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American Company Spotlight

 

Omnicity, Corp. Website: Click Here

Information As Of May 1, 2009

Exchange: OTCBB Market Cap: 25 Million
Outstanding Shares: 34.5 Million 52 Low / High: $0.46 / $0.73

Price May 1, 2009: $0.72

OMCY Recent Stock Quote and News: Click Here

'OMCY recently added 17 additional tower locations within its existing markets, acquired new tower locations through Forepoint and other acquisitions and plans to extend its services into 100 additional rural markets over the next 18 months. OMCY currently operates its network through 200 tower locations and cover over half of the State of Indiana.'


Overview

Omnicity Corp. is a public company based in Indiana providing broadband access, including advanced services of voice, video and data, in un-served and underserved small and rural markets and is planning to be the premier consolidator of rural market broadband nationwide. Omnicity's strategy is to provide a total broadband solution and continue rapid growth through acquisitions, organic growth and continue to partner with Rural Electric Membership Co-ops and Rural Telephone Companies. Omnicity has an experienced broadband operations team with extensive wireless broadband/ISP expertise as well as the expertise to consolidate large numbers of businesses through its roll-up strategy.


Investment Highlights

  • Consolidator Of Rural Broadband Market. The Company’s vision is to be the first Broadband service provider to expand its network across rural America and to emerge as a lead consolidator of rural market Broadband.
  • Huge Market Opportunity. OMCY’s target markets have terrain and other conditions better suited to wireless transmissions and not attractive to traditional hard-wire operators. The Company estimates that at least 40 million rural and small market homes, businesses, government agencies and schools have inadequate high-speed Internet service and represent a large growth opportunity.
  • Development of Nationwide Wireless Network To Deliver Low-Cost Broadband. OMCY plans to develop a nationwide wireless network and deliver high-speed Internet access to rural subscribers more cost- effectively than traditional cable or fiber optic models. Traditional hard-wire systems are generally much more expensive to build than wireless networks. Reduced network development costs means lower infrastructure costs per subscriber for wireless operators as compared to comparably-sized traditional hardwire fiber-optic systems.
  • Competitive Advantages Over Traditional Hardwire Services. OMCY believes it can deliver service to customers within three days of the initial service request. This is much faster than competitors, who require as much as two weeks for provisioning and installation. In addition, the Company’s technicians are installing the service directly in the customer’s home. Cable and DSL services require the customer to self-install routers and other equipment sent through the mail. OMCY’s services are also priced competitively with satellite services. In addition, compared to its primary competitors, OMCY provides, at no additional charge, SPAM and virus scanning of email, personal webhosting space and free technical service.
  • Aggressive Acquisition Strategy. The Company’s business model has already proven successful in rural areas of Indiana. Going forward, OMCY plans to extend its geographic reach through strategic partnerships with Rural Electric Municipal Cooperatives (REMCs), rural telephone companies and local government agencies. Since October 2008, OMCY has entered into asset purchase agreements with four wireless operators: NDWave, Inc; Forepoint Networks Inc; Mooreland Wireless and North Central Communications, Inc. As a result of these acquisitions, the Company has now more than 5,500 subscribers and 200 tower locations covering half of the State of Indiana. OMCY plans to expand into 100 additional rural markets over the next 18 months.
  • Positive Cash Flow & Strong Revenue Growth Outlook. OMCY expects to, accelerate positive cash flow and earnings and achieve growth in annualized revenues to approximately $9 million by March 31, 2010. Over the next five years, the Company anticipates growing its customer base to 170,000 subscribers. These projections are based upon basic Broadband connections only and do not include the planned additions of Voice-over-Internet Protocol (“VOIP”) and Internet Protocol High-Def TV (“IPTV”). With the addition of these two services, the Company will be delivering a “triple play” much like its competitors are delivering in cities through hard-wire systems.
  • Speculative Buy Rating Released. Lisa Springer, MBA, CFA of Beacon Equity Research has initiated coverage of OMCY with a Speculative Buy Rating and a $1.30 price target. Based on peer group companies currently trading at forward Price/Earnings multiples averaging around 9.8 times earnings, Beacon believes OMCY warrants a comparable valuation because of its niche focus on rural markets, rapidly growing subscriber base and cost savings opportunities. According to Beacon's research report, they also think the Company will emerge as an attractive acquisition target for a larger competitor interested in acquiring OMCY’s revenues, subscriber base and coverage area. Beacon values OMCY at a 8.0 times forward multiple to projected EBITDA, which they are using as a proxy for earnings, and obtain a $1.30 price target, based on their assumption that equity sales will increase shares outstanding to 40 million in 2010.


