Up until now I have been neutral on INT's valuation. Of course, I did show that Futura's Loyalty Program has ten times more revenue than Intertainment's New Media division, but I can respect that Ortsbo and other INT projects have value.
I got a couple of private messages on Stockhouse regarding FUT and how I am pumping it. Apparently somebody on the INT board consistently links to my Futura posts there and the INT longs don't appreciate that so they go to me. A post I made on Stockhouse got me motivated to write this piece where I will compare how FUT and INT are perceived outside of the small world of Canadian small cap investing.
The first part of my Stockhouse post was intended to show another member a list of Futura's competitors. I found Points.com supported programs to be a reliable industry list as Points is a popular way to redeem or exchange your points.
https://www.points.com/pdccontent/supportedprograms.html
Here was my commentary from Stockhouse related to this link:
"Futura is there. There's a lot of them but the majority of them are airlines. There's also a few chain store rewards programs like Petro Canada, Office Depot, Best Buy etc but those are not really competitors since they will never try to expand outside their own retail chain.
Notice the big void when it comes to anything car related. Canadian Tire is the only one that really pops out. I go into a dealer to get my car fixed and I get jack all (for now until Futura takes care of them).
Here's another thing I like about Futura. I can go onto a website like Points and they have Futura's business on there without any mention of the stock. I go find something about Ortsbo and there's always something connected to INT in some way. Futura is a real business with real revenues that has respect in its industry and not just with investors and day traders."
In the process of researching Futura's competitors, I stumbled across an industry article that outlines the relationship between TADA and their loyalty program. This article was written by Joel Cohen, the TADA President, a respected automotive industry leader:
http://www.wheels.ca/article/794777
There was only one line mentioning Futura in the entire article as it was described as an Aeroplan program, which is accurate. If you typed in Futura into a search engine this article likely wouldn't come up until much later in the search results. This makes Futura go very under the radar with investors. Even though this article is extremely good for company revenue growth, it is practically useless for FUT Investor Relations. End result - the company is not being credited for extremely improved revenue prospects when this article makes its rounds. Automotive industry members are motivated to go to Futura to sign up for the program when reading this article, not to go into their trading account and buy FUT stock. That makes the company's stock price undervalued, not pumped. The line goes as follows:
"The program will be administered for TADA dealers by Futura Loyalty Group, the sales agent for Aeroplan in the automotive category"
Here was my commentary on Stockhouse with respect to this one line:
"Even though it is just one line, this line is HUGE. This implies that Futura is the exclusive sales agent for Aeroplan in the automotive industry or at least perceived as such by an industry leader. But Futura is not exclusively automotive focused so this is an opportunity to dominate one category and then see if dominoes fall in other major retail industries thanks to it.
Whether or not Futura is actually an exclusive sales agent for Aeroplan by contract doesn't make a difference. An industry leader thinks so and perception is 90% of the battle. Sure there are other soft drink makers but we all think Coke and Pepsi is a duopoly.
So if you're a car dealer, body shop or tire store in Canada and you want a loyalty rewards program, you either do your own (which is very hard for a small or mid sized player) or you go with Aeroplan administered by Futura.
So to answer your question with respect to competitors - within the auto industry it sounds like Futura is the only game in town (other than Canadian Tire money). Outside the auto industry, they have several potential competitors as listed in the points.com link but in my view that's just gravy if they can really kill it within the automotive sector.
Remember, this is not me as an investor or Futura saying it. This is a respected member of the automotive industry, Joel Cohen, President of TADA making the claim that Futura is the sales agent for Aeroplan in the automotive industry. Where are respected professional translators saying Ortsbo is the translating tool of the industry?"
This leads me to my point of my last sentence as to where Ortsbo stands within the industry of online translation and does it get any respect. My first step was to put a neutral industry search term into Google. That was "online translation".
A list of the websites that first came up were webtranslation.paralink.com, babelfish, Google's translator, freetranslation.com, babylon, worldlingo, something called omniglot and reverso.net. And it goes on and on like this. I went through the first dozen pages and Ortsbo did not make the top 120 webpages for online translation.
Now I typed in the word Ortsbo to see what I could find. The first link I could find that doesn't direct me to ortsbo.com or intertainmentmedia.com was this:
http://www.variety.com/article/VR1118034959?refCatId=1009
Hmm Gene Simmons backs Ortsbo. That's good. Who is he, an industry expert in translation services? A sponsor who is going to provide INT with a lot of revenue opportunities? No wait, he's a rockstar who has a personal vested interest in the success of Intertainment Media.
Remember what I said about the Futura article above. That there is one line mentioning Futura as the administrator - tons of revenue opportunities, hardly anything to pump the stock.
Now contrast that to this article. Does the following sentence:
"The Kiss frontman and serial entrepreneur has signed on with Intertainment Media's Ortsbo as a business partner and spokesman."
Make you want to try out Ortsbo translation services, or does it want to make you buy INT stock?
There is only one paragraph that alludes to revenue opportunities and that is this:
"The software can also be utilized across instant messaging, email and RSS. While Ortsbo is free on social media, some of its offerings require payment, including mobile apps to be deployed this summer."
There's one final paragraph that I would really like to challenge:
"Simmons noted numerous potential applications for the entertainment business since Ortsbo can allow stars to speak to fans in more than one country simultaneously. "Any pop culture entity has to be worldwide," he said."
If Simmons said this then he is completely off base. Twitter is an application where you can reach people of multiple countries at once. What he meant to say is Ortsbo is an application where you can reach people of multiple languages at once. And that's a much more limited use because most of the internet is in English and cultural and language barriers are often the same.
How many celebrities do you know of that can't speak English? There's only one that came to my mind and that was Ichiro, the baseball player for the Seattle Mariners. And I don't think I really have much of an urge to chat with him. I have great doubts that any Indian or Chinese person who is isolated enough from Western society to not know any English has any knowledge of or caring to speak with a celebrity from the Western world. They have their own culture and pop icons that they want to follow. And we have likely never heard of them.
So let's review. In a Futura article that barely mentioned the company name, a revenue opportunity within the automotive industry was clearly identified. The respected automotive industry leader Joel Cohen implied Futura was the way to go for a Loyalty Program not only to his members but to other automotive industry members across Canada.
In the Ortsbo article, Gene Simmons, a person with a vested interest in Intertainment Media, gave some phantom application of celebrities using Ortsbo to talk with their fans (when they already use Twitter for that). He identified no clear revenue opportunities with respect to this idea.
Which article will be used as social media for automotive members to provide revenue opportunities for a company? Futura's.
Which article will be used as social media as fodder to pump a stock price? Intertainment's.
Before you go and complain about a stock being pumped, perhaps you need to take a look at your own investments to see how much they are being pumped.
