AKR - Ackroo

[gary17]

Hello

I am wondering if anyone on this board has looked at Ackroo - AKR.V (Toronto Venture Exchange) .  The company is in the loyalty and gift card market with very high monthly recurring revenues + margin.  The company started off with the wrong sales plan, so had to do a round of financing at the beginning of the year to go with the new direction of using distributors for their products.

 

What they do: they offer a service to merchants who want to retain their clients - via gift cards and loyalty program.  They provide the software and network platform to manage this service and charge a small fee for it. 

 

Business plan: they want to expand to as many merchant locations as possible and also sell their service through distributors in international markets. 

 

So one way of tracking their progress is how many merchant locations they have.  As of today, they have approximately 1100;  each providing a monthly recurring revenue (MRR) of about $101 .  they also get one time activation fees for new customers.

 

growth: they plan to grow the business both organically and inorganically through acquisitions.  they recently bought PhotoGiftCards and also Dealer Rewards Canada to get their customers.  Then they grow the existing business organically by making it more efficient and also sell to them Ackroo services.

 

the company is projecting break even revenue of $2.3M - over which is all profit.  25M shares outstanding on a fully diluted basis. 

 

I like the high client retention rate and barrier to entry associated with the business , noting they sell a management service of the loyalty / gift card program.

 

Management is projecting break even in 2015.  Then EPS of 0.016 2016 and EPS of 0.05 in 2017. 

 

What I would be interested to learn is if other board members have experience in this type of business and how to value it based on Discount Future Cashflows.    Given the high uncertainty - what's a fair discount rate ?

 

Here's the latest investor presentation - perhaps explains this better than I can.

 

http://ackroo.com/wp-content/uploads/2015/06/Ackroo-Investor-Deck-June2015.pdf

[Phaceliacapital]

Do you know if they sell/use the transaction data (generated through gift cards/loyalty cards transactions) to create or offer targeted marketing campaigns?

[Liberty]

How do you think an Apple Pay loyalty program platform (as is rumored to happen soon) could affect the business? Same question for the eventual Android Pay.

[gary17]

Do you know if they sell/use the transaction data (generated through gift cards/loyalty cards transactions) to create or offer targeted marketing campaigns?

 

I believe so or at least they have the ability to do so based on the presentation. 

 

The thing with micro cap here is the value lies in the future cash flows. Whereas a typical value stock is more based in discount to net asset or disruption of cash flow due to some one time event.  In either case nobody knows the future ....

 

I'm really interested to know if there are valuation experts here that can take a conservative guess of their DCF   

 

Thanks

[gary17]

How do you think an Apple Pay loyalty program platform (as is rumored to happen soon) could affect the business? Same question for the eventual Android Pay.

 

I'm not familiar with either platforms loyalty program.  But my understanding is the gift card business is not likely going to change.  People will buy gift cards.    And then there's the loyalty business which is like storage of the customers "credit".

 

Essentially, this is a business of managing the merchants "credit" in a network.  For now I am not seeing how apple pay will affect this ecosystem.  Now I did invest in blackberry so take my words with a grain of salt !

 

Again. Love to hear your valuation of this business , earning power. On a very conservative basis. 

 

Thanks.

Gary

[Liberty]

How do you think an Apple Pay loyalty program platform (as is rumored to happen soon) could affect the business? Same question for the eventual Android Pay.

 

I'm not familiar with either platforms loyalty program.  But my understanding is the gift card business is not likely going to change.  People will buy gift cards.    And then there's the loyalty business which is like storage of the customers "credit".

 

Essentially, this is a business of managing the merchants "credit" in a network.  For now I am not seeing how apple pay will affect this ecosystem.  Now I did invest in blackberry so take my words with a grain of salt !

 

Again. Love to hear your valuation of this business , earning power. On a very conservative basis. 

 

Thanks.

Gary

 

If you can pay for things pretty much everywhere with Apple Pay the way you can with a credit card, wouldn't it be easy to have digital gift cards that are basically being either credited to an existing account, or that are a separate virtual card inside your virtual Apple Pay wallet?

 

It could even be given to people as physical gift cards that you scan into your iPhone, in the same way that if you get an iTunes/App Store gift card, you can scan the barcode in the back and your iTunes account gets credited.

 

I don't know much about Ackroo, but if I was looking at the industry, this seems like something important that is going to play out over the next 3-5 years.