Profile

Omnicity Corp (OTCBB: OMCY) is the Midwest’s leading Broadband service provider. The Company provides affordable, high-speed fixed and wireless Internet access and advanced communications solutions to rural communities, businesses and residential users. At present, OMCY offers its services in unserved and underserved rural markets of the Midwest. It is already covering over half of the State of Indiana. OMCY’s vision is to be the first Broadband service provider to expand its network across rural America.

A great article in the Indianapolis Business Journal recently outlined OMCY's past, present and future, including their business model and growth prospects. In the article, CEO Dick Belthoover stated "We have 28 acquisitions in the pipeline right now."  Beltzhoover wouldn’t identify the other pending acquisitions. But Illinois, Kentucky, Ohio and Minnesota are among the states Omnicity has been scouting for targets, said Larry Morningstar, who handles investor relations for the company.

Omnicity is also trying to earn the trust of the federal government. Last month, President Obama signed a $7 billion rural broadband stimulus program to expand broadband in rural areas. Beltzhoover and his team have spent time in Washington in recent months, meeting with the state’s congressional delegation to figure out how to tap into the money. Investors are encouraged to take a read at the article located here.

OMCY’s 5,500 subscribers include homes, businesses, government agencies and schools. Opportunities to expand its subscriber base are significant; approximately 85% of the line-of-sight households within the Company’s Broadband markets have limited access to high-speed Internet service. OMCY is partnering with Rural Electric Membership Cooperatives (REMCs) and Rural Telephone Companies (RTCs) to provide a comprehensive broadband solution. About 80% of the nation’s counties rely on the services of Rural Electric Membership Cooperatives, which represent the largest electric utility network in the United States with over 40 million member-owners. Over the next five years, OMCY plans to grow its customer base to 170,000 subscribers. It is also likely that, as the subscriber base grows to exceed 25,000 subscribers, OMCY will emerge as an attractive acquisition candidate to a larger competitor interested in acquiring the Company’s revenues and profits, customer base and coverage area. OMCY plans to extend its services into 100 new rural markets over the next 18 months. The Company already covers over half of Indiana’s markets and plans to continue its Midwestern expansion in 2009. Nationwide expansion is targeted in 2010.

In March 2009, the Company announced the acquisition of NDWave, Indiana’s fastest-growing Wireless Internet Service Provider (WISP). The acquisition added 1,450 customers to OMCY’s subscriber base in rural north central Indiana and brought coverage to another 34 rural Midwestern counties. Also in March, the Company acquired Cue Connex of Hartford City, Indiana. Through this acquisition, OMCY adds fiber and carrier-class wireless infrastructure to its municipal network as well as new, value-added municipal services such as automatic meter reading for water and utility companies and first responder networks for police, fire and EMS. On March 31, 2009, OMCY acquired Indiana’s fastest WISP, Forepoint Networks. This acquisition represented the third of several the Company plans to close before the end of May, 2009. The Forepoint acquisition adds another 1,000 subscribers and 23 towers to OMCY’s network. Some 20 of the 23 new towers are located in OMCY’s Tipmont REMC partner region.

