additionally, while they grew revenues this year, they could not eclipse the $35M in pre-merger revenue from 2023.

In the company’s annual MD&A, they list fifteen accomplishments during the year. Only one of them relates to a signed contract of $9M ($4.5M guaranteed), while TEN of those accomplishments relate to raising capital or dilutive measures.

Post financials, Volatus up-listed from the Venture to the TSX.

What did Volatus do well in 2025? Raise capital is at the top of the list through five separate financings, and that does not include debt for equity transactions or increases to convertible debentures. That gives them a strong enough balance sheet to withstand 2025 performance levels for at least two years without additional funding.

With all of my negativity here, I’m not blind in terms of the overall bullishness of the sector. This has been apparent for several months with NATO and other countries significantly increasing defence spending budgets, and the use of drone activity in both the Iran and Ukraine conflicts. This sector is huge and is only going to grow exponentially in the next few years.

To be honest, no small cap across North America has great fundamentals, and you can throw in PARRO out of France in that mix too. They all trade at very high P/S multiples while burning large amounts of cash and suffering substantial losses.

I think we need to also discuss management’s credibility. At this time last year, Volatus was touting a $600M sales pipeline. They did so within multiple MD&A’s last year and was included in their investor presentations. It’s notable that this reference is no longer contained within their MD&A and has been reduced by $100M in their latest deck. I’ve ranted plenty on this metric usage in other reviews, but to sum it up, they are virtually meaningless without any corresponding historical metric on how sales pipelines convert to revenue. One $9M contract signed last year supports this.

For reference I have attached the company’s latest investor deck from last month:

Ultimately I think the whole sector is tradable, with most of it being un-investable, especially at these astronomical valuations. The biggest winner in this space almost assuredly will come from being an acquisition target. Whomever guesses correctly on the who and how much may be the ultimate winner.

These two reviews have inspired my next article which will be part of my Scholastic Series. Look for that shortly.

I want to give them 1.5 stars. But I just gave that rating to DPRO and I hate them more. 1.75 it is.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

This will be my first review of this tiny picocap trading at a $9.5M valuation. It’s not the first time I have done any research on them however. They did come up as a suggestion for a 2026 Wolf Pick, but they did not make the cut for reasons I cannot recall.

While the stock is up 30% over the past year it trades very choppy, down nearly 50% from their July highs. If one zooms out, Innovotech is trading at nearly the same valuations they did five years ago.

Innovotech Inc. is an established and scaling life sciences services and technology company specializing in contract research, analytical, and microbial testing within regulated healthcare markets.

The company announced their annual results on Tuesday evening reporting more than double 2024 revenues. The market responded positively on Wednesday sending the stock up 22%, but then were nailed to the cross by 10% on Thursday to end the short week leading into Easter weekend.

It feels like a company who struggled to hit $1M in sales five years ago that just doubled their revenue this year should be in a better share price position, and not down by 50% over the last nine months.

What’s missing? Let’s try to find out.

(Paywall will be removed on Saturday April 11th and be available to all readers)

Balance Sheet:

While the numbers are small, Innovotech has a very liquid and solid looking balance sheet. They sport a current ratio of 6.7 that consists of $1.6M in cash, $700k in receivables, and $500k in other short term assets against only $451k in liabilities due over the next twelve months (deferred removed).

Receivables are solid, as evidenced by their aging (not ageing) report with 89% of money’s owed being current.

Longer term, they have $100k in contingent consideration from last years acquisition and $160k in convertible debentures.

We’re off to a very solid start.

Cash Flow:

Over the past two years, Innovotech has been just on the wrong side of cash flow neutral, experiencing $62k of cash burn in 2025, slightly better than the $82k suffered in 2025.

The company converted $550k worth of long term investments to cash, and purchased $470k worth of assets during the year. They raised nearly $800k to the treasury through options and warrants exercised, raised $200k through convertible debt and paid out $100k of contingent consideration.

Overall, they improved their cash position by over 120% during 2025, which makes the $200k in convertible debentures a curious decision, although it was done at a premium to market at $0.25.

Share Capital:

• 54.4M shares outstanding with 10% dilution occurring during the year, all through warrants (4.3M) and options (370k) exercised

• 1.9M options with 1.4M currently ITM with all of those expiring within one year

• 800k potential dilution from convertible debentures, 25 cents expiring in October of 2030.

• 38% insider ownership (per Yahoo Finance)

• Plenty of insider activity with most on the share acquisition side including several warrant and option exercises above the current share price

Income Statement:

As I mentioned in the opening, Innovotech had a solid year on the top line with $4.53M in revenue, 107% better than their previous year. Margins also improved by 230 basis points to 52.9% which helped drive gross profit dollars 116% higher.

The company falls well short of achieving the elusive Wolf Trifecta however with 118% more in cash burning operating expenses. This significant increase in spending was experienced in all buckets - G&A costs rose by 102%, R&D by 89% and Marketing and business development increased by 5.5x from $66k to $364k.

All of that performance from revenue and margin lines were essentially wasted from an overall profitability perspective. In fact their net income decreased YoY from $214k down to just $88k on the year.

In Q4 alone, revenue was more comparable as their Keystone acquisition occurred in mid Q4 of 2024. Those revenue gains from Q1 - Q3 which surged by numbers between 150% and 270% screeched to a halt with just an 8% gain to close out the year including their organic business down by 6%.

The rest of the Q4 is a bit of a mixed bag. While the total year had a great performance on margin, Q4 was 800 basis points lighter resulting in a 7% erosion of gross profit dollars. Then total expenses were up by 42% on only 8% more revenue and less gross profit. Even with a birdie on grant income, net income was down by 62% in the quarter. On the plus side, it was their most profitable quarter of the year.

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Overall:

That income statement felt like a lot to absorb, particularly for a sub $10M market cap company.

Some companies do a better job than others with transparency in their financial statements and I have to say Innovotech is one of the better ones. They do an excellent job of breaking down their business by segment and geographic region. As you can see, while their organic business suffered in Q4, it was quite strong for the total year, up 59%.

If we look backward to the Keystone acquisition, it was done for a total of $517k ($300k cash + stock) with $300k in potential earn outs based on revenue and positive net income metrics. A portion of those earn outs were paid out in 2025 leading you to believe those goals were met. Considering that overall margins improved during the year and Keystone nearly generated $1.4M during their first year, it appears to be a very solid acquisition. Management is continually looking for other similar opportunities, and once you’ve seen one seemingly successful acquisition it should give you more confidence should they announce another.

Where do they go next is the question, and that’s where additional due diligence begins. For me, let’s just say that didn’t go very well initially. From their investor relations website, I was asked to enter my name and email address in order to download their investor deck (Note to everyone else, don’t do this).

After entering my information, I clicked the link and received this:

Also, if you recall my introduction, I gave a brief overview of what the company actually does. I didn’t write that, instead it was a cut and paste from the latest press release. What you may notice is I had to correct a spelling mistake within it. This is boiler plate stuff folks, so my introduction to how they communicate with investors did not get off to a great start.

Thankfully, Smallcap Discoveries has done a series of interviews with the company dating back at least five years. I’ve attached the most recent for your viewing and researching pleasure.

When you go through Innovotech P&L, it shows great organic and overall revenue growth, margin improvement but no operational leverage to take any of those gross profit gains down to the profitability lines. In fact, profitability became worse year over year. I therefore wanted to see some rationale within the MD&A that would speak to increases in headcount due to the acquisition and an indication that future synergies would ultimately gain some of that operational leverage not seen in 2025.

But I didn’t. Instead I surmised these margins improvements may not be sustainable as it is not a primary focus and expenses were just consistent with growth without any comforting statements that would lead me to believe that they would improve.

I won’t go as far as saying I think Innovotech is overvalued. In fact I’d say they look like a much better company than they did five years ago at the same share price. But there isn’t much within these financials to make me want to become an investor, nor did I feel ultimately inspired by the CEO within the attached interview - Paul Andreola asked him all the right questions to provide that opportunity.

Ultimately, it’s a very uninspiring three stars from me.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

As you might imagine (or not), I receive many requests for reviews and deep dives - so much so that it is virtually impossible to get to them all. I do have a section within the Wolf Den discord that I try to give my two cents for requests that I won’t be able (or don't want) to review.

My initial reaction to this request wasn’t overly energizing or motivating, but when I looked at what they were doing and what the valuation was, I thought it might be worth a look. Investors on the other hand have not felt that way in the past year with the share price losing over 30% in value.

So that’s where we are. I might love it, I might hate it. I really have no idea where this may go, and sometimes these are the most fun.

Balance Sheet:

Big Rock doesn’t have a balance sheet that jumps off the page at you but when you look at the terrible shape it was in just a year ago it does give you an indication that they accomplished some things in 2025.

Their current ratio is just above 1 and consists of just $537k in cash, $4.8M in receivables, $8M worth of inventory and $1.5M in other current assets against $14.4M in liabilities due throughout 2026.

Receivables in terms of aging are ok at best, but not overly concerning.

The company holds $9.5M worth of debt with a little more than half due this year under two separate credit facilities. The majority of the long term debt, nearly $5M isn’t due until 2031.

Post financials the company modified one of their loans including the payment schedule but that announcement was short on details.

Far from a stellar looking balance sheet and not very liquid, but when compared to the .36 current ratio they started 2025 with, it’s certainly much improved which includes reducing their debt by nearly half.

That $9M was not settled via cash flow however. It was settled via a debt for shares transaction, done at $1 share and also with a related entity - VN Capital. Those 9M shares of course now worth 31% less.

Cash Flow:

$4.15M of operational cash burn during 2025, and that is 180% worse than the $1.5M they burned in 2024.

This was heavily influenced by working capital changes due to paying down payables, and investments within inventory. It’s also worth noting that the last three quarters have been operationally cash flow positive. I’ll go as far to suggest that their OCF is better than it looks.

During the year they raised $7.4M (net) of capital through a private placement at $1/share and made $2.5M of asset investments.

Overall their cash position improved by 44% during the year, but once again just sits above the half million dollar mark.

Share Capital:

• 24.5M shares outstanding with extreme 3.5x dilution during 2025 due to the debt settlement and private placement

• 305k options, all well out of the money at $1.57 but not expiring for over four years

• 726k RSU’s with nearly 900k granted in 2025. Granting 900k RSU’s when the share count to begin the year was less than 7M appears excessive.

