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November 8, 2000
Volume III, Issue 95
Email : info@otcjournal.com
URL : http://www.otcjournal.com

To OTC Journal Members:

As promised this past weekend our mid week edition contains a review of the September quarter financial statement released by MedGrup (OTC BB: CODX) last Friday after the market closed.

Before covering MedGrup, one quick announcement: This Friday, after the market closes, we will be releasing our November profile. This particular company has an 11 on a scale of 1 to 10 for excitement. The story is almost like a Hollywood movie. Budget some time to read over the weekend.
 

MedGrup (OTC BB: CODX) Update

MedGrup's September quarterly earnings release was right on track with our expectations, and only reinforces our belief that the stock is currently worth $6 per share based on growth rate and trailing profitability.

If you never read our profile on the company, now would be a good time to do so. There was some confusion in the way Friday's press release was worded, and the stock pulled back slightly. We have seen a high of nearly $5 since our original release at $3.13, and the stock has made a round trip on light volume. Click Here to read our original profile.

MedGrup's numbers demonstrate a company continuing the blistering pace of nearly doubling in size with every quarterly statement. Below is a table which compares MedGrup's performance in the September quarter as compared to the same quarter the previous year:
 

                                                             Three Months Ended         Nine Months Ended
                                                                September 30,                 September 30,
                                                         --------------------------    --------------------------
                                                               2000          1999               2000           1999
                                                         -----------    -----------    -----------    -----------

                                                                                                  
REVENUE .........................................   $ 1,026,184    $602,280    $ 2,861,594    $ 1,423,982

COSTS AND EXPENSES
  Cost of revenue .............................       409,445        219,393      1,067,320        602,226
  General and administrative ................       448,904        216,274      1,161,247        533,911
  Loss on disposal of assets ...................          --             --              553           --
  Depreciation ..................................        37,528         17,346         96,249         37,583
                                                         -----------    -----------    -----------    -----------
              TOTAL COSTS AND EXPENSES       895,877        453,013      2,325,369      1,173,720

NON-OPERATING INCOME (EXPENSE)
  Interest expense ..........................        (2,822)        (4,218)        (9,677)        (8,600)
  Interest income ............................         4,961           --           11,575           --
                                                         -----------    -----------    -----------    -----------
               NET INCOME BEFORE TAXES       132,446        145,049        538,123        241,662

INCOME TAXES ................................       (55,298)          --            (157,405)          --
                                                         -----------    -----------    -----------    -----------
                                    NET INCOME   $    77,148    $   145,049    $   380,718    $   241,662
                                                       ===========    ===========    ===========    ===========

NET INCOME PER COMMON SHARE:
  Basic ..............................................   $      0 .01     $     0.03                  $0.07                 $ 0.06
                                                         ===========    ===========    ===========    ===========
  Diluted ............................................   $      0.01      $    0.03                   $0.06                 $0.06
                                                         ===========    ===========    ===========    ===========

SHARES USED FOR COMPUTING NET INCOME PER COMMON SHARE:
  Basic ..............................................     5,541,538         4,470,000           5,537,179         4,315,556
                                                         ===========    ===========    ===========    ===========
  Diluted ............................................     6,174,664         4,470,000           5,993,751         4,315,556
                                                         ===========    ===========    ===========    ===========

While revenues grew from $602,280 to $1,026,184, profits actually shrunk from $145,049 to $132,446. This is due to the high costs the company incurred during the quarter to ramp up its infrastructure to handle the new business which is coming in. In order to handle the volume of new business the company is hiring and training new coders. There is a several month lag time between hiring new employees and having them generate revenues.

The money they invested in growth will come out in the form of profits over the next several quarters. We continue to believe this stock is undervalued and under followed. Time should change those conditions.


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The OTCjournal.com Newsletter is an independent electronic publication committed to providing our readers with factual information on selected  publicly traded companies. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward  maximizing the upside potential for investors while minimizing the downside risk, whenever possible.  Moreover, as detailed below, this publication accepts compensation from certain of the companies which it features.  Likewise, this newsletter is owned by MarketByte, LLC.  To the degrees enumerated herein,  this newsletter should not be regarded as an independent publication.

Click Here to view our compensation on every company we have ever covered, or visit the following web address:  http://www.otcjournal.com/disclaimer.html for our full profiles and http://www.otcjournal.com/trading-alerts/disclaimer.html for Trading Alerts. MarketByte LLC has been paid a fee of $40,000 and 40,000 shares of MedGrup stock for representing MedGrup for one year. The fee has been paid by SSP Management acting on behalf of MedGrup. 

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