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It's interesting to watch the dynamic between the TSXV and the OTC play out. Yesterday, with the TSXV closed, the OTC drifted higher without much selling pressure closing at $2.18 on decent volume (105K sh), which would imply a $2.73 CAD share price. Then The TSXV opens up at $2.46 today and the OTC is smacked down to $2.01 on a measly 9.4K shares LOL. It's pretty clear that the TSXV is setting the price and the OTC is just kept in sync. I remember a similar dynamic playing out on a prev Canadian holiday.
To clarify, the "move" I'm referring to that occurred after the bond deal announcement is the break above the $1.45 resistance that held for about 6 weeks from the beginning of June until the July 14th breakout (bond announcement was 7/12 after the close.) Of course the stock had already bounced a little over 50% off the lows prior to then.
Yea, Mcmeekin essentially told us on 5/26 that Q2 connections wouldn't be much better than Q1. So I think 2000-2400 is probably reasonable to expect in Q2. I do think the Q2 CC will be extremely important though, considering we'll be almost 2/3 thru Q3 when they have the call.
Today's been one of the few days where we've seen any decent increase in volume, so I've been trying to temper my enthusiasm. There's a few things that *could* be contributing, like the Saudi stuff, Utilty partnerships, ESG hype, Alberta/Cali reopenings or even Naz uplisting optimism. But, the timing of this move is not lost on me. It started almost immediately after the announcement re the deal struck with the convert holders. Do we really think that's a coincidence? I guess you could look at it a couple different ways. That bondholders converting to equity is being interpreted as a bullish sign and people are following their lead into the stock, or that the bondholders were the ones supressing the stock in the first place in order to force their little sweetheart deal. You can probably guess my opinion on that.
Coincidence that the stock broke through resistance one trading day after the convertible news? LOL.
Also, something else to consider. If you take the 40M outstanding shares and add in the 6.3M shares just converted x the current OTC share price you get:
46.3 x 1.75 = $81.025M
The threshold for Naz listing is $75M.
Well, they did raise $522K as part of this whole deal. $302K of that was to cover the outstanding interest on the bonds and another $420K to "advance the Company's Alberta-led ESG and oil and gas decarbonization agenda ..." Which seems to be their new "go to" excuse for capital raises. I don't get it, but I never really do with this company. It's always the same story ... lots of capital raises and lots of partnership announcements. Maybe someday it all pays off.
If I'm trying to put the most positive spin possible on this, could it be maybe that they are negotiating a big refinancing of the 2019 debenture with ATB and that this was possibly the first step in cleaning up the B/S in preparation for that?
Here's the short video that went along with that PR if you missed it. Not much added, except we at least now know who the guy in the twitter photo was ...
https://vimeo.com/572607291?utm_source=ActiveCampaign&utm_medium=email&utm_content=mCloud+Partners+with+URBSOFT+to+Bring+AssetCare%E2%84%A2+to+Market+in+Saudi+Arabia&utm_campaign=Press+Release+-+mCloud+Partners+with+URBSOFT+in+Saudi+Arabia
p.s. did you like the opening infomercial for the Saudi airport? I'm guessing that wasn't optional.
yea, that's probably #2 on McMeekin's Greatest Hits list.
Tick, these bonds weren't going to mature till 2024. If you believe McMeekin's projections, then refinancing shouldn't have been a problem, right? Also, what about that ATB credit facility? Remember his comments during the last CC about taking out the debentures and corresponding warrant overhang at a lower rate? Just more hot air from "Mr. 70-72 Million"?
p.s. I think he was actually talking about the 2019 debenture which are about 3x the amount even. I'd post the quote, but the co. never uploaded the transcript for the Q1 call.
It sure sounds good, but so did the announcements of all the other partnerships ...
https://investor.mcloudcorp.com/press-releases/press-releases-details/2021/mCloud-Partners-with-URBSOFT-to-Bring-AssetCare-to-Market-in-Saudi-Arabia/default.aspx
Also, I don't think the timing of this PR in relation to last night's is an accident.
I don't know what to make of this. Lowered the conversion price on $2.3M of the bonds and doled out 6.3M more warrants in total. They even issued warrants on the bonds they lowered the conv price on. Really? Is this McMeekin's way of winning back the good graces of the bond holders after shafting them with the public offering in April at the expense of shareholders.
