Just in time for the holidays, the latest issue of the CSE Quarterly is now available.
This year has been another record-breaking one at the Canadian Securities Exchange. Thanks to growing interest from investors who are paying more attention to the innovative companies choosing to list on the CSE, trading volume and value have eclipsed last year’s numbers.
Whether it’s the disruption of delivery logistics with drones or redrawing the map on payment processing, the diversity of innovative stories contained in this issue of the CSE Quarterly highlight the fact that innovation is alive and thriving at the CSE.
Many people know the Canadian Securities Exchange as the Exchange for Entrepreneurs, but did you know that the people behind the CSE are a very colourful bunch?
From motorcycle instructors to master chefs, gospel stars to goal scorers, there are some talented individuals working to make the CSE not only Canada’s most innovative exchange, but also Canada’s most interesting one.
So, in keeping with the holiday spirit, staff at the CSE have put together an Advent Adventure that features a daily fun fact about a special skill, talent or quirky story of someone at the CSE.
Every day in December up to Christmas Day, one of these individuals will be revealed. Follow the clues on Twitter or Facebook.
Think you can guess who it is? Scroll down below for the clue and the link to an answer.
Not only did this CSE foodie flex his brunch building prowess in a televised competition, but he proved his icebreaking skills are unrivaled. Find out who smashed his way into our hearts here.
Not only did this CSE team member break hockey sticks, but he also broke records as the youngest assistant coach of Stanford University’s hockey team in school history. He may also be the best dressed house league coach ever, although that’s yet to be confirmed. Find out who this acclaimed style savvy advent adventurer is here.
Even though this CSE team member has not been a wedding singer but that hasn’t stopped him from appearing in a televised wedding. Find out who today’s clue refers to here.
As the lead instructor at one of Canada’s most recognized riding schools, this CSE team member teaches motorcycle riders how to (safely) live at full throttle. Find out who today’s advent adventure clue is about here.
Tony Stark might take a cue or two from this CSE iron man who’s ran, biked and swam his way to 10 half-ironman races across North America and the Caribbean. Think you can catch today’s advent adventurer? Find out here.
With a passion for music, a pair of gospel albums and a new single in the works for 2017, this CSE team member is one half of the real life sister act HerCastleGirls. Find out which CSE staff member is bringing together fashion, music and business here.
This CSE staff member has been walking the walk, literally every year, in support of a great cause since 2002. The annual Walk So Kids Can Talk celebrated their 15th anniversary this year and has raised money and awareness for child and youth emotional health and well-being and directly supports Kids Help Phone. Think you can guess which CSE team member has been there every step of the way? Find out here.
In 2015, an avid fan of Murdoch Mysteries and William Shatner found himself to be the catalyst in bringing one to the other in the infamous episode entitled Marked Twain. Here’s the backstory behind the episode and the tweet that proves it. Curious which CSE team member it is? Find out here.
For many entrepreneurs, the decision to go public is a significant milestone. Getting to that point, however, requires sound preparation and the right partners around the table.
Fortunately for those seeking to go public in Canada, there is now more choice, innovation and value than there has ever been in the past.
To help entrepreneurs navigate the journey to going public, the Canadian Securities Exchange organized their first ever Go Public Boot Camp. This event, co-sponsored by McMillan LLP, brought interested entrepreneurs together with a great team of thought leaders from across the capital markets landscape who offered their perspectives on important components of the public listing process.
Included in the list of presenters were:
James Black – VP Listings Development, CSE
James Munro – Partner at McMillan LLP
Quinn Martin – Audit Principal at Davidson & Company LLP
Simon Thomas – VP at Computershare Canada
Mark Faulkner – VP Listings and Regulation, CSE
Justin Meiklem – VP of Sales and Marketing at Stockhouse
Bryan Henry – Senior Investment Advisor, PI Financial
Brayden Sutton – President Sutton Ventures
Collectively, these presenters covered topics relevant to the process of taking a company public. Subjects discussed included how to properly prepare financial statements for a public listing, the importance of working with right brokers, what it takes to successfully structure a capital raise and much more.
Alongside the presenters and panelists were members of the CSE team including Mark Faulkner, Vice President Listings and Regulation, who provided an in-depth look at the requirements and better practices for successfully listing on the CSE.
Unlike a fitness boot camp, where the goal is to run around, attendees of the Go Public Boot Camp were glued to their seats. The thoughtful speakers in combination with the Q&A session definitely resonated with the audience, who were keenly interested in hearing about the shifting landscape of capital markets and how to overcome hurdles to raising capital in Canada.
