Input Capital (TSXV: INP) â Initiating Coverage - First ... - Baystreet.ca

Siddharth Rajeev, B.Tech, MBA, CFA 

Analyst 

Daniel Iwata, BA 

Research Associate 

August 1, 2013 

Input Capital (TSXV: INP) – Initiating Coverage - First Agriculture Streaming Public Company in 

Canada - Focus on Canola 

Sector/Industry: Agriculture 

www.inputcapital.com 

Market Data (as of August 1, 2013) 

Current Price 

C$1.75 

Fair Value 

C$3.00 

Rating* 

BUY 

Risk* 

4 (Speculative) 

52 Week Range N/A 

Shares O/S 35,577,273 

Market Cap 

C$62.26 million 

Current Yield 

N/A 

P/E (forward) 41.2x 

P/B 2.7x 

YoY Return 

N/A 

YoY TSXV -21.8% 

*see back of report for rating and risk definitions 

Financial Summary (FYE - Mar 31) 

Investment Highlights 

• Input Capital (“Input”) is an agriculture streaming company. The company 

advances funds to farm operators, and in return receives the right to purchase a 

set amount of tonnage of the crop produced every year, at a low fixed price, for 

5 – 7 years. Input may also purchase additional tonnage from farm operators 

based on the farmer’s annual yield performance. 

• The current focus is on canola, which is Canada’s largest crop by revenue. 

• Input went public on July 22, 2013. 

• Input’s management has extensive experience in the agricultural industry. They 

have operated three canola investment funds, and currently operate the 

Assiniboia farmland fund. 

• Input does not take any operational control in the farms. They have no exposure 

to operating or capital cost overruns. Their exposure to crop yield volatility is 

protected through crop insurance. The primary risk for Input is their exposure to 

Canola prices. 

• Input offers farm operators many benefits over traditional agriculture financing, 

including longer terms, flexibility in structure, etc. Most importantly, Input 

allows farmers to raise capital without issuing debt or equity. 

• Management raised $24.35 million (gross) in November 2012, and reports that, 

as of early July 2013, $19 million has been deployed in streaming contracts. 

Risks 

• Expected returns will drop, or rise, if any of the inputs used in our base case 

scenario move unfavourably, or more favourably, respectively. 

• Deployment of capital in a timely manner is crucial. 

• Returns are very sensitive to the price of Canola; low prices could adversely 

affect Input’s income stream. 

• There is no prior history of agriculture streaming business returns. Input, to our 

knowledge, will be the first agriculture streaming company. 

• The farmers may breach their streaming contract. 

• New streaming companies may enter the market. 

• Input may raise additional capital through share issuance, which may dilute 

current equity holders. 

2012 2013E 2014E 

Capital Deployed $ 6,000,000 $ 19,500,000 $ 25,282,288 

Revenues - $6,581,250 $8,532,772 

EBIT Margin N/A 32% 36% 

Net Income $ (369,606) $ 1,555,813 $ 2,250,632 

EPS (basic) $ (0.03) $ 0.04 $ 

0.06 

Total Assets $ 24,167,799 $ 25,752,011 $ 28,129,492 

ROE N/A 6.34% 8.51% 

Input Capital Corporation focuses on providing farm operators with capital through streaming contracts. The company was 

founded in 2011, and began operations in late 2012. We expect revenues and net income of $7M and $1.6M (EPS: $0.04) in 

FY2013. 

© 2013 Fundamental Research Corp. “10 Years of Bringing Undiscovered Investment Opportunities to the Forefront “ www.researchfrc.com 

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT

Page 2 

Overview 

Previous funds 

operated by 

management 

Input Capital Corporation (“Input”), headquartered in Regina, Saskatchewan, was founded in 

October 2011, and started operations in late 2012. Management claims Input is the world’s 

first agriculture streaming company. Through streaming contracts, Input advances funds to 

farm operators, and in return, receives the right to purchase a fixed tonnage of canola, for no 

payment or a low fixed price, for a term of 5-7 years. Input engages in a number of 

mitigating strategies to limit the volatility of farming and non-delivery by the farmer. As of 

June 30, 2013, management states Input has raised $24.35 million through private 

placements, and deployed $19 million. Input’s shares started trading on the TSX Venture 

Exchange on July 22, 2013. 

Management of Input Capital also currently runs Assiniboia Capital Corp., which is a Regina 

based investment company. Assiniboia Capital Corp. was founded in 2005, with the launch 

of the Assiniboia Farmland Limited Partnership. The Farmland LP is one of the largest 

farmland fund in Canada, and has approximately 115,000 acres owned and under 

management. According to management, the farmland fund has returned a 20.2% IRR (net 

of fees) since inception. Assiniboia consisted of four separate LPs that were combined into a 

single entity in 2009. The December 31, 2010, audited statements for Assiniboia reported a 

Net Asset Value (“NAV”) of $30.30. The December 31, 2012 statements showed the NAV 

increased to $51.75. 

Management has previously operated three Limited Partnership (“LP”) private funds that 

invested in canola. These businesses had a very different model than Input. They were one 

year joint ventures with farmers, where the fund received a percentage of the crop yield for 

that year. This exposed the fund to volatility in yield due to weather, harvest, etc. The three 

LPs were formed in 2009, 2010 and 2011, and raised a total of $7.1 million. Returns data for 

the LPs are not available as they were private funds. However, as discussed below, the high 

percentage of investors who transferred their units to Input Capital, we believe, indicates 

they were satisfied with their investment. 

LP unit holders were given the opportunity to convert their LP units into Input Capital shares 

in November 2012. At this time, the LPs had no business operations, their assets consisted 

only of cash and receivables. The majority of the investors in LP2 (87.1%), and LP3 

(90.8%), transferred their units into Input Capital. LP1, however, transferred only 25% of 

units into Input Capital, which is due to one large investor who controlled over 70% of the 

fund not transferring their shares. For LP 2 and 3, the cash and receivables held by the LPs 

were transferred to Input Capital. Cash and receivables of LP1 will be transferred as LP1 is 

still in the winding down process. 

Streaming 

business model 

Management states that the ‘streaming structure’ concept was derived from their 

experience operating the three previous canola funds, and the business model of 

established metals streaming businesses. Some of the key factors for creating a streaming 

public company are: 

• Farm operators prefer long-term capital commitments. 

