KeyStone’s Stock Talk Show Episode 257. 

Great to chat with you again on the edge of Summer. I will start this week’s episode with a Star of the Week, one that should be well known to clients as it was a recommendation in our Canadian Small-Cap Growth Stock Research this past Fall. The company, Vitalhub Corp (VHI:TSX), is a software consolidator focused on the healthcare vertical. The stock is up 95% YTD in 2024 and 141% in 7-months since our recommendation, largely driven by a breakout in earnings and cash flow growth with a strong balance sheet to grow via M&A. In our YSOT segment Aaron answers a viewer question on ECN Capital Corp. (ECN:TSX), a company which originates, manages, and advises on credit assets, like consumer loans and commercial loans on behalf of its customers. ECN Capital is down 46% in 2024, and Aaron let’s you know why and if the company is attractively priced after the sharp drop. On the flipside, Brennan answers a viewer email on Zedcor Inc. (ZDC:TSX-V) which has seen its stock rise over 100% in 2024. The company provides technology-based security and surveillance services in Canada and the U.S. – Brennan let’s you know if the rise is justified and can continue. Finally, Brett answers a viewer submission on the Kevin O’Leary backed, Wonderfi (WNDR: TSX), an operator of regulated Canadian Crypto Trading Platforms and other digital asset businesses including Bitbuy, Coinberry, Coinsquare, CoinSmart, Tetra and SmartPay. The stock, which has been a poor performer historically is down another 37.50% in 2024 – Brett let’s you know why and if it is an opportunity or to quote O’Leary, should be taken out behind the barn and shot.

Let’s get to the show – we welcome my cohost, Mr. Aaron Dunn and the killer B’s, Brett, and Brennan.

Vitalhub Corp.


Symbol VHI:TSX
Stock Price $7.78
Market Cap $394.35 Million
Yield 0%


What does VitalHub do? 

Headquartered in Toronto, VitalHub is a software consolidator focused on the healthcare vertical. While the company primary products historically include electronic medical records (EMR) and patient flow solutions the company also provides Case Management, Care Coordination, Operational Visibility, and Mobile App solutions. Vitalhub provides its technology to Health and Human Service providers including, Hospitals, Regional Health Authorities, Mental Health, Long-Term Care, Home Health, Community and Social Services. The company has over 1,000 customers.

What makes it a star? First the stock performance YTD in 2024.

Stock Performance since our recent recommendation – the stock was only recommended 7-months ago. It has gained 141%.

What is driving the share price – Long-term growth track record as you can see here in terms of revnues..

But it is really the increase in organic growth,  profitability and free cash flow that has driven the stock. These are key elements we look for in a stock to recommend to clients.

When we recommended it in November of this past year, here were the highlights.

  • VitalHub was producing $10-12 million in Free-Cash-Flow (FCF) per year and growing which can be recycled into M&A.
  • Management targeting scaling the business to $75-80 million in the medium term.
  • Strong organic growth, cash rich for acquisitions, trading under 10x FCF.

Latest quarter – growth continues.

Inorganic Growth: M&A well positioned.

VitalHub continues to have a strong balance sheet, holding $33.3 million of cash, and a pro forma cash position of ~$70 million after the recent share issuance and the acquisition of Premier I.T. Partnership Limited.

In addition to the cash on hand, VitalHub has access to a $27 million revolving term facility and an operating line of credit of $6.0 million at Scotiabank prime rate +1%.

The company has noted that its acquisition pipeline has improved in 2024, opening doors for capital deployment.


Slide 1

Zedcor Inc. (ZDC:TSX-V) 

Price: $1.34

Market Cap: $121.3 Million


Zedcor Inc. provides technology-based security and surveillance services in Canada and the U.S. It engages in the provision of rental, service, and remote monitoring of its proprietary MobileyeZ security towers; surveillance and monitoring of fixed site locations; and security personnel.

In Q4 2023, 50% of its revenue came from the construction industry, with 16% from energy and 14% Pipeline.

