EQUITY RESEARCH Telecom, Media, Tech · Blake Indursky EVP & SVP Operatngs Merrill Lynch, Pierce,...
Transcript of EQUITY RESEARCH Telecom, Media, Tech · Blake Indursky EVP & SVP Operatngs Merrill Lynch, Pierce,...
EQUITY RESEARCH
Telecom, Media, Tech
INITIATION REPORT Member FINRA/SIPC
Toll Free: 866-928-0928 ⬧ www.DawsonJames.com ⬧
Please find Important Disclosures beginning on Page 17. Page 1 of 18
June 4, 2018
Initiate at Buy as LiveXLive Creates Live Music Platform • We initiate coverage of LiveXLive Media shares with a Buy rating and a $7 price
target.
• It is a live music streaming and social media platform with an artificial intelligence
driven internet radio platform – Slacker Radio – that was recently acquired and is
being integrated.
• LiveXLive’s model is similar to that of ESPN as it seeks to become the go to
platform for live music events with all music genres including, rock, country, jazz,
electronic and hip hop.
• It mainly targets millennials but with so many music genres, it should have a wider
reach.
• Music in general and live music in particular is incredibly important to our lives
with the music of our youth staying with us through life. Music transcends race,
religion, politics, nationalities and other barriers that divide us and LiveXLive
strives to maintain this harmony in its platform.
• The company operates at the intersection of several cultural, financial and technical
trends with the time right to build an integrated, socially-based platform around live
music.
• We see the company in the first stage of what should be a three-stage process
involving building a schedule of festivals, attracting viewers to its platform, and
monetizing these.
• Most of its revenue today is from recently acquired Slacker Radio but we see
revenue building from $7 mm for FY 2018, ended in March and to be reported this
month, to $34.5 mm in FY 2019 and $147 mm in FY 2020.
• EBITDA will likely be negative this year, but its margins should be high if it
executes so we see $29.8 mm in FY 2020.
• The company had $13.7 mm in cash at the end of December, which covers our
EBITDA deficit, but we do expect a secondary offering to build more of a cushion.
We would not be afraid to buy ahead of a deal because we think the exposure of an
offering will be a positive.
• Our $7 valuation is based on a multiple of 12x FY 2020 estimated EBITDA which
is consistent with comps outlined in this report.
• The key risk is execution. It appears to be off to a good start putting the pieces in
place, now they must monetize. Surprisingly, competition does not look to be a
major threat as larger players have executed poorly and are exiting.
LiveXLive Media, Inc. (NASDAQ/LIVX)
BUY
LiveXLive Media is the first and only live music streaming and social media platform. It is
integrating its recently acquired Slacker Radio to create a unique offering.
Barry M. Sine Senior Research Analyst
646-422-1333
www.dawsonjames.com
LiveXLive Media, Inc. Page 2 of 18
LiveXLive Media Inc269 South Beverly Drive
Beverly Hills, CA 90212
+1.310.601.2500
http://www.livexlive.com
Rating Buy
Target Price $7.00 Earnings Per Share Normalized to exclude unusual items
Ticker Symbol LIVX FYE - March 2018E 2019E 2020E
Market NASDAQ 1Q - June ($0.08) ($0.12) ($0.00)
Stock Price $4.45 2Q - Se9tember ($0.12) ($0.12) $0.08
52 wk High $90.00 3Q - December ($0.10) ($0.08) $0.13
52 wk Low $3.43 4Q - March ($0.10) ($0.07) $0.19
Year ($0.39) ($0.39) $0.40
Shares Outstanding: 50.5 M
Public Market Float: 20.5 M Revenue ($mm) $7.1 $34.5 $147.0
Avg. Daily Volume 46,795 EV/Rev 30.2X 6.3X 1.5X
Market Capitalization: $221 M
Institutional Holdings: 14.1% EBITDA ($mm) ($0.0) ($9.9) $29.8
Dividend Yield: 0.0% EV/EBITDA NM NM 7.2X
Common Ownership Profile
Senior Executives Shareholder Shares ('000) % of Total
Robert Ellin Chief Executive Officer Fidelity Management & Research Co. 4,020.0 8.0%
Mike Zemetris Chief Financial Officer Sandor Capital Management LP 3,018.6 6.0%
Douglas Schaer Chief Operating Officer Millennium Management LLC 70.3 0.1%
Jerome N. Gold Chief Strategy Officer Morgan Stanley & Co. LLC 2.0 0.0%
Blake Indursky EVP & SVP Operatngs Merrill Lynch, Pierce, Fenner & Smith, Inc. (Invt Mgmt)0.2 0.0%
Directors and Officers 18,164 36.0%
Capitalization
Market Value Basis ('000) 05/31/2018 %
Long-Term Debt $8,412 3.9%
Market Value of Equity 220,947 102.5%
Less: cash -13,754 -6.4%
Enterprise Value $215,605 100.0%
Book Value Basis ('000) 12/31/2017 %
Long-Term Debt $8,412 12.2%
Other Liabilities 19,962 28.9%
Book Value of Equity 40,783 59.0%
Total Capital $69,157 100.0%
Source: Company reports, Metastock and Dawson James estimates.
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www.dawsonjames.com
LiveXLive Media, Inc. Page 3 of 18
Building the First and Only Live Music Social Platform
We initiate coverage of LiveXLive Media with a Buy rating and a $7 target price.
LiveXLive has a bold strategic vision but is relatively early in its implementation. The
company is looking to build the preeminent media platform for live music events, similar
to how ESPN has come to dominate live sports. There are over 2,000 music festivals
around the world annually, with a combined revenue of around $2 bn. LiveX has already
announced plans to webcast 27 of these this year and it is regularly adding new festivals
and distribution partners.
We value LIVX shares at $7 per share. We note that the company has limited financial
history and while we are confident that the company does have a unique, monetizable
model, the trajectory of getting there is a little unpredictable. Having said that, we forecast
revenue of $35 mm this fiscal year, and $147 mm next with negative EBITDA of $10 mm
this year and positive $30 mm next year. We provide a comps table later in this report but
there are no exactly direct comps and those that are comparable vary widely in valuation.
But having said that, we use a multiple of 5x revenue and 12x EBITDA. On revenue this
yields a $3 valuation on this year’s revenue and $15 on next year’s. On EBITDA we only
look at FY2020 since we forecast negative EBITDA this year. At 12x, this gets to a $7
price target. We could easily justify a 15x multiple based on comps, which we would likely
move to as we see a couple of quarters of execution on the business plan. This gets us to
a $9 stock. We discuss risk factors later in this report, but would stress that this company
is in its early stages and has a lot of execution to prove.