All entrepreneurs know that learning ‘on the job’ comes with the territory. For attendees of the CSE Go Public Boot Camp, in addition to learning what it takes to go public, the more valuable lesson learned was how to prepare to do so well. That is a distinction that can save time, money and ultimately bring entrepreneurs one step closer to reaching that significant milestone.
It all started with a lighthearted debate between husband and wife that ended in a draw, both sides claiming their friends would agree that they were right. “Of course they would,” each thought, recognizing friends could hardly be relied upon to render an impartial judgement. But from this stalemate emerged an idea: in our increasingly digital age, wouldn’t it be something if there were a virtual space to go where groups of people could provide a ruling?
The next step was to figure out how to apply this inspiration to the business world. Blair Naughty, the husband side of that fortuitous quarrel, took the idea to friend and seasoned technology entrepreneur Bill McGraw, whose advice was to run with the concept but focus it on a particular set of consumers prone to taking sides.
Long story short, the two now run FanDom Sports Media Corp. (CSE:FDM), Naughty as CEO and McGraw as president.
FanDom’s business revolves around an app and supporting network that aims to function as the global center for sports chat. “You won’t come to FanDom to find out the score,” explains McGraw. “You’ll come to FanDom to find out what people are saying about the score.”
The FanDom concept goes well beyond conventional comment streams, its basic framework designed to supply the one element all high-traffic mobile apps need – a compulsion loop. In layman’s terms, the compulsion loop is the particular thing about an app that keeps people coming back. It’s what prevents you from putting down the game you are playing, even though you know that there are more productive things you could be doing with your time.
Compulsion loops are pretty complex things, based on a deep understanding of the sociology of your core user base. For FanDom, the compulsion loop is an environment in which users essentially become players who compete in multiple ways to determine a result important to them as sports fans.
FanDom users will vote on arguments, taking one side or the other and betting on the outcome with virtual currency. But don’t mistake this for a gambling app, because that’s definitely not what it is.
All FanDom users will initially receive virtual currency to use for betting on debates. The more you contribute to discussions and the better you are at choosing winners, the more currency you will stockpile and the higher your standing will be on the platform.
There are many personality profiles to whom this could appeal, but imagine the sports enthusiast who thinks he knows just as much, if not more, about his favorite teams as the pundits…or even the coaches. On FanDom, you’ll not only get to offer your opinion in the comment streams but also wager on and influence the outcomes of debates on a variety of topics. Think you’re right? Prove it.
“Our initial challenge will be to ensure we have enough content,” says McGraw. “If I vote on eight or nine topics during my morning commute and then look again at lunchtime, there had better be some different opinions in there, because if it is the same ones I’ll conclude that this isn’t much fun.”
Getting off to a strong start will surely be important, and while the app itself is only just heading into beta phase, the game plan for quickly establishing a committed user base is ready to go.
Part of the plan is to dovetail the initial app launch with primetime on the sports calendar.
“Football is starting soon, as well as hockey and then basketball, and of course we have the Major League Baseball playoffs,” explains McGraw. “We have a pre-launch plan that will integrate with events at some major universities. We’d look to do a regional launch in Southern California, then move to the top 15 to 20 population centers in the United States. From there it should begin to generate its own momentum.”
Once critical mass is reached, McGraw says that FanDom has multiple monetization levers it can pull, some conventional, such as online advertising, and others reflecting the unique dynamics of the FanDom app. Examples in the latter category could include sponsorships when FanDom builds discussions around a major sports figure who participates actively on the platform.
Merchandising is another opportunity. “With some things you end up making more money by tying what goes on in the app to what is going on offline,” says McGraw. “I have been doing this for many years and can tell you that there is no magic bullet. You just have to go back in day after day and look for a new place to generate traffic and monetize. You have to let the content people do what they do, and another side of the team has to become the monetization engine.”
Scores of apps are put on the Apple and Android stores every day, but a miniscule percentage have the quality of team behind them that FanDom enjoys. McGraw has stickhandled the launches of over 30 games and mobile apps. Other team members bring decades of game development, online marketing, athlete management and branding experience. The athletes McGraw says the company is lining up participation agreements with are almost all household names. The potential for creating buzz is enormous.
The trick will be to take that buzz and shape it in such a way as to leverage it optimally for FanDom, its users, as well as its athlete participants and their sponsors, a process that will require observation plus more than a little trial and error. “My experience tells me that whatever we end up building, the consumer will use it in different ways than we anticipate. Or the areas we did not think would be that popular will be, or vice versa. Having the team in place that we do gives us the best cut at it to begin with and then we can iterate on that as we go.”