• Approx 70% of the float is closely held via insiders or related parties - namely VN Capital Fund

• No open market buys, but insiders participated for over $1M in their recent placement (currently down 31%)

Income Statement:

Big Rock achieved $49.1M in revenue during 2025, an impressive 15% improvement YoY. Perhaps more impressively is that they blew gross margins out of the water with a 950 basis point improvement from 25.1% last year to 34.6% this year. That resulted in delivering 59% more dollars to the gross profit line.

Expenses were also controlled very well spending 6% less in G&A costs while selling expenses only rose by 8% which feels like pretty good conversion, particularly when you include the margin impact.

Dare I say it, but those metrics are Wolf Trifecta worthy - Double digit revenues, margin improvement with operational leverage gains.

That just came $179k short of break even at the operating income line, but that compares to an operating loss of $6.1M a year ago.

Below operations, they also saved $1.7M through restructuring their debt so their net loss was reduced by over $12.5M from $13.5M to $939k.

In terms of quarterly revenues, they were $11.1M, up 23% over the prior year with margins of 30.1%, far exceeding the measly 10.5% in the comparable quarter. All of those annual losses however came in Q4, losing $1.06M. Since Q4 is seasonally weaker, revenues were also off to Q3 by 21%.

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Overall:

I feel the company did a lot of things right in 2025 and these financials support that, yet the share price decreased by over 30%. They grew revenue by double digits, significantly improved their margins and did all of that at the same time as obtaining some decent operating leverage.

Does any of that make me want to invest in them? Not at all.

After going through the financials, my next step was to visit their investor relations page online. I’ll include their latest investor deck, but I must warn you, it’s from January of 2025 - fifteen months old.

Unfortunately, once you get into the deck, it appears much older as if it was created by someone who used PowerPoint for the very first time, powered by Windows 95.

The one thing that stood out the most was the slide which included their 2025 forecast which was over $63M in revenues. They fell 22% short of that coming in at $49.1M.

My favourite had to be the Key Leadership slide. Is this what they are supposed to look like while wearing beer goggles? Who thought this was a good idea?

Aside from the fact their investor deck gives me zero inspiration, and that it is fifteen months old makes me wonder if they want retail participation in the first place. It is very heavily insider controlled after all. I don’t like when a balance sheet lacks liquidity and the company chooses a significant amount of RSU or DSU share based compensation plan over option based ones.

The stock itself is very illiquid also, going several days without a single trade with their high volume day in the past year being 39,000 shares. I’ve probably never been less attracted to a set of Wolf Trifecta worthy financials. Perhaps the beer goggles aren’t working yet.

I’m giving them 2.5 stars, but note that it would have been 1 star or less had I reviewed their 2024 financials. The goggles just aren’t strong enough to rate them any higher. Pour me another pint.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

There has been very little to cheer about in the market over the past couple of months, but this 2026 Wolf Pick has been one of the few exceptions. iFabric is up 99% since the pick in mid December and over the past twelve months has gained 141%

That doesn’t mean iFabric has been kind to all investors over the past month. Just last week, a few days after the company provided incredible Q1 guidance, multiple investors (jabroni’s) sent the stock up 27% at the opening bell to $4.50. While that share price did trigger the tenth Wolf Pick since 2023 to at least triple in value (out of 20), it turned out to be a grievous error in judgement fairly obvious to anyone at the time. With yesterday’s close at $2.99, those antsy buyers are down 34% in just 8 days.

Amusingly, in my March WWW article published on March 16th I told readers I was hesitant to call out a buy zone prior to their annual financials, but I felt great about their 2026 comps. Within an hour of hitting send on that article, iFabric dropped news and unexpectantly provided guidance for Q1 - one of the comps I was most excited for.

That guidance called for a potential tripling of revenue at the top end of guidance. In the press release announcing their financials this morning, they increased that guidance - the bottom end of which will at least 3.5x what they achieved in the comparable period.

While I covered my bull case in my 2026 Wolf Pick article, I haven’t performed a full financials review of iFabric since June of 2024. They received 3.25 stars at the time.

Being the eternal skeptic, when they first dropped news about their Q1 of 2026 and not mentioning a word about their Q4 of 2025, it left me wondering if there would be some potential issues. Given my cursory look this morning, that may indeed be the case.

How much should we care given their early 2026 optimistic outlook? Let’s don our best scrubs to dive in and find out.

Balance Sheet:

We are looking at a much different and mixed looking balance sheet than the 4.4 current ratio they ended 2024 with. That ratio is now down to 1.7 and consists of $3.8M in cash, $9.8M of receivables, over $20M worth of inventory and $2.9M in other short term assets against $22M in short term liabilities.

Their A/R aging report is up there with the cleanest I have ever seen with over 97% current.

Inventory values exploded in Q4 to over $20M from $8.5M just last quarter - an expected move to support the new programs for shipment in the following quarter. Their Q1 guidance supports this but this had impacts through the rest of the balance sheet also. Accounts payables increased by $8M and they tapped into their LOC to the tune of $6.66M to support the financing of their inventory wind up.

iFabric has a $3.6M mortgage that does not expire until 2055, but it is showing in current liabilities as the company had failed to meet one of the loan covenants. Normally this would be a yellow flag, but post financials the lender waived this so investors should expect this to return to long term liabilities when the company reports Q1.

Overall the balance sheet is pretty messy, but most of this should look much different in six weeks or so when we see their next set of financials.

Cash Flow:

For similar reasons we have additional messiness within the cash flow statement with the company burning $4.4M in cash in 2025 compared to generating $300k of positive operational cash flow a year ago.

$1.7M of this burn occurred in Q4. Some but not all can be attributed to working capital changes, but a good portion of the rationale was decreased profitability in the full year.

In 2025, iFabric also utilized $2.2M to purchase the remaining 25% of a subsidiary, increased their debt by $9.5M and purchased $340k worth of equipment.

Overall their cash position improved by 84%.

Again, not a great 2025 portion of the financial statements, making their Q1 of 2026 that much more important.

Share Capital:

• 30.3M shares outstanding. identical number from one year ago in a historically well managed float

• 1.9M options outstanding, all but 200k ITM

• Zero warrants with all 2.9M outstanding last year, expiring unexercised.

• 66% insider ownership including 63% from President & CEO Hylton Karon although historically allergic to transactions on the open market

Income Statement:

Total revenues of $32.9M in fiscal 2025 a 20% increase over last year. Margins were atrocious coming in almost 1000 basis points less at 31.9% compared to 41.3% in the year prior and that resulted in bringing 7% less dollars to the gross profit line.

Expenses converted fairly well, growing by 12% on 20% more business but the gross margin is the big story here resulting in a decrease of of nearly $2M or 89% in operating income.

After taxes, iFabric experienced a net loss of $100k after delivering $1.6M in profit in 2024.

While margins also didn’t look great compared to last year after Q3, they took a much stronger turn for the worse in Q4, only coming in at 24.1% compared to over 40%, and to have that kind of margin erosion in your best revenue quarter killed the profitability of the entire fiscal year.

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Overall:

Investors were aware of their margin difficulties for most of the year, mainly driven by the impact of US tariffs. Q4 had additional margin pressures from license exit costs. In their news release this morning, they had this to say:

Significant improvement is certainly what the market needed to hear, but it’s hard to imagine this gets them back into the 2024 range of 40% plus.

While these financials are certainly worse than I would have anticipated, I’m not sure they matter a whole lot. All eyes now move to mid May when the company will release a very important Q1. Let’s first look at their comps which consist of $7.1M in revenue, 38% margin and just better than flat profitability.

After initially issuing guidance of $20-$25M for Q1 just two weeks ago, they upgraded and tightened it to $25-$27M. The low end of that guidance is a 250% revenue increase, and would represent over three quarters of the revenue achieved in all of 2025.

Let’s attempt to make some assumptions on how the rest of the P&L could pan out. They achieved 38% margin a year ago and 32% in all of 2025 with expected improvements in ‘26. Let’s split that difference and use 35% which would deliver $8.75M in gross profit dollars.

Selling costs appear to be the biggest variable expense to revenue and typically are 9-10% of revenue which would put them at $2.5M. G&A expenses are likely where there is the most opportunity for operational leverage and were $1.6-$1.8M per quarter last year. If we assume that tops out at $2M with another $500k in other expenses that would drive $3.75M in net income and about $4.25M of EBITDA for Q1.

Beyond the first quarter is very tough to gauge and there is no doubt results will be lumpy given the nature of the business. The positive news flow kept going in Q1 with a 1000 store expansion of their scrubs program in Walmart, and the introduction of new programs into Costco. Their Intelligent fabrics division also announced new programs into bedding products and a partnership with Roots on a footwear initiative with Costco to generate up to $8M in year one.

All signs point to the medical scrubs market being the main driver of the company’s outlook in the next few years and the opportunity is extremely significant with a North American TAM of $25B expected to grow 6-7% over the next number of years. iFabric is just touching the surface in market share, but given their launches in two of the continent’s biggest retailers, they are poised to get their slice of the pie. Should they obtain an EPA “kill free” designation (99.9% of bacteria), potentially be the first ever granted, would be a big game changer.

There’s a lot to look forward to and further analyze. Had I just had these financials in front of me, it likely would have resulted in a downgrade. But given their outlook, I’ll stick with the 3.25 stars.

Note, the company will be participating in a webinar to address their earnings and future initiatives with Adelaide Capital on April 9th. You can register below.

Registration link: https://us02web.zoom.us/webinar/register/WN_MhizOHDfRvOql-kgIQr6rQ

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

I wouldn’t call it a love-hate relationship with Neupath over the past eighteen months, more of a like-meh one.

I first wrote about them in late 2024 with a decent three star take. I followed that up covering them briefly in my 2025 Wolf Picks as a potential bonus pick, stating that if they did “xy and z” correctly, the stock would be due for a re-rate. Most of that centered around obtaining some operating leverage, which required getting leaner on about a 19-20% margin rate which is not an easy ask.

They in fact achieved at least some of that, and the stock in fact did re-rate, currently up 130% from mid December 2024.

The story would have been that much better had I bought some shares myself at those lows.

Let’s find out where they stand after releasing their 2025 annuals yesterday as the market didn’t appear to be overly impressed with the stock finishing down 2 cents or 4%, dipping by another penny this morning.

(Free release to all subscribers scheduled for Friday Apr 3)

Balance Sheet:

We start with a mediocre but acceptable current ratio just shy of 1.1 consisting of $4.5M in cash, $8.7M in receivables and $750k in other short term assets over top of $12.8M in liabilities due through 2026. While a sub 1.1 ratio isn’t anything to write home about it, it is a significant improvement from where they stood twelve months ago when it was 0.72.

