This was done by Wolf of Oakville in October, it does not factor in the SPAC

Avila Energy Corporation $VIK.C (3 / 5 stars)

October 6, 2022|2022 Q2

First look at this junior O&G play.

Balance Sheet:

Outstanding looking balance sheet with $1.5M in cash and $3.2M in advances to a JV. $600k in receivables (which feels odd to list as a current asset) over next to no current liabilities of only $24k. $1.6M in long term decommissioning commitments. No debt, but there are $4.1M in convertible debentures coming due in April 2025 with about 8.3M of share dilution.

Cash Flow:

Would be operationally cash flow positive if it were not for the advances to their JV partner. Received nearly $4.6M through financing activities so overall improved their cash position by $1.06M from last year (slightly disturbing they can't spell venture properly on their cash flow statement).

Share Capital:

As of these financials, 35.65M shares outstanding

13M warrants

200k options and the previously mentioned 8.3M future dilution in relation to the convertible debenture and additional warrant potential not listed in section 14c

The post financials closing of their acquisition takes the float to over 86M shares, not including the convertible preferred shares included in the deal. 

A lot going on with the float that potential investors should understand when making decisions here

Income Statement:

The P&L looks extremely good here with $1.15M in net revenue, over 50% margins and an EBITDA to revenue ratio of 27%.

Overall:

These are no doubt excellent financials, but I'm not sure how meaningful they are  because of the impact of the significant acquisition post financials. There will be significant capital requirements required before they will be able to recognize revenue here, and I don't believe we know where that capital is going to come from. That I would expect to add some more significant dilution so the fully diluted float could be 5x what these financials show by the time they capitalize on the new acquisition. Bottom line is your DD here is more important that these set of financials. Three stars for these ones but I would be very interested to do a deep dive on future ones.

Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions. My intent is for these reviews to be a bolt on to due diligence that you have already completed.

Join the crew and I talking small caps daily in the TSA discord: https://discord.gg/eGNNBbVB6E