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Tropika International Limited, (OTC CDN: TPIL) Stock Analysis

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OTC Journal
February 18, 2000
Volume III, Issue 14

Email : info@otcjournal.com
URL : http://www.otcjournal.com

To OTC Journal Members:

Several weeks ago we were asked to look at Tropika International Limited (OTC CDN: TPIL).  We mentioned it in last Friday's newsletter.  This past week we had the opportunity to investigate the Company's financial history and interview management extensively.  We decided to make this Company our February Profile despite the fact that we view this stock as very risky, and it will be difficult to trade through US brokerage firms.

We are not averse to featuring highly risky companies if the upside potential justifies the downside risk.  Last month's profile of MicroAccel (OTC BB: MIXL) was one of the riskiest companies we have ever covered.  We brought it to you on January 21st at $4.50, and today it closed at $7.75 for a net gain of 72%.  Market conditions are very favorable right now for micro cap stocks and new technologies.

Tropika International is an Internet Technology and financial services company.  It trades in the obscurity of the Canadian OTC market under the symbol TPIL.  It is not obscure to Canadian investors as the company has over 3,000 shareholders.  If you have an on-line US brokerage account you will have to call their overseas trading desk to purchase the stock if you choose to.

The company made their 20F filing to trade on the OTC Bulletin Board as a fully reporting company last May, so they are probably near the end of the process.   We have chosen to provide you with this information before they trade in the US, rather than after.  For all you speculators that still like penny stocks, this one would clearly fit into that category.  The stock trades at about $.70 Canadian, which translated roughly to $.40 US.  The stock has a lot of momentum right now, and so does the company.  However, this is a highly risky situation, so do not invest more than you can afford to lose.  15 minute delayed quotes can be found on this stock at both www.smallcapcenter.com, and www.stockhouse.com.  Use the Ticker Symbol O.TPIL when looking for the quote.  If you Click Here you will be taken directly to the quote at smallcapcenter.

Tropika International LTD (OTC CDN: TPIL)*

Tropika International describes itself as an innovative e-commerce services company.  They have acquired a high level of IT skill by building and launching 11 casino sites and one bingo site.  We aren't profiling this company because we like the On-Line casino industry.  We like the fact that they know how to build on-line casinos that are functional and efficient.  Building an online casino requires all the skills and knowledge that are required to create and manage e-commerce solutions.

If you would like a list of their casino sites, simply click here, and you will be taken directly to it.  They have been so successful in this endeavor that last November's six month betting sales jumped from $5.7 million in 1998 to $29.4 million in 1999.  This equates to an annual growth rate of 500% for this segment of their business.

Their on-line service center is located in South Africa.  This is the first company we have ever encountered that has chosen South Africa as a technology haven.  Management told us that they get First World Technology at Third World Prices in South Africa.

However, while the growth of their on-line casino business has been prolific, it is the new e-commerce arenas they are entering that interest us.

Tropika has launched one new arena of business and is launching another in the near term that we find very intriguing.

RC Securities

On November 29th, 1999, Tropika announced that it was launching an off-shore, on-line brokerage firm specifically tailored for investors that held assets in the Caribbean, but were looking to be able to trade stocks with their capital over the Internet in world wide markets.

RC Securities is now functioning and handling transactions.  You can visit their site at www.rcsecurities.com.  Take the tour.

Tropika's shares began to trade very well when they announced the sale of 10% of RC Securities for $1 million US, implying that RC Securities has at least a $10 million US value.  RC Securities was originally purchased for $75,000 in US cash and $2.8 million CDN in stock.  Based on the $10 million value, Tropika's investment in RC Securities has nearly tripled in less than one year.

It is estimated that RC Securities functions in a market that is worth nearly $7 Trillion in annual business.   The management of off shore assets is often slow and cumbersome.  We believe that many off-shore trusts will choose the ability to actively manage their assets over the Internet.  There is competition, but the market is huge and RC Securities is in early.  This could prove to be a very profitable subsidiary in future years.  They intend to expand into Investment Banking services.

Zorro Systems Ltd- New Java Based Search Engine Technology

This Linux based Java Script search engine technology was publicly available for beta testing for two months.  The beta test ended earlier in February.

Zorro is a java-based search engine that performs real-time, online searches of price and other product-related data on e-commerce servers in order to give consumers the most economical online shopping available. Zorro's intelligent, dynamic, interactive architecture is unique in the industry. This technology will be positioned as an information intermediary, reducing extraneous data, a necessity for smart web-users who can find themselves swamped with information.

The first application of the Zorro technology was beta tested with a product called Intelli-Shop, a search engine that allows consumers to search the web for the lowest prices available on products they are seeking to buy.

They plan to roll out a final version of Intelli-Shop later this year.  The revenue model includes advertising revenues and transaction based fees.  We haven't had the chance to use this search engine yet, but the Company felt that the beta test went extremely well.  Click Here to read the Company's letter to beta testers.

