Donner Corp. International Speculative Buy Recommendation for: May-11-2001

Donner Corp. International

Investment Bankers...................Institutional Report

Clearing Agent: Penson Financial Services, Inc. Member: NASD, SIPC

Speculative Buy Recommendation for: May 11, 2001, Inc. (OTCBB : ETVT)
INVESTMENT THESIS, Inc. is emerging from a two-year investment period during which it has developed what we feel will prove to be a highly proprietary reservation technology in the form of a patent-pending net-to-phone-to-net e-commerce engine. Now that this investment period has successfully concluded, the company appears poised to expand its revenue, profit and shareholder wealth.’s Franchise Division should, we feel, be able to resume growth via aggressive placement of new locations. This effort should be significantly bolstered via “store-within-a-store” partners including Wal-Mart and Kmart

The Company’s Franchise Division should also benefit, we expect, from sharp expansion in customer count. Customers include franchisees, small office/home office (SOHO) agencies, independent travel agencies and high traffic Web sites to which provides travel-related support services.

Management believes that cash and short-term investments on hand as of December 31, 2000 and its cash flow from operations will be sufficient to meet its financial obligations on a timely basis during 2001. The company has successfully emerged from a two-year investment period and appears poised to expand its revenue, profit, and shareholder wealth., Inc., the “bricks and clicks” company founded in 1982, has developed a patent-pending net-to-phone-to-net e-commerce booking engine called REZconnect. We feel REZconnect will prove to be a highly proprietary reservation technology with applications for cruise lines, tour operators, and hotels as well as the restaurant industry with expanded application for companies who operate by appointment, including such niche markets as golf tee-time reservations.

Highly undervalued. We are impressed with the, Inc. business model—a “brick-and-mortar” travel franchise business combined with a unique Internet presence and a cutting-edge reservation technology—because it positions the Company to 1) seize attractive physical location opportunities 2) develop compelling revenue and profit opportunities on the Internet, and 3) seize application opportunities for its patent-pending reservation software in markets beyond travel

We are initiating coverage on, Inc. (OTCBB:ETVT) as a Speculative Buy Recommendation in the travel and technology industries.

COMPANY OVERVIEW, via predecessor companies, has been operating for over 19 years. The Company’s business model is currently comprised of two operating groups plus a proprietary, patent-pending net-to-phone-to-net software technology called REZconnect.
First,’s Online Division offers three unique travel-related services via the Internet. The Company’s unique Web-based business franchises are,, and

Second, through its Global Travel Network franchise business, now has over 300 locations throughout the United States. also provides core travel-related services to franchisees, small office/home office ("SOHO") agencies, independent travel agencies and high traffic Web sites.

Third, plans to aggressively leverage its patent-pending net-to-phone-to-net booking engine that its REZconnect online business is utilizing. The company believes that this technology has applications across all activities involving scheduling between/among parties who wish to connect seamlessly across a net-to-phone-to-net system. has an outstanding reputation in the field of travel services. In recognition of its stature in the travel business, has been honored as a leading travel industry franchiser by Income Opportunity Magazine, Entrepreneur Magazine, Travel Weekly and Travel Agent Magazine.

Importantly, management, over the past two years, has focused the Company’s capital and management’s effort on the development of a highly proprietary new patent-pending booking engine technology. Now that that development is complete, management is once again committing significant time and capital to the expansion of its franchise division as well as to the aggressive exploitation of application opportunities for its proprietary booking engine. We are impressed by the fact that neither activity is expected to be very capital intensive. has a strategic alliance with Liberty Travel, a chain of approximately 200 travel agencies, which holds an 8% interest in eTravnet. Liberty Travel’s wholesale division, GoGo Tours, is a preferred supplier to eTravnet’s franchised chain of travel agencies, Travel Network, offering preferential deals to Travel Network agencies.

Franchise Division’s Franchise Division has two core lines of business.

Through its Global Travel Network franchise business, as mentioned above, now has over 250 “brick and mortar” locations throughout the world. This includes approximately 50 franchised travel agencies located within Wal-Mart SuperCenters nationwide—additionally, the Company also finalized a “store-within-a-store” agreement with Kmart to establish agencies inside Super Kmart stores—and over 50 international franchised agencies and master franchises throughout 21 countries and the Caribbean.

