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This is a situation I am beginning to investigate. I think it's good enough to bring to your attention. I pick these situations from those presented to me by my network of brokers, market makers, PR companies, investment bankers, venture capitalists, & key people in various industries. My primary criterion is the same as I apply for Conservative Speculator -- my opinion of the stock's potential to double or better in the next six to 12 months.
My opinion of this situation will be online here until I find another one for you. I will, however, occasionally do updates on situations featured here which I continue to follow, either in the "Larry Oakley's Opinion" column, or in the "Larry Oakley's Comment" column. Please -- do not use these picks for investment decisions unless you decide on the basis of facts you uncover in your own investigation.
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Current Larry Oakley's Stock Pick:
Date Posted: 05/06/08
eTelcharge.com (OTC BB: ETLC)
A Serious Emerging Growth Situation
I interviewed CEO Rob Howe again & am even more impressed than when I spoke to him on two previous occasions in 2007. Rob has been very busy doing a major restructuring. I consider this a classic turn-around & an undervalued situation. Please judge it by what has been done since Howe took over on 6/21/2007, rather than on its record prior to his arrival.
What ETLC Is & Does
ETLC is an online payments company. It bills itself as “the new online way to payTM.” While it does offer traditional credit card merchant services, checks, & other existing financial infrastructure offered by banks, in my opinion, its proprietary new method of purchasing is what will generate substantial revenue growth. ETLC has just announced its first digital online merchant in the online entertainment segment, CinemaNow.
Etelcharge.com is the first Web 2.0 online payment system. It provides online shoppers the ability to charge approved transactions to their telephone bill. While addressing the concerns online shoppers have about identity fraud & identity theft, the Etelcharge payment option is also a perfect match for the millions of individuals without a credit card, or even a bank account.
ETLC’s online currency offers important advantages to two segments: (1) Persons who want a safe way to pay for online purchases; & (2) Merchants who sell their goods & services online.
Background
Two statistics underlie ETLC’s decision to develop its proprietary technology & new online currency:
1. In the U.S., there are about 70 million people in 23 million households who do not have a major credit card.
2. According to the Harris organization, about 44 million people in the U.S. have had their identity stolen.
Rob Howe was recruited as president & CEO to grow this new emerging growth situation.
ETLC’s Advantages
Those 70 million people who do not have a credit card can utilize ETLC’s new online currency to pay for the most sensible transactions online. With eTelcharge, a person can buy things online & pay by having the charges made to their local phone bill. Even if they do not have a bank account, they can buy online. Also, for some types of purchases, they do not have to wait in line at a store to buy a money order. It doesn’t cost the buyer anything other than the hidden extra that everyone pays – the price of what is sold always includes the costs associated with selling online or even in the store to folks who have credit cards. ETLC started as the only company with the ability to charge a variety of products to the home phone bill.
For those people who want safety, ETLC addresses the huge problem of identity theft & fraud online with a secure payment option.
For merchants who sell online, ETLC offers an alternative payment option. That option opens the merchants to a huge additional market that wasn’t available to them before. In addition, it saves them the problems associated with bad credit, charge backs, etc. that they experience with a percentage of the credit card payments they accept. An interesting statistic is that for every dollar spent on e-Commerce sites, over $4 dollars is left in abandoned shopping carts. ETLC’s service can greatly reduce that.
Highlights of Version 3.0
ETLC began with Version 2.0 of its technology, and is now launching its Version 3.0 – here are the features of this new version:
Members have access to the Personal Gift Card Store allowing them to select from hundreds of gift cards from premium online merchants as well as send money to friends & family in the form of digital gift cards, gift certificates, & pre-paid debit cards;
Members can make payments online using the Etelcharge payment method or use the new Etelcharge secured credit card payment option (without revealing their credit card or personal information to the merchant);
Etelcharge members only need to provide their e-mail addresses when making payments. Merchants/Retailers do not see any member's financial information;
Members can keep track of online spending & order purchase history;
Personal information is stored on servers that are heavily guarded with the latest in security encryption & firewall safety, meeting PCI certifications;
Members can create personal profiles with shopping & payment preferences allowing advertisements & special offerings meeting their criteria to reach them expeditiously;
Members can create their own Favorites List putting often visited web sites & stores within easy reach;
Members can "scribble" messages to each other & remove them at will;
Members possess their own Contact Management System allowing them to send e-mail messages & personal invitations to join the "community."
Members can also import e-mail addresses & contact information from address books such as: Gmail, AOL mail, Hotmail, & a myriad of others;
And -- Members can keep track of important personal dates, special promotion days or sales events through the Event Calendar.
CEO Rob Howe said: >I>"It is from this multi-faceted, highly accessible platform that we expect to grow our business model, attract merchants worldwide, & execute our plan."
