MicroCap Review Q1 2022 by Planet MicroCap Review Magazine

Q1 - 2022

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Microcap Review T h e O f f i c i a l M a g a z i n e o f t h e M i c r oC a p S to c k M a r k e t S i n c e 2 0 0 6

F e a tu r e :

Introducing... the MicroCap Review Index

1 2 | Finding MicroCap Compounders: A Fool’s Errand or a Labor of Love b y E u g e n e Ro b i n , CF A , Co v e St ree t C a p i ta l

F E AT U R E

Investors Outlook for 2022 and Positioning Yourself for Success featuring Paul Andreola, Kyle Cerminara and Kelvin Seetoh

4 2 | Crypto in 2022: The Year of DeFi and Regulation

b y Ca i t l i n Co o k, O n ra mp I n v es t

3 6 | Oil & Gas Outlook for 2022: Understanding Energy’s Central Role in the Economy b y Jo s h Y o u n g , B i s o n I n t eres t s 1 5 Microbix Biosystems Inc. (TSX: MBX) (OTCQX: MBXBF)

2 2 Network Media Group Inc. (TSX-V: NTE) (OTC: NETWF)

3 0 UGE International Ltd.

3 4 East Side Games Group (TSX: EAGR) (OTC: EAGRF)

4 1 VSBLTY Groupe Technologies

(OTCQB: VSBGF) (CSE: VSBY)

(TSX-V: UGE) (OTCQB: UGEIF)

46-57 MCRI Q1 2022 Constituent List

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Microcap Review In Loving Memory of Our Precious Daughter, and Sister, Sammi Kane Kraft Published Since 2006

www.SNN.Network Follow us: @StockNewsNow SNN Inc. 4055 Redwood Ave. Suite 133 Los Angeles, CA 90066 www.SNN.network PUBLISHER Robert K. Kraft, MBA SNN Chief Executive Officer, Executive Editor & Director rkraft@snnwire.com Shelly Kraft SNN Founder, Publisher Emeritus skraft@snnwire.com Lynda Lou “Lulu” Kraft SNN President & Director lkkraft@snnwire.com ASIAN PACIFIC CORRESPONDENT Leslie Richardson SNN Compliance and due diligence administration Jack Leslie chairman of snn advisory board Dr. Leonard Makowka ADVERTISING and Sales info@snnwire.com GRAPHIC PRODUCTION Unitron Media Corp info@unitronmedia.com SNN CONFERENCES info@snnwire.com ©Copyright 2022 by MicroCap Review Magazine Inc. All Rights Reserved. Reproduction without permission of the Publisher is prohibited. The publishers and editors are not responsible for unsolicited materials. Every effort has been made to assure that all Information presented in this issue is accurate and neither MicroCap Review Magazine or any of its staff or authors is responsible for omissions or information that is inaccurate or misrepresented to the magazine. MicroCap Review Magazine is owned and operated by SNN Inc. This publication and its contents are not to be construed, under any circumstances, as an offer to sell or a solicitation to buy or effect transactions in any securities. No investment advice is provided or should be construed to be provided herein. MicroCap Review Magazine and its owners, employees and affiliates are not, nor do any of them claim to be, registered broker-dealers or registered investment advisors. This publication may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking statements of or concerning the companies mentioned herein are subject to numerous uncertainties and risk factors, including uncertainties and risk factors that may not be set forth herein, which could cause actual results to differ materially from those stated herein. Accordingly, readers are cautioned not to place undue reliance on such forward-looking statements. This publication undertakes no obligation to update any forward-looking statements that may be contained herein. MicroCap Review Magazine, its owners, employees, affiliates and their families may have investments in companies featured in this publication, may purchase securities of companies featured in this publication and may sell securities of companies featured in this publication, at any time and from time to time. However, it is the general policy of this publication that such persons will refrain from engaging in any pre-publication transactions in securities of companies featured in this publication until two trading days following the publication date. This publication may contain company advertisements/advertorials indicated as such. Information about a company contained in an advertisement/advertorial has been furnished by the company, the publisher has not made any independent investigation of the accuracy of any such information and no warranty of the accuracy of any such information is provided by this publication, its owners, employees and affiliates. Pursuant to Section 17(b) of the Securities Act of 1933, as amended, in situations where the publisher has received consideration for the advertisement/advertorial of a company or security, the amount and nature of such consideration will be disclosed in print. Readers should always conduct their own due diligence before making any investment decision regarding the companies and securities mentioned in this publication. Investment in securities generally, and many of the companies and securities mentioned in this publication from time to time, are speculative and carry a high degree of risk. The disclaimers set forth at http://www.microcapreview.com/disclaimer/ - disclaimer are incorporated herein by this reference.

E d i tor i al

his issue marks a new beginning and the end of an era for SNN’s MicroCap Review Magazine. I am so proud of this magazine, published since 2006. It really has been my joy to contribute this way to the microcap market. From this issue forward, we will be entirely digital, interactive and found on our new website SNN.Network and MicroCapReview.com. The magazine will no longer be printed. Our most exciting news for 2022, is that SNN Inc., has created and launched the MicroCap Review Index “MCRI” which will highlight US and Canadian issuers included in the Index. The MCRI is as pure an index for microcap stocks as can be. We believe the MCRI will provide a much more accurate, in-depth, benchmark of the microcap stock universe, with equal weighting given across the board, regardless of company size. The MCRI will be rebalanced quarterly and published quarterly in the MicroCap Review magazine. Along with the highlighted Index companies, will be our regular contributors and headline stories in our ecosystem. As I hand publishing reins over to my son, Robert, who has led the charge to digital, I am quite proud of where we began our journey and now our future contributing to this space. He is in the vanguard of the next generation of thought leaders as are his cohorts he has met over these last years. I am confident in the continuation and excellence Robert and his team bring to us all. But hey, I am not out I am just passing the baton to the new technological generation with pride and gratitude. —Shelly Kraft, Founder of SNN Incorporated

As SNN enters a new era of it’s existence, the company’s DNA will remain. For one, Shelly and Lulu aren’t retiring just yet, but in all seriousness, the grit, grind, commitment to integrity, compliance, quality, and delivering the highest quality content, products and services will remain. I am truly thankful that I had the opportunity not only to join SNN, I am grateful to have and continue to learn from my parents. We are a unique family business – our Founder, Shelly Kraft, with over 30 years experience on Wall Street, better known as “The Legend” from those who did business with him “in the day”, and our President, Lulu Kraft, with more than 25 years experience in the entertainment business producing live television shows – from her early days at the original Financial News Network to the CableACE nominated talk show “Live From Queens.” I say this objectively, not just because they are my parents and I love them dearly, are there two better people to learn about how to produce and run a Financial Media company? The Small, Micro, Nano-cap world owes Shelly and Lulu a huge debt of gratitude for having shaped a lot of what we see today, and I’m humbled to continue that legacy with SNN Network. —Robert Kraft, CEO of SNN Incorporated

MicroCap Review Magazine 5

CONTENTS Fe atu r e s 8

Introducing…The MicroCap Review Index (MCRI™) by Robert Kraft, MBA, SNN Network

Investors Outlook for 2022 and Positioning Yourself for Success featuring Paul Andreola, Kyle Cerminara and Kelvin Seetoh

Ins igh t s 12

Finding MicroCap Compounders: A Fool’s Errand or a Labor of Love

Fund Manager Highlight: Joe Boskovich, Jr., Co-Founder and Partner at Old West Investment Management, LLC

Tackling the Five Frustrations of a Business Owner by Jackie Kibler

I’m a New Public Company, Now What?

by Eugene Robin, CFA, Cove Street Capital

Outlook for SPACs by Louis Camhi, RLH Capital

Southeast Asia’s Digital Goldrush by Drew Bernstein, CPA, MarcumBP

24 32

Resource Markets Since Pandemic Outbreak by Gavin Wendt, MineLife Accounting Corner: ESG is Coming Down the Regulatory Pipeline

by Shelly Kraft and Michael Porter

by Diane Woo

Why Buy Australian Dual-Trading MicroCaps? by Richard Revelins

Amended SEC Rule 15C2-11: Creating a More Transparent, Global OTC Markets

by Corey Fischer, CPA, Weinberg & Co.

Oil & Gas Outlook for 2022 by Josh Young, Bison Interests

Legal Corner: Vast Changes Coming to the Fundamental Structure of MicroCap Financing by Jon Uretsky, Esq., PULLP

How to Raise Capital for Funds, From a VC

by Jason Paltrowitz, OTC Markets

Profiled Companies

Crypto in 2022: The Year of DeFi and Regulation by Caitlin Cook, Onramp Invest

MicroCap ETFs by Michael Krause, AltaVista Research

22 Network Media Group

Financing Small Biotech Companies in 2022 by John Bonfiglio, PhD

Microbix Biosystems Inc. (TSX: MBX) / (OTCQX: MBXBF)

(TSX-V: NTE) / (OTC: NETWF)

30 UGE International Ltd.

India’s MicroCap Ecosystem by Maneesh Nath

Asia Corner: Hong Kong Stock Market Slumps Amid Regulatory and Market Pressures by Leslie Richardson

34 East Side Games Group

Technology Trends to Watch in 2022: Gen-Z Disruption, Consumer Data Privacy, ESG and Renewables

(OTCQB: VSBGF) / (CSE: VSBY)

by Sean Peasgood, Sophic Capital

6 MicroCap Review Magazine

(TSX-V: UGE) / (OTCQB: UGEIF)

(TSX: EAGR) / (OTC: EAGRF)

41 VSBLTY Groupe Technologies

46-57 MCRI Q1 2022 Constituent List

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MicroCap Review Magazine 7

Fe atu re

// By Robert Kraft, MBA

Introducing….the MicroCap Review Index (MCRI™) The MCRI™ is as pure an index for microcap stocks as can be. We believe the MCRI™ provides a much more accurate, in-depth, benchmark of the microcap stock universe, with equal weighting given across the board, regardless of size.

ost of the other microcap indices are market cap weighted, giving preference to larger companies with higher trading volumes, and are reconstituted bi-annually or annually, versus quarterly.

Source: MicroCap Review Index, as of January 3, 2022

8 MicroCap Review Magazine

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“While you may expect most, if not all, the Top 30 for each sector will have positive share price appreciation for the quarter, that’s not always the case.”

Source: MicroCap Review Index, as of January 3, 2022

Criteria •• U.S. (NYSE/AMEX, NASDAQ, OTCM) or Canada (TSX, TSX Venture, CSE, NEO) •• Primary Listing only (meaning, primary symbol of dual-listed companies •• On the final day of the quarter, all public companies: •• Between $10 million and $300 million in Market Capitalization •• Share price equal to or greater than $0.10 •• Filed a 10Q or 10K in the preceding quarter From there, the index comprises the Top 30 companies from each sector based on 90-day share price appreciation. At most, MCRI™ will consist of 330 constituents, from 11 sectors, all equally weighted. Q1 2022 Breakdown While you may expect most, if not all, the Top 30 for each sector will have positive share price appreciation for the quarter, that’s not always the case. This last quarter, here’s a chart that breaks down the average price performance (%) by sector: Basic Materials sector far outperformed the second highest sector, Healthcare, at an average company performance of 151% and 68% respectively. The only sector that had negative average performance was Utilities at -8%. The top performing company for the

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quarter was North Peak Resources (NPR:CA) - the stock appreciated 621.52% during Q4 2021 following the company’s announcements on the acquisition of the Black Horse Gold Property in Nevada. 9 of the Top 20 overall performing stocks for the quarter were Basic Materials, likely due in part to inflation fears and gold being a traditional store of value and anti-inflation asset. From Q1 2022, we were able to derive quite a bit of information. MCRI™ constituents had a total aggregate market capitalization totaling: $38.9B; an average market capitalization totaling: $121.2M; a median market capitalization totaling: $100.9M. Additionally, the image below showcases the breakdown of constituents by exchange listing. The exchange distribution is an interesting statistic that I’ll be following closely because one of our criteria is searching for “Primary Listing Only”. Many of the 321 MCRI™ constituents are listed on a secondary exchange, OTC Markets in particular. We wanted to use a company’s primary listing for MCRI™ to prevent: multiple stock tickers representing the same company and secondary listings (OTC Markets in particular) only require regulatory disclosure on the primary listing. Why MCRI™ When we went back into the lab to re-imagine what we wanted to do with our magazine, including going digital only, no longer printing the MicroCap Review, in conjunction with the launch of our new website, SNN.Network, the number one problem I wanted to solve was: how do we make the discovery process easier for any user interested in wanting to dig deeper into the MicroCap universe? The MicroCap

MicroCap Review Magazine 9

The goal of MCRI™ is twofold: First, to curate the user experience by helping them get their start in the discovery process in a universe of stocks that can be extremely overwhelming. Second, to have a benchmark that MicroCap individual investors and fund managers can use to track their own performance against.

Review Index™ I believe answers that question in the following ways: •• The MicroCap universe, just in North America alone, consists of more than 10,000+ publicly traded companies •• MCRI™ includes the top 30 performers across every sector; any user now has (at most) 330 companies to explore and understand why and how they performed the way they did, as well as Sector breakdowns to understand why that sector as a whole performed the way it did •• MCRI™ can be that first easy-to-understand screen of companies

Goal for MCRI™ The goal of MCRI™ is two-fold: First, to curate the user experience by helping them get their start in the discovery process in a universe of stocks that can be extremely overwhelming. Second, to have a benchmark that MicroCap individual investors and fund managers can use to track their own performance against. We believe our simple to understand, clear criteria for the MicroCap Review Index™ combined with our expertise in producing entertaining and informative content revolving around MCRI™, will provide value for new and experienced investors looking to hone their MicroCap investing skill set. Robert Kraft is the CEO of SNN Incorporated, publishers of the SNN Podcast Network, SNN.Network, MicroCap Review Magazine, Hosts of the Planet MicroCap Showcase investor conference and SNN Network family of virtual investor events. Since joining SNN in 2011, Robert has transformed the company into a fully-integrated digital media enterprise providing the best in-class news, information, resources, analysis and data covering the Small, Micro and Nano-cap markets. He is the host of the #1 podcast in the MicroCap space, the Planet MicroCap Podcast, which has garnered more than 520,000+ downloads, which he’s parlayed into guest appearances on legacy media networks including appearances in 2021 on “Making Money with Charles Payne” on Fox Business. Robert received a B.A. in Communications from the University of California, San Diego and his M.B.A. from the Pepperdine Graziadio Business School with an emphasis in Finance. He is most proud of being the father to his daughter and son, and husband to his amazing wife. For more information about SNN Network and the MicroCap Review Index, please visit: www.SNN.Network

SNN Network will provide news, resources and information covering the entire global MicroCap universe, however, a curated index helps us as news providers and content creators to better understand what’s happening in this universe on a day-to-day, week-to-week, quarter-to-quarter, year-to-year basis. Furthermore, we feel that MCRI™ can ultimately become a great benchmark for MicroCap investors and fund managers to measure their performance against. Now you can ask yourself, did my portfolio perform better than the top 30 performing companies across 11 sectors in any given quarter? MicroCap Review Index Disclaimer: As of rebalance date 01/03/2022, please see SNN’s full terms of service here: https://snn.network/terms-of-use

10 MicroCap Review Magazine

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MicroCap Review Magazine 11

insi g hts

// By Eugene Robin, CFA

Finding MicroCap Compounders A Fool’s Errand or a Labor Of Love?

We have run across many different investors, potential and current, who often remark that looking for “quality” companies in the micro/ nano cap space is a fool’s errand.

he issues facing us are massive: 1) little to any Free Cash Flow to reinvest 2) no staying power due to the subscale nature of operations 3) grade C if not worse management teams that are interspersed in a sea of general charlatans and do-nothings 4) illiquidity 5) a lack of overall capital market sophistication on Boards and 6) “fill in the blank generic problem of being tiny here”.

We do not argue any of these points, but instead, we embrace them as our guide to the possibilities that lie within. As is the case when generalities and stereotypes are applied en masse, the nuances and the differentiation points are painted over by the prevailing wisdom. The ability to find a “quality” company or one that will, with proper oversight and care, grow to become something that can graduate into the general small cap universe is a difficult task but Cove Street follows three basic principles/ variables that are applied to everything we do and especially in micro cap: BVP (Business – Value People). The Businesses we look for are ones that “have a reason to exist” even if they are subscale. These are the first building blocks of any successful investment and certainly of a compounder. If the business vanishes, would anyone care? Does it earn its cost of capital? Are gross margins greater than 40% if it’s an industrial business? What is the historic track record of ROIC? Trends in operating metrics? Proper back office corporate support functions (read: ERP)? These are all generalities that strive to answer the

12 MicroCap Review Magazine

initial question of existence and point us to the right questions to ask management --- we want to, in the end, own businesses and not stocks. If you treat your investment as a business and not a stock, you will think about the very same things. Value is self-explanatory but we put forth another subset of what value really represents (beyond straight valuation): catalysts of change. A traditionalist sense of value (cheapness) in our view has to be balanced by some outside force (change agent) that can close a valuation gap in micro land. This is of paramount importance since micro purgatory is a real place, filled with real companies tied up in a real malaise. These change agents are also important to avoid hitting the ever-looming plateau of value accretion in micro land. Without change agents, many micro caps wind up twisting in the proverbial wind, without a direction or any ability to compound higher. Often times these are the real pivot points of a micro investment: can this compound higher or have we met the “right size” and it should be sold (if management does not want to sell themselves). There are many instances where “quality” companies have been stuck on a value plateau due to various factors and only after a change agent enters the picture (almost exclusively new management) does the compounding engine restart. This extrapolation of value dovetails nicely into the final variable: management. The farther down the market cap spectrum one ventures, the more

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important this variable becomes. In larger, scaled companies, using Peter Lynch’s maxim that we should “find a business even an idiot could run, because sooner or later an idiot probably will”, management is important at “quality” businesses but not as much as the business itself. In micro land, this is the exact opposite. Compounding quality business, with a reason to exist, will be driven off a cliff to a fiery grave as soon as an idiot gets their hands on the wheel. Management’s marginal impact on the probabilities of success and failure are amplified exponentially and we are acutely aware of “betting on the wrong jockey”. How does one judge these people? Interrogations about investment philosophies, business plans and HR goals are a start. As are operational plans, the team next to Dear Leader must be probed. Incentive plans that are properly aligned with investors (for both C-level and the next level of troops) are a must. We are avid readers of proxies and believe in paying for performance. Micro cap land should not be a charity to executives but neither can it be a penny scrimping exercise. Everyone in the same boat rowing the same way is what we want!

Mixed together, these are the three starting building blocks for our all investments we make in microcap. The nuances and shades of grey abound, but this is the general template for how we operate. It is a labor of love, no doubt, to sift through the filings of thousands of micro companies that are public for various reasons. Nevertheless, the rewards can be large and the law of small numbers is always on our side! Eugene Robin, CFA joined Cove Street in 2011 as a research analyst from Proton Capital, a family office where he developed investment ideas in both public and private markets. As a firm principal, Eugene shares generalist research efforts and is a Co-Portfolio Manager on our Firm’s Micro cap strategy. He has also served on the Board of Directors of VerifyMe (VRME) and currently sits on the Board of Research Solutions Inc (RSSS). Eugene previously worked at ViaSat as a software engineer and holds an MBA from the UCLA Anderson School of Management and a BA in Computer Science from UC San Diego. Eugene lists Ukrainian intrigue, craft beer evaluation, lacrosse, and corralling his two sons as his preoccupations outside the office. For more information about Cove Street Capital, please visit: www.covestreetcapital.com

Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

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MicroCap Review Magazine 13

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Microbix Biosystems (TSX: MBX) / (OTCQX: MBXBF) INVESTOR OVERVIEW

Update with Microbix Biosystems (TSX: MBX) / (OTCQX: MBXBF)

(Data compiled as of market close on February 4, 2022)

SUMMARY Share Price ($)

0.62

Market Cap ($M)

83.1

52-Week Low/High ($)

0.49 / 0.87

Shares on Issue (M)

134.6

Warrants (M)

16.3

Options (M)

9.0

Fully Diluted Shares (M)

179.2

Volume Weekly (M)

1.3

FINANCIAL STATEMENT OVERVIEW Currency

$CAD

Cash ($m)

12.2

Debt ($m)

7.5

FY21 Revenue ($M)

18.6

FY21 Net Profit/Loss ($M)

3.2

TOP 5 INSIDER HOLDINGS (basic)

Joseph Renner

6.7

Peter Blecher

1.8

Cameron Groome

1.5

Stratpath Management Inc.

1.2

Martin Marino

1.0

Total Insider shareholdings

13.1

Revenue Growth for Fiscal Year 2021

Barriers to Entry

Supporting COVID Diagnostics

COMPANY OVERVIEW Microbix Biosystems Inc. develops and commercialises proprietary biological and technological solutions for human health and wellbeing in North America, Europe, and internationally. The Company manufactures a range of critical biological materials for the diagnostics industry, notably antigens for immunoassays and its laboratory quality assessment and proficiency (QAPs) that support clinical lab proficiency testing, assay development and validation, or clinical lab workflows. The Company also applies its biological expertise and infrastructure to develop other proprietary products, primarily viral transport medium (DxTM) and Kinlytic Urokinase.

12-MONTH SHARE PRICE CHART

MANAGEMENT & CONTACTS CORPORATE FOCUS Sector

Biotechnology

Key Product/Market

QAPs DxTM Antigen products

SENIOR MANAGEMENT & CONTACT CEO Name Investor Relations Name IR Email Address Headquarters Location Website/URL

Cameron Groome Adelaide Capital ir@microbix.com Mississauga, Ontario https://microbix.com

Please visit the company’s website for more information:

microbix.com Note: This article has been undertaken by Independent Investment Research LLC (CRD#299837) & Independent Investment Research (Aust.) Pty Limited (Lic. No. 001242826), a corporate authorized representative of Australian Financial Services Licensee (AFSL no. 410381) (“IIR”). Any opinion contained in the article is unsolicited general information only. The reader of the article should seek advice from a qualified wealth adviser. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment, nor should it be construed as a recommendation. This material contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this document and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this document and other statements made from time to time by us or our representatives might not occur.

ANALYST COMMENT provided by Independent Investment Research MBX reported record results for fiscal year 2021 (September yearend) with sales of $18.6m, up 77% on 2020, and a net profit of $3.2m. The Company reported strong margins with a gross profit margin of 59.3% and an EBITDA margin of 30.4%. The Company is gearing up to support sales of C$100m p.a. in the years to come, with sales to be driven by the expanding portfolio of medical devices. The Company is seeking to scale up and automate production, upgrade support infrastructure, and hire more staff to support growth aspirations. MBX are targeting fiscal 2022 to be another record year, driven by improving antigens margins, further sales of DxTM, and the growing QAPs portfolio. The Company is working to maintain double-digit growth in 2022 sales as well as seeking to maintain the gross and net margins in line with those achieved in 2021. The Company is well placed from a capital perspective with $10m in cash at 30 September 2021.

insi g hts

// By Louis Camhi

Outlook for SPACs SPACs remain terribly out of favor and yet I am very excited.

he implicit odds of SPACs successfully transacting is low and SPAC yields are attractive at ~3%. (Candidly, I’m not sure why an investor or corporate would buy 1-year duration treasuries yielding ~75bps, when they could have the same exposure in a SPAC yielding 3%.) There is currently minimum optionality priced into SPAC shares and SPAC warrants are trading at some of the lowest levels in recent memory. The setup is 180 degrees from where we were in early 2021, which should bode well for prospective returns. I believe that we will see an improvement in deal quality this year.

Elevated redemption rates and rising terminations are the market’s way of showing that it is becoming more discerning. It wouldn’t surprise me to see strong performance in 2022 from some of the “broken SPACs” that are profitable. Some of these companies look like great opportunities for private equity take private transactions. The IPO backlog has declined, including more than 10 registrations withdrawn, and if we see a decrease in the number of SPACs seeking targets that would be a positive for the space.

