August 18, 2024: Not A Bad Week For Tech Investors

Last week, Dow Jones was up 2.9%, S&P 500 rose 3.9% (its best weekly gain in 2024), and Nasdaq composite gained 5.3% — all strong gains from Aug. 5 lows. Investors are back lavishing millions onto megacaps as the high-flying tech stocks resume their climb, shrugging off the vestiges of last week’s market meltdown. Traders poured a net US$210 million into the Invesco S&P 500 Top 50 ETF on Monday, the biggest one-day influx in the fund’s nearly 20-year history. Among the fund’s biggest holdings are Apple, Meta Platforms, Nvidia, Alphabet, Amazon and Microsoft — the leaders of the so-called Magnificent Seven which have accounted for the bulk of the market’s gains this year. In Canada, Sophic Client OneSoft entered into an Arrangement Agreement to be acquired by irth Solutions for $0.88/sh in cash, a premium of 42% and 28% to the closing price and 20-day volume weighted average closing price of the Shares. Sophic Client UGE International announced the closing of its Plan of Arrangement to be acquired at $2/sh. Sophic Client, Intermap announced 125% revenue growth in Q2. Sophic Client, NowVertical Group, reported Q2 results, revenue was up 2% y/y adjusted for recent divestitures. Income from Operations was US$0.7 million, a 125% y/y increase due to gross margin and administrative expense improvements. Sophic Client ADM Endeavors reported Q2 results – Revenue was US$1.2 million, a 5% decrease y/y, but up 16% q/q. Sophic Client, Plurilock filed a Nonprovisional Patent application for AI-driven cloud access security broker technology for generative AI – hitting a new 52 week high. Well Health plans to spin out, and publicly list its SaaS and services business in 2025. Bitcoin miner Riot Platforms raised its stake in rival Bitfarms to 18.9%. Toronto based Radical Ventures, raised almost US$800 million for a new fund, according to Bloomberg. Radical Ventures was an early backer of model maker Cohere, recently valued at US$5.5 billion.

Sophic Client OneSoft Solutions Inc. (OSS-TSXV, OSSIF-OTC) enters into Arrangement Agreement to be acquired by irth Solutions LLC.

OneSoft Solutions entered into a binding arrangement agreement dated August 12th, 2024 (the “Arrangement Agreement”) with irth Solutions LLC and its wholly-owned subsidiary irth Acquisition Corp. (collectively “Irth”), a Blackstone portfolio company, pursuant to which Irth will acquire all of the issued and outstanding shares of OneSoft (the “Shares”) for $0.88 in cash per Share (the “Consideration”), representing a total cash equity value of approximately $113 million on a fully-diluted basis (the “Transaction”). The Consideration represents premiums of approximately 42% and 28% to the closing price and 20-day volume weighted average closing price of the Shares, respectively, on the TSX Venture Exchange (the “TSX-V”), on August 9, 2024. https://bit.ly/3yEDG9B

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) announces closing of Plan of Arrangement.

UGE International announced the closing of the previously announced plan of arrangement (the “Arrangement”) pursuant to which 1000896425 Ontario Ltd. (the “Purchaser”), an affiliate of NOVA Infrastructure Fund II, LP, acquired, with an effective date of August 15, 2024 (the “Effective Date”) all of the issued and outstanding common shares of the Corporation (the “Common Shares”) for $2.00 per Common Share (the “Consideration”), other than Common Shares held by certain management representatives and shareholders of the Corporation (the “Rolling Shares”) which Rolling Shares were rolled over into the private entity that will carry on the business of the Company. https://bit.ly/3AsM4cK

Sophic Client Intermap (IMP-TSX, ITMSF-OTC) announces 125% revenue growth in the second quarter.