· The Company also provides core travel-related services to franchisees, small office/home office (SOHO) agencies, independent travel agencies and high traffic Web sites. It provides each agency with an interactive, real time travel-booking engine and access to’s preferred travel deals that are developed via relationships with leading travel industry suppliers.

Online Division’s Online Division is currently offering three unique services. This division’s management team has strong expertise in marketing, technical support and web-based development. This Division’s three brands include the following. - A travel and hospitality site that will be the focal point of private label Web sites. - An online reservations service specializing in real time reservations for the travel, hospitality,and entertainment industries which includes hotels, unique lodgings, events and attractions, restaurants, and gold tee-time reservation globally. - A real-time reverse auction booking system that will utilize the Company’s exclusive patent pending technology for the travel industry and the retail-shopping sector.

Investment in REZconnect Technology

Over the past two years, has invested considerable management time and approximately $2 million of capital in the development of REZconnect a unique, patent-pending net-to-phone-to-net reservation technology platform. The initial application of this technology has been in the travel business. Management is now poised to market this proprietary technology to a wide variety of industries that are “scheduling centric.”

REZconnect technology, in our view, has great potential as an important revenue and profit generator for We base this view on the platform’s many unique attributes.

The simplicity of REZconnect lies in its ability to allow Web users to see information about a restaurant, fill out a reservation form and click to send the reservation information to the appropriate restaurant. The restaurant’s maitre d’ will hear the reservation information read electronically over the telephone by pre-recorded voice prompts. The maitre d’ accepts or rejects the reservation by pressing voice prompted numbers on the telephone keypad which sends immediate confirmation back to the Web user within seconds. If the requested reservation is available, the maitre d’ enters a confirmation number on the phone keypad. The web user then sees a confirmation message and reservation summary on the computer screen. Re-confirmation e-mails are sent to all concerned as a reminder.

· REZconnect's underlying software technology enables restaurants to receive Web-generated dining reservations without changing the way they do business. The restaurant does not need a computer to interact with the Web user, only a touch-tone phone. This allows travel and hospitality providers including hotels, lodgings, restaurants, tour operators, cruise lines, and public golf courses to accept web reservations by telephone in a real-time net-to-phone-to-net system.

The REZconnect system works in the same fashion and can create real-time web-based reservations for travelers, and travel agents on unique lodgings, tours, cruise events, attractions, golf tee-times, and restaurant reservations.

In general, eTravnet’s goal with REZconnect is to turn quality content into quantifiable clients by bridging the gap between the Web-enabled guest and hospitality providers whose business is done by telephone.


On May 10, 2001, has announced that it has partnered with Worldspan, the global distribution service and e-commerce company, which delivers to the 21,000 global travel agencies in its network an electronic booking engine for airlines, hotels, car rentals, cruises, and tours. The agreement calls for eTravnet to place REZconnect on Worldspan’s web-based platform to create the bridge between the automated travel agency and cruise lines, tour operators, and lodgings whose products are not represented in global distribution systems. We believe that REZconnect appears to have significant growth potential in all sectors of travel and can provide substantial value added to the Worldspan user and the product/service vendor. The implementation of the REZconnect technology appears to have substantial revenue and profit potential in all sectors of Worldspan’s product representation.

On April 20, 2001, announced that it is continuing the expansion of its Global Travel Network, the “brick and mortar” division of the core technology company, by placing its franchised travel agency locations inside Super Kmart stores. The global franchise travel agency division, entering its 20th year of operation, has forged its relationship with Kmart in order to expand its opportunities to locate its franchisees in “store-within-a-store” settings.

First, this agreement appears to have important reciprocal benefits. Kmart has a well-deserved reputation as an aggressive marketer, and travel agencies are likely to benefit from operating in prime locations inside Kmart’s high traffic retail environments. Conversely, the presence of’s Travel Network Vacation Central agencies will give Kmart shoppers an additional value-added service.

Second, Kmart opens opportunities for’s growth into areas of the US that are a perfect fit with the Company’s brick and mortar expansion plans. Specifically, the Company’s geographic expansion plan targets areas where Super Kmart stores currently exist.