• Management wanted to establish a permanent capital base instead of a 

partnership/fund structure where investors could redeem. 



Page 3 

• Public company status gives better access to capital. 

• There was more operational involvement for management in the joint ventures. With 

a streaming contract, management takes no operational control in the farm. 

The streaming business model and the differences between agriculture and metal streaming 

are discussed below. 

What is streaming 

There are many notable streaming companies in the metals industry as it is a popular way for 

companies to raise capital without taking on a large degree of debt or diluting shareholders 

through equity financings. Due to the high capital expenditure requirement for mines, metal 

streaming contracts allow for upfront payments in exchange for a portion of the metal mined 

in the future. Notable streaming companies in the mining industry include Silver Wheaton 

(NYSE: SLW; market capitalization - US$8 billion), Franco-Nevada Corporation (NYSE: 

FNV; market capitalization - $7 billion), Sandstorm Gold (TSX: SSL; market capitalization - 

$640 million), etc. These metal streamers trade at high P/E ratios, and P/CF, because of 

their high earnings and cash flow projections in the future. They also have very strong 

EBIT margins, as shown in the table below. 

Company Ticker Price 

Price/ 

Diluted EPS 

before extra P/CF Revenue (mm) EV ($, mm) EBIT Margins 

Sandstorm Gold TSX: SSL $ 6.11 43.7 15.6 55.9 547.6 37.9% 

Silver Wheaton TSX: SLW $ 23.73 17.2 12.0 886.2 8,989.5 70.6% 

Franco - Nevada Corp TSX: FNV $ 44.42 41.8 22.2 445.4 5,200.7 34.4% 

Royal Gold Nasdaq: RGLD $ 50.59 35.6 20.6 292 2,635.4 60.1% 

* Stock prices as of July 29, 2013 

* Revenue and EBIT margins for year ended December 31, 2012 

* P/Diluted EPS based on FY2013 estimate 

- Source: Capital IQ 

The following lists some of the benefits Input has over metal streamers. 

• Once capital is deployed, Input receives a return in the first year. For most metal 

streaming contracts, once capital is deployed, a mine and/or necessary infrastructure 

needs to be constructed, which can take years before the project sees cash flows. 

• Crop insurance provides protection against yield volatility. Metal streams have no 

insurance to guarantee a set amount of product. 

• Input Capital deploys their capital within the western provinces of Canada. Mining 

streamers, listed above, deploy capital worldwide, which increases political risks. 

The major downside to agriculture streaming is the life of the contract. For the initial 

payment, mining contracts are usually for the life of the mine, which can be 20+ years. Input 

has short-term contracts that need to be renewed every 5-7 years. Despite this, we feel that 

the relationships Input will build with their operators (during the 5-7 year term) should lead 

to high renewal rates. Mines also have a finite life, where farms can continually produce, 

leading to good long term renewal prospects for Input. 



Page 4 

We feel that Input has a very strong management team, and board of directors, with 

experience in agriculture and finance. We also feel they have specific canola farming 

knowledge to successfully operate Input. 

Management 

Bios 

Brief biographies, as provided by management, are presented below: 

Doug Emsley- Director, President, and CEO 

Mr. Emsley is the President, Chief Executive Officer and Chairman of Input. He also serves 

in a similar capacity at Assiniboia Capital Corp., which currently manages a $150 million 

portfolio of Saskatchewan farmland on behalf of investors in Assiniboia Farmland Limited 

Partnership, which owns and rents approximately 115,000 acres of Saskatchewan farmland 

to farmers. Mr. Emsley has a wide array of business and professional experience. He is the 

President of Emsley & Associates (2002) Inc., which operates an executive business centre 

in downtown Regina, Chairman and CEO of Security Resource Group Inc. (an IT and 

physical security firm), and Sabre West Oil & Gas Ltd. (an oil & gas company). Mr. Emsley 

previously built Vision Security & Investigations Inc. into the largest security firm in 

western Canada, before selling the company to Securitas Canada Limited. Mr. Emsley has 

also been appointed as a director of Information Services Corporation (TSX: ISV) 

Mr. Emsley is a director of the Bank of Canada, Greenfield Carbon Offsetters Inc., a 

start-up involved in the creation of carbon credits, the Public Policy Forum, and of the 

Saskatchewan Roughrider Football Club. He was previously a trustee of Royal Utilities 

Income Fund (RU.UN-T), then a TSX-listed income trust involved in the mining of thermal 

coal in western Canada, where he also served as Chair of the Audit Committee. Mr. Emsley 

has an MBA from York University in Toronto. 

Brad Farquhar: Director, Executive VP and CFO 

Mr. Farquhar co-founded Input and Assiniboia Capital Corp. with Mr. Emsley and serves as 

Executive Vice-President and Chief Financial Officer to both companies and as a director to 

Input. Mr. Farquhar is a trained financial planner and has completed the Canadian Securities 

Course of the Canadian Securities Institute. He received a Master of Public Administration 

degree in Electoral Governance from Griffith University in Australia, studied political 

science at Carleton University, and completed a Bachelor of Arts in Liberal Arts at 

Providence College. He has been engaged as an international consultant on matters related to 

the conduct of elections in Central Asia, the Middle East, and the Caribbean. He has also 

been a part-time faculty member in the Department of Political Science at the University of 

Regina. Mr. Farquhar previously served as Executive Director of the Saskatchewan Party (a 

political party forming the Official Opposition in Saskatchewan), and as Executive Assistant 

to the Leader of the Opposition in Saskatchewan. 

Mr. Farquhar is a Director of Greenfield Carbon Offsetters Inc., a start-up involved in the 

creation of carbon credits, the Frontier Centre for Public Policy, and Chair of the board of 

directors of SIM Canada. He is a former director of the International Centre for Human 

Rights and Democratic Development and the Regina & District Chamber of Commerce. 



