Glance Technologies Inc (CSE: GET) has been a fan favourite for a handful of months now. Due to some strategic licensing, the company has arms stretched out into two of the hottest sectors right now. Namely, this consists of both the cannabis market as well as the emerging blockchain sector. Further to these, these licensing deals have proven to be an excellent source of revenue for the company.
However, all is not well with Glance Technologies. Just this week, investors were hit hard with what began as the ousting of the companies president. To add to the mess, the following day a meeting request was called by major shareholders to discuss the current directors. Essentially, it consisted of the former president looking to regain control of the company that she had co-founded and remains a major shareholder in.
With this drama, the company was forced to issue a letter from the CEO and CTO describing the situation and informing shareholders of what had transpired. The response from investors was to jump ship before things could get any worse. The company lost 25% of its value within a single trading session.
As a result of this massive price swing, we determined it was a good time to look in to the company. Naturally, they are the topic of this weeks full analysis. Here we go.
A Hard Look at Glance Technologies
Glance Technologies originally went public back in August of 2016. The company itself is a family affair – it was co-founded by Desmond Griffin and his sister-in-law Penny Green, with other family members working within the company as well.
For a time, it worked excellently. After the initial IPO of the company, both the iPhone and Android mobile apps for their product had been established within a month. Initially, this mobile app focused on providing a mobile payment solution for restaurants. Although it took a few weeks to obtain interest in the market, it quickly took off afterwards. By the end of December, the company had managed to secure 130 restaurants to utilize its app, which included two chains with locations across the country.
With the advent of 2017, things appear to have slowed for Glance Technologies however. In early January they introduced their revenue structure, and it slowed down the momentum that the company had. However, this enabled the company time to enhance the product it was selling. By the end of April, a number of enhancements had been added to the Glance Pay application that transformed it entirely. The program now included a handful of additional features, which includes options for consumers to order ahead, or to pay anywhere. This however, was just the beginning of the transformation that Glance would see by the end of 2017.
Glance Technologies’ Current Operations
The bread and butter of Glance Technologies: Glance Play. What originally started as an application to streamline payments for restaurants has since evolved in to something much more. Not only that, but it has also presented white label licensing opportunities for the company that have proved quite fruitful.
The application itself is available on both iPhone and Android mobile devices, and is frequently updated by the company on both platforms. Since it’s initial release, it has evolved significantly to include several additional features that were not originally present. Users are able to search what locations currently offer the service, split the tab amongst friends, and accrue awards for utilizing the app among other things. Finally, it also offers rewards which will eventually be converted in to a cryptocurrency once the company has completed all the required legwork. Lastly, the app has since been optimized so that it can be utilized in additional sectors.
One interesting aspect of the application however, is the way in which it is presented by the company. If one visits the corporate website, it is presented as a mobile app that allows individuals to pay for services through the use of crypto currencies. It touts the security features of the product in terms of the blockchain, and presents the product as if it is solely focused on this purpose.
However, when the website for Glance Pay is accessed, the mention of blockchain and cryptocurrency is minimal. In fact, we found the word “cryptocurrency” once on this entire app-focused website. This begs the question of who the company is really selling blockchain and cryptocurrency to – consumers, or investors?
As a means of providing additional income, Glance Technologies has allowed other companies to license its technology. This is done under a white label, so that the company is able to receive additional funding for modifying the application to suit the licensee. As of the time of writing, the technology has been licensed to four separate companies as outlined below.
- Active Pay Distribution – A company focused within the health and fitness sector, Active Pay is using Glance Technologies software under a white label presently. The total revenue for the transaction comes in at $1,000,000, all paid in company stock. In addition to these initial figures however, is a 10% royalty fee payable on a monthly basis. It was unclear whether this would be paid in cash or stock. The agreement is for an initial one year, however it is renewable for up to 99 additional years at a significantly reduced rate.