Third, the addition of Kmart to the Company’s family of alliances is another validation of the quality of’s services. The relationship with Kmart resumes aggressive placement of its franchised travel agencies in store-within-a-store settings. The company plans to place travel agencies in Super Kmart centers. This opportunity should significantly bolster potential for new franchise sales by adding additional store-within-a-store opportunities in general, as well as creating specific new territories for sales due to Kmart’s presence in places where Wal-Mart does not exist.

Finally, this agreement emphasizes the fact that expansion of the Company’s “brick and mortar” division remains key to future growth and profitability. also has a relationship with Wal-Mart Stores, Inc. providing the opportunity for the company to place franchisees inside Wal-Mart SuperCenters. The company currently has approximately 50 travel agency locations operating in this store-within-a-store venue. At the same time, the technology division of is focused on the implementation of REZconnect, the Company’s unique patent-pending technology.

It should be noted that began placing its franchised travel agencies inside high traffic mass merchandisers in 1996. Now, with approximately 50 Travel Network Vacation Central brand locations in place in “store-within-a-store” settings nationwide, the Company has begun to implement the second phase of its expansion.

On April 18, 2001, formed a strategic partnership with Zagat Survey to offer the installation of the REZconnect reservation system on their website,, to the over 20,000 restaurants in the United States and abroad which are reviewed on their website. We feel the alliance with Zagat provides strong opportunity for implementation of REZconnect on Zagat’s high-traffic web site. The agreement calls for shared revenue from reservation creation.

Zagat Survey, the premier provider of consumer survey-based dining, lodging and leisure information, to offer users the opportunity to make online reservations at restaurants affiliated with REZconnect via a co-branded Web site. This agreement, in our view, has the potential to provide significant benefits to, Zagat and restaurants not equipped to take reservations directly over the Internet.

First, from the standpoint of, the Zagat relationship represents a key milestone in the implementation of the Company’s strategic marketing plan. As mentioned above , the companies goal is to turn quality Internet content into qualiafiable clients by bridging the gap between the Web-enabled guest and hospitality providers whose business is done by telephone.

Second, the combination of Zagat Survey content at and REZconnect's patent-pending net-to-phone-to-net technology is likely to provide users with a value-added e-commerce experience. users are able to choose restaurants by location, type of cuisine, atmosphere, and other features and then click a link to make a reservation. When the digital reservation form is submitted, the reservation information is converted into a telephone call to the restaurant. A recorded voice requests the reservation, prompting the reservationist to accept/decline and, if the requested reservation is available, enter a confirmation number on the phone keypad. The Web user then sees a confirmation message and reservation summary on the computer screen. Re-confirmation e-mails are sent to all parties involved in the restaurant reservation.

Third, from the restaurant’s perspective, REZconnect's underlying software technology enables restaurants to receive Web-generated dining reservations without changing the way they do business. The restaurant does not need a computer to interact with the Web user, only a touch-tone phone.

On December 11, 2000 announced a strategic partnership with Payless Car Rental to provide Payless with on-line real time booking of negotiated car rental rates. This business partnership appears to provide substantial benefits to, Payless Car Rental and car rental company’s customers.

First, from’s standpoint, this deal provides important validation of the HaggleWithUs online bidding software suite. This agreement represents another concrete step towards the fulfillment of’s corporate goal of being regarded as an Application Service Provider (ASP) to the entire travel industry.

Second, from the perspective of Payless Car Rental, implementation of the HaggleWithUs online bidding solution appears to be an excellent fit with Payless’ value-based marketing plan. Specifically, the addition of Payless Car Rental to the HaggleWithUs Web site offers travelers an easy way to greater savings through Payless Web bookings where the traveler is in control of the pricing. Additionally, the HaggleWithUs Web site is easy to navigate—customers are guided through every step of the bidding process—and customers can have one-step shopping for all their travel needs as Haggle’s site includes air, hotel, cruise and car providers for customers to access.

And, third, from the perspective of Payless customers, HaggleWithUs offers an impressive array of unique biding characteristics. The HaggleWithUs online bidding engine enables Internet users to negotiate in real time for travel related services and name their own price and receive an immediate real-time confirmation once arrangements are finalized. Also, with HaggleWithUs, there is no blind bidding. Travelers know in advance exactly what they are bidding for and typically do not have to wait hours or days to find out whether they have bid successfully.