An important aspect of the platform McGraw is confident predicting the course of, however, is that FanDom automatically roots out users who behave inappropriately, which will be welcome news to anyone who has noticed that sports comment streams often devolve into personal bicker-fests. “We will have some moderation of comments, but the testing we have done shows that the whole point of coming to FanDom is to vote ideas up or down,” says McGraw. “Selfish, misogynistic or threatening comments simply fall down the stream and get no attention, because there is no reason to vote on them.”
That will be significant because part of the plan calls for extending beyond the mobile screens of individual users to the televisions in venues where broadcasts are viewed by the public. Think fans at a bar in Boston debating with their counterparts in Los Angeles ahead of a big game between teams from the two cities.
On a bus, on a train, in the airport lounge or sitting at home with your pals, FanDom aims to give everyday people a chance to be part of the action. Perhaps not to the point of donning a uniform and stepping on the field, but to have a voice in an arena with rules, time limits and participants of varying skill is in some ways like an actual game. Real sports fans care passionately about their teams. McGraw is betting that many of them will care enough to carry that passion into FanDom.
CSE is proud to present its most recent quarterly update video and press release below highlighting the record third quarter of the year at the Canadian Securities Exchange:
Multiple Industry Sectors Push CSE Trading Volume, Financings to New Records in Third Quarter of 2016
CSE Posts Record Activity in Q3 of 2016
The Canadian Securities Exchange (CSE) today released performance metrics for the third quarter of 2016 highlighting continued strong growth, particularly in trading volume and capital raised by CSE listed companies. Both measures rose to the highest levels ever recorded by the exchange.
Trading volume in CSE listed securities climbed 138% compared to the third quarter of 2015 to 1.27 billion shares;
Companies listed on the CSE conducted 85 financings for gross proceeds totaling $109 million, an increase of 222% over the same period a year earlier;
The CSE finished the July-September quarter with 315 listed securities, 13 more than at September-end 2015;
Trading on the CSE platform in securities listed on other exchanges totaled 811 million shares, higher year on year by 59%.
Metrics for January through September also set records, with the 3.27 billion shares traded in CSE listed securities outpacing the total for all of 2015 (2.48 billion shares). CSE listed companies raised $226 million in the first nine months of the year, compared to $195 million in full-year 2015.
Trading volume continues to gain momentum in the fourth quarter, with a record 99,704,073 shares trading in CSE listed securities on October 6. Over the past 30 days the CSE has set new records for both daily trading volume and number of trades on seven occasions.
Several CSE issuers ranked among the most actively traded public companies in all of Canada during the quarter as investor interest increased across most industry sectors, and particularly for life sciences companies. The CSE also welcomed one of the few Initial Public Offerings completed in Canada this year when Glance Technologies Inc. (GET) made its trading debut on September 7.
The CSE team remained hard at work connecting with entrepreneurs, hosting events in Vancouver, Calgary, Montreal and Toronto during the quarter, as well as presenting and exhibiting at the first ever Mines and Money conference held in North America. Senior exchange staff also travelled to China and Mongolia to continue outreach efforts in growing overseas markets.
The exchange is pleased to report that it will soon implement a new trading system technology featuring execution services for all equities listed in Canada. Related to this, a commitment to heightening the visibility of companies listed on the CSE through continued investor events and publications (including the CSE Quarterly magazine), plus support for market-making and other activities, will assist with further advances in volume and liquidity.
“The CSE is firing on all cylinders, with an improved capital markets backdrop helping our issuers to meet, and in some cases exceed, their financing targets,”
said Richard Carleton, CSE Chief Executive Officer.
“Having added several talented executives to our team, the CSE is positioned even more strongly to facilitate access to growth capital for entrepreneurs at the lowest possible cost, while providing liquid and accessible trading services for investors anywhere in the world.”
“I want it and I want it now.” So the pundits say is the mindset of millennials, a generation that has grown up amid instant access to information and unprecedented awareness of other peoples’ lifestyles. Businesses, for their part, have long been this way, as some processes simply cannot move forward without the availability of certain items or documents.
Vancouver-based ParcelPal Technology Inc. (CSE:PKG) is counting on these dynamics, looking to provide on-demand (within 1 hour) and same-day delivery in local markets that beats the likes of Canada Post, FedEx and local carriers hands down. The prize is a portion of what the company claims is a market in which billions of dollars are spent each year getting items from one location to another.
The ParcelPal platform is a user-friendly marriage of software and logistics. When a customer wants something delivered they enter the details via computer or mobile device and a courier registered with ParcelPal is alerted to the request. Much like the famed Uber system for local transportation, couriers are rated by customers, and the higher your rank the more likely you are to receive the initial alert.
