Hi Jason: Thanks, and in case you missed it on RB, QB11's popst is worth reading!
A very bullish profile of INNF from THESUBWAY.COM was published today.
They focus on highly undervalued internet stocks that are poised for big gains.
Shares Outstanding: 13,130,000 Aprox.
52 Week Range: .1875 - .90
Public Float: 8,130,000
Intro Innofone.com Inc. (formerly APC Telecommunications Inc OTCBB:APCI) is a newly incorporated company that operates in two distinct segments of the burgeoning telecommunications industry –
traditional long distance and state-of-the-art Internet telephony. Telecommunications and all of its segments is "the" industry of the 21st Century and will lead no doubt to a changing status quo and a flurry of new competitors as the markets expand and consumers migrate to greater technological needs as a result of the internet. The environment will force extreme competitive price at better quality and higher speed connections. The companies that poise themselves to capture the market during the growth stages are likely to survive the carnage of the future.
Innofone.com plans to carve out a niche in the burgeoning telecommunications industry marketing local line service, traditional long distance service, Internet telephony and other services that can be marketed by our Direct Sales and Network marketing organization. During 1999, the Company intends to be known Canada-wide as a top Network marketer of Internet-based communications products and
services. Being on the forefront of technology, the Company can offer the consumer, the medium size and small/home business market innovative solutions integrating Internet telephony software,
traditional long distance and other services.
The Company and it's Entities INNOFONE's primary market comprises densely populated urban areas. Our initial sales effort will target small and mid-sized businesses located in Montreal, Toronto
and the Greater Toronto Area, the largest and strategically most significant markets in Canada.
Innofone.com Inc. has several focuses within the telecommunications market. The focuses are on Local Service, Long Distance and the Internet. Each entity is further comprised of many smaller services that combine together to formulate a package concept within each entity and then can be cross-sold to other customer segments.
The Internet The Internet telephony service represents a significant expansion of Innofone's product range which includes Guaranteed Lowest Rate (GLRTM) long distance reselling program.
The company's main objective is to become Canada's leading provider of Internet-based communications products and services by offering the consumer and small/home business market innovative solutions that integrate Internet telephony, software, and services. Products will include unified messaging, wireless Internet, interactive data sharing and multi-media transmission of voice, video, and data over the Internet at significant savings totraditional telephony.
The Company is also one of Canada's first Internet Telephony service providers (ITSP), offering phone-to-phone, PC-to-phone and discount Global Fax and Data communications using software
developed by Netspeak. The company's services offer consumers the ability to carry on long-distance conversations via the Internet from anywhere in the world at a fraction of the cost of international
long-distance calling. Once the build-out of INNOFONE's Internet network is complete in 1999, customers will be able to use their telephone to call the traditional way, yet still receive the benefit of low-cost calling using the Internet.
Local Service Innofone's objective is to build a large base of loyal customers as quickly as possible.
This base will serve as our most important asset, rapidly adding considerable value to the company given the value of local lines.
Long Distance Service The Company's main objective is to promote the availability of worldwide communications over the Internet at significant savings to traditional telephony, offering state of the-art products, which can truly compete with traditional telephony products. In addition, when the network is completed, traditional telephony users will be able to benefit from the inherent economies of the Internet as their long distance carrier. During the build-out phase of the Internet network long distance services will be routed over a traditional carrier network so that the company can build its traffic base.
Sales and Marketing The company intends to make use of their Direct Sales and Network marketing organization and affiliates to market services. This will provide growth without incurring significant overhead costs. Density management thus allows for rapid penetration of market share in any given region. The local service will be moved only into areas with sufficient business line density to warrant profitable operation. In terms of the Canadian market, this represents a limited number of major metropolitan areas including Toronto, Montreal, Vancouver, Calgary, Edmonton and Winnipeg.
