Dow Jones 13671.02 -4.23 1:03 pm PDT, October 25, 2007 NASDAQ 2755.96 -18.80 For info, visit access.smallcapnetwork.com S & P 500 1514.36 -1.52 Change your subscription status here Russell 2000 806.78 -4.07 VOLUME 07 : ISSUE 101 Titan Global: Dollars in the Details  If anybody missed Titan Global's (OTCBB: TTGL) conference call last week, the recording and transcript are now available. I know sometimes I summarize those calls, but I'm not going to today. Instead, I want to take two of the Q&A's from later in the call (where the real value of the call is) and add detail to a couple of key points possibly lost in the shuffle. One is about the bio-fuel subsidy opportunity Titan may be able to take advantage of now that they own Appalachian Oil Co. (or Appco). The other is a clear explanation of what 'Card Services' means to Titan...and its investors.    Bio-fuel Subsidies?  CEO Bryan Chance acknowledged it was potentially a big deal when asked about it, but I would have liked to have heard more details about the fiscal opportunity in offering bio-fuel and bio-diesel (ethanol-based flex-fuels) via Appco's distribution chain.  Appalachian Oil owns and operates 60 convenience stores, but they also sell petroleum products on a wholesale basis to 160 dealers (a few of which are major oil companies). In other words, they have roles as both a supplier and a distributor. As such, Titan may be the beneficiary of some pretty sweet government programs that could end up being a major boost for bottom lines. Check it out... First off, I'm an analyst and journalist - not an ethanol subsidy expert. So, I'm probably not going to be able to completely explain every last penny's worth of impact here. And second, I don't want to come across like I'm speaking for the company; these are just my thoughts and ideas. But, here are some things I do know:  * The federal government provides a 51 cent-per-gallon subsidy for blending ethanol into gasoline * Ethanol-based bio-fuels' total annual subsidies are estimated to be between $6.3 and $8.7 billion * Bio-diesel's subsidies (different than bio-fuel) are estimated to be between $1.7 and $2.3 billion each year * Some automobiles are now capable of running on an 85% ethanol/15% gasoline mix, called E85 * Congress is looking at legislation that could require 100% of all cars to be bio-fuel-compatible by 2017  It seems to me the writing is on the wall. Though the numbers and details above may change over time, the underpinnings won't - bio-fuels are being forced into the market.  Now, here's where Appco fits into the picture - they sold 200 million gallons of petroleum products last year. I don't know how much was sold as a retailer versus as a distributor, but I'm guessing the majority of the mix was on the distribution side. If they have a way of blending ethanol into their gasoline before they distribute it, I have to wonder if they're up for a big piece of the subsidy pie.  Maybe they could take advantage of the 51 cent-per-gallon gift mentioned above, or (and this is my guess) maybe there are other/better programs in the works, if not already in place. Like I said, I'm not a subsidy expert, and being a government program, I'm sure it's complicated. And no, I don't know how the NewGen/ReFuel America Inc. partnership would affect the opportunity, or by how much. The only point I'm trying to make is that the bio-fuel industry is getting a lot of government support....and dollars. That could be very good for TTGL owners. In the bigger picture, I think this makes the Appco acquisition a pretty savvy one. Appalachian Oil did about $400 million in sales last year, though only saw a net profit of a few million dollars. How much could margins improve with government assistance? I don't know for sure, but I know energy is often a thin-margin business. A small improvement a subsidy could provide may actually create a very large profit improvement. The best part for Titan Global is (even with all the recent acquisitions) Appco is still the biggest contributor to the combined company's top line. If Appco's contribution to the bottom line could be enhanced just a little, the overall impact could actually be huge.  I know this is more theory and less accounting than usual. Sorry...I just don't want to make hard estimates out of my area of expertise. For me - this time around anyway - the theory is exciting on its own.  Moving on...    'Card Services'  There was another question asked during the conference call that many of you have asked as well...why is Titan's upcoming launch of their 'Card Services' (international money transfer division) supposed to be such a big deal? Between Western Union, MoneyGram, and Coinstar, why would another player matter?  I'll admit I really didn't have an answer either - until CEO Bryan Chance explained it in the conference call. I don't know why the company didn't detail this before. Basically, there's no paperwork involved, and it's all instantaneously done by phone. The only thing the sender needs to do is buy the card with a pre-determined value, then follow the phone directions on the back of it. The phone-in number is multi-lingual, and the transfer will happen immediately. That's the competitive difference.  The company is expecting the Card Services unit to produce $45 million in revenues next fiscal year. My first though was that might be a little aggressive. My second thought, however, was a reminder that this is annually a $290 billion industry. Based on the ease-of-use we just looked at, I don't see why Titan couldn't capture a modest 15% of the market. They've certainly got the right retail network and customer base in place, as evidenced by the explosive growth they've produced with Picante and Oblio. That's it for today. I know it was a little bit different than my usual tone and topic. I just thought these two ideas (the especially the bio-fuel subsidy opportunity) were worth a closer examination that the company hasn't yet made. I'll add more details as I can.      We Value Your Feedback   Got comments, questions or suggestions? 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