[gary17]

How do you think an Apple Pay loyalty program platform (as is rumored to happen soon) could affect the business? Same question for the eventual Android Pay.

 

I'm not familiar with either platforms loyalty program.  But my understanding is the gift card business is not likely going to change.  People will buy gift cards.    And then there's the loyalty business which is like storage of the customers "credit".

 

Essentially, this is a business of managing the merchants "credit" in a network.  For now I am not seeing how apple pay will affect this ecosystem.  Now I did invest in blackberry so take my words with a grain of salt !

 

Again. Love to hear your valuation of this business , earning power. On a very conservative basis. 

 

Thanks.

Gary

 

If you can pay for things pretty much everywhere with Apple Pay the way you can with a credit card, wouldn't it be easy to have digital gift cards that are basically being either credited to an existing account, or that are a separate virtual card inside your virtual Apple Pay wallet?

 

It could even be given to people as physical gift cards that you scan into your iPhone, in the same way that if you get an iTunes/App Store gift card, you can scan the barcode in the back and your iTunes account gets credited.

 

I don't know much about Ackroo, but if I was looking at the industry, this seems like something important that is going to play out over the next 3-5 years.

 

I will certainly pay attention to Apple Pay, etc, to learn more.  I think the key here is if the rewards / giftcard is based on Apple's currency or Merchant's own currency.  So yes it's all $, but in the case of gift card or loyalty program, the currency is that of the merchants. And Ackroo's service is to manage this - almost like a bank, except it is a private one, over its private network.

 

Now comes Apple Pay -  which is a great payment service that competes with cash and other major credit cards.  But will Apple be managing the merchant's currency ?  I think that's a key point to find out more (I don't have an answer at this point).

 

Interesting you looked at the industry - did you look at WEX (formerly Wright Express).  It is in the fleet business...  Anyway, digressing here.

 

 

 

 

[Liberty]

How do you think an Apple Pay loyalty program platform (as is rumored to happen soon) could affect the business? Same question for the eventual Android Pay.

 

I'm not familiar with either platforms loyalty program.  But my understanding is the gift card business is not likely going to change.  People will buy gift cards.    And then there's the loyalty business which is like storage of the customers "credit".

 

Essentially, this is a business of managing the merchants "credit" in a network.  For now I am not seeing how apple pay will affect this ecosystem.  Now I did invest in blackberry so take my words with a grain of salt !

 

Again. Love to hear your valuation of this business , earning power. On a very conservative basis. 

 

Thanks.

Gary

 

If you can pay for things pretty much everywhere with Apple Pay the way you can with a credit card, wouldn't it be easy to have digital gift cards that are basically being either credited to an existing account, or that are a separate virtual card inside your virtual Apple Pay wallet?

 

It could even be given to people as physical gift cards that you scan into your iPhone, in the same way that if you get an iTunes/App Store gift card, you can scan the barcode in the back and your iTunes account gets credited.

 

I don't know much about Ackroo, but if I was looking at the industry, this seems like something important that is going to play out over the next 3-5 years.

 

I will certainly pay attention to Apple Pay, etc, to learn more.  I think the key here is if the rewards / giftcard is based on Apple's currency or Merchant's own currency.  So yes it's all $, but in the case of gift card or loyalty program, the currency is that of the merchants. And Ackroo's service is to manage this - almost like a bank, except it is a private one, over its private network.

 

Now comes Apple Pay -  which is a great payment service that competes with cash and other major credit cards.  But will Apple be managing the merchant's currency ?  I think that's a key point to find out more (I don't have an answer at this point).

 

Interesting you looked at the industry - did you look at WEX (formerly Wright Express).  It is in the fleet business...  Anyway, digressing here.

 

Very good question about points and other alternative currencies (miles, etc).

 

The answer is "we don't know yet", but if I had to bet on it, I'd say that Apple will offer the ability to use any kind of currency you want with their loyalty program, if only because that's a very common thing and their offering would be incomplete without it. I don't think their primary concern is charging a tiny management fee for points or whatever, what they want is to make the user experience as good as possible so that people pick their products and stick with them, and managing all your miles and points within your phone or Watch sounds like something that will please many of their customers and encourage the use of Apple Pay overall.

[constructive]

the company is projecting break even revenue of $2.3M - over which is all profit.