In early April, OMCY acquired the business and network infrastructure of Peru, Indiana-based North Central Communications. This acquisition provides the Company with additional expertise in advanced meter reading technology, over 650 new customers, 25 new tower locations and an additional 1,800 square miles of coverage area. In addition, OMCY announced a partnership with Craigville Telephone Company that will bring additional fiber optic connections to OMCY’s carrier-grade wireless network and extend its network coverage in north eastern Indiana. In addition, the Company and its alliance partner, Agility Ventures, LLC, recently added another $1.0 million to an existing Master Lease facility. This capital infusion enables OMCY to expand its broadband network in rural markets and accelerate its acquisition strategy. The Company now has over 200 towers across half of the State of Indiana.


Industry Outlook

The communications industry is the nervous system of today’s economy and its revenue contribution was estimated at $1.2 trillion in 2006. In the past, the structure of the communication industry was based on the tight integration of critical communication functionality. Services were provided by a very limited set of players, with the core of the network supplying this tightly integrated set of features, and the edge (i.e. the users) consuming them. Today, packet-based Internet increasingly decouples the network through its design, service and delivery functionality.

In 2007, the worldwide telecommunications market grew to $1.8 trillion and was expected to expand 7.6% in 2008 to $2.0 trillion. From a regional perspective, North America remains the largest telecommunications market. North American telecom revenues were forecast to reach $511.6 billion in 2008, a 4.5% increase from 2007. Technologies such as Voice-over-Internet Protocol (VoIP) and broadband video are key drivers of telecommunications industry growth.

Internet Usage

The continued rollout of Broadband and next-generation, high-speed wireless networks stimulates mobile markets and creates a major driver of industry growth. The continual increase in the number of Internet users also expands the customer base for IP-based services.

The number of Internet users already exceeds one billion worldwide. As of June 30, 2008, there were 1.46 billion Internet users worldwide, according to Internet World Stats.

Broadband Usage

Broadband is often called high-speed Internet because of its high rate of data transmission. The number of broadband connections is increasing rapidly as many users require higher speeds for peer-to-peer (P2P) files sharing systems, downloading music and games, video on demand and VoIP calls.

Point Topic predicts the total number of broadband lines in the 40 largest broadband countries will grow from 393 million at year-end 2008 to 635 million by 2013. Broadband in less developed markets is forecast to grow from 16 million to 48 million lines over the same period. The number of broadband lines globally is projected to increase 10.8% annually to 683 million lines by 2013. This is down from 27.7% annual growth between 2004 and 2008, but still a significant expansion rate. One major reason for the slowdown in growth is that most of the richer countries are approaching saturation with broadband; new customers are becoming harder to find and sign up. At the same time, poorer countries such as China and India have gone through the initial rapid growth phase and are now growing steadily rather than exponentially1.

According to Gartner Group, consumer broadband connections penetrated 18% of households worldwide in 2007, and by 2012, broadband will be found in 25% of households. Five countries exceeded 60% broadband penetration in 2007 and this number is expected to grow to 17 countries by 2012.2 The dominant fixed broadband technology is DSL, which controls 66% of the market3.

Looking five years ahead, China is forecast to emerge as the largest broadband country, with 153 million broadband lines versus 117 million lines in the U.S. In fact, China is expected to surpass the U.S. in 2009. India and Brazil are also expected to enter the top 10, with Russia positioned as number 11.


Financial Outlook

OMCY plans to become the premier consolidator of rural market Broadband service in the United States by delivering high- speed Internet access to rural subscribers.

Since its inception in 2003, the Company has grown to become the Midwest’s largest fixed and wireless Internet Service Provider (WISP). Management plans to accelerate the Company’s growth through acquisitions of smaller regional WISPs and continue organic growth in 2009. OMCY is aggressively acquiring WISPs in rural and small markets where management believes the Company can quickly achieve positive cash flow and operating income.

The Company has already entered into asset purchase agreements with NDWave, Forepoint Networks, Mooreland Wireless and North Central Communications. Each acquisition gives the Company on average 650 new subscribers, $33,000 in incremental monthly revenues and $400,000 in new assets and tower infrastructures. These acquisitions also add coverage of approximately 79,000 additional homes. As a result of these acquisitions, the Company has already increased its subscriber base to more than 5,500 customers.