While receivables make up 62% of their current assets, they remain relatively low risk mainly stemming from government agencies.

Neupath has $6.2M of debt with the National Bank of Canada of a total of $13.5M available through a term loan, acquisition line and revolving facility. All amounts outstnading are under the term loan at prime + 1%. This agreement with NBoC was entered into in March to replace existing loans with RBC, and to settle a related party loan and early redemption of debentures.

Cash Flow:

Neupath delivered $4M of operational cash flow in 2025, up 53% from last year. Much of that variance is from working capital changes, particularly growth within their accounts payables. The OCF increase is therefore somewhat of a mirage as the increase YoY is not as good as it looks.

Within the rest of the statement, NPTH invested $863k in investments and intangibles, shuffled around their debt as mentioned in the previous section, taking on a net of $300k more and also repurchased $231k in stock.

Overall, they improved their cash position by 53% during their fiscal 2025.

Share Capital:

• 56.3M shares outstanding, 80k shares less than a year ago

• Repurchased 1.04M shares under their NCIB with 50k additional shares bought back post financials

• 5.1M options - all but 124k are ITM but none of those expire for 2.5+ years

• 769k RSU’s with 435k granted in 2025

• 31% owned between insiders and institutions (per investor deck)

• 300k shares were purchased by insiders in November at around 35 cents

Income Statement:

Revenue in 2025 remained strong in 2025 with $87.2M, a 20% increase over what they achieved in 2024, continuing on their 15% CAGR path.

While the company does not calculate a traditional margin line their COMS (Cost of Medical Services) is comparable enough for analytic purposes. This gross margin improved by 40 basis points to 19.4% YoY.

While occupancy costs decreased as expected (5%), unfortunately their largest controllable expenses (G&A) rose by 26% and at a significantly higher rate than their total revenues.

Operating income (another line not shown on their P&L) did grow by 61% to $2.04M, despite that extra spending.

The refinancing of their debt did reduce their interest costs slightly but “Transactions and other costs” rose by over $600k or 110%. Much of that was in relation to costs of that refinancing and should be viewed as a one time expense although the company does not state how much.

Total net losses were $413k, slightly improving over last years loss of $485k.

If we parse out just the quarter, it’s not quite as good and that perhaps partially explains the markets rather muted reaction yesterday. While revenues continued to be strong at 17.3% above the comparable quarter, net losses increased from $180k to $324k. A big part of this was their G&A costs rose by 31.9% on those 17% additional revenues.

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Overall:

On the surface it appears to be a bit of a mixed bag with revenues performing extremely well, but they did not get much in terms of operational leverage therefore not translating to much improvement on the bottom line.

But did they perform better than it would initially appear?

Neupath had $1.4M in one-time bonuses paid out which were approved in 2023 for retention and performance. With those amounts excluded, their annual G&A costs rose by 9.5% on that 20% revenue increase and that looks like much better operational leverage than the total P&L would indicate.

In the company’s investor webinar yesterday, they stated revenue guidance of between 8-12% for 2026. What is important to note however is that growth is excluding a one time revenue item that occurred in Q2 of 2025. No dollar figure was ever provided for that but based on what the company has said I estimate that as somewhere around $2M.

Given that, let’s assume their 2025 revenue baseline as $85M rather than the $87.2M as reported, and that would put their 2026 revenue guidance between $92-$95M.

Neupath’s current valuation is at a $25M market cap, which drives a .27x P/S (2026) and under 8 EV/EBITDA with decent looking EBITDA to cash flow conversion.

With $1.4M in 2025 bonuses and perhaps as much as $600k in transaction and legal costs added back to normalize their Net Income, that could have driven as much as $1.6M of net income on a normalized basis.

I feel investors are focusing less on that and more on what they may consider to be conservative guidance, although the mid-point would still put them into the double digits in 2026. They are also continually looking at M&A opportunities and the additional flexibility they have with their new banking relationship allows them to do so. I’m also quite impressed with the new incoming CEO who seems really focused on efficiencies and getting more operational leverage out of the business. He was also one of the two insiders buying on the open market in November

To assist in improving your due diligence, I’ve attached the following.

1. Updated Investor Deck

2. Latest interview with Radius Research

3. Transcript of yesterday’s investor update (video not yet available)

March 26 Transcript

In my 2025 Wolf Bonus picks, I said if they can prove they can get to $100M in revenue and $5M in Net Income, they would get a significant re-rate. The $100M revenue is well in sight and could happen in 2026 with slightly overperforming their guidance. That net income figure looks a little further away, but I do like the initiatives they have in place to get them closer.

Upgrading to 3.25 stars. I also opened a starter position.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

I feel like I was almost dared into writing this one. Occasionally I will compose a review solely for the reason that I know it will ruffle a few feathers and piss a few others off. This is of those times.

I’ve been saying this frequently off the top of my reviews of late, but once again it has been sometime since I last did a full review of Draganfly, a dual listed stock on the Nasdaq and the typically more bottom feeding CSE.

When looking at the one year chart, DPRO has had a relatively successful last twelve months, with the stock up 52%, and at one point growing by over 4x. On the flip side, the stock has lost 66% of their value since their 52 week high six months ago, creating lots of investors holding the bag, and perhaps their own.

While I have not performed a full review in two years, I have discussed them in my monthly “What’s Wolf Watching” articles for paid subscribers. I must admit when I do put pen to paper or keystroke to monitor on this company, it often results in some NSFW language. Therefore if you’re a wee squeamish, it might be best to click the back button right now.

In mid October of last year when the stock was trading near recent highs, I put them in the Danger Zone leading into their Q3 earnings.

By the day after reporting earnings a few weeks later, the stock had decreased in value by 45%. Then, just a week and a half ago, I covered them again and finished with this:

Draganfly released their latest earnings after hours on Tuesday, and yesterday the market rewarded them with a 21% decline.

Before we get into the review itself, I think it’s important to zoom out by looking left given a lot has occurred since my last review, including a 25:1 reverse split in September of 2024. While the stock trades at just under $7 (CAD) today, it traded at the equivalent of nearly $330 five years ago. That’s nearly 98% less for you mouth breathers where math may not be your strong suit.

In my December 2022 review I said, “Heck of a lot of news releases, very little meat”.

Has anything changed? Let’s find out.

Balance Sheet:

You won’t hear me criticizing the state of their balance sheet because it has never looked better. I’ll cover the why once we dive into their cash flow statement.

Draganfly sports ridiculous current and quick ratios of over twenty consisting of $90.2M in cash, $1M in A/R, $3.9M worth of inventory and $4.8M in prepaids overtop of only $4.6M in liabilities due through their 2026 fiscal year.

Their credit manager on the other hand may need to resort to some drone surveillance for their customers as nearly half of receivables are over 60 days.

They have no debt and very little long term liabilities.

The lowlight on the balance sheet is their $140M+ accumulated deficit.

Cash Flow:

Here is where the problems begin to surface with $23.9M worth of operational cash burn in 2025 and that figure is more than double the $11.8M burned in 2024. This likely isn’t a surprise to anyone following the company closely as they burned over $90M in the last five years.

Draganfly purchased $920k worth of equipment in 2025, but the biggest news within their cash flow statement is they raising of over $109M in net capital through financing and warrant exercises. That put the company in the position of having their current assets grow by over 11x during 2025.

Share Capital:

• 29.3M shares outstanding. 440% dilution in the past twelve months and a two year dilution rate of nearly 15x.

• Only 24k options outstanding and by the table below it’s safe to say these are well out of the money

  

• When a company runs a ship as poorly as this management team has, it’s no surprise to see them move away from options to a DSU model. 413k DSU’s remain outstanding. 216k vested in 2025 with 451k newly awarded.

• 4.5M warrants outstanding. 3.5M are just out of the money at $7.36 (CAD)

• Approx 17% ownership by private equity and institutions with some of the smallest insider ownership I’ve witnessed.

• The majority of insiders have been flipping their RSU awards on the open market upon being awarded.

• Draganfly maintains a rolling 15% SBC plan.

  

The rolling part is important here. As of their Dec 31 year end, the number of outstanding shares was only 5.4M shares, giving the number of available of 814k less existing options and RSU’s for 595k available. 413k were awarded.

With the current share count of 29.3M and using the same formula, 3.96M RSU’s will be available to award in 2025.

Income Statement:

We’ve reached the part of the review where things begin to go south in a hurry. DPRO’s top line for 2025 came in at $7.7M, and that is an increase of 18% over 2024. Unfortunately, gross margin decreased by over 400 basis points down to 17.1% and that actually resulted in the company taking 5.5% LESS dollars down to the gross profit line on 18% more business.

Total operating expenses soared by 34%, nearly double the rate of their revenue increase to over $23.5M and the vast majority of that was cash burning. That resulted in an operational loss of $22.1M and a net loss of $23M, the latter amount 66% worse than the net loss of $13.9M experienced in 2024.

As for their Q4, it grew over the comparable quarter by 18.5% but was down sequentially by 11.6%, and their quarterly net loss of $9.6M was the worst the company experienced since Q4 of 2022.

A more detailed look highlights only 4.5% of gross margin. Nearly $7.9M of operating expenses, 93% more than last year to generate $86k in gross profit dollars. Their operational cash burn in the quarter was $9.7M. That’s $39M annualized and trending very poorly.

Overall:

If you read this far, and I forgive anyone who bailed at my intro, I was expecting their financials to be bad. Somehow they exceeded those expectations, and not in a good way. I was three quarters of the way through the review before I realized their Q4 was as bad as it was.

Let’s just start with a simple break even analysis. To be kind let’s go with their annual numbers. At 17.1% gross margin, to offset Draganfly’s level of spending would have required just shy of $134.5M in revenue. They achieved $7.7M or 5.7% of the revenue required to offset expenses. To make matters worse, revenues were down QoQ on low single digit margins while their spending in Q4 was double what it was in Q1. For fun their B/E point in Q4 would have been over $209M in revenues, or $836M annualized, more than 100x what they actually achieved.

Does Draganfly have anything going for them? Yes. It goes without saying that they operate in a very hotly themed sector - Drone technology. They were able to parlay that, along with the stupidity of investors to raise over $100M in capital. Amazingly, post financials, they raised capital again, this time for gross proceeds of over $68M through 5M shares and 2.1M prefunded warrants. Effectively the company is now sitting on approximately $150M in cash. That makes their cash runway enormous, even with their Q4 burn rate approaching $10M.