Also, why the need for the small Private Placement right now? Is it even possible they're out of cash again already? What about the $5M line of credit with ATB?
https://investor.mcloudcorp.com/press-releases/press-releases-details/2021/mCloud-Announces-Proposed-Conversion-of-8-Convertible-Debentures/default.aspx?utm_source=ActiveCampaign&utm_medium=email&utm_content=mCloud+Announces+Proposed+Conversion+of+8++Convertible+Debentures&utm_campaign=Press+Release+-+mCloud+Announces+Proposed+Conversion+of+8++Conv+Deb
Welcome.
I'm not much of a TA but there is def resistance at the C$1.75/$1.40 level. Top of a cup and handle or neckline of an Inverse H&S however you might look at it. Tried to break through on Monday in the OTC but I think that was more a factor of the TSX being closed than anything else.
McMeekin tweets:
Off to a great start in Saudi Arabia . pic.twitter.com/yAayMI3dC8
— Russ H McMeekin (@RussMcMeekin01) June 27, 2021
Major plans for Saudi Arabia .. pic.twitter.com/TbMzKlGTkT
— Russ H McMeekin (@RussMcMeekin01) June 28, 2021
OK, I now see where our view on this differs. Your assumption is that the sensors are hooked to the asset and then the workers could connect to receive the data from the asset. My perspective is that the sensors are actually "wearable" and are connected to the workers themselves.
From the latest PR:
"Prosaris provides impressive detection capabilities in a wearable package, enabling teams to use AssetCare to take direct action on fugitive gas emissions around-the-clock," said Russ McMeekin, mCloud President and CEO.
From McMeekin on the 3/23/21 CC:
Then there is leak detection, our next generation leak detection, working in the Province of
Alberta, which has been very strategic with the end-user customers and the regulators in the province to
focus on wearable devices on mobile workers that will feed our cloud, and use workers and reports in AI
to begin to detect things that are unseen in operations; the fugitive gas, not only at the asset level, but
as you roam facilities you'll be able to find these fugitive gas.
So using your example, if they connected a gas well and added on fugitive gas as an upsell, then is it really a matter of 1 asset vs 2 assets? If the sensors are part of the connected worker solution, then there could be dozens of workers with the sensors. That is where my question stemmed from. If there are a dozen workers with sensors and 1 fugitive gas asset, is that 12 assets or one asset? Is MRR being generated on each connected worker or each asset in that case? I would guess probably based on each connected worker and the number of actual fugitive gas assets is irrelevant. But I could certainly be wrong.
It would be helpful to know how this tech fits into their asset metrics and pricing model. Is ea sensor worn by a field worker counted as a separate asset? What's the MRR on one of these? It's also not clear to me how AssetCare adds value to this sensor technology. If these sensors are worn by the workers on site and can independently detect gas leaks then what is the role of AssetCare in integrating with this tech?
Well, at least in this case, there was actually news of a roll-out with a specific customer named. That's at least something.
I don't really understand this paragraph from today's PR"
"mCloud will partner with Prosaris to support the development of an intrinsically-safe version of their ultrasonic detector in return for time-limited exclusive access to this detector within oil and gas. This partnership complements the recent success Prosaris has had in securing funding and support from Sustainable Development Technology Canada."
How are they already deploying this technology if an "intrisically-safe version" is under development. Does that mean this version is not "intrinsically-safe" or that this is a field test as part of the development process?
Also, what the heck is meant by "time-limited exclusive access?" Who is limiting the time and why does mCloud have the rights to be granting this access?
https://investor.mcloudcorp.com/press-releases/press-releases-details/2021/mCloud-Begins-Field-Deployment-of-AssetCare-Fugitive-Gas-Solution-with-Oil-and-Gas-Operators-in-Alberta/default.aspx
We get a PR when they connect a single office at Raymond James or a Govt building in Arkansas, but no PR on a supposed "very large Connected Worker deal in China". Did this ever go-live? Crickets ...
From the Q3 2020 CC in November:
Russ McMeekin,
"On Connected Worker, you actually raised a really good one there, Kevin, and that is, believe it
or not, in China, we have a lot of connected workers and we have a contractor, a TCV that is pretty large
of a number of connected workers. The rev rec on that one, I’m not totally sure. They’ll need to have their
headsets. They’ll need to be connected. And I think they own a lot of their own headsets.
So there is some possibility there. So that’s what was called Agnity is now Connected Worker.