 

My experience with claims about fixed costs like this is that they are basically never true.

 

How does their service and pricing compare to direct competitors, for example Blackhawk? I see that as a lot more important than indirect competitors like Apple Pay.

[gary17]

the company is projecting break even revenue of $2.3M - over which is all profit.

 

My experience with claims about fixed costs like this is that they are basically never true.

 

How does their service and pricing compare to direct competitors, for example Blackhawk? I see that as a lot more important than indirect competitors like Apple Pay.

 

It's probably comparable , is my take.

Interesting to note Ackroo partnered with Blackhawk :

 

http://ackroo.com/en/ackroo-partners-blackhawk-network-canada/

 

 

OTTAWA, March 5, 2015 /CNW Telbec/ – Ackroo Inc. (TSXV: AKR), a gift card, loyalty and rewards technology and services provider, and Blackhawk Network (Canada) Ltd., a leading prepaid and payments network, announced today a partnership in which the Ackroo gift card platform will be integrated with Blackhawk Network’s in-store and online distribution channel platform in order to allow selected Ackroo merchants access to the Blackhawk network of merchants which includes large brands such as Loblaws, Metro, Safeway, Sobeys and many others.  This partnership will provide Ackroo merchants a great opportunity to have their gift cards sold within the Blackhawk Network of merchant’s which will expand their distribution footprint, broaden customer awareness and increase sales.

 

“The partnership with Blackhawk is a key strategic advancement for our gift card offering” said Steve Levely, chief executive officer at Ackroo. “Access to consumers is critical to selling gift cards and Blackhawk is one of the largest distribution channels for branded gift cards with many leading brands in their network. This partnership allows our existing and future merchants to have their gift cards sold across this network thereby increasing their potential sales. This in turn provides Ackroo with the ability to win more merchants and increase our revenue per location for merchants who have access to the network via increased transaction processing and supporting collateral sales.” “Blackhawk is a market leader in the 3rd party gift card distribution segment and we feel very fortunate to be partnering with such a powerful and innovative brand in expanding our offering.  We are excited for our growing list of merchants and for our organization as we continue to grow our market leading gift card solution.”

[oldcookie]

I've looked into this space about 2 years ago not as an investment but more as research for a potential startup for loyalty/gift card mobile app.  Spent about two months going around talking to local merchants.  Here's what I learned from that, might or might not be applicable to AKR, as I've not looked into them from an investment perspective.

 

Here's what I understood from talking to the local merchants:

 

- It's a very fragmented market that's hard to scale/grow.  It's like Groupon, where you need a large sales force to sign people up.  Most merchants are too busy with their own business to look for these things on their own.

 

- Competitions comes from many levels. It's very very hard to be a pure loyalty and gift card play.  Most merchant have a POS, POS have their own offerings or partnerships for loyalty and gift card.  If it is not the POS, payment processors like Global Payments also provide free cards and what not.  Merchants generally prefer those cause they don't need additional equipment already

 

- For loyalty also have next gen startup competitors like Five Stars and Bellycard, which face the same issues.

 

- As others pointed out Square, Apple Pay, etc. can also disrupt this market fairly easily

 

Good thing is that these systems, once implemented take a long time to ripe out.  But doesn't mean they don't get ripped out.  There was a Toronto based startup called Luxe that tried to tackle that market, go a lot of local merchant to sign up.  They were backed by Roger Ventures, but they don't get used, and I don't seem them anywhere anymore.

 

So it's a tough market.  Sales costs are high, and doesn't scale well.  Not specific to AKR though. :)

[constructive]

The partnership with Blackhawk sounds interesting. I suspect that will help revenues grow considerably but it will be lower margin than their other business since AKR and HAWK will need to split fees.

 

As I understand it Blackhawk has been building out their technology services significantly in the past two years (similar to AKR). HAWK could also be a potential acquirer.

