PrepaYd Inc. (fka PPDC)

[Bobwins]

Talked with Bruce Berman again.

I asked about the Preferred share issue. He said it was a combination of reasons to do it. He wants to maintain control of the company until there is a buyout so he exchanged most of his common stock shares for preferred shares that have a 3 yr hold. He is confident enough in the company success that he doesn't see any need to liquidate before 3 years are up.

I asked about the capital requirements to grow the wireless segment. He said it was pretty low because of the way they are building the business.

The Emida distribution network is the key. There are 15,000 outlets in the network. They buy their phone inventory directly from a wholesaler that PrepaYd recommends so PrepaYd doesn't get involved in the phones. The merchant orders the phones and charges whatever they want. All PrepaYd cares about is the monthly fees.

In order to avoid confusion, PrepaYd requires that the merchants never charge more than PrepaYd charges for the phones on their website. Berman anticipates that the merchant network will offer different phones than those on the website so they can charge what they want for the phones.

Berman is very excited about the cross selling prospects. He says that he expects the merchants to sell the phones and then pitch them on the prepaid cards. Why? Because if they sell the PrepaYd debit card along with the phone, they can be sure to receive commissions on loading the phone. Once they sell the phone, their customers can use cash at many locations but the combination sale will keep them earning commissions on both products. There are 15,000 merchants and he expects it will take about 2 yrs to penetrate a good percentage of them. He said Green Dot has 50,000 locations and NetSpend has 25,000 locations so 15,000 is an excellent start.