With the vast majority of those prefunded warrants also exercised, that puts their new share count around 36.5M, increasing that level of dilution to about 570% since the start of last year and takes their market cap to around a quarter billion CAD. When I referred to stupid investors - those that participated in that raise just over a month ago are currently down by 28%.

That $250M market cap is only about 1.5x their current cash on hand, but it is also over 32x their 2025 revenues. They are way too unprofitable to talk about P/E or EV/EBITDA ratios but their ROIC is at a staggering -45%, showing how ineffective they have been utilizing capital.

One of the most confusing things to me is their lack of capex spending given the hundreds of millions of dollars raised. Draganfly has not built or acquired a significant owned manufacturing infrastructure. Instead, it relies heavily on contract manufacturing partners. Strategically, this seems problematic and short sighted.

Earlier I shared a quote from an old review citing “A heck of a lot of news releases, very little meat”.

Since their annual filings last year, the company has put out more than fifty news releases. I’ve attached some of the more interesting ones (click the image for the full news release), but I still contend very little meat as no drone quantities or dollar figures are ever disclosed. I’ve also attached Draganfly’s latest investor deck.

The group of people who should be the most bullish are management themselves. With the cash war chest they have on hand, they can continue reaping the rewards shown below including related parties and even family members for a few more years. Let’s also remember none of them have any significant skin in the game with insider ownership at .32% (per multiple sources).

Let’s put a bow on this. Normally, this type of epic bedshitting performance would easy garner a one star review or less. But the $150M or so cash on hand with virtually no liabilities does give them a long window to eventually find themselves. Couple that with a sector that is only going to get hotter with increased defense spending across the globe, and the current Iran and Ukraine conflicts showing just how much of a future drone technology has in surveillance and warfare, and it’s hard to write them off completely.

1.5 stars with a hope and a prayer for the massive amount of bagholders in Draganfly. I gotta say I thought I would have used more foul language. Next time.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

You have to go way back to November of 2022 when Vitalhub became one of the first companies to ever receive a four star review. They traded at around $2.25 per share at that time and I also picked up some shares shortly afterwards. I exited for approximately a 200% gain back in the middle of 2024, only to see the stock to continue on a much higher ascent, peaking at close to $15 at one point last summer.

Fast forward to the spring thaw of 2026 and Vitalhub’s valuation has melted to the tune of 54% in the past eight months, leaving many in this unenviable position:

For a long time, I’ve felt Vitalhub was been trading well ahead of it’s fair valuation. But at some point this downward slide has to start to reverse. Right?

When I first glanced at their final financials of the 2025 fiscal year I thought we could be nearing that time of price recovery. We are now a week later and the stock is down 8%. Has it reached the bottom? Let’s take the first deep dive I’ve performed here in some time.

(The remainder of this article is for paid subscribers. The paywall will be removed March 31)

Balance Sheet:

Vitalhub possesses an elite level looking balance sheet with a current ratio of over 6.6 with deferred revenues removed. They have $57.6M in cash, $61.6M in short term investments, $22.5M in receivables and $3.9M in other short term assets against just $21.9M in liabilities due throughout 2026.

Vitalhub owes $14.6M in deferred taxes, and had $4.65M in consideration contingencies from acquisitions but holds zero debt. The company does have up to $65M in credit available through the Bank of Nova Scotia.

VHI does not provide an A/R aging report for their $22M+ in A/R but they do have a $775k credit loss provision.

Cash Flow:

As is usually the case with Vitalhub, their cash flow statement has plenty of activity.

The company generated $8.3M of operational cash flow in 2025 and that figure is down 45% from 2024 when they generated $15.1M. That continues the downward trend from 2023 when their OCF was $20.5M.

VHI also increased their short term investments by $61.5M, used $14.5M to acquire Induction Healthcare and $35.5 on Novari Health. They also raised capital twice in 2025 for proceeds $103M as well as $2.2M were received on the exercise of options,

In total, they ended the year with over $63M more in cash and investments than they started with.

Share Capital:

• 63.2M shares out with 20% dilutive measures in 2025 and 45% over two years

• 3.2M options outstanding with 345k granted and 827k exercised this year.

• 132k DSU’s

• Approximately $175M remaining under their base shelf prospectus announced in July. Nearly $75M has been raised under the base shelf at $12.70 (ouch)

• 11% insider ownership with 34% institutional.

• More insider selling than buying in the past nine months. Selling interestingly occurred a week after their August raise at $12.75 with the buying occurring in December around $9.

Income Statement:

Vitalhub eclipsed the $100M revenue mark for the first time achieving $109M, a 59% increase over 2024. Gross margins continue to be greater than 80% but they were 50 basis points lower YoY coming in at 80.4%. Gross profit dollars increased by 57.8%.

Cash burning expenses grew at a much higher rate than either revenue or gross profit to the tune of 65%. Their three main expenses buckets are G&A which rose by 45%, Sales and Marketing by 52% and R&D spending soared by over 90%. That by far now is their largest P&L expenditure totaling 26.6% of revenues.

While their net income did more than double to $6.1M, that had more to do with additional tax deferrals. Prior to income taxes, their profitability was virtually flat on 59% more revenues.

That has to feel like a lot of work up top to deliver so little on the bottom.

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Overall:

Even after this greater than 50% drop in share price over the past eight months, the valuations don’t exactly jump off the page as something extremely cheap. A P/E ratio of 70 and 53x cash flow with a more reasonable looking EV/EBITDA number of 14.

On the flip side, they have looked a lot more expensive at times in the past few years at much higher multiples.

Regardless of what you think of their current valuation, they have and continue to be one of the bigger small cap success stories of the past decade going from zero to $100M in revenue since 2015. I’ve been known to say the following when it comes to “roll-ups” or “serial acquirers” - the easy part is buying revenue and the more difficult part is transforming these acquisitions into profitable businesses.

This is what the last decade of M&A activity has looked like for Vitalhub, and they suggest they target companies with 1-2.5x revenue multiples with a 5-7 year cash payback and 60% recurring revenues.

Outside of the recurring revenue, I find little evidence that the company is following their own M&A model, particularly when it comes to their cash payback or adjusted EBITDA margin targets. Their two acquisitions in 2025 were Novari, who were “break even” on the AEBITDA line and Induction who had an AEBITDA loss. The 2024 acquisitions did not list any profitability numbers upon being announced. Given that their last two years of operational cash flow dropped by 44% last year and 26% the year before isn’t helping any of those cash payback numbers. I also don’t like that all of their contingent considerations are solely based on revenue targets.

I’m likely bordering on being overly critical here, but that’s because they just aren’t living up to their own playbook and that slide above has been in their deck for as long as I can remember. One part of keeping management accountable is making sure they live up to what they say, and the metrics suggest they are not. Maybe it is time to update the fucking slide.

Let’s don the more bullish hat now. Outside of this latest quarter, Vitalhub has been doing a pretty good job with organic growth.

While the company does not provide forward looking guidance, analysts are generally expecting organic growth at 10% which puts them near $130M in 2026. This is of course before any additional M&A activity, and if you’re wondering whether they are thinking about making additional “deals” I’ll just leave you with this quote from their conference call.

If you normalize their organic earnings and cash flow, you could add back just the $8.8M from acquisition and restructuring costs to come up with a little more reasonable metrics of a 30 P/E and 26x cash flow. This is of course before additional synergies. Those potential synergies remain significant when you take into consideration recurring revenues of $93.7M which is 86% of total revenues and very high margins of over 80%. Their R&D spending is also impacted from acquisitions. That additional R&D spend this year as a percentage of revenue is equivalent to another $5.5M in potential cost savings. I just wish Vitalhub would provide better guidance around some of their future spending. As usual the analysts on the conference call doled out more verbal fellatio than hard hitting questions.

Vitalhub also has a tremendous looking balance sheet and $120M in near term liquidity to be able to pull off some significant M&A opportunities when they arise. Their current market cap sits at less than 4x cash on hand,

For some further reading, I’ll attach an excellent article published in the middle of last year by Simeon Capital which really dives into the nuts and bolts of what Vitalhub does. Below that is the company’s latest investor deck.

Simeon Capital

Canadian Healthcare SaaS under the Microscope

Initial Comments…

Read more

10 months ago · 52 likes · 10 comments · Simeon Research

In summary, I do like Vitalhub in this area as it is teetering on the 200 weekly moving average. The squeamish investor could place a stop loss somewhere below that line for safety.

I feel an $11 price target by the time we review their 2026 annuals isn’t out of the question and that represents a 55% increase from this potentially lucky $7 price tag.

While these financials are not the clean four stars that I looked at three and a half years ago, they are still worthy of 3.5.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

It’s been a minute since I completed a FINS review of Haivision. Fifteen months in fact when I awarded them an average three star rating for their 2024 annuals. They “limped across the finish line” as I called it in Q4 last year and I also mentioned they didn’t do enough to interest me enough yet to become a shareholder.

Over the next year, that looked reasonably prophetic as the stock decreased by 32% over the next four months and then traded between $4 and $5 for the remainder of 2025.

Things changed dramatically when they released their Q4 and 2025 annuals this time around. The stock ripped by as much as 83% over the next ten weeks leading into these Q1 earnings.

In my Feb WWW earnings preview, I told readers I was fading Haivision citing the difficulties of repeating that Q4 performance, at least to the expectations in the market. We are now a week removed from their recent results and the stock has taken a heavy hit, down over 20%.

Where do we see them going from here? Let’s review.

Balance Sheet:

Haivision’s balance sheet looks quite strong. With deferred revenue removed they possess a current ratio of 2.7 consisting of $17M in cash, $25.8M of receivables, $11.9M worth of inventory and $6.4M in other short term assets against $22.7M in current liabilities.

The trend of two items I mentioned a year ago continue, one positive and one not so much. On the positive side they continue to get more efficient with their levels of inventory. Any time you can have 25% revenue growth while carrying 10% less inventory YoY is impressive.

On the other hand, it appears their credit manager has been asleep at the wheel with only 58% of their A/R containing customers paying their bills on time with 15% of them exceeding 90 days past due.

Haivision has $7.6M worth of debt, the majority of which is listed as current under their line of credit. That $5.5M balance is double the amount drawn from year end. It is a relatively small amount of the total available however as it is a $35M loan facility with an accordion feature of an additional $25M.

Despite the A/R concern there is more good that bad here.

Cash Flow:

Haivision had $150k of operational cash burn (OCF) in the quarter, in large part due to working capital changes, and this is a $500k improvement from where they stood after their first quarter last year.