Intermap Technologies announced 125% revenue growth in the second quarter of 2024. For the period ending June 30, 2024, the Company reported revenue of US$3.6 million compared with US$1.6 million for the second quarter of 2023. Following a successful technology upgrade, and re-certification of its sensor payload and airborne platform to meet world-leading geospatial data specifications in Indonesia. Cash and accounts receivable totaled US$1.1 million at June 30, 2024. Subsequent to the quarter, the Company successfully completed a LIFE offering of common shares, raising $3.3 million. Intermap affirms its 2024 guidance with revenue in the range of US$16-18 million and adjusted EBITDA margin of approximately 25%. Intermap is successfully executing and establishing a seamless transition to mapping the entire country of Indonesia through 2028, building a strategic national digital infrastructure that supports economic growth and commercial applications. In addition to Indonesia, the Company’s government segment built on strong momentum generated in the first quarter, winning new orders in Malaysia, Malawi, India and Greece. In the second quarter, commercial revenue totaled US$1.9 million, a 22% increase compared with the second quarter 2023. For the first six months of 2024, recurring revenue represented approximately 51% of commercial revenue. The Company projects its recurring commercial business to continue growing at a CAGR of more than 20% over the next few years as a growing number of non-expert geospatial users consume Intermap’s unique data and software through customized, cloud-based as-a-service solutions. https://bit.ly/3YKtlnh

Sophic Client NowVertical Group (NOW-TSXV, NOWCF-OTCQB) reports second quarter 2024 financial results.

Selected Financial Highlights for the Three Months Ended June 30, 2024: Revenue was US$12.3 million in Q2 2024, a 12% decrease from US$14.0 million in Q2 2023, and Adjusted Revenue was US$12.5 million in Q2 2024 compared to US$14.0 million in Q2 2023. Excluding the Allegient Defense, Inc. business, which was divested on May 24, 2024, and the Affinio Social business, which was divested on May 10, 2023, revenue was US$9.4 million in Q2 2024 versus US$9.3 million in Q2 2023, an increase of 2%. Gross Margin in Q2 2024 was 53% versus 49% in Q2 2023. Administrative Expenses were US$5.8 million in Q2 2024, a 10% decrease from US$6.5 million in Q2 2023, owing to a concerted restructuring effort by management to reduce overhead costs and increase efficiency in the business. Income from Operations was US$0.7 million in Q2 2024, a 125% increase from US$0.3 million in Q2 2023 due to gross margin and administrative expense improvements. Adjusted EBITDA was US$1.8 million in Q2 2024, an 18% increase from $1.5 million in Q2 2023. Excluding the Allegient Defense, Inc. business, which was divested on May 24, 2024, and the Affinio Social business, which was divested May 10, 2023, Adjusted EBITDA was US$1.5 million in Q2 2024 versus US$1.4 million in Q2 2023, an increase of 12%. Net Income was US$1.9 million and Net Income per basic and diluted share was US$0.02 in Q2 2024, compared to a US$1.1 million Net Loss and a Net Loss per basic and diluted share of US$0.01 in Q2 2023. NowVertical Group invites shareholders, analysts, investors, media representatives, and other stakeholders to attend our upcoming webinar. Management will discuss Q2 2024 results, followed by a question-and-answer session Monday August 19, 2024, 10:00 AM in Eastern Time (US and Canada). Register here: https://bit.ly/NOW-Q2. https://bit.ly/4fOaMEw

Sophic Client ADM Endeavors (ADMQ-OTCQB) reports second quarter fiscal 2024 financial results.

Operating Results for the 3-Months Ended June 30, 2024: Revenue was US$1,222,600, a 5% decrease over US$1,291,250 reported in Q2 2023 but a 16% improvement over the prior quarter’s US$1,056,138. Gross margin of 35% fell from 38% in Q2 2023 but increased from the prior quarter’s 32%. Operating income of US$1,564 was US$85,689 less than the US$87,253 operating income in Q2 2023 but increased US$74,227 over the prior quarter’s US$59,163 operating loss. Net income of US$201 decreased US$117,347 versus US$117,548 in Q2 2023 but increased US$64,337 over Q1 2024’s net loss of US$64,136. At June 30, 2024, the Company had cash of US$124,192, access to a US$3,000,000 line of credit, and accounts receivable of US$431,252. https://bit.ly/3WP5nV6

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB) files Nonprovisional Patent application for AI-driven cloud access security broker technology for generative AI.