Page 5 

Gord Nystuen – Vice-President, Market Development 

Mr. Nystuen is currently the Vice-President, Market Development of Input. He has played an 

important role in the development and growth of Input’s canola streaming business. He has 

an extensive background in a variety of senior roles in the Saskatchewan Government, 

including Vice-President, Corporate Affairs, at Saskatchewan Power Corporation, Deputy 

Minister of Agriculture, Chief of Staff to the Premier, Chairman of Saskatchewan Crop 

Insurance Corporation, and a variety of other roles in transportation, gaming, health, and 

finance. He has also been a director of the Saskatchewan Trade & Export Partnership 

(STEP), and the Saskatchewan Agrivision Corporation. Prior to his roles in government, Mr. 

Nystuen had a background in commercial and agricultural lending. Mr. Nystuen is a director 

of Avena Foods Ltd., a specialized oat processor based in Regina. He grew up on a farm near 

Naicam, Saskatchewan, and is a partner in Golden Acres Seed Farm. In 2009, Mr. Nystuen 

managed a project for Assiniboia Capital Corp. on behalf of a large corporate client 

conducting a $20 million land acquisition program in Saskatchewan. 

Board of 

Directors 

David A. Brown, Q.C. – Director 

Mr. Brown is Counsel at Davies Ward Phillips & Vineberg LLP. Mr. Brown served as 

chairman and Chief Executive Officer of the Ontario Securities Commission (OSC) from 

April 1998 to June 2005. Prior to joining the OSC, he was a senior corporate law partner 

with a predecessor firm to Davies Ward Phillips & Vineberg for 29 years, focusing on 

mergers and acquisitions, corporate finance and reorganization. He is a Director and Member 

of the Funds Advisory Board at Invesco Trimark Group of Mutual Funds and a Member of 

the Investment Advisory Board at Westerkirk Capital Inc. In addition, Mr. Brown is a 

member of the Dean’s Advisory Council at the Wilfrid Laurier School of Business and 

Economics, the founding chair of the Council of Governors for the Canadian Public 

Accountability Board, and a standing Member of the Audit and Assurances Standards 

Oversight Council. Mr. Brown is a past chair of the Technical Committee and a member of 

the Executive Committee of the International Organization of Securities Commissions. He 

was appointed Queen's Counsel in 1984, a member of the Order of Canada in 2009 and he 

received the Queen’s Jubilee Medal in 2012. Mr. Brown received an honorary doctorate of 

laws from McMaster University in 2005, his LL.B from the University of Toronto in 1966 

and his Bachelor's degree in Civil Engineering from Carleton University in 1963. 

David Laidley –Director 

Mr. Laidley is Chairman Emeritus of Deloitte LLP (Canada), an audit and financial services 

firm, where he was a partner from 1975 until his retirement in 2007. Mr. Laidley served as 

Chairman of Deloitte & Touche LLP from 2000 to 2006 and during that time, he also served 

on the Global Board of Deloitte Touche Tohmatsu as well as its Governance Committee and 

he chaired its Audit Committee. As a chartered accountant, he has enjoyed a distinguished 

career spanning 40 years with Canada’s largest professional services firm, with 

specialization in its tax and audit practices. Applying his background in tax, he has 

counseled many clients in the areas of corporate reorganizations, acquisitions and 

divestitures. Mr. Laidley serves on the boards of Aimia Inc., EMCOR Group Inc., ProSep 



Page 6 

Inc., Bank of Canada, Nautilus Indemnity Holdings Limited (where he is Chairman), and on 

a number of other boards of private institutions and foundations. Mr. Laidley is a Fellow of 

the Ordre des comptables professionnels agréés du Québec (CPA) and holds a Bachelor of 

Commerce degree from McGill University. 

Dr. Lorne Hepworth – Director 

Dr. Hepworth is President of CropLife Canada, the national trade association representing 

developers, manufacturers and distributors of plant science innovations for use in agriculture, 

urban and public health settings. Dr. Hepworth is currently the Chair of the Board of 

Genome Canada, a member of the Board of CARE Canada and on the Canadian 

International Food Security Research Fund Scientific Advisory Committee. He is also a 

member of the Independent Review Committee for Assiniboia Farmland Limited 

Partnership. He recently served on the Expert Panel on Sustainability Management of Water 

in Agriculture. He has served as a member of the Advisory Board of the National Research 

Council of Canada, Plant Biotechnology Institute, the Canadian Agri-Food Research 

Council, the federal Pest Management Advisory Committee and National Biotechnology 

Advisory Committee. A graduate of the Western College of Veterinary Medicine at the 

University of Saskatchewan (1971), Dr. Hepworth was a veterinarian in Alberta and 

Saskatchewan until 1982, when he was elected to Saskatchewan’s Legislative Assembly. He 

subsequently served nine years in Cabinet, during which he was minister of Agriculture, 

Education, Finance, and Energy and Mines. From 1993 to 1997, he held several executive 

positions with the Canadian Agra group of companies specializing in agri-food/feed 

production, processing and marketing. 

Agriculture as 

an Asset Class 

The following discusses the key features of investing in agriculture. 

Diversification benefits: The correlation (December 2010 – April 2013) between soybeans 

and the S&P 500 is 0.29, which indicates that soybeans offer good diversification benefits. 

We feel that soybeans and canola are highly correlated because they have similar 

applications. The charts below illustrate the above two points. 

Source: Capitalogix 



Page 7 

Source: Barchart 

Inflation: Intuitively, soybeans/canola should provide a hedge against inflation, similar to 

asset categories, such as land and commodities. However, various studies that analyzed the 

price of soybeans from 1960-2012, have shown that there is no statistically significant 

relationship between inflation and soybean prices. 

Strategy/Process 

The following presents an overview of the streaming process: 

Input enters into a contract with a farmer, whereby Input advances capital to the farmer for a 

term of 5-7 years. In return, Input receives the right to purchase a set amount of tonnage 

(“base tonnage”) at a fixed price. The fixed price, based on management’s current estimates, 

can be anywhere between $0 and $100 per tonne. Input may also purchase “bonus tonnage” 

from the farmer at the same set fixed price. The bonus tonnage will be based on the excess 

yield over the farmer’s long run average yield. The following diagram illustrates the typical 

process. 



Page 8 

Source: FRC 

Input 

Streaming 

Contracts 

The first step in the streaming contract process is adequately capitalizing the farmer so they 

can optimally farm their land. Management generally wants the farmer to have $300 per 

acre of working capital, which they feel is the cost to optimally farm each acre. They will 

look at the farmer’s finances, historic yield, and conduct a financial analysis to structure a 

contract that is acceptable for both parties. After Input has an idea of the capital 

requirements required by the farmer, they will use a conservative canola price, and determine 

the amount of annual tonnage required to generate at least a 20% return. 

