SOURCE: Alternet Systems, Inc.

Alternet Systems, Inc.

August 21, 2013 09:50 ET

Alternet Systems, Inc. (ALYI) Issues Letter to Shareholders Discussing Its Second Quarter 2013 Financial and Operational Results

Revenue Improves Significantly and Show Consistent Quarterly Growth; Global Market Presence Grows

MIAMI, FL--(Marketwired - Aug 21, 2013) -  Alternet Systems, Inc. (OTCQB: ALYI) ("Alternet" or the "Company"), an investment holding Company focused on the complementary, high-growth markets of mobile financial services and cyber-security, releases a letter to shareholders from its Chief Executive Officer, Henryk Dabrowski.

The letter discusses the Company's second quarter filing for the period ending June 30, 2013 as posted with the Securities & Exchange Commission (SEC) on August 14th 2013 and gives an overview of the financial and operational highlights for the three and six months ended June 30, 2013 for the Company and its subsidiary, Utiba Americas -- a leading mobile financial services provider in the Americas.

The CEO's letter is included in its entirety below:

Dear Fellow Shareholders,

The second quarter and first six months of the 2013 have been quite productive, characterized by growing revenues and the expansion of our mobile financial services solutions within the Caribbean and Latin America. Our quarterly report for the period ended June 30, 2013 is currently on file with the SEC, where our other material developments can be found. Alternet, through our subsidiary Utiba Americas, has continued executing successfully on customer contracts throughout the second quarter and have signed several multi-country, multiyear contracts during the first six months of the year. These projects are in the process of being implemented, which takes on average between six to twelve months for completion. As a result, revenues stemming from these projects are only reflected once the project has been successfully delivered and accepted by the client.

Given our lag in revenue recognition, Alternet and our subsidiaries understand that consistent communication, to and with the investment community, are keys to operating successfully and achieving a proper valuation in the public markets. For this purpose, we are embarking on an active public and investor relations campaign designed to bolster communication and achieve greater public and investor awareness. Campaign initiatives include bringing on a public relations firm, revamping our web site and company information kit, as well as participating in industry conferences and events. As a shareholder and / or an interested party, you should expect to see more active correspondence with the Company and more information on a regular basis.

As stated in the Company's previous Letter to Shareholders, due to the competitive nature and the critical impact of our projects on our customers' business and market strategy, many of them are reluctant to share critical information regarding the projects with the public. It is important to note that we are continuously requesting customers to allow us to disclose this information, and will disclose it only when we receive their authorization.

Revenue Recognition and Gross Profit

Alternet's revenues currently come from our mobile payments subsidiary Utiba Americas. Our product and service mix comes from the sale of applications as "software as a service" (SaaS) which translates from a one-time revenue event to monthly recurring revenue stream over a period of years. The last six months have been decisive for Alternet and its subsidiaries. Several large projects have been signed and are in the process of implementation. As mentioned, implementation can take an average of between six to 12 months, and the resulting revenues are only reflected once the project has been successfully delivered. This results in a lag when booking closed sales versus actual revenue accrual in our financials. Despite this accounting complexity, the Company remains focused on shifting its core revenues to the SaaS model, and keeping with industry trends towards the use of the cloud to host software services, as well as based on a per mobile wallet, per transaction or a combination. 

In the second quarter 2013, the Company recognized revenues of $519,582, a year-over-year increase of $302,567 or 139% and quarter-over-quarter increase of insert $82,606 or 19%. For the six months ended June 30, 2013, the Company achieved revenue of $956,558, a year-over-year increase of $680,258 or 246%. Increases in revenue stemmed mostly from the completion of several contracts during the period including Digicel Group, Astra Holdings, Corporación Digitel, Viva Bolivia, Banco Fie, Claro Guatemala, among others.

The Company incurred a gross profit of $184,449 in the second quarter of 2013, a year-over-year increase of $43,499 or 31% and quarter-over-quarter increase of $64,171 or 53%. Gross profit for the six months ended June 30, 2013 reached $304,727, up 87% year-over-year. Gross margin came in at 35% for the three months ended June 30, 2013. 