Slide 2

Now looking at the stock chart here, Zedcor has done quite well, up over 100% YTD, driven by strong growth in the business.

Slide 3

And looking at this slide (from their investor presentation) we can see the company has been aggressively adding MobileyeZ towers, looking to end 2024 with approximately 1,400 towers and 2025 with approximately 2,200 towers. And lets take a look at how this growth has translated to the financials.

Slide 4

For Q1 2024, revenue was down 5% Y/Y due to reductions in revenue for Zedcor’s ancillary services of security personnel, cameras sales and other service revenue. And the decrease was driven largely by reduced service revenues as non-pipeline security towers do not need significant service.

Adjusted EBITDA was down 11% to $1.9M in the quarter, due, in part, to higher SG&A costs as a result of a larger geographical footprint and increased sales staff.

Net income was a loss of $(470K) or $(0.01), compared to a gain of 752K or $0.01 in Q1 2023.

Looking at the balance sheet, the company has net debt of approximately $27.36M, and a trailing net debt to EBITDA multiple of 3.7x. (BUT this doesn’t include the company’s recent May 2024 Equity raise for gross proceeds of $15M).

One thing that is worth mentioning when we are looking at the financials here is that on June 30, 2021, the company sold the assets of its Rental Segment to a company controlled by a director of the company for gross proceeds of $11.3M. In addition to the gross proceeds, the company will receive a monthly management fee for up to 36 months after the closing date (Up to June 30th, 2024), plus the company may also receive an annual bonus payment of 35% of EBITDA in excess of certain annual targets, and as such, for the year ended December 31, 2023 the annual bonus was $2.16M (which hit the financials in Q2 2023).… So taking this into account in the trailing results, Q2 2023 net income was actually a gain of just $313K rather than a gain of $2.47M. (and you can see there I have the adjustment in red)

So taking this Other income into account, which is expected to end eventually… the company has negative trailing twelve month earnings, but their adjusted EBITDA already takes into account removing this Other Income… so on an EV/Adj. EBITDA basis the business trades at about 20x.

Slide 4

Subsequent events following Q1 2024 ended March 31, 2024 include a bought deal financing where Zedcor issued 15M common shares at a price of $1.00 per share for gross proceeds of $15M. So after taking this into account, the balance sheet will look more healthy with the added cash, but the company’s share count is now up to 92.36M. And as you can see from the chart, the company has been regularly diluting shareholders to maintain its growth and health of the balance sheet.

Slide 5

To conclude:

  • Zedcor is an attractive company allowing companies in need for security to avoid costly human guard services and use cheaper technological services.
  • 75% of revenue is recurring, stable utilization rates of 80-90% and has been growing its MobileyeZ fleet at an aggressive pace with targets of ~1,400 towers by the end of 2024 and ~2,200 by the end of 2025.
  • The company has strong insider ownership of ~45%. (so realistically dilution is something that you would think management will eventually want to avoid.. to maintain their stake in the business)
  • The company has been funding growth primarily through debt and share issuances. It would be nice to see an inflection point when the company will begin to self-fund with internally generated cash flow.
  • The balance sheet is reasonable (following the recent equity raise).
  • But the company remains somewhat expensive at 20x trailing EV/Adj. EBITDA.

Compared to a majority of businesses that trade on the TSX-V, I will say that Zedcor is quite attractive and someone could take a speculative position in the stock, but for our Growth at a Reasonable price investment strategy it is just a bit pricey and as mentioned, the company has been diluting shareholders and will likely continue to do so in the near term until cash flow generation is better.



Wonderfi symbol WNDR on the TSX is an Operator of regulated Canadian Crypto Trading Platforms and other digital asset businesses including Bitbuy, Coinberry, Coinsquare, CoinSmart, Tetra and SmartPay. Prominent investor Kevin O’Leary publicly backs the company and has largely.


The stock has had a poor performance year-to-date falling 37.50% to only $0.20 a share resulting in a market cap of $131 million.


Zooming out the stock has increased from its low set late last year of $0.13 but since its IPO in 2021, the stock has fallen 69%.


