A Hard Revisit: What Really Happened at Evome (TSXV: EVMT)

A post-mortem on a small-cap turnaround that unraveled — and raised more questions than answers.

Earlier this month, I kicked off my Management Talks series by spotlighting Evome Medical Technologies — a small-cap turnaround story I believed was quietly gaining traction. I had a direct, in-depth conversation with the company’s COO and CFO, asked pointed questions, and came away with what looked like a clear plan: reduce debt, offload underperforming assets, roll out new products, and unlock value.

I’ve been following Evome for over a year. I first profiled the company on my Substack back in October 2024, sharing why I saw potential in the business. Then, in early March 2025, I published a follow-up as part of Management Talks, recapping a detailed conversation with the leadership team.

At the time, it felt like progress was being made.

Then came March 28 — and the story completely unraveled.

In a surprise press release, the company disclosed it had negligible working capital, its asset-based lender had exited, there were no funds to complete its annual audit, and it was expecting a Cease Trade Order. To top it off, the CEO, COO, and multiple board members had resigned. Evome was, effectively, in financial crisis — and none of this had been communicated, publicly or privately, just weeks prior.

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The March 17 Press Release: A Misleading Narrative

What makes this especially frustrating is the contrast with the March 17 press release — just 11 days earlier.

That announcement introduced a new Chairman, emphasized board expansion, and highlighted a renewed strategic focus on the fertility market. The tone was optimistic. There was no mention of any financial distress, audit delays, executive instability, or lender withdrawal. In fact, it read like a company preparing for growth.

In hindsight, it feels more like a distraction than a disclosure.

If management already knew they were facing a cash shortfall, a departing lender, and no audit funding — and it's hard to believe they didn’t — then investors were materially misled. The inability to fund an audit, one of the most basic regulatory requirements, was never mentioned, despite being just weeks away.

Link to March 17, 2025 Press Release

Link to March 28, 2025 Press Release

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The Twist: Paying Down Debt Made Things Worse

One of the more baffling parts of this collapse? The company’s asset-based lender exited not because Evome had too much debt — but because it had too little. According to the March 28 press release, the total ABL balance had fallen below the minimum debt level required. In other words, the company paid down enough of the loan that it breached the agreement. That triggered the lender’s exit and deepened the cash crunch. It’s a setup that feels absurd — like being penalized for doing the right thing — and yet, that’s what happened.

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My Own Experience

In early March, I spoke directly with Evome’s COO and CFO. I asked about:

• The company’s debt and repayment strategy

• Working capital position

• Status of asset sales (SDP and DaMar)

• Insider buying

• Operational outlook and manufacturing bottlenecks

Their responses were confident, thoughtful, and measured. There was no indication of financial strain, no suggestion of mass executive departures, and no warning of a looming failure to meet basic reporting obligations.

As COO and CFO, the individuals I spoke with were directly responsible for the areas that later unraveled. That makes the lack of disclosure — or even a warning — especially difficult to accept.

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I Sold — But Not Before the Damage

I've since sold my entire position at a near-total loss. The stock has lost almost all of its value — dropping over 90% in a single day! What stings isn’t just the outcome — that’s part of investing. What stings is that investors weren’t given a fair shot. There were red flags — sure — but nothing disclosed publicly or privately pointed to an imminent collapse.

The way this unfolded feels fishy. It wasn’t a case of things falling apart overnight. It appears that management was aware of serious operational and financial issues — and simply chose not to disclose them.

That gap between what was said and what was known internally feels like more than poor communication. It feels like a breach of trust — and potentially, a breach of continuous disclosure obligations.

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Community Response & Shared Frustration

When I first published my Management Talks piece on Evome, it sparked meaningful discussion — especially from fellow shareholders. Many reached out, grateful to finally have direct insight into the company’s operations and outlook.

That makes what happened next even harder.

This wasn’t just my story. Other investors were equally blindsided. There was genuine optimism that Evome was turning a corner — and very few signs suggesting otherwise. The disconnect between public communication and internal reality didn’t just catch me off guard — it caught a lot of us.

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Lessons Learned

This experience has been a humbling reminder of a few key truths:

• Position sizing always matters. I didn’t get that right here — and the lesson hit hard.

• Management access ≠ transparency. A good conversation can’t replace clean, consistent disclosure.

• Cash is truth. If a company doesn’t have it, everything else is just noise.

Over the past year, I’ve been shifting my focus more toward quality — clean balance sheets, thoughtful capital allocation, and businesses with real reinvestment opportunities. That process is still evolving, and this experience, frustrating as it was, has helped clarify what to avoid — and where to dig deeper.

I remember discussing Evome with a fellow investor who followed the story closely but chose not to invest. When I asked why, he said he liked the new management but wanted to see things actually play out. He was okay with missing the early upside because the risk/reward wasn’t favorable at the time. In hindsight, that patience looks wise — and it’s a mindset I’ll lean into more.

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Not Backing Down

Ironically, this was the very first company I profiled under Management Talks. Definitely not the start I imagined — but maybe the one I needed.

It’s been a humbling experience, but I’m not backing down. If anything, I’m doubling down: on asking tougher questions, raising the bar on transparency, and continuing to share the full process — wins and losses alike.

To those who followed along or were impacted too — you're not alone. We move forward, a little more cautious… and a lot more informed.

Where Evome goes from here is anyone’s guess. I’ve taken my seat off the ride.

More to come soon — under better circumstances.

Disclaimer:
This post is for informational purposes only and does not constitute financial advice. I do not currently hold a position in the stock mentioned, though I have in the past. This may still present a perceived conflict of interest. Please do your own due diligence and consult a licensed financial advisor before making any investment decisions. All investments carry risk, including the potential loss of capital. I have not received any compensation from any company mentioned. All views expressed are solely my own.