If you are new to The Checklist Compounder or haven't read the original investment thesis, I highly recommend starting with my Original Deep Dive on NamSys (TSXV: CTZ)

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In that report, we ran NamSys through the Microcap Master Checklist. It graded out as a nearly perfect target. We identified a high-margin, inflation-resistant SaaS monopoly operating in the niche world of cash logistics, severely mispriced due to a structural, non-fundamental sell wall (the estate liquidation of the former Chairman).

The only major fundamental failure on the original checklist was capital deployment. The company was hoarding a massive treasury of cash, which dragged down its Return on Equity and left capital sitting idle.

With the release of the Fiscal 2025 financials and a major corporate update, that failure has been decisively resolved. The underlying business is accelerating, the balance sheet remains a fortress, and management just handed shareholders a massive catalyst.

Here is the breakdown of the latest filings and why the thesis has fundamentally accelerated.

The Catalyst: A 12.5% Yield While You Wait The most significant news is the announcement of a one-time special dividend of $0.15 per share, payable on March 12, 2026, to shareholders of record on March 5, 2026.

With the stock currently trading around the $1.20 level, this represents an immediate 12.5% yield. Management is taking a portion of their $10M+ cash pile and directly rewarding shareholders. This is a highly efficient mechanism to clear excess treasury cash without creating the structural liability of a regular, recurring dividend. You are effectively being paid a double-digit yield to hold the stock while the estate overhang clears.

Fiscal 2025 Results: The SaaS Engine is Accelerating

The underlying business is performing exceptionally well, passing our growth and profitability gates with even stronger numbers than previously anticipated.

• Revenue Growth: Total revenue for Fiscal 2025 hit $7.89 million, representing a 15.4% year-over-year increase.

• Elite Revenue Quality: Recurring revenue (software subscriptions, hosted services, maintenance, and product support) now makes up 99.0% of total sales, up from 98.2% in 2024. This confirms NamSys operates as a pure-play, highly predictable SaaS business.

• Margin Expansion: Gross profit margins expanded by 200 basis points, jumping from 62.4% to 64.4%. The company achieved this by scaling revenue while keeping staffing resources relatively flat, perfectly demonstrating the massive operating leverage inherent in their software model.

• Bottom Line: Net income for the year reached $2.48 million ($0.09 per share), an increase of roughly 19% from 2024.

The Fortress Balance Sheet & Aggressive Post-Year-End Buybacks Prior to the dividend announcement, the balance sheet became even more robust. As of October 31, 2025, total cash and short-term investments swelled to $10.17 million (comprising $846k in cash and $9.32M in GICs). The company remains completely debt-free. Even after distributing roughly $4 million for the special dividend, NamSys will retain over $6 million in cash.

Crucially, the financial notes reveal exactly how management is actively managing the estate’s selling pressure. While the company only repurchased 33,200 shares during the fiscal year, they aggressively stepped up their Normal Course Issuer Bid (NCIB) after the year ended. Subsequent to October 31, 2025, the company repurchased 149,600 shares for cancellation. Management is actively soaking up the estate’s sell wall at depressed prices, permanently reducing the share count.

Investing for International Growth: The Next Major Catalyst The financials also show the company is actively executing on the international growth roadmap discussed in recent annual meetings. Selling and marketing expenses jumped 61.6% year-over-year. Management explicitly noted this increase was driven by the addition of a new business development position dedicated to covering the European market, alongside expanded travel and trade show costs.

This targeted international expansion acts as a massive future growth catalyst. Because NamSys operates a highly scalable, cloud-based software model with 64.4% gross margins, any new European recurring revenue will flow disproportionately to the bottom line due to established operating leverage. Securing a contract with a major European bank, armored carrier, or retail network would not only accelerate top-line growth but also provide powerful market validation, potentially triggering a fundamental re-rating of the stock completely independent of the current estate liquidation thesis. They are actively reinvesting capital to acquire international market share and expand their moat.

The Structural Overhang is Clearing The MD&A confirms the retirement of the former Chairman on October 31, 2024. Consequently, related-party management fees and rent paid to his partially owned company dropped from $155,600 in 2024 to $nil in 2025. This provides concrete evidence that the old guard has fully exited, aligning perfectly with the thesis that the current market pressure is a temporary, non-fundamental liquidity event.

Conclusion

These new filings serve as the ultimate validation of our Information Arbitrage thesis. The “Cash Drag” risk has been decisively mitigated by returning capital to owners, the core SaaS business is compounding at an accelerated rate, and the company is aggressively buying back stock. Once the estate’s sell wall is fully exhausted, the fundamental reality of this high-margin compounder will take over.

I am long with a full position and eagerly waiting for a juicy dividend.

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Disclaimer: I am not a financial advisor, and this newsletter is not financial, investment, or legal advice. The content provided in “The Checklist Compounder” is strictly for educational and informational purposes. Microcap stocks are inherently volatile, often lack liquidity, and carry a high degree of risk. I currently hold a long position in NamSys Inc. (TSXV: CTZ). Always conduct your own exhaustive due diligence, review all public filings, and consult with a registered financial professional before making any investment decisions.

February 21, 2026

If you have been following along, you know these Odd Lot “Return Boosters” are a highly effective way to put idle cash to work. We recently executed this playbook with our Docebo Inc. (DCBO) which generated a lot of great traction and feedback from readers who captured the spread.

Yesterday, I also published an active alert for Yext, Inc. (YEXT). While we wait for the market to give us our entry price on Yext, the hunt for the next setup never stops.

To successfully execute this strategy, you cannot just wait for the official paperwork to drop. You have to read the tea leaves in earnings reports and position yourself on the runway before the plane takes off.

Right now, the radar is flashing on Altus Group (AIF.TO).

The Catalyst: An $800 Million Signal On Thursday, February 19, 2026, Altus Group released its Q4 2025 financial results. Buried in the press release was a massive authorization by the Board of Directors: they approved an $800 million capital return program for 2026.

The critical detail for our strategy is how they plan to deploy that capital. Management explicitly stated they intend to use a combination of their Normal Course Issuer Bid (NCIB) and “potential future substantial issuer bid (’SIB’) tenders“.

Why This Matters An NCIB is just the company quietly buying shares on the open market—there is no edge there for us. However, a Substantial Issuer Bid (SIB) is the exact corporate action we need. SIBs are where we typically find the “Odd Lot priority provision,” which legally requires the company to buy back 100% of our shares (if we hold 99 or fewer) without proration, often at a premium to the market price.

Altus Group just completed a $162.8 million SIB last month (January 2026), meaning management is highly comfortable with this mechanism.

The Arbitrage Math: Decoding the “Value Dislocation” The price discrepancy here is a massive signal. The gap between the $57.00 buyback price from last month and the current market price of ~$42.65 is a textbook example of what management calls “value dislocation”.

1. The “Value Signal” from Management

• The $57.00 Benchmark: Just last month, Altus Group completed an SIB where they paid $57.00 per share for approximately 2.8 million shares.

• Admission of Undervaluation: In the Q4 earnings call on February 19, CEO Mike Gordon explicitly stated that the company is “eager to activate our capital returns to capitalize on the significant dislocation in the value of our shares”.

• Inherent Value: The company formally stated that the current market price “may not reflect the inherent value of Altus Group”. When a company authorizes an $800 million return program under these conditions, they are signaling that their own stock is the best investment they can make right now.

2. Why the “Floor” Failed

• Low Participation: The January SIB authorized $350 million, but only ~$162.8 million was spent because shareholders were unwilling to sell at $57.00.

• Market Sentiment: Investors didn’t treat $57.00 as a permanent floor, and the stock has since plummeted ~26% from those levels.

• The Opportunistic Buyback: If management was willing to pay $57.00 just 40 days ago, they are likely highly motivated to launch a new SIB at these much lower prices to “mop up” the shares they couldn’t get in January.

3. Impact on the Strategy

• Increased Probability: Management is currently evaluating how to return an additional $300M to $450M in the first half of 2026. Given this dislocation, a second SIB is a high-probability tool.

• Wider Potential Spreads: If they launch a new SIB while the stock is at $43.00, the “premium” they offer to entice sellers will likely create a much wider arbitrage spread than the floors we typically see.

• Strategic Patience: This is a situation where the company is practically begging to buy back shares because they think the market is “wrong” about the price.

The Verdict The fact that they previously paid $57.00 makes a future SIB at $43.00+ a high-probability event if they want to reach that $800M capital return goal by year-end. By tracking this now, we are positioning ourselves to act the moment the company makes their official move to buy back their "undervalued" stock.

The Execution Protocol: Setting the Trap For now, AIF.TO goes firmly on the watchlist. When Altus officially announces the formal SIB, I will review the legal circular to confirm the exact terms. If the odd-lot exemption is present, I will calculate the spread, verify the execution parameters, and strike.

Stay tuned. The moment the filing drops, the math will follow.

Disclaimer: I am not a financial advisor. This post is for educational purposes only. I may hold positions in the securities mentioned. All issuer bids are subject to the terms in the formal circular on SEDAR+ or EDGAR.

February 20, 2026

A new setup has hit the market, but this one requires patience.

1. The Opportunity Overview

• Company: Yext, Inc.

• Exchange: NYSE

• Action Type: Modified Dutch Auction Tender Offer

• The Catalyst: Following the withdrawal of a $9.00 buyout offer, the Board authorized a $180 million self-tender to return capital to stockholders and provide immediate liquidity.

2. The Arbitrage Math (Wait & Watch)

• Current Price: ~$5.59

• Offer Price Range: $5.75 to $6.50

• Max Shares: 99 (Odd Lot priority provision confirmed).

• Est. Profit: At the current trading price of ~$5.59, the potential return depends entirely on the final clearing price. If the offer clears at the minimum $5.75 floor, the gross return is ~2.8% ($15.84 total profit on 99 shares). If the auction clears at the $6.50 maximum, the gross return is ~16.2% ($90.09 total profit on 99 shares). If the stock drops back down to its previous lows around $4.75, this becomes a much more attractive opportunity.

How the Modified Dutch Auction Works (The Mechanics)

To take advantage of this, it is crucial to understand how a Modified Dutch Auction works. The company wants to buy $180 million worth of shares. They ask shareholders: “At what price are you willing to sell your shares back to us, between $5.75 and $6.50?”

• You submit your 99 shares and pick your price. To guarantee your shares are accepted, you bid the absolute floor of $5.75.

• After the deadline, the company reviews all the bids, starting at $5.75 and moving up, until they secure $180 million worth of shares. The highest price they have to accept to reach their goal becomes the official “Clearing Price.”

• Every shareholder who bid at or below the Clearing Price gets their shares bought, and they all get paid the exact same final Clearing Price.

• Because the Odd Lot rule (under 100 shares) allows you to skip the line without proration, bidding $5.75 guarantees your 99 shares will be bought at the final Clearing Price, even if it ends up being higher than $5.75.

3. The Verdict

• Odd Lot Priority: Confirmed.

• Thesis: There is a great underlying opportunity here, but timing your entry is everything. At the current trading price of $5.59, the guaranteed profit floor is too thin to justify the capital lock-up and standard broker fees. However, this stock recently dipped into the $4.75 range. I am targeting a 10% return on this trade. If the stock price drops to a point where that 10% target is achievable, I will be a buyer, and I will then tender the shares at the minimum $5.75 price to guarantee execution.

Alternatively, if you are willing to take on a bit more risk, you could choose to buy more than 99 shares to increase your absolute spread and return. However, doing so means you forfeit the odd-lot priority. Your shares will no longer be guaranteed to be bought out 100% and will instead be subject to proration.

4. The Execution Protocol

Keep a close eye on this ticker to see if the market offers the right entry price. If it hits your target:

• Buy: Purchase exactly 99 shares of Yext (YEXT) on the NYSE.

• Tender: Submit instructions to your broker to “Tender” all shares at the $5.75 minimum price.

• Deadline: The offer expires on March 12, 2026, at 5:00 p.m. EST. (Your broker will have an internal cutoff 1-2 days prior).