Trade payables were reduced by over 27% in Q1. When you pay your bills on time but many of your customers don’t it can result in working capital adjustments that negatively impact your OCF, as is the case here.

Prior to working capital adjustments, OCF improved by over $2.5M YoY, so as long as their A/R aging doesn’t get worse, I would expect their Q2 OCF to be much improved.

The company made small asset investments of $200k in the quarter, increased their LOC by $2.8M (curiously), set aside over $1M of withholding tax for RSU issuance and bought back over $500k in shares.

Overall the company’s cash position decreased moderately by 1.2%

Share Capital:

• 27.5M shares outstanding, approx 700k less than one year ago

• 2.6M options outstanding, with over 2.2M ITM

• 1.28M RSU, 260k DSU’s outstanding and 68k cash settled DSU’s awarded in teh quarter

• 104k shares bought back in the quarter. The company renewed their NCIB on Feb 3rd, but hasn’t repurchased any since

• High insider ownership of 32% with 5% held by institutions (per YF) with no relevant insider activity on the open market worth mentioning

Income Statement:

Very solid revenue gains of 25% to $35.2M on the back of a very strong quarter when they were up 33% in Q4. Gross margin remains strong at over 70%, but they were off in Q1 by 150 basis points to last year (72%), and that produced 22% more gross profit dollars.

Overall Haivision generated some decent conversion within their cash burning operating expenses which grew at 11%, about half of the rate of their gross profit dollar increase. Ops and support were flat, Sales and Marketing increased modestly by 3%. R&D spending by 12%, but G&A expenses by 38%. The majority of that additional G&A spend went to five key management personnel

At the bottom, Haivision lost $180k on the net income line, but that did narrow from last year by over 83%.

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Overall:

In a pure YoY comparison, I would have to say that there is more good than bad here. You may be asking why the stock is down by $2 or a little over 20% since these numbers were released then.

I believe the drop is from much higher expectations given what the company achieved in Q4, and these numbers, although improved YoY did not meet that same bar when compared QoQ. As I said off the top, the share price increased 83% off of Q4 earnings and that creates some pretty high expectations that I don’t believe Haivision lived up to here.

The company was up against a pretty big cupcake of a quarter. The $28.2M in revenue last year was the softest revenue quarter since Q4 of 2021. If you like profitable companies, HAI also delivered $3.4M worth of net income last quarter and experienced a small loss in Q1.

Investors also need to make their own determination on how they feel about the additional $1M in compensation to the five key leaders of the company, nearly 70% more YoY. The variance is the difference between a potential $800k gain in net income to the $200k actual loss. Based on their compensation from 2025, they weren’t exactly joining any food bank lines, while investors were mainly in the red for the past four years.

I think you’re getting the gist on my opinion. I’m going to need to see a lot more based on this $230M valuation which is at an EV/EBITDA multiple of 20 and not converting as much of that EBITDA to cash flow with a 25x CF multiple.

If you wish to explore Haivision further I’ve included their most recent investor deck and a recent interview from MS Microcaps hosted by Maj and Nicholas.

Microcap Investing Cliff Notes

Haivision Systems Inc. (TSX:HAI) (OTC:HAIVF) – Starting Five Defense Virtual Conference

Listen now

6 months ago · 2 likes · MS Microcaps LLC

Had I reviewed their Q4 it would have been upgrade worthy. But I didn’t and their Q1 here was just enough to maintain a three star review.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

Of 20 annual Wolf Picks, they become number 12 to AT LEAST double. Is a 60% double rate any good?

IFabric joins (multiples at peak)

Class of 2023:

Happy Belly Food Group 23x

Atlas Engineered Products 2x

KITS Eyecare 8x

Trubar 7x

2024:

Enterprise Group 3x

Kraken Robotics 15x

NTG Clarity 19x

Gatekeeper Systems 7x

2025:

ZoomD Technologies 3x

MTL Cannabis 4x

2026

PUDO Inc. 2x

List doesn’t include mid year pick DBox Tech 6x, nor the other three 2026 picks, just three months old that I still have high hopes for.

Back to regularly scheduled programming. Thanks for allowing the personal horn toot.

Cematrix has been on a one year heater now. If you were paying attention when I wrote my “What’s Wolf Watching” article back in March of last year, I identified a buy zone below to watch for after their previous annual earnings in the 15-17 cent area.

After a couple of brief dips into that buy zone, anyone acting upon that would be up 185% from the top of that buy zone with the stock closing at $0.47 yesterday.

The stock made a strong move leading into their 2025 annual earnings release, then dropped over the next three trading sessions last week, only to rise back up by 12% in yesterday’s action to close a new 52 week high.

Is there any rationale for the yo-yo price action within the financials, or is the stock poised to close that old gap from July of 2024 to fifty cents soon? Can they improve upon the 3.5 star rating from Q3?

Let’s dive in.

Balance Sheet:

Cematrix’s balance sheet just continues to get stronger with each review, improving on the current ratio of 3.8 one quarter ago to over 6.5 currently. That consists of $11.9M in cash, $11.7M of receivables, $1M worth of inventory and $450k in prepaid expenses over top of only $3.8M in current liabilities due across their 2026 fiscal year.

$2.3M of the company’s receivables are within holdbacks, and the aging for the remainder is below.

I certainly have seen cleaner aging statements. The company’s credit terms vary between 30-90 days, and there is no distinction in the above table of what is current and what is overdue. Over 90 days is 19% of trade receivables which is definitely higher than you would want to see it. Cematrix is already planning to book a $239k credit loss compared to $111k a year ago.

It is important to point out that their trade receivables did in fact improve by 28% in the quarter, but their over 90 days have increased by 15%.

This is not the first time I’ve discussed the company’s aging report. Here’s what I said after their Q3:

CEMX does have $1.27M of debt within a equipment finance loan and $945k of that is long term at a current rate of 7.7%. They also have an $8M credit facility available at prime + 1.25%.

Overall, quite a good start to the review despite the minor concern within their receivables that investors should monitor in upcoming financials.

Cash Flow:

Operational cash flow (OCF) achieved in 2025 totaled $3.8M, but that figure is off by over $1M or 22% from last year.

The variance in the YoY cash flows comes back to (you guessed it), receivables.

The good news for investors is their Q4 OCF of nearly $3M made up 77% of their annual totals, and in their earnings release stated most of their working capital issues post financials have been resolved.

Cematrix also utilized $600k in investing activities, mainly in equipment. They also added $165k of net debt, repurchased $419k of stock and incurred $337k of interest costs.

Overall, the company’s cash position improved by 16% during 2025.

Share Capital:

• 149.7M shares outstanding, about 700k less shares from a year ago

• 1.3M shares cancelled through buybacks in 2025. NCIB expires April 16

• 8.2M warrants, all currently out of the money at $0.58

• 5.6M options outstanding, at least 4.65M are ITM but none expire for nearly two years

• 2.9M RSU’s including 1.3M granted and 540k exercised in 2025. 360k additional RSU’s have been awarded post financials.

• Fully diluted float including ITM awards is approximately 158.2M representing about 6% in future dilutionary measures

• Minimal insider ownership of 3.5% with 4.5% owned by institutions

• No insider activity on the open market since June of last year

Income Statement:

Total revenue for the year was $45.1M, and that is up 27.5% from the $35.4M they achieved in 2024. A pretty impressive end to the year after they began the fiscal year with a 21% decrease in their first quarter. Perhaps even more impressive is what they achieved within their gross margins. Those increased by 850 basis points from 26.6% to over 35%. Therefore, on 27.5% more revenue, they generated 68% more gross profit dollars from $9.4M to $15.8M.

Total operating expenses only increased by 12.5% showing excellent operational leverage on all those gross profit dollars. This is a true definition of a Wolf Trifecta showing double digit revenue growth, significant margin improvements and operational leverage.

Income after taxes soared to $4.1M as a result compared to $270k last year for a 15x improvement in profitability.

It’s really difficult to do any better than what Cematrix achieved in 2025.

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Overall:

You have to take your hat off to the management team for a great year and totally deserving of the 185% share price appreciation since they delivered their 2024 results.

So what’s next?

Backlog is a little worse than flat to where they stood a year ago, and unfortunately the company does not provide any forward looking guidance.

Astute investors would have picked up on a couple of items within the MD&A as it relates to their backlog numbers. The first is their contracts in progress is about 10% less than where it stood at this time in 2024. With Q1 being historically the softest quarter for Cematrix and their only poor quarter of 2025, does this suggest a soft upcoming quarter on soft comps? It’s hard to say for sure but what little evidence we have creates that potential.

The other item was the adjustments to their backlog which was a contract adjustment to allow their customer to purchase their own cement. The negative is a reduction in revenues with the positive upside of higher overall margins.

Valuation wise the company sits at a $70M market cap with a 15.8 P/E and an EV/EBITDA of 8.2

It feels like it’s currently pretty close to being priced appropriately given the stagnant backlog, and lack of colour from management on guidance.

Given the company’s excellent balance sheet and cash position which only got better post financials, it will be interesting to watch what the company does which could include renewing their NCIB next month. They always look like a prime acquisition target too.

It feels like a solid hold and worthy of an upgrade to 3.75 stars. I would have given it four had the valuation scream a lot more room or some stronger bullish language within their 2026 outlook.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

It’s always an exciting time when one of my annual Wolf Picks reports earnings.

After selecting them as one of my 2026 picks, the stock gained 50% within 30 days but has since pulled back to a more reasonable 20% return.

Usually I’m expecting great things, but that isn’t the case this time around. This is some of what I had to say last month in my earnings preview What’s Wolf Watching article.

We are now an hour into trading after the company reported earnings after the bell yesterday, and as expected the stock has retreated 6%. Keep reading to find out why I’m on the bid to increase my position, despite a negative surprise.

Balance Sheet:

Progressive Planet has a healthy current ratio of 2.2 consisting of $2.15M in cash, $1.3M in receivables, $2.5M worth of inventory and $300k in prepaids against $2.9M in current liabilities that will be due over the next year.

The company’s aging report looks quite similar as last quarter with 83% listed as current (87%), and $113k allowance for a write off due to customer bankruptcy.

Progressive Planet has $5.6M of debt, the vast majority under a 23 year mortgage with BDC at 5.05% interest. This replaced a BMO revolving demand loan therefore this change offers them more flexibility.

Overall they are slightly less liquid then they stood three months ago, but overall in good shape, with a bonus influx of cash post financials through the receipt of two grants.