Through acquisitions and organic growth, OMCY expects to achieve positive cash flow and earnings and record annualized revenues of $9 million by March 31, 2010. Over the next five years, the Company targets growth in its customer base to 170,000 subscribers.


Recent News and Press Releases

Omnicity Hosts Municipality Technology Summit
GlobeNewswire (Wed, Apr 22)


Omnicity Partners With Its First Rural Telephone Company -- Craigville Telco
GlobeNewswire (Wed, Apr 15)


Omnicity Acquires North Central Communications and Announces New Board Member
GlobeNewswire (Thu, Apr 9)


Omnicity Acquires Forepoint Networks
Marketwire (Tue, Mar 31)


Omnicity Acquires Cue Connex to Move Into Rural Municipality Market
Marketwire (Wed, Mar 18)


Omnicity Completes Acquisition of NDWave
Marketwire (Wed, Mar 11)


Omnicity Positions for Federal Stimulus Participation
Marketwire (Fri, Mar 6)


Omnicity Secures Major Financing Arrangement to Accelerate Its Acquisition Strategy
Marketwire (Tue, Mar 3)

 


Management

Dick Beltzhoover
President & Chief Executive Officer, Director

Mr. Beltzhoover develops and oversees implementation and achievement of business objectives, provides leadership, strategic direction and vision to Omnicity. He was the first investor of Omnicity and brings more than 35 years’ business and corporate venturing experience to Omncity. Mr. Belthoover was the Chief Operations Officer and Board member of National Vulcanized Fibre and, since 1975, has served as founder and President of Insul Reps, which represents manufacturers in the electronic and electro-mechanical markets. Mr. Beltzhoover grew sales to $40 million and directed Insul Reps expansion. Mr. Beltzhoover was also instrumental in funding and guiding Indy Connection into becoming an $8 million revenue ground transportation company, ultimately selling to Carey Limousine for $12 million. Other companies he founded include Midwest Rail, Prestige Magazine, Hunt Graphics, and Digital Arts, all of which sold to private companies. Mr. Beltzhoover holds a Bachelor of Science in Mechanical Engineering from Penn State University.

Greg Jarman
Chief Operating Officer, Director

Mr. Jarman serves as the Chief Operating Officer, in charge of managing the profitability of Omnicity’s day-to-day operations in support of established policies, goals and objectives while providing leadership, strategic direction and vision. Mr. Jarman most recently served as President of RushDSL, a rural broadband services provider. Mr. Jarman has also served as Chief Technology Officer of Q-media, a network services and managed services provider and was Chief Technology Officer and board member of Netisun LLC where he directed Netisun’s technical services group and managed network infrastructure. Mr. Jarman was a founder and executive of Indiana Communications & Systems, Inc., which was a rural business ISP and managed service providers acquired by Netisun LLC. He has 25 years of technical experience working with many corporate and governmental agencies, and has consulted with Northrop, The Associated Group, United Student Aid Funds, Cinergy, Sperry, Unisys, and EDS. Mr. Jarman received his AS in Computer Information Services from Indiana Central University and has spent 10 years of his career in information systems consulting.

Don Prest
Chief Financial Officer, Director

Mr. Prest will lead the SEC public financial reporting process for Omnicity and the overall financing plan. Mr. Prest has been a US and Canadian public company assurance partner for 17 years at a large regional PCAOB registered accounting firm located in Canada, where his career began 26 years ago. Mr. Prest has been an assurance partner for over 150 public US companies. Mr. Prest will retire from this position at the end of 2008 to focus on the business of Omnicity. Mr. Prest has been a partner of FBP Capital Corp, an investment and merchant bank, for 6 years where he has leveraged his international tax and assurance practice and contacts to assist FBP’s clients in going and being public. Mr. Prest also served as the Chief Financial Officer for Power Air Corporation for three years. Power Air is a public fuel cell company. Mr Prest is currently serving as President and Chief Financial Officer for Omnicity Corp., the OTCBB listed company that will be the parent company for Omnicity Inc. Mr. Prest will stay on as the Chief Financial Officer of Omnicity and be added to the Board of Directors. Mr. Prest started his career in 1983 upon graduating from BCIT in Financial Management. Mr. Prest received his Canadian CA designation in 1991 and his US CPA designation in 1997.

