Hey guys ...
I have followed Bill Ridley's articles over the past year and to say he's discovered some gems is an understatement. As of December 1999 Tropika is at .35 Canadian. Let's see where it goes over the next 12 months.
Here is the link to his work & the info on Tropika International Limited
billridley.com
Cheers,
Mike
nt.net
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December, 3 1999 - Tropicka International Ltd.
An Inner Circle Newsletter Special Report
Tropika International Ltd.
TPIL - Canadian Dealing Network
Shares Out: 77+ million
Investor Information:
1-800-444-9214
www.tropika.com
How to Profit from Cutting Edge E-commerce
Tropika International is an Internet based company with three e-commerce divisions:
Entertainment, Financial and e-Business Services utilizing proprietary software. At first
glance there may seem to be a disparate combination between gaming and financial
services; however, it represents the company's fully integrated strategy: creating a
flexible dynamic market driven e-commerce powerhouse. Gaming provides all the
necessary attributes for any successful e-commerce business: Web site design,
marketing, customer service, secure credit card processing use and two-way
transactions, not to mention significant cash flow.
As many of you already know, gaming is one of the hottest Internet businesses on the
web. For Tropika this heat is quite evident. Revenue generated in fiscal 1999, which
ended May 31, was over Cdn $20 million, up from $369,000 the previous year. For the
quarter ended August 31, the revenue increased by 48% over the previous quarter, to
$14.4 million. Tropika's revenue from the Entertainment Division's 12 online gaming sites
is expected to continue to increase.
Both of Tropika's other ventures are in advanced development. RC Securities was
launched at the end of November and Intellashop has just started BETA testing and
plans to launch in Q1 of 2000.
RC Securities is an electronic gateway which facilitates online trading of equities for
International Business Corporations (IBCs) and offshore trusts worldwide, on any major
exchange! This is customized software, which complements the business that is
currently being done in the world's tax free jurisdictions because it provides a level of
access and security that managers of IBCs and offshore trusts will demand for their
clients. The Company anticipates that RC Securities will be profitable in as early as 45
days, based on anticipated demand.
Last but not least, Tropika's e-Business Division will present a consumer friendly online
shopping aid called Intellashop. Intellashop is a personal shopping agent which has been
built on real-time search engine technology owned by Tropika's subsidiary Zorro
Systems Ltd. Intellashop offers consumers a complete solution for evaluating purchase
decisions on online merchants based on price, delivery considerations and a merchant
quality ranking. Best of all Intellashop will offer consumers a price/availability alert that
sends an email to a consumer when a specified product's price meets the consumer's
pre-set target.
Sound interesting? It is no wonder Tropika has become one of the most actively traded
stocks on the CDN. Their intention is to take this trading to a Canadian exchange, as
well as the OTC BB in the US and they are advanced in the necessary filings. Let's take
a closer look at the separate divisions.
THE ENTERTAINMENT DIVISION
The Internet Gaming Industry's Rising Star
Online gaming is one of the Internet's fastest growing and most profitable
businesses. There are already an estimated 25 million online gamblers and
in just two years time there will be a projected 43 million Internet- based
gamblers generating up to US $3.9 billion in revenues. Tropika has 11
casinos and 1 bingo site up and running. John Ashbee, Tropika's CEO has stated, "The
casinos are making more and more money every night. In a year to 18 months we are
expecting some exciting revenue streams." Ashbee feels that when the casinos are
running at capacity, the revenue generated could reach $60 million per month. If the
house takes 5% in profits, Tropika would end up with $3 million per month! And to
reiterate, the factors determining this success are only a function of time and
marketing.
(Remember the current capitalization of Tropika is $25 million, approximately 8 times net
revenue from the gaming side alone. I believe this is a very conservative multiple for a
company with such dramatically increasing revenues. One rule of thumb is to apply the
multiple of growth to the net revenues. So if sales are increasing by 50% per annum
continuous, then the multiple would be 50 times net earnings. Obviously, risk factors
need to be calculated into the equation, but I don't think anyone would argue with a
multiple of 20 - giving a segmented value to the Gaming Division alone of $60 million!)
Notably, the gaming support infrastructure is transferable to the Financial Services
Division, including the now operational RC Securities. We can look at this further when
we get to the next section.
For the time being, Tropika does not plan to add any more new casinos to its roster in
order to concentrate their efforts on developing the Financial Services Division.
