Is Sparta Capital a Good Eco-Friendly Soldier ?

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Written By: Marc Challande

Published September, 11th 2021

Have you ever heard about Sparta Capital ? It might be a stock under the radar. Indeed The company is applying innovative decentralized technologies to transform customers’ existing waste streams into new products or new forms of energy. Doesn’t it remind you Cielo Waste ? The difference is their current market cap is only at CAD$18M.

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A Technology Helping the Future Generations

The future is going toward green energies. Sparta understood this and by applying their technology, they can also teach to the young population how to commercialize environmental solutions. The current society over-produces waste streams and  uses inefficiently energy sources, creating a serial threat for our planet. All of this can be considered as a loss except if you plan to capitalize on it ! But how ? Sparta found the solution and the company generates revenue and profit by capturing, optimizing and upcycling wastes. But their biggest focus it to convert the customers’ existing waste streams into new forms of consumable products. Moreover, technology can henceforth transform wasted energy into cash-flow-positive solutions by increasing the efficiency, and all by generating significant profits.

Sparta is divided into three branches which cover a lot of skillsets: 

Sparta -Materials Upcycling (a.k.a. ReECOTech)

Sparta -Energy Capture & Upcycling (a.k.a. Illumineris)

Sparta -Innovation (a.k.a. SuperNova)

RecECOtech : this division’s purpose is to transform customers’ waste into new useable products through application of conversion technologies. It includes electronic, fiber conversion, precious metal capturing, and the conversion of waste plastic to fuel conversion.

Illumineris : this division’s purpose is to capture the lost energy from operational inefficiencies in manufacturing and commercial sector. 

And the last division but not the least : SuperNova. Supernova was buoyed by Covid as new opportunities appeared.  From SuperNova, they dived into new sectors. TruckSuite, where they expanded to include the truckers’ health controls and SpartaHealthcare (which is a registered Health Canada approved supplier) as the demand for Personal Protective Equipment grew exponentially . 

A Huge Market Opportunity

If we take a look at their growth, their revenues shows what the worldwide transition is currently going through. In 2016, they only had $5.54M revenue. For 2019, they doubled the revenue to top $11.1M. And then Covid passed by and affected first the company. But Sparta Capital has been able to think smartly and they are on track to top $13.9M. According to their analysis, they intend to reach $47.3M by 2024, more than 3.5 times their current revenue.

Another example of their growth, they treated 116k Tonnes of greenhouse gases &/or sequestration to target 700K Tonnes by 2024. There is a lot of place to grow just in Canada. As there is over 10 Billion square feet of commercial and industrial real estate, and each square foot costs in the range of $2 for the energy, the total addressable market is worth more than $20 Billion.

An example of how they can get revenues : they intervened and completed a lot of improvements in commercial buildings through lightning and photo-luminescent safety systems. According to their investor presentation, they applied Iot based solutions for HVAC systems leading to an average of 56% year-over-year in the reduction of greenhouse gases and an average of 32% gross margin. A lot of innovations and revenues will come in the future.

Another example: they are currently negotiating to supply 10Mw of natural gas powered electrical generation, generating monthly recurring income of $280K/month AND 3 more are in pipeline. 

Fundamentals

Regarding their last earnings report, the company has $2,769,388 in total assets and $3,080,316 in liabilities which is translated to a 0.001 in net loss per share basic and diluted. The company’s total number of shares represent 211,620,590. Besides you might see some dilution in the future. the Corporation issued 3,000,000 common shares for gross proceeds of $150,000. This capital was raised by the exercise of 3,000,000 warrants. It is always a worry for an investor as dilution lowers the shareholder’s ownership’s value. Moreover, the Company still has 9,223,000 stock options left with a weighted average exercise price  $ 0.04. They also have 15,751,500 warrants. Last concern is related to their clients. Also, almost 10% of shares is owned by insiders. It could be good enough if they weren’t diluting shares but you could see this number reducing because of the conversion of warrants and options to raise cash.

Sparta Capital Ltd.earned $1,061,662, which represents30% of its revenue, from two customers during the period ended June 30, 2021; ($1,283,955-representing 31% of its revenue, from two customers for the period ended June 30, 2020). If a customer stop their link with them, it could hamper the company. 
Besides, as I wrote earlier, the company is exploring a lot of new sectors and have new technologies in their hands. As Cielo Waste, their technologies should erase the debts, dilutions… 
 

Bottom Line

If you forget the fundamentals, the Company has great projects and opportunities for the future. Like most of the emerging/development companies, the cash is always an issue.  But their innovative technology, based on giving a better world, will find anytime soon more ears. To back my words about contract opportunities, they have a dozen or more industrial facilities now under contract for power analysis, with dozens in the queue which will generate more and more revenues.  From my point of view, this stock definitely deserves to be in your watchlist and if you have a good tolerance to risks, in your portfolio.

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This article solely expresses the opinion of the writer which might be disagreeing with the other writers of Money,eh?

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