Estimated expenses incurred by a typical canola farm operator, according to the Ontario 

Ministry of Agriculture and Food (“OMAF”), are shown in the table below. Keep in mind 

that farming costs in Saskatchewan and the western provinces may have slight variations. 

As shown in the chart, fertilizer is the largest expense in farming, followed by seeding. We 

feel that the $300 per acre working capital target Input has set would meet the needs of the 

majority of farmers. It would also allow some additional capital for unexpected expenses. 

Keep in mind, that streaming contract financing may decrease some of these costs (for 

example, because financing is received upfront, the farmer can make better purchase timing 

decisions with regard to items like fertilizer). 



Page 9 

Source: Ontario Ministry of Agriculture and Food 

. 

An example of a streaming contract is shown below for a $1 million initial payment. Based 

on the price of canola less annual payments (fixed price), an annual base tonnage is set. 

Farms usually only have a percentage of their land seeded with Canola, but can use the initial 

payment for the whole farm. On average, Input will require 0.52 tonnes of canola per acre 

per year from the farmer. Over the last 5 years, the average tonnes per acre per year 

produced in Canada was 0.75 tonnes, indicating that Input receives approximately 70% of 

the total production (as per this example). Since 1990, the lowest annual tonnage per acre in 

Canada was 0.49 tonnes, indicating that the 0.52 tonne mark provides good coverage for 

Input’s yield. 

Initial Payment $1,000,000 

Contract Length (years) 5 

Canola Price ($/t) less fixed annual payment $ 400 

Annual CF required for a 20% IRR $335,000 

Base tonnes required 838 

Farm Size (Based on a $300 per acre initial payment) 3,333 

Canola Acres (based on average) 1,600 

Tonnes of canola per acre due to Input 0.52 

Average tonnes per acre over last 5 years (Canola Council) 0.75 

Yield coverage (Yield due to Input/Average yield) 70% 



Page 10 

Expected cash flows from the above contract: 

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 

Initial Investment $ (1,000,000) 

Canola Produced by the farm (tonnes) 1,200 1,200 1,200 1,200 1,200 

Canola to Input (base tonnes) 838 838 838 838 838 

Cash flow to input $ 335,000 $ 335,000 $ 335,000 $ 335,000 $ 335,000 

The above cash flows would return an IRR of 20%. 

Benefits of 

streaming 

contracts 

Currently, farmers use traditional farm financing options, the most notable being Farm 

Credit Canada, The Canola Cash Advance from Agriculture Canada, institutional lenders 

such as large banks / credit unions, equipment leasing companies and loans through 

manufacturers (such as John Deere (NYSE: JD) etc. 

The Canola Cash Advance is a low cost financing method available from the advance 

payment program offered by Agriculture Canada. The cash advance is available at different 

parts of the harvest cycle, but mainly right before seeding or at the completion of seeding. 

The cash advance has a maximum of $400,000, which does not provide for enough capital 

for larger farms. 

We feel that Input offers an attractive offering for farm financing over traditional sources 

because it does not require the farmer to give up equity or incur additional debt. A few other 

key benefits of the streaming model, for farmers, are discussed below. 

• Maximize output 

Input’s streaming contracts allow farmers to expand their asset base, and optimally farm 

their acreage. Funds must be used for farming related expenses including purchase new 

equipment, seed more acreage, hire more staff, hire an agrologist, etc. 

• Long-term agreements 

Input offers a long-term financial solution for farmers looking to expand their operations. 

Financing from competitors are usually for one year or the life of the harvest. With a 

long-term contract, farmers can focus on growing and maximizing their operations 

without worrying about securing financing every year. We feel this is a significant 

advantage over other financing options. 

• Can buy inputs (fertilizer, pesticides, etc.) at off-market times 

The inputs used for farming such as fertilizer and pesticides are produced year around 

and due to seasonal lows in demand, inputs are often discounted up to 30% to entice 

purchases and keep inventory moving. This typically occurs near the end of the growing 

season, when most farmers have utilized their available cash on the current crop. The 

cost savings is significant, approximately 25%-40% of the total farm’s operating 

expenses are from input costs (Source: Ministry of Agriculture, Food and Rural Affairs, 

Ontario). This translates into up to a 12% savings on total operating costs if the farmers 

are able to purchase inputs at a discount. Management states that farmers also save by 

receiving discounts on inputs by paying cash, which could be as much as 3%. 

• Optimize sale time 

Canola prices are cyclical – prices tend to be the lowest right after harvest. Holding on 

to the canola and timing the sale can yield significant price improvements. The graph 



Page 11 

below shows the seasonality of canola prices - prices are highest near May/June, and 

lowest in October/November. The price fluctuations are primarily due to seasonal supply 

levels. Most financing companies require payment once the crop is harvested, leading 

farmers to sell during the lower price period. Input Capital allows farm operators to sell 

at optimal times because they do not have to pay cash at harvest. 

Source: The Progressive Farmer 

We feel that the benefits offered by Input Capital would be very appealing to farmers who 

have limited capital available. The operator can save through discounted farming inputs, 

cash discounts, and no interest charges. They can also increase their cash flow through yield 

enhancements and better timing of sale. Overall, we believe, the effective cost of capital 

for Input’s financing is likely to be much lower than traditional forms of financing for 

famers with inadequate working capital. 

Limiting risks 

of farming 

Due to the volatile nature of farming, Input has put in place a number of conditions on the 

farmer to help ensure they get their required yield. 

Factors to mitigate risks/ enhance crop yield 

• Farms must use a third party agrologist, which helps to enhance crops through 

scientific means like soil sampling, productivity assessments, etc. The farmer pays 

for the agrologist, with costs starting at around $5 per acre. The increase in yield will 

vary from farm to farm, depending on a variety of factors, but using professional 

services limits crop risk. 

• Input is looking to diversify its streaming contracts throughout Western Canada. By 

diversifying farm locations, it reduces the risks of weather and other conditions that 

could lead to a poor harvest. 