Conclusion

This company views itself as an Internet Technologies incubator.  They have proven that they can create IT solutions because of success of their on-line gaming program.

B to B business solutions and web development Companies are trading as well as any stocks today and over the last 30 days this stock is no exception.

Furthermore, the stock closed today about 13% below this week's high.  After the market closed there was a news release issued by the company which could propel the stock on to new highs.  Tropika announced that it would be receiving $2.7 million US to market three of its premier on-line casinos.  Here is the full text of the news release for your review:
 

Tropika US$2.7 Million To Fund Casino Marketing; Strategy 

via CDS
 

February 18, 2000

To Increase Marketing Pace 

John Ashbee, Chairman and CEO of Tropika International Limited, is pleased to announce that Tropika's offshore entertainment subsidiary, Online Commerce Inc., has entered into a marketing agreement for three of its online casinos - www.magic-carpetcasino.com, www.astrobet.com, and www.casinoiceberg.com. The arm's-length agreement, with Consolidated Rich Capital Corporation of Vancouver, will inject US$2.7 million over three months into marketing these casinos, using the services of Tropika's South African subsidiary, APS Marketing. In exchange, Consolidated Rich Capital will receive 50 percent of net revenues from the three casinos once its 
investment is recovered. 

'From the outset, Online Commerce Inc. has understood the need for concentrated marketing of its casinos,' said Mr. Ashbee. 'As the industry becomes better populated, the need for marketing obviously increases, and this agreement gives Online Commerce's casinos an edge. In addition, the readiness of outside parties to participate in Tropika's early-stage ventures offers independent validation of our track record as an Internet incubator. This 
joint venture enables both parties to benefit from growth in an expanding industry.' 

Well-known Bear Stearns analyst, Jason Ader, estimates that total online wagers could grow from US$1.2 billion in 1999 to US$3.0 billion by 2002. 

'We see this arrangement as a tightly focussed burst-marketing strategy,' said David Prue, Tropika's VP, Business Development. 'Essentially, the agreement provides the casinos with additional marketing funds without any dilution of Tropika's stock. There is a tremendous advantage in this partnership, since these dedicated marketing funds will enable the casinos to enjoy the kind of strong growth that we know is possible. This is a win-win situation, and we hope to work with the management of Consolidated on the marketing of future web-based initiatives.' 

Peter Wilson, Marketing Manager at APS, believes that this cash injection represents a significant step forward in positioning the three casinos as leaders in the field of online gaming. 'We pride ourselves on the quality and credibility of the marketing services that we offer,' he said. 'This substantial investment will enable us to be aggressive in communicating within an increasingly competitive marketplace.' Involved exclusively with the Internet, Tropika International Limited identifies and develops breakthrough business opportunities with the 
potential to be best-of-class in the e-commerce environment. Tropika applies its resources in IT, finance, and marketing in order to create and build value.

CONTACT: TEL: 416-674-1365 Corporate Information, Tropika International 
WEBSITE: www.tropika.com
E-MAIL: info@tropika.com 
TOLL FREE: 800-444-9214 I.R., The Investor Relations Group 
WEBSITE: www.invrel.com
E-MAIL: tropika@invrel.com 
TEL: 416-368-8770 Shareholder Relations, Ciris International 
WEBSITE: www.cirisint.com 
E-MAIL: robins@cirisint.com 
 

If you wish to learn more about their on-line casino business you can click here, and you will be taken directly to an interview with their VP of finance.  Many thanks to one of our members for finding this interview for us.



15 minute delayed quotes can be found on this stock at both www.smallcapcenter.com, and www.stockhouse.com.  Use the Ticker Symbol O.TPIL when looking for the quote.  If you Click Here you will be taken directly to the quote at smallcapcenter.


Disclaimer

The OTCjournal.com Newsletter is an independent electronic publication committed to providing our readers with factual information on selected publicly traded companies. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. All statements and expressions are the sole opinions of the editors and are subject to change without notice. This profile is neither an offer nor solicitation to buy or sell any securities mentioned. This newsletter is owned by SSP Management, Inc, a wholly owned subsidiary of 1st Net Technologies, Inc ("1st Net").  While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.  The editor, members of the editor's family, and/or entities with which they are affiliated, may own stock in and have other financial dealings with the companies who appear in the publication.  To that degree, this newsletter should not be regarded to be an independent publication.  MarketByte LLC, which publishes the OTC Journal on behalf of SSP Management has been paid a fee of $50,000 for representing Tropika International for one year.  The fee has been paid by the Investor Relations Group on behalf of Tropika.  Neither MarketByte or SSP Management have any formal relationship with Tropika. The OTCjournal.com critiques may contain forward looking statements relating to the expected capabilities of the companies mentioned herein.

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