Plurilock filed a nonprovisional patent application with the United States Patent and Trademark Office (USPTO) for a system of AI-driven cloud access security broker (CASB) technology that provides guardrails to reduce the risk of data leakage into AI platforms as users interact with generative AI. AI use in businesses has expanded rapidly since 2023, with nearly two-thirds of respondents to a McKinsey survey saying that generative AI is now in use in their organization, and industry provider OpenAI saying that over 90 percent of Fortune 500 firms use OpenAI products. The Company’s nonprovisional patent application follows the filing and later granting of a provisional patent by the USPTO and is expected to further expand the Company’s foundational IP strategy and holdings. The filing demonstrates the deep cybersecurity and engineering expertise that resides in the Company’s exceptional Critical Services team, as well as the way in which the company continues to create potential opportunities for long-term value generation in its software business. https://bit.ly/4dozDgA

Well Health (WELL-TSX) plans to spin out, publicly list SaaS and services business in 2025.

Vancouver-based digital healthcare company Well Health has revealed plans to spin out and publicly list its software-as-a-service (SaaS) business segment, Well Provider Solutions (WPS). On its Q2 2024 earnings call this week, founder and CEO Hamed Shahbazi said that Well’s current valuation is at a steep discount compared to the sum of its parts, and discussed a plan to unlock “significant shareholder value” by making WPS a standalone, Well-controlled public company in the first half of 2025. Well’s WPS business provides a platform for electronic medical records (EMR), billing and revenue cycle management, patient engagement, eReferrals, telehealth, and medical apps. https://tinyurl.com/4f396ak5

Bitcoin miner Riot Platforms raises stake in rival Bitfarms (BITF-TSX) to 18.9%.

Bitcoin miner Riot Platforms said on Tuesday it had increased its stake in rival Bitfarms to 18.9%. Riot acquired 1 million common shares of Bitfarms on Tuesday, representing about 0.22% of issued and outstanding Bitfarms common stock. The acquisition takes the total count of Bitfarms shares owned by Riot to about 85.3 million. The two companies have been locked in a dispute since April, when Riot made an unsolicited US$950-million offer to acquire Canada-based Bitfarms. Bitfarms said the bid undervalued it significantly and adopted a “poison pill” to fend off any attempt at a hostile takeover. A poison pill refers to shareholder rights plans used by corporate boards to thwart hostile takeover bids. Riot withdrew its offer at the time, but is now seeking three seats on the Bitfarms board and has said it is “ready to engage” with the reconstituted board on a potential transaction. https://tinyurl.com/bd3h6sb7

Svante gets $137-million commitment from Canada Growth Fund.

Burnaby, BC-based cleantech company Svante has received a $137-million financing commitment from the federal government’s cleantech-focused Canada Growth Fund (CGF). The commitment, which takes the form of convertible notes, is aimed at ramping up the development and construction of Svante’s commercial carbon capture and removal projects in Canada and the United States. Founded in 2007 initially as Inventys, Svante develops filters and machines that capture and remove carbon dioxide from industrial emissions and the air. The company rebranded to Svante in 2019, and currently has four pilot plants in North America, including one in British Columbia, one in Saskatchewan, and two in California. Svante has raised over $600 million since its founding, most recently closing $435 million in a Series E financing round led by Chevron New Energies, the oil and gas behemoth’s climate-focused fund. Svante was also one of 13 Canadian tech companies named to the 2024 Global Cleantech 100 list in January. https://tinyurl.com/4h896mxa

CruxOCM closes $23.3 million Series A led by Microsoft’s venture fund.

Calgary-based startup CruxOCM, which provides software that automates the operations of industrial control rooms in the energy sector, has raised a $23.3 million (US$17 million) Series A round led by M12, Microsoft’s venture fund. The round saw participation from other new investors, including natural gas company Oneok, Raven Indigenous Capital Partners, and EIC Rose Rock Fund, as well as backing from return investors including Angular Ventures, Bullpen Capital, Root Ventures, Industry Ventures, Cendana Capital, Pipeline Capital Partners, and Golden Ventures. CruxOCM said the Series A round brings its total capital raised to date up to $37 million (US$27 million). https://tinyurl.com/39fy8vry

CIBC Innovation Banking provides growth capital to Boosted.ai.