• Farmers must purchase crop insurance that covers 70% of the long-term average 

crop yield. The farmer covers the payment for the crop insurance. Input aims to 

keep their claim on the canola crops below 70%. If there is a poor crop, the farmer 

receives the insurance and can cover what is owed to Input with those funds. Since 



Page 12 

1986, the lowest crop yield was 60% of the last 5 year average. 

• Funds can only be used for farming related costs (fertilizer, fuel, pesticide, seeds 

etc.), pay down farming related debt, working capital, and to purchase equipment. 

• Input ensures that they have a claim on the assets of the farmer in case the farmer 

breaches the contract. 

• Input conducts extensive due diligence on each farmer. The due diligence process 

includes reviewing bank records, tax records, production records, payment schedules, 

leases, mortgages and previous crop insurance. In addition, they conduct land title 

searches and personal property registry. They do this to ensure that the farmer has a 

good history of meeting their obligations. Input also ensures the farm operators have 

the necessary skills and equipment to efficiently farm the land. Management also 

assesses the capital requirements of the farmer to see if their capital injection will 

benefit farming operations. 

• Input may also purchase and cover the cost of a life insurance policy on the farm 

operator equal to their initial investment. Input will be the beneficiary of the policy. 

• If the farmer cannot meet the owed tonnage, they can pay with another crop of equal 

value. Input’s management will determine the equivalent value of another crop. 

• Canola type and grade are specified in the contract to avoid farmers delivering poor 

quality product. 

Overall, we feel that Input has covered most of the major risks with farming and the 

streaming contract. We believe that the operation of the previous canola LPs helped them 

structure the contracts to mitigate risks. 

Input is still exposed to price risk, which will substantially affect the company’s 

performance. Input does not hedge the price of canola through derivative contracts. 

We feel this is a risk to investors due to the volatile nature of canola prices. However, 

hedging does not guarantee greater returns. Many of the public streaming companies do not 

hedge their long-term exposure to commodity prices. 

Target market 

Management will target farms growing canola with 3,000-15,000 acres of total acreage. The 

size of the farm may vary from this target. Canola usually makes up less than half of a 

farm’s total acreage. Input looks for farms in the dark brown, dark grey, and black soil 

zones of Alberta, Manitoba and Saskatchewan. These soil zones contain high organic 

matter, and are considered the best soil regions to grow canola. Currently, all the contracts 

Input has signed are located in Saskatchewan. We estimate there are approximately 5,900 

farms in Western Canada that meet Input’s target market. 

Input will focus on farmers looking to expand their operations, but do not have adequate 

capital. We believe that younger farmers will continue to increase as older farmers 

retire, which will benefit Input in sourcing new farm operators. These younger 

operators will likely need cash to expand operations and maximize their yield. The 2011 

agriculture census in Canada reported that 48.3% of farm operators are over the age of 55. 

This is a large increase from 2006, where 40.7% were over 55, and 1991 at 32.1%. 

We also believe that the increasing price of agricultural land (as shown in the below chart) 



Page 13 

will cause rent/mortgages to increase, and will increase the capital requirements of farmers. 

20 

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

Year over year percentage increase in farmland value 

Canada 

Alberta 

Saskatchewan 

Manitoba 

2006 2007 2008 2009 2010 2011 2012 

Source: Farm Credit Canada 

Deal Flow 

Management has developed strong connections / relationships with farmers through their 

experience managing the previous three canola LPs, and Assiniboia. Assiniboia’s farmlands 

have 75 canola farmers. In addition, Input has formed strategic relationships with large 

agriculture service companies, such as Agri-Trend and Farmers Edge, to help source 

additional farmers. There are no fees paid for referrals. Management estimates that as more 

farmers start using streaming contracts, awareness will increase because of the benefits they 

offer. 

Input had approximately $23.5 million in deployable capital in November 2012 (including 

capital from receivables). The first streaming contract was entered into on January 15, 2013. 

As of early July, management states that $19 million has been deployed in streaming 

contracts. 

Management feels streaming contracts will likely be easier to source outside the 

growing season of May to September, because farmers are not so focused on growing 

canola. 

Competition 

Competition from new streaming companies is a major risk to Input. There are few barriers 

to entry, and entrants may negatively affect returns. However, we feel that Input has 

developed relationships and industry knowledge over the last 8 years of agriculture 

investment, which gives them an operational advantage. 

Input Capital management indicated that, at the current point in time, their focus is on 

Canola streaming. In the future, they may expand into other crops. 

Canola 

industry 

We will look at the canola industry, demand for canola and key factors affecting the 

industry. 



Page 14 

Canada is the largest canola exporting nation, and the largest producer in the world 

(Source: Conference Board of Canada 2011). The canola industry contributes 

approximately $15.4 billion to the Canadian economy each year. Canada is involved in 

all aspects of the canola value chain from genetics supply, farming, seed handling, 

transportation, crushing, refining and end uses, which generates an estimated 228,000 jobs 

for the Canadian economy (Source: Canola Council of Canada). Of the $15.4 billion, $5.4 

billion is generated from Saskatchewan, where production is the highest. The chart below 

shows the amount each province generates from the Canola businesses. 

Source: Canola Council of Canada (2011) 

Below is a graph summarizing the many uses of canola. 

Demand for canola seed, oil and meal has been trending up in the past decade as - a) 

more research on the benefits and uses of canola increases, b) government takes action to 

reduce or eliminate trans-fat in foods sold, c) canola as a bio-fuel additive, d) consumers 

adapting their diets to more healthy eating habits, and e) increasing world population. 

Sales of Canola 

in Canada 

Total cash receipts (revenue) for Canola in 2012 were $8.2 billion. Saskatchewan, Manitoba 

and Alberta accounted for the majority of the receipts as shown below. Alberta and 

Saskatchewan have strong increases in the amount of canola sold as shown below. 



Page 15 

Canola cash receipts (in $1,000s) 

Source: Statistics Canada 

Canada is by far the largest exporter of Canola in the world, accounting for 72% of the 

worldwide export market. Australia is second with 17%. The majority of canola is sent to 

China, and Japan, who account for 31%, and 27%, of worldwide imports, respectively. 

Below is a graph illustrating the increasing demand in Canada for canola seeds. 