The Sales process has been reviewed to ensure quality transactions and order processing are up to par and able to handle the flow of business on a growing basis. Moreover, Innofone will establish a dedicated Account Development Team for a proactive focus on customer service designed not only to encourage customer loyalty but also to build per customer revenue on a consistent basis.
Environment There are four major competitors in the area of local line service. Bell Telephone is the current dominant competitor in the region, having had a monopoly on local line service for more than a century. As a result of it's past monopoly status, Bell Canada has had little incentive to introduce leading edge technology or to minimize the true costs of service. However, in response to competition in the long distance market, Bell has recently become more active in its marketing and customer service efforts. ACC TelEnterprises Ltd., also competes in the same market. A wholly owned
subsidiary of a U.S. public company traded on the NYSE with approximately $100 million in revenues, ACC entered the local line and flat rate business with the purchase of Metrowide in 1995. Currently,
the customer base is largely long distance with over 30,000 local lines installed. Optel Communications Corporation, a privately held company, has a customer base of over 60,000 lines and revenues of over $ 45 million after only four years. Marketing local lines and long distance to small and medium sized companies, Optel is now selling over 2,000 lines per month. MetroNet, a Calgary based company, was recently merged with AT&T Canada. Both companies have been reselling Bell Centrex lines. MetroNet is also a facilities based local service provider with its own fiber in the downtown core of eight cities. Founded in 1995, MetroNet has annual revenues of over $100 million.
According to Industry Canada, the total number of telephone access lines in Canada is close to 17 million, generating approximately $6.5 billion in revenue. Business service accounts for approximately 30 percent of this figure, amounting to over 5 million lines. According to estimates in 1994, the Greater Toronto Area (GTA) has over 4,750,000 access lines in service, 1million of which are business lines. In the province of Ontario alone, representing approximately forty percent of the Canadian market, there are over two million business lines currently deployed generating an annual revenue stream of over $1 billion. The local line market is estimated to grow to $14 billion within the next five years and to exceed $21 billion by the year 2006.
A new study from Killen & Associates, a leading research and consulting firm, (Internet Voice: Opportunities and Threats) forecasts that global Voice/Internet services revenues will top $63 billion by
the year 2002 from $741 million in 1997. Approximately 48% of the 2002 revenues will be generated in
North America while 33% will come from Europe, and the rest from Asia.
Telecommunications specialist, Vince Salvi, with the Oregon law firm of Weiss Jansen Ellis and Howard says, the current valuation rate for Local Exchange Carriers in the United States runs between US$ 1,500 and US$ 2,000 per local line. In addition to bringing fundamental value, the customer base will allow for the successful marketing of high margin enhanced services, including Internet access,
voice mail, data services, cellular, paging, unified messaging, telephone systems and, in the future, cable service.
Market Analysis
Strengths – The Company is well positioned for the transition into the 21st century by equipping its operations with the latest in technology in its infancy as a result of mission, strategy and management taking place now. Moreover, the company has built their IP telephony systems using vendors such as NetSpeak (Nasdaq:NSPK) that have benchmark reputations for quality and dependability.
INNOFONE has developed a unique packaging of services entailing a concept called Telecom Optimization Management (TOM). "TOM" incorporates two unique services: (1) Local Business Line
Optimization which provides local business telephone lines at a discount from regular Bell rates and (2) Long Distance Optimization, which through our customized GLR billing program, shows customers
comparative long distance rate plans of the three largest carriers. The invoice therefore shows that with INNOFONE they pay the lowest competitive rate! This is extremely advantageous for its target
audience of small business owners that normally do not have a communications manager to analysis and keep up with all of the promotions and rules involved with the promotions. Innofone adds a value inherent in its product of management whereas the larger companies do not afford such consideration to the smaller businesses or consumers.
The Company understanding of the need and value placed on packaging and providing its customer base with value added products that will in turn build relationships and revenue.
Weakness– A potential weakness to Innofone.com is the inherent risk built into the Internet of dependency on third party (the recipients) equipment. Innofone.com has decisively limited their liability as much as possible by investing in a quality service provider and reputable equipment.
