Alternet Systems Inc (ALYI)

[Jim Rockford]

IMHO, ALYI is Running - Watch the Open


I like how Alternet is behaving technically. Barchart.com calls it a Strong Buy (go there and plug in the symbol). I’ll go one further and say that I think it has started a run/leg-up already and IMHO it is a buy ASAP - ie. IMHO, it will continue to run on the market open.

As my blog readers know well, I’ve fully perused the November 2010 Business Plan and there are some eye-popping projections presented in that document. Please let me know by inbox if you want a copy. As it isn’t online, I’ll need an email.

I firmly believe that potential SP gains made by ALYI in 2011 should be tremendous. I also believe interest by some very powerful entities is imminent - especially when one looks at their technology space and the geographical areas where the company is building their fundamentals.

The following article on Bill Gates and the work his foundation, the Bill and Melinda Gates Foundation, is doing re mobile banking makes some great points. Oh….and it’s my bet that ALYI is already talking to them re their technology. Here’s the link, with some points from the article after it:

themhttp://o.seattletimes.nwsource.com/html/localnews/2013435793_globalsavings15.html

- Only about 10 percent of the world's poor have access to a bank account. If they do, they often pay half a day's wages just to make a deposit or withdrawal

- The Bill & Melinda Gates Foundation is bringing financial leaders from 38 countries to Seattle with the aim of changing that.

- This week the world's richest private foundation is hosting a Global Savings Forum, its first event connecting experts from banking, government, technology and other industries to devise new ways to offer savings to the poor.

- Rather than bury cash under a bed, for example, savers could store it electronically on a mobile phone.

- The Gates Foundation is also expected to make a major grant pledge representing its biggest commitment in financial services to date.

- For the 2.5 billion people who live on about $2 a day, a good day's wages might equal the price of a latte in Seattle, while a bad day would net the cost of black coffee, said Ignacio Mas, deputy director of the foundation's financial services for the poor program.

- Mas, a former executive at interTouch and Vodafone, said dozens of different mobile-banking programs are being tested worldwide.

- And local retail terminals are taking the place of bank branches. In Brazil, for example, new accounts can be opened at grocery stores, post offices and gas stations.

- The Seattle event comes at a time when loans to the poor have grown dramatically, but savings has been neglected, Mas said

- After first supporting microcredit programs, the Gates Foundation has moved away from lending to focus exclusively on savings. One program it has backed is Oxfam America's Saving for Change, which trains community groups in the poorest places to save, pool their funds and rely on their own resources for loans instead of a bank, credit union or microfinance institution.

- The foundation will share research that shows demand for savings accounts outstrips loan demand 12 to 1. Being able to pay for large expenses with savings is cheaper than taking a loan.

- While microfinance institutions may charge more than 50 percent annual interest on loans, deposit accounts help earn interest for savers.

- "Savings is an option everyone should have, which is not true for credit," Mas said.

All the above is right up the alley of the Clinton Foundation - and would enhance their current efforts in Haiti.

While doing my DD I came across a very well-informed and topical mobile payments industry blog called mPay Connect Mobile Payments Blog. The blog is written by Ms. Menekse Genser, an international mobile payments professional and lecturer (and former PayPal executive) who advises mobile payments organizations how to launch mobile payments systems and how to leverage them. Here is the link to the blog:

http://mobilepayments.wordpress.com/

The following tract is from her blog:

“Kenya is the leading country in the world when it comes to mobile money. The world looks at Kenya as the model country which is having not only the greatest uptake in usage (Today over 60% of Kenyan adults now use mPesa), but has the potential to change the economic development of the country in an unprecedented manner. New research from Billy Jack and Tuneet Suri indicates that it may be reducing the income irregularity and risk that the poor face daily. Over $400 million worth of volume goes through the system MONTHLY. To put this in perspective, last year, PayPal mobile had $600 million in volume for the entire year globally. The number of transactions passing through the mPesa system (in a country with a population of 38 million with per capita GDP of less than $1,000) is greater than all of the transactions Western Union had globally.”

As a consultant to businesses around the world, seeking to launch mobile money systems and as a former macro-economics major from Harvard, I wanted to bridge the economic theory with the reality of what is happening at the ground level in the emerging markets I have visited. My conclusion: Mobile Money will be a catalyst to jumpstart these markets because it draws on the forces inherent to mobile money itself, namely:

1. it is a new industry that is bringing investment/innovation into these emerging markets;

2. it is both a foundational infrastructure itself to enable other new industries to receive payments as well as a service that requires additional building blocks to work. These building blocks, in turn, support new industries (such as identity management for marketing or credit);

3. it leverages another infrastructure, namely mobile, which is the most ubiquitous data transmission device in the history of mankind (and penetrates to people far out of reach of banks);

4. it addresses taking cash in the informal financial sector and formalizing it into capital deposits which can spur further economic activity (such as investments); and, finally,

5. it relies on electronic transmission, which eliminates the friction and costs associated with cash (namely cost of physically moving cash from one place to the next and the lost productivity in failing to transact as needed due to this time issue.)

Iqbal Quadir, the founder of GrameenPhone in Bangladesh, states that “connectivity is productivity” whereby a study has shown that in emerging markets mobile connectivity profoundly impacts GDP (a 10% rise in mobile subscribers will raise GDP between .6% and 1.2%.) Mobile money exacerbates this phenomenon because it is the enabler of business. If mobile connectivity is the “how” to link data for commerce and business, mobile money is the “why”… so that we can earn an income. Together, the data transmissions to spur economic activity and the mobile money payments services are already unleashing a new wave of entrepreneurism in these emerging markets in an unprecedented manner with new industries leapfrogging those in developed markets (mobile money leapfrogs traditional banking similar to the way mobile leapfrogged fixed telephony and off-grid clean energy is leapfrogging grid fossil fuels.)”

Here is a link to a $2.1 million contract that ALYI did with Movilway - one in which the company netted $1 million. This is the first of many contracts, IMHO - and one that will help the company fund growth organically.

http://www.businessleader.com/SouthFlorida/index.aspx?page=ui.readstories&id=113121

On a micro level re Alternet, note that the OceanPoint IR guys have many contacts who hold Novadx (NDX on the TSX-V), a stock the OP guys took from a nickel to 42 cents - and that now trades in the 40 to 50 cent range. Undoubtedly, some of these investors will want to be in OP’s next project - namely ALYI. My educated guess is they will be coming on board ASAP with the way the fundamentals are building.

If all goes as planned for 2011, I don’t see the company remaining on the bulletin board alone. IMHO, I see a potential dual-listing on the TSX-V or TSX. That, the above, and exceptional fundamental growth, should, IMHO, make for a game-changing year for Alternet in 2011. I believe the first quarter of 2011 will be very, very rewarding and if you are so inclined, IMHO, I’d buy ASAP.

Jim