Friday 27 May 2011
Tuesday 24 May 2011
FUT and SCG vs AER and GDOT
If Futura Loyalty traded like SelectCore, BOTH companies would be trading well over 50 cents. Right now one is there while the other is under 5 cents. You do the math.
People like to compare SelectCore (TSXV:SCG) to Green Dot (NYSE:GDOT) in the US. The argument is that SCG can grow to as much as half the size of Green Dot based SelectCore's exclusive agreement to sell the Iridium MasterCard in Canada and take on a significant chunk of the US market as they can focus on smaller retail chains:
PR about their Canadian Agreement
PR about their US Agreement
An excerpt from the Canadian agreement is as follows:
"TORONTO, ON: SelectCore Ltd. (TSX-V: SCG), a provider of prepaid telecom and financial solutions for the credit challenged and unbanked consumer market is pleased to announce that it has entered into a 5 year exclusive distribution agreement for the sale of Iridium MasterCard in over 200 retail locations including Long Distance Phone Card banner stores in major shopping malls across the GTA (Greater Toronto Area) such as Lawrence Square, Parkway Mall, Woodside Square, The Albion Centre, Shoppers World Brampton, Pacific Mall, Jane & Finch Mall, Rockwood Mall, Eglington Square, Centrepoint Mall, Woodbine Centre, Ceadarbrae Mall and Bridalwood Mall."
Let's compare that to one of Futura's recent releases:
"Toronto, Canada – May 10, 2011 – The Futura Loyalty Group Inc. (TSX-V:FUT) (the "Company") today announced that since completing its partnership with The Toronto Automobile Dealers Association (TADA), the Company has executed 23 agreements with member dealers. The first group of dealers has now launched and is actively promoting and issuing Aeroplan Miles to customers. Working closely with the Company, individual dealers have the flexibility to customize their program to suit their business needs and seasonality.
“We are very excited about being able to leverage the Aeroplan program at our dealership,” said Cynthia Cochrane, Controller Town + Country BMW / Mini Markham. “We see this as a great marketing tool that will help us attract new customers while at the same time retain and grow our business with existing customers. The flexibility and ease of focusing the program on specific areas of our business at particular times is very appealing.”
About TADA
SINCE 1908, TADA serves over 340 new car dealers in the Greater Toronto Area and represents every manufacturer's brand and franchise."
Both of these releases sound kind of similar don't they? To capture the Canadian market, a great strategy is to capture Toronto first. And both companies have. SCG and FUT have carved out excellent business plans for themselves where they can pick away at the duopolies that are too big to focus on the niches that both companies thrive on. In case you don't know, the duopoly that SCG is taking on is Green Dot and NetSpend (NASDAQ:NTSP) in the prepaid "credit card" segment. Futura is taking on (and using the platform of) Groupe Aeroplan (TSX:AER) and Alliance Data Systems (NYSE:ADS), the Air Miles company, in the Loyalty Rewards segment.
Actually, the words taking on aren't exactly accurate. It's not like SelectCore and Futura are trying to compete with the big boys. Both companies are filling up an underserviced niche that no one else covers. SelectCore wants to enable those people who don't have credit cards a convenient way to pay for their goods at, for example, a local convenience store. Futura wants to enable companies to do everything they can when trying to retaining clients for future revenue opportunities. With the TADA contract, this specifically applies to everyone who drives, gets their car fixed or is planning to purchase a new car in the Greater Toronto Area. There is a saying that goes it's 10 times more expensive to obtain a new client than it is to retain an old client for the same revenue opportunity. If you're a car dealership, a loyal client captured at an early age might be purchasing 5, 10 or more $20,000 vehicles at your place in their lifetime. From the dealer's perspective, hiring a company like Futura to handle the loyalty rewards program and retain clients is well worth the investment.
Note the portion of Futura's news release above that states TADA serves as the association for 340 car dealerships in Toronto. Since signing the agreement with TADA on February 17th, FUT has already reached an agreement with 23 of these dealers to provide their loyalty services. It is reasonable to expect that contracts with the bulk of the dealers in the association will be signed. Once that happens, 20% of ALL Canadian drivers will soon be earning loyalty rewards and making revenue for Futura with EVERY mile they drive. And assuming that similar targets in Vancouver, Montreal, Calgary and other urban centers are had by Futura, EVERY Canadian driver could potentially be covered.
Not a knock on SelectCore, but I like the target market of Canadian drivers over the target market of North Americans who can't get credit a lot more. But either way, based on the niches they serve both SCG and FUT will have similar successful long term fates.
Now let's focus on the comparative valuation:
SCG has a total of 117.16M fully diluted shares outstanding. At a 57 cent stock price, that implies a $66.8M market cap. GDOT currently has a $1.6B market cap. If SCG were to grow to 50% of GDOT, that would imply a stock price of $6.83, over a 1000% gainer from current levels.
Now let's compare FUT to Groupe Aeroplan (TSX:AER). FUT has a total of 164M shares outstanding. At 3.5 cents this implies a $5.7M market cap. AER has a market cap of $2.38B. If FUT was to grow to merely 10% of AER's market cap, that would imply a worth of $238M, or a stock price of $1.45. That's over a 4000% gainer from today's price.
Another way to think about it is that SCG currently trades at about 4-5% of GDOT's market cap. If FUT were to trade at just 4-5% of AER's market cap, that would be a stock price of 58-73 cents vs a stock price of 3-4 cents today. The argument could be made that Futura is extremely undervalued to SelectCore at today's prices vs the long-term prospects of each company, even as SCG appears undervalued relative to GDOT.
Of course you could point out that SCG's revenues are far ahead of FUT's. SCG had revenues of $100M last year, nearly a quarter of GDOT's, but those are primarily extremely low margin prepaid airtime revenues which are not substantially growing and will provide the company with little profit growth potential down the road. Every $100M of those revenues comes with about a $95M in cost of goods sold for a 5% gross margin BEFORE the general and admin costs. Those revenues are not what will make SCG. If investors cared about those revenues there would have been no way SCG would have traded at 5 cents or less in the first place as SCG traded at a price to sales multiple similar to YRC Worldwide at those levels. The future Iridium MasterCard revenues are what will make SCG and those are equally as new and exciting as Futura's Loyalty revenues.
Of course you could turn this analysis completely on its head and compare both FUT and SCG revenues to INT and suggest that BOTH companies are undervalued in the 1000x's.
Click here to see a comparison of FUT to INT
SCG is a great company to invest in. A long-term goal of 10X potential gain in stock price is really good. However when you compare SCG to FUT, FUT is much more undervalued.
SCG can grow from over 50 cents to nearly $7 if it is 50% as successful as Green Dot.