ParcelPal has aimed its sights on the B2B and B2C markets to begin, focusing on both e-commerce websites and storefronts. “Currently, the delivery process is full of paperwork, phone calls and waybills,” says Jason Moreau, ParcelPal’s Chief Executive Officer. “It is ripe for automation, and by utilizing smartphone and GPS technology we have been able to automate the courier request and engineer a standard of delivery I think people will be very impressed with. Our software is scalable and we can launch in new cities quite quickly.”
Once a courier accepts a delivery request, wheels are set in motion both literally and figuratively. The courier travels immediately to the pickup point and takes possession of the package. As the courier makes his way to the destination, GPS technology is used to monitor progress. No more sitting at home all afternoon waiting for something to arrive – the customers on each end of the transaction can see precisely what is happening so they can make any related decisions accordingly.
The cost is reasonable, at $3.99 within a 4km radius for same-day delivery and $6.99 within that same radius for 1-hour service. Charges on top of the base rate are added for deliveries of more than 4km or for packages weighing more than 25kg.
Of the fee, 80% goes to the courier and 20% to ParcelPal. ParcelPal has also implemented an insurance program whereby customers can select to insure their items for up to $1,000. The company gets 100% of the insurance revenue.
Vice President of Operations Kelly Abbott explains that ParcelPal currently has some 1,600 couriers registered to deliver its packages, each of whom has undergone a screening process and training session to ensure they represent the company professionally.
“Potential couriers come in and meet us and we do a background check and an in-depth training session,” says Abbott. “We have them do a single delivery, then we show them how the application works and how to handle various delivery scenarios. Delivery standards are our main concern, so if anything goes wrong, such as if a courier is on time for pickup but takes forever to drop the parcel off, his rating will turn negative and he will automatically be removed from the system.”
Also reflecting the Uber model, couriers have the opportunity to rate customers. In this way, automation introduces efficiency but accountability is maintained through detailed monitoring of operations and real-time rating of the system’s various human components.
In the first quarter of this year, ParcelPal conducted a six-week beta launch during which it delivered over 200 packages in Vancouver and the surrounding area, its couriers traveling over 5,000km in total. The launch went “very well” according to Moreau.
In the near term, the team is continuing with its soft launch in Vancouver, slowly building the local user base and working out any kinks in the system before heading nationwide, likely in the first half of 2017. “We are receiving inquiries from Toronto and Calgary saying ‘when are you going to be here,’ but we have to make sure it is perfect first,” says Moreau. “Right now Canada is pretty much a land-grab, as anyone with a similar model is focusing on big hubs in the United States.”
Moreau says that one of the verticals envisioned is integration of the ParcelPal platform with online e-commerce websites. “What that means is a company selling shoes, or virtually any product, in a given city can integrate with ParcelPal and during the online check-out process ask how the buyer wants their goods delivered. Do you want it on-demand, same-day, or do you want it through a traditional courier that might take days? ParcelPal would handle the same day and on-demand scenarios.”
Moreau and Abbott realize that ParcelPal will have to cement its reputation before big retailers agree to feature it as a delivery option on their websites. But for smaller retailers for whom such a service could be an immediate boon to business, the API (coder lingo for the ParcelPal computer program a retailer would hook up to its system) and Shopify plug-in are available for download.
Lest anyone conclude that ParcelPal can establish itself as a household name overnight, Moreau is quick to point to the growth curve experienced by Postmates, a local delivery service based in San Francisco that was established in 2011. “It took them about five months to do their first 1,000 deliveries,” explains Moreau. A graph distributed by Postmates founder Bastian Lehmann showed it taking 116 weeks to reach 500,000 deliveries, but then only another 20 weeks to reach 1 million.
All things considered, ParcelPal seems off to a good start, with business in the first half of 2016 having moved forward according to schedule. The company recently ran an online advertising campaign which further convinced management that demand for speedy delivery is out there waiting to be met, particularly among consumers.
“We did an online ad campaign as an experiment of sorts, comparing business shipping versus consumer,” explains Abbott. “We got a little traction on the business side, but on the consumer side we got over 8,500 visits over the course of a month. It was basically an ad asking if the viewer was interested in having food, shoes or clothing delivered right to them.”
Consumer scenarios are limited in number only by one’s imagination, but a busy person needing a particular article of clothing for a function or a group wanting to order food from a restaurant are ones to which ParcelPal is perfectly suited. ParcelPal is planning to launch its consumer app early in the fall.
“Consumers will have the ability to order whatever they wish,” says Abbott. “We’ve created an on-demand marketplace right in your pocket, whether you want your lunch delivered, or you want our drivers to pick up your dry cleaning, it will be possible to have it at your door within an hour.”
For the second half of the year “we anticipate full launch of our consumer app and doing a large campaign in Vancouver,” says Moreau. “Once we are sure it is perfect then we’re going across Canada. We are a nimble young company building out some spectacular technology, and when the consumer app comes out in the fall that is where it begins to get really exciting.”