[gary17]

A Seeking Alapha write up on Ackroo -

 

I get worried a bit myself when a company I invest in is being covered by Seeking Alpha .. LOL

 

http://seekingalpha.com/instablog/4690971-thetroubledinvestor/4003706-ackroo-inc-turnaround-with-multibagger-potential

 

For what it is worth -

 

I am still interested to know the valuation based on DCF if some value guys can take a shot at this idea... :)

 

Thanks

[Guest Schwab711]

A Seeking Alapha write up on Ackroo -

 

I get worried a bit myself when a company I invest in is being covered by Seeking Alpha .. LOL

 

http://seekingalpha.com/instablog/4690971-thetroubledinvestor/4003706-ackroo-inc-turnaround-with-multibagger-potential

 

For what it is worth -

 

I am still interested to know the valuation based on DCF if some value guys can take a shot at this idea... :)

 

Thanks

 

http://ackroo.com/wp-content/uploads/2015/06/Ackroo-Investor-Deck-June2015.pdf

 

Costs have been $6m, $5m, and $4.1m in 2012-2014, respectively. Mgmt is providing guidance of $2.2m in costs and revenue (so they will break-even for the first time) in 2015 guidance. This means that revenues will increase 66% while costs will simultaneously decrease ~45%-50%. I think guidance is way too optimistic (I'm also suspect of their optimistic assumption of addressable market size) but let's pretend it's all reasonable/accurate.

 

Assuming management guidance is spot on:

*They currently have 1,100 locations so we can calculate annual reoccurring revenue for 2015 (let's assume 0% churn for simplicity)

 

2015 Recurring Revenue = 101 * 12 * 1100 = $1.3m (ARR)

2015 OTR = Guidance - ARR = $2.2m - $1.3m = $0.9m

Avg OTR/new location = $1,120 (YTD) => $0.9m/1120 = ~800 [net] new locations in 2015

*They => (imply) total costs drop to $2.2m which makes it difficult to ascertain what they use internally for incremental margin/operating leverage

 

Thus, 2016 ARR will be 101 * 12 * 1900 = $2.3m annual recurring revenue  => 2016 Rev = ARR + OTR (~$1,100 * # new locations signed/added in 2016) - (101*12 * # locations to drop service) [Churn]

*They proj $3.2m in revenue in 2016 which implies another 800 new locations with 0% churn OR ~850 new locations - ~50 locations to drop service (churn of ~3%-6% which is a good sign); same as 2015 guidance for locations

*2016 costs are proj @ $2.8m which => $1m rev growth causes only $0.6m in COGs or ~40% incremental gross margins

*Total locations @ YE16 are now ~2,700 according to guidance

 

Finally, 2017 ARR is 101 * 12 * 2700 = $3.3m ARR => 2017 Rev = ARR + OTR - [Churn] => $5m (17' guidance) = $3.3 + OTR - [0%] => ~1,500+ [net] new locations in 2017 (Seems extremely optimistic to expect new location acceleration 2 years ahead of time. Moving on...

*Their guidance => they will have ~4,250+ locations by end of 2017 vs 1,100+ currently; This is ~50%+ cagr in locations over 2.5+ years.

*Incremental margins between 2016 and 2017 are also increasing as they proj 45% operating leverage/incremental GM% (seems extremely high considering zero barriers to entry. Presumably, they have also signed all the "low-hanging fruit" and customers should become more difficult as they gain more locations (I would think at least).

*ARR @ 4,250 locations = $5.15m (2018 and beyond) which is only slightly higher than costs in 2014 when they had 1,100 customers. Although they guide for significantly lower costs, it is worth considering that this ideal scenario from guidance could possibly be just break-even if the cost savings are not realized.

 

I know this isn't a DCF but I thought it would be more instructive to breakdown their guidance in detail so you can see what is required to generate a decent return. All of the above guidance is based on gross margins (so far as I can understand; they switch between total costs and "margin" in their presentation. Assume it's gross margins and not operating margins or something). The location growth required to break-even is extremely high. If I were to ask management one question I would want to know why/how [in detail] they expect their costs to decrease so dramatically over 2015 even though they guide for higher revenues and imply a minimum 66% increase in locations! They should have commented on this in the presentation since it is the difference between a good investment and the company hurtling towards bankruptcy.

 

The above also ignores share dilution risk (which I assume is significant). It assumes a large acceleration to growth as MRR/location was just $71/mth for all of 2014 and $101/mth YTD 2015. They used MRR = $101/mth for their guidance through 2017 even though this MRR has only been obtained for a few months and most of their operating history has seen MRR between $50-$75 a month. They had 29% location growth in 2014 but assume a 57% compound growth rate through 2017. They also assume margins will increase throughout this time (presumably because of spreading costs) which is again ambitious. It implies that there will be no new competitors or pricing competition in the face of 50% growth with expanding margins. If Ackroo had even half the success that they assume then competitors will create a price war to destroy margins (especially since this is the type of business that cannot be started quickly and provide a decent salary).

