Hi all,
I think a company called Innofone (OTCBB:INNF) innofone.com would be right up your alley. They are working with PSINET (NSDQ:PSIX) and Netspeak (NSDQ:NSPK) (with good recommendation from netspeak staff; see below) to set up gateways for internet telephony. Relatively unknown at this stage as hasn't been public all that long. Management has solid history and they had a recent article on them in the Globe and Mail (Toronto). Here's their investor package; let me know what you think!
Prepared 5.01.99
Investor Fact Sheet
Innofone.com, Incorporated
Corporate Profile
 Innofone.com 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.
 The company markets competitive long distance services (Guaranteed Lowest Rates - GLR™) to provide small and medium-sized businesses discounts on their long distance calling. Customers are provided with the best rates available by analyzing their usage each month against the rates of the three leading long distance service providers. The company has entered into a strategic alliance with Datex Corporation who has developed the unique billing program that enables INNOFONE to guarantee its customers will receive the lowest program rate. Network marketing will be the mainstay of the company's ongoing sales and distribution system along with its “Affinity Program” offering group buying discounts and forging exciting partnerships with charities and other organizations.
 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
 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 to traditional telephony.
"NetSpeak believes that Innofone is truly poised for success in the Telephony marketplace. 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."
- Lane Bess, Senior Vice President, NetSpeak Corporation
Market Data As of 04.01.99
Symbol: INNF
Traded: (OTCBB)
Public Since: June 12, 1998
Head Office: Toronto, Ontario
Shares outstanding: Preferred 5,000,000
Common 10,000,000
Recent share price: $0.71
Market capitalization: $7,100,000
Analyst Coverage: None
Recent Accomplishments
 Secured an exclusive Billing Software Program with Datex Corporation for GLR™
 Contracted with NetSpeak Corporation to provide IP Telephony Technology (Gateways)
 Secured a national ISP contract and co-location agreement
 Launched national network marketing program several hundred agents signed up
 Long distance residential and commercial sales and service fully operational
 Internet Telephony Gateways installed and operational in Toronto and Montreal
 Secured a national long-distance reseller agreement with Canadian Telephone Resellers Association (CTRA).
 Secured national paging resellers agreement
 Steps taken to launch fully integrated Worldwide Internet Telephony Service in May 1999
Financial Highlights $USD
1999 2000
(projected)
Revenues $1.3 million $8.25 million
Net income (.600,000) .592,000
Current Assets .400,000 1.700,000
Total Assets 1.000,000 2.300,000
Strategies for Growth
 Continue to build its customer base through marketing the Guaranteed Lowest Rate (GLR™) discounted long distance using traditional telephony and expand its existing distribution system, which is multi-level marketing based.
 Expand the product line to include a portfolio of state-of-the-art “virtual office” products geared to the growing business/home office market which allows commercial users to consolidate voice and data into a single network with substantial savings.
 Continue to establish Internet Telephony Gateways for U.S.
 Launch flat-rate calling in Greater Metropolitan Areas (GMAs).
 Implement local service lines for business.
 Grow by strategic acquisitions.
Board of Directors
Ron Crowe, Chairman
Larry Hunt, President
Rick Quinney, C.A., Chief Financial Officer
For Further Information: Larry Hunt, President
APC Telecommunications Inc. (416) 207-0046
E X E C U T I V E S U M M A R Y
OVERVIEW
INNOFONE.COM Incorporated, (formerly APC Telecommunications Inc.) a Canadian-controlled company, listed on (OTCBB) trading symbol (APCI), 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 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.
LOCAL SERVICE
The Opportunity- A $7 Billion Market
“Local telephone connections are destined to be the focus of business expansion in the future and the centre of competition... local line service is one of the hottest industries on the globe... companies all over the world are trying to get into the business, buying up local subscriber services as fast as they come on the market...” The Globe and Mail
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.
LONG DISTANCE
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.
THE INTERNET
Internet Protocal (IP) telephony is a new technology that is changing the way communications take place. IP telephony provides a new era to enter new markets, exploit new business opportunities, and profit from being part of a new industry. It is a muti billion dollar industry, and it will be the business of the 21st century.
A new study from Killen & Associates, a leading research and consuling 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.
THE OBJECTIVE
To Become a Prominent Local Exchange Carrier In Canada
INNOFONE is focused on becoming, in a short period of time, one of the major players in the local line market. Our objective is to provide businesses with local line service, long distance service, flat rate service, data service, unified messaging, paging and various other value-added telecommunication services.