Disclaimer: I am not a financial advisor. This post is for educational purposes only. I may hold positions in the securities mentioned. All issuer bids are subject to the terms in the formal circular on SEDAR+ or EDGAR.

Date: February 18, 2026

Ticker: ASX: ABV

Price: $0.130 AUD

Market Cap: ~$51.7 Million AUD

In this deep dive, we will review Advanced Braking Technology (ABV) and apply it directly to the My Microcap Investing Checklist to determine if it meets our strict criteria for investment.

Part 0: The Business Blueprint

To understand the investment case, one must first dissect the anatomical structure of the business. We do not invest in tickers; we invest in business models.

The “What”: The Product & The Problem

Advanced Braking Technology (ABV) solves a specific, high-stakes problem in the global mining and defense industries: Brake Failure in Extreme Environments.

Standard automotive brakes are “dry” systems—friction pads pressing against rotors, exposed to the air. In a mining environment, this design is fundamentally flawed. Mud, acidic water, coal dust, and extreme gradients destroy dry brakes rapidly, leading to frequent replacement (downtime), brake fade (safety risk), and particulate emissions (health risk).

● The Physics of Failure: In an underground hard-rock mine, the atmosphere is thick with abrasive rock dust and the ground is covered in hypersaline slurry. Abrasive particles enter open caliper mechanisms, acting like sandpaper between the pad and rotor, accelerating wear rates exponentially. More dangerously, mud ingress can cause calipers to seize. On a 1:7 decline ramp with a fully loaded vehicle, this failure mode is catastrophic.

ABV’s solution is the Sealed Integrated Braking System (SIBS). This is a “wet” brake system where the braking mechanism is fully enclosed in a sealed oil bath.

● Mechanism: The oil cools the brakes, preventing fade. The seal prevents contaminants from entering and brake dust from escaping. The oil acts as a heat transfer medium, dissipating thermal energy to prevent “brake fade” on long descents.

● Fail-Safe: The system includes a spring-applied, hydraulic-release mechanism. If a vehicle loses hydraulic pressure (a common cause of accidents), the springs automatically force the brakes to lock, stopping the vehicle. This is a “Fail-to-Safe” architecture.

● Engineering Stress Test: This design represents the “Zero-Revenue Stress Test” of engineering—in the absence of energy, the system works.

Forensic Insight: ABV is not selling “brakes”; they are selling risk mitigation. For a miner like Rio Tinto or BHP, the cost of a single vehicle accident (shutdowns, investigations, corporate manslaughter liability) dwarfs the cost of retrofitting a fleet with ABV systems. This creates a price-inelastic demand curve.

The “How”: The Recurring Revenue Engine

ABV’s business model follows the classic “Razor and Razorblade” structure, but with a high-margin twist.

1. The Razor (System Sales): ABV sells the initial braking units to mining fleets. These are high-ticket capital expenditures (CapEx), often retrofitted onto light vehicles like the Toyota Hilux, Isuzu trucks, or the new Land Cruiser 70 series. In FY25, new brake sales accounted for roughly 55% of revenue. Strictly speaking, this is the customer acquisition event.

2. The Razorblade (Spares & Consumables): Once installed, the system requires specific maintenance kits, fluids, and replacement parts. Because the system is proprietary and sealed, ABV is the sole source for these consumables. There is no generic alternative. In FY25, spares and consumables contributed roughly 45% of revenue.

Forensic Insight: The 55/45 split is the “Golden Ratio” for industrial microcaps. The 55% (New Sales) drives growth and expands the installed base. The 45% (Spares) provides a recurring, high-margin annuity stream that protects the downside. Even if the mining cycle turns and companies stop buying new trucks, they must continue maintaining the existing fleet, ensuring a revenue floor for ABV. This annuity stream provides a “Margin of Safety” to the company’s cash flows, insulating it from the violent swings of the commodity price cycle.

The “Who”: The Customer Base

The customer base consists primarily of Tier-1 mining companies, mining services contractors, and defense organizations. Major end-users include blue-chip entities operating in the harshest environments on earth (Australia, Canada, Indonesia, Mongolia, South Africa).

● Why they buy: Regulatory pressure. The “zero harm” policies of global miners are moving from slogans to strict liability mandates.

● Defense Vector: The company also services the defense sector (e.g., Thales Hawkei vehicles), providing a counter-cyclical revenue stream independent of commodity prices.

● Strategic Pivot: The company has shifted focus from R&D to global commercialization. The 47% growth in international revenue in FY25 validates that the product travels well, with massive underground operations like the Grasberg mine (Indonesia) and Oyu Tolgoi (Mongolia) representing the perfect use case.

● Market Penetration (The Runway): Despite its dominance, ABV is just scratching the surface. With ~1,000 systems sold annually against a global addressable fleet of ~100,000 vehicles, current penetration is estimated at <5% . The runway within the core niche is massive, even before accounting for the heavy truck expansion.

The “Moat”: Intellectual Property & Regulatory Capture

The moat is not just technological; it is regulatory.

1. Patented Tech: The “Failsafe” and “Terra Dura” brands are protected by patents and proprietary design IP, covering approximately 70% of revenue.

2. High Switching Costs: Once a mine site standardizes its fleet on SIBS to meet a specific safety safety case (e.g., underground incline braking standards), switching back to OEM brakes requires a complete revision of the site’s safety operating procedures. This creates extreme stickiness.

○ Mental Model: Think of this like installing a proprietary commercial HVAC or security system. You do not rip out the entire building’s infrastructure just to save 10% on a maintenance filter. The initial install locks the customer in for the asset’s life .

3. Certification Barriers: ABV products are ISO 9001 accredited and meet specific ADR (Australian Design Rules) and international mining safety standards. A competitor cannot simply “copy” the brake; they would need years of field validation to prove to a Risk Manager at BHP that their alternative will not fail on a 20% gradient.

4. The “Goldilocks” Defense: Why no competition? Global giants like Knorr-Bremse or Bosch ignore this market because a ~$50M-$100M revenue opportunity is a rounding error for them. Conversely, the regulatory complexity (ISO 3450) makes it too hard for local machine shops to attack. ABV sits in the “Goldilocks” zone—too small for the whales, too hard for the minnows .

The Lollapalooza Effect (Converging Tailwinds)

Beyond the moat, three forces are currently combining to produce a non-linear adoption curve:

● Regulatory Ratchet: Safety regulators are harmonizing standards (e.g., ISO 3450), effectively legislating failsafe braking into necessity.

● ESG & Clean Air: Conventional brakes release particulate matter (PM10/PM2.5) into confined underground air. As majors pursue “Zero Harm,” ABV is no longer just selling safety; they are selling clean air.

● Automation: Autonomous haulage requires braking systems that can be digitally monitored. ABV’S BRAKEIQ product bridges the gap between the mechanical wet brake and the digital “brain” of autonomous vehicles.

Part 1: The Gatekeepers (The Kill Switch)

In adherence to the “Microcap Investing Checklist,” we apply the Universal Filters. If ABV fails any single rule here, the analysis terminates, and the stock is deemed “TOXIC.”

1. The “Global TFSA Compliance” Check

● Rule: The stock MUST be listed on a “Designated Exchange” (ASX, TSX, NYSE, NASDAQ). OTC, Pink Sheets, and AIM listings are rejected to prevent tax penalties and liquidity risks.

● Audit Finding: PASS.

○ Exchange: Australian Securities Exchange (ASX).

○ Ticker: ABV.

○ Status: Ordinary Fully Paid Shares.

○ Verification: Listing confirmed via ASX data. The company is not a REIT or a land-rich entity, making it fully eligible for TFSA/Superannuation inclusion.

2. The “Anti-Commodity” Filter

● Rule: Is this a Non-Resource business? (Reject Mining Exploration, Oil & Gas Producers).

● Audit Finding: PASS.

○ Sector: Industrials / Auto Parts.

○ Forensic Insight: While ABV sells to miners, it is not a miner. It is a technology manufacturer. This distinction is critical.

■ Price Taker (Miner): Revenue depends on the gold/iron ore price (out of control).

■ Price Maker (ABV): Revenue depends on the value of safety IP (in control).

■ ABV sets its own prices based on manufacturing costs and value delivery. As noted in the deep dive, ABV is not selling “brakes”; they are selling risk mitigation. For a miner like Rio Tinto or BHP, the cost of a single vehicle accident (shutdowns, investigations, liability) dwarfs the cost of retrofitting a fleet, creating a price-inelastic demand curve where safety trumps cost. It is an “Industrial Pick-and-Shovel” play, which historically commands higher multiples and lower volatility than pure resource plays.

3. The “Customer Concentration” Risk

● Rule: Is the top customer < 20% of Total Revenue?

● Audit Finding: PASS.

○ Data Source: FY25 Annual Report Financial Notes (Segment Reporting).

○ The Number: The single largest external customer contributed $2.420 million, representing 12% of total revenue ($19.13 million).

○ Secondary Check: The report explicitly states: “No other single customer contributed 10% or more of total Group revenue during the reporting period”.

○ Forensic Insight: This is a definitive pass. Many microcaps fail here, holding a “key man risk” where the loss of one contract destroys the business. ABV’s 12% concentration is healthy; it indicates they have a “whale” client (likely a major distributor or a specific mining contractor) but are not held hostage by them.

○ The diversification has improved significantly due to the 47% growth in international sales, spreading revenue across multiple jurisdictions (Canada, South Africa, Indonesia). This validates that the product travels well, with markets like Indonesia (Grasberg mine) and Mongolia (Oyu Tolgoi) representing massive, deep underground operations that perfectly match the SIBS use case. Furthermore, the company services the defense sector (e.g., Thales Hawkei vehicles), providing a counter-cyclical revenue stream independent of commodity prices.

○ Gatekeeper Decision: ALL PASS. The stock proceeds to Classification.

Part 2: The Classification (Path A vs. Path B)

Having cleared the kill switch, we must determine the nature of the opportunity. Is ABV a “Compounder” (Path A) or an “Inflection Play” (Path B)? Based on the continued profitability, we test Path A first.

PATH A: THE COMPOUNDER (Stability & Growth)

1. Solvency Rule: Net Cash > Total Debt?

● Rule: Cash + Short Term Investments > Total Debt.

● Data Extraction:

○ Cash & Cash Equivalents (FY25): A$2.94 million.

○ Total Debt (FY25): A$1.40 million (Includes lease liabilities and insurance funding).

○ Net Cash Position: +A$1.54 million.

● Audit Finding: PASS.

● Forensic Context: The “debt” figure is primarily comprised of AASB 16 lease liabilities (rent on the factory) rather than bank loans. This is “accounting debt,” not “distress debt.” The company has no toxic convertible notes or high-interest predatory lending. The Interest Coverage Ratio is, indicating the company can service its obligations with ease.

● Deep Dive Insight: This fortress balance sheet allows ABV to self-fund R&D and inventory without diluting shareholders. A forensic review of the 2021-2025 period confirms the company has funded its growth entirely through organic cash flow, avoiding shareholder dilution—a rarity in the small-cap industrial sector.

2. Profitability Rule: Profitable OR Cash Flow Positive?

● Rule: Profitable or Cash Flow Positive for at least 2 quarters.

○ FY25 Net Profit After Tax (NPAT): A$1.78 million.

○ FY24 NPAT: A$1.31 million.

○ FY25 Operating Cash Flow: Positive A$0.62 million.

● Trend: Profitable for two consecutive full years with expanding margins.

● Audit Finding: PASS.

● Forensic Context: The disparity between NPAT ($1.78m) and Operating Cash Flow ($0.62m) requires forensic scrutiny. Is the profit fake?

● Investigation: The cash flow statement reveals a significant outflow for inventory accumulation. The company explicitly states this was a strategic decision to “minimize potential delivery disruptions... proactively invested in inventory... to support order fulfillment”.

● Deep Dive Insight: This is a strategic necessity, not a sign of inefficiency. As ABV expands into Mongolia and Canada, it must hold stock in-country to guarantee “security of supply.” Mining customers will not tolerate a 6-week lead time for a critical brake seal. The balance sheet is being used as a logistical tool to secure the moat.