CIBC Innovation Banking announced that it has provided $10 million in growth capital to Boosted.ai, a Toronto-based company that uses AI to automate investment management processes and increase productivity. Boosted.ai will use the funds to invest in product development and sales expansion in the Canadian and US market. Founded in 2017, Boosted.ai helps institutional investors and wealth managers save time, make data-driven decisions and maintain always-on monitoring by allowing them to train AI agents to work for them. https://tinyurl.com/uzy2afrm

Radical Ventures raises nearly US$800 million for AI-focused fund.

Radical Ventures, an artificial intelligence-focused venture capital firm, has raised almost US$800 million for a new fund, according to Bloomberg, which first reported the news. Radical Ventures was an early backer of model maker Cohere, recently valued at US$5.5 billion. Radical’s new fund will back mostly later-stage artificial intelligence companies, a departure from the Toronto-based firm’s previous funds, which invested smaller checks in early-stage AI startups. Over the past five years, the firm has met with roughly 8,500 AI companies and invested in less than 50, Radical Ventures co-founder Jordan Jacobs told Bloomberg. With Radical Ventures co-founder Tomi Poutanen, Jacobs previously co-founded Milq, a social content platform that used machine learning, and an AI-research group in Canada called the Vector Institute. The new fund comes at a time when other investors have begun to wonder whether they will see returns from AI. https://tinyurl.com/43ubky6j

Dip buyers plow record cash into megacap fund dominated by tech.

Investors are back lavishing millions onto megacaps as the high-flying tech stocks resume their climb, shrugging off the vestiges of last week’s market meltdown. Traders poured a net US$210 million into the Invesco S&P 500 Top 50 ETF (ticker XLG) on Monday, the biggest one-day influx in the fund’s nearly 20-year history, data compiled by Bloomberg show. The record inflow — and fourth straight one — pushed the ETF’s assets up by 4% to US$5.3 billion, with nearly half of that attracted in the past year alone. The rush into XLG, which tracks the 50 largest companies in the S&P 500 index, underscores investors’ unwavering faith in large-cap growth stocks — dominated by tech — which propelled the stock market to multiple record highs earlier this year. Among the fund’s biggest holdings are Apple Inc., Meta Platforms Inc., Nvidia Corp., Alphabet Inc., Amazon.com Inc. and Microsoft Corp. — the leaders of the so-called Magnificent Seven which have accounted for the bulk of the market’s gains this year. An index tracking their performance has surged more than 30% this year. https://archive.ph/Lv6js

US considers a rare antitrust move: breaking up Google.

Less severe options include forcing Google to share more data with competitors and measures to prevent it from gaining an unfair advantage in AI products, said the people, who asked not to be identified discussing private conversations. Regardless, the government will likely seek a ban on the type of exclusive contracts that were at the center of its case against Google. If the Justice Department pushes ahead with a breakup plan, the most likely units for divestment are the Android operating system and Google’s web browser Chrome, said the people. Officials are also looking at trying to force a possible sale of AdWords, the platform the company uses to sell text advertising, one of the people said. The Justice Department discussions have intensified in the wake of Judge Amit Mehta’s Aug. 5 ruling that Google illegally monopolized the markets of online search and search text ads. Google has said it will appeal that decision, but Mehta has ordered both sides to begin plans for the second phase of the case, which will involve the government’s proposals for restoring competition, including a possible breakup request. https://archive.ph/fUhpZ

Tencent’s profit jumps as videogame business in China recovers.

Chinese tech giant Tencent’s net profit jumped 82% in the second quarter, thanks to growing advertising sales and a recovery in its videogame business in China. Tencent, which operates WeChat, said its revenue rose 8% in the quarter. Revenue from advertising rose 19%, driven mainly by video ads. Videogame revenue in China rose 9%, recovering from a 2% decline in the previous quarter. The gaming growth in China was due to the popularity of its “Dungeon & Fighter” mobile game and its subsidiary Riot Games’ “Valorant” shooting game. Tencent’s solid earnings and the company’s share buybacks have helped boost its Hong Kong-listed stock. Since the beginning of this year, Tencent’s share price has risen 26% so far, while Hong Kong’s Hang Seng Index has only gained 1.9%. https://tinyurl.com/yc28hkd2

SoftBank’s talks with Intel about AI chips break down.