That’s a key component of that. And kanepi, the workflow capabilities of kanepi is in that contract.
How will the revenue look in Q4 from a rev rec point of view? That is a good question. We’ll see
how it goes live, make sure everything is in place, and then we can recognize revenue on that. Like to call
(phon) very large Connected Worker deal in China ..."
Alberta passed the 70% first dose vaccination threshold yesterday which opens the door for a full reopening 2 weeks following (July 1st).
https://www.alberta.ca/stats/covid-19-alberta-statistics.htm
I agree, but it's really only the 2 founders that are loaded up with shares. What about their collection of a half dozen "Presidents". Stock was trading around a buck and nobody buys a share? I realize they all have risk-free options as part of their compensation pkg, but still seems strange to me that nobody has stepped in at these prices. It's always possible that there are other factors preventing them from buying, both personal and company related. But it sure would be nice to see some insiders show a little conviction re these lofty targets of theirs.
I think this was the clip I was thinking of re McMeekin's insider buying comments from a Sep '19 interview (2:30 mark).
"I love the company obviously and love to own as much as I can so buying some more yep"
He also mentioned a "couple day window", so it's possible the window hasn't opened since the earnings release I guess.
He did go on to buy 25.8K sh in 2020 , but none since 8/18/2020.
Almost 2 full weeks past earnings and no insider purchases since, even at these depressed price levels. Makes little sense to me that insiders wouldn't be buying at these levels if they believed in their own projections.
I've thought previously that perhaps they got in on the convertible offering so they could collect the 8% while waiting for the business to catch up, but I'm pretty sure that would have to be disclosed, correct? Also, the dilution immediately following the convert offering makes it seem more unlikely insiders would have been involved.
I once heard McMeekin say in an interview something to the effect of, 'I'm always looking to buy the stock'. Oh yeah? Stock was just down 80% from the high. Where you at?
It's a good question and something I've wondered myself. The poor connection rate in Q1 was blamed on the Alberta lockdown. So if they were able to focus their resources on commercial building installations in CA and NY, why were they only able to manage 2K connections? Why have they not built a backlog in that segment?
According to McMeekin during the CC, NY connections are still primarily being driven by energy efficiency, while BC is primarily IAQ and CA is split. So this might explain some of the lack of IAQ progress, if most of the Q1 connections were in NY.
With Alberta on schedule to be fully re-opened by the 1st of July (conditions are currently met to start phase 2 on June 10th) and CA on track to be fully open on June 15th, then Q3 is shaping up to be a "no more excuses Qtr".
The company hasn't said they will be "profitable" at 70K assets. They are saying that their operating EBITDA will break even at the point of 70K assets. They've also worded this as covering their "direct expenses". If you check their Investor Presentation (slide 18) they show how they are calculating this break even point. It does not include charges they consider to be non-recurring (or of course non-cash and interest expenses).
p.s. if you look at slide 18, the $5.8M expense must include Salaries/Benefits but for some reason is only labeled "Sales and Marketing".
Cool, hopefully you'll stick around. Always good to get new perspectives from investors.
No, I'm still holding on. There's only 4 or 5 of us that post on the board regularly, so it tends to go quiet for periods and then picks up when there's news to discuss. The nice thing about the board is there's no pumping and cheerleading, which is probably why it's been quiet during this run. That's what the Yahoo Board is for.
From the Edmonton Journal today on Alberta reopening.
https://edmontonjournal.com/opinion/columnists/david-staples-albertans-will-get-their-old-lives-back-from-covid-lockdown-faster-than-anyone-else-in-canada
This part surprised me ...
"His move to reopen Alberta earlier and more boldly than any other Canadian province comes with the risk of another outbreak."
So Alberta is actually ahead of the other provinces re reopening? Is the Canadian Govt still providing subsidies to the affected companies? How are companies up there still getting by? It seems like mCloud should be getting more assistance than they have.
OK, I've been a bit negative of late (for good reason), so I thought I'd try to parse out anything from the call that could possibly be interpreted as good news. Here are a few things that optimistic me came up with:
1. Russ seems to think that the path from 100K and beyond will be easier than the 1st 100K assets as they are able to leverage off the existing customer base.
2. According to Russ, the backlog "continues to grow" in 2021.
3. Russ's answer to the ATB analyst's 2020 debenture question (I think he meant 2019) seemed to imply that the recent credit facility opened with ATB has the ability to expand as their EBITDA grows to the point they could take out the 2019 debenture ($23M) and share overhang at a lower interest rate by the time it matures in 2022 **.