● Verdict: This is a capital allocation decision, not a lack of profitability. In a supply-constrained environment, inventory is a competitive advantage. As this inventory unwinds into sales (Q2 FY26 revenue +34%), cash flow will catch up to NPAT.

● Forensic Note on FY24 Restatement: The deep dive notes a “Fog of War” regarding the exact FY24 baseline due to restatements (FY24 revenue listed as $16.455m in the 2024 report vs. $15.287m in the 2025 comparative). While this creates some noise, the long-term trend remains positive, and the 30.1% 5-year NPAT CAGR confirms significant operating leverage.

3. Dilution Rule: Revenue Growth > Dilution?

● Rule: Is Revenue Growth % > Share Dilution %? (Accretive Growth).

○ Revenue Growth (FY25 vs FY24): $15.29m -> $19.13m = +25.15%.

○ Share Count Change:

■ FY24 Shares on Issue: ~379 million (inferred from FY24 reports).

■ FY25 Shares on Issue: 397,855,885.

○ Dilution Calculation: ~4.7% increase.

● Audit Finding: PASS.

● Forensic Context: Revenue grew 5x faster than the share count. This is highly accretive. The dilution was primarily driven by the exercise of options by management (Andrew Booth and Angela Godbeer). When management exercises options to hold shares, it is a bullish signal (skin in the game), unlike dilution used to pay electricity bills.

4. Valuation Rule: PEG Ratio < 1?

● Rule: Price/Earnings Ratio < Growth Rate (Earnings or Revenue).

○ Current Price: A$0.130.

○ EPS (FY25): 0.463 cents (approx A$0.0046).

○ P/E Ratio: 28.5x.

○ Earnings Growth Rate (FY25): +36.3% (NPAT Growth).

○ Revenue Growth Rate (FY25): +25.2%.

● Calculation:

○ PEG (Earnings): $28.5 / 36.3 = 0.78$.

○ PEG (Revenue): $28.5 / 25.2 = 1.13$.

● Audit Finding: PASS (Based on Earnings Growth).

● Forensic Context: The “Twin Engines” of wealth creation are Earnings Growth + Multiple Expansion. ABV is already experiencing some multiple expansion (P/E 28x), but the earnings growth (36%) is outpacing it, keeping the PEG below 1.0. This signals that the stock is undervalued relative to its growth velocity. A PEG of 0.78 is a classic “Growth at a Reasonable Price” (GARP) entry point.

● Deep Dive Insight: While the 29x P/E may look expensive compared to traditional mining services (6-10x EBITDA), ABV is priced as a “Technology” stock. The market is awarding a premium for the IP and recurring revenue quality, similar to high-quality industrial technology firms like Halma or Spirax-Sarco.

Path A Verdict: PASSED

ABV classifies as “THE COMPOUNDER.” It meets all strict criteria for a high-quality, growing, profitable microcap. We do not need to evaluate Path B (Inflection), as the company has already graduated from turnaround status to growth status.

Part 3: The Quality Scorecard (The Ranking)

Now that ABV is confirmed as a “GO,” we apply the 8-point Scorecard to rank its quality against other portfolio candidates.

1. Velocity: Revenue Growing > 20% YoY?

● Result: YES (25.2%).

● Score: 1/1

● Analysis: Revenue acceleration is the primary driver of microcap returns. ABV accelerated from $15.3m to $19.1m in FY25. More importantly, the Q2 FY26 update indicates this velocity is increasing, with quarterly revenue up 34% to $5.6m. This confirms the growth is not a one-off “covid bounce” but a structural trend driven by international expansion and new product uptake.

● Forensic Insight: The Deep Dive confirms this is not just top-line noise; it is high-quality growth. While revenue grew at a CAGR of ~16.3% over the last 5 years, Net Profit grew at ~30.1%. This divergence confirms significant operating leverage: every incremental dollar of revenue—particularly from the high-margin spares division—is increasingly profitable.

2. Efficiency: ROE > 20%?

● Result: NO (18.6%).

● Score: 0/1

● Analysis: Return on Equity came in at 18.55%. While this technically fails the strict 20% threshold, it is an exceptionally high number for a manufacturing business. The “failure” is marginal. The ROE is suppressed slightly by the high cash balance and inventory levels (assets that aren’t yet generating yield). As the inventory turns into cash/sales, ROE is projected to breach 20%.

● Deep Dive Context: The Deep Dive classifies this inventory build as a “strategic necessity,” not inefficiency. As ABV expands into Mongolia and Canada, it must hold stock in-country to guarantee “security of supply.” Mining customers will not tolerate a 6-week lead time for a critical brake seal. The balance sheet is being used as a logistical tool to secure the moat.

3. Moat: Gross Margins > 40%?

● Result: YES (46.0%).

● Score: 1/1

● Analysis: Gross Margins were 46.0% in FY25, down slightly from 47.7% in FY24.

● Forensic Insight: A manufacturing company with ~50% gross margins is rare. It confirms ABV has pricing power. The slight compression was due to the “International Mix Shift”—sales to overseas distributors (Canada, Mongolia) often carry a wholesale discount compared to direct sales in Australia. This is an acceptable trade-off for rapid geographic scaling. The margin remains well above the 40% “Moat” threshold.

● Red Team Stress Test: The Deep Dive validates this moat against the “Good Enough” threat. While a standard dry brake is cheaper (~$200 vs $15,000 system), the “Cost of Failure” in a deep mine (downtime, seized calipers on a 1:7 decline) vastly exceeds the price differential. This creates a price-inelastic demand curve where safety trumps cost.

4. Momentum: Trading within 20% of 52-Week High?

● Result: YES.

● Score: 1/1

● Analysis:

○ Current Price: $0.130.

○ 52-Week High: $0.160.

○ Threshold: 20% off $0.160 is $0.128.

○ Status: The stock is trading at ~19% below highs, consolidating in a tight range. This is technically a pass. It suggests the stock is “resting” after its run up, not crashing.

5. Catalyst: Specific “Call to Action” Event?

● Result: YES.

● Score: 1/1

● Analysis: The catalyst is the International Breakout. International revenue grew 47% in FY25. The company is no longer just an “Australian story.” The successful entry into the Canadian and Indonesian markets changes the Total Addressable Market (TAM) by an order of magnitude. Additionally, the Q2 FY26 report indicates a 191% increase in Net Profit Before Tax (NPBT) for the quarter, signaling a massive operating leverage kick-in for the current year.

● Deep Dive Context: The Deep Dive identifies the “Lollapalooza Effect” as a secondary catalyst: the convergence of Regulatory Ratchets (ISO 3450 standards), ESG mandates (Zero Harm/Clean Air), and Automation (BRAKEIQ for driverless trucks) is effectively legislating the product into necessity.

6. Liquidity: Market Cap < $100M?

● Result: YES ($51.7M).

● Score: 1/1

● Analysis: At ~$52M market cap, ABV is in the “Institutional Gap.” It is too small for large funds to buy (liquidity constraints), but large enough to be a viable business. This is the sweet spot for retail investors to front-run the eventual re-rating that occurs when a company crosses the $100M threshold and attracts microcap fund managers.

● Liquidity Stress Test: The Deep Dive adds a cautionary note: The liquidity position is “efficient” but not “fortress-like.” With a monthly fixed burn of ~$725k and ~$2.88m in cash, the runway in a zero-revenue scenario is roughly 4.0 months. The company relies on the constant velocity of working capital.

7. Fanatic: CEO has track record of previous exits?

● Result: YES.

● Score: 1/1

● Analysis: CEO Andrew Booth is an “Intelligent Fanatic.” His background is not just corporate management; he has a specific track record of exiting businesses. Research confirms he led the transformational growth of a logistics company in Western Australia through to a successful trade sale exit on behalf of investors prior to joining ABV.

● Implication: He knows how to dress a company for sale. Given the consolidation in the METS (Mining Equipment, Technology and Services) sector, ABV is a prime takeover target for a larger player (e.g., Epiroc, Sandvik, or a global brake manufacturer like Wabtec). Booth’s presence suggests this is the endgame.

● Deep Dive Context: Booth fits the profile of a “Builder” rather than a “Caretaker.” His “Say/Do” ratio is high, having delivered on the specific promises made in the 2022 Strategic Roadmap (international diversification and heavy vehicle entry).

8. Promotion: CEO talks business (not stock price)?

● Result: YES.

● Score: 1/1

● Analysis: A review of Booth’s investor presentations and commentary shows a relentless focus on “Safety,” “ESG,” “Productivity,” and “Blue Chip Customers.” There is no promotion of the share price, no hyperbole about “blockchain brakes” or “Al integration” (unless substantively applicable like BRAKEIQ). He talks like an operator, not a promoter.

● Owner-Operator Alignment: The Deep Dive highlights that the board is dominated by “Owners.” David Slack and Keith Knowles control >50% of the register. Slack even provided a $500k personal loan during a liquidity crunch in 2018, proving his belief in the intrinsic value. This “Owner-Operator” culture insulates the company from short-term market pressure.

● Forensic Governance Check: A review of FY24/25 accounts identified ~$61,000 in related-party payments to Rockwell Group Holdings (associated with former Director Adam Levine). His resignation in August 2025 has “cleaned up” this governance overlap, removing the agency risk .

Total Quality Score: 7/8

● Key Strengths: Sales Velocity, Unit Economics (Margins), Management Track Record, Liquidity.

● Weakness: Efficiency (ROE) strictly missed the 20% mark (hit 18.6%), though for strategic reasons.

Part 4: Financial Forensics & Deep Dive

We must move beyond the checklist and perform a deep-dive forensic analysis of the financial statements and strategic positioning.

1. The Revenue Quality & “Sticky” Income

The most attractive feature of ABV is the quality of its revenue. In FY25, ~45% of revenue came from Spares and Consumables.

● The Physics of the Moat: Because the SIBS brake is sealed in oil, it requires specific proprietary fluids and seal kits to function. Standard DOT 4 brake fluid cannot be used; standard pads cannot be fitted. ABV captures the entire lifecycle value of the brake.

● The “Golden Ratio” Insight: This 55/45 split (System Sales vs. Spares) represents the “Golden Ratio” for industrial microcaps. The 55% drives the installed base growth, while the 45% annuity stream protects the downside. Even if the mining cycle turns and companies stop buying new trucks, they must continue maintaining the existing fleet, ensuring a revenue floor.

● Inflation Hedging: In an inflationary environment, ABV can pass costs on to miners. A 10% price rise on a brake seal kit is a rounding error for a miner operating a $100,000 truck, but it preserves ABV’s margins. This is evidenced by the stable gross margins (46-48%) despite global supply chain inflation.

● Red Team Vulnerability (The EV Threat): A forensic stress-test identifies a long-term threat: Electric Vehicles. The rise of regenerative braking (where the motor does 90% of the braking) threatens to reduce the consumption rate of friction materials. However, the regulatory mandate for “failsafe” mechanical backups creates a countervailing floor. Paradoxically, the “Use It or Lose It” factor favors ABV: standard dry brakes seize if unused (due to corrosion), whereas sealed wet brakes remain pristine even if used only for emergencies, making them the superior partner for EV drivetrains.

2. The Inventory “Red Flag” De-bunked

A superficial look at the Cash Flow Statement shows Operating Cash Flow ($0.62m) lagging NPAT ($1.78m). This is often a red flag for “aggressive revenue recognition” (booking sales that haven’t been paid for).

● Forensic Reality: The gap is entirely explained by a $1.8m increase in Net Assets, driven by inventory.

● Strategic Logic (Security of Supply): The mining industry is currently suffering from supply chain fragility. If a brake part is out of stock, a truck sits idle. An idle truck costs a miner thousands of dollars per hour. By bloating its inventory, ABV guarantees availability. This reliability becomes a sales tool: “Buy from us, we have the stock right now.”

● Logistical Necessity: As ABV expands into Mongolia and Canada, it must hold stock in-country to guarantee “security of supply.” Mining customers will not tolerate a 6-week lead time. The balance sheet is effectively being used as a logistical tool to secure the moat.