Recent News
5/6/2008 -- ETLC announced that the company has entered into an agreement with CinemaNow, an innovator & leader in multi-billion dollar industry of online entertainment, to allow Etelcharge subscribers to purchase & download movies, TV shows, & music videos. This agreement represents Etelcharge’s first significant offering to subscribers utilizing its Version 3.0 technology including social networking & its alternative payment systems as well as a host of traditional payment options.
Etelcharge concurrently announced that it is the first to market with its technology to enable Digital Gift Certificates in the bill-through-phone bill market.
“We promised we’d launch our Version 3.0 by mid-May & we are fulfilling that commitment,.” stated CEO Rob Howe. ”Moreover, we’re launching 3.0 with an extra bang, because our members have the ability to immediately purchase premier digital entertainment from CinemaNow. Members will be able to access CinemaNow’s offerings including Download-to-Own, Pay-per-View, & Burn-to-DVD options. We believe our new relationship with CinemaNow, a major, top-tier electronic entertainment merchant that delivers high-quality Hollywood movies, TV shows, & music videos directly to consumers, unquestionably demonstrates our ability to bring the latest products to a new market & meet consumer demands. The time has come to subscribe to Etelcharge & to look carefully at the company’s new fundamentals & potential,” Howe concluded.
About CinemaNow
CinemaNow, Inc. (www.cinemanow.com) is an innovator in digital entertainment technology, delivering high-quality Hollywood movies, TV shows, & music videos to users across multiple platforms. Founded in 1999, CinemaNow has partnered with some of the biggest brands in consumer electronics & digital entertainment including ARCHOS, EchoStar Communications, Hewlett-Packard, Macrovision, Microsoft, Samsung, Sonic Solutions, & Technicolor to deliver thousands of video titles directly to consumers. CinemaNow works with more than 250 licensors including 20th Century Fox, Disney, EMI, HDNet, IFC, Lionsgate, MGM, Miramax, NBC Universal, Paramount Pictures, Sony, Sundance Channel, Vivendi Entertainment, & Warner Bros.
4/29/2008 – ETLC announced that the Company completed beta testing for its new version 3.0 social networking & payment gateway website & will be launching the completed new version in mid-May. On the new website, subscribers will be able to purchase digital entertainment from a top-tier digital entertainment company.
Toby Wilson, Chief Technology Officer said: "We are extremely pleased that we have completed our testing & will be launching within a couple of weeks, along with the ability to purchase digital entertainment. We incorporated many of the suggestions for improving features & usability contributed by our members. This is truly a major milestone for Etelcharge. We expect to announce the household name of the Digital Entertainment Provider next week. Etelcharge subscribers will actually be able to buy digital content like music, movies, & other downloads from this top-tier digital entertainment merchant when we launch. That represents a first for Etelcharge & a huge one."
In advance of the new version 3.0 launch planned for mid-May, ETLC opened its development website up to beta testers for a preview of the new features of the 3.0 payment gateway & social networking website. Unlike existing social networking websites, which provide ways for people to connect through an open public community, ETLC will provide members the ability to connect with one another through a private more secure social fabric. Among the many features of this new release will be an exclusive shopping network of gift cards & gift certificates from major online retailers of digital goods.
4/15/2008 -- ETLC announced that the Company is in the final stages of testing of its robust Version 3.0 payments technology. Version 3.0 is much more than an enhancement of the Company's Version 2.0 technology. Version 3.0 will launch a full-service online payments portal that will provide a host of methods for subscribers to pay for purchases & eliminate exclusive dependence on telco providers. Additionally, this breakthrough payments technology includes a social networking component plus the ability to allow consumers to buy products/services & give them to other members of their network for their online use. That, alone, represents a huge leap forward & a first to market for ETLC.
The new Version 3.0 delivers "best of breed" back end billing & payment services for both telco service industry & credit card payment options while tapping into the power of the social networking model.
CTO Toby Wilson said: "Our goal is to provide the utmost payment flexibility, enjoyment and online purchasing safely to our members. Current Etelcharge members will be automatically upgraded to the new version when it launches within the coming weeks. Version 3.0 is both technologically advanced & highly usable. Our upgraded community builds on social communities of online shoppers that share common interests & shopping habits. The information provided on the shared interests & commonalities of the community will allow much better targeted product advertising offerings."
11/27/2007 – ETLC & enStage, Inc. jointly announced that they completed a contract for implementation of the Etelcharge Digital Visa Card program.
Rob Howe said: "We have worked through all the financial as well as the operational details so that we can launch this first of its kind program in early '08.”
Govind Setlur, CEO of enStage, added: "Both our companies have worked very hard to accomplish this formidable goal. Etelcharge has the technical payments expertise & the marketing presence, while we provide the critical backend platform. Working together, we will make this program succeed. We are both highly focused on driving to a launch as quickly as possible."