Learning languages isn’t fun, even though it should be. You take classes, study grammar from textbooks and painstakingly memorize vocabulary.
Finally, the big day comes. Your plane lands in an exotic capital. Maybe you manage to make yourself understood with the first people you meet. But maybe you embarrass yourself.
Maybe you never take the trip in the first place, because you don’t have the confidence. You give up. You might sulk and regret wasting your time – and now your world has become a smaller place.
Or, you could try Hello Pal.
Hello Pal international Inc. (CSE:HP) has a social language learning network that flips the language learning process on its head. You start connecting with real people right from the start, while learning and having fun.
With nearly 1 million members in a user base that’s still growing fast, the company has captured the imagination of investors. Starting with a share price of $0.12 in May of this year, the stock was sitting at $0.43 by mid-August.
To use Hello Pal, users download the app to their smartphone. Next, they connect with a pal on the network (Think ‘pen pal’ – since that’s what the Pal in Hello Pal comes from).
Choosing a language comes next. With the help of phrasebooks integrated into Hello Pal’s chat system, users click on a phrase and then click the audio button to hear a native speaker say it.
After that, they record themselves saying the phrase. They send it to their pal. When the pal responds, the chat system helps the listener understand. Now they’re both having a conversation in a foreign language, instantly.
The user-friendly app has a big idea behind it. “We want to bring the world closer by eliminating the language barrier and letting people communicate in a joyful way,” says KL Wong, the CEO and founder of the company.
Wong, who was born in Malaysia and now lives in Hangzhou, China, speaks several languages. Fluent in English, Mandarin and Cantonese, Wong also has a working knowledge of Malay and French. He is learning Japanese and Korean.
The hard experience of learning languages the traditional way partly influenced the development of Hello Pal, but this entrepreneurial journey was anything but a straight path.
Following successful careers in law and investment banking, Wong made the switch to entrepreneur shortly after the birth of his daughter, Felicity.
With her education in mind, Wong created a team in Hong Kong and built a company, BrillKids. The company sold software to parents to help them teach their young children to read.
Wong recognized early on that it was tough to keep parents motivated to teach if they were using the software in isolation. To make BrillKids more engaging, they attached a social network and forums into the BrillKids online store, where the parents would interact.
The company gained traction and international recognition. With the support of an early investor, Wong tried to bring the solution to China.
Then he ran into a cultural barrier to entry. Parents there didn’t want their preschool kids staring at computer screens. To adapt, Wong decided to use his existing language curricula and content and target Chinese children of an older age group where the computer screen issue was less acute, and to offer the content through apps.
The vision continued to evolve. One key factor to getting children’s engagement would be to connect them with kids from other countries. He was excited about the idea at first, but he soon realized having to get parental permission would be a huge barrier.
Then came the final pivot: instead of catering to kids, they would target adults.
Hello Pal incorporated the best ideas from his earlier experiments.
“Why do we learn languages?” Wong asks. “Ultimately, to use it with real people. I started to see that beyond just helping people learn languages, I could actually play a role, however small, in helping people meet each other, communicate better and promote greater understanding around the world.”
He had a lofty goal, but at first not much of a business model for Hello Pal. “I just needed to get this product done, for the sake of many people to come,” Wong says. He put his team to work, to make this vision a reality.
When they launched in the spring of 2015, Wong had a last-minute case of nervousness, half-expecting Hello Pal to be a desert. Instead, the team’s efforts at leveraging the now-popular BrillKids community paid off with 1,000 signups on the first day alone.
They’ve seen a steady torrent of new users ever since. Today, the user base is over 1 million.
Wong still conveys that same boundless idealism of the original mission when he speaks. Still, it didn’t take long for the serial entrepreneur inside him to realize the value of what they had. He wasn’t alone.
Hello Pal’s early investor started talking with some other investors from Vancouver who were looking for their next big opportunity. They looked at the app, saw that Hello Pal was already at about 350,000 users and they were hooked.
A reverse merger and listing as Neoteck Solutions Inc. came next, before Hello Pal listed under its own name on the CSE in May 2016.
Growth followed. The company now has 18 employees in Hangzhou, consisting of a programming team that complements another team in Ukraine. International marketers and administrators work in Hong Kong. Three advisers operate out of Vancouver.
“We’re truly a global company because we have to be to do what we’re doing,” Wong says. “Particularly when it comes to operating in China, you need people on your team who are international.”
“It’s very difficult, for example, for a US company to do something like this and do it well in China,” Wong adds. “Even when I was in Hong Kong, I didn’t feel prepared to tackle China. That’s why I moved here. You’ve got to have a real presence there to have a chance.”