Cash Flow:

PLAN has generated $2.12M of operational cash flow, and that is down by about a million and a half from the $3.66M generated at this stage last year. This is quite the trend reversal - as of their Q2 financials, they were ahead of last year’s pace by 49%.

While this may appear to be a yellow flag, this can easily be explained due to timing of grant income this year over last. Without grant income, they are still outperforming last year and we know from their subsequent events, $1.4M were received earlier this month. I expect their Q4 will be much improved.

Big investments this year, nearly $5M in total with the majority of that for automation equipment for legacy businesses and building improvements for their PozGlass pilot plant. $1.07M was offset through grants. They also spent $605k in investments in another public company, adding a few shares within the last quarter it would appear. They have a $162k unrealized gain as of the end of January. PLAN has also reduced their debt by $643k YTD and received an influx of $75k to the treasury via exercised options.

Overall their cash position has depleted by 60% since the beginning of the year.

Share Capital:

• 110.2M shares outstanding. 2.35M less shares than two years ago through share buy backs - all of which occurred in their previous fiscal year with the stock in the ten cent range

• 8.5M options outstanding. All but 600k currently ITM but those are only 1.5 cents out of the money as of this writing. Approx 1.9M ITM options at 27.5 cents are set to expire in June.

• 8.3M warrants expired unexercised last year at 36 cents - none remain outstanding

• 30% insider ownership (per Yahoo Finance)

• Small sale of stock in January by the CEO, but those funds appear to have been utilized to exercise stock options in the same group of filings

Income Statement:

The company achieved $5.8M in revenue in their third quarter, a 22% increase over the prior quarter and their second highest revenue quarter in their history. Part of these gains offset the 9% decline the company had in Q2 due to shutting down three of their four production lines for factory upgrades and the launch of new sku’s. This pushed some sales from late Q2 into Q3 as expected.

Gross margins soared by nearly 600 basis points to 34.2% (28.4% LY), and that helped to drive nearly 47% more gross profit dollars on 22% more business, as more operational efficiencies have taken effect.

It does get a little messy underneath the gross profit line however. Two line items are the cause - one was expected this quarter but the other wasn’t.

The $1.2M write down of their Zeolite Quarry was announced in late December when the company released their Q2. This was the main rationale for putting the company into the Danger Zone category in my latest WWW article.

The $450k in additional advertising spend was a surprise however. That line item alone was the main driver in rising their total operational costs in Q3 by 63%. Obviously that is terrible conversion on 22% more sales and 47% more gross profit dollars.

R&D costs were also up by $300k during the quarter, but this has been the trend all year and related to their PozGlass pilot.

When you get to the net income line it results in a loss of $1.07M vs net income of $114k last year.

On a YTD basis:

• Revenue up 12% to $16.7M

• Gross margin up by 360 basis points to 37.3%

• Gross profit dollars up 24%

• Operational expenses up by 48%. Main drivers are similar line items in the quarter - Selling expenses up 47% and R&D up by 4x to $915k

• Net income up 9% to $1.2M

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Overall:

Slightly disappointing quarter due to the surprise one time slotting costs, which also impacted cash flow in the quarter.

Despite that and the $1.2M non cash write off of the Zeolite quarry, their net income is still up 9% YTD. Remove that asset write down and their profitability would have more than doubled at the three quarter pole of their fiscal year.

The slotting fee, while negatively impacting the quarter, should have long term positive impacts in doubling their sku presence. The estimated $400k fee does sound unusually high, but unfortunately the reality is a $37M market cap company isn’t going to have much leverage going up against someone like Home Depot.

The fact is once you start to normalize some of these figures including ad costs, R&D and one time items, I believe my long term thesis still holds up well. Even with these hiccups the company still put 7% of revenues on the net income line, grew it over last year and are showing solid cash conversion.

PLAN is well underway with their PozGlass pilot plant with all equipment stalled last month with another update expected at the end of this month with some production happening by the end of their fiscal year - April 30th.

You can always refer to my annual Wolf Pick article for additional information on why they made the cut as a 2026 pick.

I am on the bid for more shares this morning and maintaining my 3.5 star rating.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

AirIQ is one that I’ve wanted to get back to for sometime, as I haven’t published a formal review since November of 2024.

In my initial review earlier that year I awarded the company a handsome 3.75 stars. I tried to establish a position that day and the stock ran too quickly and I was left shareless by days end. Two quarters later I downgraded them to three stars, was thankful for not holding a position and the stock decreased by nearly 30% over the next three months.

That downward trend has reversed since their Q1 back in August of last year, going from $0.31 to $0.56 for an 81% gain and touched as high as 66 cents after these recent financials.

In my February earnings preview article last month, I categorized IQ as a Buy Zone with risk. After initially popping 20% from that article, the stock has retreated back to where it was trading then. My biggest question was whether their Q3 results were already somewhat priced in.

With that, let’s get into their Q3. Small numbers for this solid little $16M market cap so it should be a quickie.

Balance Sheet:

With deferred revenues removed from liabilities, IQ sports a solid current ratio of 3.5 that is made up of $1.4M in cash, $464k in A/R $470k in inventory and $125k in prepaids overtop of just $690k in current liabilities.

Not only do they have zero debt, they have zero long term liabilities outside of $35k in deferred revenue.

Super liquid, and cleaner than a spring breeze.

Cash Flow:

Operational cash flow was flat in the quarter, but is up 41% through three quarters to $929k vs $661k with minor movement within working capital changes.

AirIQ has utilized $2.5M via investments year to date including $850k on an acquisition of an unnamed private IOT company. They have also bought back $203k worth of stock YTD.

As a result of the NCIB, acquisition and investments, their cash position has depleted by 55% since the beginning of the year, but considering the continued health of their balance sheet, it appears these activities were excellent usage of capital.

Share Capital:

• 29M shares outstanding, approx 450k less than a year ago

• 2.24 options, all currently ITM. 800k expiring in one year under 19 cents but the rest do not expire for 6.5 years or more

• 611k shares repurchased under their NCIB this year, over 1.1M over the past two

• 41% insider ownership per Yahoo Finance

• Minor insider buying last August

Income Statement:

Revenue improved in the quarter to $1.7M, a 31% increase over last year. Margins slipped by 110 basis points but still an exceptionally healthy 61.4% and that generated 29% more gross profit dollars.

AirIQ also generated additional operational leverage in the quarter with operating expense growth of only 7% on those additional top line wins.

Even after experiencing a $87k bogey in foreign exchange. I pared to a year ago, they were still able to grow their net income by nearly 4x to $103k.

On a YTD basis.

• Top line growth of 10% to $4.66M

• A slight uptick in margins by about 25 basis points to 60.7% generating 11% more gross profit

• 2% increase in operational costs

• Total net income of $255k, 55% more than this stage last year

In total, their YTD performance gives them the Wolf Trifecta

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Great performance and they have all the hallmarks of a very well run organization. Even more encouraging is their recurring revenue growth was 33% in the quarter and that only includes an estimated $75k from their new acquisition.

That acquisition was completed at the end of October and will add $450k in new recurring annual revenue and it comes with 50% EBITDA suggesting they paid as little as 2.6x EBITDA making it look like an absolute steal.

Since 94% of this quarter is made up of recurring revenue, it makes it that much easier to extrapolate these results. If we did so that would get them in the neighbourhood of $6.8M in revenue with $500k in net income.

So with a current $16M market cap, that doesn’t exactly scream cheap year generating a P/E of 32, but their EV/EBITDA and cash flow multiples in the 10 range do look a little more attractive.

If I’m holding 30-40 cent shares I’m probably grinning widely, but given the lack of liquidity there seems to be some risk taking it on near 60. The stock hasn’t traded over 100k shares in a day since last April, and the bid/ask spread can typically be quite large. Therefore if you’re thinking about buying/adding be careful and keep those things in mind.

The company is going to need their M&A pipeline to kick in I believe to take this to another level.

Even with these great results, they are still very small potatoes. But sexy, crispy ones with a lot of flavour.

Giving them their original 3.75 stars back.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

Back to back weekend reviews of stocks that I put into the “Danger Zone” in my Feb WWW article. Yesterday we looked at McCoy Global, today KITS Eyecare.

KITS was in the group of my first year of Wolf Picks in January of 2023 when it traded at $2.58. I completed my exit sometime ago for a 500% gain only to see the stock continue to rise to $22.50 for a near 9x from that pick three years ago.

Even with the recent large pullback from the beginning of the year, the stock is still trading 66% higher over a one year time frame.

I had the following to say few weeks ago when previewing KITS’ earnings:

In the two days of trading since their earnings were released, the stock dropped by 15% and is down 21% from my article.

While I’m out of the company as a shareholder, I’m still an active customer with our household buying 5 pair of eye glasses over the past six months. But the stock has been trading at Tesla like multiples for sometime, and there isn’t the same cult mentality behind KITS. My latest review of KITS received 3.5 stars, but was downgraded earlier in the year from 3.75, mainly due to my perceived inflated valuation.

The stock sold off huge on Thursday and continued that trend on Friday finishing down another 2%. It bounced off $15 support to close at $15.50 and is currently still oversold with the RSI below 29. Does that mean it’s time to re-evaluate KITS and flip the Danger Zone into a Buy Zone?

Balance Sheet:

KITS has maintained a relatively stable current ratio for a couple of years now. They ended 2025 with a current ratio of 1.6 (deferred revenue removed) which consisted of $29.8M in cash, $3.9M of investments, $2.4M of receivables, $23.7M worth of inventory and a million in prepaids over top of $38M in liabilities due within their 2026 fiscal year.

The company continues to manage their inventory very well experiencing a 20% increase in inventory turnover and their A/R is mainly derived from credit cards and supplier rebates.

KITS had a little over $10M of debt, but this was fully extinguished post financials. This leaves them with only $290k within a promissory note.

Cash Flow:

KITS produced $11.5M of operational cash flow in 2025, but that figure is down by 12% from the $13M generated in 2024.

They incurred about $3M in net debt, received $1.8M from the exercise of stock options and made investments of $5M.

Overall, their cash position increased by 51% during the 2025 fiscal year.

Wait a second, let’s rewind the tape for a second.

Didn’t I say in the assets section they had $3.8M of investments? But they utilized $5M of cash in investments earlier in the year.

Let’s start the rewind at the end of Q4 where they had zero investments listed on the balance sheet.

Then in their annual filings, they report Investments under current assets at a value of $3.86M. Within the financing section of the cash flow statement, it states they spent $4.99M on investments. So within the three month period of September 30th to the end of the year, they lost 22.6% or $1.13M on an investment. What did they invest in?

