Bruce Linton Dedicating More Time to Martello Technologies Group Inc (CVE:MTLO)

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Martello Technologies Group Inc (TSXV: MTLO) CEO John Proctor joins James West to discuss the company’s recent stock surge. The catalyst for the exponential movement has come off-the-back of the shock news of Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1) announcing a leadership transition to replace Bruce Linton as CEO. Investors have been galvanized since finding out Bruce Linton, co-chairman of Martello, will have more time to dedicate to the technology company. Mr Proctor outlined that “Bruce has always been involved” but with his departure from Canopy “he has more time for us.” The CEO also discusses the company’s financials and highlights past and future acquisitions which will help take the company into the realm of a multi-billion-dollar global operator.

Transcript

James West: John Proctor joins me now. He’s the President and CEO of Martello Technologies Group, trading on the TSX Venture under the symbol MTLO. John, welcome back.

John Proctor: Thank you for having me back on.

James West: You bet. John, the first time you were here, you had first gone public and the stock took off in a northerly trajectory as people realized that Bruce Linton was a co-chairman of the company. And then Bruce left Canopy and showed up on CBC wearing a T-shirt that said Martello Technologies, and the stock took off again in a northern trajectory. Now you’ve traded almost 100 million shares, tripled the market cap of the company, and the world wants to know: is Bruce in fact going to devote more attention to helping Martello get its message out to the world, or is Bruce just, is that another flash in the pan that’s just a byproduct of the convergence of Bruce wearing a T-shirt and being the most famous person in cannabis in the world?

John Proctor: So I think the simple answer is, Bruce has always been involved. Ever since I took over from him as CEO of Martello in 2017, he moved up to be co-chair next to Terry Matthews, and he has been involved ever since. So there is no significant change in that respect. But what I’m already seeing since Bruce’s departure from Canopy is, he has more time for us.

James West: Right.

John Proctor: Expected: he’s running a multi-billion-dollar company versus co-chair of a small micro-cap, but now he’s got more time to devote to us, and I see that. You know, he’s been in the office, spent time helping us look at, you know, who are the acquisition targets, where we’re going, who are the capital markets we should be talking to…you know, it’s been fabulous for us. We’ve had that all along, but as you can imagine, you know, we’ve just now got more access to Bruce, which brings enormous value to Martello.

James West: Right. And Martello itself is not any slouch; it’s been performing rather well. I mean, as evidenced by most recent financials, 136 percent increase in revenue over the same period during Q3. Now, you still actually reported a loss of $1.3 million, but how soon until those numbers show a profit?

John Proctor: So there’s a couple of things. One is, since we went public, since we spoke last, we’ve done another acquisition; they’re a Dutch-based, Dutch-headquartered company, so we’re seeing growth in those numbers already. As you can imagine, it’s expensive to do, you know, those acquisitions, so we still have those costs. But certainly we’ve been, you know, public about the fact we’re going, you know, heading towards EBITDA-neutral, if not positive, ideally in the next, you know, 12 to 18 months, and we’re on track to do that. That’s the budget will allow us to do that.

But again, the thing is saying, you know, we’re not really a startup anymore. As much as we’re still on the TSXV, we’re in scale-up mode.

James West: Sure.

John Proctor: So we’re making those investments from financial systems to, you know, sales force systems, etcetera, that all allow us to be, you know, put those growth numbers to effect. And I liken it, every now and then, to we’re like a teenager. We’ve got these really big feet, and now we’re just making sure we’ve got the acquisitions to grow into it and make those feet work for us.

James West: Right. Okay, so let’s just revisit the business of Martello Technologies. Is it a business that Bruce can apply his magic to and take it into the realm of the multi-billion-dollar global operator, or is it more of a sort of a infrastructure business that’s going to be harder to get the attention and sort of the love of the investor marketplace?

John Proctor: So no, it’s certainly the former. We are growing into that multi-billion-dollar space. If you look at our client like United Nations, you know, Marriott, these are multi-billion industries, you know, that we are already in. What Bruce brings is that attention, right? I mean, we said on sort of Day One, he wore the T-shirt and suddenly all these people looked to this tiny Martello company they’d never heard of before and went, “oh, they’re a little bit undervalued; I want some of that.” Because again, as you said, we’ve got the earnings, we’ve got potential thousands of clients, and now we’re scaling up. And the same thing which is having, you know, Terry Matthews on the Board, who is no slouch either, you know, having those two, you know, co-chairs is an awful lot of horsepower on the Board, which drives, you know, our access to all these large markets.

James West: Sure. Terry Matthews was the driving force behind Newbridge Networks?

John Proctor: And Mitel, etcetera. So there’s a multi, you know – 

James West: Track record of success.

John Proctor: Large track record of success.

James West: Right. Great, well, it sounds like those two as a team could really do some damage in terms of, like, bringing investors to the fore of this. Your acquisition strategy, have you got lots in the pipeline in the year ahead?

John Proctor: We have, and again, it’s kind of nice to have. So one, we’ve had those, you know, we’ve just did an acquisition just after we went public. We’ve now integrated that one; we’ve said okay, now we’ll focus on the next targets. We’ve got that down to a list of five or six we’re having fairly serious conversations with, and that’s kind of important, right? The, you know, being as public as we are know with what’s happened in the last few days, we’re actually getting inbound, you know, from companies who said, Hey, we think we’re a good fit. We see what’s going on, we see, you know, the horsepower you’ve got; not just with Bruce and Terry, but also with a strong management team, you know, that came out of places like Newbridge, that came out of, you know, other industries where they’ve had to use their experience before, so that strong team.

So now with that, you know, higher visibility, companies are coming and saying Hey, we’re a 20, 30 person company doing 4 to 5 million a year; we think we’re a great fit for you guys, because we think we can grow together, and that’s awesome.

James West: Is Martello itself regarded as an acquisition target by anyone that you know of?

John Proctor: We’ve had probably one, two people sort of reach out and talk to us, but I don’t think we’re ready yet. You know, we want to be bigger. We want to be that large Canadian tech company before we sort of entertain those conversations. We’ve got more growing to do before we become interesting.

James West: Great. All right, John, that’s a great update. We’re going to leave it there for now, and thank you very much for coming in today.

John Proctor: Thank you for your time.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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