Etelcharge & enStage have been working to launch a digital Visa card which will enable Etelcharge members to purchase online anywhere Visa cards are accepted. Rob Howe explained: "The Digital Visa card will give Etelcharge members immediate access to 98% of online merchants. It's a huge benefit for our members -- & another compelling reason for them to purchase using their Etelcharge membership."
11/8/2007 -- ETLC announced that it signed an agreement with Elite Force, of Falls Church, VA, the successor to Tech Force One & one of the top independent providers in the multi-billion dollar PC & consumer electronics installation & support industry.
John Todd, senior VP of business development stated: "I am pleased to report that Etelcharge has signed a payment services agreement with one of the country's top electronics installation & PC repair companies. Elite Force, with 200 locations today & expanding to 1,000 locations in 2008, is similar to Fire Dog & Geek Squad, in that they install high-end multimedia systems & networks in homes, as well as providing the full array of support services for consumer electronics & PCs. Etelcharge members will be able to pay for Elite Force services using their Etelcharge membership. We expect this program to come online for our members in early 2008."
John Todd concurrently announced that during his recent trip to CA attending the Digital Hollywood Show, he engaged in substantive talks with a select group of elite players in the digital music & movie downloads space including Netflix, Real Networks (Rhapsody), CinemaNow, UniVision, & Movielink.
Todd concluded: "I was able to successfully establish the huge importance of our target customer to their continued growth. Reinforcing to the executive management teams of these companies that Etelcharge not only brings a unique & enticing Web 2.0 payment system but also brings a whole new set of new customers, that is growing by the day, who will be spending new money with them that they are not getting today. The impact to their bottom line garnered exceptional levels of interest."
11/1/2007 -- ETLC announced that pursuant to its recently announced agreement with Pasadena, CA-based CRS Corporation, full online deployment is expected within the next six weeks.
Etelcharge members will be able to subscribe to CRS services such as ReportMyBills.com & others. CRS data is accepted by such lenders as Wells Fargo Home Mortgage, Chase Home Finance, GMAC RFC, CitiMortgage, Wachovia Corp., US Bancorp, & other FHA lenders.
CTO Toby Wilson stated: "We have completed the development of this service in record time & are most enthusiastic at the prospect of its launch to a large & growing base of members. Having served in many capacities at the helm of breaking technologies that impacted a variety of industries, it is my contention that the CRS/Etelcharge service will impact an audience & an industry that is growing exponentially."
CRS President Ray Smith said: "This is a major step forward for us. Etelcharge provides services that our nearly 100,000 members can really use. Our implementation roadmap with Etelcharge is solid. We'll be processing transactions & flowing revenue quickly."
Oct 30, 2007 -- ETLC announced it expanded the scope of its development agreement with enStage to include the ability to make online purchases& bill them to a mobile phone. This will enable Etelcharge members to charge their online purchases to their cellular or mobile phone using the recently announced digital Visa/Mastercard.
Rob Howe said: ”There are 2.7 billion mobile phones in active use. That's a $725 billion annual market. We have expansion plans to move into the mobile space very quickly, & this expansion of our development agreement with enStage will make that happen even faster. This new technology will complement the expansion of our landline program, & allow us to break into mobile payments both in & outside the U.S. quickly."
“The world of online payments is destabilized, which creates an enormous opportunity for us. In a world where you can pay a parking meter with your mobile phone, great opportunity exists. Etelcharge will offer online payment programs wherever & by whatever means consumers want to make them. This is especially true of the consumer on which we are focused -- the unbanked or marginally banked consumer, & the consumer who is greatly concerned about exposing their identity online. Working with enStage, & being able to tap into their mature development resources in the mobile payments arena, is an enormous benefit for us."
Govind Setlur, CEO of enStage said: "This expansion of the scope of our agreement makes perfect sense. Our experience in this arena will enable Etelcharge to move faster into mobile payments. Mobile payments & mobile payment security have been a major focus area for us even outside the U.S. -- as we develop & deploy critical m-commerce infrastructure & innovative payment solutions."
Management
Rob Howe was recruited to take over on 6/21/2007 as president & CEO –he is now also chairman. He commented: "I'm excited to be joining the eTelcharge team. I will bring focus & execution to our strategy. I am grateful for the opportunity to realize the company's vision. My history has been that I take companies through their 'hypergrowth' phase. It's fair to say that I'm a builder. I have begun making the changes necessary to get eTelcharge moving ahead."
