Company’s get typecast by investors all the time and CAVU Resources Inc. (OTCMKTS: CAVR) is no different. We asked a handful of CAVR shareholders to describe the company in a couple of words and got about 3 to 4 different answers. Some shareholders look at CAVU Resources as a developer and builder with tangible assets. Others that see the long-term vision look at it as a lifestyle brand with a central theme around staying healthy with its new fitness climber. One more investor was looking at it as a technology company leading with its SoKu app. The topic greatly overlooked by investors is CAVU’s online education platform slated for launch in summer 2021.
Regardless of the type of investor CAVR is a bottoms-up investment, a technology investment, and a green-friendly investment all at the same time. There is something for everyone but the fundamentals are in place for CAVU Resources to be a big winner in the coming year. They anticipate 15+ million in sales, from blue-chip customers like Toll Brothers (NYSE: TOL) and TRI Point Homes (NYSE: TPH) and will launch a social app that could complete with Match Group (NASDAQ: MTCH) and an innovative immersive fitness machine that gives Peloton (NASDAQ: PTON) a run for its money.
About CAVU Resources – 4 Business Silos
CAVU Resources Inc. is a synergistic suite of technology-driven companies that create a lifestyle brand targeting the Millennial and Gen Z demographic to support how people Live, Learn, Socialize, and Stay Healthy.
Live – CAVU Resources, through its wholly-owned subsidiary Sinacori Builders, is a technology-driven real estate company with more than 13 million dollars in assets and over 11 million dollars in secured contracts/closings in 2020. This CAVU subsidiary has a strong foothold in Charlotte, North Carolina, and is expanding its footprint throughout the Southeast. The Company plans on growing its brand and enhancing shareholder value by leveraging its connections with the country’s top builders (Toll Brothers, Ryan Homes, TRI Pointe Homes) to become a national player. Their goals are sustainable communities where like-minded people want to live, work, and play while aspiring to make healthy lifestyle choices that promote eco-living and growing their own organic foods and herbs.
Learn – In partnership with Lightspeed VT, the company is launching a disruptive online education platform in Summer 2021. Lightspeed VT is the most advanced interactive training system on Earth used by such names and businesses as Zig Ziglar, UFC, Top Chef, Tony Robbins, Grant Cardone, Daymond John, Jon Taffer, and many more. They are currently writing the curriculum for the academy. For the kids, they plan on using other child actors like Wyatt McClure from Young Sheldon to be the instructors. This technique will drive engagement and lead to better learning. CAVU Resources ultimately wants to brand the “Growing Together Academy”, an online education platform to be launched in partnership with Brad Lea.
Socialize – The company’s wholly-owned subsidiary KushAmerica is launching its Social App “SoKu” in April 2021. It’s the brainchild of CAVR’s CTO Shaun Fuller. The initial focus of SoKu was a chilling out app for people that enjoyed cannabis but it has since morphed into an app that can bring people together from different lifestyles. Social following features are similar to TikTok. The core feature of the platform is a customizable avatar that allows safe yet real interaction. The avatar can be customizable to the point where it visually tells things about the person and even looks like you but it is not required to look like you so it has a level of anonymity. Kush coins allow for in-app customization and are another source of revenue. The app then matches you with people to chat with based on your preference. The company introduced the idea of social circles to get away from a pure cannabis theme so everyone can use it.
When a match is made on the platform it is engaging because you have avatars talking to each other in a meeting room instead of boring raw text. In order to continue a connection, both people need to hit the connect button after a minute otherwise a new chat partner is found. If people are connected then both people can see the profile of the other person which included friends on other social media platforms. The meeting rooms themselves are where the advertising resides with billboards in the background behind the avatars talking. They are starting off building their user base with localized communities with college campuses. Social influencers are also a big part of the marketing plan. A complete discussion of the app was on the October 1, 2020 shareholder update.
Stay Healthy – The Drip is an innovative interactive fitness climber designed by CEO Bob Silver. The Drip technology and intellectual property are patented. Major athletes are getting involved in launching the project. The concept is similar to the versaclimber which gives you a high-intensity full body cardio workout. The commercial-grade products of versaclimber retail for $5300 versus the drip which is expected to retail for $1600. The drip could be a very disruptive force in this market.
Core Business – Sinacori Builders
Sinacori Builders is a regional land developer and builder headquartered in Charlotte North Carolina. The bulk of the CAVU Resources revenue comes from Sinacori Builders. This type of business has lumpy sales from quarter to quarter and it takes time for a pipeline of business to build up. Like most businesses, Sinacori was affected by the pandemic, but it wasn’t catastrophic. The strength of their business model was their diversification in big and small projects because they found a way to adapt. The company develops land and can profit by selling to builders or the company can keep the land and lease the land to builders who are in the business of building a house with the intention to rent it versus sell it. They are also custom home builders and have been known to build on some of the choice lots within their own development. The quality of their works is exceptional as they target the high-end market. Sometimes the most lucrative lot is the last one built. They also build communities and that strikes at the core of CAVU Resources guiding principle.
The 37 story “Skygarden” tower is expected to house 362 apartments. It is a marquis project that will impact the skyline of the city and give many residents an incredible view of downtown. One of its key features will be its sky garden loathed on the top floor. The Charlotte Observer called the project “The pearl of Plaza Midwood, and it will be the center point of the neighborhood.
In their deal with TRI Point Homes (NYSE: TPH) they close to doubled the size of the development. The new deal calls for 26 lots consisting of 24 townhome lots and 2 single-family lots. The value of the deal is $4,472,000. They also have a TOL deal for $5.8 mill consisting of 129 lots.
