HI All, just found this stock while researching and found many interesting features on it (albeit some risk-issues identified as well) – Would be interesting to hear everyone’s thoughts.

Some of the points that makes me prone to invest on it are (pros):

p.1) Asset-light business model, with interesting cash flow generation (last FY - circa 10M in FCO) and low CAPEX (the company generates +100M in revenue, and CAPEX is less than 1M - this is really appealing to me)

p.2) Conversely to many start up at this stage, the company is profitable with healthy net margin (+10%). Furthermore, if you have a quick look:

• Revenue grew 50M (from 67M to 117M)
• Gross profit grew 15M (from 25M to 40M)
• SGA (Sales, General, & Administrative) expenses grew ~5M (from 15M to 20M)
• Net Profit grew ~7.5M (from 6.M to ~13.7M)

p.3) The pivot for digital market looks the right move for me, with significant gains on scalability at low cost

p.4) DoD Acquistion for me looks more like a Customer-Base Aquisition rather than a business model pivot. If you purely look for business pivot, I agree - it might be a strange deal; not aligned with the strategy. However, If you look from a CAC (Customer Acquistion Cost) perspective for the CanView platform, it might sound interesting like an interesting move and with plenty of synergies in the digital model they have - You are potentially bringing more costumers to the platform, and, assuming DoD runs at profit, you are actually being paid to bring more costumers. This CAC tends to be one of the biggest expenses in early stages of startups/digital ventures.

p.5) From the reports / presos / and info available on internet, it appears that DoD has circa 250k-300k consults per year (averaging a consult at $60 - this would generate 15M-18M in revenue) - I am not sure about the profitability. DoD also might unlock growth in other markets, apart from Cannabis. Let's assume it generates 15M in revenue - so the paid 1.66x revenue for DoD (25M - deal structure involved Equity + Cash + Debt + Vendor Finance (Cash to be paid until Oct/24)) - It does not look that terrible...

p.6) Company has nil debt, and sits on 18M cash, which looks healthy (some debt raised for DoD acquisition, and 6.25M cash used in the DoD Transaciton - now it would be more like 12M in the balance)

p.7) Company already pay some dividends, 1c per share (circa 4% DY at current price - share trades at 25 cents)

Cons for investing thesis:

c.1) It appears that some competition might put pressures on net/gross margins (gross margin contracted from 37% to 34%)

c.2) There appears to me some stuff going on in the background in board/senior management team, which is never ideal and take focus on the business growth

c.3) Growth is not as strong as it was in previous semesters

c.4) Cannabis is a sensitive market, with regulation risks and many grey areas that might impact the business model in the future

My (current) conclusion:

I like the business and I am considering adding to my portfolio in a small position. My reasons are:

• I don't see DoD as business model pivot, but rather a customer acquisition - my only concern here is whether DoD is profitable or not - looking at peers, I would say it is. I agree that a pureplay on telehealth (as ASX:DOC) looks not smart, however in a platform that you can dilute the expenses and integrate with other verticals, I believe it might have some value to be added to Vitura
• DoD acquisition opens potential expand to other areas (even though I would prefer that VIT first consolidate its position in the Canabis Market)
• I like the asset-light approach - again - $100M for $1M capex, looks impressive.
• Unlike many startups, the company is already profitable and generates significant cash (FCO ~10M)
• The senior management stuff, whilst worrying in the short term, it looks more noise to me (at this stage) rather than systematic issues in the company.
• Assuming a realistic-to-pessimistic scenario - let's say revenue growth is 5%, expenses grow at 5% because of inflation, gross margin remains at 34%.

(excluding DoD impacts)

Revenue = 123 (117 * 1.05)

Gross Margin = 34% ; Gross Profit = ~42M

Expenses = 20M *1.05 = 21M

Net Profit = 21M * 0.75 = 15.75M

P/E = ~10-11

Whilst I agree is not the best bargain in short-term, I believe the company is well positioned for future growth in a healthy manner – the asset light model is great, the DoD acquisition might bring more customers, and open more avenues – In the medium-to-long term, I think there is some value to be unlocked here and the downside does not look that bad.

My final concerns are related to the DoD operations itself, whether it is a cash-consuming  / profitable business. If they, at least, breakeven, I think the landscape is bullish from my side.