Heelo™ Mobile Market Outlook 2020

Toronto, ON, February 2, 2020

Heelo is strongly positioned within all the major retail & advertising market trends. CEOs would give their left arm for this position.

The recent release of the AdAge Marketing Fact Pack 2020 revealed “the internet in 2020 will account for more than half of both U.S. and worldwide ad spending.” A growth of 6.5% in overall U.S. ad spend is anticipated in 2020 with a 12.4% jump in digital advertising to $135 billion, making up more than 53% of total ad spend. Worldwide, digital advertising will likely hit $336 billion, more than half of the predicted $656 billion globally across all media.

Heelo is in the higher growth segment, digital.

It is not rocket science when Globe Newswire says that it’s no secret that for the last decade, the retail industry has experienced significant technological disruption, more so than any other sector. A new industry report on the state of consumer shopping finds that retailers who offer a better technology experience are more likely to gain repeat shoppers.

The new State of Mobility in Retail Report, “From ‘Bricks to Clicks’: Navigating the Retail Revolution” commissioned by SOTI Inc., in partnership with Arlington Research, looked at global consumer shopping habits in the U.S., UK, Germany and Sweden. The research revealed that American shoppers are more excited and open to technology that improves the overall shopping and retail experience.

“As we enter 2020, retailers need to strike a delicate balance between innovation and privacy,” says Ryan Webber, Senior VP of Enterprise Mobility, SOTI. “Through this research, American consumers are more bullish than their European peers when it comes to personalization, but at the same time, all crave security”

Games dominate with the highest number of downloads as younger people spend a lot of time there. You can see the disruption with shopping apps at 15% growth, neck in neck with the 2nd & 3rd highest categories.

Heelo is well positioned in the shopping category.

Stores that Offer a Better Tech Experience Get Repeat Shoppers and Longer Shopping Visits
I am more likely to shop again in the store 30.6%
I am likely to stay in the store longer 22.4%
I am likely to spend more money 19.3%
I trust the brand more 9.9%

Heelo is more disruption in retail, has the leading in-store technology and collects no personal data, zero, nata!!! This aligns perfectly with what consumers want.

Almost 70% of respondents said they find that retailers using mobile technology do end up providing a faster shopping experience for customers, and the number reached nearly 80% in the United States. Yet the desire for more in-store technology did not stop people from demanding greater data security, with more than 30% saying they were absolutely unwilling to sacrifice any personal data security just to improve their brick-and-mortar experience.

New spamming laws of 2018 in Europe is a big challenge for retailers, where rules are tighter. Under GDPR, consent for sending emails/messages must be “freely given, specific, informed and unambiguous.” And similar consent rules apply to how you “process” personal data. (In Canada, data privacy is governed by a separate piece of legislation, PIPEDA.).

These new privacy rules have put a nail in the coffin of Google’s location based geo-fencing as it uses illegal push notifications. $100s of millions, probably $billions have been spent, in wgat is now a geo-fence waste land.

Heelo is aligned perfectly, analyzing the market very thorough and knew the spam rules would be tightened and consumers were fed up with giving out personal data and learning of all the data breaches.

The US indoor analytic market is anticipated to grow at a CAGR of 30.8% during the forecast period. The US and Canada are the major economies of North America. The region has well-developed ICT infrastructure and has witnessed huge adoption of a large number of connected devices. On the basis of technology, the market is further segmented into Bluetooth, Wi-Fi, Ultra-Wideband Technology, and Others. During the forecast period, the market of Bluetooth in Indoor analytics systems is estimated to have a major market share at the highest CAGR due to the significant adoption of the beacon technology in indoor analytics systems.

And where is the fastest growth? By far it is digital advertising and this report in late 2019, reveals that it is beacon technology. Heelo is positioned perfectly with the world’s best Bluetooth and indoor analytics/marketing platform.

For decades, print publishers generated a large bulk of their revenue from various forms of print advertising, including coupons and classified ads. However, as publishers, and audiences, transitioned to digital, these legacy models of advertising made way as digital and social ads took over the majority of ad spend. Big Tech and digitally native companies have also encroached on publisher’s advertising revenue. Craigslist has become the go-to destination for classified listings and ads, along with Facebook, who also controls most of the global ad revenue, with Google and Amazon (big 3). These factors have caused publishers to search for new ways to recoup that lost revenue, including reinventing some legacy initiatives.

Heelo will disrupt the big 3 because their internet strategies have a high cost base that carries to their mobile strategies. Heelo will come in at less than 10% of their advertising rates because of Heelo’s low cost mobile solution.