SPAC Redemption Rates

Terminations

90%

80%

80% 70%

58% 61%

60% 40%

10%

53%

15%

15 21%

29%

30%

30 61%

45%

50%

20%

67%

12% 14%

2 1

0 Jan 21 Feb 21

Mar 21

Apr May 21 21

Jun Jul 21 Aug 21 21

Sep 21

Avg Redemption Rate

Oct 21

Nov 21

Dec Jan 22 21

Jan 21 Feb 21 Mar Apr 21 May Jun 21 Jul 21 Aug 21 Sep 21 Oct 21 Nov 21Dec 21 Jan 22 21 21

Deal Closings

IPOs vs. Announcements vs. Closings 120 100 80 60 40 20 0 January

February

March

April

May IPOs

16 MicroCap Review Magazine

June

July

Deal Announcements

August

September

October

November

December

January

Deal Closings

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In late 2020 and early 2021 most SPAC sponsors looked at the market and tried to replicate the transactions that were successful at the time. This included transacting in industries such as electric vehicles and LIDAR and a focus on businesses forecasting lofty growth expectations with no near-term profitability and in some cases no revenue. The sponsor community in general is financially sophisticated and savvy. They will realize those transactions have lost favor and will likely make the pivot to profitable companies at reasonable valuations. Furthermore, the current market volatility may potentially limit the ability to consummate a traditional IPO, making SPACs more attractive. I have written in the past about the challenges of the PIPE market. Those challenges have been limited to equity PIPEs, however, the prevalence of structured PIPEs in the form of convertible debt or convertible preferred stock has grown. Cash flow generating companies can afford a convertible security in their capital structure, which creates a path forward for a SPAC transaction.

families, private equity, venture capital, or corporate to name a few. To highlight the size of the opportunity set, based on their latest public filings, the top five alternative asset managers, Blackstone, KKR, Apollo, Carlyle and Ares own a combined $157 billion of private equity investments in funds that are beyond their investment periods. Adding their holdings of real estate and other real assets increases that exposure to $253 billion. I am amazed that the $253 billion represents equity capital (not enterprise value) and it’s only for those five firms. There are a lot of potential assets out there for SPACs to pursue.

Mr. Camhi, is the Founder and Chief Investment Officer of RLH Capital, LLC where he is responsible for oversight of all investment management and operational functions for the General Partner and manages the Partnership’s strategy on a day-to-day basis. In addition to his role with RLH Capital, LLC, Mr. Camhi currently serves on the board of directors of POSaBIT Systems Corporation (CSE: PBIT, OTC: POSAF). Mr. Camhi previously worked at Citadel as an Analyst, managing a $500 million equity long/short portfolio. Prior to Citadel, Mr. Camhi was a Senior Analyst at Three Corner Global LP, a fundamental long/short equity hedge fund. Mr. Camhi started his career at Credit Suisse where he worked as an analyst and was promoted to associate in the Mergers and Acquisitions group. Mr. Camhi received his Bachelor of Science in Finance and Accounting from the Leonard N. Stern School of Business at New York University.

There is no question that there is a significant amount of SPAC capital to be deployed, however, the market opportunity is quite larger. SPACs can target assets from an array of owners including Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

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MicroCap Review Magazine 17

insi g hts

// By Drew Bernstein, CPA

Southeast asia’s digital goldrush For the past two decades, China has presented a unique opportunity for emerging market investing at scale.

his is in large part due to its massive population, growing middle class, and a high rate of digital services adoption. Early investors in companies such as Alibaba, Tencent, and JD.com made fortunes as they leveraged their access to global capital markets to become digital goliaths dominating online shopping, entertainment, payments and woven into Chinese consumers’ daily lives. But tighter regulation over overseas listings have many investors asking, “What is the next China-like opportunity?” While no country can match the impact that China has had on the global economy, I believe Southeast Asia will be the next frontier. It will become a major focus of investor attention and new public company listings over the coming decade.

In fact, MarcumBP is actively working to expand into Singapore - with more updates to come. We already employ nearly 200 staff, the vast majority of which are in Asia. As early entrants in China, MarcumBP has been at the forefront of the intersection of the U.S. and Asia markets for 20 years. Now, we are eying Southeast Asia as we expand in line with the opportunities for high growth emerging companies. What is driving the emergence of Southeast Asia? 1.

Favorable Demographics – If “demography is destiny,” then the center of energy in Asia will be shifting southwards as North Asia’s industrial powerhouses of China, Japan, and Korea all begin to experience dramatic declines in their working-age populations and overall population. Southeast Asia has a population of 589 million, with 274 million in Indonesia, 110 million in the Philippines, and 97 million in Vietnam, with significantly lower labor costs than other Asian

18 MicroCap Review Magazine

economies. The region’s median age is 30 years old, and 50% of Southeast Asia’s population lives in urban areas, which will provide additional impetus to growth as urbanization continues. This large, relatively young labor base makes many countries attractive to Western enterprises seeking to build resilience into their global supply chains and mitigate the risks of the growing rivalry between China and the U.S. While the region has an enormous dispersion of incomes, ranging from GDP per capita of $60,000 in Singapore to under $3,000 in Vietnam, there is a growing middle class with a ravenous appetite for consumer goods and services. This transition from subsistence to an urbanized middle class with disposable income is a powerful catalyst for economic growth. 2. Rapid Digital Adoption – Increasingly, Southeast Asia’s consumers are turning to digital platforms to satisfy their needs. A recent report put out by Google, Temasek, and Bain Consulting entitled

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“Roaring 20s: The SEA Digital Decade” forecast that the size of the region’s digital economy will grow from $170 billion in 2021 to $1 trillion by the end of the decade. While the pandemic battered the region’s travel industry, it drove consumers and businesses to accelerate the transition to digital shopping, food, transportation, and payment services. Forty million new internet users came online in 2021 alone, bringing the region’s internet penetration to 75%. Southeast Asia’s small and medium businesses have also embraced digital, with 80% saying that they expect more than 50% of sales to come from digital in the future; one in three say that they would not have survived the pandemic without the reach of digital channels. 3. Venture Capital Pours In – These trends have not gone unnoticed by venture capital investors, who have been increasing their bets on emerging leaders of Southeast Asia’s digital economy. According to Deal Street Asia, investment in the region’s startups nearly tripled to $25.7 billion

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in 2021, resulting in 25 new “unicorns” with valuations above the $1 billion mark – more than all the prior years combined. Singapore birthed ten new unicorns last year, Indonesia had seven, and Malaysia, the Philippines, and Thailand all had their first. These deals were funded by a combination of global private equity investors and many family-owned conglomerates that have long dominated Southeast Asia’s economy. They now want to establish a foothold in fields that will define the future, including digital services, logistics, robotics, and fintech. Just as importantly, Southeast Asia now has a vibrant culture of entrepreneurship, with the younger generation embracing the risk and reward of innovation and the private sector. Four hundred eighty alumni from just one tech company, the e-commerce platform Lazada now controlled by Alibaba, have gone on to found or lead new startups of their own. 4. Investments in Infrastructure – Not to be left behind, global digital giants are racing to con-

MicroCap Review Magazine 19

Facebook plans two major new cables connecting the U.S. with Singapore and Indonesia and is laying 3,000 kilometers of fiber optic cable to connect its 140 million users in Indonesia, its third-largest market worldwide.

nect Southeast Asia’s young and mobile population to their services. Facebook plans two major new cables connecting the U.S. with Singapore and Indonesia and is laying 3,000 kilometers of fiber optic cable to connect its 140 million users in Indonesia, its third-largest market worldwide. Google, Amazon Web Services, and Alibaba are all building out data centers in the region to localize cloud services. As broadband becomes ubiquitous, this will increase video streaming, edtech, gaming, and more bandwidth-intensive applications. Investments in logistics infrastructure are also continuing apace, with 28% of the region enjoying same-day delivery service. 5. Regional Integration – One of the biggest challenges for Southeast Asia is its diversity, encompassing a range of countries with different stages of development, regulatory approaches, languages, and aspirations. But increasingly, technology companies are adopting a panregional approach to provide sufficient scale to compete with global players. Singapore provides an efficient finance and administrative hub for companies in the region, with mature financial markets and a strong tradition of the rule of law. Singapore has been ranked as the top jurisdiction globally for multinational corporations to establish subsidiaries based on its governance and regulatory regime. It has no capital gains tax, making it an attractive venue for investment firms. And it was ranked #1 worldwide for crypto-currency regulation by Coincub due to its “robust economy, positive legislative environment, and high rate of cryptocurrency adoption.” 43% of Singaporeans own cryptocurrency, compared with just 10.5% in the U.S.

20 MicroCap Review Magazine

Against the background of a trillion-dollar market opportunity, it seems inevitable that Southeast Asia will produce its fair share of new public companies that combine disruptive business models with a powerful demographic tailwind. One of the first names to catch the attention of American investors is Grab, the ridesharing, and food delivery “super app” that completed a SPAC merger that netted $4.5 billion and had an initial valuation of $40 billion. Grab’s stock has tumbled since the completion of the merger, but the company still has a market capitalization of $22 billion and remains the largest SPAC deal ever completed. Two of Indonesia’s eCommerce leaders, Gojek and Tokopedia, merged to form GoTo Group and completed a $1.3 billion pre-IPO round in November of 2021 with backers including Google, Tencent, and Temasek. GoTo is said to be planning on an IPO on Indonesia’s stock exchange later this year. Other unicorns from Southeast Asia, including travel tech company Traveloka, online property marketplace Property Guru, and logistics player J&T Express, have been weighing IPOs or SPAC mergers as a path to public status. As Southeast Asia’s tech tigers build scale, they will likely consider tapping the U.S. equity markets to enjoy higher valuations and deeper pools of liquidity than what local stock markets can offer. Several U.S.-listed SPACs have been in active discussions with companies from the region. NASDAQ and the Singapore Stock Exchange have announced a partnership to facilitate dual listings on the two exchanges. As the business models of the current crop of venture-funded businesses mature, dozens of new public companies may be coming to U.S. shores. Of course, some may stumble along the way, given how competitive many verticals in e-commerce and digital services have become. The young management teams will also face a steep learning curve to meet international accounting, governance, and investor transparency standards that public shareholders rightfully expect. Rolling lockdowns due to the spread of variants of the COVID virus suppressed the revenue trajectory of many companies in 2021, but demand is expected to snap back in 2022 as vaccination rates in the region increase.

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Seasoned emerging markets investors are fond of the saying: “Pioneers get arrows. Settlers take the land.” Early investors in Southeast Asia’s digital gold rush will need to be prepared to dodge a few arrows. But the land is rich with opportunity. Drew Bernstein, Co-Managing Partner Marcum Bernstein & Pinchuk (MBP)– a leader in SEC audit, accounting and consulting services to Chinese companies seeking access to capital markets. In 1983, Drew Bernstein co-founded Bernstein & Pinchuk. Additionally, he co-founded MarcumBP, which is a member of the Marcum Group and an affiliate of Marcum LLP, a leading U.S. accounting and advisory firm. Both firms have multiple offices within the United States and Asia. Bernstein is a distinguished expert with deep knowledge of the China and U.S. financial ecosystem with experience extending across Asia, Europe and Africa. Industry experience encompasses technology, retail, manufacturing, hospitality, pharmaceutical and real estate. Bernstein directs a global team, featuring highly trained PCAOB and SEC accounting experts and financial consultants working in New York as well as Beijing, Tianjin, Shanghai, Shenzhen, Hangzhou, and Guangzhou. Additionally, Bernstein is considered a valuable thought leader and news commentator. He has published articles for Forbes.com and China Daily and is a frequently called upon source by prominent media such as China Global Television Network, CNBC, Bloomberg TV, The Financial Times,

The South China Morning Post, The Wall Street Journal, Yahoo! Finance, and more regarding Chinese IPOs, China’s economic growth, investment appetite, innovation trends, corporate governance, SEC regulations and more. Bernstein graduated from the University of Maryland with a B.S. in Accounting. Currently, he resides in New York City with his wife and children. About MBP Marcum Bernstein & Pinchuk LLP (MBP) offers specialized audit and advisory services to support SPAC sponsors and SPAC targets in Asia. MBP and its parent company, Marcum LLP, have been involved in more SPAC transactions than any other audit firm. MBP is the only audit firm to have a dedicated SPAC team for Asia. MBP performs all audits for Marcum in Greater China, and MBP is a top-five auditor for Chinese companies listed in the United States. The dedicated SPAC team has worked with SPAC sponsors, underwriters, and targets. MBP draws on wide-ranging experience with the initial public offerings and subsequent business transactions forged by such companies. MBP has designed its audit platform to deliver the technical expertise, efficiency, and urgency required by SPAC IPOs. This includes high-quality, PCAOB-compliant audits for private Asian companies that are contemplating entering a SPAC merger. Website: U.S.: https://www.marcumbp.com; China: https://cn.marcumbp.com Drew Bernstein does not own shares in any companies mentioned.

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MicroCap Review Magazine 21

Network Media Group Inc. (TSX-V: NTE) / (OTC: NETWF) INVESTOR OVERVIEW

Update with Network Media Group Inc. (TSX-V: NTE) / (OTC: NETWF)

(Data compiled as of market close on February 4, 2022)

SUMMARY Share Price ($)

0.16

Market Cap ($M)

14.3

52-Week Low/High ($)

0.11 / 0.46

Shares on Issue (M)

89.1

Warrants (M)

0.0

Options (M)

10.5

Fully Diluted Shares (M)

99.6

Volume Weekly (M)

0.9

FINANCIAL STATEMENT OVERVIEW Currency

$CAD

Cash ($m)

0.4

Debt ($m)

1.8

CY21 Revenue to 31 August 2021 ($M)

2.7

CY21 Net Profit/Loss to 31 August 2021 ($M)

-1.8

TOP SHAREHOLDERS

Derik Murray

9.4

Paul Gertz

4.3

Gregory Zeschuk

3.5

Alidad Pejman

3.3

Timothy Gamble

Leveraging Traditional Film Production for NFT and Digital Content Initiatives

Value Catalysts for 2022

COMPANY OVERVIEW Network Media Group Inc is a television, film, and NFT production company. Through its subsidiaries, the company is engaged in the development and production of entertainment content. The Company develops and produces film, and television and NFT properties in addition to providing production services to third parties. The principal business of the company is the development, financing, production, marketing and distribution of documentaries and docu-series. Network NFT Studios collaborates with IP owners, artists and top talent to create engagement campaigns using non-fungible tokens (NFT’s). The Company was founded in 1999.

12-MONTH SHARE PRICE CHART

1.1

Insiders

22.4

MANAGEMENT & CONTACTS CORPORATE FOCUS Sector Key Product/Market

Entertainment Documentary Films Docu-series

SENIOR MANAGEMENT & CONTACT CEO Name Investor Relations Name IR Email Address Headquarters Location Website/URL

Derik Murray Trevor Treweeke trevor@networkentertainment.ca Vancouver, BC https://www.networkmediagroup.ca

Please visit the company’s website for more information:

www.networkmediagroup.ca Note: This article has been undertaken by Independent Investment Research LLC (CRD#299837) & Independent Investment Research (Aust.) Pty Limited (Lic. No. 001242826), a corporate authorized representative of Australian Financial Services Licensee (AFSL no. 410381) (“IIR”). Any opinion contained in the article is unsolicited general information only. The reader of the article should seek advice from a qualified wealth adviser. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment, nor should it be construed as a recommendation. This material contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this document and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this document and other statements made from time to time by us or our representatives might not occur.

ANALYST COMMENT provided by Independent Investment Research NTE produces documentary films and docu-series. The Company works closely with broadcasters, distributors, and exhibitors to maximise the distribution and financial return of its productions. Produced for theatrical, television, online, and home entertainment distribution and exhibition, these productions are the foundation of NTE’s brand. NTE’s revenues were significantly reduced for the first three quarters of fiscal 2021 compared to 2020, due to the COVIDrelated filming restrictions that affected the entire entertainment industry. Despite the adverse effects resulting from COVID-19, NTE remains optimistic about the future as the Company continues to expand its partnerships and collaborations. The Company is beginning to see early signals of increasing production levels and a return to a normalised schedule which will allow the Company to meet its growth targets. Network NFT Studios is a newly created division for the research and development of NFTs related to media and entertainment properties. In the December quarter 2021, the Company raised $2.075m through a private placement to fund the growth of the NFT Studios division.

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insi g hts

// By Gavin Wendt

Resource Markets Since Pandemic Outbreak What’s Happened, Why and Where We Are Right Now

he resources sector has performed strongly for the past two years, recovering strongly from the pandemic lows of early 2020, and this momentum culminated in a very strong Q4 2021 performance, which in turn has generated positive momentum into 2022. This scenario is reflected in the robust performance of the Bloomberg Commodity Index over the past couple of years.

we initially saw China doing most of the heavy lifting as far as commodity demand was concerned, boosted by government stimulus measures. This led to record prices of iron ore, in particular. The bulk commodity has been a key ingredient in China’s economic growth policy for decades, used in residential construction and steel production on a mammoth scale.

In the immediate pandemic environment of 2020,

Iron ore prices have eased significantly from their

24 MicroCap Review Magazine

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peak however, as China cleaned up its environmental act ahead of the Beijing Winter Olympics, and simultaneously sought to jawbone prices in a downward direction. But iron ore ominously seems to be regaining some of its lost momentum, as markets anticipate a rebound in China demand post the Olympics. During 2020, we also saw gold outperforming the rest of the commodity space, as investors sought the security of gold bullion at a turbulent time, with the spot price reaching an all-time high around US$2,030 per ounce. 2021 by contrast, however, was a somewhat disappointing year for the precious metal, but this was not entirely surprising as financial markets adopted a ‘risk-on’ mentality into 2021. We began to see rest-of-the-world commodity demand begin to play catch-up towards the latter stages of 2020 and into 2021, driven by government stimulus measures to reboot economies, especially in terms of future-facing industries like renewable energy. A dramatic increase in industrial production led to a spectacular increase in energy demand, which has since translated into multi-year highs for all types

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A dramatic increase in industrial production led to a spectacular increase in energy demand, which has since translated into multi-year highs for all types of energy during Q4 2021 and into 2022 – including crude oil, natural gas, thermal coal and uranium, as well as electricity costs throughout Asia, Europe and North America.

of energy during Q4 2021 and into 2022 – including crude oil, natural gas, thermal coal and uranium, as well as electricity costs throughout Asia, Europe and North America.

MicroCap Review Magazine 25

Simultaneously, a whole host of industrial metals also soared to record highs during Q4 2021, with some maintaining their momentum into 2022. Their per-

26 MicroCap Review Magazine

formance has been driven by traditional near-term demand factors, as well as an understanding that end-users want to get their hands on supply now

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due to the medium and longer-term prospects for metals-intensive green energy. We’ve also seen the emergence of inflation as a major influence in the global economic recovery,

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which is not surprising given the rising cost of production inputs such as energy, raw materials, and also transportation costs. And the consequences of this are clear. The cost of production is escalating rapidly, and these additional charges are being

MicroCap Review Magazine 27

After being outshone during 2021 by the energy and industrial metals sectors, it looks as though it’s time for gold to make up the ground it lost. Gold has just received a very bullish sign from investors who are returning to the precious metal in a big way.

passed on to consumers. It is also clear that many central bankers have underestimated (and continue to underestimate) the prospect of inflation. In terms of where we sit presently in early 2022, the outlook for the commodity sector remains robust, driven by positive fundamentals in terms of strong demand and supply shortages. If we look for example at the six major industrial metals traded on the London Metal Exchange, we see that they are all in a state of backwardation (a situation where buyers are prepared to pay a premium for immediate delivery).

traded fund, recently recorded its biggest net inflow in dollar terms since its listing in 2004 — worth $1.63 billion. And despite expectations for multiple US interestrate hikes this year, markets are betting that ‘real’ interest rates will stay negative. There is a feeling that real yields will remain negative as the Fed struggles to tighten policy enough to push interest rates above inflation. The year ahead will not be without its challenges for resources markets – with inflation, covid and volatility casting a shadow – but supply tightness with respect to most commodities is likely to continue, generating a supportive environment for commodity prices. Gavin is based in Sydney, Australia and has followed the fortunes of international resource markets for the past 25 years, covering both equities and commodities, as a research analyst. He believes that the most interesting resource opportunities are typically found at the smaller end of the market, which these days is his exclusive area of focus. The resource sector is on an inexorable growth path, driven by an ever-increasing world population and modernization of living standards in emerging economies, as well as a significant shift in how we generate energy. This will provide enormous growth in the demand for commodities of all types. Gavin is the Head of Mining & Metals with research group Independent Investment Research (IIR) and he is the Founding Director and Senior Resource Analyst with MineLife. For more information about MineLife, please visit: www.minelife.com.au

This situation of backwardation also applies to other commodities at present, like crude oil. Brent crude futures, which soared 50% during 2021, are up a further 15% already in 2022 at seven-year highs of $90 a barrel. Crude oil recently managed to register its biggest January gain in at least 30 years, and also its best monthly gain since February 2021, as robust demand outpaced fresh supply. We are likely to see more OPEC+ supply restraint, with many members unable to meet their currently allowable production quotas. With production capacity tight, inventories low and geopolitics racking several producing regions, oil is hurtling towards $100 a barrel. After being outshone during 2021 by the energy and industrial metals sectors, it looks as though it’s time for gold to make up the ground it lost. Gold has just received a very bullish sign from investors who are returning to the precious metal in a big way. SPDR Gold Shares, the largest bullion-backed exchangeNote: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

28 MicroCap Review Magazine

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UGE International Ltd (TSX-V: UGE) / (OTCQB: UGEIF) INVESTOR OVERVIEW

Update with UGE International Ltd (TSX-V: UGE) / (OTCQB: UGEIF)

(Data compiled as of market close on February 4, 2022)

SUMMARY Share Price ($)

1.57

Market Cap ($M)

50.6

52-Week Low/High ($)

1.15 / 2.94

Shares on Issue (M)

32.2

Warrants (M)

2.1

Options (M)

3.7

Fully Diluted Shares (M)

38.0

Volume Weekly (M)

0.2

FINANCIAL STATEMENT OVERVIEW Currency

$USD

Cash ($m)

1.3

Debt ($m)

2.7

CY21 Revenue to 30 September 2021 ($M)

1.5

CY21 Net Profit/Loss to 30 September 2021 ($M)

TOP SHAREHOLDERS

-3.2

2022 Solar Industry Trends

Scale of UGE’s Solar Projects

Customer Acquisition

COMPANY OVERVIEW UGE International Ltd. is a solar and renewable energy solutions company providing solar energy solutions to commercial and industrial clients in Canada, the United States, and the Philippines. It develops, builds, owns, operates, deploys, and finances solar projects, as well as offers engineering and consulting services. The Company has developed over 700 solar projects in 90+ countries. The Company was founded in 2008 and is based in New York, New York.

12-MONTH SHARE PRICE CHART

Junfei Liu

15.5

Xiangrong Xie

10.2

Nicolas Blitterswyk

4.1

Yun Liu

2.5

Robert van Duynhoven

1.4

Insiders

34.7

MANAGEMENT & CONTACTS

ANALYST COMMENT provided by Independent Investment Research

CORPORATE FOCUS Sector

Solar Community Solar Commercial Solar

Key Product/Market

SENIOR MANAGEMENT & CONTACT CEO Name Investor Relations Name IR Email Address Headquarters Location Website/URL

Nick Blitterswyk Sean Peasgood investors@ugei.com New York, New York https://ugei.com

Please visit the company’s website for more information:

ugei.com Note: This article has been undertaken by Independent Investment Research LLC (CRD#299837) & Independent Investment Research (Aust.) Pty Limited (Lic. No. 001242826), a corporate authorized representative of Australian Financial Services Licensee (AFSL no. 410381) (“IIR”). Any opinion contained in the article is unsolicited general information only. The reader of the article should seek advice from a qualified wealth adviser. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment, nor should it be construed as a recommendation. This material contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this document and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this document and other statements made from time to time by us or our representatives might not occur.

UGE is a solar energy solutions company focused on commercial and community solar energy solutions that deliver cheaper, cleaner, and more reliable electricity. UGE develops, builds, owns/ operates, and finances commercial and community solar projects in the target markets of the US and Philippines. UGE also provide worldwide renewable energy engineering and consulting services. In 2020, UGE shifted its business model to develop, build, own and operate solar facilities for its own account. The Company energised its first self-financed systems in late 2020 and has four self-financed systems energised in the United States with a further four in the Philippines. UGE has a capital-light business model with long-term recurring revenues, usually at least 25 years. UGE has a strong development pipeline with project backlog of158MW at December-end 2021, ahead of the target of 120MW. The Company is seeking to have 100MW of operating assets and 100MW of annual project development capacity by 2024. Each MW provides US$0.5m-$1.0m in net retained value and US$0.15m-0.18m annual projected EBITDA (based on Company projections).

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// By Corey Fischer, CPA

ESG is Coming Down the Regulatory Pipeline

’m often asked by clients what they can expect in the way of new financial reporting regulations that may be in the regulatory pipeline. This question is mostly asked around year end, but more often and with greater intensity in an election year when there is a change in presidential administrations.

A change in administrations obviously comes with a new president and vice president, but it also comes with new agency heads. With new agency heads come a reshuffling of priorities. When Gary Gensler took the helm as Chairman of the Securities and Exchange Commission on April 17, 2021, he wasted no time in setting new priorities for his agency. By June, the SEC disclosed a list of 49 proposed rule changes that were on the Commission’s agenda. REGULATORY PRIORITIES That agenda, which is continually updated, can be found in the SEC’s Agency Rule List. The list includes some notable proposed rules including:

Act of 2010, including incentive-based compensation arrangements, and conflicts of interest in securitizations. •• Enhancing shareholder democracy. •• Special purpose acquisition companies. •• Mandated electronic filings and transfer agents.

