MIAMI, FL--(Marketwire - Nov 14, 2012) - Alternet Systems, Inc. (
Dear Fellow Shareholders,
This letter is a follow up to our third quarter filing posted with the SEC on November 14th, which accurately depicts our financial performance for the period, but does not yet reflect important operational advances made during the first three quarters of the year. Specifically, in 2012, Alternet's mobile financial services subsidiary, Utiba Americas, has sold and deployed services in six countries of Latin America, making it the leading technology provider in the region with an estimated 35% market share of the deployments in these markets.
Since its launch in early 2010, Utiba Americas has rapidly assumed a leadership role in the emerging market of mobile payments of Latin America. The evolving regulatory environment in South and Central America has at times complicated the sale and launch of services. Despite this challenge, Utiba Americas has sold the Utiba Mobility platform to financial institutions and mobile network operators throughout the region and has deployed services in Bolivia, Colombia, Ecuador, Guatemala, Honduras and Venezuela. Utiba's customers in these countries target a total of 120 million potential users.
Bolivia. As recently announced by Utiba, Bolivia's largest bank and regional leader in micro-finance, Banco FIE, has selected Utiba's Software as a Service (Saas) solution. This project is in implementation. Additionally, the Utiba platform has been deployed in the networks of the country's two largest providers of mobile communications, who have yet to launch services.
Colombia. Utiba's platform has been deployed and is in use by one of the country's leading mobile communications providers. The platform is also being used in a pilot distributing government benefits (welfare payments), orchestrated by one of the country's leading business to business (B2B) technology providers.
Ecuador. In 2011 Utiba Americas won the public bid for the Central Bank of Ecuador mobile payments project pilot. The Bank has yet to select a provider for the full scale deployment, though a public bid is expected in the coming quarter.
Guatemala. In late 2011, Utiba Americas' hosted Mobile Financial Service platform was selected by Guatemala's largest bank and one of Central America's largest mobile operators to launch and manage an innovative mobile payment service. Since its soft launch at the end of 2011, the service has been expanded to include payroll services, bill payments, government subsidies and mobile remittance. The service has experienced a significant increase in adoption in the summer of 2012.
Honduras. In early 2013, a new mobile payment service provider will convert its current pilot, running on the hosted Utiba Americas platform, into a commercial service, offering third party bank branch services, business to business mobile collections, bill payment and domestic remittances.
Venezuela. In 2011, Utiba Americas sold and deployed its electronic recharge (top-up) platform for a Venezuelan mobile network operator, which will in 2013 expand the platform's services to include mobile commerce. Utiba Americas expects to launch additional projects in the Venezuelan market in coming months, which will include the use of a companion card tied to the mobile wallet, an important element of Utiba's Converging Payments Strategy.
Regional Deployments. Regional third party payments provider Movilway continues to deploy the Utiba electronic recharge (topup) platform throughout its distribution network in the Central and South American region. Movilway is currently in 12 countries with more than 80,000 retailers.
Utiba Americas expects to announce new regional contracts before the end of 2012 that will potentially expand its Mobile Financial Services platform to another 27 countries across the globe.
In the coming quarter, both Utiba and Utiba Americas will announce a number of strategic partnerships with companies with complementary product offerings. Pending agreements include an important regional channel partnership and a complementary suite of business analytics tools for microfinance, credit assessment, and mobile retail purchases.
Already announced in this year are agreements with i2c, Inc., Validsoft, and Spindle, which provide access to open loop payment processing, advanced mobile transaction authentication services, and a low cost acceptance network, respectively, and build upon Utiba's participation in the MasterCard Mobile Money Partnership Program announced in February.
On a separate note, one which augurs well for future success, Utiba Americas and Utiba continue to strengthen and broaden their relationship. The two companies are dedicated to making the Utiba brand and its products the preferred global solution. To that end, both entities leverage each other's capabilities and relationships and management are in constant contact to ensure seamless and timely product delivery and success.
Revenue Recognition and Accrual
As discussed in earlier shareholder communications, all of Alternet's revenues currently come from our mobile payments subsidiary, Utiba Americas, which has been changing its product mix from a traditional software license toward the sale of software as a service (SaaS), or from a one time revenue event to a monthly recurring revenue stream over a period of years. This shift is in keeping with industry trends towards the use of cloud computing and based upon an evaluation of customer needs. This shift also results in a delay in recognizing revenues and per accounting practice, accrual only of the revenues billed in a given period.
As a result, the value of Utiba Americas' multi-year agreements is not evident in our financial statements, as we are only able to bill for services when the project has been delivered, and monthly services fees are billed and booked for the period.
International Mobile Security (IMS) -- Cyber Security Subsidiary
IMS' strategic partnership and reseller agreement with UK based Delma Technologies has effectively increased the company's international sales force and given IMS access to Delma's products and resources. Based upon the early success of this relationship and complementary nature of the two companies' technologies and services, we have begun exploring additional joint efforts, to include software development and combined delivery and support efforts. We expect these efforts to permit a timelier closing of opportunities, which has caused a delay in reporting revenues at the subsidiary.
I am proud of the accomplishments of Alternet and its subsidiaries, in particular of the leadership position achieved by Utiba Americas. When we began marketing the Utiba Mobility platform in early 2010, we knew we had chosen to partner with the best technology provider, and we correctly anticipated that mobile financial services in Latin America would evolve differently than in Asia- Pacific and Africa, where the majority of the worlds' deployments had taken place previously. We quickly determined that the regulators of the region would favor financial institutions, and that financial institutions in turn would view a mobile payment platform differently than a mobile network operator, and would welcome the software as a service (SaaS) business model. This product development has been positively received in Latin America and elsewhere; in fact, we expect to announce global SaaS clients for Utiba Americas in the coming quarter.
This type of product innovation is an indication of the excellent business development and technical team we have assembled here in Miami. With this talent, we expect to lead the industry for years to come.
I would like to extend my thanks to Alternet's personnel and that of our subsidiaries for the hard work during this important year, and to our shareholders for their continued support.
About Alternet Systems Inc.
Alternet Systems Inc. (
"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.