4. There seems to be some progress on the China front. A new shopping mall apparently going live soon and wind turbines about to "really ramp up" in late 2nd Qtr to early 3rd Qtr. Russ added that overall China "coming along much better than I thought"
Anyone else find anything optimistic in the call to add?
** No reaction as of yet to the debenture price. Still trading at a 34% discount to par.
Tick, you may have caught this, but here's the CA utility that was previously unknown.
https://www.bayren.org/business
They haven't proven yet that they can significantly cut that P&C line item. So it's not like they can just choose not to spend there. Even w/o the acquisitions there's still P&C related to the financings and uplisting. Who knows when it goes away.
Check again Prime, Total Rev was DOWN 800K q/q.
Also, any "pull-forward" rev would not show as Rev on the financials, it would be booked under "Deferred Rev". G&A was actually down 580k q/q.
Yes, but it's EBITDA, not EBITDAPC. The banks know the difference.
Stock is actually moving higher.
I sure didn't hear anything that got me excited. Did I miss something? Perhaps this is a "worst is behind us" type reaction?
I guess maybe the China update was a positive. Or maybe McMeekin's response to the analysts debenture question?
Investor Presentation Update.
They added a few new slides to the updated Investor Presentation, including slide 18, which is a breakdown of how the 70K assets get them to positive operating cash flow. You'll notice the catch. They are not including the "Prof and Consulting" expenses in this calculation. And of course, they indicated these expenses will be going UP next Qtr due to the recent financings.
There's always a catch with these guys.
Here's the breakdown of the Q1 Rev by Region (from 10Q)
Canada $ 3,227,098
Asia-Pacific 1,406,769
United States 3,361,179
Europe, Middle East and Africa 83,959
Australia 150,070
China 151,961
So it's about 40% Canada and 40% US. So if they actually have a 20k asset backlog, then I'd assume about 8K in the US**. So if they have the capacity to connect 10k assets a Qtr then why did they only connect 2K of those assets in the US? What are the restrictions still impeding them?
** Given the fact that Canada's assets are more O&G focused with higher per asset revs, the number of backlogged assets in the US should actually be significantly higher than 8k based on a 40% rev share.
It's Groundhog Day.
Everything's going to magically pick up in the 2nd half, just like last year.
Blaming the 2K asset Qtr all on Alberta makes no sense to me. If they have the backlog which will now get them to 80K assets as they now claim, does that mean 90% of the backlog is in Alberta? The analyst asked the right follow-up question regarding that, but McMeekin's response was unclear. I'll need to go back and review his response when the transcript is available. But if NY, CA and TX are all open, then why can't they be focusing the backlog connections there? Unless, of course, there is no backlog there. Worse yet, it doesn't sound like Q2 will be much better than Q1.
Also, that $80M TCV number in the 2nd half is a "target". When's the last time mCloud hit one of those?
The only positive I can find in the release is that Gen & Admin expenses fell from 1.92M to 1.34M q/q. But this is probably just do to the fact they connected so few assets. Prof and Consulting down only $.35M.
... and let's not overlook the Chairman retiring. Who knows what to make of that.
Worse than I thought ...
Only 2027 connected assets in the Qtr. Brutal. Could someone please explain how they connected fewer assets in Q1 than they did in Q2 of last year when EVERYTHING shut down? How is that possible? What is going on? Now the 70K asset target is "late summer" or "early fall"? What the hell happened to mid-year? Russ said in the Q4 call that he didn't think rev would be down from Q4. That was on 3/23 with one week left in the Qtr. Well, it was down alright. The writing was on the wall that it was going to be bad, but I was expecting at least 3.5K assets.
... and this gem "The Company anticipates seeing pandemic restrictions begin to ease in late June." Again, there were 15K people in MSG on Sunday! But somehow restrictions have not begun easing for mCloud.
https://investor.mcloudcorp.com/press-releases/press-releases-details/2021/mCloud-Announces-First-Quarter-2021-Financial-Results/default.aspx
Yea, I think the $14.5M in rev is doable in the first full Qtr after hitting 70K assets, if they can do about $2.5M in Proj Serv a Qtr by then. The bigger question is whether $14.5M will still be the break even number by then. I'm quite skeptical about that second part.