At 12x FY 2020 Estimated EBITDA, LIVX Shares Worth $7
Source: Company reports and Dawson James estimates
Music is the Soundtrack of Our Lives
Music is an extremely important part of our lives. It transcends cultures, age, race, religion
and politics. For most people, the music they grew up with remains an important part of
their lives as it brings back pleasant memories from their youth. During the formative teen
and young adult years, live music events are an important part of social life. Several
important trends are combining to drive the LiveXLive strategy.
1. As noted, music is the soundtrack of our lives and is especially important
during our formative years
FY2019 FY2020
Revenue 34,450 147,040
Multiple 5.0x 5.0x
Enterprise value 172,250 735,200
Cash/(debt) (15,022) 14,794
Equity value 157,228 749,994
Per share $3.12 $14.86
FY2020
EBITDA 29,816
Multiple 12.0x
Enterprise value 357,792
Cash/(debt) 14,794
Equity value 372,586
Per share $7.38
www.dawsonjames.com
LiveXLive Media, Inc. Page 4 of 18
2. Millennials strongly identify with their social groups and are heavily
influenced by others. So much so that people with a strong social media following
are called influencers.
3. While live music is incredibly important, it can be expensive to travel to
events across the country or the globe. This is especially true for millennials, who
in many cases still live with their parents due a weak economy since the 2008
recession, have low incomes and high student loan debts. So a solution offering a
way to be part of the socially popular events, without the high cost of travel would
be ideal.
4. Live, mobile streaming has been enabled by device makers like Apple and
Samsung, 4G network providers like T-Mobile and Verizon and backend network
providers like Amazon Web Services, Cloudflare and Akamai.
5. People have shown a willingness to pay for better versions of what was once
free. Cable TV began supplementing free broadcast TV in the 1970s and two
decades later, Sirius and XM (now merged) did the same thing for radio. Today,
subscription services for web-based content like Netflix are now commonplace.
6. Putting all these trends together, the time is right for LiveX’s strategy.
The music industry has evolved with technology and is once again thriving. While we
once had dozens of “record labels” today the industry is dominated by three major music
publishers: Warner, Sony and Universal. While transition from physical medium such as
vinyl records, cassette and eight track tapes and CDs to digital media was traumatic, today
a highly lucrative industry has evolved. The early days of free, pirated music sharing by
companies like Napster are gone, replaced by a legitimate profitable distribution system.
Apple and Amazon dominate the sale of digital copies of music, but even these are being
replaced by paid subscriptions to music. And the publishers are generating record profits
without the need to produce, inventory and distribute massive amounts of physical media.
Radio is also rapidly morphing. In 1884 Guglielmo Marconi invented the first radio in
Italy. After World War I, with the adoption of amplitude modulation technology, the first
AM radio station, KDKA of Pittsburgh, went on the air. Radio was the first “internet
bubble” driving the bull market of the roaring ‘20s. Surprisingly, today advertising
supported free radio is still very popular nearly a century later.
But just as cable TV supplanted free broadcast TV, Sirius and XM (now merged)
successfully introduced paid subscription radio. Now that most consumers have a smart
phone and subscribe to high bandwidth data services, subscription web-based radio
companies like Pandora and Spotify are taking off. Broadcast radio stations are now
commonly webcast over phone apps and websites as well.
The live music space is dominated by Liberty’s Live Nation with over 25,000 concerts and 90 music festivals
annually. They are followed by other smaller festival promoters like AEG, Insomniac and Superfly. There
were early attempts by Red Bull Media and Verizon’s go90 to create live music webcast businesses but neither
really focused their efforts and both have largely exited the space. Google’s YouTube does stream some events
like Live Nation’s major Coachella festival, but they only provide bland, passive images of other people having
fun at music festivals. What if someone could create a full, branded, interactive live music experience the way
ESPN has done with sports? Enter LiveXLive.
www.dawsonjames.com
LiveXLive Media, Inc. Page 5 of 18
Building the ESPN of Live Music
CEO Rob Ellin acquired the company as a shell corporation in September 2011 via his
investment company called Trinad. It was previously a Canadian 3D printing company
called Loton found in 2009. The current business started under the brand name Festream
in February 2015, but fortunately, they adopted their current cooler name a few months
later in May 2015. The whole company was rebranded as LiveXLive in July 2017 and on
December 27 they sold five million shares at $4 per share giving the company meaningful
float and institutional ownership as well as a nice cash cushion.
One of Ellin’s first tasks was building a team of experienced media executives with an
incredible combined rolodex. Ellin got his start in finance, at one point serving as an
institutional salesperson for LF Rothschild. He morphed into the investing business and
led a leveraged buyout of bra-maker S&S Industries where he served as CEO for two years.
More recently, he was executive chairman of Mandalay Digital, a mobile solutions
company.
Among the industry leaders he brought on board are Phil Quartaro, who formerly headed
both Warner Bros. Records and EMI and later went on to found Virgin Records America
for Richard Branson. Jerry Gold, who is now the chief strategy officer, was the CFO of
Warner Music. Mike Bebel was an EVP at Universal Music and went on to be CEO of
Napster in its heyday. He also ran two joint ventures between Sony Music and Universal
Music: Pressplay and Total Music. He also held senior digital entertainment positions as
Nokia and Microsoft. COO Doug Schaer previously founded Hero Ventures which
launched The Marvel Experience with Marvel Entertainment partnering with Ticketmaster,
WWE and Magic Johnson Enterprises. Most recently, Mike Zemetra has been brought in
on the finance side as the new CFO about a month ago. We have had ample opportunities
to work with him on understanding the company and its financial potential and have found
him to be a straight shooter equally willing to discuss both the company’s enormous
potential as well as the nuts and bolts of the business. Among the board members, we note
that Tim Spengler was formerly president of Clear Channel Media, one of the largest radio
companies. So overall, our reaction is wow – a very connected, experienced team.
On December 29, 2017 the company acquired Slacker Media for total consideration of
$55.3 mm. Slacker was primarily a B2B business model selling subscriptions through
wireless carriers and car companies. It had approximately 1.5 mm subscribers, although
most were free subs with about 450,000 paid subs. It offers paid subscription plans at $3.99
and $9.99 per month to individual subscribers. With B2B subscriptions, we estimate an
ARPU around $5 per month.