The company’s strategy has been to consolidate the regulated Canadian Crypto market. Effectively across the world, Crypto has begun to be regulated in various forms over the past decade, and the winners like market share winners have been the companies who have been able to work through the regulatory system. So, by consolidating the regulated companies in a country Wondefi plans to be able to build and hold a large market share. In addition to what’s in this timeline on screen, the company acquired the 110,000 Canadian clients of Bitstamp after the quarter’s end where Bitstamp retains a portion of the revenue from clients.

Their Canadian ecosystem currently supports retail trading, institutional trading, crypto payments, staking, crypto custody, and direct investing. The company is now looking to replicate its Canadian strategy by going into Australia with its acquisition of FX Institution.


But has this strategy shown shareholders what they want in the financials?

The company has substantially grown its revenue over the past year to $18.5 million from only $2.5 million in the prior year. Due to the rapid scaling over the past year of course costs have risen across the board, but the company has been able to post an operating income of $3.1 million up from a loss of $7.5 million. The company was able to post a net income of $5.0 million for the quarter or $0.01 a share. As well the company had $4.4 million of cash from operations during the quarter.


But backtracking a bit the company had a couple of line items which I want to dive in on.

The company had a significant Interest income of $1.1 million, this is from the custodial cash they are holding for clients but they earn interest on, so if interest rates drop the company will be negatively impacted. The company held $109 million of client cash at the end of the quarter the majority being in Canadian and US dollars.

They did sell the majority of its stake in Blockchange resulting in a gain of 1.2 million as well and they had distributions from the Blockchange entities of $0.7 million. So about $1.9 million in one-off increases. So we’re looking at somewhere between $3.0 and $3.5 million in income depending on the exact tax impact of the sale.


As well a very important factor to look at is the share count increase. Shares have over tripled since the end of 2022, due to the significant acquisitions in 2022. The share count was at 215 million and is now at 653 million.

Given the acquisitive strategy, I would expect dilution going forward to acquire companies, but probably to a lesser degree than what has been done over the past year and a half. The company’s fully diluted share count is 725 million, but all of the 50 million warrants and many of the 16 million options are currently out of the money. As well I would not be surprised to see a rollback in shares.


The company does have a nice balance sheet at this time, $42 million in cash $10 million in digital assets and cryptocurrenies and only minor debt and lease liabilities, putting the net cash and digital assets position at $52 million, just under 40% of the market cap.


Lastly, I’ll highlight the reliance on the success of cryptocurrencies as an asset class for Wonderfi. The company benefits from increased prices and increased trading volumes. As the company earns its commission as a percentage of trading in a similar sense to a market maker’s spread the higher the price the higher the commission the company receives for performing the same transaction. And of course, higher transactions mean higher commissions. The image I have up is of the total cryptocurrency market cap as an asset class, currently around 2.37 trillion, which is substantially higher than the lows in late 2022 in the $700 billion area. So while the company has obviously increased in size a significant portion of the revenue growth has been driven by the price. And as price picks up so does volume creating that exponential growth effect, but if the reverse happens prices start to fall transaction volume does as well.



Wonderfi has improved significantly over the last year as it has acquired additional companies and is benefitting from a vastly improved cryptocurrency ecosystem. The company did dilute significantly in conducting aggressive acquisitions but the company is in a substantially better fiscal position due to the acquisitions. The company looks much better than when Brennan last looked at the company, the company does have cash flow and net income as well as obviously very high revenue growth driven by acquisitions. BUT the company operates in an extremely risky environment in a similar way to commodity-driven companies but with even higher volatility, so it is not a company I would jump into with a buy-and-hold mentality. If you even consider taking a position in Wonderfi you need to have the thesis that the Canadian and likely Australian Crypto-ecosystem will grow in size on top of the company’s execution risks.

It is a more appealing company than it was a year ago but that is a very low bar, within the crypto space it does have potential but it does not fit a buy and hold investment criteria due to the innate volatility.

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