COVERING THE PRIVATES •• Disclosures relating to climate risk, human capital, including workforce diversity and corporate board diversity, and cybersecurity risk. •• Market structure modernization within equity markets, treasury markets, and other fixed income markets. •• Transparency around stock buybacks, short sale disclosure, securities-based swaps ownership, and the stock loan market. •• Investment fund rules, including money market funds, private funds, and ESG funds. •• 10b5-1 affirmative defense provisions. •• Unfinished work directed by the Dodd-Frank Wall Street Reform and Consumer Protection

32 MicroCap Review Magazine

Clearly, regulators are addressing a wide swath of areas, and its regulatory footprint may increase even wider. In a recent CNBC interview Chairman Gensler said his staff is reviewing new rules that would require more transparency from private companies as well. If such new rules are approved, it likely would affect large private companies which have opted to seek growth capital through private capital markets. The SEC may consider tightening the qualifications of investors who participate in private funds and may change rules on how those investors are counted.

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Existing federal rules require companies with more than 2,000 shareholders “of record” to provide financial disclosure with the SEC, regardless of whether they have gone public. Under the current rule, an unlimited number of individuals can own shares through the same broker dealer or investment vehicle and still be counted as one shareholder. That could change, with each shareholder in an investment vehicle or fund counted individually. If that number exceeds 2,000 shareholders, those private entities may be required to comply with the same disclosure requirements as their public company counterparts. NEED ESP FOR ESG? The one item on the proposed regulatory agenda that looms largest for CFOs involves the still to be defined disclosures relating to Environmental, Social and Governance (ESG). For the uninitiated, the “E” in ESG deals with such things as energy efficiencies, carbon footprints, greenhouse gases, and climate change; in essence, what is the company doing to be a steward of nature. The “S” involves how a company manages its relationships with employees, suppliers, customers, and the communities it serves, and covers such things as labor standards, wages, benefits, board diversity, racial justice, and pay. The “G” stands for governance – or more to the point, governing over the “E” and “S”, and includes such items as corporate board composition, executive compensation, audits, internal controls, shareholder rights, and even political contributions. Currently, there is no requirement for U.S. companies to provide disclosures on ESG matters, but there is increasing social pressure, more legal challenges, and a desire by a growing number of corporate stakeholders. Financial rewards have been growing for early adopters of ESG. Global investment in funds that feature companies committed to ESG was $35.3 trillion in 2021, compared to $22.8 trillion in 2016, a 55% increase, according to the Global Sustainable Investment Alliance. Such investments are predicted to exceed $50 trillion by 2025. Currently, there isn’t a clear path for companies who want to be more environmentally and socially responsible. Consulting firm Accenture reports that

about half of large company CFOs, and other financial leaders it surveyed, said that they are unable to determine the best metrics to measure ESG performance. So far, the regulators haven’t been much help either. CFOs seeking to embrace ESGs must choose from more than 15 competing sustainability reporting frameworks that vary in detail and scope. For U.S. companies that have attempted to address ESG risk factors in their 10-Ks, the biggest questions and headaches have revolved around the lack of clarity regarding what is considered “material” by investors, and what is not. Extrasensory perception (ESP) should not be required to comply with ESG. It was initially thought that the European Union, which was an early proponent of creating and adopting ESG standards, would by now have a framework in place that U.S. regulators could adopt for U.S. companies. Not so. Chairman Gensler has said that while SEC staff will take into consideration the vast array of global ESG standards, his agency is working on a U.S. version for mandatory disclosures. Staff-proposed ESG rules will be considered by SEC commissioners sometime this year. It is anticipated that these SEC rules will likely parallel, but not duplicate, global standards. Gensler also has asked staff to propose workforce disclosure rules. Gensler said companies may need to report on metrics such as greenhouse gas emissions, financial impacts of climate change and progress towards climate-related goals. Such reports, he indicated, may be required in an expanded Form 10-K and describe a company’s direct and indirect carbon emissions, including those by suppliers and partners in its “value chain.” Once risk factors are identified, companies will be required to quantify the potential financial impact on the company and the timing of when those risks likely will occur. The regulatory pipeline may be full, but it is ESG compliance that will most challenge public company CFOs, finance executives and accounting professionals. Corey Fischer, CPA, is Firm Managing Partner of Weinberg & Company, a PCAOB and CPAB-Registered firm specializing in the audit, assurance, and tax needs of micro and small cap companies. He has more than 25 years of experience, having worked with Big 4 accounting firms, and as an SEC reporting officer for a number of NASDAQ-listed companies. Based in Los Angeles, he is an expert in financial reporting, SEC compliance, raising debt and equity, mergers and acquisitions and structuring accounting operations. E-mail: coreyf@weinbergla.com or 310-601-2200. Visit www.weinbergla.com

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MicroCap Review Magazine 33

East Side Games Group INVESTOR OVERVIEW

(TSX: EAGR) / (OTC: EAGRF)

Update with East Side Games Group (TSX: EAGR) / (OTC: EAGRF)

(Data compiled as of market close on February 4, 2022)

SUMMARY Share Price ($)

4.17

Market Cap ($M)

321.3

52-Week Low/High ($)

2.19 / 5.80

Shares on Issue (M)

77.06

Warrants (M)

0.65

Options (M)

2.99

Fully Diluted Shares (M)

91.44

Volume Weekly (M)

FINANCIAL STATEMENT OVERVIEW Currency

$CAD

Cash ($m)

11.78

Debt ($m)

0.0

FY21 Revenue ($M)

64.58

FY21 Net Profit/Loss ($M)

0.16

Update on New Game Launch Success

2022 Gaming Trends

Pipeline Depth in 2022

COMPANY OVERVIEW Leaf Mobile Inc. develops and publishes free-to-play mobile games in the United States, Canada and Europe. The Company offers a portfolio of original and licensed IP mobile games. The Company is headquartered in Vancouver, Canada and has over 170 employees and operates multiple virtual studios under the East Side Games and LDRLY Games banners. On 5 February 2021, the Company acquired Eastside Games Inc. in a reverse takeover transaction. The Company is seeking shareholder approval at the next AGM to formally change the company’s name to East Side Games Group.

12-MONTH SHARE PRICE CHART TOP SHAREHOLDERS

Jason Bailey

49.0

Joshua Nilson

5.3

Galan Akin

4.7

Michael Edwards

3.5

Pioneer Media Holdings Inc.

2.4

Insiders

70.2

MANAGEMENT & CONTACTS ANALYST COMMENT provided by Independent Investment Research

CORPORATE FOCUS Sector

Electronic Gaming and Multimedia

Key Product/Market

Mobile Games Game Kit

SENIOR MANAGEMENT & CONTACT CEO Name Darcy Taylor Investor Relations Name Josh Peligal IR Email Address ir@eastsidegamesgroup.com Headquarters Location Vancouver, BC Website/URL https://eastsidegamesgroup.com/ Please visit the company’s website for more information:

eastsidegamesgroup.com Note: This article has been undertaken by Independent Investment Research LLC (CRD#299837) & Independent Investment Research (Aust.) Pty Limited (Lic. No. 001242826), a corporate authorized representative of Australian Financial Services Licensee (AFSL no. 410381) (“IIR”). Any opinion contained in the article is unsolicited general information only. The reader of the article should seek advice from a qualified wealth adviser. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment, nor should it be construed as a recommendation. This material contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this document and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this document and other statements made from time to time by us or our representatives might not occur. The company paid consideration to SNN or its affiliates for this article.

The Company’s revenues are primarily generated through in-app purchases or in-game advertising sold to third parties. Additionally, the Company derives income from the licensing of their proprietary “Game Kit” technology to third party developers. Post the acquisition of East Side Games Inc., the Company has opened up new capital raising channels, listing on the OTCQB. The Company intends to raise CAD$10m from the listing and the Company is expected to have a market cap of ~GBP130m. Mobile Games is a fast growing market with mobile games being the world’s most popular form of gaming. According to the Company, mobile games are expected to reach 2.6 billion players and generate revenues of USD$90b in 2021. FY2021 revenue to 30 September is up 32.1% to CAD$64.58m. Consensus estimates are forecasting full year FY2021 revenue of CAD$90.22m, a 32.5% increase on FY2020. Consensus estimates are expecting the Company to report a loss for FY2021, but are forecasting a rebound in FY2022 to profitability with revenue of CAD$168m and net income of CAD$8.12m.

o Interact with our retail broker/dealer/banking network to facilitate the Company to potential Media Networks and set up small group Dinner.

o Develop plans for aggressive outbound media outreach, when requested, including existing shareholders, potential institutional and retail shareholders to ingest companies media.

o Continue periodic meetings, with locations to be determined, with Media Anchors and Producers.

o Work with management to develop a clear comparison of the firm's results to those of similar companies or competitors;

o Leverage relationships with media and financial journalists to effectively communicate the Company’s message; Including but not limited to, Cheddar, Fox Business News, TD Ameritrade Network, Yahoo Finance, Nasdaq Marketsite, Jane King Media, Modern Wall Street

o Position the management to effectively demonstrate the Company’s strategies and objectives so that companies interviews are clear & effective.

o Work with Company to develop a full release calendar, timing releases and important press announcements for utmost effectiveness; o Coordinate additional relationships with the goal of creating media awareness for the company; o 24 h hour situational crisis management with a concise strategy. Assist in addressing issues such as product recalls, contract losses, regulatory actions, litigation, loss of key employees, and all Major Media actions.

o Pinpointing of the proper media outlets to meet – and even the right individuals within those firms for maximizing interviews. o Monthly analysis of who is watching interviews, along with commentary on the ‘why’ behind these moves. o Context around effective interviews, i.e. how does it pertain to what we are seeing amongst peers, the sector and the broader market. The qualitative analysis that comes from this assessment provides company with insight into why Media Networks are doing what they are doing within their respective sector, allowing them to have more pointed conversations with these Media Professionals and be more efficient with their time spent.

MONEY BALL NETWORKS Money Ball Networks collaborates with premier investment banks, prominent broker-dealers, boutique research firms, and corporate professionals to provide an upscale experience for industry events. Our venues include A-list entertainment, top-shelf food & drink amidst alluring ambiance. MONEYBALLNETWORKS.COM

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MicroCap Review Magazine 35

insi g hts

// By Josh Young

Oil & Gas Outlook for 2022 Understanding Energy’s Central Role in the Economy

We specialize in energy investments at Bison, with a focus on oil and gas. So I’ll discuss our outlook for the industry and how we’re positioned, which could be broadly relevant as oil prices rise and investors are reminded of energy’s central role in the economy. 2022 is looking promising for the oil and gas industry on several fronts. Industry-wide investment in exploration and production is at all-time lows as a percentage of cash flows, which is limiting long term production capacity. This is partially due to uneconomic “ESG” mandates by capital allocators and increasingly unfriendly energy policy from regulators, both of which are restricting the availability of capital. Additionally, producers themselves, with the encouragement of their shareholders, are exerting capital discipline after a prior over-investment cycle. Producers are mostly choosing to use excess cash flow to buy back shares and pay dividends, rather than invest in new production. Against this backdrop of tepid supply growth, oil demand continues to rise inexorably. The swift recovery of oil demand is due to stronger-than expected recoveries in post-pandemic economic activity and travel, and to a lesser extent to the burning of oil for power generation amidst an energy crisis in Europe and Asia. Longer term trends such as suburbanization, whereby people have moved out of cities in favour of more oil-intensive suburban lifestyles, and rising standards of living in developing countries, will continue to propel oil demand higher. The prevailing “green transition,” “oil is going away” narrative is challenged and may be slowly shifting. As a result of this strong demand / weak supply dynamic, world oil inventories are being rapidly

36 MicroCap Review Magazine

depleted. With oil fundamentals strong and prices rising, oil production recovery challenges remain under-appreciated, particularly in asset areas like US shale, where misconceptions of “just turn on more oil” are prevalent. The flaws in this commonly held view include labor, supply chain and working capital, all of which should be expected after a prolonged cyclical downturn. The oil and gas industry has seen substantial turnover of highly skilled and experienced labor, coming after numerous rounds of layoffs in 2014 onwards. Industry veterans are becoming increasingly hard to replace, particularly as the oil and gas industry falls out of favor with new college graduates and an aging workforce retires. While supply chain issues are well known and are being seen across the broader post-pandemic economy, working capital depletion is under-appreciated. Drilling activity remains low versus 2019 levels, and even lower versus pre-2014 oil crash levels. With comparatively few new wells being drilled, the inventory of drilled uncompleted wells (DUCs) has been depleted. Since the onset of the pandemic, the pace of completions has far outpaced new drills, and so DUC inventory has languished. This trend looks unlikely to reverse anytime soon, especially as tough industry conditions force producers to prioritize well completion over new drilling, allowing them to maintain

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production levels with less capital, and drilling rig counts remain depressed. Oil prices will likely need to move much higher to address this market imbalance—a tailwind for our portfolio at Bison. This fundamental market imbalance will take time to resolve itself, and as such, we may be in the early innings of a multi-year bull market in oil and associated equities. Of course, we expect some volatility along the way. Our investment philosophy is simple, and we think positions us well for 2022. We buy high-quality oil and gas related securities at a deep discount to intrinsic value. Portfolio companies have high quality assets, proven management teams with a trackrecord of success, and at least one other catalyst likely to galvanize a re-rate, such as “embedded” pipeline assets, “un-booked reserves”, rapid and underappreciated de-leveraging, or potential asset or corporate sale. Companies we are interested in also have survivable balance sheets and are usually trading at a discount to asset replacement costs,

with an embedded margin of safety. We believe in concentration and are agnostic to volatility: if a security has met our stringent requirements, we buy in size and wait. Letting winners run is key to generating outsized returns, and so portfolio turnover is low, although we will sometimes add to core positions on weakness and sell opportunistically. Josh is a Co-Founder of Bison Interests and serves as its Chief Investment Officer, leading Bison’s research and investment process. He is focused on idea generation, investment strategy and portfolio construction. He is responsible for managing Bison’s outside advisers across geology, engineering, finance and management. Josh has over a decade of professional experience investing in publicly traded oil & gas stocks. He was previously Chairman of the board of Iron Bridge Resources, a publicly traded E&P. He led the reconstitution of the board and management there, $80 million in asset sales, and the sale of the company for $142 million. Prior to Bison, Josh was Portfolio Manager of Young Capital Management, a board member of Lucas Energy (LEI) – a small cap publicly traded oil producer, and an investment analyst at a multi-billion dollar, single family office, which was nominated as Institutional Investor’s Single Family Office of the Year. He has been profiled on the front page of Bloomberg.com and in Oil and Gas Investor Magazine, interviewed as an energy expert in broadcast media outlets like Fox News and Al Jazeera, quoted in publications including Barron’s and Reuters, and regularly speaks at industry events. Josh graduated with honors from the University of Chicago where he earned his Bachelor’s in economics. For more information about Bison Interests, please visit: www.bisoninterests.com

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MicroCap Review Magazine 37

L E GA L CORN ER

// By Jon Uretsky, Esq.

Vast Changes Coming to the Fundamental Structure of MicroCap Financing Has the SEC Thought This Through?

paradigm shift is coming to microcap financing. Currently, regardless of the specific method used to acquire shares in a public company direct from the issuer, most microcap financing involves some version of funds sent to the public company in exchange for shares issued directly from the public company in question. After a six-month waiting period, the shares can become unrestricted, and are then sold at a discount to the market. When things work out, both the lender and public company are happy with the deal. When the deal doesn’t work out, one of the parties to the deal sues the other. But for decades, even when they were suing each other, neither the lenders nor the issuers – or critically, the regulators - ever believed that the structure was illegal. The SEC just changed its mind.

It is difficult to overstate how much change this may cause to microcap financing. First, some background. Traditionally, when a microcap public company wants funds to finance something, it doesn’t bother going to Goldman Sachs – because there’s no point. Most of the financing available for microcap companies come from the same funds and firms that attend conferences like Planet Microcap – and very few are registered dealers. That’s because, for at least the past several decades, the entire industry had an understanding that these funds and firms weren’t required to be registered dealers. Which makes sense - there’s a significant difference between E-Trade executing trades for clients on the NYSE and a microcap fund selling its own shares onto the OTC after a Rule 144 waiting period.

38 MicroCap Review Magazine

The Law The actual language of the law doesn’t make that distinction. The Exchange Act defines a “dealer” as “any person engaged in the business of buying and selling securities… for such person’s own account through a broker or otherwise.” So, you know, everyone. Traditionally, though, the SEC didn’t prosecute everyone, and the reason was something known as the “trader exception.” Whether that exception applies turns on two questions: (1) whether a person is “buying and selling securities for its own account,” and (2) whether a person is engaged in that activity “as part of a regular business.” Microcap finance was built on this trader exception. Now the SEC thinks it doesn’t apply…and never did. The underlying question behind the SEC’s pursuit is this: Should a person who regularly lends/buys/ converts and then sells securities with their own capital be considered someone who is “engaged in the business of buying and selling securities”? For the past several decades, the answer was “no.” Recently, the SEC changed its mind. Notably, the various courts to weigh in on the SEC’s new crusade disagree with each other, as discussed below. JMJ Financial On January 21, 2022, the Court granted the SEC’s motion for summary judgment against Justin Keener and his firm, JMJ. The SEC persuaded the Court that

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Keener/JMJ failed to register as a securities dealer with the SEC when he bought convertible notes from penny stock issuers, converted those notes into new shares and sold them for a profit on a voluminous and consistent basis. According to the SEC and the Court, Keener avoided certain regulatory obligations for dealers that govern their conduct in the marketplace. The Court considered, but left unanswered, the real question: how much is too much? When a retired person sits at home, making three trades a day, are they a dealer? What about 10? 100? Refusing to answer the question, the Court characterized this threshold as being “more than a few isolated transactions.” This definition is arguably so broad that it likely captures fund managers, family officers, day traders, and other similar investors. JDF Capital The SEC filed an identical complaint against John D. Fierro and his business, JDF Capital. The court here also denied Fierro’s motion to dismiss in December 2020, stating that the factors set forth in various SEC no-action letters and other guidance are neither exclusive nor controlling. Beyond Commerce1 The District of Nevada Court came to a different conclusion. This Court ruled in November, 2021 that Discover Growth Fund, who the Court acknowledged “has invested in convertible securities of many small public companies, which it has converted into billions of shares of common stock that it resold into the public markets,” should be deemed a trader and was thus not required to register as a dealer. The Court delineated the plain language “part of a regular business” to mean “a dealer must be engaged in the securities business and be buying and selling for his own account.” Ultimately, the Court did not find that Discover engaged in these activities. Ironridge Global IV Similarly, in November 2021, the Delaware Bankruptcy Court analyzed the difference between the term “dealer” and “trader” and held that Ironridge was

not a dealer. According to the Court, Ironridge’s practice of acquiring stock at a discounted price was distinct from acquiring stock in the open market. Conclusion The takeaway here is that even the courts don’t know what to make of the SEC abruptly changing the way it interprets the “trader exception” after several decades. The SEC plainly hasn’t thought this through. The fundamental architecture of most of microcap financing structures was built on the premise that the trader exception applied. According to the SEC, now it doesn’t, and retroactively never did. PULLP represents both issuers and investor/lender funds – funds often sue issuer public companies and vice versa – and as such can say that if this new interpretation prevails, the whole of microcap financing will see a paradigm shift that may be harmful to both issuers and funds. Companies need some way of financing operations, and lender/investor funds won’t make any money without companies to fund. What does that mean going forward? The best approach is for issuers and funds to work together, using the Beyond Commerce approach as an example. Retaining experienced microcap litigators like PULLP will be crucial to proving to courts that each new case is distinguishable from JMJ, and is more like Beyond Commerce. We invite you to contact uretsky@pullp.com or 212.571.1164 for a complimentary analysis. PULLP is one of the only law firms specializing in microcap litigation. Jon Uretsky is the founding and managing partner of PULLP. Mr. Uretsky has a broad multidisciplinary practice that includes extensive experience in litigation and dispute resolution, regulatory investigations (including FINRA and SEC matters like those described above). In addition, he counsels corporate boards, board committees (including special committees) as well as being a personal adviser to many entrepreneurs, business leaders and corporate executives. He has counseled clients on significant litigation, regulatory and transactional matters across multiple industry sectors. Additionally, the PULLP team has extensive experience negotiated mergers and acquisitions (including reverse mergers); domestic and cross-border investments/joint ventures; the representation of private equity; venture capital and other private investment funds; securities offerings; and private and public financings. Notes: 1. Special thanks to Anna Adelstein, Counsel at PULLP, and Kayshana Mohanaraj, a Law Clerk at PULLP, for their assistance in researching and the preparation of this article, as well as their help in the many matters PULLP handles. 2. This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional. For more information about PULLP, please visit: www.pullp.com

1 The author of this article serves as outside counsel to Beyond Commerce and was involved in the referenced case. Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

www.SNN.Network

MicroCap Review Magazine 39

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VSBLTY Groupe Technologies INVESTOR OVERVIEW

Update with VSBLTY Groupe Technologies (OTCQB: VSBGF) / (CSE: VSBY)

(Data compiled as of market close on February 4, 2022)

SUMMARY Share Price ($)

(OTCQB: VSBGF) / (CSE: VSBY)

0.83

Market Cap ($M)

166.7

52-Week Low/High ($)

0.43 / 1.99

Shares on Issue (M)

200.9

Warrants (M)

68.9

Options (M)

12.2

Fully Diluted Shares (M)

282.0

Volume Weekly (M)

3.9

FINANCIAL STATEMENT OVERVIEW Currency

$USD

Cash ($m)

1.92

Debt ($m)

0.0

CY21 Revenue to 30 September 2021($M)

0.95

CY21 Net Profit/Loss to 30 September 2021 ($M)

-11.15

TOP SHAREHOLDERS

Guy Lombardo

6.35

Actus Interactive Software, LLC

5.49

Fred Potok

2.43

Thomas Hays

0.89

James Hutton

Partnership with Mexico’s Grupo Modelo to 2022: Focus on Executing Upon Install and Manage In-Store Media Network Recently Announced Partnerships

COMPANY OVERVIEW VSBLTY Groupe Technologies Corp. operates as a security and retail analytics technology company. Its software modules include VisionCaptor, a digital signage content management system; DataCaptor, a software module that leverages camera and sensor technology with artificial intelligence to provide real time analytics and audience measurement; and VSBLTY Vector, a facial detection software module that interfaces with a local or remote database to detect persons or objects of interest within a camera’s field of view. The company also provides retail hardware solutions, which can be integrated with the digital screen.

12-MONTH SHARE PRICE CHART

0.48

Insiders

10.45

MANAGEMENT & CONTACTS CORPORATE FOCUS Sector

Application Software DataCaptor VisionCaptor VSBLTY Vector

Key Product/Market

SENIOR MANAGEMENT & CONTACT CEO Name Investor Relations Name IR Email Address Headquarters Location Website/URL

Jay Hutton n/a Investor@vsblty.net Vancouver, BC https://vsblty.net

Please visit the company’s website for more information:

vsblty.net Note: This article has been undertaken by Independent Investment Research LLC (CRD#299837) & Independent Investment Research (Aust.) Pty Limited (Lic. No. 001242826), a corporate authorized representative of Australian Financial Services Licensee (AFSL no. 410381) (“IIR”). Any opinion contained in the article is unsolicited general information only. The reader of the article should seek advice from a qualified wealth adviser. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment, nor should it be construed as a recommendation. This material contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this document and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this document and other statements made from time to time by us or our representatives might not occur. The company paid consideration to SNN or its affiliates for this article.

ANALYST COMMENT provided by Independent Investment Research VSBY software empowers computer visions and artificial intelligence to improve the way we live, shop and protect. VSBY has three software modules that focus on two verticals: (1) The security application enables security cameras to monitor cast areas, detail specific items and identify persons of interest, measure audiences and see objects and potential threats; and (2) The digital display application allows users to engage and analyse their customer behaviours and take action based on the information gathered. VSBY has entered into a number of partnerships including a Joint Venture (JV) with Retailigent Media and Grupo Modelo. Under the JV, VSBY will supply proprietary software for analytics, security and visual displays throughout the network of 50,000 stores and independent neighbourhood bodegas in Mexico and across Latin America. VSBY will receive licensing revenue (forecast revenue of $10m p.a. by year 4) and 33% of the media value, which has a projected value of in excess of $250m p.a. by year 4. The JV in addition to a number of other key partnerships are expected to drive revenue growth in coming years.

insi g hts

// By Caitlin Cook

Crypto in 2022 The Year of DeFi and Regulation

With the highest returning coins and tokens up by multiple thousands of percents, it’s safe to say that 2021 was a positive year for a majority of the cryptoasset ecosystem.

metric far more eye popping than annual returns, however, was the overwhelming number of new entrants to the asset class. As of the end of 2021, there were over 300 million cryptoasset users globally, a number that sat at around just 100 million the year prior in 2020.

increasing efficiency and transparency while lowering friction, fees, barriers to entry, and more. In 2022, investors can expect to see continued expansion of the DeFi ecosystem into less obvious places than the products listed above. Below are a few areas that investors should keep a close eye on:

Explosive growth of the asset class in recent years, as well as the easily observable increase in both acceptance and adoption of the crypto ecosystem via celebrity endorsements, Super Bowl ads, and more, are setting the stage for an exciting year ahead. There are a variety of ongoing developments in the space; so many, in fact, that it may often feel hard to keep up. So, I’ve highlighted what I believe to be the largest areas of opportunity and important themes for investors to focus on when it comes to crypto in the year ahead.