FUT can grow from 3-4 cents to nearly $1.50 if it is 10% as successful as Groupe Aeroplan.
A 10x gain in FUT's stock price to 35 cents would imply a market cap of less than 2.5% of AER's vs SCG's 50% compared to Green Dot.
The math favours Futura.
Click here for more information on Futura
People like to compare SelectCore (TSXV:SCG) to Green Dot (NYSE:GDOT) in the US. The argument is that SCG can grow to as much as half the size of Green Dot based SelectCore's exclusive agreement to sell the Iridium MasterCard in Canada and take on a significant chunk of the US market as they can focus on smaller retail chains:
PR about their Canadian Agreement
PR about their US Agreement
An excerpt from the Canadian agreement is as follows:
"TORONTO, ON: SelectCore Ltd. (TSX-V: SCG), a provider of prepaid telecom and financial solutions for the credit challenged and unbanked consumer market is pleased to announce that it has entered into a 5 year exclusive distribution agreement for the sale of Iridium MasterCard in over 200 retail locations including Long Distance Phone Card banner stores in major shopping malls across the GTA (Greater Toronto Area) such as Lawrence Square, Parkway Mall, Woodside Square, The Albion Centre, Shoppers World Brampton, Pacific Mall, Jane & Finch Mall, Rockwood Mall, Eglington Square, Centrepoint Mall, Woodbine Centre, Ceadarbrae Mall and Bridalwood Mall."
Let's compare that to one of Futura's recent releases:
"Toronto, Canada – May 10, 2011 – The Futura Loyalty Group Inc. (TSX-V:FUT) (the "Company") today announced that since completing its partnership with The Toronto Automobile Dealers Association (TADA), the Company has executed 23 agreements with member dealers. The first group of dealers has now launched and is actively promoting and issuing Aeroplan Miles to customers. Working closely with the Company, individual dealers have the flexibility to customize their program to suit their business needs and seasonality.
“We are very excited about being able to leverage the Aeroplan program at our dealership,” said Cynthia Cochrane, Controller Town + Country BMW / Mini Markham. “We see this as a great marketing tool that will help us attract new customers while at the same time retain and grow our business with existing customers. The flexibility and ease of focusing the program on specific areas of our business at particular times is very appealing.”
About TADA
SINCE 1908, TADA serves over 340 new car dealers in the Greater Toronto Area and represents every manufacturer's brand and franchise."
Both of these releases sound kind of similar don't they? To capture the Canadian market, a great strategy is to capture Toronto first. And both companies have. SCG and FUT have carved out excellent business plans for themselves where they can pick away at the duopolies that are too big to focus on the niches that both companies thrive on. In case you don't know, the duopoly that SCG is taking on is Green Dot and NetSpend (NASDAQ:NTSP) in the prepaid "credit card" segment. Futura is taking on (and using the platform of) Groupe Aeroplan (TSX:AER) and Alliance Data Systems (NYSE:ADS), the Air Miles company, in the Loyalty Rewards segment.
Actually, the words taking on aren't exactly accurate. It's not like SelectCore and Futura are trying to compete with the big boys. Both companies are filling up an underserviced niche that no one else covers. SelectCore wants to enable those people who don't have credit cards a convenient way to pay for their goods at, for example, a local convenience store. Futura wants to enable companies to do everything they can when trying to retaining clients for future revenue opportunities. With the TADA contract, this specifically applies to everyone who drives, gets their car fixed or is planning to purchase a new car in the Greater Toronto Area. There is a saying that goes it's 10 times more expensive to obtain a new client than it is to retain an old client for the same revenue opportunity. If you're a car dealership, a loyal client captured at an early age might be purchasing 5, 10 or more $20,000 vehicles at your place in their lifetime. From the dealer's perspective, hiring a company like Futura to handle the loyalty rewards program and retain clients is well worth the investment.
Note the portion of Futura's news release above that states TADA serves as the association for 340 car dealerships in Toronto. Since signing the agreement with TADA on February 17th, FUT has already reached an agreement with 23 of these dealers to provide their loyalty services. It is reasonable to expect that contracts with the bulk of the dealers in the association will be signed. Once that happens, 20% of ALL Canadian drivers will soon be earning loyalty rewards and making revenue for Futura with EVERY mile they drive. And assuming that similar targets in Vancouver, Montreal, Calgary and other urban centers are had by Futura, EVERY Canadian driver could potentially be covered.
Not a knock on SelectCore, but I like the target market of Canadian drivers over the target market of North Americans who can't get credit a lot more. But either way, based on the niches they serve both SCG and FUT will have similar successful long term fates.
Now let's focus on the comparative valuation:
SCG has a total of 117.16M fully diluted shares outstanding. At a 57 cent stock price, that implies a $66.8M market cap. GDOT currently has a $1.6B market cap. If SCG were to grow to 50% of GDOT, that would imply a stock price of $6.83, over a 1000% gainer from current levels.
Now let's compare FUT to Groupe Aeroplan (TSX:AER). FUT has a total of 164M shares outstanding. At 3.5 cents this implies a $5.7M market cap. AER has a market cap of $2.38B. If FUT was to grow to merely 10% of AER's market cap, that would imply a worth of $238M, or a stock price of $1.45. That's over a 4000% gainer from today's price.
Another way to think about it is that SCG currently trades at about 4-5% of GDOT's market cap. If FUT were to trade at just 4-5% of AER's market cap, that would be a stock price of 58-73 cents vs a stock price of 3-4 cents today. The argument could be made that Futura is extremely undervalued to SelectCore at today's prices vs the long-term prospects of each company, even as SCG appears undervalued relative to GDOT.
Of course you could point out that SCG's revenues are far ahead of FUT's. SCG had revenues of $100M last year, nearly a quarter of GDOT's, but those are primarily extremely low margin prepaid airtime revenues which are not substantially growing and will provide the company with little profit growth potential down the road. Every $100M of those revenues comes with about a $95M in cost of goods sold for a 5% gross margin BEFORE the general and admin costs. Those revenues are not what will make SCG. If investors cared about those revenues there would have been no way SCG would have traded at 5 cents or less in the first place as SCG traded at a price to sales multiple similar to YRC Worldwide at those levels. The future Iridium MasterCard revenues are what will make SCG and those are equally as new and exciting as Futura's Loyalty revenues.
Of course you could turn this analysis completely on its head and compare both FUT and SCG revenues to INT and suggest that BOTH companies are undervalued in the 1000x's.
Click here to see a comparison of FUT to INT
SCG is a great company to invest in. A long-term goal of 10X potential gain in stock price is really good. However when you compare SCG to FUT, FUT is much more undervalued.