Today, Hello Pal is free to download and the company is pre-revenue. “Right now, we’re focused on user growth and acquisition,” Wong explains. But that will change.
“We feel we’re actually spoiled for choice in terms of revenue models,” Wong says. The company aims to target three silos of customers: social people who just want to meet people from other countries, language learners who want to talk to native speakers and travelers who want to meet people from other countries before they go there.
These groups have some common interests, but Hello Pal ultimately aims to cater to them in different ways, leveraging the huge user base when they’re ready to go after revenue.
“Just looking at the social marketplace, there are a lot of tried-and-tested revenue models that have been highly successful,” Wong says. He points to the Chinese social network Momo, which was valued at $3 billion not long after it had its IPO on the NASDAQ.
He points out that in China, social networks become very profitable by charging for VIP systems, small gifts, digital stickers (like emoticons on steroids, Wong explains) and many other offerings. “These are things that are not necessarily popular in the West, but hugely popular in the East,” he adds.
Beyond that, there’s advertising, sponsorship, and more. “When it comes time, we’ll have lots of options.”
For technology companies based in North America, the Chinese market is an enticing yet perplexing marketplace.
China’s vast population and the increasing wealth of its industrious citizens make it attractive to outside entrepreneurs and investors.
At the same time, there are unique challenges for foreign companies wanting to do business there: a relatively arcane regulatory regime, an uncertain commitment to intellectual property rights and a business culture very different from in the USA or Canada. Google, Apple, Uber and other tech titans have each stumbled on these various hurdles.
Peak Positioning Technologies Inc. (CSE:PKK), based in Montreal, has a straightforward strategy for avoiding these barriers to entry: buying innovative companies and finding strategic local partners.
Peak is an IT portfolio management company. Its mission is to deliver value to its shareholders by assembling a portfolio of high-growth-potential projects and companies in the e-commerce and fintech sectors in North America and China.
The company closed a major deal this year as it finalized a partnership with the owner of the Zhonghai Wanyue Group Enterprises conglomerate of 29 companies, Jiang Wang, who is based out of Shanghai.
Peak received a $4 million strategic investment from Wang this spring. The company used approximately $3 million of the investment proceeds to pay for the development of a fintech platform called Gold River, and to establish an operating subsidiary called Asia Synergy Technologies (AST) in Shanghai.
Gold River is a web-based platform operated by AST that digitizes the distribution process of petrochemical raw materials and certain other commodities in China. The platform allows AST to receive and process orders from its clients and offer value-added services associated with the orders, such as purchase order financing, loans and logistics.
Gold River is set to process $575 million in transactions over the next 18 months, including $100 million by the end of 2016, with an average profit margin of 5%, explains Peak’s CEO Johnson Joseph. “Those orders are legally binding commitments from clients that AST simply now has to fulfill by the end of 2017.”
In return for Wang’s investment, the conglomerate owner received a 51% ownership stake in Peak.
The companies in Zhonghai Wanyue, together worth an estimated $10 billion, offer financing and supply chain solutions for a wide range of industries, from plastics distribution, manufacturing and clean tech to metals trading, auto parts distribution and financial services.
AST and Gold River will also help companies in the Zhonghai Wanyue group to transition from traditional offline paper-based operations to connected, digitally driven businesses.
The company didn’t start out by acquiring and managing ventures, though. Back in 2010, Peak was a security software development company.
Peak’s leadership team took their first trip to China, prompted by an entrepreneurial colleague who played up all the success he was having in the country’s tech sector.
“We knew that as a publicly traded company, if we could give our shareholders access to this market, it would be a big value-add,” Joseph says.
Peak learned the hard way about the challenges of running a new venture in China as they tried to develop security applications, a complicated business even under ideal conditions.
Differences in language, time zones and business culture played havoc with development timelines.
The company’s leadership team understood that there was still a huge opportunity in China’s tech sector, but after months of hitting a wall they had to change their strategy.
Around 2014, the company made a hard pivot. “We completely abandoned app development to become an asset management company, acquiring applications in China and Canada and delivering value to shareholders that way,” Joseph says.
While Peak is scaling the heights of success today, their leadership team is still realistic about the challenges of doing business in China. They have a healthy sense of caution and a desire to learn how to operate effectively in this environment.
“The biggest challenge is just learning about Chinese business practices in general, because there are a number of things we take for granted in how business is done,” Joseph says. “Just getting this transaction done with Zhonghai Wanyue was a challenge. In a situation like that, you usually just write a cheque.” The process took much longer than anticipated.
