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The
Formula For Success in Microcaps |
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Here's the formula: Find a market
with massive increasing demand. Find a company with outstanding and proven
technology in that market. Find a company with significant and growing
sales. Find a company with a reasonable market valuation that has upside
and isn't widely followed. Find a company that has the potential to deliver
catalytic events that will result in a higher stock price. Invest in the
stock and wait for developments to put profits in your pocket. Here's a
bonus- if the company is already profitable, it diminishes your risk considerably.
Today's idea has it all.
So, let's talk about the market for
today's idea:
Biometrics- it's an en vogue buzz word- but
what does it really mean? Biometrics is defined as: "verifying the
identity of an individual based on measurable physiological and/or behavioral
characteristics".
It's all about security and indentification.
Not just security against terrorism- it's also about security from bank
fraud, border crossing, airports, public venues, etc. Do you know the estimated
number of persons entering the US illegally every year? 330 million. Mind
boggling. The immigration issue is in the press everyday, and the problem
is growing.
So, here's your market: The current
market for Biometrics Technologies is about $1 billion annually. Growth
estimate: $7 billion annually by 2008. The US Government spent $432 million
on biometrics technologies in 2004. Growth estimate for government spending:
$1.8 billion annually on same in 2008. Now, that's growth.
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Titanium Group
(OTC BB: TTNUF): Recognizes You |
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Facial recognition software- the
biometric security of the future? or is it here today? If you are thinking
fingerprint identification- eye scanners- dna testing- are the future,
you would be wrong. They all have their strengths and weaknesses.
Fingerprint identification can corrode
over time. Iris scanning can be skewed by contact lenses- DNA testing-
way off in the future. In fact, there is only one solution that has the
capability of quickly handling the scanning of many- Facial Recognition
Software.
You might think this is a very futuristic
technology- you have to bet on them developing the systems and eventually
selling them to the market. Not so- Titanium Group has the most
sophisticated facial recognition sofware available, they are selling systems
now, and they have a three year history of profitability.
Facial recognition software is not
a stand alone security system. Most new security systems are a combination
of components which could include finger print ids, retinal scanning, etc.
Titanium Group's technology
has been developed in the Far East. Ti-Face SDK (software development kit)
is Windows driven software. They have been awarded "Gold Level" status
at Microsoft, which is a big deal to programmers. Their Ti-Face SDK is
a face recognition software engine that can accurately detect, recognize,
and identify human faces.
The technology can work off video
or still digital images, and works either one to one or one to many (individually
or in a crowd). There are competitors, but TTNUF has a number of
advantages. First, unlike many competitors, it works in all light conditions.
Secondly, also unlike several competitors, it works with relatively simple
camera lenses, which reduces costs.
The technology is already being widely
used in the Far East. Here's one example. Many people think the busiest
border crossing in the world is between Tijuana and San Diego. Not so-
the traffic pales in comparison to the border crossing between Hong Kong
and China.
200,000 people per day cross the
Hong Kong/China border. TTNUF facilitates the speed and ease of
the crossing with its facial recognition software. Frequent crossers get
their picture taken once. 3.5 million particpants have enrolled. When crossing,
you simply step into a kiosk for a digital image which only takes a moment,
and in a second or two subjects are identified and allowed to pass through.
There are installations at several
factories in China with 8,000 to 10,000 employees. TTNUF provides
a modern version of punching your time card. An employee walks into a kiosk,
an image is taken, and in a second or two the correct employee is confirmed
and on the clock. The software works with 99.9% accuracy.
I have a list of 40 different installations
in the Far East. Here's just a couple of high profile customers:
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The People's Bank of China
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ESPN
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IBM
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GuangDuong Immigration Department
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Hong Kong Department of Health
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Shenzhen Commercial Bank
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King Brand Industria Limited
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JJ Garment Manufacturing
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Sanfeng Bags Factory
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many, many others
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Financial
Performance and Upside |
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TTNUF delivered about $1.1
million in revenues in the June quarter of '06. This was up about 50% from
the March quarter. The company delivered a net profit of about $26,000.
50% quarter over quarter growth is very strong, and the small amount of
profit has much larger implications. It means the company is cash flow
positive and doesn't need to raise dillutive capital. No dillution means
the stock can trade up more easily.
The "F" at the end of their symbol
means the company is a foreign issuer. While the finanicial reporting standards
can be lax for foreign issuers, TTNUF voluntarily reports as if
it were a US domestic company. The same Q's and K are filed on time, along
with the same insider trading stats.
There are 50 million share I&O.
Therefore, at Friday's closing price of $.54, the market is saying the
company is worth $26 million. Based on the June quarterly numbers, the
company has an annual revenue run rate of $4 million plus. Since revenues
grew at a 50% rate over the March quarter, one can assume the real revenue
run rate will end up closer to $6 millon annually.
Unlike all but one of the companies
in this space, TTNUF is generating a profit. Profits help mitigate
your downside risk and make it much easier to hold the stock for the long
term.
In my view, TTNUF is going
to start penetrating the North American market in the near future. They
already have a foothold through an installation with Comalex, a Florida
based company.
TTNUF has only been trading
publicly since July 13th. They went public by filing an S1 registration
statement, so they have been through a full SEC review process.
Since first trading, the stock has
had a ceiling in the $.70 range, and support in the $.45 range. From a
traders perspective, it is a little closer to the lower end of its trading
range, making for a favorable entry level. The stock typically trades north
of 100,000 shares daily, so it's reasonably liquid for individual investors.
A solid break above the blue downtrend line would signal a new upwards
direction.
I believe expansion with contracts
into the North American market will serve as a catalyst to get this stock
moving up the charts. There's no news today, so I'm not using a news release
of a new contract to introduce the company. I'm bringing it to you while
it is quiet.
I firmly believe this stock is bound
for $1 by year's end. The industry is exploding-they have
very strong propietary technololgy within the group, and it is not widely
followed at this time.
Their technology is being used by
thousands of factory workers in China, 3.5 million people who cross the
Hong Kong/China border, and numerous banks and other entities in the region.
Here's the much bigger picture- the
catalyst that could send this stock into orbit- consider the implications
of facial recognition software as an anti-terrorism tool in crowded areas-
airports for example. With the proper database, their technology has the
capability of scanning a crowd with a simple video camera, comparing the
images to known terrorists, and identifying them in an instant. How about
the possibilty of identifying sexual offenders around schools? With the
right database, they could do it today. If they deliver any contracts along
these lines watch your money multiply.
I love this stock right now
up to $.64 now. SSL- $.45. The last two new ideas were up 30% in
the first 10 days. This one could easily follow suit.
For more info: check out www.titanium-tech.com.
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