The Metaverse

Themes to follow in 2022: The year of DeFi The Decentralized Finance (DeFi) movement is based on the idea that the financial system should not be controlled by intermediaries and third parties, but should rather be governed by permissionless peerto-peer networks and infrastructure via blockchain technology. Commonly known existing DeFi applications include stablecoins, decentralized exchanges, peer-to-peer lending services, and non-fungible digital assets or tokens (NFTs). While some of these products are entirely new, many of these developments were created as alternatives attempting to improve upon traditional financial systems by

42 MicroCap Review Magazine

The term metaverse made its foray into the general public in 2021, with Facebook even going as far as renaming their company to Meta… but what is it? The metaverse can be loosely defined as a network of virtual 3D worlds that facilitate social connection and the trade of digital goods and services amongst individuals. While the internet allows people to connect on a common interface in real time, the metaverse will allow individuals to do this to a greater extent, even enabling the use of custom avatars in place of natural appearance, virtual landscapes, and more, within a 3D world. The metaverse is in its early stages of development, but will be an area to watch throughout the year as builders in the DeFi space, along with traditional corporations such as Microsoft, Facebook, and even Walmart, all look to build towards this ecosystem in a variety of ways. NFTs From celebrities and pro athletes changing their profile pictures to Bored Apes, to sporting events giving out one-of-a-kind collectibles to attendees, NFTs had quite the year in 2021. 2022 will be the year that the general public begins to understand many of the emerging use cases for NFTs outside of art. The immutability and transparency of blockchain technol-

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ogy, among other characteristics, make NFTs desirable for a variety of use cases. Proof of attendance and certifications, identity verification, secure storage of sensitive data (particularly in industries such as legal and healthcare), documentation of intellectual property and patent rights, supply chain tracking and transparency, and tracking ownership of digital assets in play-to-earn games such as virtual land or avatar costumes are just a few of the many ways in which NFTs can be used at scale. Play-to-Earn and the Gamification of DeFi With billions of players globally, the gaming industry has provided participants with entertainment and ample opportunities for building virtual communities with fellow participants online. For many, participation in the gaming industry has historically been driven by a desire for stimulation and entertainment from the comfort of their homes; the newest iteration of gaming will provide an opportunity for income generation as well. Play-to-earn gaming, otherwise known as GameFi, is a coming together of DeFi and the Metaverse that will introduce new use cases, potential income streams, and provide another ave-

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nue for the adoption of DeFi products. Axie Infinity and Decentraland are two of the biggest play-toearn games in the space at present, but onlookers can expect to see a flood of entrants, both new and old (legacy gaming firms in the coming calendar year as the space continues to develop. In many ways, the games offered in DeFi are akin to those that gamers are already familiar with, such as Fortnight, Call of Duty, Minecraft, or Animal Crossing. However, simply put, play-to-earn games allow participants to earn cryptoassets in return for their time and efforts as they participate in the gaming ecosystem. Even if you aren’t a gamer yourself, it is important to note that the gamification of blockchain technology, cryptoassets, and DeFi will play a critical role in promoting mainstream adoption of the industry in the coming years. Continued Corporate Adoption Much of the world has started to accept crypto as a space that is unlikely to go away. As we approach mass adoption, the industry will need to secure the buy-in of more traditional players. from financial

MicroCap Review Magazine 43

institutions to large corporations and other organizations that contribute to mainstream culture in material ways. But it’s not just about these groups buying and holding bitcoin. Many corporations are beginning to interact with the crypto economy in interesting ways. This is an important development to keep in mind when assessing the acceleration of adoption. Rather than focus on short term price action, true long-term investors should be focusing on the big picture. Below are just a few examples of how traditional organizations are building to the emerging crypto space •• Over 25 publicly held companies hold bitcoin on their balance sheets •• Mastercard partnered with Coinbase so that users of the crypto exchange will be able to make purchases with Mastercard credit and debit cards. Mastercard had previously announced back in October that it’s teaming up with Bakkt to let banks and merchants in its network offer crypto-related services. •• 300 community banks announced that they will allow customers to buy and sell bitcoin on mobile banking apps. •• Visa has partnered with more than 65 crypto platforms and shared that 100 million vendors worldwide are accepting crypto payments. •• Square, now called Block, has integrated lightning network payments , enabling users to send bitcoin to each other for free and near instantaneously. •• TurboTax is now offering the ability for customers to receive tax refunds in cryptoassets. •• Nike, Adidas, Disney, Walmart, Coca-Cola, Anheuser-Busch, Taco Bell and Pizza Hut are now selling NFTs. •• Sports Illustrated is launching a sport based NFT marketplace •• Gamestop is launching a gaming based NFT marketplace Regulation Saving the least sexy topic for last, 2022 will undoubtedly be the year that crypto regulation takes center stage. The evolving regulatory landscape of crypto and DeFi is a systemic risk factor that should be considered by any prudent investor.

of comments, often contradicting each other, in regard to their outlooks on the asset class. However, much of this is purely speculatory as very few definitive decisions have been made about the future of the space. As evidenced by the comments above, many consider the current regulatory landscape to be opaqueunderstandably so, with the amount of noise put out into the ether (crypto pun intended). However, what the average investor should anticipate is this: Regulation will come to a head in the coming calendar year as Congress continues to cooperate with leaders in the crypto industry to better understand the underlying technology before putting more concrete legislation forward. While the CFTC, SEC, and others have gone back and forth on who will be primarily responsible for the regulation of the asset class at large, it is highly probable that the SEC will be leading the charge. An alternative idea put out by crypto-friendly representatives, however, is the creation of an entirely new regulatory body exclusively responsible for oversight of this emerging space. Rather than try to fit a square peg in a round hole by fitting traditional regulatory frameworks to a novel and futuristic asset class, the creation of a new regulatory body entirely could likely better cater to the unique characteristics of this space. Time will tell, of course, as it always does, but know that regulation is coming. Stablecoins and yield products have been cited on several occasions as a main area of concern, and financial institutions looking to get more involved in the asset class will have to do so while jumping through many regulatory hoops primarily created to promote investor protections. In regard to more immediate concerns, retail investors that participated in the crypto economy in 2021 should be sure to closely track their transaction history; the IRA has explicitly stated that they will be cracking down on those who leave crypto activity out of their 2021 tax filings. Caitlin Cook is Head of Community at Onramp Invest and VP of Operations at Onramp Academy. She is also host of the popular show, “The Chicks of Fintwit” podcast - an investing podcast by women, for everyone. Known as @DeadCaitBounce Twitter, Caitlin has cultivated an incredible community of folks that are actively looking to learn more about how they can use finance and investing in order to accomplish their own financial goals. And please, Get Outside today. For more information about Onramp Invest, please visit: www.onrampinvest.com

The CFTC, SEC, FINRA, IRS, White House, Congress, Senate and other major bodies have given a variety Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

44 MicroCap Review Magazine

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MicroCap Review Magazine 45

Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX ABVC

ACNB

ACU

ACY

ADN

AFGC AGRI

ALCO

ALJJ

ALY:CA

AMPD:CNX

AN:CA

ARC

ARCH:CA

Microcap Review INDEX

ABVC BioPharma Inc.

ARKR

ACNB Corporation

ARMP

Acme United Corporation

ARR:CA

AeroCentury Corp.

ART:CA

Advent Technologies Holdings Inc.

ASRT

American Financial Group Inc. 5.125% Subordinated Debentures due 2059

ATX:CA

AgriFORCE Growing Systems Ltd.

AUTO

Alico Inc.

AWKN:AQL

ALJ Regional Holdings Inc.

AXE:CA

AnalytixInsight Inc.

AXR

AMPD Ventures Inc.

BAC:CNX

Arena Minerals Inc.

BBQ

ARC Document Solutions Inc.

BCLI

Arch Biopartners Inc.

BDI:CA

Healthcare http://abvcpharma.com/

Financial Services https://www.acnb.com/

Consumer Defensive https://www.acmeunited.com/

Industrials https://www.aerocentury.com/

Utilities https://www.advent.energy/

Real Estate

Consumer Defensive https://agriforcegs.com/

Consumer Defensive https://www.alicoinc.com/

Industrials http://www.aljregionalholdings.com/alj/

Financial Services https://www.analytixinsight.com/

Financial Services https://ampd.tech/

Basic Materials https://arenaminerals.com/

Industrials https://www.e-arc.com/

Healthcare https://www.archbiopartners.com/

Ark Restaurants Corp.

Consumer Cyclical https://arkrestaurants.com/

Armata Pharmaceuticcals Inc.

Healthcare https://www.armatapharma.com/

Altius Renewable Royalties Corp.

Utilities https://www.altiusminerals.com/

ARHT Media Inc.

Technology https://arhtmedia.com/

Assertio Holdings Inc.

Healthcare https://www.assertiotx.com/

Atex Resources Inc.

Basic Materials https://www.atexresources.com/

AutoWeb Inc.

Communication Services https://www.autoweb.com/

AWAKN Life Sciences Corp.

Healthcare https://awaknlifesciences.com/

Acceleware Ltd.

Technology https://www.acceleware.com/

AMREP Corporation

Real Estate https://amrepcorp.com/

BacTech Environmeental Corp.

Industrials https://bactechgreen.com/

BBQ Holdings Inc.

Consumer Cyclical https://www.bbq-holdings.com/

Brainstorm Cell Therapeutics Inc.

Healthcare https://brainstorm-cell.com/

Black Diamond Group Limited

Industrials https://www.blackdiamondgroup.com/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

46 MicroCap Review Magazine

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Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX BDL

BGI BGSF

BHSC:CNX

BITE:CNX

BK:CA

BNKR:CNX

BRE:CA

BRID

BTCY

BWMN

CALB

CDX:CA

CDZI

Microcap Review INDEX

Flanigan’s Enterprises Inc.

CFW:CA

Birks Group Inc.

CHCI

Consumer Cyclical https://www.flanigans.net/

Consumer Cyclical

BGSF Inc.

Industrials https://bgsf.com/

CHMI

BioHarvest Sciences Inc.

Healthcare https://bioharvest.com/

CHW:CA

Blender Bites Limited

Consumer Defensive https://blenderbites.com/

CLPR

Canadian Banc Corp.

Financial Services https://www.quadravest.com/

CNET

Bunker Hill Mining

Basic Materials https://www.bunkerhillmining.com/

Bridgemarq Real Estate Services Inc.

Real Estate https://www.bridgemarq.com/

Bridgeford Foods Corporation

Consumer Defensive https://www.bridgford.com/

COIN:AQL

CPHC

CPIX

Biotricity Inc.

Healthcare https://www.biotricity.com/

CPL:CA

Bowman Consulting Group Ltd.

Industrials https://bowman.com/

CPOP

California BanCorp

Financial Services https://www.californiabankofcommerce.com/

CPSS

Cloud DX Inc.

Healthcare https://www.clouddx.com/#/

CREG

Cadiz Inc.

Utilities https://www.cadizinc.com/

CRKR

Calfrac Well Services Ltd.

Energy https://www.calfrac.com/

Comstock Holding Companies Inc.

Real Estate https://comstockcompanies.com/

Cherry Hill Mortgage Investment Corporation

Real Estate https://www.chmireit.com/

Chesswood Group Limited

Financial Services https://www.chesswoodgroup.com/

Clipper Realty Inc.

Real Estate https://www.clipperrealty.com/

ZW Data Action Technologies Inc.

Communication Services

Tokens.com Corp.

Financial Services https://www.tokens.com/

Canterbury Park Holding Corporation

Consumer Cyclical https://www.canterburypark.com/investor-relations/

Cumberland Pharmaceuticals Inc.

Healthcare https://www.cumberlandpharma.com/

Copper Lake Resources Ltd.

Basic Materials http://copperlakeresources.com/

Pop Culture Group Co. Ltd

Communication Services http://cpop.cn/

Consumer Portfolio Services Inc.

Financial Services https://www.consumerportfolio.com/

China Recycling Energy Corporation

Utilities http://www.creg-cn.com/en/

Creek Road Miners Inc

Financial Services https://creekroadminers.com/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

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MicroCap Review Magazine 47

Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX CRP:CA

CRUZ:CNX

CSCW

CTG

CUSN:CA

CWCO

CYAN

DALN

DCM:CA DEAL:CA

DIT

DLA

DLCG:CA

DLHC

Microcap Review INDEX

Ceres Global Ag Corp.

DOGZ

Cruz Battery Metals Corp Com

DTEA

Color Star Technology Co. Ltd.

DXYN

Computer Task Group Incorporated

EAGR:CA

Cornish Metals Inc.

EARN

Industrials https://ceresglobalagcorp.com/

Basic Materials https://www.cruzbatterymetals.com/

Communication Services https://www.colorstarinternational.com/

Technology https://www.ctg.com/

Basic Materials https://www.cornishmetals.com/

Consolidated Water Co. Ltd.

Utilities https://cwco.com/

EDN EDUC

DallasNews Corporation

Communication Services https://www.dallasnewscorporation.com/

EEX

Data Communications Management Corp.

EFOI

Industrials https://www.datacm.com/

Playgon Games Inc.

Communication Services https://www.playgon.com/

AMCON Distributing Company

Consumer Defensive https://www.amcon.com/#/

Delta Apparel Inc.

Consumer Cyclical https://www.deltaapparelinc.com/

Dominion Lending Centres Inc.

Financial Services https://dominionlending.ca/

DLH Holdings Corp.

Industrials https://www.dlhcorp.com/

DAVIDsTEA Inc.

Consumer Defensive https://www.davidstea.com/

The Dixie Group Inc.

Consumer Cyclical https://www.thedixiegroup.com/

East Side Games Group

Communication Services https://eastsidegamesgroup.com/

Ellington Residential Mortgage REIT of Beneficial Interest

Real Estate http://www.earnreit.com/

Empresa Distribuidora Y Comercializadora Norte S.A. Utilities

Cyanotech Corporation

Consumer Defensive https://www.cyanotech.com/

Dogness (International) Corporation

Consumer Defensive https://webus.dogness.com/index?lang=en

EGT:CA

ELA

ELSE

ENSC

ESE:CA

Educational Development Corporation

Communication Services https://www.edcpub.com/

Emerald Holding Inc.

Communication Services https://www.emeraldx.com/

Energy Focus Inc.

Consumer Cyclical https://www.energyfocus.com/company/

Eguana Technologies Inc.

Industrials https://www.eguanatech.com/

Envela Corporation

Consumer Cyclical https://envela.com/

Electro-Sensors Inc.

Technology https://www.electro-sensors.com/

Ensysce Biosciences Inc.

Healthcare https://ensysce.com/

ESE Entertainment Inc.

Communication Services https://esegaming.com/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

48 MicroCap Review Magazine

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Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX ESN:CA

ESSC

Microcap Review INDEX

Essential Energy Services Ltd.

GFED

East Stone Acquisition Corporation

GIGM

Energy https://essentialenergy.ca/

Financial Services

EVGN:CA

FAT

FAT:CNX FDM:CNX

FHYD:CA

FLNT

FNGR

FNWB

FRBK

FUU:CA

GASS

GASX:CA

EverGen Infrastructure Corp.

Utilities https://www.evergeninfra.com/

FAT Brands Inc.

Consumer Cyclical https://www.fatbrands.com/

Foremost Lithium Resource & Technology Ltd Com

GIII:CA

GIP:CA

GLDC:CA

Basic Materials https://foremostlithium.com/

Fandom Sports Media Corp.

GNE

Technology https://www.fandomesports.com/#/

First Hydrogen Corp.

GNPX

Consumer Cyclical https://firsthydrogen.com/

Fluent Inc.

GRB:CA

Communication Services https://www.fluentco.com/

FingerMotion Inc.

GVP

Communication Services https://www.fingermotion.com/

First Northwest Bancorp

Financial Services https://www.ffnwb.com/

Republic First Bancorp Inc.

Financial Services https://www.myrepublicbank.com/

Fission 3.0 Corp.

Energy https://www.fission3corp.com/

StealthGas Inc.

Industrials https://www.stealthgas.com/

NG Energy International Corp.

Energy https://ngenergyintl.com/

GWAY:CNX

GXE:CA

GXU:CA

HAMR:CNX

HBP

Guaranty Federal Bancshares Inc.

Financial Services https://www.gbankmo.com/

GigaMedia Limited

Communication Services http://www.gigamedia.com/EN/home/Default.asp

ReGen III Corp.

Energy https://www.regeniii.com/

Green Impact Partners Inc.

Utilities https://www.greenipi.com/

Cassiar Gold Corp.

Basic Materials https://cassiargold.com/

Genie Energy Ltd. Class B Stock

Utilities https://genie.com/

Genprex Inc.

Healthcare https://www.genprex.com/

Greenbriar Capital Corp.

Utilities https://greenbriarcapitalcorp.ca/

GSE Systems Inc.

Technology https://www.gses.com/

Greenway Greenhouse Cannabis Corporation

Healthcare https://www.greenway.ca/

Gear Energy Ltd.

Energy https://gearenergy.com/

GoviEx Uranium Inc.

Energy https://goviex.com/

Silver Hammer Mining Corp Com

Basic Materials https://silverhammermining.com/

Huttig Building Products Inc.

Industrials https://www.huttig.com/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

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MicroCap Review Magazine 49

Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX HCDI

HEO:CA

HGSH

HHS

HME:CA

HOLD:AQL

HPS.A:CA HSON

HTIA

HTOO

HWBK

HWO:CA

HZN

IBAT:CNX

Microcap Review INDEX

Harbor Custom Development Inc.

IDG:CA

H2O Innovation Inc.

IEI:CA

China HGS Real Estate Inc.

IFRX

Harte-Hanks, Inc.

IINN

Hemisphere Energy Corporation

ILI:CA

IMMUTABLE HOLDINGS INC.

IMBI

Hammond Power Solutions Inc. Class A Subordinate Voting Shares

IMUX

Real Estate https://harborcustomhomes.com/

Utilities https://www.h2oinnovation.com/

Real Estate http://www.chinahgs.com/

Communication Services https://www.hartehanks.com/

Energy https://www.hemisphereenergy.ca/

Financial Services https://www.immutableholdings.com/

Industrials https://americas.hammondpowersolutions.com/

INTG

Hudson Global Inc.

Industrials https://www.hudsonrpo.com/

IPO:CA

Healthcare Trust Inc.

Real Estate http://www.healthcaretrustinc.com/

IROQ

Fusion Fuel Green PLC

Utilities https://www.fusion-fuel.eu/

ISIG

Hawthorn Bancshares Inc.

Financial Services https://www.hawthornbancshares.com

ISPC

High Arctic Energy Services Inc.

Energy https://haes.ca/

IVAC

Horizon Global Corporation

Consumer Cyclical https://www.horizonglobal.com/

International Battery

JE:CA

Indigo Books & Music Inc.

Consumer Cyclical https://www.chapters.indigo.ca/en-ca/

Imperial Equities Inc.

Real Estate https://imperialequities.com/

InflaRx N.V.

Healthcare https://www.inflarx.de/

Inspira Technologies Oxy B.H.N. Ltd.

Healthcare https://inspira-technologies.com/

Imagine Lithium Inc Com

Basic Materials https://www.imaginelithium.com/

iMedia Brands Inc.

Consumer Cyclical https://www.imediabrands.com/

Immunic Inc.

Healthcare https://imux.com/

The Intergroup Corporation

Consumer Cyclical https://www.intgla.com/

InPlay Oil Corp.

Energy https://www.inplayoil.com/

IF Bancorp Inc.

Financial Services https://www.iroquoisfed.com/

Insignia Systems Inc.

Communication Services https://insigniasystems.com/

iSpecimen Inc.

Healthcare https://www.ispecimen.com/

Intevac Inc.

Industrials https://www.intevac.com/

Just Energy Group Inc.

Utilities https://investors.justenergy.com/

Basic Materials https://www.ibatterymetals.com/ Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

50 MicroCap Review Magazine

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Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX JILL

JOB

JOY:CA

JRJC

JVA

JWEL

KFS

KPT:CA

KULR

LAKE

LAZY

LEE

LEM:CA

LFT

Microcap Review INDEX

J. Jill Inc.

LFVN

GEE Group Inc.

LGVN

Journey Energy Inc.

LINC

Consumer Cyclical https://www.jjill.com/

Industrials https://www.geegroup.com/

Energy https://www.journeyenergy.ca/

China Finance Online Co. Limited

Financial Services http://www.chinafinanceonline.com/

LIQT

Coffee Holding Co. Inc.

LIS:CA

Consumer Defensive https://coffeeholding.com/

Jowell Global Ltd.

Consumer Cyclical https://www.1juhao.com/

LMB

Kingsway Financial Services Inc.

Consumer Cyclical https://kingsway-financial.com/

LMNR

KP Tissue Inc.

Consumer Defensive https://www.kptissueinc.com/home

KULR Technology Group Inc.

Technology https://www.kulrtechnology.com/

LMRKO

LOV

Lakeland Industries Inc.

Consumer Cyclical https://www.lakeland.com/us

LQDA

Lazydays Holdings Inc.

Consumer Cyclical https://lazydays.com/

LQID:CNX

Lee Enterprises Incorporated

Communication Services https://lee.net/

LTBR

Leading Edge Materials Corp.

Basic Materials https://leadingedgematerials.com/

Lument Finance Trust Inc.

Real Estate https://www.lumentfinancetrust.com/

LTRX

Lifevantage Corporation

Consumer Defensive https://www.lifevantage.com/us-en/

Longeveron Inc.

Healthcare https://www.longeveron.com/

Lincoln Educational Services Corporation

Consumer Defensive https://www.lincolntech.edu/

LiqTech International Inc.

Industrials https://liqtech.com/

Lithium South Development Corporation

Basic Materials https://www.lithiumsouth.com/

Limbach Holdings Inc.

Industrials https://www.limbachinc.com/

Limoneira Co

Consumer Defensive https://www.limoneira.com/

Landmark Infrastructure Partners LP

Real Estate https://www.landmarkmlp.com/

Spark Networks Inc. American Depositary Shares

Communication Services https://www.spark.net/

Liquidia Corporation

Healthcare https://www.liquidia.com/

Liquid Avatar Technologies Inc.

Technology https://liquidavatartechnologies.com/

Lightbridge Corporation

Industrials https://www.ltbridge.com/

Lantronix Inc.

Technology https://www.lantronix.com/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

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MicroCap Review Magazine 51

Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX LXE:CA

MAYS

MBX:CA

MCR:CA

MFH

MHC.U:CA MIR:CA

MITT

MLP

MOVE:AQL

MPM:CA

MRAM

MRBK

Microcap Review INDEX

Leucrotta Exploration Inc.

MTEX

J. W. Mays Inc.

MXG:CA

Microbix Biosystems Inc.

NBVA:CA

Macro Enterprises Inc.

NCX:CA

Energy https://www.leucrotta.ca/

Real Estate http://www.jwmays.com/

Healthcare https://microbix.com/

Energy http://www.macroindustries.ca/

Mercurity Fintech Holding Inc.

Financial Services https://mercurityfintech.com/

Flagship Communities Real Estate Investment Trust

Real Estate https://flagshipcommunities.com/

NEN NGC:CA

NGEX:CA

AG Mortgage Investment Trust Inc.

Real Estate https://www.agmortgageinvestmenttrust.com/

NOW:CA

Maui Land & Pineapple Company Inc.

Real Estate https://mauiland.com/

POWERTAP HYDROGEN CAPITAL CORP.

Utilities https://powertapfuels.com/

Millennial Precious Metals Corp.

Basic Materials https://millennialpreciousmetals.com/

Everspin Technologies Inc.

Technology https://www.everspin.com/

Meridian Corporation

Financial Services http://www.meridian-ks.com/meridian/

Maxim Power Corp.

Utilities https://maximpowercorp.com/

Nubeva Technologies Ltd.

Technology https://www.nubeva.com/

NorthIsle Copper and Gold Inc.

Basic Materials https://www.northisle.ca/

New England Realty Associates Limited Partnership Class A Depositary Receipts Evidencing Units of Limited Partnership Real Estate

MedMira Inc.