Canola Seed Demand/Supply (000’ tonnes) 

Source: Canola Council of Canada 

Farms in 

Canada 

A breakdown of the number of farms in Canada according to varying characteristics is 

shown below. Our estimate of farms that meet Input’s target market is included. 



Page 16 

Canada Alberta Manitoba Saskatchewan 

Total Farms 205,730 43,234 15,877 36,952 

Farms over 2240 Acres 17,131 5,438 2,219 8,357 

Percentage of total farms over 2240 acres 8% 13% 14% 23% 

Canola Farms 35,073 11,889 6,151 15,736 

Canola Acreage 19 million 3.3 million 6 million 9.8 million 

Est. of Canola farms over 2240 acres 1,495 860 

Source: Statistics Canada Agriculture Census 2011 

3,559 

Farmland 

Canada 

The total farmland area in Canada has declined slightly over the last 3 decades. In 

1976, there was an estimated 169 million acres of farmland, 167 million acres in 2006, and 

160 million in 2011 (Source: Statistics Canada). The Canadian population increased from 

23.5 million in 1976, to 32.5 million in 2011. The following table shows the farm area, 

number of reporting farms and average area in Saskatchewan. 

Total Farm Area in Saskatchewan (1976 to 2011) 

1976 1986 1996 2006 2011 

Area in acres 65,511,431 65,728,443 65,653,588 64,253,845 61,628,148 

Farms reporting 70,958 63,431 56,995 44,329 36,952 

Average area 923 1,036 1,152 1,449 1,668 

(Source: Statistics Canada, Census of Agriculture ) 

The area of farmland is decreasing and the average size of farms is increasing, while the 

number of farmers is decreasing. We think that the above shows farmers are increasing their 

farm size through mergers and takeovers of other farms. This trend of farmers’ to keep 

expanding their acreage is beneficial for Input as farmers will continue to need capital (for 

acquisition and/or working capital). The decreasing acreage of farmland should also put 

pressure on overall crop prices due to the limited supply. 

Canola pricing 

and outlook 

Canadian supply growth has slowed while demand for canola has been increasing which has 

led to a historical increases in prices. 

Below is a graph of the average canola seed price over each calendar year from 2002-2013. 

Since 2008, the price of canola has been steadily trending up. Over the last 10 years, the 

price of Canola has ranged from the low $200’s to over $700 per tonne. The current price of 

canola is currently just below $500. 



Page 17 

Source:Barcharts 

We believe that slower growth in supply and increasing demand for canola will lead to 

increasing pricing for canola. We expect in the medium term the price to fluctuate around the 

current $500-550 level. 

Corporate 

Structure 

Input Capital went public on July 22, 2013, at a deemed price of $1.52, through a reverse 

takeover of WB II, a capital pool company (“CPC”). 

As of March 31, 2013, the fiscal year end for Input, there were 34.8 million shares 

outstanding. The following summarizes the shares issued. 

• Private placements in 2012 raised $20.3 million by issuing 20.48 million units, or 

$0.995 per unit. 

• Acquisition of 25.7% of Input Capital Limited Partnership for 0.97 million shares, 

valued at $0.87 million, or $0.90 per share. Over 70% was held by one investor who 

did not want to convert to Input shares. 

• Acquisition of 87.1% of LP2 for 1.03 million shares and received of $0.95 million in 

cash and receivables, or $0.95 per share. 

• Acquisition of 90.8% of LP3 for 2.35 million shares and received $2.2 million in 

cash and receivables, or $0.95 per share. 

• 10 million founder shares, issued to Input’s management were issued for proceeds of 

$999. This was structured by GMP Securities L.P, the lead underwriter of the private 

placement. 

Input currently has 35,577,273 shares outstanding. The increase in shares is the result of 

shares given to WB II. The following shows the share structure, as of the July 5, 2013. 



Page 18 

Source: Input Capital Filing Statement (July 5, 2013) 

The following lists the terms of the outstanding options: 

• 2,864,601 options to management of the company with an exercise price of $1.00; 

expires on November 30, 2017. 

• 265,001 options to employees and consultants. The exercise price is $1.00; expires 

on November 30, 2017. 

• 78,125 options to WB II with an exercise price of $1.60 and expires April 24, 2022. 

• 15,625 options to agents of WB II with an exercise price of 1.60 and expiry date of 

April 24, 2022. 

• 350,000 options are expected to be issued to the board of directors and a consultant at 

a price of $1.28 per share and an 8 year expiry. 

All the options are currently “in the money”. 

Management and insiders control 29.87% of the outstanding shares and 34.46%, on a fully 

diluted basis. The shares held by management are subject to the following trading 

restrictions. 

• 10% available for immediate trading. 

• The next 20% of shares are available for trading in 6 months. 

• The next 30% shares are available for trading in 12 months. 

• The next 40% shares are available for trading in 18 months. 

Management compensation 

Mr. Emsley, Mr. Farquhar and Mr. Nystuen will receive an annual base salary of $100,000 

each. 

Financials 

Input Capital had no revenues for the year ended March 31, 2013. Although they raised 

capital in November 2012, and started deploying capital in January 2013, revenues are not 

received until late August - September. We feel to accurately review Input’s financial 

performance, investors should review annual performance, and not quarterly reports due to 

the seasonality of canola. 

For FY2012, Input had no revenues, and incurred a loss of $0.37 million (EPS: -$0.03). Our 

revenue forecasts for FY2013, and FY2014, are $6.58 million, and $8.53 million, 

respectively. The assumptions made for our estimates are discussed in the valuation section 

below. Our net income forecasts are $1.56 million (EPS: 0.04) in FY2013, and $2.25 



Page 19 

million (EPS: 0.06) in FY2014. 