● Liquidity Stress Test: This inventory also acts as a buffer. A “Zero-Revenue” stress test indicates the company has a cash runway of ~4.0 months based on fixed burns. The company relies on the constant velocity of working capital, making this inventory build a critical solvency shield.

● Validation: The Q2 FY26 revenue jump (+34%) validates this strategy. The inventory accumulated in FY25 is being successfully converted into sales in FY26.

3. The R&D Tax Incentive: Double-Edged Sword

ABV received approximately $0.95 million in R&D tax incentives in FY24.

● The Bull Case: This non-dilutive funding covers a massive chunk of their operating expenses, effectively subsidizing their engineering team. It validates that their work (BRAKEIQ, new polymer housings) is genuine innovation.

● The Bear Case: If the Australian government tightens R&D eligibility (a perennial risk), ABV’s cash flow takes a direct hit.

● Mitigation: The “Underlying NPAT” (excluding the tax rebate) rose 86.5% to $1.05m in FY25. This is the most critical metric in the entire report. It proves that the business is structurally profitable from operations alone, without relying on government handouts. The tax credit is just the cherry on top, not the cake.

● Capex Nuance: A forensic split of Capex reveals that ABV reinvests ~12-13% of product sales revenue back into R&D. This is “Maintenance Capex” required to keep products compatible with new vehicle models (e.g., Toyota Land Cruiser facelifts), distinct from “Growth Capex” (Volvo FMX), ensuring the moat does not decay.

4. Valuation Forensics: The “Invisible” Value

At 28.5x Earnings, ABV looks expensive compared to a typical ASX industrial (usually 12-15x). However, the Checklist demands we look at the PEG ratio and the durability of growth.

● Operating Leverage: In Q2 FY26, Revenue grew 34%, but Net Profit Before Tax (NPBT) grew 191%. This is “Operating Leverage” in action. Because ABV’s fixed costs (factory rent, R&D salaries) are relatively stable, every additional dollar of revenue flows disproportionately to the bottom line.

● The “Jaws” Ratio: Forensic analysis confirms positive “Jaws”—Revenue is growing faster than Expenses. While Revenue grew at a CAGR of ~16%, Operating Expenses grew more slowly, indicating disciplined management of corporate bloat.

● Reverse DCF Reality Check: To justify a 29x P/E, the market is pricing in ~15-18% compound annual growth. Historical 5-year NPAT CAGR is actually 30.1%. If ABV can maintain even half its historical growth rate, the current valuation is fair.

● The Re-Rate Potential: As ABV crosses $100M market cap (requiring a share price of ~$0.25), it becomes eligible for “Microcap Funds.” These funds are currently barred from buying it due to liquidity rules. When they enter, they buy in bulk, driving a multiple re-rating. We are currently front-running this institutional wall of money.

Part 5: Future Value Architecture & The “Steal” Price

We do not merely want to buy good companies; we want to buy them at prices that make failure difficult and success explosive.

Based on the synthesis of the Deep Dive, we project the following future value horizons and establish our strict “Steal Price.”

5.1 The 5-Year Vision: The “Two-Stage” Rocket

The investment thesis relies on ABV evolving from a “Niche Monopoly” (Stage 1) to a “Global Safety Standard” (Stage 2). The reports paint a clear picture of what this company looks like in 2031.

● The Base Case: “The Niche Monopoly” (Probability: ~50%)

○ The Scenario: ABV continues to dominate the Toyota Land Cruiser market in underground mines but struggles to fully crack the heavy truck market. They remain a highly profitable small cap.

○ The Financials: Revenue grows at historical ~15% CAGR to ~$40M. Margins remain stable.

○ Valuation: The market prices it as a “Mining Service” stock (P/E ~12-15x).

○ Stock Price Target: $0.20 (Modest compounding + Dividends).

● The Bull Case: “Global Safety Standard” (Probability: ~30%)

○ The Scenario: The Volvo FMX heavy truck partnership succeeds and becomes the factory-standard option for Glencore and other Tier-1 miners globally. International sales (Canada/Mongolia) overtake Australian sales.

○ The Financials: Revenue grows at >20% CAGR to reach ~$60M - $70M. Net Profit Margins expand to 20% due to operating leverage (fixed costs stay low).

○ Valuation: As Market Cap crosses $100M, institutional funds enter, driving a re-rate to a “Quality Industrial” multiple of 25x-30x.

○ Stock Price Target: $0.75- $1.00 (Approx. 6x-8x returns).

5.2 The “Heavy Truck” Multiplier (The Catalyst)

The difference between the Base Case and Bull Case is the success of the heavy truck division. The Deep Dive confirms that the Heavy Vehicle Total Addressable Market (TAM) is “significantly larger by value” than the light vehicle market.

The Unit Economics Shift:

The Unit Economics Shift resulting from entering the truck market transforms the P&L structure as follows:

Revenue per Unit:

• Current Status (Light Vehicle): ~$15,000

• Success Case (Heavy Truck): $45,000 - $75,000

• The “Why”: Truck systems are 3x–5x more expensive due to their increased complexity and scale.

Gross Margin:

• Current Status (Light Vehicle): ~48%

• Success Case (Heavy Truck): ~50%+

• The “Why”: A favorable mix shift toward higher-margin, proprietary truck consumables.

Operating Expenses:

• Current Status (Light Vehicle): High % of Revenue

• Success Case (Heavy Truck): Lower % of Revenue

• The “Why”: Operating Leverage. Because engineering costs for the brake are largely “fixed,” selling more units does not result in a linear increase in costs.

Net Profit Margin:

• Current Status (Light Vehicle): ~9%

• Success Case (Heavy Truck): ~20%

• The “Why”: The “drop-through” to the bottom line explodes as fixed costs are fully covered.

5.3 The “Steal Price”: Targeting $0.10

While the Stock Audit classifies the current price of $0.13 (PEG 0.78) as “Growth at a Reasonable Price” (GARP), our mandate is to capture asymmetric returns.

● The “Fair” Price ($0.13): At this level, you are paying a fair price for a high-quality compounder. It is buyable, but it prices in some future growth success.

● The “Steal” Price ($0.08- $0.10):

○ Logic: Applying a strict PEG of 0.5 (the “Deep Value” standard) to the current metrics yields a price of roughly $0.083.

○ Risk Adjustment: We set our target entry at $0.10. At this price, the P/E compresses to ~20x. You are effectively paying for the existing profitable business and getting the “Volvo Growth Option” for free.

● Action: We will “Accumulate on weakness.” If the stock dips to $0.10, the margin of safety becomes extreme.

5.4 Conclusion: The Munger Imperative

Charlie Munger famously stated: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” ABV is, by our classification, a “Wonderful Company”—it possesses a regulatory moat, pricing power, and high returns on capital.

● At $0.13, we are honoring Munger’s rule: buying a wonderful company at a Fair Price.

● At $0.10, we are achieving the “Super-Investor” ideal: buying a wonderful company at a Wonderful Price.

Final Recommendation:

I am not initiating a position at the current price ($0.13). While this is a “Fair Price” for a high-quality compounder, I am waiting for an extreme margin of safety. I will initiate a position in the $0.08 to $0.10 range. This secures the compounding engine while respecting the risk of the microcap liquidity trap.

⚠️ Disclaimer

This newsletter is for informational purposes only and does not constitute financial advice. I am not a financial advisor. All investment strategies and investments involve risk of loss. Nothing contained in this newsletter should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.

Date: Feb 18, 2026

Time: 12:45 PM EST

The recent price action in Docebo (DCBO) is a masterclass in why “special situations” are so valuable. While the general market is panicking, the structural math for our 99-share trade has actually improved significantly.

I wanted to get this gift out to you all immediately. While I personally cannot capture this extra yield—as my own cost basis is locked in at my original suggested buy price of US$19.04—the opportunity for those entering now is incredible. Nothing has changed in the thesis except for the potential returns getting a massive boost.

The News: A “Whale Panic” Discount

As of this writing (12:45 PM EST), the stock has “dumped” roughly 11%, hitting as low as US$16.60. This wasn’t because the business failed; it was a shift in the “big money” dynamics:

• The Warburg Exit: Warburg Pincus, a major private equity backer, is fully exiting their 12.63% stake. They agreed to sell over 3.6 million shares to Intercap Equity at US$18.77 per share in a deal closing around Feb 27, 2026.

• The Intercap Flip: Intercap (the 56% majority owner) originally said they wouldn’t participate in the buyback. Today, they changed their tune, stating they “may participate” to manage their own capital.

• The Panic: When a 56% owner decides to tender shares into a capped $60M buyback, it crowds out every other large fund. These funds are now panic-selling because they face heavy pro-ration—meaning only a tiny fraction of their shares would actually be bought at the premium price.

Why the “Odd Lot” is Still a Fortress

While the “whales” are fighting for space in the pro-rata line, the Odd Lot Provision remains your legal “fast pass.” The formal SIB documents specify that the company will purchase all shares from Odd Lot Holders (those with fewer than 100 shares) before any other shares are purchased.

The Rule: If you hold exactly 99 shares, you are exempt from pro-ration. You get your full US$20.40 exit even if Intercap tenders 10 million shares.

The Updated Math: A ~23% Yield

The price drop has effectively supercharged the potential return. Because the Exit Price is fixed at US$20.40, the lower entry price simply widens the spread.

Original Post (Feb 4)

• Buy Price: ~US$19.04

• Exit Price: US$20.40

• Absolute Return: ~7.1%

Updated (Feb 18)

• Buy Price: ~US$16.60

• Exit Price: US$20.40

• Absolute Return: ~22.9%

In less than 30 days (the offer expires March 10, 2026), you are looking at a nearly 23% tax-free return if executed in a TFSA.

The Execution Protocol

To capture this yield, you must follow the rules strictly:

• Buy Exactly 99 Shares: Purchase exactly 99 shares of Docebo (DCBO) on the Nasdaq. Do not buy 100, or you lose the priority and get lumped in with the “whales” and the pro-rata panic.

• The Valuation Floor: Intercap is literally paying US$18.77 to Warburg next week. Buying at US$16.60 today is a gift from the market’s temporary liquidity fear.

• Tender: Watch your brokerage account for a “Voluntary Corporate Action” notice. Submit instructions to “Tender” all shares.

I’m sticking to the plan, banking the win, and rotating that capital back into my high-conviction microcaps.

Disclaimer: I am not a financial advisor. This post is for educational purposes only. I may hold positions in the securities mentioned. All issuer bids are subject to the terms in the formal circular on SEDAR+.

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Date: Feb 6, 2026

Ticker: TSXV: BEW.V

Price: $0.87 CAD

Market Cap: ~$77.7 Million CAD

In this deep dive, we will review BeWhere Holdings Inc. (BEW.V) and apply it directly to the My Microcap Investing Checklist to determine if it meets our strict criteria for investment.

PART 0: THE BUSINESS BLUEPRINT

The “What”: Digital Eyes for Dumb Assets

What product or service are they selling?

BeWhere is an Industrial Internet of Things (IIoT) company that designs and manufactures ruggedized, low-power hardware (”beacons” or “trackers”) combined with cloud-based software to track assets in real-time.

Unlike traditional GPS tracking used for powered vehicles (like the truck cab), BeWhere focuses on “non-powered” assets—items that do not have their own power source. Their devices utilize Low-Power Wide-Area Network (LPWAN) technology (specifically LTE-M and NB-IoT) to transmit data like location, temperature, light exposure (indicating if a door is open), and impact/shock.

Key Products:

• Hardware:

  • BeSol+: Solar-powered tracker for trailers and containers with infinite battery life in the field.

  • BeTen+: Battery-powered unit (10+ year life) for assets without sun exposure.

  • BeMini: Smaller rechargeable tracker used for smaller assets like pallets or bike-share programs.

• Software: A cloud-based dashboard and API that allows clients to view asset location, receive alerts (e.g., “Trailer 002 left the geofence”), and integrate this data into their existing ERP systems.

The “How”: The “Rental” Cash Flow Engine

How does a dollar move from the customer to the bank account?