On November 19, 2000, announced the first Internet-to-Phone International Restaurant Reservation System with “REZconnect” will allow consumers to book restaurant reservations anywhere in the world and receive immediate confirmation with patent-pending Internet-to-phone technology. Called “REZconnect,” the program will ultimately enable customers to make a dining reservation at any, which has over 100,000 restaurants in over 7,000 cities in 47 countries in its database.

On October 24, 2000, announced that REZconnect was selected by the Tony May Group to provide net-to-phone-to-net reservation services for the Group’s Manhattan restaurant locations.

This deal provides highly credible validation, we feel, of the ability of REZconnect’s technology to provide a bridge that seamlessly allows each party to engage with one another by the means they each prefer. Tony May stated in an press release, “This is the first technology that understands that the restaurant reservation process and managing restaurant reservations is unique. REZconnect is set up to meet our specific reservation needs. I chose REZconnect because it allows me to continue to manage my business as I always have without having to make changes in the way I do business, and I don’t need to buy or install any computer equipment or make any investment. What REZconnect will provide for my restaurants is to bring the Web user to my telephone where we can take the reservation in a ‘business-as-usual’ manner. Since we have an international clientele, this will make it even easier for our European clients to make their reservation.”

Tony May has established himself as a knowledgeable and respected member of the restaurant industry. The New York City branch of the New York State Restaurant Association selected Tony May as Restauranteur of the Year 2000. His lifelong experience as a restauranteur puts him in an excellent position, we feel, to evaluate the ability of REZconnect to provide a reservation service that brings a Web user’s reservation request directly to a restaurant’s telephone.

This agreement calls for REZconnect to be installed at Tony May’s San Domenico restaurant, which has been rated by The New York Times as one of only three three-star Italian restaurants in New York City. This installation will be quickly followed by a second installation at Gemelli’s, Tony May’s restaurant location at the New York City World Trade Center.

On September 21, 2000, announced that REZconnect was positioned for implementation in the lodging industry. As mentioned above, this unique patent-pending technology is designed to connect the tech-savvy Web-user with independent lodgings globally that do not have sophisticated computerized room reservation systems making them almost impossible for the traveler or travel agent to book them efficiently.

REZconnect’s target lodgings include mansions and stately homes, independent hotels, historic inns, unique accommodations and Bed and Breakfast lodgings. To launch the REZconnect product, purchased Inn & Travel, a company with a database of over 20,000 B&B Inns. Inn & Travel’s database was acquired in a cash and stock transaction. eTravnet’s business strategy calls for this B&B database to be available to its global chain of franchised travel agencies to book directly on behalf of their clients and for travelers to book directly on travel agents’ Web sites and other portals.

On September 18, 2000, announced that Stephanie Abrams, Executive Vice President, was again named to the list of “The 100 Most Powerful Women in Travel”. This list is published by Travel Agent Magazine. In the past, Travel Agent Magazine honored the industry’s 200 top female executives but this year decided to limit the number to 100 honorees spanning every segment of travel including airlines, cruises, tour operators, car rental companies, and tourist board destinations among others.

Abrams has been with since 1986 when it was exclusively Travel Network, the franchisor of travel agencies. Abrams has established an outstanding record in the travel industry with a range of experience in travel agency operations, hotel sales and marketing, and wholesale/tour operator travel experience. Her achievements in marketing and franchise leadership have earned her a number of awards. She has served on the advisory boards of ASTA (American Society of Travel Agents), the ASTA Council of Travel Marketing Organizations, System One and AMADEUS Airline Computer Systems, the Hong Kong Tourism, Association, and the Advisory Board of Dollar Rent-A-Car.

PRODUCTS AND SERVICES’s growth strategy is to utilize its “power base” of more than 250 agencies globally—this base books an estimated $1,000,000,000.00 (one billion dollars) in total annual sales—to advance the Company’s Web-based business of travel sales through various channels of distribution. In general, eTravnet’s revenues are predominately comprised of franchise fees and franchise service fees, commissions paid by travel providers, and the retail value of travel agency related sales. In addition, certain travel suppliers pay performance-based compensation known as "override commissions" or "overrides." Management expects that revenues from Web-based products will increase in importance over the next several years.