When I interviewed him the first time, I learned that he has a very strong background. From 5/2006 to 2/2007, he was president & COO of DualCor Technologies, Inc, a technology firm that developed a mobile handheld computer. From 9/2000 to 5/2006, he acted as a consultant & advised technology firms regarding go-to-market readiness both independently & in collaboration with the Sightline Group. From 10/1997 to 9/2000, he was president of CompUSA PC. He spearheaded the turn-around of CompUSA's in-house PC brand, developed & executed strategies for retail, channel, web, & direct marketing for 250 stores, built a state-of-the-art ISO certified manufacturing facility in Fort Worth, TX & achieved ISO 2000 certification within four months of operation. He also implemented build-to-order manufacturing, sales & distribution, accounting & finance, order entry, & shop floor control programs for CompUSA & maintained strategic partnerships with Microsoft, Intel, Fujitsu, IMB, AOL, & Prodigy. He was senior VP responsible for $2 billion in revenue in the sales, marketing & service organizations at Dell North America. He created & established the worldwide DellWare business, launched in the U.S. in 8/1992, generating gross revenue in excess of $160 million in its first year. He created the DellWare model which revolutionized the physical distribution of software & peripherals for computer manufacturers. While at AT&T GIS, he established 2,500 retail facings for the AT&T Globalyst PC worldwide, while building to a $2.5 billion annual run rate. He obviously has great experience with companies that had what he calls `hypergrowth.’ I feel he will achieve the same type of growth for ETLC.
On 7/24/2007, Rob Howe announced that James T. (Toby) Wilson was appointed CTO (Chief Technology Officer). "Mr. Wilson has deep experience deploying e-commerce technology," Howe said. "I am especially pleased to add his experience & expertise to our company as we prepare to launch Version 2.0 of our alternative payment system. Wilson has experienced launches of this nature before, & he has a keen understanding of not only what it takes to bring in an application like ours, but also to have it interface with our partner merchants & our carrier partner. He has a passion for security & maintains the highest industry standards. This is a big win for us," Howe said.
Toby Wilson was most recently the principal of JTW Consulting, where, among other projects, he implemented complex e-commerce systems for streaming video, & for high SKU count distributors. "I am excited about the eTelcharge mission," said Wilson. "I look forward to delivering on the eTelcharge promise. Rob is all about execution, & that is my long suit.
My Opinion
I like what Rob Howe has accomplished since he took over. He turned this into a completely new company. It’s truly an emerging growth company – it’s a serious turnaround – & it’s extremely undervalued, based on the huge market it serves.
Don’t be fooled by the past history on this one – the important element here is the large market ETLC faces. Can you just picture the many folks who have neither a bank account nor a credit card that will be able to purchase some of their key staples online? I suggest that you take a close look at this one before many in the investing public learn about what ETLC is doing. Check www.eTelcharge.com.
I especially like all of the key agreements Rob Howe has negotiated – especially the one announced this morning regarding the fact that its subscribers can purchase premier movies, TV shows, & music videos through its industry first “Electronic Bill-Through-Phone Gift Certificates.”
ETLC closed last evening (5/5/2008) at $0.0339, which I feel is very undervalued when considering the unusual appreciation potential of this emerging growth situation. I look forward to watching its progress.
ETLC is located at 1636 North Hampton Road, Suite 270, DeSoto, Texas 75115-8621. Call Cynthia DeMonte @ 917-273-1717 – Email: cdemonte@demonte.com or cynthiademonte@gmail.com or ir@etelcharge.com
My comments in this column are strictly my personal opinion. At times, I will include forward-looking information as that term is defined in the Private Security Reform Act of 1995. Such information & the related company are subject to many risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, local & foreign factors, & other matters will not differ materially from those suggested in any of my forward-looking statements. Such differences are the result of all sorts of factors (some examples: market conditions, competition, advances in technology, acquisitions, mergers, potential litigation, personnel changes, market changes, capital availability, etc., etc.).
Do not run out & buy a stock just because I am enthusiastic about the situation. Call the company before you buy -- satisfy yourself first. I always include a phone number for that purpose. My purpose in this column is to respond to your request for my personal opinion. You have the responsibility of making your own investment decisions. Do not give up that responsibility.
My editorial coverage has always been, is now, and always will be without charge. That includes what I write in Conservative Speculator, and what I write in "Larry Oakley's Opinion, " "Larry Oakley's Stock Pick," "Larry Oakley's Comment," & "Larry Oakley's Bold Ventures" columns. It also includes what I write in such venues as articles submitted to other publications, interviews on radio & television, and at the investment seminars and conferences at which I am a featured speaker. By doing all my editorial work free of charge, I have the advantage of writing about what companies I particularly like. There are occasions when I will write about a company that is a paying participant on WallStreetCorner -- that's because I like the company. I always make it clear to them that editorial coverage is free and is not a part of the fee they pay to have their Profile researched, prepared, & posted at WallStreetCorner.
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