SCG can grow from over 50 cents to nearly $7 if it is 50% as successful as Green Dot.
FUT can grow from 3-4 cents to nearly $1.50 if it is 10% as successful as Groupe Aeroplan.
A 10x gain in FUT's stock price to 35 cents would imply a market cap of less than 2.5% of AER's vs SCG's 50% compared to Green Dot.
The math favours Futura.
Click here for more information on Futura
The Next Big Canadian Tech Stock
In this article I will talk about the small cap tech stock that:
Has MORE new tech revenue than Intertainment Media
Is growing FAST just like Intertainment Media
Has less shares outstanding compared to Intertainment Media
And is priced at less than 5% of Intertainment Media’s stock price.
This stock trades at a mere $5-6 million market cap despite revenue of $1.7M last year, $1.3M of which was based upon their exciting new business which grew 124% from 2009. The company has been aggressively signing contracts this year and late last year, so there is potential to grow revenues much faster than that for 2011!
February 8th 2011. That day will go down in infamy with respect to TSX Venture small cap tech stocks. I like to call them the "Intertainment followers". Intertainment Media had just achieved its first peak at 96 cents after trading at 10 cents a few weeks prior to that. The fallout of this was that there were many TSX Venture tech stocks with similar characteristics riding the wave as people's attention on the Venture shifted from mining stocks to tech stocks. Let’s take a look at a chart summarizing the price performance of several stocks that day:
FSW and PYN traded similarly to INT in that they had topped out early in the trading day on February 8th after a few days of insane gains. The others tried to pack weeks worth of fun into one day as a rumour had spread that DIL was connected to INT in some way. Traders scoured stocks that appeared similar to INT and started pouring money in. All of these stocks achieved 52 week highs on that day on abnormally high amounts of volume. Many of those highs still stand as their 52 week highs more than 3 months later. It was a great day for daytraders.
Since then, INT has become a household name for anyone who trades Venture stocks but it has struggled after breaching the $3 mark. FSW has had a few spikes up followed by periods of slow decline but overall has done well. PYN has drifted downward and while it has some good prospects vs Groupon, its share count of over 350 million has made it difficult to breach the 30 cent mark as that would put it at a market cap north of $100 million.
Then we get to the pump and dumps. RFD is gone. Bankrupt. Delisted. Worthless. DIL has since done a reverse split of 10 to 1 and is currently halted from trading. URO is a shell company that recently sold off its only business asset and sits at 2 cents with no clear direction and yet has the best prospects of these three.
That leaves one company left out of all the "Intertainment followers", FUT. Futura Loyalty. It shares some commonality with PYN in that its stock price has been fairly quiet since that infamous day. But unlike PYN it has less than half of the shares outstanding and unlike PYN, INT or FSW it does not rely on India, or China or any other third world country for revenue. It is growing, growing quickly and growing 100% in Canada. The market it's in is so underrepresented that it can achieve tremendous growth without having to think of leaving the borders for years to come. That being said, they are already working on a strategy to gain clients in the United States.
There is one company absent from this February 8th list and that is SelectCore (TSXV:SCG). The start of their impressive rise happened one day after on February 9th when their stock price ran from 5.5 cents then to over 70 earlier this month. The smart money was getting in on them while they were cheap and the chasers were getting in on the shell companies URO, DIL and RFD because of their heavy volume. Now the smart money is getting in on Futura while it is trading at a "SelectCore February 8th market cap" of under $6 million. Futura has been relatively quiet since February but in the last few weeks the price and volume have been picking up from a consistent supply of positive news releases regarding their business.
Click here for a detailed comparison of SCG to FUT vs the big players in their respective industries
What is Futura's target market? The broadest answer to this is any company that is not a monopoly and has to work to retain clients. Futura offers loyalty reward programs (either their own or Aeroplan miles) to retail businesses in Canada. The more specific answer to "What is Futura's target market?" is drivers in Canada.
Futura provides their loyalty services to well-known Canadian retailers like Active, Green & Ross, OK Tires, Speedy Auto Service, MAACO, and recently, an agreement with the Toronto Automobile Dealers Association has resulted in 23 new car dealers signing up for Futura loyalty programs thus far with a potential for over 300 more. Those businesses cover everything from car purchases to car maintenance and repair to tire services. The majority of people in Canada are drivers and will use those services extensively over their lifetime. If you're a driver, would you not like the idea of earning rewards points the next time you make a $20,000 new car purchase or $500 for new tires or getting something back for your next $1,000 car repair bill? And if you are already getting loyalty rewards for those services, well, Futura is very likely the company that is administering your program.
Futura also has a strong foothold in the pet supplies industry as they have an agreement with Pets Unlimited and PJ's Pets to provide loyalty programs. A full list of their Aeroplan and Futura Loyalty program partners can be seen here. Going through the list you can see that Futura is a dynamic company that is able to provide their loyalty programs to any number of retailers and industries, but is also able to dominate a category like they do with automobile services. If companies like Speedy or PJ's can achieve success in retaining clients through these programs, how long do you think it will take before Midas or PetSmart adopts them?
You can see an obvious benefit to a business plan focused on retaining customers for car dealerships, tire retailers and bodyshop repair. Canadian Tire dollars are such an ingrained piece of Canadian culture - everybody knows you collect them for every dollar you spend in a Canadian Tire store. Aeroplan miles (and Air Miles) are also an ingrained part of our society. Groupe Aeroplan has taken that simple concept and with that grew into a company with a $2.4 billion market cap. Futura is in the process of combining the two concepts brought forth with Canadian Tire money and Aeroplan miles for everything to do with cars.
Even if you don't see too much value in the loyalty rewards programs themselves, a careful read of their NR about signing 23 TADA dealers brings you this information:
""We are very excited about being able to leverage the Aeroplan program at our dealership," said Cynthia Cochrane, Controller Town + Country BMW / Mini Markham. "We see this as a great marketing tool that will help us attract new customers while at the same time retain and grow our business with existing customers. The flexibility and ease of focusing the program on specific areas of our business at particular times is very appealing."
Using Futura's robust, web based issuance and reporting module, dealers are able to launch the Aeroplan program soon after signing a contract. Futura has also developed a selection of point of sale marketing kits as well as a hands on staff training program making the entire process of launching Aeroplan simple and easy."
Signing up with Futura isn't just about companies being able to offer rewards programs to their customers, its about better tracking and understanding of their customers' needs. In my opinion, this is the more important function that Futura can offer to retailers. The Social Media craze that has led to Twitter and Facebook being valued in the multibillions and Intertainment Media in the hundreds of millions has one bottom line and that is all about getting to know your customer. Futura does the exact same thing but because they don't directly connect to hundreds of millions of people like the other companies do, their stock price is severly undervalued because they fly under the radar of the investing general public.
