PORTLAND, Ore., Sept. 13, 2004 (PRIMEZONE) -- (Pink Sheets:ONTT) Paul R. Peterson CEO, issued the following Letter to Shareholders:
Dear Ontus Telecommunications Corporation Shareholders,
There are many of you who have been following the progress of the Company's performance over the past years. I would like to update you on the transitions and progress that the Company has been making recently as well as outline our immediate and future development plans. I hope you will see that our core business activities and our plans to build the Company with the appropriate business practices and management will drive our long term growth and future success.
Since I founded Ontus in July 2002, I have been able to maximize our impact in the market and position the Company for sustained growth. I would like to take this opportunity to recap some of our key accomplishments during the past six months and outline our "go-forward" strategy and address some questions presented to me by our shareholders.
Our primary management philosophy, as a group, is focused on creating substantial value for our shareholders and to consistently develop and maintain competitive strategies that position the Company at the forefront of ever-changing market trends. In this regard, we are working towards creating a corporate platform that will deliver a strong business and operational model while yielding positive financial results on a consistent basis. To assist us in our growth, additional directors and professional advisors have joined the team to maintain appropriate levels of corporate governance as we grow. In particular, we are working on establishing an independent board of directors, thus creating a corporate advisory board. The Company has committed to filing the Securities and Exchange Commission "fully reporting" regulatory documents and to meet all public company requirements on a timely and accurate basis from our December 31, 2004 year-end.
This is an entrepreneurial organization. We expect to continue to make additions to our management team, board of directors, business partners, as well as increase our capitalization during the next three to eighteen months as we deploy our products and services.
To support increasing shareholder value, we are pursuing a course to exploit our core technologies and next generation VoIP (voice over internet protocol) services through a series of strategic partnerships, acquisitions and licensing relationships in order to aggressively market our products and services worldwide.
Our key milestones have been, and will be the following:
* Completion of our going-public merger * GAAP Audited financials for 2002, 2003 and 2004 * Expansion of senior management and professional advisors * Utilization and development of the latest technologies * Defined business strategy * Strategic partnerships and targeted acquisitions * Capitalization strategy
I would like to briefly discuss each of these milestones.
Completion of Merger
Through the addition of professional advisors and new directors we have completed a "going public" transaction as of September 2004 through a merger with Elite Field Service Inc., Elite Field Service Inc., subsequently changed its name to Ontus Telecommunications Corporation. The Company's common stock trades NASDAQ Pink Sheets Exchange under the symbol ONTT.
The rationale behind the merger was the opportunity to be a publicly traded company, which increases our shareholders' liquidity and allows us to use our public stock in attracting seasoned executives and additional management talent, pursue various strategic relationships, acquisitions and, to the extent necessary, gain access to local and international capital markets. We anticipate filing our post-merger 2004 Annual Report on Form 10-KSB with the SEC by the end of the first quarter of 2005. Additionally, we intend to file proxy materials and schedule our Annual Shareholders' Meeting soon after the 2004 Annual Report is filed.
Senior Management Team
When I founded the Company in July 2002, a key objective was, and continues to be, to drive telecommunication partnerships and technology with well-established academic institutes and the highest quality third-party commercial partnerships.
Over time, at the board's encouragement I assumed the role of CEO. As we moved forward, we began to fill various senior management and executive roles within the Company and its various subsidiaries, including the recruitment of seasoned executives and managers with expertise in our international markets. In the near term, we have targeted the recruitment of a seasoned CFO and regional sales management in key markets as our immediate priorities in order to assist us in our drive for long-term growth.
Core Technologies
Technology is the cornerstone of our business. Evolving technologies change the way we live and the way we communicate. The ability to use the internet as a telecommunications infrastructure for the average consumer is nothing short of revolutionary. This revolution has been brewing for over a decade and the technology is reaching early consumer acceptance now, evidenced by small, agile companies like Ontus entering the fray and experiencing explosive growth.
Fortunately, Ontus has no need to invent products or invest in research and development. We will integrate robust technologies that have been proven and are in widespread use for over a decade (although your phone company would prefer you didn't know it!). Wholesale carriers like Ontus Telecommunications use VoIP to transport almost every call that consumers make through the internet these days. Yet because the caller and receiver have to be connected over the "last mile", the call must still go through a LEC ("Local Exchange Carrier").
With the latest technologies provided by Ontus, our customers no longer need the LEC. To take advantage of this market, we set up Ontus Advantage as a wholly owned subsidiary. Using Ontus Advantage's WWVoice(r) service, calls go from your telephone, to the internet, and to the receiving party, just like an email, in real time and with tier one carrier sound quality. Just as you don't pay the long distance phone company to send an email across the country or around the world, you don't have to pay long distance telephone charges either.
Ontus has prudently partnered with industry leaders who provide a global network footprint, the latest hardware and software platforms and consumer-friendly telephone adaptor devices and phones. We recognize that the average consumer has grown accustomed to "just picking up the phone and hearing dial tone". We ensure that our WWVoice phone service is simple to order, set up and use.