Healthcare https://medmira.com/

Mannatech Incorporated

Consumer Defensive https://us.mannatech.com

NPK:CA

NPR:CA

NREF

NSE:CA

NTE:CA

Northern Genesis Acquisition Corp. III

Basic Materials http://www.northerngenesis.com/

NGEx Minerals Ltd.

Basic Materials https://ngexminerals.com/

NowVertical Group Inc.

Technology https://www.nowvertical.com/

Verde Agritech Plc Ordinary Shares

Basic Materials https://investor.verde.ag/

North Peak Resources Ltd.

Basic Materials https://northpeakresources.com/

NexPoint Real Estate Finance Inc - Ordinary Shares

Real Estate https://www.nexpointfinance.com

New Stratus Energy Inc.

Energy https://newstratusenergy.com/

Network Media Group Inc.

Communication Services https://www.networkmediagroup.ca/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

52 MicroCap Review Magazine

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Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX NTRB

NUZE

NVVE

NYC

OAM:CA

OBT

OCC

OCG

OEG

OG:CA

OPBK

OPT:CA

OXBR

PDFI:CNX

Microcap Review INDEX

Nutriband Inc.

PETV

NuZee Inc.

PETZ

Healthcare https://nutriband.com/

Consumer Defensive https://mynuzee.com/

Nuvve Holding Corp.

PEX:CA

Consumer Cyclical https://nuvve.com/

New York City REIT Inc. Class A

PGLD:CA

Real Estate http://www.newyorkcityreit.com/

OverActive Media Corp.

PHUN

Communication Services https://overactivemedia.com/

Orange County Bancorp Inc

PINE

Financial Services https://www.orangebanktrust.com/

Optical Cable Corporation

Technology https://www.occfiber.com/

Oriental Culture Holding LTD

Consumer Cyclical http://www.ocgroup.hk/

PINK:CA

PLIN

Orbital Energy Group Inc.

PMKR:CA

Organic Garage Ltd.

PMT:CA

Utilities https://www.orbitalenergygroup.com/

Consumer Defensive https://www.organicgarage.com/investors

OP Bancorp

Financial Services https://myopenbank.com/

Optiva Inc.

Technology https://optiva.com/

Oxbridge Re Holdings Limited

Financial Services http://www.oxbridgere.com/

Prophecy DeFi Inc. Subordinate Voting Shares

Financial Services https://www.prophecydefi.com/

PPIH

PPR:CA

PPSI

PRPH

PetVivo Holdings Inc.

Healthcare https://petvivo.com/

TDH Holdings Inc.

Consumer Defensive

Pacific Ridge Exploration Ltd.

Basic Materials https://pacificridgeexploration.com/

P2 Gold Inc.

Basic Materials https://www.p2gold.com/

Phunware Inc.

Technology https://www.phunware.com/

Alpine Income Property Trust Inc.

Real Estate https://alpinereit.com/

Perimeter Medical Imaging AI Inc.

Healthcare https://www.perimetermed.com/

China Xiangtai Food Co. Ltd.

Consumer Defensive http://ir.plinfood.com/

Playmaker Capital Inc.

Consumer Cyclical https://www.playmaker.fans/

Perpetual Energy Inc.

Energy http://www.perpetualenergyinc.com/

Perma-Pipe International Holdings Inc.

Industrials https://www.permapipe.com/

Prairie Provident Resources Inc.

Energy https://www.ppr.ca/

Pioneer Power Solutions Inc.

Industrials https://www.pioneerpowersolutions.com/

ProPhase Labs Inc.

Healthcare https://www.prophaselabs.com/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

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MicroCap Review Magazine 53

Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX PRQ:CA

PSD:CA

PSH:CA

PTPI

PVT:CA

QRHC

RCMT

RDCM

RELI

RELL

RET.A:CA

RETO

RGCO

Microcap Review INDEX

Petrus Resources Ltd.

RHC:CA

Pulse Seismic Inc.

RMCF

PetroShale Inc.

ROOT:CA

Petros Pharmaceuticals Inc.

RZE:CA

Energy http://www.petrusresources.com/

Energy https://www.pulseseismic.com/

Energy http://www.petroshaleinc.com/

Healthcare https://www.petrospharma.com/

Pivotree Inc.

Technology https://pivotree.com/

Power REIT

Real Estate https://www.pwreit.com/

Quest Resource Holding Corporation

Industrials https://www.questrmg.com/

RCM Technologies Inc.

Industrials https://www.rcmt.com/

SACH

SALT:CA

SANW

SATO:CA

Radcom Ltd.

Communication Services https://radcom.com/

Reliance Global Group Inc.

Industrials https://relianceglobalgroup.com/

Richardson Electronics Ltd.

Technology https://www.rell.com/

Reitmans (Canada) Limited

Consumer Cyclical http://www.reitmanscanadalimited.com/

SAU:CA

SCYX

SEAC

SECU:CA

ReTo Eco-Solutions Inc.

Basic Materials http://en.retoeco.com/intro/1.html

RGC Resources Inc.

Utilities https://www.rgcresources.com/

SELF

Royal Helium Ltd.

Energy https://royalheliumltd.com/

Rocky Mountain Chocolate Factory Inc.

Consumer Defensive https://www.rmcf.com/

Roots Corporation

Consumer Cyclical https://www.roots.com/

Razor Energy Corp.

Energy https://www.razor-energy.com/

Sachem Capital Corp.

Real Estate https://www.sachemcapitalcorp.com/

Atlas Salt Inc.

Basic Materials https://atlassalt.com/

S&W Seed Company

Consumer Defensive https://swseedco.com/

Invesco Alerian Galaxy Crypto Economy ETF

Financial Services https://www.invesco.com/us/financial-products/etfs/productdetail?audienceType=Advisor&productId=ETF-SATO

St. Augustine Gold and Copper Limited

Basic Materials https://www.sagcmining.com/

SCYNEXIS Inc.

Healthcare https://www.scynexis.com/

SeaChange International Inc.

Technology https://www.seachange.com/

SSC Security Services Corp.

Consumer Defensive https://securityservicescorp.ca/

Global Self Storage Inc.

Real Estate https://www.globalselfstorage.us/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

54 MicroCap Review Magazine

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Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX SEV:CA

SEVN

SGA

SGLY

SHLE:CA

SKLL:CNX

SLNH

SMC:CA

SMID

SMIT

SOIL:CA

SONA:CNX

SOTK

Microcap Review INDEX

Spectra7 Microsystems Inc.

SPG:CA

Seven Hills Realty Trust

SPN:CA

Saga Communications Inc.

SQFT

Singularity Future Technology Ltd

SRTS

Source Energy Services Ltd.

STG

Technology https://www.spectra7.com/

Real Estate https://sevnreit.com/home/default.aspx

Communication Services https://sagacom.com/

Industrials https://www.sino-global.com/investor-relations/corporateprofile/default.aspx

Energy https://www.sourceenergyservices.com/

Scienjoy Holding Corporation

Communication Services https://ir.scienjoy.com/

Royal Wins Corporation

Consumer Cyclical https://royalwins.com/

Soluna Holdings Inc.

Technology https://www.solunacomputing.com/

Sulliden Mining Capital Inc.

Basic Materials http://sulliden.com/

Smith-Midland Corporation

Basic Materials https://smithmidland.com/

Schmitt Industries Inc.

Technology https://www.schmittindustries.com/

Saturn Oil & Gas Inc.

Energy https://www.saturnoil.com/

Sona Nanotech Inc

Healthcare https://sonanano.com/

Sono-Tek Corporation

Technology https://www.sono-tek.com/

STON

STS:CA

SUMR

SWP:CA

SXP:CA

TATT

TBRD:CA

Spark Power Group Inc.

Utilities https://sparkpowercorp.com/

Snipp Interactive Inc.

Communication Services https://www.snipp.com/

Presidio Property Trust Inc.

Real Estate https://presidiopt.com/

Sensus Healthcare Inc.

Healthcare https://www.sensushealthcare.com/

Sunlands Technology Group American Depositary Shares representing Class A

Consumer Defensive http://www.sunlands.com/

StoneMor Inc.

Consumer Cyclical https://www.stonemor.com/

South Star Battery Metals Corp.

Basic Materials https://www.southstarbatterymetals.com/

Summer Infant Inc.

Consumer Defensive https://www.summerinfant.com/home

Spring Valley Acquisition Corp.

Financial Services https://sv-ac.com/

Swiss Water Decaffeinated Coffee Inc.

Consumer Defensive https://www.swisswater.com/

Supremex Inc.

Consumer Cyclical https://www.supremex.com/

TAT Technologies Ltd.

Industrials https://tat-technologies.com/

Thunderbird Entertainment

Communication Services https://thunderbird.tv/

TuanChe Limited

Communication Services http://ir.tuanche.com/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

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MicroCap Review Magazine 55

Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX TDAC

TGL:CA

TGO:CA

TLT:CA

TNY:CNX

TNZ:CA

TOMZ

TOT:CA

TPHS

TRKA

TRL:CA TRT

TSQ

TTX:CNX

Microcap Review INDEX

Lottery.com Com

TYUM:CNX

TransGlobe Energy Corporation

UBCP

Financial Services https://lottery.com/

Energy https://www.trans-globe.com/home/default.aspx

TeraGo Inc.

Communication Services https://terago.ca/

Theralase Technologies Inc.

Healthcare https://theralase.com/

The Tinley Beverage Company Inc

Consumer Defensive https://drinktinley.com/

Tenaz Energy Corp.

Energy https://www.tenazenergy.com/

TOMI Environmental Solutions Inc.

Industrials https://tomimist.com/

Total Energy Services Inc.

Energy https://www.totalenergy.ca/

Trinity Place Holdings Inc.

Real Estate https://tphs.com/

Troika Media Group Inc.

Communication Services https://www.troikamedia.com/

Trilogy International Partners Inc.

Communication Services

UG UGE:CA

UNTY

USAK

UTI VBFC

VENZ:CA

VIA

VLI:CA

Trio-Tech International

Technology https://www.triotech.com/

VO:CA

Townsquare Media Inc. Class A

Communication Services https://www.townsquaremedia.com/

Tantalex Resources Corporation

Basic Materials https://www.tantalexlithium.com/

VRAR

VSBY:CNX

Yumy Candy Co Inc Com

Consumer Defensive https://yumybear.com/

United Bancorp Inc.

Financial Services https://www.unitedbancorp.com/corporate-information/ corporate-profile/default.aspx

United-Guardian Inc.

Consumer Defensive https://u-g.com/

UGE International Ltd.

Technology https://ugei.com/

Unity Bancorp Inc.

Financial Services https://unitybank.com/

USA Truck Inc.

Industrials https://www.usa-truck.com/

Universal Technical Institute Inc

Consumer Defensive https://www.uti.edu/

Village Bank and Trust Financial Corp.

Financial Services https://www.villagebank.com/investor-relations/

Venzee Technologies Inc.

Technology https://venzee.com/

Via Renewables Inc.

Utilities https://viarenewables.com/

Vision Lithium Inc.

Basic Materials https://visionlithium.com/

Valore Metals Corp.

Energy http://valoremetals.com/

The Glimpse Group Inc.

Technology https://www.theglimpsegroup.com/

VSBLTY Groupe Technologies Corp - Ordinary Shares

Technology https://vsblty.net/investors/

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

56 MicroCap Review Magazine

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Microcap Review INDEX Q1 2022 Constituent List

Microcap Review INDEX VUI:CA

VWTR

WAVD

WAVE

WDR:CNX

WEB:CA

WEE:CA

WEYS

Virginia Energy Resources Inc.

Energy http://virginiaenergyresources.com/

Microcap Review INDEX WHY:CA

Vidler Water Resources Inc.

Utilities http://www.vidlerwater.com/

WNDR:AQL

WaveDancer Inc.

Technology https://wavedancer.com/

WSTG

Eco Wave Power Global AB

Utilities https://www.ecowavepower.com/

WWT:CA

Wondr Gaming Corp.

Communication Services https://www.wondrgaming.com/wondr-nft/

XSPA

Westbridge Energy Corporation

Energy https://www.westbridge.energy/

Wavefront Technology Solutions Inc.

Energy https://onthewavefront.com/

Weyco Group Inc.

YAK:CA

West High Yield (W.H.Y.) Resources Ltd.

Basic Materials http://www.whyresources.com/

WONDERFI TECHNOLOGIES INC.

Technology https://www.wonder.fi/

Wayside Technology Group Inc.

Technology https://www.waysidetechnology.com/

Water Ways Technologies Inc.

Industrials https://water-ways-technologies.com/

XpresSpa Group Inc.

Consumer Cyclical https://xpresspagroup.com/

Mongolia Growth Group Ltd.

Real Estate https://www.mongoliagrowthgroup.com/

17 Education & Technology Group Inc.

Consumer Defensive

https://ir.17zuoye.com/

Consumer Cyclical https://www.weycogroup.com/home/index.html

Note: As of rebalance date 01/03/2022, please see SNN’s criteria for inclusion in the MicroCap Review Index here: https://snn.network/key-criteria

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MicroCap Review Magazine 57

ET F CORN ER

// By Michael Krause

Microcap ETFs ETF Landscape Microcap stocks offer many attractions for investors, and ETFs are an easy and popular way to gain exposure to this segment of the equity market. There are three ETFs explicitly tracking U.S. microcap stocks. The oldest and largest by far is the iShares Micro-Cap ETF (IWC), with almost $1.1 billion in assets under management (AUM). The fund takes a traditional, passive approach to microcaps by tracking a broad, market-cap weighted index including nearly 1,800 stocks (Table 1). In contrast, the First Trust Dow Jones Select MicroCap ETF (FDM) takes a more selective approach by including only 207 microcap stocks that are screened for both liquidity and fundamentals such as their price-to-earnings ratio, operating profit margins and EPS growth. Its performance history is nearly as long as IWC’s, and both funds have an expense ratio of 60 basis points. Finally, the AdvisorShares Dorsey Wright Micro-Cap ETF (DWMC) is an actively managed fund with an expense ratio to match of 127 basis points. This seems excessive to us given that the ETF follows a systematically-driven methodology based on relative strength, with stock selection done without regard

to a company’s fundamentals. Few investors have been willing pay the hefty charges, with the fund gathering only about $6 million in AUM so far. Under the Hood Let us look under the hood to see how these funds differ from one another, focusing primarily on how the broad-based passive approach of IWC contrasts with the selective approach of FDM. The two funds have 178 holdings in common (89% of FDM’s 207 stocks) but overlap by weight is just 20% (Figure 1). This results in significant differences in sector exposure, with IWC offering significantly more Health Care (+14%) but less exposure to Financials (-13%). This gives FDM somewhat of a “Value” tilt relative to IWC, not surprising given the former’s fundamentally-driven screening criteria. This is further supported when looking at valuation metrics of the two funds. Stocks in the broader IWC are significantly more expensive in aggregate than their counterparts in FDM based traditional valuation metrics including price-to-earnings (P/E), price-to-book value (P/BV) and others (Table 2). The difference in the P/E ratio is particularly large but can be explained by the high number of loss-making companies in IWC (which

Table 1: Microcap ETFs

Fund (Ticker)

Expense Ratio

# of Holdings Inception Date

AUM (mns)

iShares Micro-Cap ETF (IWC)

60 bp

1,786

8/12/2005

$1,091

First Trust DJ Select MicroCap ETF (FDM)

60 bp

207

9/27/2005

$170

AdvisorShares Dorsey Wright MicroCap ETF (DWMC)

127 bp

163

7/10/18

Source: www.etfrc.com

58 MicroCap Review Magazine

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Figure 1: Overlap Analysis IWC vs. FDM

Source: www.etfrc.com

depresses overall profits and drives the P/E ratio up). for those in FDM. The result is that on a price-toThe presence of many loss-making companies is growth basis (P/E divided by the LTG estimate, or understandable in a microcap index which is bound “PEG”), IWC actually appears a bit cheaper than FDM. to include many early-stage, high-growth companies. (For perspective, the LTG forecast for firms in the The methodology behind FDM on the other hand S&P 500 is 12%). screens most of these companies out. Performance FDM’s attractive valuation multiples do not come without some tradeoffs. The biggest is that compaBoth IWC and FDM have a lengthy performance nies in IWC are forecast to have a much higher long history for comparison. As Figure 2 below shows, term EPS growth rate of 58% compared to just 10% returns for the two were nearly identical for their Table 2: Valuation Metrics

IWC

FDM

Fwd. Price-to-Sales (P/S)

0.8x

0.7x

Fwd. Price-to-Earnings (P/E)

41.5x

11.5x

Fwd. Price-to-Cash Flow (P/CF)

10.0x

6.9x

1.9x

1.4x

2.0%

2.4%

Long Term EPS Growth Est. (LTG)

58%

10%

Price-to-Growth (PEG)

0.7x

1.2x

Fwd. Price-to-Book Value (P/BV) Fwd. Yield

Source: www.etfrc.com as of 2/4/22

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MicroCap Review Magazine 59

Figure 2: Total Returns (Rebased) IWC vs. FDM, 9/30/05 – 1/31/22

400

IWC

350

returns resulting from FDM’s more selective portfolio versus the broad microcap portfolio tracked by IWC—over the most periods over the 15-year history examined was minimal, at less than ±1.0. The lone except is the most recent one-year period, where FDM has done significantly better.

FDM

300 250 200 150 100 50 0 2005

2008

2011

2014

2017

2020

2023

Source: www.etfrc.com

If history is any guide, then over the very long term it may not make much of a difference in which of these two ETFs one chooses to invest. Over the intermediate term, however, we have seen that returns can diverge quite substantially. Whether one of these outperforms in the next few years will likely depend on whether the recent rotation towards value—which tends to benefit stocks in FDM—persists or proves to be fleeting. Why invest via ETFs?

first 10 years in existence. But in mid-2015 returns began to diverge, with FDM opening a considerable lead over IWC until the pandemic hit the market in February 2020. Subsequently, FDM experienced a greater drawdown, followed by a weaker recovery rally such that the two ETFs ended up with virtually identical long-term returns through the fall of 2021. Recently however, returns have begun to diverge again, with the sell-off of stocks in IWC accelerating in January 2022, while the smaller group stocks in FDM have held up relatively well. Further analysis shows that the two funds tended to be highly correlated, with an r-squared value ranging between 76% and 91%, and volatility generally within a percentage point of each other (Table 3). As a result, the information ratio—that is, the risk-adjusted

When stock returns are reasonably well dispersed with a normal distribution, then investors stand at least a 50/50 chance of improving returns through stock selection as opposed to owning a broad swath of the asset class as with an ETF. However, that is often not the case in the microcap segment of the equity markets where “losers” often outnumber “winners” but a few of the winners have exceptional returns. Returns are not normally distributed, but rather skewed towards the below-average. For example, the average return for stocks in IWC with full five-year results for the period ending January 31, 2022 was a gain of 35%, but the median return was just 2%. Looked at another way, 855 out

Table 3: Performance Analysis

1 YR

3 YRS

5 YRS

10 YRS

15 YRS

IWC

-6.3%

12.7%

9.5%

11.4%

6.4%

FDM

20.8%

11.9%

8.5%

12.2%

7.4%

IWC

16.0%

26.8%

23.4%

19.8%

22.2%

FDM

17.4%

26.8%

23.0%

19.5%

21.8%

11.0

-0.3

-0.4

0.4

0.5

Annual Returns

Volatility

Information Ratio FDM vs. IWC Source: www.etfrc.com

60 MicroCap Review Magazine

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of 1,289 stocks, or 66%, had below-average performance, making it a tough environment for stock pickers (Figure 3). This makes an index-based approach to microcap investing ideal in our opinion, where the few big outperformers will be somewhere among the more

number of stocks

Figure 3: Histogram of 1YR returns Stocks in the iShares Micro-Cap ETF 400

numerous laggards. This is especially true for investors who see the appeal of the microcap space but lack the time to do sufficient research these oftenoverlooked companies. Mr. Krause is a pioneer in the research of Exchange Traded Funds, having developed a process for aggregating a fundamental analysis of the funds’ underlying constituents into a unique, forward-looking set of ratings and metrics for each ETF. He founded AltaVista Research in 2003, which today tracks more than 2,400 ETFs. The company publishes its ratings and analysis, along with portfolio building tools, on the ETF Research Center website (www.etfrc.com). Michael Krause does not own shares in any ETF’s mentioned.

avg. return 35%

350 300 250 200 150 100 50 0 <-50%

0-50%

100-150%

200-300%

400%+

Source: www.etfrc.com Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

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MicroCap Review Magazine 61

insi g hts

// By John Bonfiglio, PhD

Financing small biotech companies in 2022 A Serial CEO’s perspective

It has been a difficult few years for microcap biotech companies both in terms of funding and drug development.

y 20 plus years experience as a CEO and COO for several microcap and private biotech companies has given me some unique perspectives on issues that can affect financing and increasing valuations. Most of my career has been spent running and advising public companies but recently I have been advising pre-IPO companies. The issues can be remarkably similar. Every company has its own history and “baggage” and path to success. However, there are many similarities that can cause difficulties in raising capital. For example, let’s examine a private company whose founder is the CEO and owns most of the Company’s shares or the original funding for the start-up of the company was friends and family investors. Rarely are venture capital or outside funding sources early in the process. Founders often times have a strong desire to protect the equity of the early investors when raising capital. Company Board members want to take the company public but can’t decide by which pathway or are not connected in the investment banking community. Today many choices exist; IPO? Reverse merger? SPAC? Each have their own pros and cons but what they have in common is more than likely the process will involve the need to reverse stock split along with a capital raise. Ultimately the Board needs to convince the CEO/founder that owning a substantial percentage of a well-funded public company with a decent market cap is better than owning all or most

62 MicroCap Review Magazine

of a company’s shares as a private company without funding. Unfortunately, some companies go public either through an IPO or a reverse merger prematurely. The expectations of the possibilities derived from publicly trading often times lead to tremendous disappointment when they have no stock trading volume, no institutional support, and it is very difficult to raise additional capital. Once reality replaces wishful thinking there remains no easy solution for this situation. Raising awareness for the company and its technology is critical at this point. A strong management team with experience is also important at this juncture. Experienced management has been

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there done that so the planning for each stage capital formation for the public company relationship with investors is hopefully management’s strength. But again, there must be an appetite for the company’s technology and a clear pathway to a major inflection point in the stock or the company’s valuation will suffer even after capital is raised. What are the answers? As you already know there is no one answer for all situations. Let’s talk internal issues first. I have found that small private companies with very little capital have neglected auditing their financials on a yearly basis to preserve capital. It is essential for companies looking to raise institutional capital to bring the financials up to date. Then there is the mindset of the company. I have seen many Boards and CEOs balk at the pre-money valuations offered by potential investors. I understand the consternation especially if the valuation is far less than the last round of financing. The two options are to look for a different source of funding or to negotiate with the existing investor. Remember too that if this is a public company a reverse stock split may be required as well. There is another internal issue that can be sensitive – who is the best person to be the face of the company? Of course, normally it is the CEO or the CFO. However, in my experience, sometimes the lead person is not a good presenter. I’ve seen CEOs lose their audience in the first five minutes of a presentation. Why? The presenter doesn’t tailor the presentation to the audience. If you are presenting to a potential institutional investor and there is an analyst in the room, a presentation with a technical slant is fine. If however, you are speaking to an audience of stock brokers, a presentation that leaves them with at most three key takeaways they can pitch to their clients is needed. A good external coach can help sometimes but other times its best to find a different senior manager or Board member to help. In my opinion, many companies do not spend enough time on their corporate presentations. A good investor presentation can greatly help get attention from potential investors. The presentation should include the following: 1. A clear mission statement of the company’s goal and area of focus. 2. Slides on the technology, unmet medical need and market potential.

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“Unfortunately some companies go public either through an IPO or a reverse merger prematurely. The expectations of the possibilities derived from publicly trading often times lead to tremendous disappointment when they have no stock trading volume, no institutional support, and it is very difficult to raise additional capital.”

3. Why this technology fills an unmet medical need? 4. Milestone slide with reasonable timelines. The timelines need to be real regardless if it pushes filing of an NDA or BLA out further. Include potential meetings with FDA or results of meetings if applicable. 5. Pipeline slide if applicable. 6. Intellectual property status – what is the major coverage? Is it composition of matter, use, formulation? 7. Use of funds overlaid with milestones. 8. Exit strategy if any for the company. Sale, merger, or licensing deal. 9. Management team and Board with short bio’s. In seeking capital, it is important to realize investors are looking for some tangible milestones that will increase the value of the company over time. This seems self-explanatory but it sometimes is not clear. Some companies are afraid of asking for the capital they need to move the company forward simply because they believe the investors will balk at such a large amount. I believe it is critical that the timelines and capital needed are spelled out in detail. If it is possible to tranche the raise based on hitting milestones, then that is one option. The other option

MicroCap Review Magazine 63

is to simply base the capital raise on the first several milestones and plan on another raise hopefully at a higher valuation once the milestones have been completed. Many times meeting a milestone can trigger a cash infusion for further growth as an example calling outstanding in the money warrants. Finally, the senior management team and the Board have to realize the importance of market awareness investor visibility and an outside investor relations group. The right group can increase awareness, set up meetings with potential investors, advise the company on which meetings to attend and which are not worth the time or expense. They can also help put together presentations and press releases. It is difficult to convince some Boards and CEOs to spend much needed cash on these activities however, they are critical and I believe hard to manage internally while trying to move the company forward. I hope this short article will help put some of the critical issues into focus. Obviously, types of financing, investment bank choices, and when to raise capital also need to be discussed. I’ll save those discussions for my next article.