A potential concern for INT or SCG investors is that a bigger player could come in and directly compete with Ortsbo or the Iridium MasterCard market space. Because Futura is a sales agent for Aeroplan miles, Groupe Aeroplan does not have much incentive to compete in Futura's various niches as they already get compensated for Futura's work. They have essentially outsourced potential loyalty programs not already covered by them to Futura. Futura has this incredible advantage that a strong market player in loyalty rewards is on their side. Green Dot is definitely not on SelectCore's side and companies like Microsoft or Google may be Intertainment's best friend in a buyout scenario or worst enemy in a competitor scenario.
Click here to see how Futura compares to Intertainment Media in growth
Even if Futura achieves just 1% of Groupe Aeroplan's $2.4 billion market cap, that's $24 million, much higher than its current market cap of $5-6 million. And all indications are that they have potential to far exceed 1% of AER's market cap.
After reading all this you're probably wondering how is such an incredible company like Futura trading at 3-4 cents in the first place?
Well, there is a certain level of risk to it when looking at its balance sheet. Like INT, SCG and others, FUT is in the same boat with respect to having had negative equity as of the end of 2010. But even in that you can point out obvious goodness.
Referring to this article:
"The Futura Loyalty Group Inc. (TSX VENTURE:FUT) (the "Company") today announced that it has closed a shares for debt transaction whereby the Company issued a total of 160,571 common shares ("Debt Settlement Shares") at a deemed price of $0.05. This transaction is in connection with the conversion of $8,028.54 of accrued interest on certain convertible debentures described in a press release dated February 17, 2009 into common shares of the Company"
And to this one here:
"The Futura Loyalty Group Inc. (the "Company") (TSX VENTURE:FUT) today announced that it has secured $936,029 in financing commitments through a tax structured financing which was completed on December 31, 2010. $680,579 of the funds have been paid to the Company and the remaining $255,450 of the funds will be paid to the Company by March 31, 2011
The Company sold the Processing Division for $8,000,000, less transaction costs of approximately $245,000 in an arm's length transaction. The purchase price is comprised of $855,000 in cash to be paid in two installments of $679,500 on December 31, 2010 and $175,500 on March 31, 2011, and the remainder via promissory notes due December 31, 2018. The Company also received interest of $1,079 on December 31, 2010 and will receive additional interest of $79,950 on March 31, 2011. In addition, the Company is working to secure additional buyers for the promissory notes which may result in the Company securing additional working capital of up to $700,000 on or before March 31, 2011.
The Company has been granted the option to repurchase the Processing Division between January 15, 2012 and June 30, 2012 (the "Call Option Period")."
What does all this mean? Well the first article states that Futura issued 160K shares at a price of 5 cents to pay off some interest due on the debentures. The stock price around this time was 2.5-3.5 cents. Now why would the holder of the debentures be willing to exchange the debt for shares at such a high premium unless they were worth much more than 5 cents in that investor's opinion?
The second release is even more telling. They sold their processing division for $8 million but have an opportunity to buy it back in the first half of 2012 should they so choose. In the process they sorted out short term working capital issues and with the promissionary notes, improved their balance sheet.
All of this brilliant maneuvering was done to avoid dilution in the stock. As mentioned, only 160K shares were added to the share count in all of this. This is obviously a company that wishes to protect its shareholders and their interests. There are no millions of shares and warrants being added to the company's stock a few weeks before the company turns viral like in the case of Intertainment.
Do you appreciate loyalty rewards programs?
Do you drive or own pets?
Do you think companies will value a tool that can better track and retain customers?
Do you like companies with an aggressive growth strategy in Canada?
Do you like companies that intelligently use finance options to avoid shareholder dilution and have clear debenture holder support?
If the answer is yes to any of these, you might consider FUT as an investment within your small-cap portfolio.
Has MORE new tech revenue than Intertainment Media
Is growing FAST just like Intertainment Media
Has less shares outstanding compared to Intertainment Media
And is priced at less than 5% of Intertainment Media’s stock price.
This stock trades at a mere $5-6 million market cap despite revenue of $1.7M last year, $1.3M of which was based upon their exciting new business which grew 124% from 2009. The company has been aggressively signing contracts this year and late last year, so there is potential to grow revenues much faster than that for 2011!
February 8th 2011. That day will go down in infamy with respect to TSX Venture small cap tech stocks. I like to call them the "Intertainment followers". Intertainment Media had just achieved its first peak at 96 cents after trading at 10 cents a few weeks prior to that. The fallout of this was that there were many TSX Venture tech stocks with similar characteristics riding the wave as people's attention on the Venture shifted from mining stocks to tech stocks. Let’s take a look at a chart summarizing the price performance of several stocks that day:
| Company | Symbol | Open | High | Low | Close | Volume | Change | % Change |
| Intertainment Media | INT | 0.960 | 0.960 | 0.610 | 0.790 | 45,689,219 | 0.070 | 9.72% |
| Poynt Corporation | PYN | 0.250 | 0.275 | 0.230 | 0.230 | 23,458,214 | 0.005 | 2.22% |
| Digifonica Int | DIL | 0.070 | 0.310 | 0.070 | 0.270 | 4,896,139 | 0.230 | 575.00% |
| Ipico | RFD | 0.040 | 0.160 | 0.040 | 0.140 | 11,290,600 | 0.100 | 250.00% |
| Urodynamix Tech | URO | 0.035 | 0.120 | 0.035 | 0.070 | 10,469,593 | 0.040 | 133.33% |
| Fireswirl Technologies | FSW | 0.305 | 0.380 | 0.210 | 0.235 | 8,506,169 | 0.035 | 17.50% |
| Futura Loyalty Group | FUT | 0.020 | 0.050 | 0.020 | 0.045 | 22,905,404 | 0.030 | 200.00% |
FSW and PYN traded similarly to INT in that they had topped out early in the trading day on February 8th after a few days of insane gains. The others tried to pack weeks worth of fun into one day as a rumour had spread that DIL was connected to INT in some way. Traders scoured stocks that appeared similar to INT and started pouring money in. All of these stocks achieved 52 week highs on that day on abnormally high amounts of volume. Many of those highs still stand as their 52 week highs more than 3 months later. It was a great day for daytraders.
Since then, INT has become a household name for anyone who trades Venture stocks but it has struggled after breaching the $3 mark. FSW has had a few spikes up followed by periods of slow decline but overall has done well. PYN has drifted downward and while it has some good prospects vs Groupon, its share count of over 350 million has made it difficult to breach the 30 cent mark as that would put it at a market cap north of $100 million.