Bitcoin? Are you serious? Let’s move on for now, but I’ll have more to say about this later.

Share Capital:

• 32.2M shares outstanding, 2.2% dilution during the year from RSR’s and options exercised

• 2.07M options outstanding with only 25k currently out of the money

• 1.6M options at $2.61 will expire at the end of September. When exercised, this will dilute the float by approximately 5%

  

• 108k of restricted share rights were awarded during 2025

• Very high insiders, private company and institutional ownership with about 25% held by retail

• Moderate insider buying in the open market in the last six months

Income Statement:

Incredible year on the top line for KITS exceeding $200M for the first time finishing with $202.5M, a 27% increase. After posting $92M in 2022 when they were first selected as an annual Wolf Pick, they have grown by 32%, 32% and now 27% in the past three years.

Gross margin grew by nearly 200 basis points from 33.7% to 35.6% and that helped to generate 34% more gross profit dollars.

Unfortunately, KITS generated near zero operating leverage in 2025 with their cash burning operating expenses rising by the same rate of revenue. Fulfillment costs rose by 20%, G&A by 15% and Marketing by a concerning 38%.

Unfortunately the company had a $4.5M bogey to last year in foreign exchange, suffering a $1.8M loss this year compared to a $2.7M gain a year ago.

After $500k in increased finance costs (more on this later) and $600k in additional income taxes, net income on the year was flat at $3.1M.

That has to feel awfully disappointing on $43M more in revenue and $18.5M more in gross profit dollars.

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Overall:

Let’s start with the positives. Their revenue growth was outstanding yet again and surpassing $200M in annual revenue is a major milestone. To top it off they did it with nearly 200 basis points of additional margin.

The exchange loss this year had a significant impact on profitability, where last year the exchange gain made the company look more profitable than they really were accounting for 86% of their annual net income. If we normalized their net income without forex, it would be $4.9M of profitability vs $431k last year, growing it by over 11x.

Unfortunately, foreign exchange is a fact of life, but I will give the company credit for better improvement than the comparables would appear.

KITS also increased their “Active” customer base by over 16% eclipsing 1M, and have a very high repeat business within their contact lens category.

On the flip side, while the company has been able to obtain some leverage with their G&A and Fulfillment costs, the same can not be said for their marketing spend which rose from 13.6% of revenue in 2024 to 14.9% in 2025 and year over year grew by more than 1000 basis points of their growth in revenue. Much of this contributed to a 12% decline in operating cash flow on the year.

Now let’s get back to this Bitcoin investment, which I was not expecting to find within this review. This is the kind of thing that I would expect from shitco’s trading on the CSE (see LEEF Brands), not one of the best performers on the TSX over the past three years.

We do not know the exact ETF vehicle KITS invested in, but if we look at BTC’s chart we know the company lost 23% of their investment sometime within this highlighted window. BTC ended the year around $87,400 so by that we can assume KITS purchased $5M of this ETF around the time Bitcoin traded around $114k.

BTC currently trades just below $67k meaning the company has lost as much as 41% of their investment as of today - in approximately five months. If that value holds by the end of the month, that would suggest KITS would take another $900k or so hit to their profitability based on this investment alone. That would represent more than half of their profitability from Q1 of 2025.

In my opinion, the optics get even worse, as this item is buried in a very unusual category within the P&L. It certainly gives me the impression that they stated it this way in an attempt to hide it from investors.

In an unusual move, I asked two AI agents their thoughts, and both Grok and ChatGPT gave similar responses. ChatGPT gave the best comprehensive answer in my view so here is what they said based on my query, “Would listing a loss of investments on the income statement within "Finance Costs" seem unusual to you?

Let’s leave it at that for now.

Now let’s review the valuation of $500M CAD. That drives some very expensive looking metrics of 175 P/E, 45 EV/EBITDA and 47x Cash Flow. Investors have been willing to pay this premium for KITS for sometime based on their tremendous growth history.

Personally, I’m willing to pay a metrics premium when I’m confident growth will continue at a solid pace AND I believe the company can improve their profitability margins. Their current EBITDA margin is around 5% and I would want to know how they can grow that into double digits.

If they doubled sales to $400M and delivered 10% EBITDA of $40M, a 12x multiple would put them at a market cap of $480M. They are at $500M already which still suggests to me that they are highly overvalued.

Coming into the review, I would have anticipated that I had valuation concerns. But now I also have management issues with their judgement and I’m not sure that I can trust their transparency. Responsible leaders of half a billion dollar company’s do not risk nearly half of their annual operating cash flow in highly speculative assets such as Bitcoin.

I did not listen to the earnings call but I did download the transcript. There was not one mention of Bitcoin, nor did any of the analysts covering the stock from Desjardins, Beacon Securities, Cannacord, Stifel or Roth Capital even touch on it. But they spent a lot of time asking about AI glasses, which to me feels like a strategic distraction. This is why you read the Wolf.

Three stars. Downgrading one quarter star on the results, and another quarter star for loss of faith in management.

(Written wearing a pair of KITS Adler frames)

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

That sound you heard last night was the weeping from McCoy Global shareholders after the stock dropped by over 18% in yesterday’s trading. The company released their Q4 and annuals for 2025 pre-market. I was among those with teary eyes.

One year ago, after their 2024 annual earnings release, I selected McCoy Global as a mid year Seal of Approval pick at $2.39. Four months later the stock had appreciated by 85%. After yesterday’s ass whooping, those gains had eroded to only up 12%.

In my February WWW earnings preview article, I put MCB in a danger zone, suggesting it would be a bad time to pick up shares prior to their earnings release. While that turned out to be true, I had the reasons all wrong.

Let’s get into the financials. Does the thesis from last year still hold up?

(Note: will be available in full to free subscribers on Thursday March 12th)

Balance Sheet:

While McCoy has an overall solid balance sheet, their near term liquidity could look a lot better. They do sport an excellent current ratio of 3.1 consisting of $3M in cash, $20M in receivables, $43.7M worth of inventory and $1.6M in other short term assets against $22.1M in short term liabilities due within their 2026 fiscal year.

That current ratio is up from 2.6 a year ago but at the same time their liquidity has weakened due to their cash position of just $3M, and their inventory position going from 53% to 64% of current assets.

Their Cash and A/R does offset their one year cash commitments, but the receivables aren’t looking so hot with bills over 121 days approaching 20% (8% last year), and a near doubling of allowances for doubtful accounts.

The company does have a $5M credit facility available to them and if those receivables don’t come in ASAP, they could have to tap into it.

Cash Flow:

Due to significant working capital adjustments, operational cash flow looks like a dog’s breakfast, showing an overall cash burn of $1.7M during 2025 compared to generating $6.5M of positive cash flow a year ago.

This is what happens when you pay your bills on time but your customers don’t return the favour. Couple that with additional investments in inventory and the end result is operational cash burn.

During 2025, the company also invested $6.8M in capex, borrowed but repaid all of their $5.3M debt, repurchased $1.4M worth of stock and paid out over $2.5M worth of dividends.

All of that combines for an 82% reduction in their cash position from the start of the year.

Share Capital:

• McCoy has managed their float extremely well - 26.8M shares outstanding which is less than the number from two years ago with their buybacks more than covering options and RSU’s

• 519k shares repurchased at an avg price of $2.67

• 2M options outstanding, a little more than half ITM but none expiring for three years

• Approx 1M in DSU’s, DPSU’s, RSP’s and PSU’s

• Overall SBC costs in 2025 were $783k, 55% less than 2024, $1.73M

• 30% institutional and 5% insider ownership

• 7 different insiders were buying either in the open market or through their company purchase plan in the last three months. At an average price of about $3.25/share so they are down about 18% since.

  

Income Statement:

Revenue for the year came in 8% higher than 2024 to $83.8M vs $77.5M. Gross margin slipped by over 200 basis points to 33.5% resulting in only 1.6% more gross profit dollars on that growth.

Operating expenses were flat at $17.7M but total expenses grew by 4.2% due to increased finance charges and foreign exchange losses. Thanks to a $400k savings in taxes, they did squeak out 2% growth in net earnings, $9.02M vs $8.87M.

At the top of the review I mentioned the danger zone from my February WWW earnings preview article. In that I mentioned Q4 concerns as they were up against that big record quarter a year ago.

Not only did they offset their revenue from last year with a small 1% increase, but they grew net earnings by 44% and EBITDA by 46%.

While the quarter overall was much more successful than I had anticipated, unfortunately much of that earnings improvements were non cash impacting including a $1.6M reversal within stock based compensation.

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Overall:

If Q4 was better than I anticipated, why did the share price take such a beating yesterday?

Two main reasons as cited within their news release which accompanied their results yesterday. The current conflict in the Middle East and pausing their quarterly dividend.

Personally, the dividend issue is a very minor one for me. As a small cap investor, I’m not seeking companies with 3% dividend yield, at least not for that segment of my portfolio.

The conflict concerns are more troubling for the near term and those will only grow the longer this regional war lingers.

On the positive side, backlog is up from this time last year and their order intake in the quarter was up 42% from last year and their second best in the last two years.

The problem is more than two thirds of that increased backlog stems from the Middle East which likely pushes revenue and cash inflows back during the year. How long is anybody’s guess in these uncertain times and investors do not have much patience for uncertainty.

So back my original question, does the thesis still hold? I think both bulls and bears have a good case to be made.

On the bullish side, the company has great products and their diverse product offerings within the sector give them a competitive advantage. That competitive advantage puts them in a prime position when bidding on new contracts, of which more than 100 could be awarded this year.

However, due to the same ME conflict, even those NEW tenders could be pushed back. But higher sustained oil futures could spur new investment in the sector increasing in other regions creating additional future opportunities.

From a long term TAM and competitive advantage perspective, I think the thesis continues to hold.

Where the thesis starts to come into question for me is the apparent cash mismanagement situation the company is currently in. Firstly, McCoy carries a very high amount of inventory relative to their revenue and that turnover ratio only worsened with inventory values growing at a higher rate than sales. To make matters worse, the company writes off an alarming amount of inventory each year.

But the biggest factor for their decision to halt their dividends is the management (or lack thereof) of their accounts receivables. Almost two thirds of their A/R is over 30 days aged. Getting paid from your customers should be more reliable than an invitation to sit on Trump’s Board of Peace. The Middle East sitch only amplifies the poor cash management of the past.

I added to my position yesterday on the dip. I’m starting to regret that decision. This could get cheaper, even with a current P/E of 8.