John N. Bonfiglio PhD MBA and has over 30 years’ experience in the biotech/pharmaceutical industry Including over 20 years as a C-level executive in the biotech industry. Dr. Bonfiglio started his career with 11 years at Allergan pharmaceuticals. He spent 3 years at Baxter HealthCare before starting a career in small biotech companies. He rose to the position of CEO at Peregrine Pharmaceuticals where he turned around the financially strapped public company. Dr. Bonfiglio was named COO at Cypress Bioscience while the company was reinventing itself as neuro-pharmaceutical company. He then joined the Immune Response Corporation as CEO and was responsible for raising over $50M and restarting clinicals in the HIV and MS areas. As CEO at Argos Therapeutics a privately held oncology company, he raised $35M through a series C financing. His tenure at Argos produced clinical data which led to an IPO and subsequent financings. Following Argos, he became President and CEO at Oragenics in Tampa, Fl. Here he completed two strategic deals with Intrexon Corporation, raised $29M relisted the company on the NYSE:MKT and refocused the company on new novel and proprietary antibiotics Dr. Bonfiglio was the COO at TapImmune where he was responsible for starting a clinical program, raising capital and relisting the company on Nasdaq. The company is now known as Marker Therapeutics (MRKR -Nasdaq). Dr. Bonfiglio has held independent Board positions at GT BioPharma (GTBP), Microlin and Genprex (GNPX). He recently joined Sequella a private company developing new therapies for Multi Drug Resistant tuberculosis as an executive Board director. To reach Dr. Bonfiglio: bonfiglio.john@gmail.com

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// By Maneesh Nath

India’s MicroCap Ecosystem India became a $1Trillion economy in 2007, during the past 15 years; it has grown at around 8% per annum and has more than tripled to $3.1 Trillion in 2022.

iven the tremendous amount of growth rate in the Indian economy, Indian equity markets have also performed well in the past decade and expect to give good results for the next few decades. So, many new big companies will be coming

out of India for the foreseeable future. Starting from the microcap region, it provides a long runway for the company to grow so it really helps the portfolio performance to find these multi-baggers.

June 2020 to Feb 2022 US Small Cap Stocks Portfolio 1.7 Years Performance Summary:

S.NO.

Ticker

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

CASH SHYF RCM VBTX STC VCTR MED VRTU MITK FFXDF CSIQ SNEX MBUU REGI GRVY VNDA EGO ELA CNXN MHH OESX

S.NO. Symbol 1

Holding Meta Financial Grp Inc The Shyft Group Inc R1 RCM Inc Veritex Holdings Inc Sangoma Technologies Corp Victory Capital Holdings Inc Medifast Inc Virtusa Corp Mitek Systems Inc Fairfax India Holdings Corp Canadian Solar Inc INTL FCStone Inc Malibu Boats Inc Renewable Energy Group Inc GRAVITY Co Ltd Vanda Pharmaceuticals Inc Eldorado Gold Corp Envela Corp PC Connection Inc Mastech Digital Inc Orion Energy Systems Inc

Benchmark

^RUT Russell 2000

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Inception Price on 1st Jun 2020 (USD) 18.5 16.8 10.8 17.8 1.7 16.6 103.3 30.4 9.4 7.7 18.4 51.2 47.1 28.6 51.2 11.4 8.4 3.5 43.4 18.3 4.5

10th Feb 2022 Since Inception 1st Jun 2020 to Market Price (USD) date (Gain/Loss %) 60 44 27 41 4 37 197 54 16 12 29 77 71 39 65 14 10 4 50 20 4

224% 164% 147% 132% 129% 123% 90% 76% 75% 60% 57% 51% 51% 37% 27% 26% 22% 20% 16% 7% -9%

Index on 1st June 2020

10th Feb 2022 Index Value

73%

1406

2051

46%

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Since June 2020, Best performing stock in the US Small Cap portfolio: Meta Financial Grp Inc (CASH) is up 224% (3.3X) in 1.7 years

After doing lot of research, it was quite clear that in the Indian equity markets, very high growth rate happens up to the company reaches market cap of $5 Billion. So to get a 100X in a decade or less in a stock idea, I have to start looking at companies around $50 Million market cap. Now Indian equity markets have roughly 2000 publicly listed companies in the $5Million to $300M market cap range. Most of these companies are under researched and has lack of institutional and big investor’s coverage. This provides a vast variety of companies and if carefully studied, lot of good wealth creators can be found early on. So, I fine tuned my framework which I had earlier developed for the US equity markets to take care of the vast amount of companies and complexities of the Indian equity markets. Once, I started getting some success in the mid and small cap Indian

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companies, I started venturing in the Indian microcap companies. Eventually, using the positive feedback loop of portfolio company’s results, I developed a better framework and getting good success rate in the Indian microcap segment as well. In June 2020, with the help of my Systematic Stock Selection Process (SSSP) framework, I created an equally weighted 21 US Small Cap companies portfolio. In the past twenty months (1.7 years), my US portfolio (also published in the SNN Microcap Review Magazine Aug 2020 edition) has generated a cumulative return of 73%, out-performing the Russell 2000 Index benchmark by 27%. Following seven stocks which have more than doubled in the past 1.7 years are as follows: Meta Financial Grp Inc (CASH), The Shyft Group Inc (SHYF), R1 RCM Inc (RCM), Veritex Holdings Inc

MicroCap Review Magazine 67

May 2020 to Feb 2022 India Small Cap Stocks Portfolio 1.8 Years Performance Summary:

S.NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

S.NO. 1

Ticker

HLEG.BO INAM.BO

Holding

HLE Glascoat Ltd Indo Amines Ltd PAUS.BO Paushak Ltd AOLL.NS Apollo Pipes Ltd ELHO.BO Eldeco Housing And Industries Ltd PRIVISCL.NS Privi Speciality Chemicals Ltd AXTL.BO Axtel Industries Ltd GUFI.BO Gufic BioSciences Ltd NEWG.NS Newgen Software Technologies Ltd ASTE.BO Astec LifeSciences Ltd ASAL.BO Associated Alcohols & Breweries Ltd AJAN.NS Amrutanjan Health Care Ltd BHAGERIA.NS Bhageria Industries Ltd GTHM.BO Gujarat Themis Biosyn Ltd HEST.BO Hester Biosciences Ltd BATP.BO Bharat Parenterals Ltd GMBR.NS G M Breweries Ltd VALN.BO Valiant Organics Ltd TSPK.BO Transpek Industry Ltd IOLCP.NS IOL Chemicals & Pharmaceuticals Ltd

Symbol

Benchmark

Inception Price on 8th 10th Feb 2022 Market Since Inception 8th May May 2020 (INR) Price (INR) 2020 to date (Gain/Loss %) 6425 112 9900 512 795

442 98 58 150 514 188

1978 385

352

227 560 1664 476 832

112

252

192 1132

421 2432 377

202 411 732

1584 328

668

1070 2182 407

Index on 8th May 10th Feb 2022 Index 2020 Value

BSE-SMLCAP S&P BSE SmallCap

(VBTX), Sangoma Technologies Corp (STC), Victory Capital Holdings Inc (VCTR), Medifast Inc (MED). Thirteen out of 21 stocks (62%) in the portfolio are out-performing the benchmark index. Only one out of twenty one stocks (4.8%) is in negative territory. Latest Super stock (Portfolio) level metrics compared to June 2020 are stable and most of the companies are showing signs of growth. I will change the allocation when more earnings data is incorporated in the coming quarters. India Small Cap Portfolio Update May 2020 to Feb 2022 When I created the above US small cap portfolio, I had also created an India small cap stocks portfolio. I am here sharing the performance of that 20 stocks equally weighted portfolio here as well. In the past twenty one months (1.8 years), my India

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727 22 1955 108 171

10639

29074

784% 409% 406% 374% 365% 348% 293% 291% 273% 224% 153% 136% 125% 119% 115% 87% 63% 46% 38% 24%

234% 173%

small cap portfolio has generated a cumulative return of 234%, out-performing the S&P BSE SmallCap Index benchmark by 61%. Following ten stocks which have more than tripled in the past 1.8 years are as follows: HLE Glascoat Ltd (HLEG.BO), Indo Amines Ltd (INAM.BO), Paushak Ltd (PAUS.BO), Apollo Pipes Ltd (AOLL.NS), Eldeco Housing And Industries Ltd (ELHO.BO), Privi Speciality Chemicals Ltd (PRIVISCL.NS), Axtel Industries Ltd (AXTL.BO), Gufic BioSciences Ltd (GUFI.BO), Newgen Software Technologies Ltd (NEWG.NS), Astec LifeSciences Ltd (ASTE.BO) Ten out of 20 stocks (50%) in the portfolio are out-performing the benchmark index. All the twenty stocks are in positive territory. My long term strategy is to find multi-baggers and stay with them for over a period of time. If some of the portfolio companies grow tenfold in the next

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Since May 2020, Best performing stock in the India Small Cap portfolio: HLE Glascoat Ltd (HLEG.BO) is up 784% (9X) in 1.8 years

Since 2012, Best performing stock in the India Small Cap portfolio: Paushak Ltd. (PAUS.BO) is up 19035% (190X) in 10 years

Top 41 Multi-baggers, which I found in the Indian Stock Market in the past decade, are as follows: S.NO.

Ticker

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41

PAUS.BO

Multibaggers 2012 to 2022

Paushak Ltd. ASPT.NS Astral Poly Technik Ltd SHJP.BO NGLF.BO

Shri Jagdamba Polymers Ltd.

NGL Fine Chem Ltd. AVNT.NS Avanti Feeds Ltd. RLXO.NS Relaxo Footwears Ltd ATLP.NS Atul Ltd ADRG.NS Aarti Drugs Ltd. VNTI.NS Vinati Organics Ltd. LAOP.BO La Opala RG Ltd. GRAN.NS Granules India Ltd THIN.NS Expleo Solutions Ltd. (Thinksoft Global.) CCLP.BO CCL Products (India) Ltd. PERS.NS Persistent Systems Ltd. RMT.NS Ratnamani Metals and Tubes Ltd ROTP.BO Roto Pumps Ltd. TVSM.NS TVS Motor Company Limited CHLA.BO Cholamandalam Investment & Finance Company Ltd. CERA.BO Cera Sanitaryware Ltd. SAKS.NS Saksoft Ltd. FNXC.NS Finolex Cables Ltd PLYP.NS Polyplex Corp.Ltd. TREN.NS Trent Ltd CEAT.BO Ceat Ltd. DYPR.NS Dynemic Products Ltd. SUVP.BO Suven Life Sciences Ltd. MAYU.BO Mayur Uniquoters Ltd. RPGL.NS RPG Life Sciences TEML.NS Tech Mahindra Ltd. SYMP.NS Symphony Ltd FIIN.BO FIEM Inds Ltd. DHNP.BO Dhanuka Agritech Ltd. HCLT.NS HCL Technologies Ltd TORP.NS Torrent Pharmaceuticals Ltd. BAYE.NS Bayer CropScience Ltd TCS.NS Tata Consultancy Services Ltd GRPL.NS Greenply Industries Ltd. AMAR.NS Amara Raja Batteries Ltd. WIMP.BO Wim Plast Ltd. AXBK.NS Axis Bank Ltd LART.NS Larsen & Toubro Ltd

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May 2012 Buying Price (INR)

52 18 9 24 7 20 197 13 52 11 9 46 19 171 99 20 32 34 251 60 35 153 90 94 50 8 48 59 148 108 135 93 143 320 799 649 42 137 101 200 725

10th Feb 2022 Market Price (INR)

9,950 2,080 957 2,202 601 1,308 9,560 517 1,915 381 307 1,399 474 4,263 2,199 421 660 680 4,472 941 485 2,051 1,072 1,067 553 86 492 570 1,428 999 1,117 764 1,169 2,582 4,599 3,704 203 615 449 804 1,859

Gain%

19035% 11456% 10533% 9075% 8486% 6440% 4753% 4003% 3604% 3364% 3311% 2941% 2395% 2393% 2121% 2005% 1963% 1900% 1682% 1468% 1286% 1241% 1091% 1035% 1006% 975% 925% 866% 865% 825% 727% 722% 717% 707% 476% 471% 383% 349% 345% 302% 156%

MicroCap Review Magazine 69

10 Stocks have gone up in between 35X and 190X, 10 stocks have gone up in between 15X and 34X, 10 stocks have gone up in between 10X and 14 X and 10 Stocks have gone up in between 4X to 9X.

three years, it takes care of the overall portfolio returns. India Portfolio Update for the Past Decade (2012 to 2022) Since 2013, in the past 9 years, India Small Cap Model Portfolio is up 15X. Cumulative performance of the portfolio is 1400% (Ann. 37%) vs. S&P BSE Small Cap Index Benchmark 400% (Ann. 21%). Using my Systematic Stock Selection Framework, which I have developed over the past few decades, I have found these wealth creating stocks. 10 Stocks have gone up in between 35X and 190X, 10 stocks have gone up in between 15X and 34X, 10 stocks have gone up in between 10X and 14 X and 10 Stocks have gone up in between 4X to 9X. In the past couple of years, there has been a lot of volatility in the markets due to Covid-19 crisis, my portfolios which have endured and out-performed during this period shows the resilience of the framework which I have developed over the past two decades. Going forward also, I am optimistic with the companies in the portfolio to do well and create wealth for the investors.

Profile Information: Maneesh Nath assisted the Hedge Fund Manager of Arcstone Capital starting 2013 which in 2014 became the World # 1 Rank Hedge Fund among all the 17,000 hedge funds across all asset classes globally. Maneesh Nath is a world-class portfolio manager with over 12+ years of international investing experience in the US, EU, and Indian Equities. Maneesh has a proven track record of generating 1500%+ absolute returns and out-performing the USD Adjusted BSE India Small-Cap Index by 1000%+ during the period May 2012 to Feb 2022 (Ann. Returns of 31% vs. 15% of Index over the 10 years). Major Performers in the portfolio were: Paushak Ltd. (PAUS.BO) is up 190X, Astral Poly Technik Ltd. (APTL: BO) is up 115X, Shri Jagdamba Polymers Ltd. (SHJP.BO) is up 105X , NGL Fine Chem Ltd. (NGLF.BO) is up 90X, Avanti Feeds Ltd. (AVNT.BO) is up 85X. In Oct 2012, Maneesh created a model portfolio of 10 large & mid-cap stocks from MSCI India Index which outperformed the index for the next 9.3 years. Top picks included Tata Consultancy Services Ltd., HCL Technologies Ltd., Tech Mahindra, Axis Bank Ltd. In Jan 2009, Maneesh created a USA Model Portfolio of 17 Mid and Large Cap USA Companies (equally weighted) which outperformed the DJIA for 13 years (Jan 2009 to Jan 2022). During this period, his USA Model Portfolio went up ~8 folds in 13 years (with no turnover) vs 3.8 folds of DJIA, Cumulative Returns of 700% vs. 280% DJIA and Annualized Returns of 18% vs 11% DJIA; Major Performers in the portfolio were: TJX Companies Inc., Ingersoll-Rand PLC, Harris Corporation, Stryker Corporation, FMC Corporation, Varian Medical Systems, Inc. In Jun 2015, Maneesh created a Model Portfolio of 24 USA Small Cap companies (created in Jun 2015) delivered Cumulative gains of 62%, (Ann. Returns of 13.1%+) over the 4 years Jun 2015 to May 2019, out-performing the Russell 2000 benchmark by 8% (Ann). Top stock picks included EnviroStar Inc (EVI) +700%, Richmont Mines Inc (RIC) +220%, Omega Flex Inc (OFLX) +200%. LinkedIn: https://www.linkedin.com/in/maneeshnath Email: maneeshnath.devraj@gmail.com Phone: +91 727 510 8108 Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional. Maneeth Nath do not own any shares of companies discussed.

70 MicroCap Review Magazine

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For more information, please call 212-332-2980, visit www.tuesdayschildren.org or scan this QR code with thewww.SNN.Network camera on your phone. MicroCap Review Magazine

ASIA CORN ER

// By Leslie Richardson

Hong Kong Stock Market Slumps Amid Regulatory and Market Pressures

eversing the strong start in the first months of 2021, Hong Kong stocks were hit by a multitude of obstacles throughout the year ranging from China’s widespread crackdowns across numerous industries, uncertainly of contagion from China’s real estate industry to increasing geopolitical tensions between the US and China. As of November 8th, the Hang Seng Index was down around 10% for the year.

Dragging down the market is a weakening sentiment for Chinese tech stocks which represent approximately a quarter of the index’s weighting. This summer, China shook up the markets in an unprecedented crackdown covering a broad range of industries as it moves to build a fairer society through its “common prosperity” policy. The regulatory crackdown gave rise to an atmosphere of uncertainly around the unpredictability of China’s economic and financial policies and increased investors’ anxiety as hundreds of billions of dollars were wiped out from global markets. Leading the broader crash in Chinese tech stocks was video streaming platform Kuaishou Technology which raised $6.2 billion in February in the largest IPO in Hong Kong this year. Kuaishou is among the worst performing stocks of the year down over 69% from its initial offering as its business took a blow from China’s policies to curtail inappropriate online content and the influencer industry. China set limitations on the time and content minors can consume on gaming, live-streaming platforms and social networks in its newly published 10-year national guidelines on children’s development. The government also put the brakes on its $70 billion online education industry by banning tutoring firms from making a profit on subjects taught in school causing New Oriental Education to plunge over 85% for the

72 MicroCap Review Magazine

year. Additionally, Macau’s casino stocks lost $17 billion after authorities proposed regulations to tighten oversight, and some medical beauty stocks suffered following a government move to tighten advertising guidelines in the industry. However, in the light of the lower than expected GDP of 4.9% for the third quarter, investors are expected to get some relief as China eases on its common prosperity policies in an effort to rejuvenate growth. Additional concerns weighing on Hong Kong’s market is the uncertainly around China’s $62 trillion real estate market which contributes to approximately 28% to 30% of the country’s GDP. China’s second largest property developer, Evergrande, made worldwide news as it experienced a liquidity crunch in September. Contagion effects have rattled investors as risk of a fallout could impact the economy with problems spilling over to direct and indirect suppliers, many of which are small and medium-size enterprises. Six developers have so far run into trouble. According to The Guardian, nearly a third of China’s property developers may struggle

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to pay their debts over the next twelve months while credit agency S&P warned many other property developers could be headed for bankruptcy.

Shui On Land submitted an application for its Xintiandi division. The spin-off could raise at least $500 million in a public offering next year.

While investors remain cautious about the macro environment, Hong Kong’s deep liquidity and access to international investors continues to attract mainland companies. IPO and secondary listings in Hong Kong reached record level in the first nine months of 2021, raising $35.9 billion for 73 companies, according to Refinitiv. A further 200 companies are in the pipeline to launch their IPO in Hong Kong, the highest on record. Homecoming listings are leading Hong Kong’s IPO market as China intensifies oversight on overseas listings. Homecoming listings Baidu, Bilibili, Trip, and online car portal Autohome raised a combined $8.1 billion, representing approximately 31% of the city’s IPO proceeds in the first six months of 2021. Xpeng raised $1.4 billion in its summer dual listing debut while LiAuto raised $1.5 billion. Electric vehicle makers are specifically attracting investors as China looks to dominate the global electric vehicle market. With tighter oversight and restrictions from both China and the US, more mainland firms are revaluating plans to list in the U.S. Chinese lifestyle platform Xiaohongshu (Little Red Book), e-commerce platform Meicai, Hong Kong logistics start-up Lalamove, medical data solutions provider LinkDoc Technology, bike sharing firm backed by Ant group, Hello Inc, China’s artificial intelligent chip firm Horizon Robotics, social platform popular with Gen-Z SoulGate Inc, China’s biggest online audio platform Ximalaya and the fitness app Keep are among the firms that have delayed or scrapped listing plans in the US in recent months. Many have already entered discussions to go public in Hong Kong.

Hong Kong’s fastest growing IPO market segment is biotech with the number of total listing possibly tripling this year and over 50 healthcare companies in the pipeline to list in the city. Hong Kong Exchange has been striving to become the global leader in biotech fundraising after making major reforms to listing requirements in 2018 and is on track to overtake NASDAQ in five to ten years. Fueling new listings is China’s move to become a biotech superpower as the sector is growing at a torrid pace and leaders are emerging in critical areas such as cancer treatment. According to McKinsey, China’s biotech industry is expected to advance in three major areas, faster drug development, deeper differentiation, and the ambition to make an impact on the global innovation landscape. In just over the past twelve months, Chinese biotechs have signed a record 12 major out-licensing deals for innovative drugs with MNC. Founder and managing partner at leading biotech venture capital firm Lilly Asia Ventures, Shi Yi, stated that around 90% of the Chinese healthcare companies in its portfolio have plans to go public in Hong Kong.

While the pace of IPO listings weakened in the third quarter as dozens of companies paused plans to list amid increasing regulation, there are positive signs for future IPOs as markets expect activity to pick up again in 2022. The much anticipated IPO for China’s largest artificial intelligence company, SenseTime Group, was announced in late August with the company possibly raising up to $2 billion. Electric vehicle market Leapmaker has just picked three banks for its planned $1billion Hong Kong IPO. Asian logistic carrier, 58 Freight also filed its application to list in Hong Kong while Malaysia’s Top Glove, the world’s biggest rubber glove maker, is renewing its plan to list in Hong Kong as it looks to raise up to $545 million in a dual listing to attract a new group of investors. After scrapping plans to list in the US, Shanghai –based property firm

Still some companies are taking a more caution approach as several potential billion dollar IPOs have fallen by the wayside during China’s regulatory onslaught. NetEase Inc delayed the $1 billion Hong Kong IPO of its music streaming service Cloud Village because of volatile trading in China’s major tech companies. IPO applications for Tencent backed We Doctor and WM Tech lapsed as oversight increases on business operations and how tech giants’ mange the data collected. WeDoctor was seeking to raise up to $3 billion while supermarket owner WM Tech was looking to raise up to $1 billion. Additionally, real estate trading platform, Anjuke’s IPO application that was submitted in April has become invalid. Ms. Leslie Richardson has over 20 years of investment management and equity research experience. She operates a boutique investor relations firm in Hong Kong for Asian companies listed in the U.S. and Hong Kong. She also assists private companies develop investment material and build an investor following in preparation for a public listing. Additionally, she is the Asian Correspondent for Micro-Cap Review, www.microcapreview.com, a financial magazine focused on mirco-cap companies. Previously, she worked for CCG Elite in assisting Asian-based, U.S. listed clients formulate key communication strategies. Ms. Richardson began her investment career at U.S. Trust Company then went on to join Odyssey Advisors as a portfolio manager and Director of Research. Ms. Richardson specialized in high growth sectors such as bio-tech, alternative energy, IT and telecommunications. She earned her M.B.A. from the University of Southern California. Ms. Richardson is based in Hong Kong. www.elite-ir.com. Leslie Richardson does not own shares in any of the companies mentioned.

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MicroCap Review Magazine 73

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// By Sean Peasgood

Technology Trends to Watch in 2022 Gen-Z Disruption, Consumer Data Privacy, ESG and Renewables

Despite tax loss selling, the pandemic, pending Central Bank rate hikes and the end of the world, SNN’s MCRI tech subsector’s 64% return in Q4 2021 outperformed the S&P 500’s 11% appreciation, the NASDAQ Composite’s 8%, and the Russell 2000’s 2%.

hat accounts for this significant outperformance? The answer comes from how index returns are calculated. The most common indices are price-weighted, market-weighted, and equal-weighted. A price-weighted index (such as the DJIA) sums the share prices of all constituents and assigns each stock a weighting based upon its share price relative to the sum. For example, if your price-weighted index has 2 stocks (one is $1/share and the other is $2/share), the sum of stocks would be $3. The first stock would be weighted 1/3 and the second 2/3, so your index would be (1/3 × $1) + (2/3 × $2) = $1.67. You’d calculate a market-weighted index (like the S&P500, NASDAQ Composite, and Russell 2000) like a price-weighted index but use constituent market capitalizations instead of share prices. An equal-weighted index (SNN MCRI) invests an equal amount of money in each constituent. In the prior 2-stock example, each stock would have a 50% weight, so the index would be ($1 × 50%) + ($2 × 50%) = $1.50.