BeWhere is transitioning its revenue model to improve quality and stability. Historically, it operated on a hybrid model, but it is shifting toward a higher recurring revenue mix.

• Legacy Model (Transactional + SaaS): The customer buys the hardware upfront (one-time revenue) and pays a lower monthly fee for the software and connectivity.

• New “Rental” Model (Hardware-as-a-Service): To reduce friction for customers with limited capital expenditure (CapEx) budgets, BeWhere is moving to a rental model. The customer pays $0 upfront for hardware but pays a higher monthly recurring fee (OpEx). This increases the Lifetime Value (LTV) of the customer and smooths out revenue lumps.

Sales Channel (Low Overhead): Crucially, BeWhere sells primarily through distribution partners like AT&T, Bell, T-Mobile, and Geotab. BeWhere takes a lower margin on the hardware to leverage these partners’ massive sales forces, keeping BeWhere’s own Sales & Marketing expenses very low.

Financial Stability: As of Q3 2025, the margin from their recurring revenue covers approximately 99% of their total cash operating expenses, meaning the business is self-sustaining purely on subscriptions, with hardware sales acting as “gravy”.

The “Who”: Whale Hunting (UPS, Costco, Ford)

Who is the target customer and why do they need this specifically?

BeWhere targets enterprise-level clients in logistics, construction, utilities, and transportation who manage thousands of movable assets.

Key Verticals:

• Transportation/Logistics: Tracking dry van trailers, flatbeds, and chassis to prevent theft and optimize utilization.

• Construction: Monitoring generators, compressors, and cable reels to ensure they remain on job sites.

• Gov/Municipal: Tracking waste management bins or public works equipment.

Major “Whale” Clients:

• UPS: Tracking equipment during peak seasons to optimize inventory.

• Costco: Tracking container fleets to manage inventory flow from yard to warehouse.

• Lyft: Tracking e-bikes for their ride-share program.

• Ford Pro: Integrating BeWhere sensors into Ford’s commercial telematics offering.

Why they need it: These clients often lose millions in lost or underutilized equipment. BeWhere provides “electronic eyes” on assets that were previously invisible once they left the warehouse.

The “Moat”: Price Destruction & Satellite Supremacy

Why is it hard for a competitor to steal this revenue?

• Price Disruption (Expanding the TAM): BeWhere’s primary moat is engineering cost out of the hardware. By driving tracker costs below $50 (and monthly fees toward $1), they make it economically viable to track cheaper assets (like pallets or porta-potties) that competitors with $200 trackers cannot touch. This expands their Total Addressable Market (TAM) into areas competitors ignore.

• Technical Integration (Barriers to Entry): BeWhere is deeply integrated into the networks of major carriers (Bell, AT&T). They use proprietary firmware that allows devices to switch between private 5G networks and public LTE networks, a technical hurdle that is difficult for generic hardware makers to replicate.

• Satellite Hybrid Tech: BeWhere has successfully tested direct-to-device connectivity with AST SpaceMobile. This allows their standard low-cost cellular devices to connect to satellites when out of cell range (e.g., tracking mining equipment in remote Canada). This creates a “first mover” advantage in global, low-cost satellite tracking.

• Switching Costs: Once a client like Costco installs 10,000+ BeWhere sensors on their fleet and integrates the data into their daily logistics workflow, ripping them out to switch to a competitor is logistically painful and expensive.

PART 1: THE GATEKEEPERS (The Binary Kill Switch)

These are the non-negotiable safety filters. A “NO” on any of these typically disqualifies a microcap investment under this strategy.

1. The “TFSA Compliance” Check

• Rule: Is it listed on TSX, TSX-V, CSE, or NEO? (No Pink Sheets/OTC).

• Verdict: PASS.

• Evidence: The company is listed on the TSX Venture Exchange (TSX-V) under the ticker symbol BEW. It is also listed on the OTCQB under BEWFF, but its primary listing is a major Canadian exchange, making it fully TFSA eligible.

2. The “Ryan Irvine” Solvency Test (Net Cash?)

• Rule: Does the company have a Net Cash Position? (Cash + Short Term Investments > Total Debt).

• Verdict: PASS (Strong Pass).

• Evidence (as of Q3 2025):

  • Cash & Cash Equivalents: $4,137,267.

  • Total Debt: The company carries zero interest-bearing bank debt. It has a $1,000,000 revolving credit facility that remains undrawn.

• Liabilities Analysis: Its primary “debt-like” obligations are:

  • Government Loans: ~$411,000 total (interest-free or low-interest loans from FedDev/CEBA).

  • Lease Liabilities: ~$205,829 (for office space).

• Calculation: $4.1M Cash > ~$0.6M Total Debt/Leases.

• Net Cash Position: ~$3.5 Million. The company has a “fortress” balance sheet relative to its size.

3. The “Anti-Commodity” Filter

• Rule: Is this a non-resource business? (No mining exploration or oil/gas producers).

• Verdict: PASS.

• Evidence: BeWhere is an Industrial Internet of Things (IIoT) technology company. It designs and manufactures hardware sensors and software platforms. It is a “Price Maker” (setting its own pricing based on value/ROI) rather than a “Price Taker” dependent on commodity spot prices.

4. The “Paul Andreola” Dilution Gate

• Rule: Is Revenue Growth % > Share Dilution %?

• Verdict: PASS (Accretive Growth).

• Evidence:

  • Revenue Growth (YTD Q3 2025): Revenue grew from $12.85M (YTD 2024) to $15.82M (YTD 2025), an increase of ~23%.

  • Share Dilution:

    • Shares Outstanding (Sept 30, 2024): 87,315,111.

    • Shares Outstanding (Sept 30, 2025): 89,290,502.

  • Dilution Rate: ~2.3%.

• Conclusion: The business grew 10x faster than the share count (23% vs. 2.3%). Management is extremely disciplined with equity, having not raised capital since 2019.

5. The Profitability Gate

• Rule: Is it Profitable OR Cash Flow Positive (for at least 2 quarters)?

• Verdict: PASS.

• Evidence:

  • Net Income: The company has been profitable for years. For the nine months ended September 30, 2025, Net Income (Comprehensive) was $942,482.

  • Quarterly Consistency:

    • Q1 2025: Profitable ($95k).

    • Q2 2025: Loss of ~$131k (due to a one-time $425k tariff hit).

    • Q3 2025: Profitable again (Record Adjusted EBITDA of ~$800k).

  • Operating Cash Flow: Positive $322,713 YTD 2025. Note: Cash flow was temporarily impacted by an increase in Accounts Receivable (collections), with ~$600k collected immediately after the quarter closed.

6. The “Survival Gap” Pre-Mortem

• Rule: Identify the single biggest risk. Does the company have enough “Room for Error” (Net Cash) to survive without going to zero?

• Verdict: PASS.

• Risk Analysis:

  • Primary Threat: Tariffs. In Q2 2025, U.S. tariffs hit the company for $425,000, wiping out quarterly profit.

  • Secondary Threat: Customer Concentration. Losing a top client (like UPS) would be a significant revenue hit.

• Survival Buffer:

  • Cash: $4.1 million in the bank.

  • Working Capital: ~$7.3 million.

• Stress Test: Even if the $425k tariff hit happened every quarter (totaling $1.7M/year), the company has enough cash on hand to survive for 2+ years without raising a single dollar of external capital. Furthermore, they have already mitigated this risk by moving manufacturing to Albania.

PART 2: THE SCORECARD (The Ranking System)

7. Sales Velocity (The Momentum)

• Rule: Is Revenue Growing > 20% Year-over-Year?

• Verdict: PASS (Strong Pass).

A. Annual Performance (Last 3 Years) The company has demonstrated an accelerating growth trajectory over the last three fiscal years, moving from steady double-digit growth to explosive expansion in 2024.

• 2024: $17.5 Million (+45% YoY) - Significant expansion in hardware sales and recurring revenue scaling.

• 2023: $12.1 Million (+20% YoY) - Consistent rollout of M-IoT devices; 31% increase in recurring revenue.

• 2022: $10.0 Million (+17% YoY) - Recovery from COVID-19 challenges; 55% increase in Gross Profit.

B. Quarterly Execution (Last 3 Quarters) The momentum has carried into 2025, with the company setting consecutive revenue records. The “lumpiness” of hardware sales is being smoothed by a strong base of recurring revenue (ARR), which reached ~$8.6 million in Q3 2025.

• Q3 2025 (Sept 30): $6.08 Million (+21% YoY) - “All-Time Record. Highest product revenue in history. Gross Profit jumped 42% YoY as the company began mitigating tariff impacts through supply chain adjustments. Adjusted EBITDA hit a record $802k.”

• Q2 2025 (Jun 30): $5.52 Million (+28% YoY) - “Previous Record. Driven by the second-highest quarterly unit volume in history. However, margins were compressed by a ~$425k tariff hit, which masked the true profitability of the quarter.”

• Q1 2025 (Mar 31): $4.21 Million (+20% YoY) - “Seasonal Strength. Recurring revenue grew 40% YoY, aided by seasonality (UPS peak season usage). Net income rose 49% YoY, signaling strong operational leverage early in the year.”

Analysis: The company is consistently growing above the 20% threshold. Growth is driven by record hardware shipments and a compounding recurring revenue base.

8. The “Rule of 20” (Valuation Check)

• Rule: Is P/E < Revenue Growth Rate? (PEG < 1).

• Verdict: FAIL (on P/E Basis) / PASS (on EV/EBITDA Basis).

The Numbers:

• Net Income (LTM): ~$1.1M (approx. based on Q4’24 + YTD’25).

• Market Cap: ~$63M (assuming ~$0.70 share price on ~89M shares).

• P/E Ratio: ~57x (High).

• Revenue Growth: 23%.

Context: The “Rule of 20” fails on GAAP earnings because depreciation/amortization shields much of the cash flow. However, on an EV/EBITDA basis, the company trades at approx. ~20x (based on LTM Adjusted EBITDA of ~$2.4M and EV of ~$65M).

Insight: While it fails the strict PEG < 1 test, the valuation is not “euphoric” given the 45% growth in 2024. The market is pricing in the transition to higher profitability.

9. The “Jason Donville” Quality Floor

• Rule: Is ROE > 20%? (Or if early stage: Revenue Growth + Profit Margin > 40?)

• Verdict: FAIL (Current ROE is ~10-12%).

The Numbers:

• Equity: ~$10M.

• Net Income (LTM): ~$1.1M.

• ROE: ~11%.

Analysis: The ROE is suppressed because the company is currently hardware-heavy (lower margin) and recently absorbed significant tariff costs ($425k in Q2 2025).

The “Rule of 40” Save: However, if we use the SaaS “Rule of 40” (Growth + EBITDA Margin), BeWhere scores: 23% Growth + ~12% EBITDA Margin = 35%. It is approaching the quality floor but not quite there yet.

10. The “Unit Economics” Check

• Rule: Are Gross Margins high/stable (>40-50%)?

• Verdict: FAIL (Currently ~33%).

The Numbers:

• Q3 2025 Gross Margin: 33% ($2.02M on $6.08M revenue).

• Trend: Margins dipped to 26% in Q2 due to tariffs but recovered to 33% in Q3.

Why it Fails: BeWhere is currently a “Hardware-Enabled SaaS” company. It sells hardware at low margins (~10-20%) to secure high-margin SaaS (~90%).

• The Pivot: Management is launching a new lower-cost device (”The Batman”) in Q4 2025/Q1 2026 designed to increase hardware margins. Until recurring revenue (60-90% margin) becomes the majority of the mix, consolidated gross margins will likely remain below the 40% target.

11. The “Telford” Momentum Check

• Rule: Is the stock trading within 20% of its 52-Week High?

• Verdict: PASS (Conditional on current price).

• Data: The stock traded between $0.60 and $1.00 recently.

• Context: If the stock is currently near $0.70-$0.80, it is consolidating. The “Atrium Research” on BeWhere website note suggests a target valuation significantly higher than current levels, but technical momentum depends on the specific daily price (which fluctuates).

12. The “Inflection Signal” (Catalyst)

• Rule: Is there a specific “Call to Action” event occurring right now?