A second consecutive downgrade. Three stars.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

This will be my first full coverage of Dirtt Environmental via requests from the Wolf Den discord, but it’s far from the first time I’ve talked about them.

The first was after sitting through their presentation in Las Vegas last spring. It showed some positive guidance and some flashy numbers. Unfortunately I found their presentation lacking something. No meat.

This was my summary of what I had to say in that April conference recap.

Then, in July I previewed their earnings, and had this to say:

The stock tumbled by 27% over the next month after dropping a “Dirtt Snake” on the market.

Over a one year period the stock is essentially flat. Today is a new day however, and time to look at them with a fresh set of eyes.

Naked Eyes if you will.

Let’s see if it’s time for DRT to rise from up the “dirt”

(All figured in USD unless otherwise specified)

Balance Sheet:

A barely satisfactory current ratio of 1.1 that consists of $20.6M in cash and restricted funds ($250k), $22.4M of receivables, $15.8M worth of inventory and $3.7M in other short term assets over top of $56.7M in liabilities due throughout their 2026 fiscal calendar.

No traditional aging report was provided but 89% current, along with very limited anticipated losses look more than acceptable. I’d still like to know how overdue the aged portion is however.

At year end, DRT had $23.2M worth of debt mainly in the form of convertible debentures. All were current as they expired at the end of January and August. Unsurprisingly since the January debentures converted at over 4x the current share price ($4.06), the principal of $12.1M was paid post financials.

That leaves $10.8M expiring at the end of August with a conversion of $3.64 (CAD) per share.

Post financials they received a $5.5M loan (CAD) from the BDC of an allowable $15M.

It’s a lot of bouncing balls after these financials so their Q1 in May it will be important to re-assess where they stand.

Cash Flow:

Let’s be generous and call their 2025 operational cash flow as neutral. The final results show operational burn of $192k for the entire fiscal year. By comparison it’s a very disturbing three year trend of $14.8M in OCF in 2023, achieving less than half of that total in 2024, and then moving to slightly negative this past year.

Not great news when their liquidity looked questionable at year end and they began tapping into their debt facility in February.

Dirtt also spend a net of $3.7M in asset spending during the year, and repurchased $4.4M shares. Overall their total cash position depleted by 30% during 2025.

Share Capital:

• 191.9M shares outstanding, which is 1.7M less shares outstanding than last year but 82% dilution over a two year period

• Purchased 5.8M of shares under their NCIB

• 209k warrants expiring this year that are so far out of the money they aren’t worth discussion

• 8.2M RSU’s, 2.6M PSU’s and 3.5M DSU’s outstanding. 3.5M vested combined in 2025 and 3M additional were granted.

• Ownership breakdown below with under 1/3rd held by retail (per SimplyWallSt)

Income Statement:

Revenue decreased by 3.1% during 2025 to $168.9M, down from $174.3M. That is after a 4.2% drop the previous year from $181.9M. That revenue decline came after an across the board 5% hike on all orders in the final three quarters of the year. The company’s three year revenue history is shown below:

The story isn’t better on the margin line which decreased by over 400 basis points to 32.8%, so on 3.1% less revenue, contributed 13.9% less gross profit dollars. To complete the reverse Wolf Trifecta, operating expenses increased by over $6.5M or 11% more than 2024. $3.8M of those additional expenses to the year prior did come from reorganizational costs. As you can see below, reverse Trifecta’s make for an unhappy Wolf.

All the above contributed to a $29M turnaround to the negative on the net income line, putting them as a similar loss as what they occurred in 2023 on 7.2% less business than they generated two years ago.

To be fair to DRT, tariffs on aluminum have been a significant impact to them. The bad news is there isn’t much light at the end of the tunnel regarding resolution.

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Overall:

So after all of that, the stock is up over 10% since they dropped these financials and are up by 39% since their 52 week low experienced in September.

I’ll be honest, I don’t get it. Part of the reason may be that Q4 trended much better than the rest of the year on the revenue line and they also posted much stronger gross margin.

But those numbers still resulted in a near $11M (CAD) turnaround to the negative on the net income line, losing $5.2M (CAD).

Another reason for investors to be encouraged is their 2026 guidance. The bottom end of that guidance represents a 15% increase over last year. While they give bottom line guidance, I don’t put any stock in AEBITDA numbers. In addition, the last time I heard them give 15% revenue guidance was back in April in Las Vegas, and they delivered -3.1%.

Pipeline? Sure the sales pipeline is up, but that is about as useful as a one legged man in an ass kicking contest. Poor sales people have too much of an easy time manipulating their sales pipeline. I’m not suggesting that is the quality of Dirtt’s sales team, but their two year track record isn’t great and I’ve seen this game before. It looks great in your CRM software though.

The company touts a strong balance sheet. It’s really not. I also highly question management’s decision to buy back as many shares as they did in 2025 given the mediocrity of their cash position. To top it off, they basically replaced shares repurchased with free shares to insiders via their SBC plan. Given their two year performance, that feels undeserving.

You made me promises (promises), promises
Knowing I'd believe
Promises (promises), promises
I knew you'd never keep

Now they’re back with more. I’m passing (again).

2.75 stars.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.

BLM released their first quarter of the new fiscal year on Wednesday evening. Revenues increased by 45%, yet the stock was down by as much as 15% over the next two trading sessions. I had this to say in my monthly WWW earnings preview article almost two weeks ago. (The first paragraph is in reference to their 2025 full year earnings)

The share price is up over the past year by 33% however, but 30% off of their high from last May.

I haven’t fully reviewed BLM since this time last year when they were awarded three out of five stars. Now that the dust has settled, let’s take a look to see if they are worthy of more than just a watchlist candidate.

Balance Sheet:

BluMetric ended Q1 with a current ratio of 1.45. The ratio is acceptable but it does bring their liquidity into question being comprised of just $1.8M in cash, $18.7M worth of receivables, and $13.6M in other short term assets including $600k in “due from related parties”. Those come overtop of $23.4M in short term liability commitments including $15.3M in trade payables.

The company’s accounts receivables account for 55% of their current assets and are are up by 78% or $8.2M in the past three months. Almost all of that increase is related to the A/R on the books from the acquisition of DS consultants completed a few weeks prior to quarter end. The company does not provide an aging report for their receivables, but what we can gleam from the financial notes is to expect credit losses amounting to $2.08M. This also stems from the DS Consultant acquisition, and without additional disclosures it does make me question the quality of these remaining receivables.

BluMetric has no traditional long term debt but does have $6M in contingent considerations relating back to the acquisition, for which $3.16M is current. BLM also has a $4M credit facility available to them and I would not be surprised if they needed to tap into that in the short term.

Cash Flow:

Not a great start to the year with $1.8M of operational cash burn compared to generating $838k of positive cash flow a year ago.

They also spent $10.5M of cash on the DS acquisition which was funded by the $12.5M raise at the same time.

Overall, their cash position depleted by 16% during the quarter.

Share Capital:

• 54.5M shares outstanding, 48% dilution during the past year and 71% over the past five quarters. 16.8M additional shares are directly related to the DS Consultants acquisition

• 950k warrants outstanding. 262k well ITM at 80 cents which expire this June.

• 4.55M options, the vast majority ITM but none expiring for 3.5 years or more

• 10.5% insider ownership (Per SimplyWallSt) with rather significant open market buying activity of late from insiders

• Of the $15M (gross) raised in early December, only $12,484,000 made it’s way into the treasury. A typical 6% in commissions went to the broker along with an equal amount of warrants but somehow $1.26M went to key management for services provided. Ex-fucking-scuseme?

Income Statement:

It’s hard to imagine the year starting off stronger on the revenue line with $20.3M representing a 45% increase over the comparable period. Gross margin continues the terrible trend downwards however, losing over 500 basis points at 27.9% comparted to 33% last year. So on 45% top line growth, that margin erosion shrinks that growth to just 22.5% more gross profit dollars.

BLM only has one major operating expense bucket, lumping all of their opex under SG&A expenses. Those costs rose by 56% in Q1, a significantly higher rate than both their revenue and the 22.5% gross profit dollars realized. That doesn’t even include acquisition costs for the DS Consultants purchase, as those $333k costs are shown below the operating income line.

BluMetric realized $700k in income tax recovery in Q1 which limited their net loss to just $67k vs net income of $378k last year. Losses prior to income taxes compared to last year therefore look considerably worse, a $773k loss compared to a $693k profit.

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Overall:

The revenue performance is quite commendable, achieving by far a record quarter on the top line. Given that their big new acquisition only accounted for approximately $1.5M of that total, perhaps even more so.

But that is BLM’s only redeeming quality in these and their 2025 financials. After margins depleted by 1100 basis points in in 2025, they dropped by over 500 more to start the year in Q1. To top it off operating costs continue to balloon at a greater rate than dollars delivered to the gross profit line.

After four straight profitable quarters from Q4 of 2023 through Q3 of 2024, the company has posted losses in six of the past seven.

Prior to the DS acquisition, the stock traded at $1.35 and carried a market cap of $50.6M. The stock currently trades at $1.22 (down 10%), but due to the dilutionary measures the market cap has grown by 32% to $66.6M. For that you get a company trading at a 66 EV/EBITDA with negative cash flow and ROIC on a TTM basis.

What I said above confirms my biggest worries I referred to in my earnings preview earlier this month. What I wasn’t counting on was insiders pocketing $1.26M of the $15M raised in their recent financing. If you paid a company 6% commissions or $900k, what justification for services rendered for key management could there be? This was not mentioned in the news release when the financing closed. I did not check the prospectus but I think those participating in the raise would have liked to know that fact.

On Friday the company also released their information circular for their upcoming annual shareholder meeting on March 31. Within the items to be voted on is an amendment to their 2026 stock option plan, increasing the amount of options available under the plan.

While I don’t like anything larger than 10% SBC plans, 13.5% is far from the most egregious I’ve seen covering microcaps. But when this is coupled with the $1.26M mentioned earlier, it sends a pretty distinct message to retail shareholders in this writers opinion. Retail does have an advantage of holding over 85% of the shares, but sadly most retail investors in microcaps aren’t smarter than the average zoo chimp, so I fully expect this amendment will pass.

100M in revenue in 2026? Who gives a shit? BLM goes from the watchlist, to the ignore pile. We witnessed what a loss in faith of management in Simply Solventless can do last night. While this may not be in the same category yet, this has too much stank on it.

Downgrade to 2.5 stars.

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Disclaimer:

My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.