Smallcap Discoveries: Weekly Update: April 25

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Subject: Smallcap Discoveries: Weekly Update: April 25 - 29

April 25 - 29

Market Commentary

Markets were extremely volatile this past week, and mostly to the downside. Nasdaq suffered the largest decline, down 3.9%, as it reached levels not seen since December 2020.The DOW was lower on the week by 2.5% and the TSX lower by 2.0%. Once again energy led the gainers while healthcare and communications sectors led to the downside.

The Nasdaq is down 21.4% since the start of the year. Once high-flying tech names continue to find new 52 week lows. Household names such as Amazon, Facebook, and Intel all hit new 52 week lows this past week. The once high flyers have had their wings clipped. Consider that Teledoc, (TDOC) once a wall Street darling is down 90% from its 2021 high. The ARK Innovation fund is now down 64.4% from its high reached in June of 2021. Investors continue to rotate out of "growth" stocks and into "value". Perhaps traditional fundamentals do matter as the Fed appears to be taking away the punch bowl and tightening interest rates.

When money is cheap and plentiful profits aren't a big deal but when the reverse is in place.... profits are a big deal!

Energy prices, after the recent sharp dip, appear to be climbing again as we had WTI oil close the week back above US$100 and natural gas closed above US$7. Many energy producers reported financial results this past week and most are gushing cash. Most are willing to drill and produce more but are finding it difficult to to a lack of workers. https://www.reuters.com/business/energy/n-american-oil-companies-scramble-find-workers-despite-boom-2022-04-29/

The number of active drill rigs in service continues to climb yet production is far away from reaching a level that can slow down energy prices. With all the recent effort and "bearish" macro events such as the China lockdowns and the US SPR release it's quite telling that energy prices continue to stubbornly stay up at current levels. It's our opinion that barring an unforeseen macro event that causes major demand destruction we are very likely to see much higher energy prices.

And if you needed one more signal to consider investing in the energy space take note that none other than the oracle of Omaha, Warren Buffett, has made a very heavy investment in energy. Buffett's bet on the oil sector is now worth over $40 billion as he increased his stake of Chevron making it his 4th largest position in Berkshire, which has overall holdings worth about $388 billion.

Buys and Sells This Week

No buys or sells this past week

Smallcap Discoveries

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Route1 Inc (TSX.V: ROI) Price - $0.21 Market Cap - $8.3M

Route1 Announces Q4 and Full Year 2021 Financial Results
Q4 Revenue of $7M
Q4 Gross profit of $2.37M
Q4 Operating loss of ($7K)
Q4 Net loss of ($315K)
FY Revenue of $27.2M
FY Gross profit of $10.8M
FY Operating profit of $1M
FY Net income of $222K
Press Release https://tinyurl.com/2p8s9cfb

Revenues were lower in 2021 vs 2020. Operating profit declined for the year. While the company generated a profit for the year the lack of growth in hardware sales and more importantly, recurring and service revenue was disappointing. We will discontinue coverage of Route1.

Fab-Form (TSX.V: FBF) Price - $0.99 Market Cap - $9M

Q4 Revenue of $802K
Q4 Gross profit of $239K
Q4 Net income of $91K
FY Revenue of $4.42M
FY Gross profit of $1.56M
FY Net income of $765K

Fab-Form generated solid operations in 2021 with revenues increasing 68% and generated record profits. Company continues to take advantage of strong industry fundamentals and material and labor shortages which increase the demand for their products. The company's share currently trade at roughly 11.6 times earnings.

Renoworks (TSX.V: RW) Price - $0.375 Market Cap - $15M

Renoworks Partners With Top Manufacturer to Increase Qualified Leads By 1300%
Press Release https://tinyurl.com/ysdjw9kr

Smallcap Discoveries

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Boardwalktech Software Corp (TSX.V: BWLK) Price - $0.53 Market Cap - $42.4M

BOARDWALKTECH SIGNS NEW CONTRACT WITH MAJOR INDIAN BANK
Press Release https://tinyurl.com/2p8hx3x3

Smart Employee Benefits (TSX.V: SEB) Price - $0.14 Market Cap - $24M

Smart Employee Benefits Announces Partial Sale of Paradigm Investment
Press Release https://tinyurl.com/2s4kj6kd

Vitalhub (TSX: VHI) Price - $3.00 Market Cap - $130M

VitalHub Corp. Announces Acquisition of Hicom Technology Limited
Press Release https://tinyurl.com/22n36yxm\

Covalon Technologies (TSX.V: COV) Price - $1.98 Market Cap - $51M

Covalon Announces New Senior Vice President of Marketing
Press Release https://tinyurl.com/r46kkuvn

EnWave Corporation (TSX.V: ENW) Price - $0.78 Market Cap - $87M

EnWave Reports Successful Injunction Application Against Former CEO
Press Release https://tinyurl.com/bdaxpjea

Innovotech (TSX.V: IOT) Price - $0.19 Market Cap - $7M

INNOVOTECH Reports Increased Net Profit in 2021
Q4 Revenue of $456K
Q4 Net income of $202K
FY Revenue of $1.48M
FY Gross profit of $1.11M
FY Net income of $367K
Press Release https://tinyurl.com/bdaxpjea

Katipult Technologies (TSX.V: FUND) Price - $0.105 Market Cap - $7.5M

Katipult Releases 2021 Results
Q4 Revenue of $480K
Q4 Net loss of ($461K)
FY Revenue of $1.7M
FY Net loss of ($2.27M)
FY ARR of $1.68M
Press Release https://tinyurl.com/46hak8ub

MediaValet (TSX: MVP) Price - $1.75 Market Cap - $68M

MediaValet Selected by Well-Known Global Consumer Skincare Company
Press Release https://tinyurl.com/mpa8u36n

Inventronics (TSX.V: IVX) Price - $2.03 Market Cap - $10M

Inventronics Announces 2022 Q1 Financial Results
Revenue of $3.75M
Gross profit of $1.16M
Net income of $501K
Press Release https://tinyurl.com/ybz5w9r6

Very solid operating performance as the company generated record revenues and profit in Q1. The company was able to take advantage of continued strong demand for their products within the telecommunications industry. Revenues were up 109% from Q1 2021. The company's shares currently trade at roughly 5.2 times trailing 12 month earnings.

Zedcor (TSX.V: ZDC) Price - $0.45 Market Cap - $32M