Then we get to the pump and dumps. RFD is gone. Bankrupt. Delisted. Worthless. DIL has since done a reverse split of 10 to 1 and is currently halted from trading. URO is a shell company that recently sold off its only business asset and sits at 2 cents with no clear direction and yet has the best prospects of these three.
That leaves one company left out of all the "Intertainment followers", FUT. Futura Loyalty. It shares some commonality with PYN in that its stock price has been fairly quiet since that infamous day. But unlike PYN it has less than half of the shares outstanding and unlike PYN, INT or FSW it does not rely on India, or China or any other third world country for revenue. It is growing, growing quickly and growing 100% in Canada. The market it's in is so underrepresented that it can achieve tremendous growth without having to think of leaving the borders for years to come. That being said, they are already working on a strategy to gain clients in the United States.
There is one company absent from this February 8th list and that is SelectCore (TSXV:SCG). The start of their impressive rise happened one day after on February 9th when their stock price ran from 5.5 cents then to over 70 earlier this month. The smart money was getting in on them while they were cheap and the chasers were getting in on the shell companies URO, DIL and RFD because of their heavy volume. Now the smart money is getting in on Futura while it is trading at a "SelectCore February 8th market cap" of under $6 million. Futura has been relatively quiet since February but in the last few weeks the price and volume have been picking up from a consistent supply of positive news releases regarding their business.
Click here for a detailed comparison of SCG to FUT vs the big players in their respective industries
What is Futura's target market? The broadest answer to this is any company that is not a monopoly and has to work to retain clients. Futura offers loyalty reward programs (either their own or Aeroplan miles) to retail businesses in Canada. The more specific answer to "What is Futura's target market?" is drivers in Canada.
Futura provides their loyalty services to well-known Canadian retailers like Active, Green & Ross, OK Tires, Speedy Auto Service, MAACO, and recently, an agreement with the Toronto Automobile Dealers Association has resulted in 23 new car dealers signing up for Futura loyalty programs thus far with a potential for over 300 more. Those businesses cover everything from car purchases to car maintenance and repair to tire services. The majority of people in Canada are drivers and will use those services extensively over their lifetime. If you're a driver, would you not like the idea of earning rewards points the next time you make a $20,000 new car purchase or $500 for new tires or getting something back for your next $1,000 car repair bill? And if you are already getting loyalty rewards for those services, well, Futura is very likely the company that is administering your program.
Futura also has a strong foothold in the pet supplies industry as they have an agreement with Pets Unlimited and PJ's Pets to provide loyalty programs. A full list of their Aeroplan and Futura Loyalty program partners can be seen here. Going through the list you can see that Futura is a dynamic company that is able to provide their loyalty programs to any number of retailers and industries, but is also able to dominate a category like they do with automobile services. If companies like Speedy or PJ's can achieve success in retaining clients through these programs, how long do you think it will take before Midas or PetSmart adopts them?
You can see an obvious benefit to a business plan focused on retaining customers for car dealerships, tire retailers and bodyshop repair. Canadian Tire dollars are such an ingrained piece of Canadian culture - everybody knows you collect them for every dollar you spend in a Canadian Tire store. Aeroplan miles (and Air Miles) are also an ingrained part of our society. Groupe Aeroplan has taken that simple concept and with that grew into a company with a $2.4 billion market cap. Futura is in the process of combining the two concepts brought forth with Canadian Tire money and Aeroplan miles for everything to do with cars.
Even if you don't see too much value in the loyalty rewards programs themselves, a careful read of their NR about signing 23 TADA dealers brings you this information:
""We are very excited about being able to leverage the Aeroplan program at our dealership," said Cynthia Cochrane, Controller Town + Country BMW / Mini Markham. "We see this as a great marketing tool that will help us attract new customers while at the same time retain and grow our business with existing customers. The flexibility and ease of focusing the program on specific areas of our business at particular times is very appealing."
Using Futura's robust, web based issuance and reporting module, dealers are able to launch the Aeroplan program soon after signing a contract. Futura has also developed a selection of point of sale marketing kits as well as a hands on staff training program making the entire process of launching Aeroplan simple and easy."
Signing up with Futura isn't just about companies being able to offer rewards programs to their customers, its about better tracking and understanding of their customers' needs. In my opinion, this is the more important function that Futura can offer to retailers. The Social Media craze that has led to Twitter and Facebook being valued in the multibillions and Intertainment Media in the hundreds of millions has one bottom line and that is all about getting to know your customer. Futura does the exact same thing but because they don't directly connect to hundreds of millions of people like the other companies do, their stock price is severly undervalued because they fly under the radar of the investing general public.
A potential concern for INT or SCG investors is that a bigger player could come in and directly compete with Ortsbo or the Iridium MasterCard market space. Because Futura is a sales agent for Aeroplan miles, Groupe Aeroplan does not have much incentive to compete in Futura's various niches as they already get compensated for Futura's work. They have essentially outsourced potential loyalty programs not already covered by them to Futura. Futura has this incredible advantage that a strong market player in loyalty rewards is on their side. Green Dot is definitely not on SelectCore's side and companies like Microsoft or Google may be Intertainment's best friend in a buyout scenario or worst enemy in a competitor scenario.
Click here to see how Futura compares to Intertainment Media in growth
Even if Futura achieves just 1% of Groupe Aeroplan's $2.4 billion market cap, that's $24 million, much higher than its current market cap of $5-6 million. And all indications are that they have potential to far exceed 1% of AER's market cap.
After reading all this you're probably wondering how is such an incredible company like Futura trading at 3-4 cents in the first place?
Well, there is a certain level of risk to it when looking at its balance sheet. Like INT, SCG and others, FUT is in the same boat with respect to having had negative equity as of the end of 2010. But even in that you can point out obvious goodness.
Referring to this article:
"The Futura Loyalty Group Inc. (TSX VENTURE:FUT) (the "Company") today announced that it has closed a shares for debt transaction whereby the Company issued a total of 160,571 common shares ("Debt Settlement Shares") at a deemed price of $0.05. This transaction is in connection with the conversion of $8,028.54 of accrued interest on certain convertible debentures described in a press release dated February 17, 2009 into common shares of the Company"
And to this one here:
"The Futura Loyalty Group Inc. (the "Company") (TSX VENTURE:FUT) today announced that it has secured $936,029 in financing commitments through a tax structured financing which was completed on December 31, 2010. $680,579 of the funds have been paid to the Company and the remaining $255,450 of the funds will be paid to the Company by March 31, 2011
The Company sold the Processing Division for $8,000,000, less transaction costs of approximately $245,000 in an arm's length transaction. The purchase price is comprised of $855,000 in cash to be paid in two installments of $679,500 on December 31, 2010 and $175,500 on March 31, 2011, and the remainder via promissory notes due December 31, 2018. The Company also received interest of $1,079 on December 31, 2010 and will receive additional interest of $79,950 on March 31, 2011. In addition, the Company is working to secure additional buyers for the promissory notes which may result in the Company securing additional working capital of up to $700,000 on or before March 31, 2011.
