CCC's STO Offers Real-World Solutions with a 4-Year ROI

Summary

• Unique patented solutions for empty backhauls in the road freight market in North America with future opportunities in China
• A security token with a return on investment in four years given company projections
• Has the STO found the company at the right time or is the final push for growth?

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The Road Less Traveled

In road freight, wasted space is a killer. Nearly half of all road transport miles are made with empty trailers costing the road freight industry over $100 billion annually worldwide. It also results in over 22 million tons of needless Co2 emissions annually. The Calgary-based company Convertible Concepts Corporation (CCC) wants to change this and has issued an STO to take its solutions to the world.

“This problem is our opportunity, as we monetize normally empty miles reducing carbon footprint, improve efficiencies and help reduce the cost of the distribution of finished vehicles.” Bill Pawluk, CEO, CCC.

In it for the long haul

Bill Pawluk founded Convertible Trailer Manufacturing Worldwide, the predecessor to CCC in 1997  and remains its CEO. A problem solver by nature, he was struck by the number of auto-carrier trucks he saw that returned home with an empty load after a delivery. After several years of research and trial and error, he developed his first-generation convertible truck trailer in 1999. The trailer can convert between a car carrier and a flat deck trailer in seconds. This gives drivers the flexibility to deliver a return load. 

Today, CCC has one trailer in production for the North American market and is close to releasing a second trailer for the North American and Chinese markets. There are also over 8 convertible trailer prototypes in active use. CCC is targeting a 15% market share in 5 years and a 25% market share in 10 years.  

Bill has also surrounde him with an operational team and board members with over 100 years of combined experience in the automotive logistics industry. CEO of CLC global, Stephen Harley, was an Executive Director Global MP&L and PS&L at Ford Motor Company. Board member Dennis Manns was  Assistant VP of North American Sales and Logistic Planning at Honda. And board member Steve Tripp was Head of Worldwide Vehicle Transportation at FCA.

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Merging Lanes

After designing the convertible trailer, Bill turned towards container hauling and he developed the Autobox. The Autobox is a standard-sized mini container for dry packaging that is collapsible, stackable, trackable with RFID, and can be linesided onto trains. CCC has worldwide patents on its convertible trailer and Autobox.

But what Bill is most excited about is his Convertible Logistics Intelligence Center (CLIC) Software. The software analyzes manufacturing plants and shipping routes to identify backhaul opportunities. It is the final piece of the CCC puzzle. It provides the opportunities for truck drivers to take advantage of their convertible trailers and Autoboxes.

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Future growth

The CLIC software also promises to be CCC’s most lucrative income stream. The convertible trailer has a Total Addressable Market (TAM) of $2 billion annually and the Autobox’s is $5 billion annually. However, CLIC has a giant TAM of $300 billion annually. 

CCC North America is expected to turn a profit in the second year and return an EBITDA of $147.28 million by year 5.

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The STO opportunity

CCC decided to raise capital to finance its future growth through a securitized token offering (STO) on the INX platform. The offering was launched on Jul 5, 2023, and has already raised $15 million.

Token holders will collectively receive dividends drawn from 40% of total CCNA profits in North America, with no cap.

200 million tokens will be issued in total with the STO limited to the first 2,000 investors with the price per token at $0.50.  Investors will be initially limited to a pool of 47,333,834 tokens with Convertible Concepts North America taking 15 million. A further 40,666,166 token increase is at the discretion of the Executive Management Team. This leaves a total balance of 97 to 137.66 million tokens to be issued or awarded in the future.

The token is available to US accredited and international investors. It is regulated by the SEC with an exemption from registration under rule 506 of Regulation D of the US Securities Act and under Regulation S Offshore Offers and Sales.

US investors cannot trade their token for 12 months after the close of the offering while international investors have a 40-day lockdown from the close of the offering.

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Verdict

While the patented convertible trailer and Autobox have a less sizable TAM than the CLIC software, their patent and unique solution to a common problem in the road freight industry provides a more defensible moat. The three are probably best as a package with the CLIC software leveraging off the convertible trailer and Autobox and bringing in the recurring revenues that the hardware doesn’t.

Token holders should see their initial investment of $0.50 per token paid back in full by year 4 given CCC’s estimates. However, investors need to keep an eye on the 100 million plus shares being held back. Even so, given the expected jump in EBITDA in year 4 of $116.19 million, even with the full 200 million shares issued, investors will have made their money back.

This is another real-world business taking advantage of capital raising in the security token space. And with over 26 years of experience, it is no fly-by-night operation cashing in on the STO trend. However, other than prototypes and the start of production in North America, the company does not have much to show for its 26 years. It may have already raised $15m in capital with the STO, but its assets are listed under $5 million. But when you consider the team of experienced individuals with deep operational, managerial, and sales excellence, CCC looks poised to take hold of its new capital and grow fast.