INNOFONE will maximize the use of innovative technology and leading-edge facilities to gain competitive and cost-effective advantage. Conservative projections of $3 million in annualized sales at the end of year one, and over $15 million at the end of year two, can be reasonably achieved.
THE STRATEGY
To Provide Full-Service, One-Stop-Shopping Telecommunication Services
The current environment requires companies to use several providers and receive several bills for local telephone, long distance, flat-rate long distance, Internet access, paging and other telecommunication services. INNOFONE will submit just one bill for many of the aforementioned services. Additionally, local lines will be offered to businesses at an 18 percent to 50 percent discount from the Bell local line rate.
INNOFONE's GLR  (Guaranteed Lowest Rate) billing service will also appeal to a broad range of companies, offering long distance rated calling comparisons with Bell, Sprint and AT&T's savings programs to ensure our customers pay the lowest competitive rate.
INNOFONE uses Centrex-based telemanagement which replaces customer's existing telephone lines with Centrex lines. Centrex lines supplant existing business lines as the local access to the PSTN. Once these lines are installed, INNOFONE will manage both local and long distance traffic while offering services such as voicemail, call display, customized billing, telecommunications consulting and management reports.
In this telemanagement process, the customer's telephone number is transferred from the end-user to INNOFONE. Each customer therefore adds to our foundation of installed and managed local lines, thereby building the value of our business.
THE MANAGEMENT
The INNOFONE management team is comprised of 3 highly experienced individuals, one of whom was the president and founder of Metrowide Communications Group. Metrowide was a pioneer in the local line business and provider of flat rate long distance services. In 1995, ACC TelEnterprises Ltd. one of Metrowide's major suppliers, purchased the business for an amount in excess of $10 million. At the time of sale Metrowide had an installed base of approximately 7000 local lines which had been garnered in just 18 months of line sales activity. The other 2 principals have combined financial, franchising and banking experience in excess of 40 years.
THE PLAN
INNOFONE's strategy comprises three phases.
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) Intallation and testing of two Internet telephony gateways
d) Signing up more than 200 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
Phase Two is to 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) Intoducing new services to our Network marketing agents
The reselling of Bell business lines will economically build a customer base from which to position INNOFONE for future growth.
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 dialtone and Internet service to customers.
The implementation of Phase Three will lower the cost of providing existing services while presenting new opportunities.
TELECOMMUNICATIONS FACILITIES MANAGEMENT
Offering A Comprehensive Solution
Companies that do not employ a specialist telecom manager or technical department are often confused by the wide range of offering of products, services, and pricing schemes in the market place.
There are at present, over 25 different long distance savings options being offered by the majors, Bell, Sprint, Fonorola, ACC and AT&T. Which ones have the best rates? To properly compare takes a lot of effort, especially since new plans are introduced monthly. No wonder many customers choose to stay with Bell.
Telecom Optimization Management (TOM)
To address this challenge, INNOFONE has developed 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!
SALES AND MARKETING PLAN
Our Marketing Strategy
For many businesses, telephone expenses are the third largest item in the operating budget. As the foundation of small business communications, the basic telephone line is not inexpensive. Pricing policy, developed as a result of a monopolistic environment, mandated higher rates for business than for residential customers.
Even a small percentage reduction in these costs can amount to thousands of dollars in annual savings. However, most businesses have neither the resources nor the expertise to achieve competitive advantage through telecommunications nor to implement cost-reducing strategies.
INNOFONE will offer a full service solution to small and medium- sized businesses. Customers will be able to choose from appropriate telecommunication services and features at lower costs than would ordinarily be available, even if the customer had the resources to evaluate all the options.
Network Marketing
Network Marketing (or MLM) is an alternative method of distributing a product or service to the consumer. Network Marketing is not a business itself, but rather, it is a way of doing business. It is a marketing method, and each marketer is an independent distributor, not a company employee. Each has his or her own business!
It is the most effective, powerful marketing system in the world. And it is the perfect vechicle for home based business and the decentralization of business which is rapidly approaching . Yet, while more and more people are enjoying it's benefits, most are still very unfamiliar with it.
Traditionally, 80% of the cost of getting a product or service to the consumer is marketing related. MLM companies eliminate the wholesalers , eliminate the high cost of centralized advertising, eliminate the high cost of having employees, and deliver the product or service directly to the consumer with the assistance of independent contractors; i.e. distributors. This greatly reduces the expense of getting the product or service sold, and the increased profits are shared with the distributor network.
ACN, an MLM telecommunications company, has quickly become one of the fastest growing companies in North America. From revenues of $2 million in its first year (1993), ACN's annual revenues have skyrocketed to more than $100 million in 1997.
