EQ Inc V.EQ

SMEDLEY NEWSLETTER highlights EQ!!

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EQ Inc.
The Data Revolution is Disrupting Everything

EQ Inc. (EQ-TSXV) is a $1.50 stock that has at last achieved some Bay Street exposure, about four years after I first walked into the office of Geoff Rotstein, President and CEO. Canaccord Genuity took the team around to say hello to institutional investors last month.

Geoff Rotstein has been active in data in Canada for a long time. He transformed Cyberflex, a dinosaur name, into EQ, an industrious micro cap of a company that has been growing quite modestly, but becoming one of the best investments I have ever made; up 2,757.14%. And that is not a typo. And hardly equilibrium, which is the word from which EQ originated.

I first knew EQ as a company that was mapping away and capturing people-flows across every square inch of North America. It used this data to help its clients identify consumer tendencies – where they shop or go to events and to which districts they went home. It was all done by tracking cellphones – think 300 million of them –

but without identifying who was Harry and who was Jane and without securing personal details that would offend the right to privacy. From those phones, Rotstein’s group has analyzed over one petabyte of data. A petabyte is equal to one million gigabytes, if that helps.

I wrote four years ago that EQ could identify instantly all major hockey games in North America and follow the fans to their residential neighbourhoods. That was my primitive view of it all, but I was impressed by the angel investor backing that had gathered around Geoff Rotstein; and the stock did fit my weakness for discovering stocks that I could pretend were known only to me.

EQ continues building an immense collection of data for its proprietary location platform and, as everybody who follows the technology sector knows, data is gold today. The company has clients that include major names in retail, luxury cars and media. It can place advertising for them if that is

what they want, but its main function is to take on what have become paralyzing amounts of data and help clients arrive at actionable and predictive results. Another benefit that can arise is giving clients control over their own data, which would otherwise be kept by the tech giants that have traditionally retained the intelligence within their own walls to create dependency. That makes it sound like a freedom movement!

Big data accumulations cannot be replicated in a short time so the company should continue to grow. Company financials are still at the low end of the scale, but growing. Annualized cash burn presently is only about $2 million and a doubling of revenues would move the top line to about $20 million. I see that when I first wrote about EQ, both market cap and revenues were around $3 million.

It can take an awful long time to build a data pot of gold, but I note that supportive and expert early investors are still there.