The Company has been granted the option to repurchase the Processing Division between January 15, 2012 and June 30, 2012 (the "Call Option Period")."
What does all this mean? Well the first article states that Futura issued 160K shares at a price of 5 cents to pay off some interest due on the debentures. The stock price around this time was 2.5-3.5 cents. Now why would the holder of the debentures be willing to exchange the debt for shares at such a high premium unless they were worth much more than 5 cents in that investor's opinion?
The second release is even more telling. They sold their processing division for $8 million but have an opportunity to buy it back in the first half of 2012 should they so choose. In the process they sorted out short term working capital issues and with the promissionary notes, improved their balance sheet.
All of this brilliant maneuvering was done to avoid dilution in the stock. As mentioned, only 160K shares were added to the share count in all of this. This is obviously a company that wishes to protect its shareholders and their interests. There are no millions of shares and warrants being added to the company's stock a few weeks before the company turns viral like in the case of Intertainment.
Do you appreciate loyalty rewards programs?
Do you drive or own pets?
Do you think companies will value a tool that can better track and retain customers?
Do you like companies with an aggressive growth strategy in Canada?
Do you like companies that intelligently use finance options to avoid shareholder dilution and have clear debenture holder support?
If the answer is yes to any of these, you might consider FUT as an investment within your small-cap portfolio.
How Futura Loyalty Compares to Intertainment Media
If you read my article here, two of my claims about Futura Loyalty (TSXV:FUT) were that they have more new tech revenue than Intertainment Media (TSXV:INT) and they have similar extremely positive growth prospects as INT. The easy part is proving that Futura's loyalty rewards program is currently more prosperous than Intertainment's New Media division.
Let’s take a look at Futura's Q4 earnings:
“Total revenue from continuing operations for the year ended December 31, 2010 was up 34% to $1,654,326, from $1,237,770 in 2009. Excluding breakage, revenue for 2010 and 2009 was $1,369,626 and $745,725 respectively, an 84% annual increase. The increase in revenue in 2010 was largely the result of increased branded loyalty reward currency revenues which rose to $1,287,019 in 2010, compared to $574,742 in 2009, a 124% annual increase.”
That last sentence is important. The vast majority of their revenue and all of their growth is from their loyalty reward currency revenues.
If we review Intertainment Media's SEDAR filings and scroll down past all the news releases, we eventually get to their MD&A for 2010. The New Media division is key as that is the division with itiBiti, Ad Taffy, and of course, Ortsbo. An excerpt from their MD&A is here:
"Revenue for the quarter ended December 31, 2010 was $1,402,890 compared to $1,465,610 the quarter ended December 31, 2009, representing a decrease of 4%. This decrease was almost entirely due to significant one-time order in the Graphic Services division in fiscal 2010 not repeated in fiscal 2011. Graphic Services division revenue for the quarter ended December 31, 2010 was $1,370,804 compared to $1,465,434 for the quarter ended December 31, 2009, representing a 6% decrease. Revenue from the New Media division for the quarter ended December 31, 2010 was $32,086 compared to $176 for the quarter ended December 31, 2009, representing 18131% increase. The increase was due to the launch of itiBiti players during fiscal 2010, the NBC Communicator, sponsored by NBC.com and The LaunchPad, sponsored by McDonald’s Canada."
Although their total revenue is higher than Futura's, the vast majority of that revenue is from their printing business. Not exactly the driver of INT's stock price. They only achieved $32K in revenue from their new media in the quarter. While the math trick of a 18,131% increase looks nice, next to Futura's full year loyalty points revenue of $1.3M or $461K for the 4th quarter and $32K is miniscule by comparison.
Here is Futura's revenue profile for their Aeroplan Miles loyalty currency revenues by quarter. Note that this is Aeroplan Miles only, excluding the small portion of their own rewards program that is included in the loyalty figures above.
While FUT’s loyalty revenue has a nice growth profile, it is really 2011 revenue that you should be getting excited about as they have signed a contract with CARP late in 2010 and with TADA early in 2011.
From CARP release:
"TORONTO, ONTARIO, Nov. 10, 2010 (Marketwire) -- CARP, A New Vision of Aging for Canada, and The Futura Loyalty Group Inc. ("Futura") (TSX VENTURE:FUT), a provider of customer loyalty and technology solutions, today announced that Futura Rewards will become the official loyalty currency for CARP's 300,000 members, automating CARP's benefits program.
Futura Rewards (www.FuturaRewards.ca) is a free national rewards program, enabling members to earn cash rewards from hundreds of participating merchants in communities across the country. The program also offers members access to a robust on-line shopping mall, where they can earn rewards from over 50 leading retailers. Futura will work with CARP and its national network of chapters and ambassadors to actively recruit more merchants to the program in each CARP chapter community, enhancing CARP/Futura members' ability to earn cash rewards with local shopping, keeping spending in their immediate area."
From the TADA release:
"TORONTO, ONTARIO -- The Futura Loyalty Group Inc. (TSX VENTURE:FUT) (the "Company") today announced that since completing its partnership with The Toronto Automobile Dealers Association (TADA), the Company has executed 23 agreements with member dealers. The first group of dealers has now launched and is actively promoting and issuing Aeroplan Miles to customers. Working closely with the Company, individual dealers have the flexibility to customize their program to suit their business needs and seasonality.
About TADA
SINCE 1908, TADA serves over 340 new car dealers in the Greater Toronto Area and represents every manufacturer's brand and franchise."
Reading the underlined content shows that Futura greatly expanded their client base with 300,000 CARP members now a part of Futura's benefits program. They have signed up 23 car dealerships associated with TADA and have the opportunity to increase that base much further as there are still over 300 additional dealerships that have great incentive to follow the other 23 dealers so they are not at a competitive disadvantage to them.
INT has had a wonderful PR campaign going. There are multiple press releases stating its millions of users and multimillions of page views all over the world for Ortsbo. However, each of these users earns INT pennies of revenue each through advertising revenue. When you ask yourself as an investor or as a business owner, would you rather have millions of users that earn you a little bit of revenue each, or a few hundred users that earn you thousands or millions of dollars in revenue each?
INT has the former structure. FUT has the latter. Not to say one business plan is superior to another, but I believe the former plan sets up for easy press releases and word of mouth on the stock price, leading to the events that saw INT rise to $3 and crash to less than $1 in a very short time frame. I believe the latter business plan just earns you revenue growth and a long-term, consistent stock price increase.