The Chinese government’s control of the Internet is another very direct challenge for technology companies. “Here, we take it for granted that if you want to put up a website, you just do it,” Joseph explains.
“In China, you need to have a license. Just look at Google, which is blocked and not allowed to operate in China. There are a number of things like this that we’ve learned and are still learning.” AST received its license to operate Gold River in mid-August, clearing the way to begin processing payments on their tested platform.
Aside from government bureaucracy, it is also common for business contracts in China to include verbal agreements on the side, in contrast to simply spelling all essential obligations out in writing.
To deal with these culture gaps, Peak has agreements in place between all of the parties it does business with to ensure that its subsidiaries and partners operate according to international business norms.
“We’re training them to be part of a public company that has the highest reporting standards and they are cooperating 100%,” Joseph says. “At the same time, we have to respect how our partners in China do business as well. If something doesn’t affect us negatively, we may be willing to accept it, but they also do what we need them to do to protect all of our interests.”
Being willing to adapt to unforeseen circumstances has helped the company get to where it is today. “Peak started out as something different, but we adjusted to be a portfolio management company. Then our first transaction didn’t work out because of circumstances beyond our control, but we did manage to get it done and that has turned into the best thing for our shareholders.”
With the revenue stream coming online from the partnership, Peak will continue seeking out new opportunities in China’s dynamic marketplace, Joseph adds. “We’re now in the process of building a solid foundation, which hopefully will allow us to build on a track record of success.”
It is a big statement to make that one’s company is working on an important part of a fourth Industrial Revolution. But listening to Greg Johnston, and the particular analogy he uses to put Carl Data Solutions Inc.’s (CSE: CRL, FSE:7C5) achievements into context, it is a statement that actually makes quite a lot of sense.
Those of us old enough to remember the pre-Internet days can probably recall when we first heard about the World Wide Web and thought “What would I need that for?” Fast-forward to today and the question has become “How would I live without it?”
Such is the dynamic that Johnston, who is Carl’s President and Chief Executive Officer, believes will take place over coming years with the so-called Internet of Things, which at its core involves appliances, automobiles and other everyday devices communicating with one another to make our lives safer, easier and more efficient.
“When the Internet came into play people did not know what it was and some perhaps dismissed it as just another trend that was going to be out of style in a couple of years,” Johnston explains. “Of course, the Internet changed distribution, it changed businesses, and continues to do so every single day. New devices, smart meters, data loggers and the products we are building do just that. It’s the Internet of Things and they are calling it the fourth Industrial Revolution.”
Carl got its start in 2014, analyzing bulk data from social media and other public sources for consumer marketing purposes. “When we started, we worked with unstructured information such as text from social media posts, media shares, photos, videos and the like,” Johnston says. “It was looking at social media and making this mass of information into something orderly and more useful, mainly for the purposes of social referral marketing, which has grown to become a more effective form of marketing than traditional strategies.”
Drawing on two decades of experience in e-commerce and database management, Johnston sensed that applying his team’s skills to increase the efficiency of industries lacking advanced analytical tools would be what ultimately separated his company from the pack. “It was always our intention to get into another vertical we thought had great promise but was underserved by technology and current marketing offerings, and the area we decided to focus on was the utilities sector,” he says.
In the fourth quarter of 2015 Carl acquired FlowWorks Inc., and with it an array of capabilities perfectly suited to utilities and municipal waterworks. Put simply, FlowWorks collects data from sensors within a city’s physical network and then applies layers of analytics to determine everything from how its systems can operate more effectively to the potential for a flood or failure in the city’s water or sewer network.
“Most cities have sensors throughout their storm water and sewage systems,” Johnston offers by way of example. “Every few minutes data loggers transmit information that can be collected, stored and funneled into the FlowWorks application that city employees can use on desktops or mobile phones to see what’s going on. This level of analysis used to take days and now we can deliver it in near real time.”
In addition to contracts with a number of cities in British Columbia, Carl works with a long list of large cities in other parts of Canada and the United States. In July, the company announced a contract to provide its services to the City of Toronto in a collaborative effort with a major engineering consulting firm it has worked closely with over the years on other projects.
Carl reported sales of just over C$227,000 in the first quarter of 2016 ended March, and since revenue is primarily recurring in nature, recent contract wins, plus more anticipated before the end of the year, have the potential to push the top line for full-year 2016 quite comfortably into the seven-figure range.
“Our revenue is based on three areas: setup fees, recurring licensing fees and customization fees,” says Johnston. “Out of those three, recurring licensing is the one growing the fastest. The other two really are enablers for the licensing revenues. I would say that right now about 90% of revenue, of which roughly 60% is in US dollars, comes from FlowWorks business. Growing those revenues is going to remain our main focus for the remainder of 2016 in conjunction with some possible utility-related acquisitions.”