A key aspect of the acquisition was the technology. It was this technology that led Elon
Musk to personally select Slacker as the built-in music app for Tesla cars. With Slacker’s
computer learning algorithms, consumers can skip songs they don’t like, and the software
will learn the consumer’s tastes over time.
Slacker had experienced declining revenue and losses with the loss of a key Samsung
relationship ahead of the acquisition. But since then, momentum has turned and the
company has reported a gain of about 10,000 subscribers. We model essentially flat
Slacker revenue this year, and accelerating growth next year, but early momentum suggests
we may be proven too pessimistic.
LiveX is already incorporating marketing for Slacker into its live music broadcasts, driving
some success with 10,000 new subscribers in the March quarter. Over time, likely next
www.dawsonjames.com
LiveXLive Media, Inc. Page 6 of 18
year, we look for full integration with a combined, and likely rebranded,
LiveXLive/Slacker service.
The company mainly targets the millennial demographic and we think its product is ideally
suited to the unique aspects of this generation. First, millennials are largely group-thinkers
and heavily follow influencers on social media. LiveXLive has hired several of the leading
influencers such as Amanda Cerny. Second, like all generations of youth, millennials are
passionate about their music and closely follow their favorites. Thus they are likely to be
intensely aware of major upcoming events like music festivals. Third, with a poor
economy until recently and degrees in popular college majors that offer low compensation
and high college debt, millennials have little disposable income. Thus the record high
incidence of youth living with and being supported by their parents well into their 20s and
even 30s. So while they passionately follow their favorite artists, they cannot afford to
attend the major music festivals around the globe. Fourth, millennials are incredibly
technologically savvy. Many have incredible advanced computer programming skills and
thus their ability to master multiple social media internet platforms. Fifth, millennials are
willing to pay for content, with most subscribing to more than one streaming music service.
LiveXLive is at the center of these trends, offering a mobile web-based, low-cost solution
for millennials to watch their favorite artists perform at music festivals and virtually
interact with them.
With the pieces in place, we believe that LiveX is ready to start booking significant revenue
with a rapid ramp. The company is early in the stages of a three-step process to build its
revenue base:
1. Build a robust schedule of festivals
2. Build a user base with a target of up to 100 mm views this year
3. Monetize the festivals and visitors
The company is well on its way to building a robust schedule and it is developing a solid
relationship with festival promoters such as Live Nation, AEG and Insomniac. In FY 2017
it kicked off streaming four festivals. In FY 2018, the company webcast five festivals. It
is on track to webcast 27 festivals this year, and we estimate as many as 70 next year.
Many of its festival contracts are for multiple years, so as it signs for one year, it is also
building out its schedule for future years
The second step in the process is to build loyal viewership and it is off to a good start.
During the weekend of May 18 – 20 it webcast three major festivals and drew 14 mm
views. Thus it is off to a great start to getting to 100 mm this year. In this business, success
begets success. Not only with LiveX utilize its own platforms to cross promote other
festivals and Slacker, its user can also leverage social media, including that embedded in
the LiveX app, to engage their friends.
The most impressive metric in this industry is the 45 mm views Beyoncé Knowles-Carter
generated for her appearance at Coachella over YouTube in April. Mrs. Knowles-Carter
widely publicized the ability of her many fans to view her live appearance through
streaming over her social media accounts. She has over 100 mm followers on Instagram,
her preferred platform and, according to Variety, she “broke” Instagram with her
pregnancy announcement (fortunately, it has since been fixed). The 45 mm views
reinforced her already superstar image, but sadly, YouTube did nothing near what LiveX
envisions to monetize these views. To YouTube owner Google, 45 mm views is just
another day at the office. To LiveX, it would be half a year’s business plan. Coachella is
owned by Live Nation, which LiveX has a budding relationship with.
www.dawsonjames.com
LiveXLive Media, Inc. Page 7 of 18
LiveXLive Festival Streaming Schedule
Source: Company reports and Dawson James estimates
Festival Start Date End Date Location 2017 / 2018 Lineup Organizer
FY 1Q 2017
Rock in Rio [Lisboa] 5/19/2016 5/29/2016 Lisboa Metallica, Motley Cure, Royal Blood and Gorjica. Live Nation
Total 1 Festival
FY 2Q 2017
Outside Lands 8/5/2016 8/7/2016 San Francisco, CARadiohead, LCD Soundsystem, Duran Duran,
Lionel Richie, J. Cole, and Lana Del Rey.Superfly Presents
Breakaway Music Festival 8/26/2016 8/27/2016 Columbus, OhioRae Sremmurd, L Grime, Dillon Francis and Young
Thug.Prime Social
Country Night Lights 9/23/2016 9/24/2016 Athens, Ohio Jake Owen, Sam Hunt and Brett Eldredge. Prime Social
Total 2 Festivals
FY 1Q 2018
Hangout Music Festival 5/19/2017 5/21/2017 Gulf Shores, AL
Mumford & Sons, MGMT, Weezer, Frank Ocean,
Chance The Rapper, Major Lazer, Twenty One
Pilots and DJ Snake.
AEG
Summerfest 6/28/2017 7/29/2017 Milwaukee, WI
Red Hot Chili Peppers, Paul Simon, Tom Petty &
the Heartbrerakers, Will Nelson, Bob Dylan and
Cheryl Crow.
City of Milwaukee
Total 2 Festivals
FY 2Q 2018
Paléo Festival de Nyon 7/18/2017 7/23/2017 Nyon, SwitzerlandRed Hot Chili Peppers, Arcade Fire, Macklemore &
Ryan Lewis.
Outside Lands 8/11/2017 8/13/2017 San Francisco, CA
Metallica, Lorde, Gorillaz, The Who, Solange, Fleet
Foxes, A Tribe Called Quest, Thundercat and
Queens of the Stone Age.