- Euro Asia Pay Holdings – Initially announced as a letter of intent in April, in October 2017 Glance Technologies and Euro Asia Pay came to a deal on the licensing of the application software. Similar to Active Pay, Euro Asia will pay Glance a total of $1,000,000 for access to the software which will be used to create an app focused on Chinese tourists and students. Of this sum, $250,000 has been already received in cash payments, with $155,000 more to be paid out. The remainder is to be received in the form of stock. As a result of the transaction, Glance will own roughly 30% of Euro Asia Pay Holdings.
- Fobi Pay Technologies – The latest licensing deal for Glance Technologies, is also it’s largest. In exchange for the Glance suite of software, Fobi Pay will reimburse Glance Technologies the equivalent of $5,000,000. This sum will be paid entirely in common stock of Fobi Pay. Additionally, as a result of this arrangement Glance will be purchasing a software license from a company related to Fobi pay for $1.5 million.
The last licensing agreement that we have yet to touch on, is that of Cannapay Financial Inc. With this transaction, Glance Technologies’ involvement in the cannabis sector had begun. In exchange for this license, Glance was compensated $1,000,000, in addition to potential royalties from sublicenses issued. This however was completed in the form of company stock essentially, with Glance now owning 43% of the cannabis related company. Additionally, as a result of the sublicenses stipulations, the company recently received $1,000,000 in shares from Loop Cannabis Insights this past week.
The technology itself will be used by Cannapay to perform legal business to business and business to consumer transactions. That by all means, is not the issue that we see arising here. Instead, the issue is that it is an arms length transaction. More specifically, is that the President and COO of the company is Penny Green, who up until last week served in the same role for Glance Technologies itself. With the recent ousting of her from the company, it’s uncertain how this will play out. Will Cannapay play it fair, or will Penny force the dilution of the company’s share structure to reduce Glance’s investment? We’ll be watching to see how this plays out in the coming weeks.
Glance Coin Inc
On December 28, 2017, Glance Technologies announced that they had established Glance Blockchain Token Inc as a company. This was then later changed to Glance Coin Inc. Although a somewhat recent development, the company had actually begun working towards this in early October. Initially, this was through a partnership with NetCoins Inc, wherein Glance would utilize the company to facilitate the buying and selling of cryptocurrencies. This was when the idea of a Glance coin was first speculated, as it was stated that the use of Glance Dollars could be used by users to potentially speed up transaction times.
By the end of the month, the company had announced that it intended to develop a rewards-based cryptocurrency. This currency would then be utilized both inside and outside of the Glance Pay application as a means of payment for transactions. Within a month following this announcement, the company confirmed that the currency would be rewarded for each transaction carried out on the app, regardless of if the payment was made in cash or a cryptocurrency. This would then assist in mainstream acceptance of the currency.
By early December, Glance Technologies had acquired BlockImpact to assist in developing it’s specialized currency. It is currently in the process of being integrated with the Glance Pay mobile application.
Glance Technologies’ Financials
Unfortunately for our report, Glance Technologies’ annual financials aren’t due out for another month. This in turn means that the current data available for us to review is many months old.
With the latest data available being for the nine month period ending August 31, 2017, bare with us. For the reporting period, the total revenues rolled in at $383,221, which is largely the result of licensing fees. In regards to this, additional licensing has occurred since the reporting period as we addressed previously, which should have a positive impact on revenues.
Of particular interest to us, is the revenue collected as service fees for its mobile app. Although licensing is an excellent one time surge in revenues, it is not a substantial recurring revenue. There are annual renewals for these fees however they are at significantly reduced rates. Until royalty fees start to come in from these licenses on a consistent basis, these service fees are what will float the company. Consistent revenues is what we like to see quarter over quarter, rather than a roller coaster ride that is unpredictable.
In regards to it’s revenue plan, little has been released by the company aside from this vague statement issued January 17, 2017. The statement was related to the revenue plan for the company as it entered 2017. No similar release was issued by the company for the current year. Rather, the information we received was simply that they were working with companies to determine a sufficient revenue strategy that works for both parties.
