To OTC Journal Members: 

Single Touch Dives Into a $2.5 Billion Pool

Today's news from Single Touch Systems (OTCBB:SITO) couldn't have come at a better time, as it gives me a reason to mention we've posted our first blog entry for the stock. 

The blog is your place to ask questions, leave comments, and tell everyone else what you see (or don't see) with a particular stock. We'll have more blog entries in the future for SITO, but the first one will get the ball rolling. 

As far as today goes....

A Virtual Vending Machine

I don't want to dive too far into the mechanics. However, a bit of a review may be called for since today's news will affect SITO's revenue flow in the same way.

Think of Single Touch as something of a toll booth, collecting a modest fee every time a car drives down that road. No big deal - tolls are fairly inexpensive to those drivers, and thousands (if not hundreds of thousands) of drivers pay 'em every day.

What if you owned the toll booth though? All of a sudden it's an enormous, multi-million dollar enterprise, rather than just a few cents to drivers in their cars. 

Well, Single Touch owns the proverbial toll booth. In this case though, the toll booth isn't set up on a road, but rather on the information superhighway. 

If you've used a cell phone or mobile web device like a BlackBerry to do anything besides talk (such as send a text message, browse the internet, download a ring tone or a game), then you're part of the reason mobile data transfer - not voice services - but mobile data transfer has grown at an average annual pace of 63% over the last three years. 

Now, what if you could collect a few cents every time a consumer sent or received any kind of data to or from a company like Wal-Mart, Sears, McDonald's, a taxi service, or any one of hundreds of other enterprises SITO is looking to partner with? Wal-Mart may respond to a shopper with a text massage that a prescription is ready for pick-up, Sears could send a sale list, McDonald's could send a virtual (paperless) coupon, and texting #TAXI may put you in touch with a taxi service near you. What if each of those data transmissions put a tiny amount of money in your pocket like SITO's newest client (the news is below) is going to? 

A penny or two may not seem like a lot, and it isn't, but thousands and thousands of pennies per day is a big deal, and potentially a multi-million enterprise. 

Yeah, well, that's what Single Touch Systems is doing... setting up a virtual vending machine that requires minimal maintenance once the technology is set up.

At this point then, new clients mean incremental revenue for SITO. Now it's a matter of going out there and adding more partners like BET, #TAXI, and Deal Or No Deal (#DND) who will feed their customers through one of Single Touch's abbreviated dial codes.

Now, I said all that to set the stage for today's announcement.... 

Any And All Purposes

When I first started studying Single Touch, in my head the possibilities were endless, but the potential partners I was imagining were all for-profit clients. I never really thought about the possibility of Single Touch siding with a charity to offer a cash donor the option of giving-through-texting. Looks like the folks at Single Touch and Truist were a little more creative than I was, since this is exactly what they're going to be doing through CharityCall. 

As far as Single Touch's role in the relationship goes, I suspect it will pretty much work the same as it would for any other enterprise - the company collects a small fee of a few cents for every data message sent to or from CharityCall. 

The nice part for users (donors) is the security of the transaction. No SMS texting or credit card numbers are sent; all the logistics of the donation are handled on the back end. Truist can just focus on eliciting the donation, and the donors have ease of mind about giving the gift.

But is this just small potatoes for Single Touch? Not quite. Truist collected more than $2.5 billion (yes, with a 'b') in charitable giving last year. A tiny fraction of the total could still be pretty big bucks for SITO. 

In short, add another layer of incremental revenue to the tally. More's on the way, which is the bigger message for all of us as shareholders - each new client becomes something of an annuity, and Single Touch is clearly adding clients. That's why getting in early is better than getting in late. The revenue machine is solidifying right in front of us, right now. 

As far as the stock goes, I think SITO has found a nice balance between early euphoria and the subsequent profit-taking dip. 

The stock eased back from a high of $2.55 on Friday to a low of $1.80 on Monday, only to end up closing at $2.38. This should have shaken out any traders with excessively itchy trigger fingers (on either side), leaving behind what should be a much tamer chart. So, if you were waiting for a less volatile entry point, now's your chance - I see smoother sailing ahead.

Here's today's press release.