For our customers the transition is seamless from POTS (Plain Old Telephone Service) to VoIP.
Ontus Advantage Inc. "WWVoice" ....your Voice over the World Wide Web."
Ontus Advantage Inc's VoIP service offering is called "WWVoice" with the tag line, "....your Voice over the World Wide Web." This nomenclature is self-explanatory and eliminates the need to spend huge advertising and marketing dollars explaining VoIP to consumers. We intend to let the giant Telco's altruistically spend their giant budgets educating consumers about VoIP while WWVoice targets very specific sales channels with very aggressive pricing and packaging.
WWVoice will attack traditional and expensive Telco pricing by using language and pricing scenarios that consumers are more familiar with, more akin to cellar phone packages. Initially we will offer our bundled local, long-distance and international calling service for $59.00 per month for unlimited minutes and unlimited usage (much like cellular). To insure "quick" buy-in, we have "sweetened the pot" by allowing subscribers to sign up five friends and get their service for free (or 20% off their monthly bill for each additional subscriber).
As our name suggests; we intend to utilize the World Wide Web and viral marketing campaigns to introduce and promote our products and services to our sales channels:
-- Consumer Offering - WWVoice telecommunications services for
the residential and SOHO (small office, home office) markets
-- Affinity Marketing, Multi Level Marketing -- Viral Marketing
-- Independent Telcos - Will eventually enter the VoIP market and
will seek a proven marketing agent with additional products
and services to collateralize and package their services.
The launch date for both our consumer and affinity marketing is set for September 15. As well as traditional marketing tactics, we will be sending potential subscribers to the Company's web portals, where consumers can learn about our products, see animated "flash" presentations of how the technology works and purchase our World Wide Voice(r) service.
Business Strategy and Core Activities
We are focused on the significant impact that VoIP is making in the telecommunications industry, coupled with broadband data service, particularly in the SOHO marketplace. Other advanced applications that our customers will benefit from include, but are not limited to: local and long distance calling with videoconferencing. Our primary objective is to deliver higher quality innovative value added services and VoIP network deployment at competitive costs.
In our pursuit of the most dynamic opportunities, we will pursue the following core activities as our primary lines of business:
-- VoIP telecommunications services for the residential and
SOHO markets
-- Acquisition and integration of networks and customer bases
-- Acquisition and development of sought-after services and
technologies for our customers
Our foremost objective is to capture a meaningful share of the growing residential and SOHO internet telecommunications services market by leveraging our existing technologies and marketing capabilities. It is our intent to differentiate ourselves with products, services and innovative marketing designed to increase network efficiency. This enables fast data transmission rates through existing channels of bandwidth, thereby increasing overall network capacity and allowing for a more cost-effective transition to next generation networks.
Ontus Telecommunications has formed Ontus Advantage Inc., a wholly owned subsidiary, to market international and domestic long distance and local VoIP services. VoIP is significantly more cost-effective than services currently provided by traditional telephone service providers. VoIP is the fastest growing market segment in the telecom industry, and we are confident that our VoIP solutions will capture a significant market share in those geographic markets that we will aggressively dominate.
Target Markets
Our strategy principally consists of focusing on capturing market share in the domestic and international long distance sector in the U.S. and Canada, then expanding into developing countries where our value proposition is readily apparent to the consumer and where a significant amount of capital has already been committed to network expansion based on standard IP infrastructure technologies.
As such, we are currently preparing to launch the marketing of our VoIP technology and international long distance services in the following regions:
-- Throughout the U.S. and Canada (4th quarter 2004)
-- The Philippines, Japan and China (1st quarter 2005)
-- India and Pakistan (1st quarter 2005)
-- UAE and Kuwait (1st quarter 2005)
-- Germany, France and the UK (2nd quarter 2005)
-- Russia, the Ukraine and Poland (2nd quarter 2005)
-- Mexico and Central America (3rd quarter 2005)
-- Brazil, Chile and Argentina (4th quarter 2005)
Strategic Relationships
A core component of our strategy is to create a network of strategic relationships to expand our infrastructure, increase the depth and breadth of our offerings and expedite the pace at which our solutions are introduced to the marketplace.
We intend to operate primarily through joint ventures with prominent local business partners, with which we jointly exercise management control. While the day-to-day management of our operations is the responsibility of the local management team, key personnel of operations will be appointed in co-operation with our partners. We expect to generate significant revenues via royalties or through revenue sharing agreements.
A key aspect of our development plan is our ability to acquire assets and businesses in the international markets in which we expect to deploy our technology. By using our public currency and access to capital in combination with our technologies, we believe we have a distinct competitive advantage in the markets in which we have chosen to compete.
To date, our attention towards emerging markets is largely attributed to the fact that strategic partnerships have already been established and our customer base exists in these markets. In the coming quarters we expect to make certain key announcements about our business development activities and milestones that are achieved.