Superfly Presents
Rock in Rio 9/15/2017 9/24/2017 Rio de Janiero, BrazilMaroon 5, Justin Timberlake, Aerosmith, Bon Jovi,
Guns N' Roses, The Who, Red Hot Chili Peppers.Live Nation
Total 3 Festivals
FY 1Q 2019
EDC China 4/29/2018 4/30/2018 Shanghai, ChinaMarshmello, deadmau5, Alison Wonderland,
Hardwell, Martin Garrix, Mija and Disclosure.Insomniac
EDC Las Vegas 5/18/2018 5/20/2018 Las Vegas, NevadaArmin Van Buuren, Diplo, Kaskade, Marshmello,
Martin Garrix, Tiesto, Hardwell and Zeds Dead.Insomniac
Hangout Music Festival 5/18/2018 5/20/2018 Gulf Shores, ALThe Killers, The Chainsmokers, Kendrick Lamar,
Zedd, OdeszaAEG
Rock On The Range 5/18/2018 5/20/2018 Columbus, OHTool, Avenged Sevenfold, Alice in Chains, A
Perfect CircleAEG
Country 500 Music Festival 5/25/2018 5/27/2018 Daytona, FL Toby Keith, Chris Stapleton, Dierks Bentley AEG
Rock in Rio [Lisboa] 6/23/2018 6/30/2018 LisboaBruno Mars, The Killers, Muse, The Chemical
BrothersLive Nation
Montreux Jazz Fest 6/29/2018 7/14/2018 Lake Geneva, Switzerland See Website Mathieu Jaton
Total 7 Festivals
www.dawsonjames.com
LiveXLive Media, Inc. Page 8 of 18
Festival Schedule Continued
Source: Company reports and Dawson James estimates
Festival Start Date End Date Location 2017 / 2018 Lineup Organizer
FY 2Q 2019
Audiotistic Bay Area 7/14/2018 7/15/2018 Mountain View, CAMarshmello, Lil Uzi Vert, Nghtmre, Slander, Keys n
Krates, Joyride
Paléo Festival de Nyon 7/17/2018 7/22/2018 NyonRed Hot Chili Peppers, Arcade Fire, Macklemore &
Ryan Lewis (2017)
Global Dance Festival 7/20/2018 7/21/2018 Denver, COTiesto, Deadmau5, Future, Adventure Club and
Gucci Mane.AEG
HARD Summer 8/4/2018 8/5/2018 Fontana, CA TBD Insomniac
Sziget 8/8/2018 8/15/2018 Budapest, Hungary Arctic Monkeys, Kendrick Lamar, Mumford & Sons
Rock en Seine 8/24/2018 8/26/2018 Paris, France The xx, PJ Harvey, Flume, Franz Ferdinand
Bumbershoot 8/31/2018 9/2/2018 Seattle, WA Flume, Lorde, Odesza, Big Sean (2017) AEG
Nocturnal 9/14/2018 9/15/2018 San Bernardino, CADillon Francis, GTA, Excision, Zomboy, Keys N
Krates, Sub Focus, Claptone (2017)Insomniac
Breakaway Festival 8/24/2018 8/26/2018 Columbus, OH Halsey, Odesza and Migos. Prime Social
Country Night Lights Sept, 2018 Athens, OHJake Owen, Brett Eldredge, Brothers Osborne,
Frankie BallardPrime Social
Total 10 Festivals
FY 3Q 2019
Escape 10/26/2018 10/27/2018 San Bernardino, CATiesto, DJ Snake, NGHTMRE, Marshmello,
Afrojack, Alan Walker, Eric Prydz (2017)Insomniac
EDC Orlando 11/9/2018 11/10/2018 Orlando, FL
Armin Van Buuren, Marshmello, Galantis, Dimitri
Vegas & Like Mike, Seven Lions, Jauz, NGHTMRE
(2017)
Insomniac
Dreamstate SoCal 11/23/2018 11/24/2018 San Bernardino, CAArmin Van Buuren, GAIA, Paul van Dyk, ATB, Paul
Oakenfold, Andrew Rayel, MaRLo (2017)
Countdown 12/30/2018 12/31/2018 San Bernardino, CA
Alison Wonderland, Borgore, Deadmau5, Diplo, DJ
Mustard, GTA, Galantis, Porter Robinson, What So
Not (2017)
Insomniac
Total 3 Festivals
FY 4Q 2019
Decadence NYE 12/31/2018 1/1/2019 Denver, CO Armin Van Buuren, Justice, Galantis (2017) AEG
EDC Mexico Mexico City, MexicoAbove & Beyond, Zedd, Eric Prydz, deadmau5,
Tiesto, Dillon Francis (2018)Insomniac
Beyond Wonderland SoCal San Bernardino, CADiplo, Hardwell, Alison Wonderland, Yellow Claw,
GTA, Markus Schulz, NGHTMRE (2017)Insomniac
EDC Japan Tokyo, JapanMartin Garrix, Kaskade, Marshmello, Axwell ^
Ingrosso, Armin Van Buuren, Afrojack (2017)Insomniac
Total 4 Festivals
Feb, 2019
Mar, 2019
Mar, 2019
www.dawsonjames.com
LiveXLive Media, Inc. Page 9 of 18
Even if it does not pick up Coachella or other mega-festivals, LiveX can and does embed
the YouTube feed on its website, preserving some monetization capability and building its
rep as the go to platform for live music. The artists appearing at the festivals LiveX has
announced have a collective 2.2 bn social media followers. As they see Beyoncé, and other
stars, build their presence through publicizing festival streams, we expect them to do the
same, building LiveX’s brand. In turn, LiveX builds the festival’s brand so it becomes a
virtual win-win-win cycle for artist, LiveX and the festival promoter. That’s the dream
anyway.
How to Win Friends and Influence Millennials
It has also engaged its own army of influencers and has signed three of the biggest:
• Amanda Cerny – she rocketed to fame in October 2011, posing nude as Playboy’s
Playmate of the Month when they still did that. She leveraged that by posting
comedy sketches on now defunct Vine and today has two million followers on
YouTube and 20 mm on Instagram. Cerny is now the head of LiveX’s digital talent
division and has already directed a music video for LiveX.
• Jake Paul – he got his start on the Disney Channel in the series Bizardvark in 2015,
but as happens with many young Disney Channel stars, he graduated to more, shall
we say, adult themes and was terminated. Today he is a highly popular and
controversial YouTube star with 14 mm followers and another 11 mm Instagram
followers.
• King Bach – real name Andrew Bachelor - got his start on Vine and is now popular
on YouTube with 2 mm followers and another 15 mm on Instagram. He has also
morphed into traditional media appearing in 15 movies and 12 TV shows since
2011.
LiveX CEO Rob Ellin invited all three to his home recently and put the video on YouTube
generating tremendous buzz and new subscribers for LiveX. The company is also building
a stable of younger, but lesser known, up and coming influencers. Each of these has
thousands of followers on social media and their millennial fans will almost slavishly
follow them.
The company’s secret weapon is the vast array of artists at these festivals. Collectively
these artists have over 2.2 billion, that’s billion with a B, followers on social media. And
they are certainly not shy about publicizing the ability of their fans to watch their
performance live. This presents a perfect opportunity for a poor millennial living with their
parents to still engage with the cool crowd, on a very limited budget.
