Glance Technologies (GET.C) bets Glance Pay will be the next PayByPhone

In 2001, Desmond Griffin co-founded PayByPhone. Griffin grew the Vancouver-based mobile parking payment app from local novelty to a global leader operating in over 100 cities. Volkswagen snapped up PayByPhone in December 2016 for $43.89 million to put the emissions scandal behind them while opening up a new revenue stream for their beleaguered investors.

Griffin made out like a bandit and deservedly so. He spotted a trend before it was one and helped establish the defacto leader in a nascent space.

After generating one hell of a pay day for himself and PayByPhone shareholders, Griffin turned his attention to another developing need. Our cashless 21st century world is still tied down to specialized machines and relatively complicated transactions when we choose to pay digitally.

How many times have you gone to a restaurant for an enjoyable evening out only to have the experience marred by waiting 20 minutes for the staff to show up at your table with a debit machine so you can pay for your meal?

PayByPhone revolutionized how we paid for parking, could another mobile-based payment app solve the restaurant challenge? Creating a mobile app payment system is still a little dicey as Apple Pay, with more money than God, has failed to make any real dent in consumer’s lives with only one in four iPhone 6 users actually using the app.

Griffin knew his mobile-based payment solution would have to do more than just pay the bill and set to out to create a holistic suite which would include in-app marketing, in-store rewards, bill payment, transaction history, payment confirmation as well as the ability to split the tab.

With the help of head programmer, Angela Griffin, Glance Technologies’ (GET.C) Glance Pay was launched in September 2016 and more than 40 local restaurants signed onto the service within a few weeks.

Restaurants were more than receptive. Mobile payment was on par with fees charged by debit/credit services. It freed up servers to tend to patrons, instead of running around all night with a debit machine, and the service immediately notified staff of payment, cutting down the possibility of someone pulling a dine and dash.

Glance Pay also critically connected restaurants with the Millennial consumer who steps out for dinner on average 235 times a year and is surgically joined to their smartphone. The app is easy to use. Simply take a photo of the bill with your smartphone, select the portion of the bill you wish to pay, add the tip (because you should, you cheap bastard), then confirm and pay with the press of a button.

Loyalty rewards are another important part of Glance Pay, but the restaurant isn’t forced to use them if they prefer just to offer another method of payment for their customers. I was at the Fable Diner on Main and Broadway on the weekend and was offered $10 off if I used the mobile app to pay for my meal.

I am horrible when it comes to impulse purchases so I begged off until I could learn more about the app, but the discount system is an incredible way to seed your customer base.

In February, Glance Pay went national when the company’s mobile app solution was launched in the Toronto market through an agreement with Fresh Restaurants. Later that month, the company updated its Restaurant Discovery feature to include ratings and in-app reviews, helping generate the good reviews that restaurants depend on.

At the beginning of this month, Glance Pay announced joining the massive US$200 billion quick serve restaurant market in North America with a unique innovation to its mobile payment platform.

Then on April 6th, Glance Technologies announced that it had entered the food delivery market by partnering with Daily Delivery, a Vancouver-based on-demand urban delivery service made famous by its appearance last year on CBC’s Dragon Den.

Described as an Uber service for food delivery, Daily Delivery did $300,000 in sales in its first year and since that time has enabled over 300 stores and brands to offer their customers on-line ordering and on-demand deliveries. Glance is the perfect fit for Daily if it intends to scale.

With all this massive growth, you may have guessed that the bottom line is weak. The numbers from fiscal 2016, released in March, reveal a net loss of $2.15 million, up almost 300% from YE 2015’s net loss of $538,425.

So, it is of little surprise that Glance has offered a financing to the market. What is surprising is how its doing it. Glance is offering rights to the holders of its common shares as March 29, 2017. Each common share owned would get one right and six of those rights entitles the holder to subscribe for one unit of Glance at $0.20 per unit.

Each unit is comprised of one common share and one common share purchase warrant. The warrant can be exercised for a period of 24 months after issuance at a price of $0.23 for the first six months and $0.25 thereafter until the expiry date.

Glance is working with Mackie Research Capital Corporation (MRCC) and MRCC has agreed to a limited stand-by commitment where it will purchase up to $1.0 million worth of units.

That’s one way of guaranteeing that $1.0 million is going to come through the door, but the rights offering doesn’t seem to make much sense to me.

This is my take…

Glance continues to improve on its tech and as I understand, has integration with Squirrel, a pioneer product in restaurant POS systems. This is a definite bonus and makes it even easier for restaurant owners to incorporate Glance Pay.

However, the business model of mobile payment solutions is volume-based and the fact that Glance has to provide an Ipad to every restaurant that subscribes to the service will throw a wrench in the way of growth.

Then there’s the fact that the mobile payment space is already overflowing with some formidable players in Apple and Google. As such, there are mobile payment service providers for nearly every market vertical, and even though Glance Pay differentiates itself in the space with a complete intelligent application delivering more than just mobile payment, I don’t believe the company’s future is in diversification. In fact, if it continues, it may very well shoot itself in the foot by spreading too thin. Remember how PayByPhone succeeded, it found a niche, it didn’t try to boil the ocean.

It would be better for the company to pursue as many relationships as possible with restaurant establishments to make Glance Technologies a tasty takeout target for larger entities such as Open Table, a San Francisco-based online restaurant discovery and reservation service that is already integrated in more than 40,000 restaurants worldwide.

I like what I see at Glance, the tech is solid, and I can see potential for the company as an acquisition target but Glance needs to tighten focus on its core segment and streamline accordingly.

Currently the company trades at $0.19 per share for a market cap of $12.31 million.

 

–Gaalen Engen

http://twitter.com/gaalenengen

 

FULL DISCLOSURE: None of the companies mentioned in this article are clients of EQUITY.GURU and the author has no connection to them.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

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