The Good, the Bad, and the Ugly (April 2025)
Welcome to your monthly recap of the Canadian microcap market!
April was one of the most volatile months I can recall since the COVID-19 pandemic. Uncertainty has been a recurring theme since U.S. President Donald Trump took office. The month began with a surprising announcement that the U.S. would impose significant tariffs on most countries worldwide, creating heightened volatility and a sharp market selloff, followed by an almost complete recovery by the end of the month.
Let's look at some of the main company highlights!
The concept is simple for those who recently signed up for this newsletter. I feature the news that caught my attention during the previous month after skimming through all the press releases on the Canadian market. Every press release, every single day!
The Good
The market volatility didn’t deter acquirers from scooping up Canadian microcaps. LifeSpeak (TSX: LSPK) will be privatized by a consortium of investors, including its lender and the management team, for a 64% premium to the last share price. INX Digital (CBOE: INXD) will be acquired by Republic, a strategic investor, for up to US$60 million or a 457% premium to the last closing price. Theratechnologies (TSX: TH) had to disclose that its board of directors is discussing selling the company with two potential suitors. The stock jumped 135% in the two days following the news. Lastly, Banxa Holdings (TSX-V: BNXA) disclosed it had received an unsolicited acquisition proposal at a purchase price of $1.00 to $2.00 per share, compared to a prevailing share price of $0.45. Following two failed attempts to sell the company earlier this year, let’s see if this one is serious!
At a time when the economy seems to be weakening and the threat of tariffs is looming, investors were doubting AdTech company Zoomd Technologies (TSX-V: ZOMD)’s resilience and stickiness with its customers, judging by the 40%+ share price decline from its March peak. The company put some of those concerns to rest with a phenomenal Q1 results pre-release. Revenues are expected to be US$18 million, a 106% increase compared to the prior year. Adjusted EBITDA and net income are also expected to improve by 317% and 800%, respectively. Zoomd’s stock went up as much as 51% the following day.
Cannara Biotech (TSX-V: LOVE), a vertically integrated cannabis licensed producer (LP), published what I thought was one of the best earnings reports this past month. Net revenues for the quarter were up 35% year-over-year to $26.6 million, with an EBITDA margin of 27% and net profit margin of 12%. While the Canadian cannabis industry is still hungover from a massive bubble in 2018, I’m starting to see some LPs separate from the pack. From what I can gather, everybody hates cannabis right now, but such financial performance should become hard to ignore over time.
McCoy Global (TSX: MCB), an equipment provider to the energy industry, announced the successful commercialization of its new smarTR technology with $11 million in contract awards. This new technology has been five years in the making and is expected to fuel the company’s next leg of growth. Additionally, this new technology moves McCoy beyond equipment sales into the software realm, with a component of these contracts being utilization-based SaaS revenues. Shares shot up 40% in the two days following the news.
The Bad
CanadaBis Capital (TSX-V: CANB), which had announced its acquisition by Simply Solventless Concentrates (TSX-V: HASH) in March, decided to terminate the agreement due to a ‘‘Material Adverse Change’’ at Simply Solventless. Meanwhile, Simply Solventless had an issue with its audit and will file its 2024 audited financial statements late. Apparently, the late filing is unrelated to the termination of the acquisition, and Simply Solventless disputes the allegation that there is any ‘‘Material Adverse Change’’. This is a developing story as we don’t know who’s right or wrong yet. I suspect one of these companies will not look good when everything gets sorted out.
Verticalscope Holdings (TSX: FORA), an acquirer and operator of online communities, released an updated 2025 outlook. Due to reduced revenues from video ads and a change in Google’s core algorithm impacting traffic on Verticalscope’s websites, the company expects 2025 adjusted EBITDA to be US$21-24 million. At the midpoint, this is a decline of 24% compared to 2024, while analysts were forecasting EBITDA growth. The stock sank 37% the next day and has not recovered.
This one made me chuckle. Geekco Technologies (TSX-V: GKO) announced preliminary financial results for the fourth quarter and fiscal year 2024. The company anticipates… *drum roll*…no revenue in Q4 and no revenue for the year. I’m unsure why that was worth a pre-release, but thanks for the information!
On March 17, Evome Medical Technologies (TSX-V: EVMT) appointed Michael Dalsin, a large investor, as its chairman to supposedly assess new opportunities in the fertility space. Eleven days later, the company released a statement informing investors that it was in a dire financial situation and needed to solve its cash flow crunch. On April 9, less than a month after his appointment, Dalsin announced his resignation as chairman. He cited massively challenging market conditions and shared his hope that something would be left for shareholders after selling all the assets and retiring the debt. That doesn’t sound very optimistic…
The Ugly
In March, Spectra7 Microsystems (TSX-V: SEV) made my Ugly section after announcing the sale of all its operating assets for expected proceeds to shareholders of 2.8 cents ($0.028) per share, a 53% DISCOUNT to the prevailing share price. About five weeks later, it turned out that employee compensation, maintenance and wind-down costs were higher than expected, leading to a reduced distribution of 1.4 cents ($0.014) per share, another 50% haircut. What a brutal way for Spectra7 to end its public company journey.
Things don’t appear to be going in the right direction at Prime Drink Group (CSE: PRME). In May 2024, the company announced the acquisition of Triani Canada, a company specialized in the production, bottling and sale of alcoholic and non-alcoholic beverages, for $19.5 million in shares and cash. The purchase price was renegotiated to $11.4 million in shares plus warrants when the deal closed in November 2024. Less than six months later, Triani’s creditors filed an application pursuant to Section 243 of the Bankruptcy and Insolvency Act (Canada) to try to recover over $54 million in unpaid debts. I also read in a Montreal newspaper (in French) that Triani had lost its license to produce and sell alcoholic beverages a month ago, without any public disclosure from Prime Drink Group. Apparently, the CEO was not even aware, according to the newspaper article…
Unidoc Health (CSE: UDOC) renewed its investor relations engagement with Rumble Strip Media to provide the company with social media and marketing services. You might think that the cost of the extension, US$500,000 for three months, is egregious, but wait, there’s more! In a second press release a few weeks later, the company had to disclose that it spent $3.84 million (!) with Rumble Strip Media in the last year alone. That is A LOT of promo! Look at the volume and share price spikes throughout last year. However, when the company turns off the tap on marketing, guess what? Surprise, surprise: the share price returns to square one with no trading volume. What a waste.
That's all I have for you this month! I hope you enjoyed it.
If you like the content, please help spread the word by sharing it with like-minded investors.
Did I miss any crucial developments last month? Let me know in the comments which news or earnings reports caught your attention!
Disclaimer
This publication is for informational purposes only. Nothing produced under the Stocks & Stones brand should be construed as investment advice or recommendations. Mathieu Martin, the author, is employed as a Portfolio Manager with Rivemont Investments. This publication only represents Mathieu Martin’s own opinions and not those of Rivemont. Rivemont may own positions and transact on any securities mentioned in this publication at any time without prior notice. At the time of this writing, the Rivemont MicroCap Fund holds shares of Cannara Biotech (TSX-V: LOVE) and CanadaBis Capital (TSX-V: CANB). Always do your own research and consult a professional before making investment decisions.
If you’d like to invest in small public companies, check out this post.