 

I have no interest in the underlying business so I'm not interested in an investment [at nearly any price] but this definitely has potential to generate excellent returns [just too much has to go right]. I'd be interested to hear critique of my overview. I'm pretty confident however that my numbers above accurately reflect management's guidance intentions.

 

Summary of risks:

*Guidance for 2015 assumes costs: -50% and rev: +66% (seems ridiculous on the surface; makes you wonder why they invested ~$10m to R&D for a business that will be lucky to earn $400k/yr in [gross] margin...

*MRR +43% to $101 (from $71) and is used in guidance through 2017. If MRR falls back to $71 range then all guidance is materially over-estimated

*Churn is currently 9%. If it increases then revenue will sharply decrease

*Operating margins estimated at 40% and 45% for 2016 and 2017, respectively. Not only is this a HUGE improvement but it represents better margins than Moody's (not that dissimilar of a business).

*>19% of A/R take >30 days to collect

*Avg OTR/new location decreased from $1,570 (2014) to $1,120 (YTD 2015). This is the up-front costs paid by new customers. I see this as an early sign of a price war (unless management mentioned something regarding lower OTR for higher MRR?). This would also imply that the +43% of MRR is unsustainable (and future guidance is inflated by 43%).

[InsecurityAnalysis]

Thanks for the analysis Schwab.

 

The guidance given for growth in locations looks extreme. YTD with an additional 200 net locations since 2014 and assuming another 200 by the end of the year, 1300 locations by YE 2015 --> 4250 locations by 2017 they aren't pulling any punches with this estimate.

Like Schwab mentioned, the decrease in OTR could be an indication of new competition or a change to their operating envrionment

[gary17]

Very interesting analysis !  I am going to guess here management projection includes both organic and inorganic growth via acquisition -

 

For break even, the $2.3m  doesn’t need to be made up of MRR entirely.  Their revenue is made up of both MRR and OTR (one time revenue) when new merchants sign up. 

 

2015 Recurring Revenue = 101 * 12 * 1100 = $1.3m (ARR)

2015 OTR = Guidance - ARR = $2.2m - $1.3m = $0.9m

 

Yes - so OTR is $180 for existing and $1120 for the new locations

 

So I know at the beginning of the year they had 900 locations... so OTR = 900 x 180 = $162,000

They have so far added 200 locations , so OTR = 200 x $1120 = $224,000

So OTR to date is about $386,000...

 

So if they add another 200 locations, the additional OTR would be $224,000 and the additional MRR = 200 x 101 x 12 = $242,000 or about $500K    so this makes up the $2.2M guidance.

 

( $1.3M MRR from 1100 locations + $386,000 OTR based on 900 existing, 200 new, + $500K baed on 200 new locations for the next 6 months = about $2.2M

 

I think the key here is OTR for new customer is substantially more than existing customers. 

 

Also they plan to do more acquisitions is my understanding - keep in mind they bought PhotoGiftCard a while ago and can convert their customers to Ackroo customers as well. 

 

Gary

[gary17]

Thanks for the analysis Schwab.

 

The guidance given for growth in locations looks extreme. YTD with an additional 200 net locations since 2014 and assuming another 200 by the end of the year, 1300 locations by YE 2015 --> 4250 locations by 2017 they aren't pulling any punches with this estimate.

Like Schwab mentioned, the decrease in OTR could be an indication of new competition or a change to their operating envrionment

 

I think Schwab's calc should be modified to account for OTR for existing customers of $180...

So existing customers pay MRR of $101 or about $1200 PLUS one time fee of $180 so that's about $1380 / year

 

New customers pay $101 x 12 + $1120 = $2320/year

 

So 900 existing x $1380 + X_new_location x $2320 = $2.2M

 

X = 413 new locations for 2015. 

 

They've done 200 new locations with the Dealers Rewards Canada acquisition.  They just need to find another 200 or so to get there -    I think that's probably fairly doable , given they can either do that by converting photo gift card customers (noted as 500+ in the presentation) or do another acquisition. 

 

Gary

 

[Guest Schwab711]

Thanks for the analysis Schwab.