The Marketplace
According to Industry Canada, the total number of telephone access lines in Canada is close to 17 million, generating approximately $6.5 billion in revenue. Business service accounts for approximately 30 percent of this figure, amounting to over 5 million lines.
According to estimates in 1994, the Greater Toronto Area (GTA) has over 4,750,000 access lines in service, 1million of which are business lines.
INNOFONE forecasts a 1.5 percent market share by the end of year one, building to over 5 percent by the end of year three. Local revenue per line across Canada rose an average of 6.1 percent in 1995, moderately higher than the 5.6 percent rise recorded in 1994.
The Customer Base
INNOFONE's objective is to build a large base of loyal customers as quickly as possible. This base will serve as our most important asset, rapidly adding considerable value to the company given the value of local lines. According to telecommunications specialist, Vince Salvi, with the Oregon law firm of Weiss Jansen Ellis and Howard, the current valuation rate for Local Exchange Carriers in the United States runs between US$ 1,500 and US$ 2,000 per local line.
In addition to bringing fundamental value to INNOFONE , 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. INNOFONE's two year local line contracts also ensure that the company has a solid revenue stream during its initial growth phases.
The mature markets of the American local line industry reinforce the value of a large customer base. For example, Centex, located in San Francisco, resells services purchased in volume from facilities-based carriers without owning transmission or switching facilities. In 1994 the company, with approximately 11,000 business customers, was sold to MFS Communications Co. for US$201 million, or over US$ 1,700 per installed line.
The value of local lines is growing given the increasing number of applications such as fax, E-mail, video conferencing, etc. INNOFONE intends to be well positioned to provide access to the “infotainment” and information highway services of the future.
The Markets
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.
We intend to make use of our 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. We will move our local service 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 Montreal, Vancouver, Calgary, Edmonton and Winnipeg.
As well, 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.
The Competition
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 its 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 revenes of over $100 million.
In the MLM long distance market INNOFONE has two competitors:
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 approximately 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.
Management
Ron Crowe, Chairman of The Board and CEO
Ron has been involved in the Canadian telecommunications industry since 1983 when he and his partner started Astro-Tel Communications, a company providing a flat rate long distance service between Midland, Barrie, Orillia and Toronto. Astro-Tel was the first company in Ontario, Canada to challenge the right to become a reseller of long distance services. Slightly ahead of their time, and after 3 years of providing a discount long distance service to businesses and residents of Simcoe County, the CRTC ordered Bell Canada to disconnect Astro-Tel's services.
In the fall of 1986 Ron joined Call-Net, where he worked as a consultant assisting Call-Net in their drive to become a long distance reseller. Once this was accomplished he joined the Network marketing team where he was the top performer for several months up until the time he left. In 1989 Ron left Call-Net, and started Metrowide Communications. Metrowide began by offering a flat rate long distance service along with a per minute long distance service. In 1993 Metrowide was the first to offer local line service and when it was sold in 1995, it had an installed base of over 7000 lines with total annual revenues of over $15 million.
Larry Hunt, President & COO
As co- founder of INNOFONE.COM., Larry has over 20 years experience in Finance and Banking, working over 16 years in senior management positions for companies including Canadian Acceptance Corporation, The Times, and the countries largest financial institution, The Royal Bank of Canada. In 1982, he secured McDonalds Restaurants as one of the bank's favored customers and went on to become the youngest manager in the history of The Royal Bank of Canada.
His entrepreneurial spirit and involvement in franchised operations with several large corporations led him to establish a national financial network across Canada.
After relocating to the United States, and two years of design, research and development, he established Direct Quest, an Internet Service providing a diversified multilingual business directory and other web site services.
Richard Quinney, C.A., Chief Financial Officer
Rick is a graduate from the business school at the University of Western Ontario in London, Ontario. He graduated with an Honours BA from the Richard Ivey School of Business in 1972. He started training as an accountant with Peat Marwick Mitchell Co. in Toronto in 1972 and obtained his Chartered Accountancy designation in 1974. In 1976, he began specializing in corporate restructuring and in 1981 he obtained his licence as a Trustee in Bankruptcy. He transferred to London, Ontario in 1979 and started an insolvency practice for Peat Marwick. He became a partner with Peat Marwick in 1981. In 1988 he transferred back to Toronto, and continued as a partner specializing in audit and accounting of growing and emerging business.
NEWS RELEASES
The following is a link to the Innofone News Release site.
www.innofone.com/news.htm
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