• Verdict: PASS (Multiple Catalysts).

• Catalyst 1: The Satellite Breakout. In October 2025, BeWhere successfully connected a standard device to AST SpaceMobile’s satellite network. This opens a massive new Total Addressable Market (maritime, mining) without requiring new hardware development.

• Catalyst 2: The “Batman” Launch. A new low-cost device launching in late 2025 designed to replace older units with better margins.

• Catalyst 3: FirstNet/Government. Secured an 8,000 unit order for FirstNet (AT&T) in August 2025, validating the government/emergency services vertical.

13. The “Institutional Gap” & Liquidity

• Rule: Is Market Cap < $100M (ideally < $50M) AND does it trade < $50k volume/day?

• Verdict: PASS.

The Numbers:

• Market Cap: ~$60M - $70M.

• Gap: Too small for most large institutions, but large enough for microcap funds. This is the “sweet spot” where retail investors can front-run institutional flows before the company crosses $100M.

14. The “Intelligent Fanatic” Track Record

• Rule: Does the CEO/Board have a track record of previous exits?

• Verdict: PASS.

• Evidence: CEO Owen Moore co-founded Grey Island Systems, grew it to $24M revenue, and sold it in 2009 for $40M.

• Quote: “I sold my last company too soon... I think we have a lot more runway ahead of us... we’d like to get it up to that $50 million revenue mark before we take a serious look at putting the company up”.

15. The “Promotion” Test

• Rule: Does the CEO talk more about the business than the stock price?

• Verdict: PASS.

• Evidence: In the Smallcap Discoveries conference (2025), the CEO explicitly stated: “We didn’t do any marketing in 2023, we stopped investing in IR... we took that budget and moved it into an issuer bid share buyback”.

• Alignment: Management owns ~22% of the company, aligning their incentives with business performance rather than stock promotion.

Conclusion: The Verdict

Final Score: 12/15

It is not a “defensive” play; it is a high-velocity compounder that has just been refueled. The $4M financing is the “smoking gun” that demand for their Rental and Satellite solutions is accelerating beyond what their organic cash flow can support.

• Financial Safety: Fortress balance sheet (~$8M Cash post-raise).

• Growth Torque: 20%+ Revenue Growth with a massive Satellite TAM opener.

• Management: Proven allocators who treat shareholder capital with respect.

Action: I am still digging deep into my thesis to understand this more before I make a decision to buy, but at the standstill this looks like a great opportunity.

⚠️ Disclaimer

This newsletter is for informational purposes only and does not constitute financial advice. I am not a financial advisor. I am long BeWhere Holdings (TSXV: BEW). All investment strategies and investments involve risk of loss. Nothing contained in this newsletter should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.

The Checklist Compounder is primarily built to find Canadian microcaps that can compound for 10+ years. That is the main course.

However, in the pursuit of high returns, we cannot ignore the “free lunches” that the market occasionally serves up. To truly maximize performance over the long run, I use a small portion of my portfolio (often idle cash) to execute “Return Boosters.”

These are low-risk, high-probability special situations—specifically Odd Lot Tender Offers—popularized by Joel Greenblatt in You Can Be A Stock Market Genius. These small 4-7% wins might not look like much in isolation, but when you stack them on top of a core portfolio year after year, the compounding effect is massive.

A perfect setup just hit the market: Docebo Inc. (DCBO).

The Setup: Why This Works

Docebo has announced a Substantial Issuer Bid (SIB) to buy back shares at a fixed price of US$20.40.

Usually, these buybacks are “pro-rated,” meaning if too many people sell, the company only buys a fraction of your shares. But to save on admin costs, Docebo included an Odd Lot Provision.

• The Rule: If you own fewer than 100 shares (i.e., 99 shares), you are exempt from proration.

• The Edge: While billion-dollar funds are fighting for allocation, the company is legally committed to buying 100% of your small position at the premium price.

The Math (USD Execution)

To maximize the spread and avoid currency friction, I am executing this trade in USD (using a TFSA at Interactive Brokers).

• The Exit Price: US$20.40 (Fixed Offer)

• The Buy Price: ~US$19.04 (Current Market)

• The Volatility Bonus: The stock has been volatile, wicking down as low as US$18.69 intraday. If you set aggressive limit orders, you can widen the spread even further.

The Payoff (99 Shares at US$19.04):

• Total Cost: $1,884.96 USD

• Total Cash Out: $2,019.60 USD

• Net Profit: $134.64 USD

• Return on Capital: ~7.1% (in approx. 40 days)

• CAD Equivalent: ~$184 CAD (at 1.365 exchange rate)

The Execution Protocol

To capture this yield, you must follow the timeline strictly:

1. Buy: Purchase exactly 99 shares of Docebo (DCBO) on the Nasdaq immediately. (Do not buy 100, or you lose the exemption).

2. Tender: Watch your brokerage account for a “Voluntary Corporate Action” notice. Submit instructions to “Tender” all shares.

3. Collect: The offer expires on March 10, 2026. Cash is typically disbursed ~35 days later.

This isn’t a “multibagger” play; it is a surgical cash management maneuver. We take the easy 7%, bank it, and rotate that capital back into our high-conviction microcaps.

Disclaimer: I am not a financial advisor. This post is for educational purposes only. I may hold positions in the securities mentioned. All issuer bids are subject to the terms in the formal circular on SEDAR+.

Date: January 29, 2026

Ticker: TSXV: KDOZ.V

Price: ~$0.40 CAD

Market Cap: ~$52.0 Million CAD

In this deep dive, we will review Kidoz Inc. (KDOZ.V) and apply it directly to the My Microcap Investing Checklist to determine if it meets our strict criteria for investment.

PART 0: THE BUSINESS BLUEPRINT

The “What”: Safe AdTech Infrastructure (The “Black Box”)

Kidoz is not just an ad agency; it is a software platform. They own a proprietary Software Development Kit (SDK) that sits inside over 5,000 mobile apps. This tech stack includes a Demand Side Platform (DSP), Supply Side Platform (SSP), and Ad Exchange. Their core product is the Kidoz Safe Ad Network, which delivers COPPA/GDPR-compliant ads to children (under 13). They also have a secondary product, Prado, targeting teens and adults.

The “How”: Contextual Targeting (No Data Harvesting)

Kidoz generates revenue by connecting brands (Demand) with app publishers (Supply). Unlike Google or Meta, which use behavioral data (tracking user history), Kidoz uses Contextual Targeting. Their AI analyzes the app’s content (e.g., “This is a dress-up game”) to serve relevant ads (e.g., “Barbie doll”) without collecting personal data. They earn money on a CPM (Cost Per Mille) basis, keeping approximately 54% of the revenue (Gross Margin), while paying the rest to the app developer.

The “Who”: The “Whales” of Advertising

Their customers are not small businesses; they are global giants. The top three clients are McDonald’s, Lego, and Mattel. These clients need Kidoz because they face massive regulatory fines if they accidentally track children online. Kidoz provides the “Safe Harbor”.

The “Moat”: Regulatory Oligopoly & Tech Friction

• Regulatory: Kidoz is one of the few Google Certified Safe Ad SDKs. Google’s “Families Ads Program” effectively bans non-certified competitors.

• Switching Costs: Once an app developer installs the Kidoz SDK, ripping it out requires coding changes and app store re-submission. This creates a “sticky” supply chain.

• The “Black Box”: The CEO notes they have invested over $20 million in expensed R&D to build this stack. A competitor cannot easily replicate this without years of development and compliance audits.

PART 1: THE GATEKEEPERS (The Binary Kill Switch)

[X] 1. The “TFSA Compliance” Check

• Status: PASS

• Detail: The company trades on the TSX Venture Exchange (TSXV) under the ticker KDOZ.V. It is fully eligible for registered accounts (TFSA/RRSP).

[X] 2. The “Ryan Irvine” Solvency Test (Net Cash?)

• Status: PASS

• Detail: As of late 2024, the company held approximately $2.8 million USD in cash and has zero debt.

• Deep Dive: The CEO explicitly stated in Jan 2026: “We have no intention of going to the market... we don’t need more for growth”. They are funding operations through organic cash flow. This passes the solvency test comfortably.

[X] 3. The “Anti-Commodity” Filter

• Status: PASS

• Detail: Kidoz is a software/AdTech business. It is not a resource explorer. It is a price maker to an extent because of the scarcity of “safe” inventory for kids, evidenced by their high gross margins (54%).

[X] 4. The “Paul Andreola” Dilution Gate

• Status: PASS

• Detail:

  • Revenue Growth: Q3 2025 revenue grew 60% YoY.

  • Dilution: The share count grew only ~1.5% in 2024 (133M to 135M shares).

• Verdict: This is “Accretive Dilution.” The business is growing significantly faster than the share count. They are not issuing shares to pay salaries; they are self-funding.

[X] 5. The Profitability Gate

• Status: PASS

• Detail: Kidoz reported a record Q4 2024 pre-tax profit of $2.2 million USD. For the full year 2024, they generated $1.3 million USD in Free Cash Flow. They have crossed the threshold from “growth at all costs” to profitability.

[X] 6. The “Survival Gap” Pre-Mortem (The “Kill” Risk)

• Status: PASS (With Caution)

• The “Kill” Risk: Customer Concentration. The top three clients (McDonald’s, Lego, Mattel) account for ~60% of revenue. If Kidoz loses one of these relationships, the stock would likely crash.

• The Buffer: They have ~$2.8M cash and positive cash flow. This gives them a “Survival Gap” of roughly 12-18 months to find new clients if a major one left.

• Regulatory Risk: There is a risk Google changes its policy to ban all third-party SDKs. However, regulators (DOJ/EU) are actively fighting Google’s monopoly, making this unlikely in the near term.

PART 2: THE SCORECARD (The Ranking System)

[X] 7. Sales Velocity (Revenue > 20%?)

• Score: PASS (Currently)

• Deep Detail: Historically, this was a failure. Revenue dropped 12% in 2023 and grew only 6% in 2024.

• The Pivot: However, this was deliberate. They spent 2022-2023 firing low-quality “reseller” clients to replace them with direct brand clients. The “Sales Velocity” has now returned with a vengeance: Q3 2025 revenue grew 60%. The forecast for full-year 2025 is ~$18M (up ~28%) and 2026 target is $25M.

[X] 8. The “Rule of 20” (PEG < 1)

• Score: PASS (On Owner Earnings)

• Deep Detail: The GAAP P/E looks high (~60x) because Kidoz expenses 100% of its R&D ($20M lifetime) rather than capitalizing it. This artificially depresses Net Income.

• Owner Earnings Reality: If you add back non-cash charges (Amortization/SBC), the company trades at roughly 13x Owner Earnings.

• PEG: With a growth rate of ~30% and a multiple of 13x, the PEG is 0.43. This is highly attractive.

[X] 9. The “Jason Donville” Quality Floor (ROE > 20%)

• Score: FAIL / MIXED

• Deep Detail: ROE was 12.4% in 2024. It fails the 20% hurdle.

• Redeeming Factor: ROIC (Return on Invested Capital) rebounded to 21.6% in 2024. This discrepancy exists because they hold a lot of cash (which earns little interest), dragging down the equity return. The operating business is highly efficient.

[X] 10. The “Unit Economics” Check

• Score: PASS

• Deep Detail: Gross Margins hit 54.1% in 2024. This is the “smoking gun” of a Moat. Generic ad networks usually have margins of 30-40%. Kidoz retaining 54% proves they have Pricing Power—advertisers are willing to pay a premium for “Safe” inventory.

[X] 11. The “Telford” Momentum Check

• Score: PASS

• Deep Detail: As of Jan 28, 2026, the stock is trading at $0.40 CAD. The 52-week high is $0.46. It is trading within ~13% of its high. The stock recently broke out of the $0.30 range on the back of the Q3 news.

[X] 12. The “Inflection Signal” (Catalyst)

• Score: YES

• Deep Detail: The catalyst is the “Contextual Pivot” realization. The market hated the revenue stall in 2022/23. The Q3 2025 earnings (60% growth) provided the “Inflection Signal” that the new strategy (Direct Sales) is scaling faster than the old strategy (Resellers) was declining.