David Bradford
Vice President Corporate Development, Director

Mr. Bradford assists senior officers of Omnicity in the design and development of Omnicity’s long-term strategic planning, organization of resources to execute its plan, and the timely and accurate reporting and analysis of operating results. His responsibilities include advising management on acquisitions, operations, and financial matters, and ensuring their most effective synthesis to the maximization of Omnicity’s strategic and operating plans. David works currently in that capacity on a consulting basis for Omnicity through International Corporate Resources Group, an international Investment Banking services firm, where he serves as Senior Analyst. Mr. Bradford has devoted the majority of his senior management career to the telecommunications industry. From 1977 through 1987 he served in executive positions at the Chicago Tribune’s broadcast and cable television divisions. Positions included Vice President and General Manager for Tribune Cable Communications, Vice President of Operations for WGN Electronic Systems Company, and Director of Strategic Planning for Tribune Cable and subsidiaries. After leaving the Tribune companies Mr. Bradford served as President of Empire Communications and Bradford Communications, Inc., both rural cable television multi-system operators. Mr. Bradford subsequently served as President of National Telsat, Inc., a rural wireless television and data provider. Mr. Bradford also currently serves on the Board of Directors of KX2 Performance Group, Inc., a North Carolina based NASCAR motorsports marketing firm. Mr. Bradford brings thirty years of successful subscriber based telecommunications operating experience to the Omnicity team as well as participation and oversight of numerous debt and equity financings, acquisitions, and restructurings.

David Weddell
Vice President, Sales and Marketing

Mr. Weddell manages and expands business relationships with Rural Electric Membership Cooperative groups (“REMCs”), acquisitions and large clients. Mr. Weddell develops and implements strategy, sales plan, and forecasts for overall business development, sales, and account management. Mr. Weddell has been a visionary and entrepreneur throughout his 28 year business career. In 1996 he worked with GTE Wireless Data based in Tampa, Florida and developed a team that brought mobility to the credit card industry. In 2003 his passion turned toward the WISP industry and he became North American Sales Director for Supernova Systems, Inc., an Indiana based WISP. Mr. Weddell was responsible for implementing the Virtual WISP program for Supernova Systems and created partnerships with Verizon Wireless, Lightyear Network Solutions, Sprint, DISH Network, DIRECTV and Wild Blue Satellite Internet. By 2007 Mr. Weddell became the Founder and President of Cue Connex, LLC and focused on building a financial model that partners with municipalities to deliver automatic meter reading, first responder and carrier-grade IP networks delivering internet, telephone and television services. Mr. Weddell earned a Bachelor of Science degree from Indiana State University.

Bob Evans
Vice President of Acquisitions

Mr. Evans graduated magna cum laude from Indiana University School of Law, Bloomington, in 1986 after majoring in Accounting at the Indiana University School of Business, from which he graduated in 1983. Mr. Evans worked for the Indianapolis law firms of Bingham Summers Welsh & Spilman and Kroger Gardis & Regas where his practice was focused primarily in the areas of Mergers and Acquisitions and Securities Regulation. Mr. Evans has extensive experience in a broad variety of transactional work, including asset acquisitions and SEC compliance work. Mr. Evans also has significant experience in leadership and operations management, working for small to medium sized businesses as well as heading the field operations effort for the 2000 Census in Chula Vista, California.


Contact

Omnicity Corp.
720 N. Range Line Road
Carmel, IN. 46032
Phone: (317) 818-0023
Fax: (317) 818-0029
Email: ir@omnicitycorp.com
Website: www.omnicitycorp.com

Larry Morningstar - Customer Service

Phone 1: 1-877-888-0459 & Phone 2: 1-866-586-1518


FORWARD LOOKING STATEMENTS

This report includes forward-looking statements that reflect Omnicity Corp. current expectations about its future results, performance, prospects and opportunities. Omnicity Corp. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Omnicity Corp.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.


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