Climber Exercise Machine
They took a great idea of a climbing machine and simply made it better and patented their design. The patented improvements like a more durable belt versus a knock-off chain version that makes a clunking noise. It’s called The Drip and it’s part of a large overarching theme tied to their rollout of a studio called sweat. They don’t want to be in the machine business they want entrepreneurs who buy the machines to subscribe to the studio concept. They plan on franchising it whereby you buy 8 machines and the franchise fee is waived. They anticipate spending $250,000 to roll out the product and the launch in the coming year. The machines are going to sell for $1600 and they have a 50% gross margin. This was talked about on the October 22, 2020 fact series video.
The thing that isn’t talked about is the new CLMBR machine backed by JayZ and Novak Djokovic, the number one tennis player in the world. They have a patent-pending design, they have an all-star board of directors, they have product ambassadors like Chauncey Billups, Parker Spencer, Lance Kendricks, and Casey Mears. They got a lot of money and talent invested in it so how on earth would CAVR compete with a machine that is supposed to give Peloton (NASDAQ: PTON) a run for its money?
Before we answer that, investors need to ask what don’t they have? If you guessed a patent. Then you hit the nail on the head. They have a “patent pending” and if you look closely at the machine you can’t really tell if there is a belt drive in it but if there is, who has that patent? The point for investors is that IF there is infringement it’s going to be cheaper to pay a royalty on every machine to CAVR than shut down the business. It is almost a lottery ticket for CAVR shareholders with a read-out in the next couple of months as it has been 22 months since the provisional patent was filed on May 31, 2019, and shareholders could find out if there is any conflicting language very soon. Stay tuned, CAVR could evolve into a patent play.
The company has a market capitalization of around $20 million assuming 1.417 billion shares outstanding. There are approximately 440 million shares held at DTC and 928 million restricted shares primarily held by management and affiliates. Their share count is near their authorized limit (1.5 billion) so they are effectively unable to finance operations via dilutive equity transactions. This is good because the company has no toxic debt on its books and has a book value of $.004/share with $6.1 million in stockholders equity. In a private transaction that closed on March 2, 2020, the company bought back all of its preferred A shares (118,007,477 common) and returned them to the treasury.
The balance sheet is showing $13.1 million of assets sitting on the books. The company is profitable and has EPS of $.0006 for their latest quarter. The executives are taking NO Executive Compensation which goes to show the tremendous belief they have in the company. In the future, if the company wants to raise equity it’s likely that management will have a massive share reduction in exchange for preferred convertible stock. With the recent news of project financing for its tower project, it appears that CAVR will continue on its non-dilutive pathway.
Given the tremendous ramp in sales, it’s very reasonable to expect that the company could do $20 million in revenues in 2021. General building contractors trade at a multiple of 1.5X in the private market so a multiple of 3 for a public company with so many upside verticals seems very conservative. This represents a conservative 6-month price target of $.042 on just the building business. Should the company launch any of these other verticals and start to get traction the stock could move significantly higher.
Now that the company is over $.01 they are eligible to uplist from pink to OTCQB, but they do not meet the requirements of a reporting company. Some of the upgrades they have been making are with respect to building up their board of directors. They still have control but recent discussions on the conference calls indicate they are looking for independent directors which could mean a much bigger uplisting to a major exchange.
The management team consists of CEO Bob Silver and Russ Sinacori the COO. Bob has a long track record of entrepreneurship with an emphasis in entertainment. He is currently the agent of a 12 yr old actor that stars on the CBS show Young Sheldon. He also has many music contacts and is trying to leverage them in helping him market his SoKu App when it launches.
Russ represents the corporate knowledge behind Sinacori Builders. He has relationships with many of the national builders like Toll Brothers, looking to build on developed parcels of land. He has the experience to negotiate and get the land ready for sale.
Active Shareholder Community & CEO Communication
The shareholders are active on Investors hub and also have their own chat groups. The company does conference calls and there are consistent numbers of followers that watched “the Facts Series” which was 5 weekly webinars that really informed shareholders about what the company was doing and the progress they were making. The CEO keeps shareholders updates on Twitter and augments some of the press releases with pictures of progress and new developments.
The strength of the underlying development and building operation is helping incubate new verticals aligned with the company’s vision. New revenue streams will come from the new verticals, but the underlying business is growing and is sustainable due to some new financing partners. The education business has tremendous potential and you could almost call CAVR a “Stay-at-Home” stock that really hasn’t moved during the run-up. Some expected updates in this area could really attract shareholder interest. The apps are ready to go mainstream and could come out of beta test mode at any moment. The climber machine is akin to a lottery ticket, but the odds are stacked in your favor because it’s 50/50. They either got the patent before CLMBR or they didn’t. The management team behind the company is keenly focused on creating shareholder value and sustainable growth. They have stabilized the company’s revenues and earnings and put them on a positive trajectory and capitalized on short and long-term opportunities with significant upside for investors. This upside is unquantifiable, but the building division is quantifiable with a target of $.04 – $.06 in the next 6 months. When the company announces projections in short order this stock is poised to run because sales have ramped very quickly and projections will give investors a better way to value the company.
WHEN INSIDER FINANCIAL HAS A STOCK ALERT, IT CAN PAY TO LISTEN. AFTER ALL, OUR FREE NEWSLETTER HAS FOUND MANY TRIPLE-DIGIT WINNERS FOR OUR SUBSCRIBERS. WE SPECIALIZE IN FINDING MOMENTUM BEFORE IT HAPPENS!
Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.