The most impressive metric we have seen in this industry was the 45 million views
Beyoncé Knowles-Carter generated for her appearance at Coachella which was streamed
over YouTube in April. Mrs. Knowles-Carter widely publicized the ability of her many
fans to view her live appearance through streaming video over her social media accounts.
She has over 100 million followers on Instagram, her preferred platform and, according to
Variety, she “broke” Instagram with her pregnancy announcement (it has since been fixed).
The 45 million views reinforced her already superstar image, but sadly, YouTube did
nothing near what LiveXLive envisions to monetize these views. To YouTube owner
Google, 45 million views is just a day at the office. To LiveXLive, it would be half a year’s
business plan. Coachella is owned by Live Nation, which LiveX has a budding relationship
with. Even if it does not pick up Coachella or other mega-festivals, LiveX can and does
www.dawsonjames.com
LiveXLive Media, Inc. Page 10 of 18
embed the YouTube feed on its website, preserving some monetization capability and
building its rep as the go to platform for live music. The artists appearing at the festivals
LiveX has announced have a collective 2.2 billion social media followers. As they see
Beyoncé, and other stars, build their brand through publicizing festival streams, we expect
them to do the same, building LiveX’s brand. In turn, LiveX builds the festival’s brand so
it becomes a virtual win-win-win cycle for the artist, LiveX and the festival promoter.
That’s the dream anyway.
It also has a number of partners who have signed deals to distribute LiveXLive content
including Tencent, Twitter Live, Dailymotion and Cinedigm. It has apps for both Google
Android devices and Apple IOS devices and one the Amazon Firestick, Roku and Apple
TV devices.
LiveXLive Has Multiple Revenue Levers to Pull
The last and most critical step is to monetize the first two steps. We see six major buckets
of revenue:
1. International distribution
2. Advertising/sponsorship
3. Branded sponsors
4. Subscription
5. Ticket sales
6. Merchandising
The company is off to a great start in signing in international distribution deals and has
already signed deals with the most important media company in the most important market:
Ten Cent in China to carry LiveX’s EDC stream. These deals bring in additional revenue
with no additional cost since the company is just providing its partners with its own feed.
This feed will include proprietary LiveX branding and its own talent. The company is
already streaming festivals from the US, South America, China and Europe and so it is
building a global brand. We expect to see some modest revenue in the June quarter from
distribution, ramping over time.
Advertising/sponsorship is another major revenue source potentially, but first the company
needs to build viewership, which it is doing. The millennial market is highly sought after
since at this age, people are developing purchase habits that will last a lifetime. Consider
how banks give out credit cards like water at universities, knowingly absorbing high credit
losses, just to build customer bases. Companies in nearly every consumer category should
be attracted to advertising on LiveXLive platforms. But while the company’s customer
base is largely millennials, its programming attracts a wide demographic, with rock,
country, electronic, hip hop and jazz music events. So, it should also have an even wider
appeal to advertisers.
Branded sponsors are another category. LiveX can do virtual “wraps” of festivals using
technology and have sponsors actually brand shows on LiveX. One of its flagship projects
is its LiveZone daily program with updates on the live music scene including interviews
with artists, modelled after ESPN’s hugely successful Sports Center. In late May, when it
webcast three festivals simultaneously, it also shot pilots for 15 potential new shows. It
featured dating events at festivals as well as candid interviews with artists including its
promising “Golf Cart Confessions” series. This content leverages the camera crews, hosts
and access to talent LiveXLive enjoys at festivals, so the incremental cost is low.
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LiveXLive Media, Inc. Page 11 of 18
Subscription revenue is another source. We note that Live Nation sells annual subscription
packages to attend all of its festivals, charging $5,000 for a VIP pass, and these are all sold
out. One thing the entertainment industry has definitely learned is that consumers will pay
for content, especially millennials. In fact, most millennials subscribe to more than one
music channel, so there is plenty of room for Spotify, Pandora, LiveXLive and more. In
fact, LiveXLive should be complementary since it features live events and will increasingly
feature live events with artists. Slacker gets about 10% of its revenue today from
subscriptions, and LiveXLive added 10,000 subscribers to it in the March quarter, reversing
years of losses. While today Slacker and LiveXLive are still separate, they heavily cross
promote and we expect them to morph into a single platform over time.
Two other revenue streams are ticket sales and merchandise, but management has de-
prioritized these until at least next year. In terms of ticket sales, the LiveXLive apps will
know where you are and what kind of music you like, including specific artists. Imagine
if the app sent diehard Guns N’ Roses fans a notification when the band was coming to
their town and let them buy tickets with a tap on their phones. Again, obviously they need
to build this subscriber base up first, but if and when they do, the potential seems strong.
Merchandising should also be strong. We believe that a key benefit will be LiveXLive’s
ability to let poor millennials still be part of the in-crowd, virtually participating in live
events. What if they could get a T-shirt from the concert shipped to them the next day,
purchased via the app. It would be like they really attended the concert and they could
wear the T-shirt while everyone was still talking about it. We also note that a big part of
LiveXLive’s marketing mix is influencers, due to their strong ability to influence
millennials. So they should be able to influence millennials to buy things.
Revenue Should Ramp Quickly
In our model we break revenue out between Slacker Radio and the LiveXLive business.
In the near term, we expect the vast majority of revenue to come from Slacker. In the
December quarter, before being acquired by LiveX, Slacker posted $6.8 mm in revenue,
down 5% from the year ago period. Slacker had recently undergone a 25% headcount
reduction, and was facing challenges, so we assume that revenue will stabilize at $7 mm
per quarter FY2019 before growing 5.5% in FY2020. Management has made positive
comments about the integration of Slacker, so we could prove to be too pessimistic. We
also believe that ownership under a company with a larger strategic vision should be
inspiring for Slacker’s San Diego based workforce, whereas previously their private equity
owners were in sale and cost cutting mode.
The LiveX business had five festivals in FY2017, ended March 31, 2017 and 7 for FY2018.
It already has 27 on the books for FY2019 and we forecast 70 for FY2020.
Based on the above monetization discussion, we build a monetization per festivals
schedule. In FY 2018, revenue was just $400k from five festivals or $80k per festival. As
we noted previously, it is currently in the eyeball acquisition stage, and monetization was
not the priority in FY2018. We see this changing in FY2019 starting slowly and ramping
quickly. Some international distribution deals have already been announced and we should
see modest revenue in the current quarter. So we model $100k per festival in the present
June quarter, ramping to $2.5 mm per festival by the fourth fiscal quarter of FY 2020. As
we noted, the company has a massive ramp ahead of them. We do not break our revenue
per festival into the six buckets we discussed because at this point, we have no visibility.