SoftBank talked to Intel about producing artificial intelligence chips, but the talks broke down because the U.S. chip giant did not meet SoftBank’s demands, according to a report in The Financial Times. SoftBank wanted to use Intel’s chip manufacturing unit, Intel Foundry, to manufacture AI chips that would compete with Nvidia’s, combining technology and expertise from Softbank-controlled Arm and Graphcore, a startup the Japanese conglomerate recently bought. But Intel did not meet SoftBank’s requirements for volume and speed, according to the report. Intel is an attractive partner because it is a U.S.-based company, which could have given it the opportunity to get funding from the Biden administration’s Chip Act. The Financial Times reported that SoftBank is now picking up its discussions with Taiwan Semiconductor Manufacturing Co., the largest chip maker. https://tinyurl.com/43vmbh4f

Intel sells stake in UK chip designer Arm holdings.

Intel Corp sold all of its 1.18 million share stake in British chip designer Arm Holdings, according to a regulatory filing on Tuesday, as the Santa Clara, Calif.-based company strives to turn around its businesses. Intel’s stake in Arm was valued at US$147 million as of the end of March, when the company last reported its stake in the British firm. Softbank Group owns the majority stake in Arm. Intel’s divestment, made during the second quarter, emerged days after the company reported that it had swung to a net loss of US$1.6 billion between April and June from a net profit of US$1.5 billion in the same period last year. The company plans to slash 15,000 jobs, or more than 15% of its workforce, over the next two years, as part of a US$10 billion cost-reduction plan to improve its competitiveness. https://tinyurl.com/ys2n5tfp

Cisco to cut over 5,000 jobs amid declining sales.

Cisco will lay off 7% of its workforce in the coming months, the company said on Wednesday, as it reported a decline in sales. The company said it will spend roughly US$1 billion on severance as it lays off employees. Cisco didn’t disclose which parts of its business would be most affected, but CFO Scott Herren said in a statement that Cisco plans to invest in areas like cybersecurity and AI “while maintaining capital returns.” Cisco had 84,900 employees at the end of last year, implying that nearly 6,000 jobs will be cut. Cisco reported that its revenue was US$13.6 billion in the past three months, down 10% from the same period last year. But the company slightly exceeded its revenue projections set last quarter, sending its stock up 6% in after-hours trading Wednesday. Nearly US$1 billion in revenue from the quarter came from Splunk, the cybersecurity business that Cisco acquired for US$28 billion in March. https://tinyurl.com/yc7bd75j

Apple targeting sub-US$1,000 price for iPad-like robotic home device.

Apple is moving forward with its plans for home robotics, according to a new report from Bloomberg. Apple is reportedly ramping up its work on a tabletop smart home device with a robotic arm, which would serve as a “smart home command center, videoconferencing machine and remote-controlled home security tool.” Apple’s personal robotics ambitions were first detailed in April when Bloomberg reported that Apple was exploring a “mobile robot that can follow users around their homes.” Apple is also reportedly developing a HomePod-like device with a screen that can swivel like a robotic arm. Today’s report focuses on Apple’s work on a tabletop home device. Mark Gurman reports that Apple has a “team of several hundred people” working on a “pricey tabletop home device that combines an iPad-like display with a robotic limb.” Gurman explains that the product’s display will be able to tilt up and down and spin 360 degrees with an actuator and a “thin robotic arm to move around a large display.” Apple executives reportedly approved this project in 2022, but work began ramping up in recent months. https://tinyurl.com/t46neaxr

Google unveils new AI assistant, Pixel upgrades at hardware event.