Global beacon technology market stood at $1.17 billion in 2018 and is projected to grow at a CAGR of 45.5% during 2019-2024 to reach $ 10.2 billion by 2024, on account of increasing demand for technology as it can assist marketers in building and optimizing their strategies. Beacons are small, inexpensive wireless transmitters, which use low-energy Bluetooth technology to send signals to nearby compatible smart devices. The technology has been around for a few years and is expanding to various verticals, such as retail and healthcare, among others at a rapid pace. Increasing proliferation of smartphones and surging demand for location-based marketing solutions is expected to drive the market through 2024.

An even more bullish case from Allied Market Research says the Global Beacon Market was valued at $626.5 million in 2017, and is projected to reach at $14,838.8 million by 2024, growing at a CAGR of 61.5% from 2018 to 2024.

Heelo is well positioned in the fastest growing segment in the tech sector.

What are coupon and shopping saving tools and apps worth? On Nov. 20, 2019 PayPal Holdings, Inc. (NASDAQ: PYPL) agreed to acquire Honey Science Corporation, a rapidly-growing technology platform for shopping and rewards, for approximately $4 billion. Honey, in combination with PayPal’s two-sided network, will transform the shopping experience for PayPal’s consumers while increasing sales and customer engagement for its merchants.

Honey does not even have a mobile app, it is an extension you add to your web browser, so you could add into the web browser on your mobile device as well. They have about 17 million MAU so that puts a valuation at US$235 per user, on the low end, but probably because it is not a mobile app.

PayPal to Acquire Honey

Heelo could be similar to ROKU Inc NASDAQ:ROKU , the name behind the popular internet-television tuner of the same name. It stood up against such titans as Apple, Google and Amazon, and beat them all to become the market-share leader within the standalone digital TV-tuner market. Along with many inexpensive options compared to competitors. Part of Roku’s success is its simple interface and remote. Roku sorts all of your streaming apps in one simple main menu. The large app icons make it easy to understand for users of all ages.

Roku was among the first or the first to offer a streaming device for TV in 2002. So they started early ahead of the crowd, by making it inexpensive and easy to use. Nobody can catch them. It is valued at over US$16 billion and at the end of December 2019 had 32.2 million MAU so at $500 per MAU.

In just the 2nd month from it’s launch, Heelo among Canadian shopping apps jumped 76 positions to #15 and blew by Walmart, PC express, Costco, Groupon, Ardene, lululemon, Foot Locker, Kijiji Autos. IKEA. Urban Planet, adidas, Hudson Bay, Rakuten Ebates. Micheals, Craigslist, Canadian Tire, Best Buy Canada and a bunch of others I do not know well on the Apple store. I expect ratings will be volatile early on, jumping up and down.

Heelo also hit a rank of 15 at the Google Play store and as of this writing is at position 43. What is significant about this, there are over 80,000 shopping apps on Google Play and about 8,000 in Canada. You can use either number and being in the top 50 puts Heelo in the top 0.5% with 99.5% of the shopping apps rated lower. This is just in the first 2 months with no advertising yet, imagine where Heelo will be by year end.

This early performance is unprecedented and Heelo is blowing away all the metrics, like retention, active usage, coupon redemption rates and more.

Heelo Valuation Outlook 2020

Just before the end of January, the Heelo app went over 10,000 downloads. This is a very strong start for organic growth and no advertising yet, other than social media. Heelo is growing bigger and showing bigger following on social media. We waited until February to provide this outlook to get a better grasp of the growth potential for the year.

The app has received very good reviews and is being actively used by most who download it. Heelo’s conversion rate has also been very strong with about 70% of those that look at the app in the app store, downloading it.

Currently the number of downloads are doubling about every 3 to 4 weeks. Using a more conservative number of every 6 weeks, by the end of the year Heelo would have 2.5 million downloads just based on the organic growth. This is with no advertising or other initiatives.

A similar app that offered coupons at fast food chains and they achieved over 500,000 downloads in one year was just focusing on one geographical location in Canada. Heelo is all across Canada and in the U.S.

Based on a number of ways to crunch the numbers, Heelo will have between 1 and 2 million downloads by the end of the year. We stress this is a conservative number, it could be much higher.