Some areas may prove more successful in the future than expected, and vice versa.
However, the key takeaway is that in our opinion, LiveXLive has a solid business plan,
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LiveXLive Media, Inc. Page 12 of 18
and an untapped market, but as we note in the risks section, execution is the key risk facing
the company.
Costs Should Ramp With the Number of Festivals
We assume $500,000 in production costs per concert. The company has its own in-house
production team and relies on third party camera crew contractors. At the festivals, it uses
well known hosts, looking to elevate their own careers and pays them just $500 per day.
One of the hosts at its May festivals was Allison Hagendorf, Spotify’s global head of rock
music. Our model simply multiplies the number of festivals by $500k to get cost of goods
sold. With this cost held flat, and revenue for festival growing exponentially, LiveX should
be a profit machine. But we note, that we don’t have the festival business at breakeven,
i.e. over $500k in revenue per festival, until FY 2020.
For now, the company’s financials are dominated by Slacker. In the company’s most
recent Q it provides a pro forma with Slacker so we can see that was unprofitable, with
SG&A alone exceeding the $6.8 mm in revenue and another $1.2 mm in quarterly R&D
spend. Now some of these costs will likely come down. For example one of the things the
new CFO mentioned was bringing Slacker under LiveX’s benefits plan.
Two great things about the LiveXLive model from a financial perspective are that content
costs are lower, in fact much lower than internet radio companies. The company pays fees
to festival promoters, which it hopes to keep low as it adds value to each festival through
its streaming and social media marketing and becomes the streaming platform of choice.
Even YouTube does not do this. Once they pay this fee, they get the right to stream the
live performances of the artists who have signed agreements with the festivals. Thus this
content is cheaper than paying per song rights for songs as traditional streaming radio
companies do, and the content is unique and exclusive.
The second should be a lower CPGA or cost per gross add. This is where its influencers
and the social media accounts of the artists appearing at its festivals come in. As they
remind their collective 2.2 billion followers to watch them on LiveXLive, it should pick up
a good deal of these to be subscribers. At a subscription fee of $10 per month, the revenue
from just 0.1% of these followers would be $264 mm, and the CPGA should be negligible
with perhaps some small fees to influencers.
Longer term, out into FY 2020, our crystal ball gets murkier and we suspect, so does the
company’s. Given the astronomic growth in revenue we forecast, and the sources of
revenue we discussed, it will take money to build the business. In this case, success may
lead to higher spending if for example a particular marketing strategy proves fruitful. We
expect the company to adopt a nimble, flexible, opportunistic approach to SG&A, but do
expect it to move higher. With very little basis to go on, we model SG&A at 60j% of
revenue in FY 2020.
Our model yields $35 mm in revenue in FY 2019 surging to $147 mm in FY 2020. We
show negative operating income at negative $15.9 mm this year, flipping to a positive $23.8
mm next year.
Converting operating income to EBITDA we add run rate $1 mm per year of D&A and $5
mm per year of stock-based comp to get negative EBITDA of $9.9 mm this year, and a
strong positive $29.8 mm next year.
The company’s balance sheet is flush with $13.7 mm in cash as of the end of December
from the late December secondary offering. Debt of various forms is a manageable $8.6
mm and the Slacker deal closed before year end, so this is in there. Surprisingly, cash on
www.dawsonjames.com
LiveXLive Media, Inc. Page 13 of 18
hand just about covers the next five quarters of negative EBITDA in our model, but its
close. And remember, our model has a high level of variability given the execution
challenges both in turning Slacker around and monetizing festivals.
Given the potential of running low on cash under our model, we expect a secondary
offering in 2018. The company is building a base for this appearing at multiple investor
conferences and feeding the market a steady diet of disclosure with copious, timely
operating metrics to gauge the company’s success in near real time. For example, just a
week after the big late May festival weekend, we had the number of viewers in a press
release.
So the next challenge is valuing the company. In the figure below, we put together a range
of what we loosely call comps but the challenge is no one has done what LiveX is
attempting. ESPN may be the closest model, but megacap Disney is certainly not a comp.
Other web-based, millennial focused companies like Pandora or Twitter may be.
The comps we selected have a range of revenue multiples of 0.9x to 14.2x – quite a range
– with an average of 1.5x. We use 5x in our valuation work. On an EBITDA basis The
average is 9.0x with a range of 2.9x for Cinedigm and 49.9x for Twitter. We use 12x. On
a revenue multiple basis, that gets us a value of $3 per share on this years startup revenue,
and $15 per share on next year’s revenue, based on our less than certain forecast. For
EBITDA, there is nothing to value this year with expected negative EBITDA and $7 per
share on next year’s EBITDA at 12x. If we get a few quarters of risk reduction and
execution, we would use 15x or $9 per share and if it looks like they will even come close
to hitting our numbers, more like 20x or $12 per share. But let’s not get ahead of ourselves.
For now, this is a $4.45 stock, that we expect to move to $7 or 57% upside.