Google announced a revamped virtual assistant for Android phones on Tuesday at Made by Google, its hardware event. The virtual assistant, powered by Google’s chatbot Gemini, can work across Google’s apps to help users draft messages and schedule calendar events. Subscribers to Gemini Advanced also now have access to Gemini Live, a voice assistant that can hold hours-long conversations. The AI-focused announcements took aim at Apple in particular. Executives wrote in the press releases accompanying the events that “there are no handoffs to third-party chatbots or AI providers that you may not know or trust,” a clear reference to Apple’s partnership with OpenAI on Siri. Google also announced upgrades to its Pixel phones, watch and earbuds, including generative AI photo editing features on Pixel that allow users to change backgrounds or combine pictures to insert themselves into the picture. https://tinyurl.com/zhetj9fy

Judge blocks Disney, Warner and Fox from launching new sports service.

A federal judge has blocked a joint venture between Disney, Fox and Warner Bros. Discovery from launching a new sports-focused streaming service this fall, ruling that it will harm competition. The ruling is a victory for Fubo TV, a sports-heavy streaming service that sued to block the new service. The streaming service, called Venu Sports, would offer sports TV channels and other live and on-demand sports programming from Disney’s ESPN, Fox Sports and Warner Bros. Discovery—representing a majority of sports from the major U.S. leagues—for US$42.99 per month. In it lawsuit, Fubo argued that while Disney, Fox and WBD use their access to live sports to force Fubo TV to carry non-sports TV channels on its service, Venu would not have to. Venu’s pitch is that it is targeting sports fans with its service who are willing to pay for a cheaper bundle of channels, but don’t want to pay for entertainment and news channels that are available on other, more expensive pay-TV services. Fubo argued that it would go bankrupt if Venu were to launch. Venu’s three owners said they would appeal the ruling. https://tinyurl.com/2y7p2c5k

Massive data leak may include the personal data of every person in the US, UK, and Canada.

A massive data leak of some 2.7 billion records may include sensitive personal data for every person in the US, UK, and Canada. For the US, the data includes social security numbers. The data is said to have come from a company known as National Public Data, which collects and sells personal data for use in background checks by private investigators and others… Bleeping Computer reports that a hacker attempted to sell this data (then said to be 2.9B rather than 2.7B records) for US$3.5M, stating that it contained records of every individual in each of the three countries. Since then, there have been various partial leaks, but what is said to be a full copy of the database has now been made available for download. The leaked data consists of two text files totaling 277GB and containing nearly 2.7 billion plaintext records, rather than the original 2.9 billion number originally shared by USDoD. https://tinyurl.com/h276c5z3

Alibaba’s profit drops as China commerce revenue dips.

Alibaba Group’s net profit fell 27% in the quarter through June, as revenue from its commerce operations for consumers in China declined. The e-commerce giant, whose marketplaces charge sellers for marketing and other services, said revenue from its “China commerce retail” business, which includes its Taobao and Tmall shopping sites, fell 2% in the quarter. Alibaba’s overall revenue rose 4%, helped by a 6% rise in the cloud computing division and a 38% increase in overseas commerce operations. Alibaba, which has struggled to fend off competition from domestic rivals such as PDD, said its market share in China’s e-commerce sector is now “stabilizing,” thanks to high single-digit percentage growth in e-commerce transaction volume and double-digit growth in the number of orders in the quarter. But even so, Alibaba’s revenue from merchants, known as customer management revenue, rose only 1% in the quarter, as a decline in its take rate offset the growth in its transaction volume. Alibaba in April launched a new advertising tool that could help boost its revenue in the long run. But executives said during a conference call with analysts that it could take six to 12 months for the new advertising product to achieve “solid progress.” https://tinyurl.com/ys9yrwp5

Rivian pauses production of delivery vans used by Amazon.

Electric automaker Rivian has temporarily halted production of delivery vans for Amazon due to a shortage of parts, a spokesperson said. Rivian expects to make up all missed production, the spokesperson said, though they did not say when production will resume. An Amazon spokesperson said the company is aware of short-term production issues at Rivian but does not expect the problems to affect Amazon. Amazon, which owns a 16% stake in Rivian, has already deployed more than 15,000 Rivian vans and has a deal to receive 100,000 from the automaker by 2030. In December, Rivian also said it planned to start delivering vans to AT&T as part of a pilot program with the telecom giant, its second corporate customer. https://tinyurl.com/ehpf9df6