To accommodate the objectives of Phase Two, the projected total cash requirement will be $2.5 to $3 million. The Company intends to overcome the capital requirements by heavy networking marketing
initiatives and raising capital within the financial markets. Furthermore, management is forecasting profitability and positive cash flow in the 16th month with surplus cash thereafter being available to
reduce capital injections.
Phase Three would require significant additional financing, but the time horizon to Phase Three is at minimum 2 years distant. Due to the technological advances and price changes which will take place
during the intervening period, no projections have been prepared relative to the entry into this phase of the company's future. The company does demonstrate a confidence that the cash flow will persist and even intensify as customers are added and additional services are sold to existing customers and the steady flow from the networking marketing efforts produce an increasing flow.
Competition –The Internet services market harbors many potential competitors, like the bells. However, the bells lack the flexibility to adapt new technology and services as quick as a smaller
entrant in the market could and are likely to be focused on larger corporate clients.
ACN and Excel. Both are US based corporations who have been very successful in their home market. ACN, who entered Canada in 1997, has signed up over 60,000 long distance customers and approx. 6,000 MLM distributors in less than two years. Excel, a billion dollar company, began operating in Canada in March of this year.
Competition in the local market will also come from competitive long distance providers as well as from major cable companies with fiber optic infrastructure already established in major cities. Initial competition will arise via resale and will be affected by whatever tariffs are mandated by regulators.
In general, INNOFONE's target market, small and medium sized businesses, has been underdeveloped by the major telecommunications service providers such as ACN and Excel. However, this market holds significant revenue potential.
The Next Step Innofone's strategy comprises three phases.
I Phase One is nearing completion and has included:
a) The development of our GLR (Guaranteed Lowest Rate) billing plan
b) The development of our Network marketing plan and recruitment kit which includes a video, audio tapes and training manuals
c) Installation and testing of two Internet telephony gateways
d) Signing up more than 1200 long distance customers using GLR.
e) Negotiated a exclusive agreement with Orbit Wireless to market their wireless Internet service
f) Signed agreements with several affinity groups including Primex Corporation, Sunnybrook Jewish Chapel and Prepar International
II Phase Two will focus primarily on:
a) The reselling of Bell Centrex lines, and provision of long distance services while building critical mass.
b) Expanding our Internet telephony network
c) Installing a pre-paid and post-paid calling card platform
d) Installing a unified messaging platform in Toronto and Montreal.
e) Introducing new services to our Network marketing agents
III Phase Three will examine the feasibility of becoming a full scale, competitive local exchange carrier (CLEC). This initiative would involve building a network of wireless digital switches and installation of fiber to provide dial tone and Internet service to customers.
Summary Innofone.com is already receiving accolades and good remarks from its associates in the market as to its potential and impressive start the company has made in the area of Internet telephony. Lane Bess, Senior Vice President for the Internet's leader in telephony software NetSpeak believes that "Innofone is truly poised for success in the Telephony marketplace and with the company's unique understanding of the Canadian market, the core management team's successful track-record, and their overall dedication to high-quality service in the modern IP Telephony infrastructure this is one company that will make an impact in the IP Telephony space."
Innofone.com forecasts a 1.5 percent market share by the end of year one, building to over 5 percent by the end of year three. Local revenue per line across Canada rose an average of 6.1 percent in 1995, moderately higher than the 5.6 percent rise recorded in 1994.
Innofone's two-year local line contracts also ensure that the company has a solid revenue stream during its initial growth phases.
The reselling of Bell business lines will economically build a customer base from which to position Inions for future growth. The implementation of Phase Three will lower the cost of providing existing services while presenting new opportunities.
INNOFONE is proactive in adding further products to its product line to ensure that the customers needs are met fully by them and continue to receive the same quality of service throughout their
Innofone experience to ensure customer retention and loyalty through building relationships.
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