No True Comp For LiveXLive, and Our Loose Comps Have a Wide Range of Valuations
Source: FactSet Data Systems
The chart on the following page shows LIVX’s recent trading history. We ignore its
illiquid history prior to the late December secondary. A couple of things stand out on this
chart. First, it looks to have a solid base of investor support at $3.50 with the stock
bouncing off this level on eleven separate trading days this year. The theory behind looking
at support levels is that presumably one or more investors see value at that level, have
stepped in to halt declines in the past, and are still out there to do so in the future. That
would be 17% downside if we revisited support. On the other hand, on May 17 the stock
Company Fiscal Shares Market Outstanding Enterprise Value/ Value/ Value/
Name Period Price Outstanding Value Diluted Value Sales EBIT EBITDA Sales EBIT EBITDA
LiveXLive Media 12/31/2017 4.21 49.65 209.03 36.54 203.69 0.08 (9.29) (9.22) 2537.8x - -
Live Nation Entertainment, Inc. 12/31/2017 42.63 208.88 8,904.39 204.92 9,321.67 10,337.45 110.43 545.96 0.9x 84.4x 17.1x
Cinedigm Corp 03/31/2017 1.58 34.95 55.22 8.05 115.09 90.39 7.14 40.58 1.3x 16.1x 2.8x
Dolphin Entertainment Inc 12/31/2017 3.22 11.04 35.54 10.61 39.01 22.41 (0.84) 3.78 1.7x - 10.3x
Dover Motorsports, Inc. 12/31/2017 2.10 18.26 77.22 36.28 77.37 46.74 7.28 10.66 1.7x 10.6x 7.3x
Speedway Motorsports, Inc. 12/31/2017 16.70 40.97 684.12 41.04 849.46 453.59 70.12 123.90 1.9x 12.1x 6.9x
Pandora Media, Inc. 12/31/2017 7.22 256.70 1,853.35 243.64 2,085.57 1,466.81 (322.46) (259.51) 1.4x - -
Netflix, Inc. 12/31/2017 351.60 434.69 152,838.06 446.81 156,786.77 11,692.71 838.68 7,169.06 13.4x 186.9x 21.9x
Sirius XM Holdings, Inc. 12/31/2017 7.10 4,478.74 31,799.08 4,723.54 38,532.90 5,425.13 1,686.89 1,985.49 7.1x 22.8x 19.4x
Twitter, Inc. 12/31/2017 34.70 752.67 26,117.55 732.70 23,397.32 2,443.30 45.44 441.31 9.6x 514.9x 53.0x
Snap, Inc. Class A 12/31/2017 11.39 944.62 14,349.19 1,166.09 12,544.04 824.95 (3,485.58) (3,424.29) 15.2x - -
Meet Group Inc 12/31/2017 3.65 72.50 264.61 68.74 289.00 123.75 11.57 23.14 2.3x 25.0x 12.5x
Match Group, Inc. 12/31/2017 41.15 67.00 11,395.40 296.08 12,367.53 1,330.66 365.77 399.85 9.3x 33.8x 30.9x
PeerStream, Inc. 12/31/2017 6.00 6.72 40.34 6.45 36.83 24.84 (4.98) (2.85) 1.5x - -
Spotify Technology S.A. 12/31/2017 157.71 178.15 28,096.04 183.85 27,414.70 4,613.25 (426.36) (365.45) 5.9x - -
Average 1.5x 30.8x 8.9x
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LiveXLive Media, Inc. Page 14 of 18
opened at $3.80, its low of the day, and went straight up to $6.95, its close for the day,
representing a 65% gain and taking the stock into overbought territory. The stock quickly
gave most of this back the next day, but since then has settled in with higher volume and
somewhat higher prices.
LIVX Shares Still Trading Near Support Levels
Source: Company reports and Dawson James estimates
Looking ahead, we see several catalysts:
1. Management is presenting on Tuesday June 5 at the LD Micro conference, and
more conference appearances are likely to follow.
2. As we note in this report, it has an active schedule of festivals already announced,
and will likely continue to update investors with metrics on a regular basis.
a. Rock in Rio, Lisbon, Portugal, June 23 – June 30
b. Montreux Jazz Festival, Geneva Switzerland – June 29 – July 14
3. Financial progress. The company’s fiscal year is March 31 so its K is not due until
year end but even that should be uneventful with one quarter of Slacker, and no
festivals. Future Qs should show modest signs of festival revenue generation, a
turnaround at Slacker and give us a better sense of run rate expenses. By then, the
company’s now month-old CFO, should have a finely honed financial message to
guide investors with more clarity than we provided in this report.
The Key Risk is in Execution
We have tried to stress the risk factors throughout this report, but we will recap them here.
While the company has an all-star management team, a great business plan and an untapped
market, the risk is in execution. It has already retired risk by getting so many festivals on
its calendar. Now it must monetize. If it can, we see significant EBITDA materializing
given the nature of the model, but we stress the word “if”.
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LiveXLive Media, Inc. Page 15 of 18
We don’t see competition as a major risk because live music is a separate category and at
least to date, LiveXLive has the field to itself. Verizon tried with its go90 platform but it
appears that a century old phone company was unable to successfully connect with
millennials, despite enormous expenditure of resources. Red Bull Media was also in the
game but is now down to just two festivals and we believe it is likely to exit altogether,
setting it up as a potential partner for LiveXLive. YouTube does provide live steams of
concerts, but these are boring stagnant camera feeds like watching security camera footage
while LiveXLive engages with known millennial hosts and spruces its content up with
talent interviews, dating contests and more while offering messaging over its app, so the
viewer feels connected.
For now, we believe that the current low level of the stock more than factors in these risks,
and does not reflect the potential upside. Thus, we initiate at Buy.
www.dawsonjames.com
LiveXLive Media, Inc. Page 16 of 18
LiveXLive Media Income Forecast
Source: Company reports and Dawson James estimates
Dollars in thousands, except per share data 2018E 2019E 2020E
Fiscal years ended March 31 1QA 2QA 3QA 4QE YEAR 1Q 2Q 3Q 4Q YEAR 1Q 2Q 3Q 4Q YEAR
June Sept Dec March June Sept Dec March June Sept Dec March
Slacker Radio 6,500 6,500 7,000 7,000 7,000 7,000 28,000 7,140 7,280 7,420 7,700 29,540
YoY grow th 7.7% 330.8% 2% 4% 6% 10% 5.5%
Seq grow th
LiveXLive 276 124 - - 400 700 2,000 1,250 2,500 6,450 20,000 30,000 30,000 37,500 117,500
# of events 2 3 - - 5 7 10 5 5 27 20 20 15 15 70
Revenue per event $138 $41 $80 $100 $200 $250 $500 $239 $1,000 $1,500 $2,000 $2,500 $1,679
YoY grow th
Seq grow th 185.7% -37.5% 100.0% 50.0% 0.0% 25.0%
Revenue 276 372 - 6,500 7,148 7,700 9,000 8,250 9,500 34,450 27,140 37,280 37,420 45,200 147,040
YoY grow th 2687.4% 2318.4% 46.2% 381.9% 252.5% 314.2% 353.6% 375.8% 326.8%
Seq grow th 18.5% 116.9% 91.7% 115.2% 185.7% 137.4% 100.4% 120.8%
Cost of Revenue 79 72 - 151 3,500 5,000 2,500 2,500 13,500 10,000 10,000 7,500 7,500 35,000
Per festival 39 24 30 500 500 500 500 500 500 500 500 500 500
Gross Margin 197 300 - 6,500 6,998 4,200 4,000 5,750 7,000 20,950 17,140 27,280 29,920 37,700 112,040
As a percent of revenue 71.4% 80.7% 100.0% 97.9% 54.5% 44.4% 69.7% 73.7% 60.8% 63.2% 73.2% 80.0% 83.4% 76.2%
Selling General and Admin 2,288 3,754 2,618 9,000 17,659 9,240 9,000 9,075 9,500 36,815 16,284 22,368 22,452 27,120 88,224