[X] 13. The “Institutional Gap” & Liquidity

• Score: PASS

• Deep Detail: Market Cap is ~$52M CAD. Average volume is only ~24k shares/day.

• The Trap: It is very illiquid. You cannot buy or sell large positions quickly. However, this fits the checklist perfectly: “Big funds cannot buy stocks this small.” You are buying before the institutions can.

• Improvement: They hired ITG as a market maker in Aug 2025, which has tightened spreads.

[X] 14. The “Intelligent Fanatic” Track Record

• Score: PASS

• Deep Detail:

  • Tenure: CEO Jason Williams and Tech Lead (his brother, ex-Electronic Arts) have been working together for 20+ years.

  • Culture: Turnover is near zero. “Once you come into Kidoz... you don’t leave”.

  • Integrity: During COVID, management took “huge pay cuts” so they didn’t have to fire staff. This signals high alignment with the business’s long-term health.

[X] 15. The “Promotion” Test

• Score: PASS

• Deep Detail: The CEO discusses the business metrics (engagement, tech stack) deeply.

• Nuance: He does care about the share price. He explicitly stated that a higher share price is a strategic goal to enable M&A. However, he allocated only ~$60k (1% of expenses) to market making/promotion, proving he is frugal and not pumping the stock with paid newsletters.

SUMMARY & INDEPENDENT VERDICT

Checklist Score: 14/15 (The only “Fail” is the strict ROE < 20%, though ROIC passes).

The Conclusion:

Kidoz is a “Inflection Point” microcap. It spent two years in the wilderness (2022-2023) fixing its business model, which made the stock “dead money”. The financial data from late 2025 proves the fix worked (60% growth, 54% margins, profitable).

The Risks You Must Accept:

1. Concentration: You are betting on McDonald’s, Lego, and Mattel staying happy.

2. Seasonality: The business lives or dies in Q4. Q1 and Q2 are often boring or break-even.

3. Liquidity: It is hard to get in and out of $52M CAD stocks without moving the price.

Final Verdict:

The company is Undervalued based on Owner Earnings (~13x) relative to its Growth (30%). It passes the “Survival” gates and has triggered the “Inflection” signal.

Disclosure: I currently hold no position in Kidoz Inc. This deep dive is part of my active research process, and I am still digging into the data to verify the thesis. Please conduct your own independent research and due diligence.

Date: January 26, 2026

Ticker: TSXV: BQE

Price: ~$70.00 CAD

Market Cap: ~$90.8 Million CAD

Today we are running BQE Water Inc. through the Microcap Master Checklist. At first glance, BQE looks like a volatile mining services contractor. However, if you dig into the accounting quirks and recent contract wins, you find a rapidly growing, high-margin environmental utility trading at a fraction of its potential value.

Here is the deep dive.

PHASE 1: THE FORTRESS (The Kill Switch)

These are binary filters. If “NO,” the stock is rejected immediately.

[X] 1. The “TFSA Compliance” Check

• Rule: Listed on TSX, TSX-V, CSE, or NEO?

• Verdict: PASS

• Data: Listed on the TSX Venture Exchange (Tier 1 Issuer) under ticker BQE.

[X] 2. The “Ryan Irvine” Solvency Test

• Rule: Net Cash Position? (Cash > Debt).

• Verdict: PASS (Elite)

• Data: As of Q3 2025, BQE holds $17.0 million in cash and cash equivalents.

• Debt: The company carries negligible interest-free government innovation loans (~$634k) and no commercial bank debt.

• Insight: With only ~1.29 million shares outstanding, there is roughly $13.00 per share in net cash backing the stock price. This is a fortress balance sheet that allows them to self-fund growth and weather mining cycles.

[X] 3. The “Anti-Commodity” Filter

• Rule: Non-resource business? (No mining/oil exploration).

• Verdict: PASS (With Nuance)

• Data: BQE is a technology provider, not a miner. They treat toxic wastewater (Selenium, Cyanide, Sulphate) so mines can operate legally.

• The Nuance: They do have exposure to copper/zinc prices through their Joint Venture (JV) in China, which sells recovered metals. However, the company is actively pivoting toward recurring “water treatment fees” (fixed tolling) to de-risk this exposure. The new 20-year Britannia Mine contract is purely fee-based, further insulating them from commodity volatility.

[X] 4. The “Paul Andreola” Dilution Gate

• Rule: Revenue Growth > Share Dilution? (Share count shrinking is best).

• Verdict: PASS (Gold Standard)

• Data: The share count is stable and shrinking. BQE has an active Normal Course Issuer Bid (NCIB). In the first 9 months of 2025, they cancelled 1,000 shares.

• Comparison: While the share count remained flat/down, Proportional Revenue grew 66% year-over-year in the first 9 months of 2025. This is massive accretive growth per share.

[X] 5. The Profitability Gate

• Rule: Profitable OR Cash Flow Positive?

• Verdict: PASS

• Data: Highly profitable. Net Income for the first 9 months of 2025 was $6.4 million, up 78% from $3.6 million in the prior year.

PHASE 2: THE ENGINE (Growth & Drivers)

Does it have the fundamental momentum to drive multiple expansion?

[X] 6. Sales Velocity

• Rule: Revenue Growing > 20% YoY?

• Verdict: PASS (High Velocity)

• Data:

  • GAAP Revenue: $28.0M YTD 2025 (vs. $12.1M YTD 2024).

  • Proportional Revenue: $31.5M YTD 2025 (up 66% YoY).

• The Driver: Technical Services revenue surged by 484% YTD in 2025 due to emergency work at Eagle Gold and new plant installations. Technical Services is the “leading indicator”—engineering work today becomes recurring operations revenue tomorrow.

[X] 7. The “Rule of 20”

• Rule: P/E < Revenue Growth Rate? (PEG < 1).

• Verdict: PASS

• Data:

  • P/E Ratio: Trading at roughly 11.7x TTM Earnings (~$70 share price / ~$6.00 EPS).

  • Growth: Earnings grew ~78% YTD.

• Valuation: You are paying ~11x for a business growing at >50% with 30%+ margins. This is a classic mispricing due to obscurity.

[X] 8. The “Jason Donville” Quality Floor

• Rule: ROE > 20%?

• Verdict: PASS

• Data: Return on Equity (ROE) is estimated at ~33% for 2025.

• Insight: BQE requires almost no capital to grow because the mining clients pay for the plant construction (Capex). BQE simply provides the IP and the people. This asset-light model generates software-like returns on capital.

[X] 9. The “Unit Economics” Check

• Rule: Gross Margins > 40-50%?

• Verdict: PASS

• Data: Gross Margins were ~51% in Q3 2025. The recurring operations side acts like a high-margin royalty stream on the mine’s existence.

PHASE 3: THE DISCOVERY (Entry & Advantage)

Why is it cheap? We are looking for “Information Arbitrage.”

[X] 10. The “Institutional Gap” & Liquidity

• Rule: Market Cap < $100M and Volume < $50k/day?

• Verdict: PASS

• Data: Market Cap is ~$90M. Average volume is extremely low (~420 shares/day).

• The Advantage: Large funds literally cannot buy this stock yet. They need liquidity. You are front-running the institutions. By the time it is liquid enough for them, the stock will likely be over $100.

[X] 10a. The “Hidden Asset” Accounting

• Rule: Is the value hidden by GAAP?

• Verdict: PASS

• The Situation: GAAP rules force BQE to hide its massive China Joint Venture revenue. It only shows up as “Share of Income” on the bottom line. Investors screening for “Revenue Growth” miss the full picture.

• Reality: The “Proportional Revenue” (which includes the JV) shows the true scale of the business is ~20% larger than GAAP suggests.

[X] 11. The “Moat” Verification

• Rule: Does it have a technological monopoly?

• Verdict: PASS (The Selenium Moat)

• Data: BQE has the only commercially available non-biological solution for Selenium removal (Selen-IX™).

• Why it matters: Biological solutions (using bugs) stop working in cold weather (Canada/Yukon). BQE’s chemical process works year-round and can be turned on/off instantly. If a mine in the north needs a permit, they effectively have to hire BQE.

[X] 12. The “Insider” Alignment

• Rule: Management owns > 10%?

• Verdict: PASS

• Data: Insiders and three major shareholders control roughly 58% of the float.

• Behavior: Management has refused to do stock splits or promotional marketing to artificially boost liquidity. They are focused entirely on operations.

[X] 12a. The “Company Maker” Catalyst & The Valuation Gap

• Rule: Is there an impending event to re-rate the stock?

• Verdict: PASS

• The Event: In Dec 2025, BQE signed a 20-year contract with the BC Government for the Britannia Mine.

• Impact: This converts the company from a “risky contractor” to a “government-backed utility.”

• The Valuation Bridge: Management has explicitly identified a massive gap in the market. They stated there are companies worth $100 million (like BQE) and companies worth billions (Veolia), but “there’s nobody really sitting in that 500 million to a billion dollar space.”

• The Re-Rate: The Britannia contract is the first step in bridging this gap. It provides the long-term, government-backed recurring revenue that justifies a higher “Utility” multiple. With BQE sitting at the ~$100M mark and now securing multi-decade income, the stock is positioned for significant valuation expansion as it moves toward that $500M tier.

PHASE 3b: THE PRE-MORTEM (Risks)

What could go wrong?

• Liquidity Trap: This is a double-edged sword. While it creates the mispricing, it also means you cannot exit a large position quickly without crushing the price. Capital allocated here must be patient.

• Geopolitical Exposure: A significant portion of current income is derived from the Chinese JV. While the company is pivoting to North America (Britannia), political tension remains a tail risk.

• Execution Risk: Transitioning from “Contractor” to “Owner/Operator” requires flawless execution on the Britannia mandate to prove the model works at scale.

PHASE 4: THE HOLD (Compounder Mindset)

[X] 13. The Reinvestment Test

• Rule: Can they reinvest at high rates of return?

• Verdict: PASS

• Data: They are using cash to fund the working capital for new massive projects (like the Valley Tailings plant in the Yukon) and R&D for new contaminants (Sulphate/Cyanide). The ROE of 33% proves they reinvest efficiently.

[X] 14. The “Owner Earnings” Shield

• Rule: Stock down but Earnings up?

• Verdict: PASS

• Data: The stock has been consolidating in the $50-$70 range while earnings power has nearly doubled in the last 2 years. This is “coiled spring” dynamics.

FINAL SUMMARY

Total Checklist Score: 14 PASS / 0 FAIL

The Bottom Line:

BQE Water is a rare “A+ Quality” microcap. It combines the safety of a fortress balance sheet ($13/share in net cash) with the upside of a technological monopoly in a regulated industry.

The market currently prices BQE as a cyclical mining service company (~11x earnings). However, with the new 20-year government contract and the dominant Selenium IP, it is transitioning into a high-margin Environmental Utility. Utilities with this growth profile typically trade at 20-25x earnings.

The Strategy:

Due to extreme illiquidity, you cannot rush into this position. Use Limit Orders only. Do not chase the ask.

• Current Price: ~$70.00

• The Upside: Management sees no competitors in the $500M to $1 Billion range and BQE is sitting at the $100M mark, well-positioned to capture this valuation premium.

• The Play: Accumulate slowly. You are buying a monopoly on environmental compliance before the Britannia income hits the books and forces the re-rate.

Disclaimer: I am Long BQE.V. Do your own due diligence.

Date: January 26, 2026

Ticker: TSXV: CTZ

Price: ~$1.28 CAD

Today we are running NamSys Inc. through the full 21-point Microcap Master Checklist. This company operates in the unsexy world of “Cash Logistics Software,” but it dominates its niche.

Here is the deep dive.

PHASE 1: THE FORTRESS (The Kill Switch)

These are binary filters. If “NO,” the stock is rejected immediately.

[X] 1. The “TFSA Compliance” Check

• Rule: Listed on TSX, TSX-V, CSE, or NEO?

• Verdict: PASS

• Data: Listed on the TSX Venture Exchange (Tier 2 Technology Issuer) under ticker CTZ.