One item that Glance Technologies has handled very well, is its cash position. To this end, the company has the wild cryptocurrency run to thank for its current financial fortune. When it was announced that the company would be involved in the blockchain sector, investors piled in to get a piece of something they knew little about. The company acted fast on this, and completed a $11,000,000 bought deal which had a minimal impact on the share count.
As it stands, the funding for the companies cash position has largely been the result of share related payments. In addition to the $11,000,000 bought deal the company performed in December, there was a raise conducted in October as well, to the tune of $4.38 million. Mixed in with the exercise of warrants and the company’s revenues, by the end of December the company had $17.4 million sitting in the bank. As a result of an October 27, 2017 update, we are able to determine the company’s cash burn for the two month period.
In total, it is estimated that the company spent over $2 million each month to sustain operations, before revenues are factored in to the equation. The data for this was compiled through the use of SEDAR filings, and monthly filings on the CSE. Not outlined in these filings was the cost of performing such financings, which will lower the “monthly cash burn” by a certain degree. However, with revenues not being factored in to the equation, we are fairly confident with our findings.
Share Structure of Glance Technologies
All right, time for us to take a look at the share structure of the company. Admittedly, this is the reason for the delay in our release – it took multiple hours to compile everything due to the amount of transactions the company has performed. Here’s the full history of everything that has gone down with the company’s share structure since the date of its last financials. Apologies for having to scroll endlessly.
Essentially, the company loves to constantly change its share structure. Not included in the list, is a recently announced share buyback of up to 6,500,000 shares. As of yet it does not appear that this has occurred. Furthermore, our compilation is based on data filed by the company to the CSE. Our figures were triple checked, however we still could not come out to the final tally that the company issued in its latest filing. Our estimate actually has a lower outstanding share count at 130,622,327 versus the companies stated count of 132,100,192.
Based on the companies stated share figure of 132,100,192, using the closing price of $0.54 on February 23 gives Glance Technologies a market valuation of $71.33 million. On a fully diluted basis, this amounts to $85.30 million. Considering that the company has in the neighborhood of $17 million in the bank, this may be a very fair valuation. In any sense, it’s a long way off from its high of $3.84 seen just a few short months ago.
The last item we wanted to cover is the inside ownership of Glance Technologies. Presently, over twenty percent of the company is held by two insiders – Desmond Griffin, and Penny Griffin.
Now normally, these large insider positions would be an excellent thing. It shows strength in the company from management, and signals to investors the faith management has in their success. However, there are times that it can be a negative thing. Such as right now for Glance Technologies.
Why is it a bad thing? Right now, the single largest shareholder is Penny Green. As we addressed earlier, she was forced out of the company last week by Desmond and his wife Angela, both of whom are officers of the company. Following this, Penny Green requested a vote for shareholders to potentially remove three independent directors and replace them with three of her own. By doing so, she could regain control of the company in which she co-founded. Right now the company is in a power struggle and investors are at the mercy of management.
Closing Remarks on Glance Technologies
If you didn’t catch it by now, we are heavily focused on the current power struggle that has developed within Glance Technologies. It’s had a major impact on the valuation of the company, and it’s difficult to determine when it will be over. Since the close on February 16, the final day before things erupted at Glance, the companies share price has been effectively halved. In total, its market valuation has taken a hit to the tune of $72.66 million in the last week.
It would also not be surprising for the trend to continue. As it stands, the power struggle could result in either party gaining control of the company. Ultimately, this will affect the direction in which the company continues. And regardless of how it plays out there’s the potential to see major selling pressure from the losing party, both of whom are a major shareholder. For now, this leaves us bearish on the company – no matter how bullish we are on the technology in which they possess.
Be aware of family operations. As can be seen, they’re inherently risky. Dive Deep.
Information for this analysis was found via The CSE, SEDAR, Glance Pay, LinkedIn, SEDI, Google Play, and Glance Technologies Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.