The day after each quarter end, the MCRI replaces underperformers across 11 sectors with the top 30 or so outperforming microcap stocks in each sector. The idea is to highlight the top performers and let them run for a quarter. So, while the MCRI’s returns are impressive, knowing how they are calculated can

74 MicroCap Review Magazine

help provide context when comparing to your own portfolio’s returns. The table above shows the performance of the 11 sectors tracked by the MCRI. Sophic Capital’s bread and butter is founded in developing capital markets strategies for technology issuers, so naturally we are pleased to see tech place third. We are continually asked what tech trends we are watching and which companies could benefit. For 2022, here are a few of the trends we are watching along with a couple potential beneficiaries:

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Gen-Z

ESG and Renewables

Gen-Z, people born in the mid-to-late 1990s, are the world’s largest demographic, especially in Africa where the median age is 19.7 years. We like this demographic because they will be customers for decades to come. Brands think they can throw a bunch of cash at marketing and Gen-Z will pay attention. If it were only so easy.

We believe existing trends, such as ESG and Renewables, will only get bigger. Corporations continue to establish and update their Environment, Social, and Governance (ESG) standards. Many of the largest institutional investors screen for ESG, many governments have regulations surrounding ESG; but perhaps the most important driver is Gen-Z (remember them?). Gen-Z will not only be consumers for decades to come but are also employees and investors. They’ll shun any business that harms the environment, does not stand up for what’s socially correct, or has an inequitable workplace. The number of issuers that leverage ESG continually grows; here are some of our favorites:

Gen-Z tends to be very different from us old fogies. They have no brand loyalty and value community, trust, and social justice. Marketers ignoring these aspects won’t be employed for long. Fortunately, several brands understand how to resonate with Gen-Z; especially esports companies (gaming is GenZ’s favorite entertainment activity). Here are some companies worth investigating that could benefit from this trend: •• Swarmio Media (CSE:SWRM) – helps telcos attract Gen-Z subscribers via EDGE technology that reduces lag for gamers and a gaming community platform •• Mijem (CSE:MJEM) – social media meets buy & sell for Gen-Z university/college students •• GameSquare Esports (CSE:GSQ) – connecting brands to Gen-Z via esports and influencers •• Real Luck Group (TSXV:LUCK) – esports betting •• GA Pizza (TSXV:GA) – first online subscription pizza service

Consumer Data Privacy For decades, businesses have monetized your personal online data without your consent and without compensating you. That is slowly starting to change: Europe has GDPR for protecting personal data. California, Virginia, and Colorado followed suit (another 30 states are going through the process). However, Big Tech could provide the impetus to safeguard our personal data. Apple allows iOS users to opt-out of ad tracking. Google is banning cookies in its Chrome browser (following actions by Firefox and Safari). Online advertising businesses are facing headwinds. Reklaim (TSXV:MYID) allows users to recapture their personal data and monetize it should they choose.

•• UGE International (TSXV:UGE) – develops, owns, and operates community solar project across the Northeastern U.S. and was recently added to SNN’s MCRI index (congratulations!) •• Legend Power Systems (TSXV:LPS) – detects and corrects power issues from utility grid connections to commercial buildings, reducing electricity waste and greenhouse gases •• Clear Blue Technologies (TSXV:CBLU) – wireless, renewable power solutions that bring telecom, internet, and IoT services to remote locations, particularly in developing nations •• OneSoft Solutions (TSXV:OSS) – as the world transitions to renewable energy over the next few decades, it’s imperative to safeguard fossil fuel transportation infrastructure and OneSoft’s machine learning solution predicts when and where pipeline failures could occur. So now you know the key tech trends we’re following. Sophic Capital is always happy to discuss these and other issuers with you, and we’d love to hear what you find interesting. Feel free to reach out any time at All@SophicCapital.com. All companies named may be clients of Sophic Capital. Please review Sophic Capital’s full disclaimer on their website here: https://sophiccapital. com/disclaimers/ Sophic Capital’s President and CEO, Sean Peasgood, has enjoyed a successful career as a sell-side Analyst for over eight years. As an Analyst, he covered a diverse set of clean technology and technology stocks, including hardware and software companies that ranged from micro-cap to large-cap stocks. Sean has experience with all segments of the capital markets: Equity Research (Technology and Clean Technology), Investor Relations, Raising Capital, Corporate Presentations, Financial Modeling, Deal and Non-Deal Roadshows,Valuation, Initial Public Offerings, Strategic Communications, Equity Sales, Mergers and Acquisitions and Investment Banking. For more information about Sophic Capital, please visit: www.sophiccapital.com

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MicroCap Review Magazine 75

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// By Joe Boskovich, Jr.

Fund Manager Highlight Joe Boskovich, Jr., Co-Founder and Partner at Old West Investment Management, LLC

In each issue of the MicroCap Review Magazine moving forward, we want to highlight fund managers who are either specifically focused on Small, Micro, Nano-caps (“SMN-caps”), have a “SMNcap” strategy, exposure to “SMN-caps” that are adding a ton of value, not only for their constituents vis a vis quality performance, but also for our universe at large from an education perspective. For this issue, I’d like to highlight someone who I’ve interviewed many times on the Planet MicroCap Podcast, Joe Boskovich, Jr., Co-Founder and Partner at Old West Investment Management, LLC. He’s an incredibly thoughtful investor who looks for opportunity in every sector. For this “Fund Manager Highlight”, we are re-publishing Joe’s Q4 2021 letter because I think it provides one of the best overviews of what happened from an investing perspective in 2021 and why. Please enjoy!

he stock market finished 2021 on a strong note with the S&P 500 index up 29% for the year and that comes on top of a 18% return in 2020. These are not easy returns to compete against, but we at Old West are thrilled to have easily beaten the market once again. Our long only separate managed accounts were up from 45% to 51% net of fees. Our three L.P’s had an outstanding year with our long/short fund up 39%, our Income Fund up 42%, and our Opportunity Fund up an eye popping 66%, all net of fees. As you know, technology stocks have driven overall market performance for the past ten years, but we have been able to beat the

76 MicroCap Review Magazine

market investing in solid companies from a variety of industries that we have uncovered with our internal research process. We are confident we will continue to outperform the market given the extraordinary opportunities in our portfolios. With the exception of brief corrections in 2018 and 2020 (Covid), the stock market has grown dramatically since 2009. Scores of young people in the market today, many of whom are decision makers, have never seen a bona fide bear market. The market has been driven by the Federal Reserve Bank manipulating interest rates to near zero, which has caused bubbles in every asset class including stocks, bonds, private equity, venture capital, cryptocurrencies, real estate, art, classic cars and more. This is the most expensive stock market in history, including 1929 and 2000. Our team is keenly aware of this and we love being invested in areas of the market where few have traveled. Although the current low rate environment seems like it’s been in place forever, it might be coming to an end. In my letter to investors of last April I discussed the threat of runaway inflation and what

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effect it could have on markets. As everyone knows, we now have inflation that is much more than transitory and is dramatically affecting people worldwide. My heart goes out to the construction worker that pays $100 to fill his tank on Monday morning. Food, utilities, gas, healthcare, housing, and other daily expenses have all risen dramatically. This will cause the Fed to take away the punch bowl which might result in a bear market. The market began reacting to these facts the past several months. Investors continue to crowd into the mega cap tech stocks (you know the names) thinking they are safe havens immune to correction. At year end with the S&P at an all time high, over 300 NYSE companies were trading at their 52 week low, more than double the number trading at 52 week highs. The last time that happened was just before the bursting of the tech bubble in 2000. Another warning signal for the market is that for the past few years 80% of the market increase has come from multiple expansion and only 20% from earnings growth. That is not a recipe for continued market upside. If I sound negative about the prospects for the market this year, I am. As I have said many times, with trillions of dollars invested in index funds that are market weighted, everyone is crowded into the same handful of companies. Investors have become conditioned to think today’s mega cap companies are not risky investments. Go back just twenty years and the largest companies by market cap were General Motors, Wal-Mart, Exxon, Ford and General Electric. I find it amazing that not one of these companies is in the top five today. If history is any guide, the list twenty years from now will look very different from today’s top five. Most money managers do not like to invest in companies that produce commodities because the price of the commodity has such great influence on the profitability of the company. We have always welcomed the opportunity to invest in these companies, one, because they normally aren’t crowded trades, and two because they are essential to our economy. Over the past few years, our investments in uranium miners and companies involved in the nuclear fuel cycle have been large contributors to our outstanding performance. Old West partner Brian Laks spearheaded our investments in this area,

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and for the past year Brian has been doing a tremendous amount of research in another commodity that is greatly misunderstood and has little following, tin. You’ve all heard of tin cans and tin roof, but few people, and few professional investors realize how critical tin is to today’s economy. Brian writes the following: We first highlighted tin in our Q2 letter as part of a broader theme of critical minerals that we had been researching along with our work in uranium. We are always interested when areas with excellent prospects are relatively underfollowed by the investment community because it gives us time to examine the industry while valuations are still attractive. Often we discover outstanding fundamental characteristics where the main impediment to a more robust valuation is merely a lack of awareness. Of specific interest to us are niche commodities where supply/demand imbalances can form with relative ease, leading to either current or expected shortages. This could be from falling supply due to natural depletion or lack of investment during a low price environment. Alternatively, technological developments may lead to an increase in demand for certain materials faster than supply can respond. This has certainly been the case for a wide variety of specialty metals necessary to enable the global transition to clean energy. At a recent conference in Glasgow, Treasury Secretary Yellen referenced an estimate of $150 trillion in spending needed to achieve climate goals. We have already begun to witness significant price increases for many of the raw materials that will be needed. Tin is a fairly small market, only about 2% the size of copper, but essential to the functioning of electronic devices that are ubiquitous in an increasingly digital world. The largest use of tin is in solder, the conductive material which connects electronic components in printed circuit boards. Demand received a boost around the turn of the millennium with the switch to lead-free solder in many regions for environmental reasons. Semiconductor demand has also been strong, especially recently as the pandemic forced people into their homes and spending increased on electronic goods like laptops and cell phones. TSMC, the world’s largest semiconductor manufacturer, recently raised their growth guidance amid surging demand from what they call a multi-year industry megatrend.

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Two major areas driving this growth are the push to 5G networks and the development of an Internet of Things. 5G networks require more densely distributed transmission equipment and an Internet of Things would see billions of objects interconnected, each requiring additional circuitry to operate and communicate with one another. More data centers will also be required to process the large increase in information generated. Another area of increasing demand is electric vehicles, which typically require twice as much tin as an internal combustion engine vehicle. One of the newest demand drivers is solar ribbon, copper wire that has been coated in tin and used to connect individual solar cells together into panels. As renewable energy continues to be deployed widely, this is expected to become a major demand driver for tin in the future. Against this backdrop of strong demand is a supply situation that is quite fragile. The two largest producers, China and Indonesia, control roughly half the market and have seen their production decline over the last two decades. In China much of the production comes from the southwestern province of Yunnan, where extreme weather and rising coal prices have led to power rationing that has impacted supply. Indonesia has mined much of their onshore resource and miners have been forced into shallow offshore waters to dredge alluvial tin from the sea floor. The country has also considered an export ban on mineral concentrates as a way to capture more of the value chain locally, a move which would further tighten global supplies. The third largest producer, Myanmar, is politically unstable and was recently beset by a coup. A relatively new entrant to the major producers, large scale production only began in the last decade and peaked after several years of rapid growth. Much of their high grade discovery has been depleted and they will be forced to go into more complex underground mining of lower grade material to halt further production declines. Tin is attractive to us because there are not many high quality development projects to fill the growing supply gap. Lower quality projects require a higher price to be economic, and recently the tin price has been setting record highs suggesting that such projects may actually be needed. Global inventories are near all-time lows and consumers are forced to pay high premiums for immediate delivery. One need only look at the extremely low grades of projects being floated to see how dire the supply outlook

truly is. Some companies are considering reopening centuries-old mines, and others are proposing to mine what would normally be considered waste rock. There are also very few investment options. The large producers trade on local exchanges in places like Shenzhen, Jakarta, Kuala Lumpur and Lima. Companies that do trade on Western exchanges may have assets in challenging jurisdictions or low share liquidity making it difficult for large institutions to invest. These types of situations are often ripe with opportunity, and we have identified a few bright spots for further research. At current prices there are producers trading at 3-4x EBITDA and development projects trading at a fraction of net asset value. This is in stark contrast to other areas of the market which we view to be wildly overvalued with much less fundamental support. We have not been this intrigued by an idea since we started researching the uranium industry several years ago. As you have seen in your account statements, that diligence and patience translated into exceptional returns over the last two years. We encourage current and prospective investors to contact us to learn more about this new opportunity. It will be fascinating to see how 2022 plays out and we are very comfortable and optimistic with how we are positioned in our portfolios. Thank you for your continued loyalty and support and we wish you a happy, healthy and prosperous year. Sincerely, Joseph Boskovich, Sr. Chairman and Chief Investment Officer Sincerely, Joseph Boskovich, Sr. Chairman and Chief Investment Officer At Old West, Joe serves as a member of the Portfolio Management Team and Old West Investment Committee. Prior to joining Old West, Joe spent five years as First Vice President at Aletheia Research and Management, Inc. At Aletheia, Joe established and cultivated some of the firm’s largest institutional relationships, and had a meaningful part in growing the firm from $300 million in assets under management to roughly $ 11 billion. Joe began his career at the Century City office of Bear Stearns & Co., working in the private wealth management division. Joe graduated from the Marshall School of Business at the University of Southern California, where he was a four year letterman and Academic All-American on USC’s National Championship Football Team. For more information about Old West Investment Management, please visit: www.oldwestim.com

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EVER WONDER WHERE THE PEOPLE WITH ALL THE ANSWERS, GET ALL THE ANSWERS?

Ask MARCUM

For More Information: CLICK HERE

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// By Jackie Kibler

Tackling the Five Frustrations of a Business Owner Regardless of the system they follow, every business leadership coach has one primary task: help their clients overcome the impediments to their success.

hen Gino Wickman developed the Entrepreneurial Operating System®, he wanted to help entrepreneurs overcome what he called the “Five Frustrations of an Entrepreneur.”

In my work as a Certified EOS Implementer®, I’ve seen how EOS® addresses each of the Five Frustrations. Here are some examples. Frustration 1: Lack of Control Entrepreneurs and business owners tend to be optimists. Where others may see problems, they see endless opportunities. However, this perspective can change as circumstances begin to put speedbumps in front of what started as a seemingly perfect business model. I have a client that specializes in building components for the Southern California light industrial manufacturing sector. When we started working together on their EOS Journey, the CEO shared with me the following thought: “With our business so dependent on how the economy is going, it often feels like we’re just blowing in the wind. I want to change that.” What EOS has helped them do is to become more creative. EOS hasn’t stopped the wind from blowing, but it has helped their team focus on what they can control. Each quarter, they agree to a set of company Rocks (90 day priorities for the company) aimed at diversifying into growth sectors. It has

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changed the way they plan for the future without changing who they are culturally. Frustration 2: Lack of Profit Not many business owners or CEO’s I meet are first motivated by money. They have a passion for what they do. However, each agrees that making a profit is essential. When a business hits the ceiling, its profits tend to drop along with the team’s productivity. One of the marketing agencies I work with experienced this very issue. They reached a tipping point: at first glance, they seemed to have too many projects and not enough people, so they were constantly losing profitability to contractor fees.

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EOS helped them see that the roots of their problems were not quite what they thought. After identifying their Core Focus™, they discovered that a few of their high volume, low profitability engagements were outside their target market. They also learned that they had people in seats that didn’t belong to them. By correcting those things, they began seeing the business’s profitability edge higher.

sary for our first six months working together. The growth experienced by the business had changed some of the roles within, and certain employees weren’t suitable fits for the business’s needs. For the greater good of the company, a few people needed to be let go. But it set them on the right track for renewed growth. Frustration 5: Nothing Works

Frustration 3: People Finding the right help is never easy. Most business owners & CEO’s have experienced the unsettling reality that even finding the proper help won’t always result in a perfectly resolved process. Colleagues fall out of alignment, pulling in different directions and getting frustrated. Projects don’t get done on time, and quality suffers. I work with a Visionary who came into EOS feeling deeply unsure of herself as a leader. She’d made a few strategic hires that had gone sideways: their irregular meetings had become tense and awkward, with mixed signals passing down to the rest of the company and creating confusion. EOS helped her see that the problem wasn’t with her people, but with her process. The Accountability Chart was a huge help for her. She calls it her team’s “clarity chart.” With clear responsibilities, her team isn’t getting in its own way anymore. Those strategic hires are free to exercise their talents without running into conflicts. Frustration 4: Hitting the Ceiling Many entrepreneurs hit the ceiling and don’t know why. They’ve done so well up to this point; why aren’t old tricks still working? Without a framework, answering that question—or even knowing to ask it —can be difficult. That happened to a small service company I work with. Their Visionary is great at building relationships and closing sales. He’d built a successful business, but new clients weren’t getting the attention they expected, and older clients were starting to slip away. As a result, the team was scrambling to keep all the details straight, and he knew he needed help. Getting the right people into the right seats (think Jim Collin’s in his book “Good to Great”) was neces-

Perhaps the most pressing frustration is that no amount of effort seems to address them. Ironically, visionaries tend to struggle with what is required to unstick an organization’s gears: structure. That was the case with the founder of a construction business I met a few years ago. We got talking about the role of the Integrator—an idea he’d never heard about—and he told me, “That’s what I ask my secretary to do.” I told him if his secretary was a good Integrator, he’d better give her a promotion, a new title, and a raise. Fast forward to today, and that construction company is running on EOS with a dedicated Integrator. “It’s like night and day,” their CEO told me the other day. “I had no idea I was so disorganized.” Coming from someone who works in a precision industry, that’s saying something. Ready to tackle your frustrations? Do the Five Frustrations sound familiar to you? EOS might be the answer you’re looking for. As a Certified EOS Implementer, I work with business owners and entrepreneurs at every phase of business growth to overcome obstacles using the tools offered by EOS. Send me an email or give me a call at (818) 649-1103. Jackie Kibler grew up in an entrepreneurial family with her father in the music and entertainment business. Her father had a passion for music and like many entrepreneurs, wasn’t able to create a solid business infrastructure to grow the business. At a very early age, Jackie realized her passion was to help business owners get more from their businesses. After college, Jackie worked for larger companies like Dun and Bradstreet, Wells Fargo, Corporate Executive Board and Vistage Worldwide to learn best practices. She progressed through the leadership ranks and over the next 25 years, quickly became known as the “go-to person” for underperforming offices, regions, or companies using a strategic mix of goal setting, process development, and personal accountability. At Vistage Worldwide, and partnered with over 100 entrepreneurial CEOs to help them improve their businesses. Within 12 months her region improved in rankings from #10 to #2 nationally. It was there that she learned about EOS and when she read the book Traction, she immediately aligned. It was everything she had done, in a proven process that was being used globally with entrepreneurs in all types of businesses.

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// By Shelly Kraft and Michael Porter

“I’m a New Public Company, Now What?” I wondered what could I write to provide today’s microcap company C suite management teams some sage advice coping and dealing with investors, shareholders, media, and investor relations?

wrote an outline with my ideas and sent it to Michael Porter, of Porter Levey & Rose Investor Relations to join me in this endeavor. Mike added his 2 cents and turned my outline into this article. Mike has been doing IR for 55 years he refers to me as “the kid” since I only started on Wall Street 38 years ago. Anyway that’s 93 years of experience! I know some of you have ties older than that. For today’s CEO’s things have changed but, in many ways, they have stayed the same. Here are some insights for our readers especially company leaders, so keep this article like a blackjack player keeps a rules card of when to split, double-down, hit or stay. By the way, Porter and I are still close friends and speak every day! Most of all we love the microcap space and enjoy helping small emerging growth companies. Cheers to that! •••

You are now a listed company. Congratulations! It was quite a long road to get here, wasn’t it? Yes, but the rewards are worth it. We want to help you stay listed and grow and thrive. This means you need to manage your expectations and qualify your next steps. We want to help you. We understand the time and effort you, your staff, your attorneys and your accountants put in to making this happen, not to mention all of the costs it took to get here, but now your ticker symbol is live and good things are on the horizon, alongside numerous compliance risks, the relentless incoming service provider sales calls and emails, and

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the challenges you’ll face sharing your story with current and potential shareholders. This note is meant to offer some assistance in navigating these waters. A listing guarantees very little, and your objective now is to differentiate your company as an investment vehicle not only from other opportunities in your niche or space but from the entire global investment ecosystem. This is no small feat. As a microcap company there are crucial dos and don’ts to which you must adhere to right out of the gate, in the first few quarters after your IPO. Here is a brief list: •• Establish your investor relations (IR) budget and figure out what you hope to achieve. This includes price ascension, liquidity, new shareholder engagement, market recognitions, M&A

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opportunities, institutional investment, buying acceptance and the provision of guidance to current and potential investors. •• Choose a course of action. You need to decide how your company will interface with the markets. As a new public company, you need an investor relations representative, either a member of your team or an account executive from an outside agency, to serve as your first point of contact – this individual must be a gatekeeper, a diplomat, a detective, user-friendly and polite, informative yet compliant, and preferably familiar with the landscape. •• Cohesive messaging and branding. You’ll need to organize and categorize your marketing plan, since whatever you do and announce is now subject to SEC regulations and must be announced publicly via press release. It sounds simple, but this is where strategy plays a big part in your relationship with investors. The nuances of when, where, how, why and what of your press releases are many times so involved management, boards and professionals must participate for careful wording, compliance, timing and follow-up. In the end, your press releases will serve as your company’s semaphores, the message you send from the deck of your ship. What can a strategic IR program do for your company? It will increase your visibility and influence key players in the global financial community – from institutional and retail investors to family offices – and ensure your messages are articulated accurately and disseminated as widely as possible to the right audiences. Given the amount of stock promotion on the Internet and the ever-increasing prevalence of opinion shared on social media, the investment community has become increasingly dependent on credible, reliable and responsive corporate liaisons to inform and educate them on a company’s investment thesis. A successful IR program combines digital communication practices an old-school commitment to relationships. The right IR agency will also help you nimbly navigate SEC rules and regulations – the agency should be fully versed in Regulation FD and Sarbanes-Oxley. To be successful in the current market means you must ascend above the noise. One of the best ways to do this is to develop personal relationships with influential members of the investment community,

as your company may not yet enjoy the luxury of coverage by banks and wire houses. Investors must be “courted” – they must be made to feel comfortable in weighing the potential growth of a company with the risk of investing in a “new” company. In today’s marketplace, management credibility has to be established and maintained to attract longerterm holders who will help maintain the stock price and increase its value. Many U.S. investors approach companies with a “back the jockey, not the horse” mentality, and a sound IR program regularly highlights management’s achievements and pedigree – your ability to grow the business is a major factor in driving investment. Operational performance is quite important, but your credibility is your best card, one that will give you more long-term stability, through good times and bad. This credibility is core to a solid investor relations program, and the first step to building and concretizing this credibility is by committing to transparency and by educating the investment community. Your mission should be to make sure investors clearly understand management’s philosophy, appreciate its accomplishments and believe it can achieve its operational goals. We believe good companies have an excellent opportunity, after listing, to establish themselves as exciting investment opportunities and to communicate their stories to the right audiences, those that can make a difference to their valuations. For more information, please contact skraft@snnwire.com and mike@plrinvest.com. And congratulations, again, on your achievement. We wish you immense success. Michael Porter has been in the investor relations industry for more than 40 years and co-founded PLR in 1971. In addition, he has served on the board of several publicly held companies. In his earlier career, Michael was an analyst and portfolio manager for a NYSE member firm and major institution and has served on the board of directors of several companies. Michael earned a BS in Finance from Rider University and completed The Owners, Presidents and Managers course at Harvard University School of Business in May 2004. In 2009, Michael was appointed to the President’s Council at Rider University. In his time spent on Wall Street as a retail stockbroker and OTC market maker, investment banker, author, and as President of Emanuel & Co., Mr. Kraft has met many incredible people. He retains many of those friends and contacts to this very day. In his early career in the Wall Street trenches he often wondered when he would finally reach the pinnacle of wisdom and understanding he so diligently craved; well here it is 2022, and he says: “I am still wondering.” He has had many great experiences, been an influencer his whole career and today supports the team at SNN Inc., SNN. Network, MicroCap Review Magazine (2022 is the 17th year publishing) now digital, and the popular in person event Planet MicroCap Showcase, May 3-5, 2022, Bally’s Las Vegas. Mr. Kraft’s legendary career stems from his devotion to MicroCap pubco’s and private companies, his over 10,000 CEO live video interviews, his writings and appearances, today Mr. Kraft remains one of the MicroCap Stock Market’s great ambassadors.

