Alternet Systems, Inc. (ALYI) Issues Letter to Shareholders Discussing Its Second Quarter 2013 Financial and Operational

Alternet Systems, Inc. (ALYI) Issues Letter to Shareholders Discussing Its 
Second Quarter 2013 Financial and Operational Results 
Revenue Improves Significantly and Show Consistent Quarterly Growth;
Global Market Presence Grows 
MIAMI, FL -- (Marketwired) -- 08/21/13 --  Alternet Systems, Inc.
(OTCQB: ALYI) ("Alternet" or the "Company"), an investment holding
Company focused on the complementary, high-growth markets of mobile
financial services and cyber-security, releases a letter to
shareholders from its Chief Executive Officer, Henryk Dabrowski. 
The letter discusses the Company's second quarter filing for the
period ending June 30, 2013 as posted with the Securities & Exchange
Commission (SEC) on August 14th 2013 and gives an overview of the
financial and operational highlights for the three and six months
ended June 30, 2013 for the Company and its subsidiary, Utiba
Americas -- a leading mobile financial services provider in the
Americas. 
The CEO's letter is included in its entirety below: 
Dear Fellow Shareholders, 
The second quarter and first six months of the 2013 have been quite
productive, characterized by growing revenues and the expansion of
our mobile financial services solutions within the Caribbean and
Latin America. Our quarterly report for the period ended June 30,
2013 is currently on file with the SEC, where our other material
developments can be found. Alternet, through our subsidiary Utiba
Americas, has continued executing successfully on customer contracts
throughout the second quarter and have signed several multi-country,
multiyear contracts during the first six months of the year. These
projects are in the process of being implemented, which takes on
average between six to twelve months for completion. As a result,
revenues stemming from these projects are only reflected once the
project has been successfully delivered and accepted by the client.  
Given our lag in revenue recognition, Alternet and our subsidiaries
understand that consistent communication, to and with the investment
community, are keys to operating successfully and achieving a proper
valuation in the public markets. For this purpose, we are embarking
on an active public and investor relations campaign designed to
bolster communication and achieve greater public and investor
awareness. Campaign initiatives include bringing on a public
relations firm, revamping our web site and company information kit,
as well as participating in industry conferences and events. As a
shareholder and / or an interested party, you should expect to see
more active correspondence with the Company and more information on a
regular basis.  
As stated in the Company's previous Letter to Shareholders, due to
the competitive nature and the critical impact of our projects on our
customers' business and market strategy, many of them are reluctant
to share critical information regarding the projects with the public.
It is important to note that we are continuously requesting customers
to allow us to disclose this information, and will disclose it only
when we receive their authorization. 
Revenue Recognition and Gross Profit 
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) which
translates from a one-time revenue event to monthly recurring revenue
stream over a period of years. The last six months have been decisive
for Alternet and its subsidiaries. Several large projects have been
signed and are in the process of implementation. As mentioned,
implementation can take an average of between six to 12 months, and
the resulting revenues are only reflected once the project has been
successfully delivered. This results in a lag when booking closed
sales versus actual revenue accrual in our financials. Despite this
accounting complexity, the Company remains focused on shifting its
core revenues to the SaaS model, and keeping with industry trends
towards the use of the cloud to host software services, as well as
based on a per mobile wallet, per transaction or a combination.  
In the second quarter 2013, the Company recognized revenues of
$519,582, a year-over-year increase of $302,567 or 139% and
quarter-over-quarter increase of insert $82,606 or 19%. For the six
months ended June 30, 2013, the Company achieved revenue of $956,558,
a year-over-year increase of $680,258 or 246%. Increases in revenue
stemmed mostly from the completion of several contracts during the
period including Digicel Group, Astra Holdings, Corporacion Digitel,
Viva Bolivia, Banco Fie, Claro Guatemala, among others.  
The Company incurred a gross profit of $184,449 in the second quarter
of 2013, a year-over-year increase of $43,499 or 31% and
quarter-over-quarter increase of $64,171 or 53%. Gross profit for the
six months ended June 30, 2013 reached $304,727, up 87%
year-over-year. Gross margin came in at 35% for the three months
ended June 30, 2013.  
Financing of Operations and Loans
 Alternet, through subsidiary,
Utiba Americas, is generating 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. Additional cash requirements thus far for 2013
have been non-dilutive, and made through loans made by shareholders
and certain members of management as indicated in our SEC filings.  
Market Presence
 Alternet's subsidiary, Utiba Americas, has greatly
expanded its regional market presence in South and Central America as
well as the Caribbean, having sold and implemented the Utiba Mobility
platform to over 62 financial institutions and mobile network
operators throughout the region. To date, we have deployed services
in Bolivia, Colombia, Guatemala, Honduras, Mexico, Venezuela and most
recently, Haiti. 
The recent launch of our mobile money and transactional services in
Haiti's Digicel "TchoTcho" Mobile is the first implementation of our
multi-country migration of leading mobile network provider, Digicel,
and their 22 operations in the Caribbean and Pacific regions, to
Utiba's Mobility platform. The migration is expected to progress over
the next three years and once completed it will be the most robust
mobile money service offering in the market. Armed with our expanded
mobile money services, Digicel will be better equipped to penetrate
the unbanked populace within and outside of their growing global
customer base, and in turn, we will gain access to their growing
subscriber market.  
Moving forward, we are concentrating on broadening our presence in
the Latin American market, one that has proved to be quite lucrative
and relatively untapped, and expanding via additional strategic
partnerships and in such cases, large ventures, with selected leading
financial institutions as well as mobile network operators. By mid
2014, we expect to be in 14 markets in Latin America, including
Brazil.  
Mobile Security - International Mobile Security
 Our mobile and
digital security subsidiary, International Mobile Security (IMS), has
continued to pursue several opportunities in partnership with Delma,
our United Kingdom based commercial partner who specializes in the
development and supply of security, tracking and communications
solutions. Most recently, the companies entered into a software
development and intellectual property improvement agreement together. 
We expect IMS's first sales opportunity to materialize a
t the end of
2013, with a significant revenue project yet to be announced. The
project is currently undergoing testing by customer and if accepted,
we anticipate being awarded the contract in the current quarter.  
It is our belief that the mobile security industry is in its infancy.
With the global proliferation of mobile devices and heightened
security measures needing to be taken across the globe, growth of and
innovation within this industry is imminent. IMS is at the forefront
of this opportunity and as such, we at Alternet are committed to
placing renewed efforts and resources in the promotion of IMS going
forward.  
Conclusion
 Management is motivated with the results but
not satisfied. My team and I continue to strive and are committed to
leading the company and its subsidiaries to financial success and
increasing shareholder value and returns.  
Already mid-way into the third quarter, we remain confident that 2013
will be a year of success, characterized by improvements in our top
and bottom line, as well as further expansion of our brand in the
mobile financial services solutions space. Fueled by large
multi-country and multi-bank ventures with key customers, our market
position moving forward is strong. We expect to gain even further
traction as we embark on strategic partnerships focused on layering
in complementary, value-added synergistic services to our currently
robust offering.  
I would like to close this letter thanking our loyal shareholders,
our investors and our staff for the unwavering support and loyalty.
We look forward to sharing our successes and further increasing
shareholder value in the time ahead. The results are near and our
progress has been successful.  
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 complementary, 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, Investor
Relations at 1-888-823-8494 or 800-631-1872 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. 
Investor Relations Contact at Alternet: 
ir@alternetsystems.com
1-888-823-8494 
 
 
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