[X] 2. The “Ryan Irvine” Solvency Test

• Rule: Net Cash Position? (Cash > Debt).

• Verdict: PASS (Elite)

• Data: As of Q3 2025, NamSys holds ~$9.55 million in cash and short-term investments. Total Debt is $0.00.

• Insight: Cash represents roughly 25% of the market cap (~$0.35/share). We are buying a fortress.

[X] 3. The “Anti-Commodity” Filter

• Rule: Non-resource business? (No mining/oil).

• Verdict: PASS

• Data: This is a pure-play SaaS (Software-as-a-Service) company. They do not manufacture the safes or drive the trucks; they sell the cloud software that runs the logistics. 99% of revenue is recurring.

[X] 4. The “Paul Andreola” Dilution Gate

• Rule: Revenue Growth > Share Dilution? (Share count shrinking is best).

• Verdict: PASS (Gold Standard)

• Data: Share count is shrinking. The company has an active Normal Course Issuer Bid (NCIB). In Fiscal 2024, they repurchased and cancelled 355,600 shares.

[X] 5. The Profitability Gate

• Rule: Profitable OR Cash Flow Positive?

• Verdict: PASS

• Data: Highly profitable. Net Income margins are 31%. They have been profitable for over a decade.

PHASE 2: THE ENGINE (Growth & Drivers)

Does it have the “Rocket Fuel” to double or triple?

[X] 6. Sales Velocity

• Rule: Revenue Growing > 20% YoY?

• Verdict: MIXED (Hidden Rocket Fuel)

• Data:

  • Total Revenue: Grew 12% in 2024.

  • Recent Trend: H1 2025 hit 21-23% (Pass), but Q3 2025 decelerated to 10% (Fail) as a major rollout completed.

  • The Hidden Engine: The specific Cirreon CIT segment (Logistics) grew 52% in 2024. We are buying the high-growth segment masked by the slower legacy business.

[X] 7. The “Rule of 20”

• Rule: P/E < Revenue Growth Rate? (PEG < 1).

• Verdict: PASS

• Data: P/E is ~15x. Earnings grew 29% in 2024. The PEG ratio is roughly 0.5–0.8.

• Valuation: Ex-Cash P/E is only 11.2x.

[X] 8. The “Jason Donville” Quality Floor

• Rule: ROE > 20%?

• Verdict: PASS

• Data: ROIC is rising. Net margins expanded from 26% to 31% in 2024. This proves they have pricing power and operational leverage.

[X] 9. The “Unit Economics” Check

• Rule: Gross Margins > 40-50%?

• Verdict: PASS

• Data: Gross Margins are 63%. Operating Margins are ~39-41%. These are elite software margins.

[ ] 9a. The “Telford” Momentum Check

• Rule: Trading within 20% of 52-Week High?

• Verdict: FAIL

• Data: The stock is trading at ~$1.28, down from a high of ~$1.68. It is in a consolidation phase.

• Why: See Rule 10a below.

PHASE 3: THE DISCOVERY (Entry & Advantage)

Why is it cheap? We are looking for “Information Arbitrage.”

[X] 10. The “Institutional Gap” & Liquidity

• Rule: Market Cap < $100M and Volume < $50k/day?

• Verdict: PASS

• Data: Market Cap is ~$36M CAD. Daily volume is extremely low (~6,000–12,000 shares/day). Big funds simply cannot buy this yet.

[X] 10a. The “Greenblatt” Special Situation

• Rule: Artificial selling pressure (Spinoff, Forced Seller)?

• Verdict: PASS (The Estate Overhang)

• The Situation: The Estate of the late Chairman (K. Barry Sparks) is systematically selling shares for liquidity/estate planning.

• Evidence: Insider filings show the Estate sold 92,000 shares in three days in Jan 2026. This artificial supply is the only reason Rule 9a (Momentum) failed.

[X] 10b. Share Structure Tightness

• Rule: Tight Structure (<50M shares)?

• Verdict: PASS

• Data: Only ~26.9 million shares outstanding. A very tight float means when the Estate stops selling, the price can move fast.

[X] 11. The “Scuttlebutt” Verification

• Rule: Verified product/customer?

• Verdict: PASS

• Data: Verified customer: Brink’s (accounted for ~38% of revenue historically).

• Stickiness: Zero customer churn in 2024. Net Revenue Retention is 112%.

[X] 12. The “Insider” Alignment

• Rule: Management owns > 10%?

• Verdict: PASS

• Data: Management and Family entities control >30%.

• Buying: CEO Jason Siemens was buying shares in the open market in February 2025.

[X] 12a. The “Intelligent Fanatic” Track Record

• Rule: Proven track record?

• Verdict: PASS

• Data: Jason Siemens isn’t a hired gun; he is a “Second Generation Operator” who started as a programmer 15+ years ago. He successfully pivoted the company from legacy software to Cloud/SaaS.

[X] 12b. The “Promotion” Test

• Rule: Talks business > stock price?

• Verdict: PASS

• Data: In interviews, Siemens focuses entirely on “efficiency,” “margins,” and “cash supply chains.” He actively avoids hyping the stock.

PHASE 4: THE HOLD (Compounder Mindset)

[ ] 13. The “Connor Leonard” Reinvestment Test

• Rule: Can they reinvest at high rates of return?

• Verdict: MIXED / FAIL

• Data: They are struggling to deploy capital. They have $9.5M in cash because they cannot find acquisitions that meet their high standards. This creates “Cash Drag.” However, they return excess cash via Special Dividends ($0.05 in 2024).

[X] 14. The “Owner Earnings” Shield

• Rule: Stock down but Earnings up?

• Verdict: PASS

• Data: The stock is flat/down, but Net Income grew 29% in 2024. This is a classic “coiled spring” divergence where valuation compresses while value increases.

[ ] 15. The “Francois Rochon” Rule of Three

• Rule: Psychological acceptance of volatility.

• Verdict: N/A (This is a mindset rule for you, the investor).

PHASE 5: THE EXIT (Selling Protocol)

Currently, we are buying, so these are N/A.

[ ] 16. Trigger A: Euphoria Trim

• Verdict: N/A (Stock is depressed, not euphoric).

[ ] 17. Trigger B: Thesis Breach

• Verdict: N/A (Thesis is intact: SaaS transition is working, margins are high).

[ ] 18. Trigger C: The Upgrade

• Verdict: N/A (Currently evaluating entry).

PHASE 6: CASH MANAGEMENT (The Odd Lot)

[ ] 19 - 21. Odd Lot Tenders

• Verdict: N/A (There is no current Odd Lot tender offer active for this stock).

FINAL SUMMARY

Total Checklist Score: 15 PASS / 2 FAIL / 4 N/A

The Bottom Line: NamSys Inc. is a textbook “Checklist Darling.” It passes every single test for solvency, profitability, and insider alignment.

The two failures (Momentum and Reinvestment) are technical, not fundamental. The lack of momentum is artificially caused by the Estate liquidation—a temporary “Special Situation” that creates an opportunity for nimble investors.

The Strategy: I am accumulating shares in the $1.28 – $1.30 range, buying alongside the company’s own NCIB bid. My thesis is simple: “Estate Arbitrage.” Once the Estate finishes liquidating and the “Sell Wall” vanishes, the market will likely re-rate this 11x P/E business to a standard SaaS multiple. This implies a near-term target of ~$2.00+ (approx. 55% upside).

Disclaimer: I am Long CTZ.V. Do your own due diligence.

If you are reading this, you probably know that the stock market is generally efficient. You probably know that beating the S&P 500 over the long term is incredibly difficult. And you probably know that most people are better off buying an index fund and going to sleep.

But you are here because you are looking for the exception.

You are looking for the “Institutional Gap.”

My strategy is built on a single, powerful premise supported by investors like Ian Cassel and Paul Andreola: Small retail investors have a structural advantage over Wall Street in one specific area—Microcaps.

Big funds cannot buy companies with market caps under $100 million because the stocks are too illiquid. They physically cannot deploy their capital without moving the price. This creates an “information vacuum” where profitable, high-growth businesses trade at absurdly low valuations simply because they haven’t been “discovered” yet,.

My goal is to find these companies, buy them in my TFSA (Tax-Free Savings Account), and hold them until the institutions can buy them—driving the price up 5x,10x, 20x, or even 100x.

Here is the system I use to find them.

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The Strategy: “The Solvency & Compounding System”

I do not gamble on mining exploration or pre-revenue biotechs. I treat stocks as ownership in real businesses. My strategy is a “Closed Loop” checklist distilled from the methodologies of the world’s best microcap investors.

It is designed to filter out the junk (90% of the market) and leave only the high-probability compounders. Here is what I look for:

Phase 1: The Fortress (Safety First)

Before I look at upside, I look at survival. In a TFSA, you cannot claim capital losses, so avoiding a “zero” is priority #1.

• The “Net Cash” Rule: I look for companies where Cash > Debt. David Barr and Ryan Irvine emphasize that in microcaps, debt is the primary killer because financing windows close during downturns. A net cash position allows a company to survive recessions and acquire distressed competitors,.

• The Profitability Gate: The company must be profitable or cash-flow positive. Paul Andreola notes that 82% of 100-baggers were profitable businesses. If they are profitable, they control their own destiny and don’t need to dilute shareholders to keep the lights on,.

• No Commodities: I avoid mining and oil/gas explorers. These are “price takers” dependent on commodity cycles, not “compounders” that grow through their own execution.

Phase 2: The Engine (Rocket Fuel)

Once safety is established, I look for the mechanics of a multi-bagger.

• Hyper-Growth: I look for Revenue Growth > 20-25%. Ryan Telford’s data shows that sales growth is the primary driver of returns for 10-baggers, accounting for over 75% of the return profile,.

• The “Telford” Momentum Check: I prefer to buy stocks trading within 20% of their 52-week highs. It feels counterintuitive, but buying “cheap” stocks hitting new lows is often a trap. As Telford and Andreola agree: “Winners keep winning”.

• Unit Economics: I look for high Gross Margins. Chris Mayer cites research showing that gross margin is the single best indicator of a “moat” because it proves the product is special, not a commodity.

Phase 3: The Discovery (The Edge)

This is where we get in before the crowd.

• The Institutional Gap: I target companies with a Market Cap < $100M. This is the “arbitrage.” We buy when the stock is too small for the big funds. When the company grows to $300M+, the institutions arrive, and their buying pressure drives the multiple expansion.

• Special Situations: I look for Spinoffs. As Joel Greenblatt teaches, spinoffs often face indiscriminate selling by institutions, creating “unfair economic returns” for those willing to do the work,.

• The “Promotion” Test: I avoid CEOs who talk about the stock price more than the business. As Mathieu Martin warns, a promotional CEO is usually looking to exit or dilute.

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The “Hold”: How to Survive the Volatility

Finding the stock is only half the battle. Holding it is the hard part.

Chris Mayer points out that Monster Beverage (a 100-bagger) had multiple drawdowns of 50% on its way up. If you sell every time a stock drops, you will never catch a 100-bagger.

To manage this, I use François Rochon’s “Owner Earnings” Mindset:

• If the stock price drops 30%, but the earnings went up, I do not sell. I buy more.

• I accept the “Rule of Three”: One year out of three, the market will go down. One stock out of three will be a mistake. Accepting this volatility as the “price of admission” prevents panic.

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Who This Is For (And Who It Isn’t)

This newsletter IS for you if:

• You view stocks as partial ownership of a business.

• You are willing to do “Scuttlebutt” research (e.g., calling customers, checking Glassdoor ratings) to verify a product.

• You have a time horizon of 5–10 years.

This newsletter is NOT for you if:

• You are looking for “get rich quick” penny stock pumps.

• You cannot handle seeing a stock drop 20-30% without selling.

• You want to invest in cyclical resource stocks (gold, oil, lithium).

My strategy is simple, but it is not easy. It requires the discipline to say “No” to 99% of stocks and the guts to hold the 1% that pass the test.

Welcome to The Checklist Compounder. Let’s find the next big winner, while it’s still small.