SOURCE: Alternet Systems, Inc.

Alternet Systems, Inc.

February 05, 2014 09:30 ET

Alternet Systems, Inc. (ALYI) Issues Letter to Shareholders Discussing the Proposed Transaction With Utiba Pte. Ltd and the Future of the Company

CEO Comments on the Company Future Growth and the Merits of the Transaction to the Shareholders

MIAMI, FL--(Marketwired - Feb 5, 2014) - Alternet Systems, Inc. (OTCQB: ALYI) ("Alternet" or the "Company"), today delivered a shareholders letter from its Chief Executive Officer, Henryk Dabrowski.

The letter discusses the company's transition into digital currency, mobile remittance, and micro payment markets enabled by a licensing agreement and asset sale transaction with Utiba Pte. Ltd. ("Utiba"). It also addresses investors' concerns related to the transaction and provides a roadmap for future of Alternet Systems, Inc.

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

Dear Fellow Shareholders,

Alternet Systems, Inc. is monetizing its investment in Utiba Americas and transitioning into what we call "The Internet of Money, or the Alternet"; and as we see it, the convergence of Digital Currency, Mobile Security and Mobile Financial Services.

Alternet's current business has centered in the Mobile Financial Services space, through its subsidiary Alternet Transaction Systems, Inc. ("Utiba Americas"). Over a period of 3 years, the Company has been focusing in selling the Utiba software, primarily to Mobile Network Operators, Financial Institutions and Payment Service Providers. The strategy has been centered in expanding our market presence in the Americas market. The Utiba application is used by almost 50% of all implementations in Latin America and the Caribbean. This success has allowed the Management team to identify several new areas of opportunity. We expect to unveil our digital roadmap over the next several months. This initiative will lead to the creation of new business and partnerships in 2014 and beyond.

Why is the Sale of Assets of Utiba Americas a good opportunity?

The sale of the assets of Utiba Americas (the "Transaction"), allows us to successfully exit the Mobile Financial Services software sector, both in a timely fashion and profitably. It benefits the Company by reducing its risks resulting from significant adverse changes in market conditions, arising from increased and more robust competition, greater sophistication requiring broader product offering, more resources and additional capital investment.

The Transaction provides Alternet with a strong 150% return on its investment over 3 years based on the total capital investment to date of $2 million. It provides Alternet with cash to invest in exciting high growth opportunities, such as Digital Currency services, as well as continue to invest in the Mobile Commerce and Mobile Remittance segments. Mobile and Digital Security are key sectors for the Company and we expect to continue to grow by adding new services and products.

The Transaction also provides an opportunity for the Company to reassert its core vision and mission while expanding its scope. Internally referred to as Alternet 2.0 Global Strategy, the initiative that began in November 2013 is expected to be launched immediately after closing the Transaction. Management and the Board of Directors are very excited with the opportunities presented to date and eager to implement its strategy.

Management analysis of the Sale of Assets of Utiba Americas

Per our latest Proxy filing describing the Transaction, we have received a proposal to sell the assets and transfer selected liabilities of Utiba Americas to our joint-venture partner Utiba. The proposal derives from the acquisition, in October 2013, of Utiba by Amdocs, Inc., a global technology player.

The Transaction's terms have been negotiated and agreed, and the Board of Directors is submitting it to shareholders for approval. We expect to hold several conferences, post information on our web site and maintain our Investor Relations line available, allowing shareholders to submit questions on the Transaction in order to facilitate an informed decision. The Company has also engaged the Proxy Solicitation services of Morrow and Co.

The Board of Directors and Management decision was based on the following four key factors:

First, the opportunity to timely exercise our Tag Along rights established in the Utiba Americas shareholder agreement with Utiba. This allowed Utiba Americas to receive a valuation similar or equal to Utiba and its subsidiaries and provided Alternet pari passu treatment with the Utiba founders and shareholders.

Second, Management has evaluated the potential impact of the sale of Utiba to Amdocs. From the inception of Utiba Americas, Alternet's Management has had a direct and open relationship with the founders and shareholders of Utiba. This relationship further strengthened over the years with daily interaction and greater familiarity, resulting in increased trust and respect. In part, the relationship was based on the parties' shared dynamic entrepreneurial spirit and buttressed by similarly-held visions and goals. This relationship facilitated our ability to make decisions in a swift and effective manner. The sale of Utiba will undoubtedly change the dynamics of our relationship, given the significantly different stage of development of the companies, Alternet and Amdocs, resources, organizational structures and goals. It is expected that these factors will adversely affect Alternet and place the company at a disadvantage, potentially resulting in significant dilution. 

Third, a strategic exit based on market fundamentals currently affecting the Mobile Financial Services software sector. The mobile financial core software industry has dramatically evolved over the last 12 months with the entrance of significantly larger and diversified competitors, such as Visa, MasterCard and Ericsson. This has adversely affected our previous competitive advantage, market position and impacted our ability to effectively address opportunities, promote the company and compete financially. Management and the Board of Directors believe that market consolidation and increased competition from larger, diversified and financially stronger competitors makes our position untenable. We simply cannot effectively compete. The sale of Utiba Americas permits the company to reduce its exposure and limit additional financial investment with little likelihood of return.

The last factor is that the Transaction and the resulting proceeds will permit Alternet to leverage its experience, market contacts and operating capabilities to take advantage of opportunities in more promising sectors, such as Digital Currencies and Commerce, Mobile Micropayments and Cross Border Remittance Services, Mobile Retail Working Capital Services and Digital Customer Retention Services. Numerous opportunities are being explored and as Management and the Board of Directors select and close the on these opportunities, the investments will be promptly announced. 

As a shareholder what should you expect?

Management and the Board of Directors kindly ask for your support of the Transaction. It is a key milestone for Alternet and the result of several years of hard work by Utiba Americas, Management and employees, as reflected in Utiba Americas' leadership position in the Americas market. The time has come to move on and proceed with new and exciting opportunities, with a healthier and stronger company, and a motivated Management team ready to undertake more ambitious and larger projects.

It will permit Alternet to focus its strategy directly on consumers and businesses, creating greater enterprise value and corresponding appreciation of share price and improved market perception.

The proceeds will allow Alternet to strengthen its balance sheet and streamline operations. It also allows Alternet to take advantage of the accumulated net operating losses to reduce the tax impact.

The information memorandum and the proxy have been sent to all of the shareholders on record. By the time you read this shareholder letter, you probably have received your personal copy of the information. Our Investor Relations team is available to respond any questions you may have. We encourage you to reach out to them at 1-888-823-8494 or email your inquiries to ir@alternetsystems.com.

Management will hold two conference calls to explain the transaction and the respond to questions. Our Investor Relations team will announce the dates for these calls in the upcoming weeks. We expect to have a Shareholder Meeting on at 9:30 am, on February 21, 2014, our offices at 2665 S. Bayshore Dr. Ste 301, Miami, Florida. It will be at this Shareholder Meeting, where the final decision will be made as to the successful approval of the proposed transaction. We welcome of all our shareholders to come to this Shareholder Meeting and expect to have a positive turnout.

The future is promising and Management and the Board of Directors are optimistic. Alternet has always been a visionary company. The path to the Internet of Money is clear, and we expect to continue delivering additional growth and value to the shareholders.

Sincerely,

Henryk Dabrowski
Alternet CEO

About Alternet Systems Inc.
Alternet Systems Inc. (OTCQB: ALYI), a US corporation headquartered in Miami, Florida, is an enterprise accelerator company focused on the complimentary, high-growth markets of cyber-security, digital 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, Rich Kaiser, 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