April 5, 2004..NEWS
To Our Valued Shareholders,
I would like to take this opportunity to update you on the progress of the Company and share with you our vision of what we want GlobeTel to become over the next few years. Our prime goal, of course, is to dramatically increase the worth of the company and shareholder equity. But first I want to explain why we the filed for an extension of our 10-KSB. I realize that some of you may see this as a deficiency when we elect to use extra time to file the 10-KSB. We are still a small company, growing very rapidly, developing several new technologies and our staff and resources are stretched to the maximum during these reporting periods. Our first responsibility and mine as CEO is to drive the growth of our business. This often leaves us with very little time to construct these reports and too often we find ourselves reaching for more time. I take full responsibility for the filing of the extension, and I hope that you will understand our priorities. As the company and its resources continue to grow, we will be able to devote more company resources to the timely filing of our quarterly and year end reports.
This month we will launch our Public Relations and Investor Relations (PR/IR) campaign. We are bringing new faces to the table to help better tell our story. Many of you have wanted us to concentrate on the public markets. I was unwilling to do so until all the pieces of our business plan were in place. That time is now. In April we will also begin redesigning our website. Over the next few months, the site will provide access to all of our products and services. It will allow better access to project information and will be more user friendly.
Let me briefly explain the reasons for Sanswire acquisition and the markets it fills. One of the largest problems facing telecommunications in the world today is getting services to the people – the last mile solution. Over 75%f of the world’s population has never made a telephone call. In most countries, infrastructure is very basic, expensive to install or upgrade, and only reaches the main population centers in any capacity. For example, the Philippines is a country made up of over 7000 islands. Inter connection of telecommunications service is problematic. In China, its shear land size and terrain prevents the timely rollout of the massive communications network the country requires. We believe Sanswire and our Super Hub technology will help change all that. First the acquisition is an asset purchase with Globetel purchasing all of the assets of Sanswire including intellectual property and key employees and no liabilities for 28 million shares. Approximately 21 million of these shares are restricted for one year and the remainder will be free trading issued to the public shareholders of Sanswire. There are also incentive bonuses provided once the platform proves its commercial and engineering viability. Sanswire will operate as a wholly owned subsidiary of GlobeTel and Michael Molen will remain as its President.
Placing a communications platform into the Stratosphere has never been done before. Such a platform will change how the world delivers telecommunications. A low cost, high attitude Sanswire platform will deliver telephone service, Internet service, video and much more. We estimate the cost will be a one time infrastructure investment of $60 paid by each subscriber. The Stratellite airships remain in place using a very sophisticated GPS guidance system and electric powered engines that draw their power from solar cell gel packs that cover the Kevlar skin of the airship. One Stratellite delivers service to an area the size of Texas, approximately 300,000 square miles. At thirteen miles up, the atmosphere is made up of very light gases and very little to no air. High speed winds at this height would not even mess up your hair much less interfere with the operation of the airship. Beta testing of the Sanswire technology will begin within the next 90 days. We will keep you informed. Management believes with the successful test of the Stratellite, hundreds of governments and companies will flock to this technology for their 21st century telecommunication needs. As this date becomes more definite, we will provide the time and place of the demonstration and, of course, the results.
This year the Magic Money Card is being rolled out in Asia, Australia, Europe, North America, and South America. Magic Money products combine many valuable products and services. Today we offer telecommunications, prepaid debit and credit card applications, (i.e. MasterCard and Visa) and money remittances. The product supports the multi-billion dollar money remittance business at a fraction of the cost. Many national regulatory agencies have taken notice. In most countries 80 to 90 percent of the population is considered unbankable. Large segments of the population survive on the money being sent from a relative working abroad. These individuals cannot afford a bank account and are forced to carry around cash to purchase the basics of life which also makes them a target for crime. Remittance fees are very high and it can take days for their families to receive their money. Magic Money is the answer to this problem. It is an electronic bank account. Money is remitted instantly to any card on our system. The costs are very attractive. Magic Money cards can be used at over 1 million ATM and 20 million merchants worldwide on the electronic payment networks displayed on the cards. This product has endless uses. Our system gives the cardholders details for every transaction through our web interface, Interactive Voice Response (IVR) or customer service in their respective countries. It will be useful for families, companies using it for payroll services, governments for benefit payments, to name a few. The Magic Money launch is taking place in foreign markets that have the greatest demand and will then be tied to the ethnic communities in the U.S. Magic Money also gives these cardholders our prepaid calling services automatically. Why buy a standard prepaid calling card when you can purchase a calling card that is also a credit card that you can use at millions of stores and ATMs around the world?
The Text Card is a Short Message Service (SMS) micro-payment system being launched in the United Kingdom initially directed towards the cellular phone prepaid calling market place. This is the fastest growing segment in cellular phone services. Up to 50% of the face value of a prepaid calling card is spent in its distribution. A prepaid calling card provider selling a $10 calling card can have up to $5 in distribution cost before a single minute of calling is spent. With Text Card, the card providers sell their products via a cell phone text message purchase. The cellular user simply text messages our site to purchase the card and within seconds our gateway returns to the cell phone user a local access number and the pin number to make the prepaid calls. The charge is billed to their cellular monthly bill or deducted from their Magic Money Card or other available funds account. The Card provider will save 20 to 30 percent in distribution costs while directly marketing to the customer.
The Magic Phone product is an IP adapter that allows an Internet subscriber to place a low cost, high quality phone call via the Internet. The product also allows the users to have a public telephone number that travels with them. Anytime the adapter is plugged into an Internet port, our network detects it, logs onto our system and routes all their calls through our network. Calls between Magic Phone subscribers are free and voicemail, conferencing, call forwarding, call waiting are just a few of its many added features. This is a great product on its own but coupled with Magic Money and the Sanswire technology, it gives GlobeTel the unique ability to be a self contained telecommunications provider, going directly to the subscribers without the need of any other network provider or putting financial resources at risk as in the case of post paid services.
We have added to our carrier traffic operations Asian and European Gateways. The traffic continues to grow. This income should continue to grow and remain a strong component of our overall revenues
We are building GlobeTel to become a world content distribution network capable of delivering voice, data, Internet service, video, banking, rich content, interactive services, cellular, security, advertising, financial services and much more. We envision a low cost IP delivery system being able to reach everyone within a country, providing them with basic phone service, Internet service, IP Television, IP cellular service and financial services. By deploying Magic Money, the Magic Phone, Text Card and Sanswire, GlobeTel has the first opportunity to become the first independent world based carrier, being able to deliver products and services around the world in ways never seen before. The possibilities are virtually endless.
Revenues and profits will begin to be driven the second half of this year with the launch of these products. The make up of our revenues will transition from lower margin international termination services to higher margin value added services in the third and fourth quarters of this year. Our goal is to be at an annualized run rate of $60 million by the end of the fourth quarter of this year and be providing services on 4 continents. We plan to continue our goal to move off the OTCBB by engaging market support professionals around the world. To make it easier for foreign investors to purchase our stock we will list our company on appropriate and advantageous foreign exchanges.
I hope this letter has helped in the understanding and sharing of our vision. We believe with the recent $15 million funding package we have the financial tools and resources to capitalize on our opportunities. During our planned annual shareholders meeting which will be announced within the next 60 days, we hope to meet with many of you and report on our progress with our products and services and answer any questions you have.
Sincerely,
Timothy M. Huff
Chief Executive Officer
