Stonegate Capital Partners Updates Its Coverage on ProStar Holdings Inc. (OTCQX: MAPP.F) Q2 23

DALLAS, TX -- Sepetember 5th, 2023 -- ProStar Holdings Inc. (OTCQX: MAPP.F): Stonegate Capital Partners updates coverage on ProStar Holdings Inc. (OTCQX: MAPP.F). The full report can be accessed by clicking on the following link: MAPP.F Q2 23 Report

Company Summary

• New Partnerships: Within the last 3 months, MAPP.F has announced partnerships with Leica Geosystems to integrate PointMan™ with Leica Geosystems receivers, a partnership that adds Tasc Finaland Oy Ab to the ProStar distribution network, and a partnership with The Village of Taos SkiValley to use PointMan™ when mapping underground infrastructure. These new relationships illustrate the numerous avenues for growth that MAPP.F is taking advantage of across both hardware and software partnerships as well as uses for both domestic and international customers.
• Expansion Leads to Revenue Growth: This expansion in customer base and partnerships is turning into significant growth on the income statement, growing revenue 38.5% year over year. This is in addition to deferred revenue growth of 405% year over year. We view this as an early sign that the groundwork ProStar has laid will continue to translate into tangible financial results. As ProStar transitions its focus towards sales metrics we expect the cash burn rate to meaningfully decrease due to cost associated with employing sales professionals being lower than tech professionals.
• Expanding Leadership Team: Recently the Company added Wayne Moore to the Company’s Board of Directors. Mr. Moore was a former MD and GP of Goldman Sachs. The Company also recently hired Louis Suchy as the new CTO. Mr. Suchy has a track record of leading tech companies and is expected to improve scalability and user friendliness of the product.
• Financing Deal: In July the Company closed an upside non-brokered financing that issued 11,833,334 units at a price of $0.23. This deal reaffirms our valuation of the Company by valuing MAPP.F closer to our midpoint. We note that this financing deal closed quickly and exceeded the initial goal. We view this is a positive for the demand picture of MAPP.F, illustrating the ability of the Company to raise capital as needed while also boosting the liquidity profile of the shares being traded. We expect this demand to continuously increase as more positive news flow is generated.
• Technology Update: Recently ProStar was approached by CDOT to explore the possibility of using PointMan to close out 811 tickets in the field. Prior to digging, general contractors must close out any open 811 tickets requiring them to take preliminary measurements. Closing 811 tickets is a lengthy process due to the manual nature of the workflow. ProStar has developed a feature that allows contractors to close out 811 tickets digitally in real time and onsite. This new feature is easily rolled out to other states.
• What’s next: We think it is reasonable to expect significant expansion of the customer base, including further penetration into its existing customer base and increased visibility of the product as PointMan becomes more widely adopted. Given the current partnership wins with companies like Leica Geosystems, we see a clear path for ProStar to add more hardware providers to the partnership list. We expect this to be followed closely by integration of ProStar software within its partners hardware.
• Valuation: We use a comparative analysis to frame valuation. Using an EV/Sales range of 5.5x to 8.5x with a midpoint of 7.0x, we arrive at our valuation range of US$0.23 to US$0.35 with a mid-point of US$0.29.