THE FINANCIAL SERVICES DIVISION
RC Securities Plans to Introduce Online Trading To Offshore Accounts Whose
Value Is Approaching US$7 Trillion
There is estimated to be US $7 trillion dollars of capital in offshore
jurisdictions throughout the world. My interviews with individuals who own
offshore trusts and International Business Corporations have revealed
that trading securities in these offshore jurisdictions can be time
consuming, inefficient and a slow process. In every other aspect of
securities trading, the Internet has revolutionized efficiency in the client's favor.
RC Securities has the first entry to bring this revolution to the offshore world. Now an
"advisor" to an offshore trust or IBC will be able to log onto the account, in the most
secure environment available (128 encryption Internet versus fax or phone), from
anywhere in the world, execute the transaction, get a report and sign off. Very simply,
this software complements the existing business in tax-free jurisdictions by providing
the client with what the client wants. This is the key to describing successful
enterprises.
RC Securities has retained a respected brokerage firm to execute, clear and provide
custodial services for their clients. This relationship further evidences the quality of
their product. The IBCs and trusts will be assured that they are not dealing with an
unproven custodian. Furthermore, the offshore world is fragmented and secretive by its
very nature.
E-BUSINESS DIVISION
Tropika is looking at a number of initiatives that would fall under the e-business initiatives
category.
The two they have announced, Zorro Systems Ltd. and its application, Intellashop Inc.,
work together
to provide consumer's a dedicated shopping tool. Zorro's real-time, multi-channel search
technology
has been assembled so that it can be easily licensed into other verticals. Intellashop is
another
venture in which Tropika can capture a dominant marketing lead, as they are the first
company to offer
the consumer a complete real-time personal shopping agent solution for evaluating online
merchants.
Intellashop, based on Zorro System's search technology, began beta testing in November.
Intellashop Inc.
Intellashop has been described by John Ashbee as a "consumers best
friend". Tropika's aim is to launch Intellashop to work on behalf of the
consumer in the lucrative books, music and video markets. Immediately
after launching, Intellashop is scheduled to continually add consumer
shopping categories.
Now let's say you wanted to buy a particular book. You would enter the
subject/book title into Intellashop and within seconds you would have a
complete global listing of all the choices available on the net, as gathered
from a real-time search across online merchants. Then, selecting the
specific edition (hard cover, publication date, author, etc.) Intellashop would present a
table of available merchants of the product broken down by price, shipping
considerations and quality of the merchant.
The implications of this service to the buyer are enormous. We all like to comparison
shop, but doing this on the Internet is contradictory to the time saving of shopping on
the net - until now. Intellashop's software differs from others, in that it performs its
duties in real-time through all available merchants.
There are other consumer advantages in addition to time savings. For example, let's say
the best price for your book is $16 but you only want to spend $12. You can program
Intellashop to keep watching for an opportunity to buy at your set price. When
Intellashop finds the right deal, you will be able to program it to execute the order
automatically or to email you as to the availability.
Now here's another twist that could save you money. Let's say there are 5,000 people
who also would only be interested in paying $12 for your book. As critical mass grows
Intellashop will be in a position to secure a volume purchase at a lower rate through
available vendors.
There are significant business opportunities for management to derive revenue from
Intellashop, including advertising, commissions, and trend analysis. But initially, the
primary objective is to secure a relationship with the growing world of Internet
consumers. The contribution to the value of Tropika is clear when it's compared to other
comparative Internet companies trading in the US market, with market capitalizations in
the 100s of millions. Clearly, when this service catches on, Tropika will have another
huge winner!
Zorro Systems Ltd.
Zorro's team of developers has pushed the envelope with their real-time
search technology. Initially built to support Intellashop's shopping engine,
the team at Tropika has established other vertical applications for this
proprietary technology.
Tropika is committed to building a senior team of marketers to implement
the Zorro technology in as many vertical markets as possible. Dependant
on the success of Intellashop's launch, Zorro will leverage them to enter into the search
technology space.
Zorro presents a great opportunity to derive revenue from licensing and partnerships
from other .com companies.
CONCLUSION
Tropika International offers the small cap investor leverage into three vertically
integrated companies operating in the world of e-commerce, all under one umbrella.
There are several points to keep in mind when assessing this opportunity:
All 12 of their gaming sites are operational and generating net revenue.
RC Securities provides software that brings the world of the Internet into the rich
offshore market.
Intellashop is a unique service that could have a serious impact on how people
shop as we enter this next century.
Zorro Systems is positioned to apply its proprietary search technology in a
multitude of vertical markets.
Individual evaluations of each of the separate divisions reveal significant
discrepancies in comparable companies and could provide spin off opportunities to
shareholders.
A Canadian listing and an OTC BB listing in the US will do much for the profile of
the company.
I will be watching Tropika closely and can see big things for shareholders in the months
ahead.
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