Franchise Division sells franchises to existing and start-up travel agency operators who then use the Company's systems, methods and techniques for promoting and performing travel agency services. Franchisees are charged an initial franchise fee when they sign a franchise agreement. Additionally, franchisees are required to remit monthly service and advertising fees, as defined in the franchise agreement, to The Company’s franchise agreements are typically for 15 year terms and are renewable for additional 10 year terms. also sells area franchise agreements. Area franchisees are charged an initial fee when they sign a franchise agreement. In consideration for soliciting, screening, evaluating and introducing prospective franchisees to the Company, as well as undertaking certain franchiser responsibilities, the area franchisee receives from 50% to 67% of any initial franchise fees granted in the defined area. Area franchise agreements typically run for a 10 year term and are renewable for one additional 10 year term.

In effect, then,’s Franchise Division currently generates revenue from 1) franchise start-up fees, 2) service fees and 3) commission fees. A schedule of these fees is shown in the table below.

Agency Type Franchise/Sign-up Fees Service Fees* Commission %
Conversion Agency $3000-$7500 $250-$500 n.a.
Small Office/Home Office (SOHO) $4000 $50-$150 3.75%
Start-up Agency $19900-$29900 $350-$770 + CPI n.a.
Wal-Mart Supercenter $24000-$29900 $350 -$750+ CPI n.a.
Regional Presdient $80000 $250 - $570 + CPI n.a.
International President $125,000-$500,000 $350 -$750 + CPI n.a.

*Service Fees are charged monthly and increase annually according to the length of the agency's affiliation with the network

Online Division expects to garner Web advertising revenues from a variety of sources. These sources include 1) the average number of unique visitors per Company Web site, 2) the average number of monthly visits per visitor, 3) the average number of page views per visit, and 4) the average number of banners per page view in order to get a total number of page views.

The Company’s second Online Division product is, a reverse, real time, one-on-one multiple bid virtual auction system. “Reverse bid” means that the bid price goes lower (not higher), is interactive, and involves one bidder at a time. Because the system is Web-based (rather than e-mail-based) and real time, multiple elements (such as brand name and other specifics) can simultaneously be incorporated into the terms of a bid. This contrasts with, for instance, which is price-based. If the price is met, one must accept the associated conditions of a sale. With, a user's bid is not accepted unless all elements of a bid are met. technology permits simultaneous, multiple bids as well as back and forth bidding similar to that found in a live auction environment. is owned and operated by and allows a consumer to negotiate directly with any travel supplier chosen by the consumer. When the consumer makes a bid for the purchase of the travel services, this bid is transmitted to the travel supplier through the Web site. The bid is converted to an automated phone call which is received by the travel supplier at which point the bargaining process begins. Assuming that the travel provider is able to offer a price which is acceptable to the consumer and that the consumer is willing to accept the price of the travel supplier, a confirmation can be issued by the travel provider within minutes of the initial consumer inquiry. The process enables a consumer to maintain control over their transactions by allowing them to pick the travel supplier, bid directly with the travel supplier for the lowest price and confirm the travel arrangements. According to management, this can all happen within minutes

Currently, sells products, resorts, tours, cruises and airline tickets. The following table enumerates the listing fees charged and the commission arrangements on transactional sales for each type of related product:

Market Product Listing Fees* Commission %
Hotel $12.50 - $1800 10%
Tours 5.00 - 8.00 10%
Cruises 5.00 - 10.75 10%
Airline Tickets 2.00 - 3.50 10%
Car Rentals 10.00 - 15.00 10%

*Product listing fees are charged monthly and increase annually according to the length of the travel supplier's usage of the application

Finally, the revenue model for REZconnect provides for the generation of income from e-mail advertising that will appear on the duplication of the Web booking confirmation that is sent to the customer and to the restaurant for quality assurance. Current plans call for no cost to the restaurant or to the consumer. The quality of the restaurant chosen by the customer will be matched to an appropriate product for truly targeted advertising opportunities. This will allow advertisers to reach diners who will be in their neighborhood or geographic area. The Company is in discussion with restaurant suppliers who see the value in this opportunity to bring their product news to the restaurant owner and encourage interested advertisers who wish to reach the targeted customer and restauranteur.