Income Statement 2012 2013E 2014E 


Base Tonnage Received N/A 14,625 18,962 

Avg Contract Price $ per tonne N/A $ 50 $ 

50 

Avg Canola Price $ per tonne N/A $ 500 $ 

500 

Sales $ - $ 6,581,250 $ 8,532,772 

COGS $ - $ - $ 

- 

Gross Profit $ - $ 6,581,250 $ 8,532,772 

G&A Expenses $ (364,969) $ (1,200,000) $ (1,236,000) 

EBITDA $ (364,969) $ 5,381,250 $ 7,296,772 

Amortization $ (100) $ (3,250,000) $ (4,213,715) 

EBIT $ (365,069) $ 2,131,250 $ 3,083,058 

Non-recurring income (expenses) $ (121,105) 

Income before income tax (loss) $ (486,174) $ 2,131,250 $ 3,083,058 

Income tax (recovery) expense $ (116,568) $ 575,438 $ 832,425.55 

Net income (loss) $ (369,606) $ 1,555,813 $ 2,250,632 

Weighted average number of common shares $ 11,415,448 $ 35,577,273 $ 35,577,273 

Earnings per share (loss) $ (0.03) $ 0.04 $ 

0.06 

Operating 

margins 

Our estimates of operating margins are shown below. When comparing margins with metal 

streamers, Input has lower EBIT margins due to the shorter contract length. This causes 

amortization of initial capital to be higher for Input. 

Margins 2012 2013E 2014E 

EBITDA N/A 82% 86% 

EBIT N/A 32% 36% 

Net N/A 24% 26% 

Cash Flow 

Our estimate of free cash flow (“FCF”) for FY2013 is $0.23 million. We anticipate that free 

cash flow in subsequent years will be reinvested into new streaming contracts. 

Cash Flows 2012 2013E 2014E 

Cash from Operating $ 955,369 $ 5,782,288 $ 6,529,954 

Cash from Investing $ (18,827,586) $ (3,833,349) $ (5,782,288) 

Cash from Financing $ 19,382,687 $ - $ - 

Net increase (decrease ) in cash $ 1,510,470 $ 1,948,939 $ 747,665 

Free Cash Flows to Firm $ (5,302,326) $ 227,447 $ 747,665 

Balance Sheet 

Key balance sheet ratios are shown below. The trailing ROE of comparable mining 

streamers is 11.7%. 



Page 20 

2012 2013E 2014E 

Liquidity Analysis 

Cash + Marketable Securities $ 14,316,375 $ 3,459,409 $ 4,207,075 

Working Capital $ 17,500,396 $ 8,054,104 $ 8,997,592 

Current Ratio 45 20 17 

ROE N/A 6.3% 8.5% 

Valuation 

For our valuation, we considered the following 3 scenarios. 

1. Input does not reinvest funds generated from operations, or raise any new equity to 

expand its existing portfolio. This is a very unlikely scenario. 

2. Input raises new equity to expand its portfolio - Although this is a realistic scenario, 

we feel that forecasting the terms of equity financings in the future (such as share 

price at the time of financing) is indeterminate at best. 

3. Input grows through reinvesting its free cash flows – this scenario is as likely as (2). 

However, we believe this scenario provides us a better indicator of the fair value of 

the company, as it generates more predictable cash flows. 

The key assumptions we used in our model are: 

• We anticipate that Input reinvests all of their free cash flow until they have a capital 

base of $300 million. This will take 18 years. After this point, we assume the 

company maintains its asset base. 

• No debt or equity raised. 

• Discount rate of 10% 

• We use $450 per tonne as the long-term net price received by Input. 

• We assume no bonus tonnage is received by Input. 

Given these assumptions, our discounted cash flow model (DCF) gave a fair value estimate 

of $2.55 per share. The calculation is shown below. 

Discount Rate 10% 

Total PV $ 92,010,476 

Cash - Debt (at the end of FY2012) $ 1,510,470 

Equity Value $ 93,520,946 

Shares O/S (dil) * 36,651,724 

Value per share $2.55 

*Calculated based on the treasury stock method 

The table below shows our comparables valuation – which gave a fair value of $2.82 per 

share. 



Page 21 

Input Comparable 

Input's FV 

Est. 

EV/ EBITDA 8.7 12.10 $2.51 

P/CF 10.3 17.60 $3.14 

Average $2.82 

*Inputs metrics were based on our FY2014 estimates 

*Comparable metrics were based on the trailing average of metal streamers, and grain/bean 

industry players. 

Returns are extremely sensitive to the net canola prices received by Input. Our share 

estimates based on varying canola prices ranges from $0.64 to $8.12 per share. 

Sensitivity analysis - canola net prices 

Net price of canola $ 350 $ 400 $ 450 $ 500 $ 550 

DCF Model $ 0.64 $ 1.33 $ 2.55 $ 4.65 $ 8.12 

Comparable fair value $ 2.10 $ 2.46 $ 2.82 $ 3.20 $ 3.58 

Rating 

Risks 

Based on our valuation and outlook, we initiate coverage on Input Capital with a fair 

value of $3.00 per share, and BUY rating. 

The following risks, though not exhaustive, may cause our estimates to differ from actual 

results: 

• Input Capital is the first to use an agriculture streaming model. 

• The company may need to raise additional capital through equity offerings and dilute 

current equity. 

• A decrease in the price of canola would negatively affect Input. 

• Timely Deployment of capital is crucial to the success of Input Capital 

• There may be new entrants to the industry increasing competition for Input. This 

may negatively affect returns. 

• Farmers may breach contracts with Input Capital. 

• Expected returns will drop, or rise, if any of the inputs used in our base case scenario 

move unfavourably, or more favourably, respectively. 



Page 22 

Appendix 

Input Capital current Canola contracts 

Source: Input Capital 

Income Statement 2012 2013E 2014E 


Base Tonnage Received N/A 14,625 18,962 

Avg Contract Price $ per tonne N/A $ 50 $ 

50 

Avg Canola Price $ per tonne N/A $ 500 $ 500 

Sales $ - $ 6,581,250 $ 8,532,772 

COGS $ - $ - $ - 

Gross Profit $ - $ 6,581,250 $ 8,532,772 

G&A Expenses $ (364,969) $ (1,200,000) $ (1,236,000) 

EBITDA $ (364,969) $ 5,381,250 $ 7,296,772 

Amortization $ (100) $ (3,250,000) $ (4,213,715) 

EBIT $ (365,069) $ 2,131,250 $ 3,083,058 

Non-recurring income (expenses) $ (121,105) 

