ALYI Alternet Systems Inc New (PK)

Alternet Systems, Inc. (OTCQB: ALYI) ("Alternet" or the "Company"), an investment holding company focused on the complimentary, high-growth markets of mobile financial services and cyber-security, today released a letter to shareholders from its Chief Executive Officer, Henryk Dabrowski. The letter discussing the business opportunities for 2013 and 2012 year in review for the Company and its subsidiary, Utiba Americas, a leading mobile financial services provider in the Americas, is included in its entirety below.

Dear Fellow Shareholders,

2012 was a great year for Alternet and our growing subsidiary, Utiba Americas. The year was marked by multiple accretive wins, allowing us to gain further share in the growing mobile financial industry. These 'wins' include several projects that have been outlined in the Company's previous filings with the Securities & Exchange Commission, as well as projects seen in our 2012 financials. Alternet, through our subsidiary Utiba Americas, has closed more than seven projects over the course of the year ended December 31, 2012, including Digicel Group, Inc., Astra Holdings, S.A., Banco Fie S.A., and four others that the company is not in a position to disclose as of this letter. The Company also successfully launched the balance recharge systems for Digitel in Venezuela, and for Movilway, including a mobile commerce demo, and multiple system upgrades for several other clients.

Alternet and our subsidiaries understand that proper communication, both with investors, with clients, and their respective target markets is essential. In this effort, we continuously request to our clients and partners to allow us to announce key commercial events such as entering into contracts, launching of commercial services, and other relevant information. However, due to the competitive nature and the critical impact of these projects to their business and strategy, most of our clients are reluctant to share such information. As a result, we are unable to keep investors full informed of the progress and certain advances we're making. While we respect the privacy of our clients, we also remain committed to communicating and increasing transparency with our shareholders and as such, we will continue to push for greater disclosure moving forward.

Regional Leadership Alternet's subsidiary, Utiba Americas, has greatly expanded its regional market presence in South and Central America throughout the year ended December 31, 2012. The Company has sold and implemented the Utiba Mobility platform to over 62 financial institutions and mobile network operators throughout the region and has deployed services in Bolivia, Colombia, Ecuador, Guatemala, Honduras, Mexico and Venezuela. Currently, the Company is working on seven more implementations in various Latin American countries and recently, received a formal letter of intent and is now in the final stages of contract negotiations, to provide our suite of mobile financial services applications to a multi-country and multi-bank venture. Once finalized, this will be a monumental agreement for the Company as it will allow us to effectively expand into an additional 225 million subscriber market, dramatically broadening our reach and revenues.

Moreover, we recently disclosed the signing of a supply and professional services agreement with the largest mobile network operator in the Caribbean and the Pacific regions. The initial agreement starts with the implementation of the platform for their services in Haiti. The accepted proposal covers all of the group's properties, and it's expected to be launched over the course of the next three years.

On the product offering side, Utiba Americas entered into several agreements and strategic commercial relationships to expand our offering of products and services beyond mobile financial services, and into converging payments, staying in line with Utiba's (joint card and mobile wallet offering) strategy. These include our relationships with i2c, Inc. and Credencial Argentina, Inc., as well as working closely with MasterCard's Latin America operations, as part of the Utiba global partnership with the franchise.

Our expansion into Mexico with the incorporation of Utiba Mexico, a local subsidiary of Utiba Americas, is another growth effort that has been seeing great progress. We have been working with our local partner in Mexico for over 14 months, and recently, we were selected as the chosen technology platform for a payment processing company. We anticipate launching Utiba Mexico services in the country by the end of the year and will disclose additional details as they become available.

Given our growth trajectory on the product side and recent strategic agreements and relationships entered into, we expect to continue our expansion in this space over the next 5 years, and have discussed internally the potential broadening of our product and services offering via strategic mergers or acquisitions down the road. These strategic mergers and/or acquisitions may include technology companies both in the US and Latin America.

Revenue Recognition As discussed in earlier shareholder communications, all of Alternet's revenues currently come from our mobile payments subsidiary Utiba Americas. Our product and service mix comes from the sale of applications as "software as a service" (SaaS). This translates from a one-time revenue event to a monthly recurring revenue stream over a period of years. Utiba Americas is focused in shifting its core revenues to the SaaS model, in keeping with industry trends towards the use of cloud computing and based on a per mobile wallet, per transaction or a combination.

This causes a significant delay in the recognition of revenues. Utiba Americas, and in turn, Alternet Systems, have a lag when booking closed sales versus actual revenue accrual in our financials.

Financing of Operations and Loans Alternet, through subsidiary, Utiba Americas, has started to generate modest income, which has been used to cover operating expenses and business costs, thus reducing our reliance on additional investment capital to continue executing on our growth and expansion initiatives. Until recently, most of the cash requirements have been procured through loans made by shareholders and certain members of management.

Conclusion In closing, we are pleased with the progress that both Alternet and Utiba Americas have made in 2012. With the first quarter of 2013 already behind us, the management team of both companies remains quite enthusiastic about the current and future opportunities seen in the mobile financial services space. Particularly, the recent selection of Utiba's Mobility platform by a large multi-country and multi-bank venture is very exciting. Assuming the initiative involves the rolling out of our suite of services into at least 14 countries, we expect to quickly gain market presence and increase our profitability.

As we continue to execute in 2013, I look forward to sharing more news of contract signings and project launches as I am able to. These revenue producing events will undoubtedly improve our operational cash flows, decrease our dependence on external financing, and further increase the value of our investments to our shareholders. We believe strongly in the opportunity and vision of enabling secure mobile commerce and communications and hope you will continue to join us as we make it reality.

Sincerely,

Henryk Dabrowski Alternet CEO

About Alternet Systems Inc. Alternet Systems Inc. (OTCQB: ALYI), a US corporation headquartered in Miami, Florida, is an investment holding company focused on the complimentary, high-growth markets of cyber-security and mobile financial services. Through its subsidiaries, Alternet captures and converts the extraordinary growth and opportunities surrounding the explosion of mobile phones worldwide. Its cyber-security subsidiary, International Mobile Security (IMS), provides mobile and digital security solutions to law enforcement agencies. Alternet's mobile financial services subsidiary, Utiba Americas, is a joint venture with Utiba Pte, the leading developer of mobile payment software solutions. Utiba Americas is deploying mobile financial services solutions for mobile network operators, financial institutions and third party payment service providers throughout the Americas region. More information about Alternet and its subsidiaries can be found at www.alternetsystems.com and by following the company on Twitter www.twitter.com/alternetsystems.

For further information about this release contact, Rich Kaiser, Investor Relations, 1-888-823-8494 or to ir@alternetsystems.com.

"SAFE HARBOR STATEMENT" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the Company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Add to Digg Bookmark with del.icio.us Add to Newsvine

Investor Relations Contact at Alternet: Rich Kaiser Email Contact 1-888-823-8494