There are numerous initiatives in the works and you will see announcements soon that will drive a lot more growth, such as:

  • Heelo will be signing advertising deals and from our conversations so far, the potential advertisers also want to use Heelo. They see the power and benefit of it for advertising and after all Heelo is an advertising company that provides a unique new advertising platform;
  • Heelo will run contests, use endorsements and influence rs to drive further growth;
  • The next version of the app will be out in early March. This will allow other restaurants to join up and advertise on the Heelo app under a new function of the app to discover local deals. Heelo already has 100s of restaurants on the waiting list. I expect there will be 1,000s by year end. This will generate revenue for Heelo, but also important – drive the app download growth further as all of these locations will be advertising Heelo;
  • These new locations will also have the option to install beacons and the Heelo ping system. This further enhances the Heelo experience for both the restaurants and the users;
  • This is not limited to restaurants, any retail business can sign up here. Outside restaurants and food, Heelo customers can choose to install Heelo or NotifyM, depending on their preference. With NotifyM they can also white label it and call it their own brand;
  • There are other things in the works, like delivery and loyalty programs, but I am not considering anything here for 2020. It will just be a plus it it arrives this year.

There will be deals and growth outside food and restaurants. Heelo already has signed deals and has installs in construction (Bone Structures), cannabis, (Compassionate Care Centers) and sports & entertainment (Canlan Ice Sports).

For the purpose of giving Heelo a valuation by year end, we will use a very conservative approach. We will IGNORE all the initiatives that are forthcoming and IGNORE everything outside food and restaurants. We will IGNORE the number of Heelo locations and the number of revenue generating installs.

Only considering organic growth of app installs and typical market valuations of Monthly Active Users (MAU). At year end Heelo will have 1 to 2 million MAU. Let’s use 1.5 million in the middle.

The value of MAU can range from about US$300 to US$2,000 depending how fast a company is growing and how useful or attractive their application is to users. For example Facebook is at the top of the range. Because Heelo is unique and a leading edge platform, we believe it should have a valuation at the high end of the scale. Also consider most users are better than MAU as they use it weekly, even daily.

Since Heelo will still be small in comparison to the big boys, like Heelo will not have near as many users as Facebook in the first year. It is appropriate to use US$300 and US$700 per MAU.

1.5M users at US$300 = is a US$450 million valuation and at US$700 MAU is a US$1.05 billion

Heelo has 75 million shares out so puts a year end valuation between Cdn$8 and Cdn$18.66 per share. Again this is using conservative numbers.

Heelo’s objective is to IPO on Nasdaq or New York and for liquidity a lot more than 75 million shares outstanding will be required. When objectives are met, a stock split is likely this year.

Appendix 1

For market values, the market cap from Marketwatch.com based on share price was used and for private companies based on their last funding round.

Company Market Value MAU Value/MAU
Honey from above US$235
ROKU from above US$500

Food Delivery Apps – what is noteworthy is that almost 50% of customers use more than one App. Also Grubhub has lost 70% of it’s value from 2018 to end of 2019 as competition has increased and Doordash has moved to #1 in food delivery apps. Postmates is a little different so 80% of the number of deliveries/month was deemed as MAU.

Company Market Value MAU Value/MAU
Doordash US$13 billion 17.7M US$734
Grubhub US$4.85 billion 19.3M US$251
Postmates US$2.4 billion 4M US$600
Ride share apps
Uber US$62 billion 91M US$681
Lyft US$14.1 billion 18.6M US$758
Average US$605

You can think of Heelo like these other App companies. They provide a service to people that is easy to use and saves money. Uber is a significant discount to Taxis and food delivery apps provide some discount to previous delivery costs. These App companies deliver physical things which are costly. Heelo delivers digital coupons and ads so has a profit margin 5 to 10 times higher. Heelo also has more revenue streams.

The average value per user is US$605 and using a range of US$300 to US$700 for Heelo gives a good idea of the potential value at year end. Of course if Heelo gains more users the valuation would be higher.

An example of an App that is growing fast and is profitable is Netflix and commands a higher valuation. Netflix is easy to use and is at a discount to conventional TV cable rates. There is also a lot of competition in this streaming field with video and music. Streaming services do not deliver physical things but digital.

Company Market Value MAU Value/MAU
Netflix US$151.5 billion 158M US$959

About Heelo™

Heelo is a leading proximity based marketing and advertising network that uses the latest BLE beacon technology as an indoor positioning system to build its mobile audience, deploy SMB offerings and deliver advertising campaigns. Heelo is planning its commercial stage of development and growth after successfully engaging over 700 customers and 15,000 mobile users in early trials. All campaigns and offerings are delivered by the Heelo Smart Advertising platform which takes a complete 360 approach to the way real-time actionable campaigns, data management and reporting are utilized on beacon and smartphone technologies through our branded apps. http://www.heelocoupons.com/

Press Contact:

Ron Struthers, Investor Relations, Corporate Analyst

William Kim, VP Operations and Marketing

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