As a percent of revenue 828.1% 1008.7% 138.5% 247.0% 120.0% 100.0% 110.0% 100.0% 106.9% 60.0% 60.0% 60.0% 60.0% 60.0%
Related Party 90 90 90 90 360 - - - - - - - - - -
As a percent of revenue 24.2% 1.4% 5.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Operating income (2,180) (3,543) (2,708) (2,590) (11,021) (5,040) (5,000) (3,325) (2,500) (15,865) 856 4,912 7,468 10,580 23,816
Operating margin -65.5% -55.6% -40.3% -26.3% -46.1% 3.2% 13.2% 20.0% 23.4% 16.2%
Interest expense (635) (759) (901) (900) (3,194) (900) (900) (900) (900) (3,600) (900) (900) (900) (900) (3,600)
Fair value of w arrants - - - - - - - - - - - - -
Earnings from investment in aff iliate - - - - - - - - - - - - -
Impairment loss - - - - - - - - - - - - -
Loss on sale of investment in aff iliate - - - - - - - - - - - - -
(635) (759) (901) (900) (3,194) (900) (900) (900) (900) (3,600) (900) (900) (900) (900) (3,600)
Pretax Income (2,815) (4,302) (3,608) (3,490) (14,215) (5,940) (5,900) (4,225) (3,400) (19,465) (44) 4,012 6,568 9,680 20,216
Taxes - - - - - - - - - - - - - - -
Net income - continuing ops (2,815) (4,302) (3,608) (3,490) (14,215) (5,940) (5,900) (4,225) (3,400) (19,465) (44) 4,012 6,568 9,680 20,216
Net income margin -1019.1% -1156.0% -53.7% -198.9% -77.1% -65.6% -51.2% -35.8% -56.5% -0.2% 10.8% 17.6% 21.4% 13.7%
Diluted shares outstanding 35,528 36,016 36,543 36,568 36,164 50,500 50,525 50,550 50,575 50,538 50,600 50,625 50,650 50,675 50,638
Seq change 487.8 527.2 25.0 13,932 25.0 25.0 25.0 25.0 25.0 25.0 25.0
EPS diluted ($0.08) ($0.12) ($0.10) ($0.10) ($0.39) ($0.12) ($0.12) ($0.08) ($0.07) ($0.39) ($0.00) $0.08 $0.13 $0.19 $0.40
EBITDA (1,562) (2,890) (1,339) (1,090) (6,882) (3,540) (3,500) (1,825) (1,000) (9,865) 2,356 6,412 8,968 12,080 29,816
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LiveXLive Media, Inc. Page 17 of 18
Important Disclosures:
Source: Metastock
Price target and ratings changes over the past 3 years: Initiated – Buy – June 4, 2018 – Price Target $7.00
Dawson James Securities, Inc. (the “Firm”) is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”).
The Firm does not make a market in the securities of the subject company (s). The Firm has NOT engaged in investment banking relationships with LIVX in the prior twelve months, as a manager or co-manager of a public offering and has NOT received compensation resulting from those relationships. The Firm may seek compensation for investment banking services in the future from the subject company(s). The Firm has NOT received other compensation from the subject company(s) in the last 12 months for services unrelated to the managing or co-managing of a public offering. Neither the research analyst(s) whose name appears on this report nor any member of his (their) household is an officer, director or advisory board member of these companies. The Firm and/or its directors and employees may own securities of the company(s) in this report and may increase or decrease holdings in the future. As of May 31, 2018, the Firm as a whole did not beneficially own 1% or more of any class of common equity securities of the subject company (s) of this report. The Firm, its officers, directors, analysts or employees may effect transactions in and have long or short positions in the securities (or options or warrants related to those securities) of the company(s) subject to this report. The Firm may effect transactions as principal or agent in those securities.
Analysts receive no direct compensation in connection with the Firm's investment banking business. All Firm employees, including the analyst(s) responsible for preparing this report, may be eligible to receive non-product or service specific monetary bonus compensation that is based upon various factors, including total revenues of the Firm and its affiliates as well as a portion of the proceeds from a broad pool of investment vehicles consisting of components of the compensation generated by investment banking activities, including but not limited to shares of stock and/or warrants, which may or may not include the securities referenced in this report. Although the statements in this report have been obtained from and are based upon recognized statistical services, issuer
reports or communications, or other sources that the Firm believes to be reliable, we cannot guarantee their accuracy. All
opinions and estimates included in this report constitute the analyst’s judgment as of the date of this report and are subject to change without notice.
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LiveXLive Media, Inc. Page 18 of 18
Information about valuation methods and risks can be found in the “VALUATION” and “RISK FACTORS” sections of this report.
The securities of the company discussed in this report may be unsuitable for investors depending on their specific investment objectives and financial position. This report is offered for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. Additional information is available upon request.
Ratings Definitions:
1) Buy: the analyst believes the price of the stock will appreciate and produce a total return
of at least 20% over the next 12-18 months; 2) Neutral: the analyst believes the price of the stock is fairly valued for the next 12-18
months; 3) Sell: the analyst believes the price of the stock will decline by at least 20% over the next
12-18 months and should be sold.
The following chart reflects the range of current research report ratings for all companies followed by the analysts of the Firm. The chart also reflects the research report ratings relating to those companies for which the Firm has performed investment banking services in the last twelve months.
Analyst Certification:
The analyst(s) whose name appears on this research report certifies that 1) all of the views expressed in this report accurately reflect his (their) personal views about any and all of the subject securities or issuers discussed; and 2) no part of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this research report; and 3) all Dawson James employees, including the analyst(s) responsible for preparing this research report, may be eligible to receive non-product or service specific monetary bonus compensation that is based upon various factors, including total revenues of Dawson James and its affiliates as well as a portion of the proceeds from a broad pool of investment vehicles consisting of components of the compensation generated by investment banking activities, including but not limited to shares of stock and/or warrants, which may or may not include the securities referenced in this report.
Ratings Distribution # of Companies % of Total # of Companies% of Total
Market Outperform (Buy) 19 86% 6 100%
Market Perform (Neutral) 3 14% 0 0%
Market Underperform (Sell) 0 0% 0 0%
Total 22 100% 6 100%
Company Coverage Company Coverage