Financing of Operations and Loans
Alternet, through subsidiary, Utiba Americas, is generating income, which has been used to cover operating expenses and business costs, thus reducing our reliance on additional investment capital to continue executing on our growth and expansion initiatives. Additional cash requirements thus far for 2013 have been non-dilutive, and made through loans made by shareholders and certain members of management as indicated in our SEC filings.

Market Presence
Alternet's subsidiary, Utiba Americas, has greatly expanded its regional market presence in South and Central America as well as the Caribbean, having sold and implemented the Utiba Mobility platform to over 62 financial institutions and mobile network operators throughout the region. To date, we have deployed services in Bolivia, Colombia, Guatemala, Honduras, Mexico, Venezuela and most recently, Haiti.

The recent launch of our mobile money and transactional services in Haiti's Digicel "TchoTcho" Mobile is the first implementation of our multi-country migration of leading mobile network provider, Digicel, and their 22 operations in the Caribbean and Pacific regions, to Utiba's Mobility platform. The migration is expected to progress over the next three years and once completed it will be the most robust mobile money service offering in the market. Armed with our expanded mobile money services, Digicel will be better equipped to penetrate the unbanked populace within and outside of their growing global customer base, and in turn, we will gain access to their growing subscriber market.

Moving forward, we are concentrating on broadening our presence in the Latin American market, one that has proved to be quite lucrative and relatively untapped, and expanding via additional strategic partnerships and in such cases, large ventures, with selected leading financial institutions as well as mobile network operators. By mid 2014, we expect to be in 14 markets in Latin America, including Brazil.

Mobile Security - International Mobile Security
Our mobile and digital security subsidiary, International Mobile Security (IMS), has continued to pursue several opportunities in partnership with Delma, our United Kingdom based commercial partner who specializes in the development and supply of security, tracking and communications solutions. Most recently, the companies entered into a software development and intellectual property improvement agreement together.

We expect IMS's first sales opportunity to materialize at the end of 2013, with a significant revenue project yet to be announced. The project is currently undergoing testing by customer and if accepted, we anticipate being awarded the contract in the current quarter.

It is our belief that the mobile security industry is in its infancy. With the global proliferation of mobile devices and heightened security measures needing to be taken across the globe, growth of and innovation within this industry is imminent. IMS is at the forefront of this opportunity and as such, we at Alternet are committed to placing renewed efforts and resources in the promotion of IMS going forward.

Conclusion
Management is motivated with the results but not satisfied. My team and I continue to strive and are committed to leading the company and its subsidiaries to financial success and increasing shareholder value and returns.

Already mid-way into the third quarter, we remain confident that 2013 will be a year of success, characterized by improvements in our top and bottom line, as well as further expansion of our brand in the mobile financial services solutions space. Fueled by large multi-country and multi-bank ventures with key customers, our market position moving forward is strong. We expect to gain even further traction as we embark on strategic partnerships focused on layering in complementary, value-added synergistic services to our currently robust offering. 

I would like to close this letter thanking our loyal shareholders, our investors and our staff for the unwavering support and loyalty. We look forward to sharing our successes and further increasing shareholder value in the time ahead. The results are near and our progress has been successful.

Sincerely,

Henryk Dabrowski
Alternet CEO

About Alternet Systems Inc.
Alternet Systems Inc. (OTCQB: ALYI), a US corporation headquartered in Miami, Florida, is an investment holding company focused on the complementary, high-growth markets of cyber-security and mobile financial services. Through its subsidiaries, Alternet captures and converts the extraordinary growth and opportunities surrounding the explosion of mobile phones worldwide. Its cyber-security subsidiary, International Mobile Security (IMS), provides mobile and digital security solutions to law enforcement agencies. Alternet's mobile financial services subsidiary, Utiba Americas, is a joint venture with Utiba Pte, the leading developer of mobile payment software solutions. Utiba Americas is deploying mobile financial services solutions for mobile network operators, financial institutions and third party payment service providers throughout the Americas region. More information about Alternet and its subsidiaries can be found at www.alternetsystems.com and by following the company on Twitter www.twitter.com/alternetsystems.

For further information about this release contact, Investor Relations at 1-888-823-8494 or 800-631-1872 to ir@alternetsystems.com.

"SAFE HARBOR STATEMENT" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the Company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Contact Information

  • Investor Relations Contact at Alternet:
    Email Contact
    1-888-823-8494