 

The guidance given for growth in locations looks extreme. YTD with an additional 200 net locations since 2014 and assuming another 200 by the end of the year, 1300 locations by YE 2015 --> 4250 locations by 2017 they aren't pulling any punches with this estimate.

Like Schwab mentioned, the decrease in OTR could be an indication of new competition or a change to their operating envrionment

 

I think Schwab's calc should be modified to account for OTR for existing customers of $180...

So existing customers pay MRR of $101 or about $1200 PLUS one time fee of $180 so that's about $1380 / year

 

New customers pay $101 x 12 + $1120 = $2320/year

 

So 900 existing x $1380 + X_new_location x $2320 = $2.2M

 

X = 413 new locations for 2015. 

 

They've done 200 new locations with the Dealers Rewards Canada acquisition.  They just need to find another 200 or so to get there -    I think that's probably fairly doable , given they can either do that by converting photo gift card customers (noted as 500+ in the presentation) or do another acquisition. 

 

Gary

 

Good catch! I didn't think the difference would be so material so I didn't bother including it, but 413 seems much more reasonable and it is certainly more accurate to incorporate the $180 OTR for existing customers. This helps even further moving forward. I'll update my post if I get some time tomorrow.

 

So they have half of their 2015 new adds, now can they lower costs and keep up the growth for 2 more years? If so, this could be 2x-3x in a short time. Customer service and ability to adapt your offerings to customer's needs seems to be the differentiation sauce in this business.

 

 

I think the key here is OTR for new customer is substantially more than existing customers. 

 

This also keeps locations as customers once they sign since on-going cost is so much lower than total average cost or sunk-cost?

[gary17]

I think the cost structure and having the merchant currency in the Ackroo system are two reasons for the high customer retention rate , above 90% according to the presentation.  I like this a lot myself. 

 

Schwab, I'd be interested to learn what you think the intrinsic valuation is approximately. 

 

 

I also encourage you to check out http://photogiftcard.com/ the business Ackroo acquired. They should be able to convert a high % of them to Ackroo customers this year. 

 

Gary

[Liberty]

Apple did announce store loyalty/reward cards will now be available with Apple Pay:

 

http://i.imgur.com/vrDbsqjl.jpg

[gary17]

Hi Liberty - yes I did see this -

will need to learn what the impact will be

it is certainly more convenient for the customers; but i wonder what is the impact to the merchants ?

 

if it is just an account number, ackroo can easily develop an app that allows this to be processed.

 

Gary

[Liberty]

if it is just an account number, ackroo can easily develop an app that allows this to be processed.

 

Gary

 

Loyalty apps can already exist. But they'll never have the convenience and deep system integration of Apple Pay, where you just have to put your finger on the fingerprint sensor and put your phone near the terminal (1 second, bam, or even faster with the Watch). They also won't be installed by default on hundreds of millions of devices.

 

I think over the next few years our wallets will become ever more digital, and those who owns the platforms (Apple, Google) will have a big advantage over third parties.

[matthewd98]

Here is my update on the DealerReward's acquisition and why I think the stock is undervalued: https://espacemc.com/en/investment-ideas/ackroo-company-update

 

Disclosure: I took part in the private placement in December and have bought additional shares since.

[matthewd98]

Ackroo to commence trading on the OTC under the symbol "AKRFF"

 

http://www.stockhouse.com/news/press-releases/2015/09/02/ackroo-to-commence-trading-on-the-otc-under-the-symbol-akrff

[matthewd98]

CEO publicly announced during a recent interview that Ackroo should be profitable in Q4. That would most likely mean that Ackroo will be breakeven in Q3. Furthermore, we know the DealerRewards acquisition will be contributing in excess of $200k in revenue per quarter starting in Q3 as per the Q2 MD&A.

 

Link to audio of interview: http://app.getresponse.com/click.html?x=a62b&lc=OhgZG&mc=C8&s=zHD6Ke&u=vq6x&y=N&

 

Excerpt pertaining to profitability in Q4:

Brandon: Last question from us Steve. What milestones should investors be looking for in 2015 and beyond?

 

Steve: I think the biggest and most obvious one, and I’ve been providing a bit of guidance to the market, is that we’re striving to have our first profitable quarter this year.

 

Our goal is that Q4 we've got a profitable quarter to boast on and hopefully it’s a big enough quarter to make up for the losses happening earlier in the year.