Income before income tax (loss) $ (486,174) $ 2,131,250 $ 3,083,058 

Income tax (recovery) expense $ (116,568) $ 575,438 $ 832,425.55 

Net income (loss) $ (369,606) $ 1,555,813 $ 2,250,632 

Weighted average number of common shares $ 11,415,448 $ 35,577,273 $ 35,577,273 

Earnings per share (loss) $ (0.03) $ 0.04 $ 0.06 



Page 23 

Cash Flow Statement 2012 2013E 2014E 

Operating activities 

Net income (loss) for the year $ (369,606) $ 1,555,813 $ 2,250,632 

Adjustments 

Amortization of intangible assets $ 100 $ 3,250,000 $ 4,213,715 

Equity pick up Input Capital Limited Partnership $ 11,125 

Income tax (recovery) expense $ (116,568) 

Interest income $ (58,094) 

Share based payments $ 123,080 

Unrealized market value adjustment $ 120,721 

Interest received from marketable securities $ 5,905 

Changes in non-cash working capital $ 1,238,706 $ 976,476 $ 65,607 

$ 955,369 $ 5,782,288 $ 6,529,954 

Investing activities $ 5.05 

13% 

Acquisition of canola interests $ (6,133,703) $ (17,500,000) $ (5,782,288) 

Acquisition of marketable securities $ (15,500,000) 

Proceeds from sale marketable securities $ 2,694,095 $ 12,805,905 

Purchase of intangible assets $ (5,985) 

Cash acquired in partnership acquisitions $ 118,007 $ 860,746 

$ (18,827,586) $ (3,833,349) $ (5,782,288) 

Financing activities 

Shares issued $ 20,352,522 $ - 

Share issuance costs $ (969,835) $ - 

$ 19,382,687 $ - $ - 

Net increase (decrease ) in cash $ 1,510,470 $ 1,948,939 $ 747,665 

Cash – beginning of year - - - $ 1,510,470 $ 3,459,409 

Cash – end of year $ 1,510,470 $ 3,459,409 $ 4,207,075 



Page 24 

Balance Sheet 2012 2013E 2014E 

Assets 

Current 

Cash and cash equivalents $ 1,510,470 $ 3,459,409 $ 4,207,075 

Marketable securities $ 12,805,905 $ - $ - 

Current portion of canola interests$ 990,014 $ 3,377,164 $ 3,638,593 

Trade and other receivables $ 2,593,389 $ 1,645,313 $ 1,706,554 

$ 17,899,778 $ 8,481,885 $ 9,552,222 

Non Current 

Canola interests $ 5,022,968 $ 16,885,818 $ 18,192,963 

Investment in Input Capital LP $ 860,746 $ - $ - 

Deferred income tax assets $ 378,422 $ 378,422 $ 378,422 

Intangible assets $ 5,885 $ 5,885 $ 5,885 

$ 24,167,799 $ 25,752,011 $ 28,129,492 

Liabilities 

Current 

Trade and other payables $ 399,382 $ 427,781 $ 554,630 

Equity 

Share capital $ 23,653,482 $ 23,653,482 $ 23,653,482 

Contributed surplus $ 123,080 $ 123,080 $ 123,080 

Retained earnings (deficit) $ (364,798) $ 1,191,015 $ 3,441,647 

Non-controlling interests $ 356,653 $ 356,653 $ 356,653 

Total Equity $ 23,768,417 $ 25,324,230 $ 27,574,862 

Liabilities + SE $ 24,167,799 $ 25,752,011 $ 28,129,492 



Page 25 

Fundamental Research Corp. Equity Rating Scale: 

Buy – Annual expected rate of return exceeds 12% or the expected return is commensurate with risk 

Hold – Annual expected rate of return is between 5% and 12% 

Sell – Annual expected rate of return is below 5% or the expected return is not commensurate with risk 

Suspended or Rating N/A— Coverage and ratings suspended until more information can be obtained from the company regarding recent events. 

Fundamental Research Corp. Risk Rating Scale: 

1 (Low Risk) - The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry. 

The future outlook is stable or positive for the industry. The company generates positive free cash flow and has a history of profitability. The capital structure is 

conservative with little or no debt. 

2 (Below Average Risk) - The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitive 

to systematic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cash 

flows (though current free cash flow may be negative due to capital investment). The company’s capital structure is conservative with little to modest use of debt. 

3 (Average Risk) - The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitive 

to economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, and 

coverage ratios are sufficient. 

4 (Speculative) - The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in a 

turnaround situation. These companies should be considered speculative. 

5 (Highly Speculative) - The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products. 

Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues, and may rely on external funding. 

These stocks are considered highly speculative. 

Disclaimers and Disclosure 

The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any “forward looking statements” are our best estimates and 

opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. 

There is no guarantee that our forecasts will materialize. Actual results will likely vary. The analyst and Fundamental Research Corp. “FRC” does not own any shares 

of the subject company, does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject 

company. Fees were paid by INP to FRC. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence 

including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts 

may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are 

protected contractually. To further ensure independence, INP has agreed to a minimum coverage term including an initial report and three updates. Coverage can not be 

unilaterally terminated. Distribution procedure: our reports are distributed first to our web-based subscribers on the date shown on this report then made available to 

delayed access users through various other channels for a limited time. The performance of FRC’s research is ranked by Investars. Full rankings and are available at 

www.investars.com. 

The distribution of FRC’s ratings are as follows: BUY (69%), HOLD (8%), SELL (5%), SUSPEND (18%). 

To subscribe for real-time access to research, visit http://www.researchfrc.com/subscribe.php for subscription options. 

This report contains "forward looking" statements. Forward-looking statements regarding the Company and/or stock’s performance inherently involve risks and 

uncertainties that could cause actual results to differ from such forward-looking statements. Factors that would cause or contribute to such differences include, but are 

not limited to, continued acceptance of the Company's products/services in the marketplace; acceptance in the marketplace of the Company's new product lines/services; 

competitive factors; new product/service introductions by others; technological changes; dependence on suppliers; systematic market risks and other risks discussed in 

the Company's periodic report filings, including interim reports, annual reports, and annual information forms filed with the various securities regulators. By making 

these forward looking statements, Fundamental Research Corp. and the analyst/author of this report undertakes no obligation to update these statements for revisions or 

changes after the date of this report. A report initiating coverage will most often be updated quarterly while a report issuing a rating may have no further or less frequent 

updates because the subject company is likely to be in earlier stages where nothing material may occur quarter to quarter. 

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