In our view, enjoys a distinct competitive advantage because its patent-pending technology products offer the Company’s clients unique opportunities to save money in all segments of the travel industry.

Specifically, enjoys the characteristics of both an online travel provider and a “brick and mortar” travel agency. This business model has the potential, in our view, to provide the Company with several significant revenue and profit opportunities.

The Company appears to have greater revenue and profit potential because it can sell its travel-related products through both traditional brick and mortar travel agencies as well as online sites.

The Company has the opportunity to enhance its buying power and reduce its acquisition costs.

Additionally, this unique positioning results in having fewer direct competitors. While the Company’s competition can be classified into three separate types of companies—online travel providers, retail travel providers, and electronic distributors of travel information and services—very few enterprises compete with across all sectors.

Competitors in the online travel provider category offer travel bookings solely through the use of the Internet. Key competitors in this market sector include Expedia, Preview Travel, Inc., Cheap Tickets, Inc.,,,, and

Retail travel providers offer various services to online travel providers and through brick and mortar agencies. Their services include the distribution of vacation packages, designing and marketing travel programs, corporate travel management, vacation products and travel related information. Specific competitors in this market sector include 800 Travel Systems, Inc., Intrav, Inc., Global Vacation Group, Grand AdventuresTour and Travel Publishing Corp., Navigant International,, TravelDynamics, Inc., and Travel Services International.

The competitor that appears to be most comparable to is provides products and services through the Internet to leisure and business travelers, and also operates a travel fulfillment center for home-based agents and online companies.


As of December 31, 2000, had $30,970 in cash and approximately $1,031,000 in short-term investments. Management believes that cash and short term investments on hand at December 31, 2000 and its cash flow from operations will be sufficient to meet its financial obligations on a timely basis during 2001.

· Cash provided by financing activities was approximately $896,000 in 2000. This consisted of proceeds from the sale of 143,497 shares of the Company’s series A convertible preferred stock .

· Cash provided by financing activities was approximately $15,000 in 1999. This was from the sale of equity interests of $210,000 offset by approximately $195,000 of distribution to shareholders prior to the Company’s merger with Playorena, Inc.


· is working to create a consortium of on-line directories which will allow vendors who sign-up to be represented on multiple major websites. First phase implementation will target restaurants and hotels.

· will target other sectors which require appointment scheduling like golf courses for golf tee-times.

· will develop and implement “Global eGram,” a system utilizing REZconnect technology, which allows the website user to create a text message on the website and send that message to a telephone where the receiver can hear the message “read” and can answer questions by pressing numbers on the telephone keypad. The value of this service is to bring the web user to the non-computerized receiver. Examples of the usage include messages to family, instant simultaneous information disbursement to a sales force, and wake-up call service. The uniqueness of Global e-mail is that the person receiving the call can “press one” for yes’ “5” for no to answer routine questions asked by website users like, “will you meet me at the airport?” “Can we have dinner tonight?” “Do you love me?”

In the wake-up service arena, the call will, direct the person to “press 1, if you want to snooze for 10 minutes and get another wake-up call,” etc.

There is a revenue model created from usage and advertising associated with Global e-mail.

We believe that’s stock is highly undervalued.

Following a two-year investment program in support of the successful development of a proprietary, patent-pending net-to-phone-to-net reservation technology, appears poised to resume growth in its original franchise business and seize new growth opportunities in a wide variety of schedule centric businesses.

· The Company has substantial opportunity, in our view, to expand its network of franchise locations. This expansion should be receive a significant boost from relationships with new “store-within-a-store” partners such as Wal-Mart and Kmart.

· The Company’s unique technology platforms position it effectively, we feel, to attract Web traffic and related revenues and profits.

· Also, appears to have developed a reservation technology that is exceptionally customer AND vendor friendly. Expansion of the application of this technology to industries beyond travel could lead to the development of a significant stream of recurring advertising revenues.

In general, eTravnet’s business model—industry leading travel expertise complemented by cutting-edge technology—should, we feel, result in significant expansion in revenues, profits and shareholder wealth in coming years. These factors indicate that is well-positioned for upward movement