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// By Diane Woo

How to Raise Capital for Funds, From a VC When it comes to raising capital for VC investments, entrepreneurs will generally receive capital through one of two primary avenues; direct investments from a VC’s own capital, or from a fund.

hat most entrepreneurs don’t realize, however, is that raising capital for an investment fund as a VC is one of the most challenging and tasking parts of being a venture capitalist. It takes a certain degree of skill, as well as a strong capability for networking and building relationships with other VC, in order for an investment fund to gain the necessary attention from the right investors. For over 15 years, I have honed my knowledge and skill set as a coach and mentor to hundreds of businesses and startup ventures, as well as an investor to dozens of additional companies and VC funds throughout the United States. As a result of my experience, I have been able to hone my abilities as a venture capitalist and have helped to fundraise millions of dollars for a broad array of VC funds targeting the retail tech, medtech, consumer goods, and restaurant industries. In this article, I want to help highlight the skills and abilities you will need as a venture capitalist or investor to help raise capital for a VC fund. Scale to a level where VC fundraising is necessary

First things first: before you begin attempting to raise capital for a VC fund, you need to ensure that you — as an investor — are prepared for the challenges

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and hurdles that come with fundraising. Depending on your firm, along with any firms or Limited Partners (LPs) you or your firm are partnered with, you will likely need to give those LPs or other partners anywhere from 90-180 days’ (or 3-6 months) notice of your fundraising initiatives. From there, you will need to prepare material and data to present to your partners so that they can perform their due diligence. Once the official fundraising begins, expect for it to take anywhere from a few weeks to a few months to finalize. This time frame also depends on the type of fund you plan to raise. Newer funds often take longer to raise capital than those with proven successes in the past. If your fund is newer and doesn’t yet pos-

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sess this track record, expect to hear “no” a lot from other investors, VCs, LPs, and general partners (GPs) you pitch the fund to, and be prepared to deploy a greater portion of your own capital in order to raise the funds you need to. If you cross-analyze the fund’s finances and realize that you’ll need to deploy a significant amount of your own capital in the fundraising process, you may not have scaled to a high enough level where VC fundraising is needed yet. Build your network and find the right investors for your fund My second piece of advice is this: network, network, network, and then network some more. Most of us are familiar with the old adage, “it’s about who you know, not about what you know.” This saying could not hold more true in the realm of VC fundraising if it tried. For VCs and investors who are relatively new to fundraising, you should expect to make dozens of new connections (if not more) with potential investors, LPs, and/or GPs each week prior to and during the fundraising process.

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One common mistake newer investors and VCs make when networking is that they tend to immediately want to target larger and more established institutional investors and partners. While the draw of these larger investors is obvious, you shouldn’t overlook the potential value and ROI of networking with lessinstitutionalized individual investors and smaller corporate offices. Think of this step as raising funds for a new startup: if you’re early on in the fundraising process, you would want to focus more on finding angel investors rather than larger, more established VCs. If your fund is newer and less established, you want to ensure that you focus your time and efforts on meeting and building relationships with those who are most likely to invest in your fund now—not 5 or 10 years down the road. Be able to efficiently (and effectively) negotiate with investors The final piece of advice I want to bestow in this article is knowing how to negotiate with the investors you pitch your fund to. By this point, you should have

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Prior to any sort of negotiation taking place, it’s paramount that some level of mutual trust has been established between you and the investor(s) your fund is pitched to.

a clearer idea of which types or demographics of investors you want to pitch. If you have already met with these individuals or partners, at least a handful of them should be qualified using your fund’s investment criteria, and you should have a better understanding of what they are looking for when investing in a fund. For those investors who are looking to sign smaller checks for your fund, typically only 2-3 meetings need to happen before a decision is made on their end. If your fund needs larger amounts of capital investiture, however, consider the benefits and downsides of potentially having to wait longer for them to make a decision. Whatever the case, be prepared to negotiate on the amount they wish to invest, what (and/or how much) they expect in return, as well as the specific terms of their investment. Prior to any sort of negotiation taking place, it’s paramount that some level of mutual trust has been established between you and the investor(s) your fund is pitched to. Without that, your deal is bound to fall through before it even begins. When it comes time to negotiate dollar amounts and terms, it can be easy to become bogged down by sheer numbers, but numbers are only part of the puzzle. If you can clearly communicate the value and ROI of investing in your fund outside of dollars and cents, you create more leverage for yourself at the negotiation table.

deal possible when raising capital for your fund, no matter how new or established that fund may be. Diane Yoo is a results-driven entrepreneur and venture capitalist with more than 15+ years of experience. As an accredited investor, she has invested in 35+ companies with a focus on diverse founders. She created 15 funds in the last year alone and is in the 1% of Asian-American female founders who are also a partner. Diane has founded angel networks, venture funds, and investment networks. She is Founding Partner for a Medtech and Healthtech venture capital firm in partnership with the largest medical center of the world. With VC and accelerator expertise, she works extensively with over 700+ global companies and her firm has deployed significant capital into the startup ecosystem. She has launched numerous venture funds for over 15 universities across the US and has built a powerful co-investor US network with offices in Texas and New York. Diane is Co-founder of Global She Ventures, an accelerator in partnership with Rice University to catalyze global women entrepreneurs. Diane is also Co-founder to a national media platform, Identity Unveiled highlights trailblazing Asian American women who have broken barriers and become firsts in their industry. She is also an investment partner to several Silicon Valley funds including the largest women’s fund and the first FemTech fund in the nation. Diane is also mentor/partner to Global Venture Accelerator, a Rice University initiative. She serves as mentor/judge to Rice Business Plan Challenge, Rice University’s 48 Hr Accelerator, Gener8tor, Brandery, and Mass Challenge. She sits on numerous boards and advises other venture capital funds, diversity funds, and the largest women’s fund in Texas. Diane was awarded “Diane Yoo Day” on August 26th for her international achievements in diversity leadership. She received her MBA from Jesse H. Jones School of Business at Rice University. https://www.dianesyoo.com/ https://www.identityunveiled.org/ https://www.globalsheventures.com/ https://www.parliament-ventures.com/ Otter PR 6.18.21 Growing up as a second generation Korean American with immigrant parents, I lived in a one bedroom apartment with newspaper as our furniture and a car that would occasionally choke start. My parents worked 5 jobs and my father ate salt cubes just to keep up with all the manual labor. He endured racial discrimination and fought off bullies as he was working only to put a roof over his family’s head. I grew up in a predominantly white neighborhood where I constantly struggled with my cultural identity and experienced bullying. The first time I ever felt like I belonged was when I was an exchange student in Korea. That summer was eye opening. I looked around and everyone around looked like me and smelled like me, and finally for the first time I felt a sigh of relief. Such tumultuous times forged my trailblazing impact in the world of VC. I aim to support underserved women and diverse talent, so they don’t have to hesitate when an opportunity because they feel like they don’t belong there. You belong there; take full command. When you get a seat at the table, pull the chair out next to you for others to come.

Lastly, and perhaps most importantly, I always recommend having a knowledgeable and experienced business lawyer on your side; preferably one with prior experience in VC and investing, as well. They will help guide you through the negotiation process as well as help ensure that you are getting the best Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

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Investors Outlook for 2022 and Positioning Yourself for Success featuring Paul Andreola, Kyle Cerminara and Kelvin Seetoh

2021 is in the rear-view mirror, and for most, based on most of the Q4 2021 fund manager letters, I would say are happy that the calendar year has flipped.

s host of the Planet MicroCap Podcast, I’ve had the chance to speak with and get to know some of the best investors of our generation, and while none of them are oracles or have a crystal ball, experience begets wisdom, which in turn begets doing our best to make educated guesses on what the future may hold. As of this publishing, we’re already more than halfway through Q1 2022, but as we can all agree in this post-pandemic era, even a day seems like an eternity in the stock market. With that, I wanted to showcase how some incredibly well-respected investors are thinking about the year ahead and how they are positioning themselves for success. Paul Andreola, Small Cap Discoveries

Website: https://smallcapdiscoveries.com/ Twitter: https://twitter.com/PaulAndreola 2021 was extremely rough for many of the microcaps I follow. The fact it was so tough makes me feel much more optimistic for 2022 since valuations have declined significantly even though many of these companies have had record financial results. We’ll be battling inflation and higher interest rates which I believe will make stock picking much more

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important than usual. I’m not much of a trend guy and have much more of a bottom-up approach to stock selection. That said I expect to find good opportunities in a few sectors and have recently been very active in the energy service sector. Paul Andreola

Energy stocks were the best performing sector in 2021 but energy service companies lagged energy stocks considerably. Larger service companies have been moving higher but many of the small players have yet to move in a meaningful way. I suspect there is still a lot of hesitancy to play the sector because of how devastating the bear market has been over the past decade. I also suspect that institutional money has been more willing to buy some of the more liquid, larger names and have ignored the smaller, less liquid names. I’ve been finding some very cheap opportunities in some of the very small energy service companies. I’m finding good values in companies that have low institutional ownership, are undiscovered and or misunderstood. This includes smaller commodity service companies and several different niche businesses. I’m looking for small businesses solving current logistics

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problems, local suppliers of materials and companies that are “onshoring” products and services. I think 2022 could be one of the better buying opportunities in the very small nano-cap stocks. Notice I didn’t say a good year for nanocaps as I’m terrible at predicting when markets will turn up. The current environment for nanocaps/microcaps reminds me of the brief period in late 2019 early 2020 prior to the onset of Covid. Smaller stocks were very illiquid, large stocks were garnering the attention. Smaller stocks were very cheap, and it turned out to be a great buying opportunity. I saw similar buying opportunities back in 2012/2013. I’m finding, due to inflation and higher interest rate concerns, and expect to continue to find good buying opportunities in smaller companies growing at double digit rates but trading at single digit valuation metrics. If small company valuations stay depressed, I think we will see an increase in small company takeovers and go-private transactions. We’ve seen it start already and have had two companies recently acquired by larger players. In many cases it will be cheaper to buy than build for some of the large companies. I believe investors need to think like these acquirers. Kyle Cerminara, Fundamental Global Investors Website:https://fundamentalglobal.com/ Twitter: https://twitter.com/kcerminara We are well over a decade into a bull market for the major market indices, but there are still incredible values to be found investing in smaller companies such as micro caps. Fundamental Global Investors is fascinated by what we deem to be a very unfortunate trend towards passive and index-based investing over the last few decades with active management becoming a smaller and smaller percentage of total equity assets under management and larger cap investing dominating the indices vs. smaller and micro-cap investing. So much investing power has been placed in the hands of a very small group of index providers. An index addition or elimination and the rebalancing can in many cases have a positive (or negative) impact on stock prices. Many of the studies we have read suggest that well over 50% of the market is

now in index or closet index strategies compared to a much smaller number 10 or 20 years ago. We believe the number is likely even higher when you include all of the closet indexers and newly created strategies like smart beta. Equity flows dominate and momentum strategies have benefited from Kyle Cerminara positive equity flows into many of these index-based strategies. If you think about it logically, the higher a stock price goes, the greater the rebalance as a % of the index the following year and vice versa for the underperforming names. We believe this has caused a bubble in a few largecap names and dramatic undervaluation in companies that are (a) not in the index, such as micro caps that are too small and (b) companies that have had poor performance right before they are rebalanced lower causing all of the index-based strategies to sell them for potentially non-fundamental reasons. Fundamental is in our name and we love special situations investing where we can find very undervalued companies to own and work to realize that value over time. We are positioned accordingly and have taken a significant role in each of the companies we invest either as a board member or similar position. I think great fundamental investors focused on smaller-cap companies are going to do very well over the next few years. I also believe that as these smaller companies grow and get into the major indices, they will benefit from a much larger investor opportunity set. Kelvin Seetoh Twitter: https://twitter.com/ SlingshotCap From a high level, 2022 will be filled with a lot of uncertainty because it’s the year where inflation is running rampant. While inflation is Kelvin Seetoh mostly caused by supply chain issues, the Federal Reserve is going ahead to hike the interest rates. This creates a downward pressure on valuations. As long-term investors, we have to select companies exhibiting durable growth potential. Strong growth compounded over many years would be able to offset price multiple contractions.

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MicroCap Review Magazine 89

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// By Richard Revelins

Why Buy Australian Dual-Trading MicroCaps? “Buy low- Sell High”, we hear that all the time, it is initiatively obvious, and pretty much the way in which the majority of so-called hedge funds and institutional investors outperform the market.

he term, “Hedge Fund” is often a mis-used description, as most hedge funds don’t in fact “hedge” anything. They prefer to invest at an early or development stage of a company’s growth cycle and use their financial backing and corporate influence to grow the subject company into a much larger business, to then on-sell to later stage investors, or the general public, through a trade sale, an Initial Public Offering (IPO) or into a SPAC. They can do this because of their well-established financial engineering models and depth of expertise in certain industry sectors.

So where does this leave ordinary investors? Generally, this leaves ordinary investors paying full retail at the IPO stage, when the smart money is already in at a fraction of the eventual issue price. OK, so how can I get into an investment at an earlier stage and what are the risks? Investment is always a risk/return equation. The greater the risk the greater the anticipated upside should be, and the converse applies for larger established, dividend paying investments. If you have little, or no risk tolerance, then you are probably not a MicroCap Review Magazine subscriber in the first place! The common idea behind microcap investing is we are all looking for that diamond in the rough, or that undervalued/ overlooked/misunderstood investment opportunity.

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How do Aussie Microcaps provide superior investment opportunities? I have opined on this subject before, but simply it comes down to structural differences between US and Australian equity markets. At the top end these markets function fundamentally in the same way. Share prices and markets caps are a function of fiscal performance, industry outlook and earnings multiples. At the earlier, more speculative microcap end, it is more to do with the past track record/credibility of the management teams, the robustness (if that is a real word) of the project and the level of appetite in the market. As a career wide speculative investor I have had investments which have made 10, 20, 50 time return on capital, and I have also had investments where I have lost the lot.

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This is only sustainable if the winners exceed the losers and the best way to make that happen is to be diligent, perform your own evaluation and analysis and back credible, experienced management teams. A good management team can make an average project succeed, but a bad management team can kill a great project. To secure a full listing on the Australian Securities Exchange (“ASX”) a company need only demonstrate net tangible assets of AUD $ 4 million (USD $ 2.84 million) (net of costs of fundraising) OR 12-month Profit from Continuing Operations of $500,000 (USD$ 355,000). Compared to the requirements of NASDAQ or NYSE, companies in Australia are often listed and traded at a far earlier stage. This provides investors with the opportunity to participate at an earlier stage of the growth cycle, with the protection of Continuous Disclosure, Fully Audited Financial Accounts, and compliance with the ASX Listing Rules. There are of course risks associated with earlier stage companies, however investors can mitigate these risks to a large degree by reliance on full and complete market disclosure of material activities. How do US Retail Investors trade Australian shares? Most broker/ dealers have reciprocal arrangements with brokers in foreign jurisdictions, however this can sometimes be more complex and costly and doesn’t work well with online trading platforms. An increasing number of ASX listed entities are bridging this gap by establishing dual trading on the Over-The-Counter Markets in the US and in particular OTCQX and OTCQB. Exemption 12g32(b) of the Securities Exchange Act allows foreign companies who are listed on an approved foreign exchange to apply for dual quotation and trading in the US. This allows US investors to buy and sell shares during US trading hours and settle trades through their existing trading platforms. Most dual trading Aussie issuers are taking the additional step of applying for DTC eligibility which offers faster and cheaper settlement of trades. There is a growing trend with many broker/dealers introducing trading restrictions whereby they are no longer facilitating trading in non-DTC eligible securities.

The Aussies keep coming, look out for them through OTC Markets and keep reading MicroCap Review Magazine for potential superior return on investment opportunities.

in December 2019. At the time the application was filed Lake’s stock price was around AUD 3 cents and the market cap was around AUD $ 40 million. After trading commenced on QB, the stock moved up to around 6 cents per share and subsequently 10 cents once DTC was established. A number of positive commercial developments significantly accelerated the share price which reached a high of $1.15 on 1 November 2021. This represented a return of over 38 times on the initial share price. The current share price is AUD $ 0.92 providing a market cap of around $1.1 billion. Many other of other ASX dual trading companies possess similar upside potential and trade at substantial discounts to their NASDAQ or NYSE peers, this particularly true right now in the area of battery materials and battery technologies. The Aussies keep coming, look out for them through OTC Markets and keep reading MicroCap Review Magazine for potential superior return on investment opportunities. Richard Revelins has worked as an international investment banker for over 30 years and specializes in listed public companies. He is a co-founder of Peregrine Corporate Limited based in Australia and is also a Managing Director at Cappello Group Limited based in Los Angeles, USA. He currently resides in Venice, California and divides his time between the US and Australia. Rick Revelins does not own shares of Lake Resources.

As an example of what can happen when an ASX stock becomes “discovered” and traded on both OTCQB and ASX, Lake Resource N.L. (ASX: LKE, OTCQB: LLKKF) commenced trading on the OTCQB Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.

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MicroCap Review Magazine 91

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// By Jason Paltrowitz

Amended SEC Rule 15c2-11 Creating A More Transparent, Global OTC Markets

On Tuesday, September 28, 2021, amended SEC Rule 15c2-11 became effective.

ule 15c2-11 serves as a regulatory gateway to the public markets, establishing the requirements for public quoting in OTC stocks (i.e., those not listed on an exchange). The Rule’s implementation represents a transformational moment for OTC Markets Group, as a Qualified Interdealer Quotation System operator— recognizing our mission-critical role and aligning with the data-driven disclosure standards we’ve created as the core foundation of our OTCQX, OTCQB and Pink markets. By requiring companies to provide current, public disclosure as a pre-requisite for general distribution of proprietary market maker quotes, the Rule facilitates better-informed, more efficient financial markets and upholds our commitment to investor protection. As a regulated market operator, OTC Markets Group now plays a greater role in bringing companies onto our markets and streamlining the pathway to the public market for companies meeting their disclosure requirements.

ATS, whether on a proprietary basis or on behalf of a customer order. Accordingly, the Rule does not apply to the underlying transactions or the ability of an investor to buy or sell a security, but rather the ability to publish a quotation, or an “indication of interest,” to the greater investing public.

What is Rule 15c2-11? First adopted nearly fifty years ago in 1971, long before the existence of electronic trading, Rule 15c2-11 was originally designed to deter fraudulent quoting activity by broker-dealers in OTC securities by requiring brokers to obtain and review specified information about the issuer before initiating a quoted market. The Rule governs a broker’s ability to submit or publish quotations (i.e. bids and offers) in OTC securities in trading systems such as our OTC Link

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What are the most significant changes to Rule 15c2-11? While the final Rule contains many changes, the overarching framework aims to modernize the OTC market in the following ways: Companies are now required to publish current information in order to be publicly quoted on OTC Link ATS. By requiring current information and shifting the information review obligations to the operator of the trading system, issuers are encouraged to make

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disclosure available, and brokers can more easily rely upon our current information designations to quote and trade OTC securities. Companies that do not make current information publicly available and meet the requirements for ongoing quoting, will be shifted to our ‘Expert Market’ OTC Markets Group designates certain securities for quoting on the Expert Market based on a lack of issuer disclosure and other security attributes. The Expert Market is a regulated and transparent market for broker-dealers to meet their best execution responsibilities under FINRA Rules and serve the needs of sophisticated investors in different types of restricted securities. This means broker-dealers can publish unsolicited quotes representing Limit Orders from retail and institutional investors who are not affiliates or insiders of the issuer. Distribution of Expert Market quotations is limited to broker-dealers and other professional and sophisticated investors.

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How has Rule 15c2-11 transformed the OTC market? The modernized Rule has brought greater transparency and efficiency to the OTC market. Importantly, it formally recognizes our existing information review and compliance processes that issuers use to efficiently disclose information and that brokers and investors rely on to price risk and make informed investment decisions. The amended rule also introduced several new exemptions to facilitate the development of public markets in stocks that are less susceptible to fraud. Securities of large, liquid companies that meet minimum financial standards, and those issued in underwritten offerings, now have a streamlined pathway to a public market under the new Rule. September 28th also marked the beginning of our role as a Qualified Interdealer Quotation System under the rule as a regulated market operator

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building reliable processes and systems to serve our customers while enhancing regulatory compliance. The amendments provide a new opportunity for us as a market operator to 1) streamline the onboarding of new securities, 2) offer transparent trading for brokers, and 3) oversee ongoing issuer disclosure and compliance that is relied upon by investors, broker-dealers, and regulators. Lastly, on the heels of the SEC’s amendments to Rule 15c2-11, effective November 8, 2021 FINRA ceased operation of its OTC Bulletin Board (OTCBB), the legacy quotation system for OTC securities Impact of Rule 15c2-11 post September 28, 2021 effective date

•• No changes in Proprietary Quote Eligibility status for OTCQX and OTCQB securities The Data above compares security level information on December 31, 2021 with data from September 27, 2021 (the final day of the prior rule set) As a regulated entity and Qualified Interdealer Quotation System, OTC Markets Group has assumed greater responsibility as a trusted information source for broker-dealers. The changes we’ve seen as a result of amended SEC Rule 15c2-11 underscore the evolution of our market and solidify our trajectory as a global, transparent market operator that empowers today’s investors with data to make informed decisions. Supporting Links and Resources:

Preliminary analysis indicates that these changes created more transparency for investors while also significantly increasing the number of quoted global securities. Notably, over 3,000 securities became eligible for public market maker price quotations on OTC Markets after meeting the new rule’s requirements. Snapshot of High-level numbers:

•• Nearly 1,000 companies subscribed to provide public disclosure in 2021 •• The total number of Proprietary (Market Maker) Quote Eligible securities increased to 10,144 – a 12% increase •• 2,165 former Pink No Information securities shifted to the Expert Market tier, where securities may only be quoted on an Unsolicited (customer order) basis. While this represents a large number of securities, it represented less than 5% of the total dollar volume •• 1,666 Pink No Information securities lost Proprietary (Market Maker) Quote Eligibility status •• 1,064 Grey Market securities gained Proprietary Quote Eligibility and shifted to either the Pink Current or Pink Limited tiers. These securities qualified under the Large Company Exemption available under amended 15c2-11. The Large Company Exemption is available to international securities which have total assets greater than $50 million, shareholder equity greater than $10 million and average worldwide dollar volume for the past 60 days greater than $100,000

SEC Final Rulemaking SEC Press Release 15c211 Resource Center In his dual role as Director, OTC Markets Group International Ltd. and EVP, Corporate Services, Jason Paltrowitz manages the company’s international and domestic Corporate Services business, supporting more than 1,200 companies that trade on the premium OTCQX and OTCQB Markets. Leveraging his background in financial services and expertise in cross-border trading, Jason spearheads sales initiatives and alliances to provide issuers with efficient alternatives to raise capital, access U.S. investors, and help small-cap companies alleviate the cost and complexity associated with being a public company. Prior to joining OTC Markets Group in October 2013, Jason was Managing Director and Segment Head at JP Morgan Chase responsible for the custody, clearing and collateral management business in the Corporate and Investment Bank division. Jason also held multiple senior management positions at BNY Mellon, most notably, as Head of M&A for the Financial Markets and Treasury Services Sector and 11 years as the Head of the Global Capital Markets Group in the Depositary Receipt Division. Jason served on the Board of Directors of the Crowdfunding Professional Association (CfPA) from 2017 - 2020. He previously served as a member of the Board of Directors at OTC Markets Group from 2008 - 2011. Jason holds a bachelor’s degree in International Relations from Boston University and received his MBA from the NYU Stern School of Business. For more information about OTC Markets Group, please visit: www.otcmarkets.com

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challengedathletes.org l 501(c)(3) Tax ID #33-0739596 MicroCap Review Magazine 95

Save the Date SNN Network presents

2022

The Premier Event in MicroCap Finance

May 3-5, 2022 Bally’s Las Vegas Hotel & Casino www.PlanetMicroCapShowcase.com

MicroCap Review Q1 2022

Articles inside

I’m a New Public Company, Now What?

Fund Manager Highlight: Joe Boskovich, Jr Co-Founder and Partner at Old West Investment Management, LLC

How to Raise Capital for Funds, From a VC

Tackling the Five Frustrations of a

Why Buy Australian Dual-Trading

Introducing…The MicroCap Review Index (MCRI™) by Robert Kraft, MBA, SNN Network

Resource Markets Since Pandemic

Accounting Corner: ESG is Coming Down the Regulatory Pipeline

Southeast Asia’s Digital Goldrush

Asia Corner: Hong Kong Stock Market Slumps Amid Regulatory and Market

Technology Trends to Watch in 2022 Gen-Z Disruption, Consumer Data Privacy, ESG and Renewables

India’s MicroCap Ecosystem by Maneesh Nath

Legal Corner: Vast Changes Coming to the Fundamental Structure of MicroCap