See here for a complete list of Futura's clients. There is a variety of Aeroplan Partners that Futura supports but their most complete industry coverage is automobiles. In addition to the TADA clients above, they have brought loyalty rewards programs to well-known repair, maintenance and tire shops. At the rate of Futura's growth, everybody who drives a car in Toronto and soon in all of Canada will be earning revenue for Futura for every mile they drive in some fashion as they collect reward benefits. Whether that's through a new car purchase or repair at their dealer, body shop work or tire replacement.
When choosing an investment, you have to ask yourself this question. What do you spend more time doing? Driving? Or talking online with a Chinese, Indian or Russian person or Gene Simmons using an online translation program? If it’s the former task, then you should certainly consider FUT as an investment.
Click here to see the full Futura Story
Click here to see how Futura compares to SelectCore
Let’s take a look at Futura's Q4 earnings:
“Total revenue from continuing operations for the year ended December 31, 2010 was up 34% to $1,654,326, from $1,237,770 in 2009. Excluding breakage, revenue for 2010 and 2009 was $1,369,626 and $745,725 respectively, an 84% annual increase. The increase in revenue in 2010 was largely the result of increased branded loyalty reward currency revenues which rose to $1,287,019 in 2010, compared to $574,742 in 2009, a 124% annual increase.”
That last sentence is important. The vast majority of their revenue and all of their growth is from their loyalty reward currency revenues.
If we review Intertainment Media's SEDAR filings and scroll down past all the news releases, we eventually get to their MD&A for 2010. The New Media division is key as that is the division with itiBiti, Ad Taffy, and of course, Ortsbo. An excerpt from their MD&A is here:
"Revenue for the quarter ended December 31, 2010 was $1,402,890 compared to $1,465,610 the quarter ended December 31, 2009, representing a decrease of 4%. This decrease was almost entirely due to significant one-time order in the Graphic Services division in fiscal 2010 not repeated in fiscal 2011. Graphic Services division revenue for the quarter ended December 31, 2010 was $1,370,804 compared to $1,465,434 for the quarter ended December 31, 2009, representing a 6% decrease. Revenue from the New Media division for the quarter ended December 31, 2010 was $32,086 compared to $176 for the quarter ended December 31, 2009, representing 18131% increase. The increase was due to the launch of itiBiti players during fiscal 2010, the NBC Communicator, sponsored by NBC.com and The LaunchPad, sponsored by McDonald’s Canada."
Although their total revenue is higher than Futura's, the vast majority of that revenue is from their printing business. Not exactly the driver of INT's stock price. They only achieved $32K in revenue from their new media in the quarter. While the math trick of a 18,131% increase looks nice, next to Futura's full year loyalty points revenue of $1.3M or $461K for the 4th quarter and $32K is miniscule by comparison.
Here is Futura's revenue profile for their Aeroplan Miles loyalty currency revenues by quarter. Note that this is Aeroplan Miles only, excluding the small portion of their own rewards program that is included in the loyalty figures above.
| Q1 | Q2 | Q3 | Q4 | Year | |
| 2009 | 14,777 | 44,010 | 101,691 | 322,310 | 482,788 |
| 2010 | 201,408 | 323,936 | 273,820 | 461,687 | 1,260,851 |
While FUT’s loyalty revenue has a nice growth profile, it is really 2011 revenue that you should be getting excited about as they have signed a contract with CARP late in 2010 and with TADA early in 2011.
From CARP release:
"TORONTO, ONTARIO, Nov. 10, 2010 (Marketwire) -- CARP, A New Vision of Aging for Canada, and The Futura Loyalty Group Inc. ("Futura") (TSX VENTURE:FUT), a provider of customer loyalty and technology solutions, today announced that Futura Rewards will become the official loyalty currency for CARP's 300,000 members, automating CARP's benefits program.
Futura Rewards (www.FuturaRewards.ca) is a free national rewards program, enabling members to earn cash rewards from hundreds of participating merchants in communities across the country. The program also offers members access to a robust on-line shopping mall, where they can earn rewards from over 50 leading retailers. Futura will work with CARP and its national network of chapters and ambassadors to actively recruit more merchants to the program in each CARP chapter community, enhancing CARP/Futura members' ability to earn cash rewards with local shopping, keeping spending in their immediate area."
From the TADA release:
"TORONTO, ONTARIO -- The Futura Loyalty Group Inc. (TSX VENTURE:FUT) (the "Company") today announced that since completing its partnership with The Toronto Automobile Dealers Association (TADA), the Company has executed 23 agreements with member dealers. The first group of dealers has now launched and is actively promoting and issuing Aeroplan Miles to customers. Working closely with the Company, individual dealers have the flexibility to customize their program to suit their business needs and seasonality.
About TADA
SINCE 1908, TADA serves over 340 new car dealers in the Greater Toronto Area and represents every manufacturer's brand and franchise."
Reading the underlined content shows that Futura greatly expanded their client base with 300,000 CARP members now a part of Futura's benefits program. They have signed up 23 car dealerships associated with TADA and have the opportunity to increase that base much further as there are still over 300 additional dealerships that have great incentive to follow the other 23 dealers so they are not at a competitive disadvantage to them.
INT has had a wonderful PR campaign going. There are multiple press releases stating its millions of users and multimillions of page views all over the world for Ortsbo. However, each of these users earns INT pennies of revenue each through advertising revenue. When you ask yourself as an investor or as a business owner, would you rather have millions of users that earn you a little bit of revenue each, or a few hundred users that earn you thousands or millions of dollars in revenue each?
INT has the former structure. FUT has the latter. Not to say one business plan is superior to another, but I believe the former plan sets up for easy press releases and word of mouth on the stock price, leading to the events that saw INT rise to $3 and crash to less than $1 in a very short time frame. I believe the latter business plan just earns you revenue growth and a long-term, consistent stock price increase.
See here for a complete list of Futura's clients. There is a variety of Aeroplan Partners that Futura supports but their most complete industry coverage is automobiles. In addition to the TADA clients above, they have brought loyalty rewards programs to well-known repair, maintenance and tire shops. At the rate of Futura's growth, everybody who drives a car in Toronto and soon in all of Canada will be earning revenue for Futura for every mile they drive in some fashion as they collect reward benefits. Whether that's through a new car purchase or repair at their dealer, body shop work or tire replacement.
When choosing an investment, you have to ask yourself this question. What do you spend more time doing? Driving? Or talking online with a Chinese, Indian or Russian person or Gene Simmons using an online translation program? If it’s the former task, then you should certainly consider FUT as an investment.
Click here to see the full Futura Story
Click here to see how Futura compares to SelectCore
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