Capitalization Strategy
There is no doubt that we will require capital to fully and successfully execute on our plan. Our approach is to leverage strong strategic partners in local markets and to access capital in those markets jointly with these partners in order to fund the capital expenditures or related investment spending required to bring our solutions to market. We anticipate accessing domestic capital markets on an as-needed basis.
Summary
Our revenue drivers have historically been the purchase and profitable resale of distressed hi-tech and telecommunications assets and equipment, and as an FCC licensed international and long distance communications provider leasing and reselling "raw data" transmission capacity.
We will continue these activities and simultaneously, aggressively implement marketing of WWVoice VoIP products and enhanced IP telephone services through Ontus Advantage Inc. We will launch WWVoice services in earnest by September 15th 2004.
By working in partnership with leading technology and telecommunication companies, in this operating year - '2004', our goals are to increase our revenue, acquire more management talent, strategically add to our board of directors, complete certain strategic partnerships and implement our core service offerings.
The Company is uniquely positioned to provide valuable, profitable services that customers seek. Over time, we will deliver an attractive, profitable and compelling growth stock to our shareholders.
Sincerely, Paul R. Peterson Chief Executive Officer
About Ontus VoIP services:
VoIP (or Voice over Internet Protocol) is the new way to make, receive and manage your phone service. Ontus converts your phone calls into data that zips through your high-speed Internet connection. The big Ontus Advantage is that you can call anywhere at anytime for a fraction of the cost of using your POTS.
You can utilize WWVoice for all the state-of-the art phone services including; Caller ID, Call waiting, Call forwarding, Anonymous Call rejection, Do Not Disturb, Multi line Conferencing, Call notify, Emergency 911, Find me Follow me - all with toll quality. "pin drop" clarity and 99.5% uptime.
According to IDC's most recent forecast, worldwide sales of IP telephony equipment will see substantial growth between 2004 and 2007, increasing by 48% in 2004 and topping $4.9 billion by year's end. Equipment sales will continue to grow by more than 50% in 2005 and 2006, to reach $11.4 billion in 2006, and $15.1 billion in 2007.
Infonetics Research estimates that worldwide sales of next generation voice equipment grew by 21% last year (2003), and is set to increase by a compound annual rate of 42% between 2004 and 2007, when sales will eventually total $5 billion. Infonetics includes media gateways, soft switches, voice application servers and session border controllers within its forecast.
Businesses spent an estimated $2.0 billion on IP-capable telephone systems in North America last year, according to Gartner Dataquest, which also predicts that enterprise spending on IP phone systems will more than double during the next four years, to reach $4.2 billion in 2007. Gartner goes on to note that IP telephone systems accounted for just 1.4% of total business telephony equipment sales in 1999. In 2003 IP telephony equipment increased its market share to 56% of all sales, and by 2007, it is expected to account for 97% of all business telephony sales.
Similar data from In-Stat/MDR notes that sales of IP-based telephone stations nearly doubled from 23.7% of total enterprise telephone station sales in 2001, to 46.3% of sales in 2002. About Ontus Telecommunications Corporation:
Ontus Telecom is an FCC licensed international and long distance communications provider headquartered in Portland, Oregon. Ontus Telecom is in the business of building international telecommunications routes and selling telecom capacity through wholesalers and retail distributors. With sales and service facilities located in the U.S., Western Europe, India, Asia and the Middle East, Ontus Telecom is uniquely positioned to provide telecommunications capacity at greatly reduced prices and with unparalleled service to distributors and retail customers.
About Ontus Advantage Inc.:
Ontus Advantage (a wholly owned subsidiary) sells domestic, long distance and international telecommunications VoIP services to residential, small office and home office ("SOHO") customers from its headquarters in Portland, OR.
Ontus Advantage is a unique competitor, having developed and deployed multi-level marketing, and affinity group marketing programs around the Company's VoIP service brand "WWVoice....your Voice over the World Wide Web."
Ontus Advantages customers enjoy substantial savings on their international, long distance and local calling service, whist simultaneously pursuing lucrative business opportunities as independent distributors of the WWVoice service.
Ontus Advantage is launching Asia Pacific distribution and services from Honolulu, HI in the fourth quarter of 2004. Ontus Advantage is then launching Middle East and Central Asia distribution in the first quarter of 2005, launching in Eastern Europe and the CIS countries in the second quarter of 2005, China and SE Asia in the third quarter 2005, and Central and South America in the third and fourth quarters of 2005.
Forward Looking Statement
This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events and the future financial performance of Ontus Telecommunications Corporation ("Ontus") that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry and in various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market; the timing of orders and manufacturing lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; the ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; increased competition in the networking industry; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, intellectual property, antitrust, shareholder and other matters; the ability to recruit and retain key personnel; our ability to manage financial risk; currency fluctuations and other international factors; potential volatility in operating results and other factors listed in Ontus' most recent reports. Ontus' results of operations are not necessarily indicative of Ontus' operating results for any future periods. Any projections in this release are based on limited information currently available to Ontus, which is subject to change. Although any such projections and the factors influencing them will likely change, Ontus will not necessarily update the information, since Ontus will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.