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Comments in the BLOG

There haven't been any BLOG entries so far this week, but your comments and questions are welcome on the most recent: BrandPartners (BPTR).

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every question. If not for the filter, our BLOG would be filled with invitations to online poker sites- a total waste of the resource.

Despite the hideous market conditions, you have to give our crack technical team credit for coming up with a great trading idea in last week's edition entitled "Three Biotech Trading Ideas For a Bounce". The three ideas were Imclone (IMCL), Boston Scientific (BSX), and Protein Design Labs (PDLI). 

IMCL opened below the stop loss, so it was never in play. BSX was suggested at $30.50, and is currently trading above $30 and so far is a non event. PDLI has been one of the few big wins in the market over the past week with everything getting clobbered- the entry level was $15.60, and PDLI is currently trading at $17.56 for a net gain of 12.5% in less than a week. Our price target was $17.25. Time to sell and take your profit. 

That's a pretty good win in a very tough market.
 

NeWave (OTC BB: NWWV) Reports Year End Numbers: Wave Gets Bigger

NeWave reported year end numbers last week, and the company is continuing to deliver growth at a staggering pace. Year end numbers for small companies are usually old news as it is reported more than three months after the period ends. However, you can learn quite a bit from the 10K if you drill down.

For those who need a refresher course, NeWave owns and operates www.onlinesupplier.com. They have a turn key solution for putting individuals in business on the internet for a nominal fee. A mere $9.95 gets you started, and an ongoing monthly fee of $29.95 keeps you going. 

NWWV has clearly hit a sweet spot with consumers, and the proof is in the numbers. The company is delivering unbelievable growth, especially when you consider it was a zero revenue start up in August of '03.

Here's a quick recap of the numbers as disclosed in the 10K filing:

• Revenues: Rose from $1.126 million in '03 to $6.548 million in '04- A staggering 481% year over year growth rate.
• Shareholders Equity: Rose from -.46 million to +.224 million- low but very positive move in the right direction. The shareholders equity gives zero valuation to the 150,000 paid subscribers, so it doesn't really reflect the true value of the company.
• Gross Profits: Since it is a service company revenues are nearly 100% gross profits.
• Net Loss: $3.8 million

Of the $3.8 million loss, a full $3.7 million was non-cash, and mostly one time. $1 million in expenses went to depreciation and amortization. Another 2.7 million was associated with stock issuance to employees, board members, and consultants. 

Therefore, the cash flow picture, which is the most important factor for smaller companies, was a loss of only $100,000. When you consider the company moved its business to a much larger location in June, this number becomes in more extraordinary. After taking out the non-cash expenses and the one time moving expenses, I wouldn't be surprised if NWWV was cash flow positive from operations in '04.

Unlike many of its microcap brethren that are breaking trend lines in this fairly brutal market, NWWV is holding up quite nicely. The company's stellar performance is no doubt keeping potential sellers on the sidelines.

While the year end numbers look great, they disguise what was a moderately weak 4th quarter, which is strictly seasonal. The company will always have a seasonally weak 4th qtr. Q1 '05 numbers should be the best in company history.

NWWV is focused on the roll out of their new subsidiary "Auction Liquidators". They are putting together a nationwide network of drop off centers for selling goods on eBay. Once fully implemented, NWWV will use its current base of over 150,000 individuals serviced to drive business to the eBay drop off centers. This could turn out to be a very prolific area of growth for the company. 

Furthermore, NWWV is getting ready to launch a nationwide infomercial featuring widely recognized Bob Eubanks as the host. You will see it on TV this summer.

Therefore, the future looks for bright for NWWV. During q1 of '05 NWWV hit the 150,000 members serviced mark, and probably recorded the strongest quarter in company history.

I have always felt the magic number for this company would be $1 million per month in revenues. They are approaching that number now pre infomercial, and if one time, non-cash expenses are kept to a minimum this year, NWWV could conceivably turn profitable.

This one is a definite accumulate for those who want to participate in the growth of this company over the next several years. Since the stock has not participated in the recent market declines, it should do very well as market conditions improve. Long term holders: Continue accumulating.

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