Being an early mover in any business segment brings the opportunity to help shape that market and Carl looks set to benefit from being a standard-bearer in advanced analytics for the utilities sector.
Johnston explains that most of the company’s contracts are obtained by partnering with hardware vendors. When a city issues a Request for Proposals (the contract award process commonly referred to as an ‘RFP’), more often than not they want not only pumps, regulators and other infrastructure equipment but access to the detailed information that these devices generate.
“What seems to be happening more and more is that the hardware vendors can’t provide a software application with the tools and functions that a city is looking for, so they partner with us to complete the RFP and stand out from other firms who are also bidding for the job. The majority of our contracts are like that now and we are starting to see cities include compatibility with FlowWorks as a requirement in their RFPs. In other words, the analytics solution must have the certain feature set that our FlowWorks application has. This is great because it means word is getting out and cities are recognizing how valuable the platform and its capabilities are.”
It is worth noting that Carl’s analytics platform is “hardware agnostic” and thus not limited to interfacing with certain brands or models of equipment like some of the software solutions FlowWorks’ competitors provide. All Carl needs is the raw data, sent from a physical data logger, through its cloud service, and into its application.
At the end of the day, making systems run better means they cost less, perform more effectively and operate more safely. And given the scale of infrastructure that a platform such as Carl’s can improve almost immediately, the potential to directly influence the lives of large numbers of people is clear.
Taking things a step further, Carl’s platform will soon go beyond historical analysis and near real-time monitoring into the realm of predictive modeling. Here, machine learning and other processes will be used for comparing layers of data to pinpoint anomalies that could herald problems with the potential to result in floods or infrastructure failure. Identifying weak spots within gas pipelines is a good example of the capabilities of machine learning.
“Think sensors on cars: 12 records per minute times 12 sensors per car times 3 million cars operating almost 365 days a year – that is a lot of information going back to a manufacturer,” says Johnston offering one last illustration. “It is going to be the same for the utilities sector. They need a way to understand information at a glance and use analytics to figure out how they can make more intelligent decisions managing their infrastructure and resources. That is how we are going to help them – by providing innovative solutions and offering advanced analytics that make better sense of their data in less time and at lower cost than has ever been possible.”
This past summer, the CSE team set out to meet and greet entrepreneurs all across Canada.
From Bay St boardrooms to Alberta badlands and a few golf courses on either side , the CSE team had a great time connecting with listed issuers as well as with folks interested in learning more about how the CSE can help junior companies improve access to the lowest-cost of public capital.
Check out the highlights from this summer’s adventures below and be sure to stay on top of all of our upcoming events by visiting the new and enhanced events calendar here or by following us on Twitter or Facebook.
The CSE was thrilled to welcome a record setting crowd to this year’s breakfast (150+!), an annual institution for the CSE and its network of friends and supporters in Calgary.
Along with a healthy spread of pancakes, sausage, and other breakfast staples, the crowd was treated to a welcome address from CSE CEO Richard Carleton who dusted off his best western wear for the occasion.
Mark your calendar for next year’s occasion which is slated for July 6th! Yahoo!
Summer Golf was in full swing for the CSE in August, where amateur golfers across the organization gathered to crush drives, sink puts, and network over 18 holes of scenic golf courses.
Our team hosted the first annual Montreal Summer Golf at the members only Mr. Bruno Country Club – an event so exclusive we could not even take photos! Rumour has it that it was a competitive round highlighted by exceptional play of CSE Senior Advisor Scott Pritchard.
Toronto was also on the tour, where Senior VP Rob Cook and Director – Listed Company Services Barrington Miller showcased their game at the TechConnex golf tournament.
Finally, in Vancouver, another “first annual” golf tourney was hosted at Northlands Golf Course – where a group of 24 played a friendly round of Texas scramble on what was agreed to be “the nicest day of the year” – a claim supported by the photos included in this gallery.
Canadian Securities Traders Association Conference
A marquee event of any Summer is the annual CSTA (Canadian Securities Traders Association) Conference – held this year in beautiful Whistler, BC.
Often a productive mix of both business and pleasure, the CSE managed to strike a good balance between both.
From a business perspective, CSE CEO Richard Carleton participated on the much anticipated marketplaces panel, lending his thoughts on the status of exchanges and leading trends in the trading world.
Afterward, CSE offered up an equally substantial piece of hospitality, hosting an exclusive dinner at the renown Araxi Restaurant + Oyster Bar. A truly spectacular meal (accompanied by choice wines) was followed by an impromptu lottery and betting pool in anticipation of the Tragically Hip’s final song during the next evening’s concert.