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To OTC Journal Members:

Congratulations to members that have been hanging in there on NetSol International (OTC BB: NTWK).  Despite a stream of recent positive news developments, the stock has been stuck in the Mid $3 range.  Today, the stock closed at $4, nearly an all-time high since we originally released our profile.  If you own this stock it is likely that you have a nice profit today, and the picture seems to be improving.

The theme of our newsletter is to find undiscovered Companies on behalf of our members which have great upside potential, in addition to being opportunities members would not likely discover on their own.  We then present you with all the facts, and let you make your own informed investment decision.  Once a profile is released, we strive to keep you updated on any further corporate developments in an informative and timely manner.

The following is a Special July Profile Report.  When this Company was brought to our attention, we were compelled to release this as quickly as possible.  We want members to be aware of this particular opportunity while the stock still trades at its currently attractive level.  This profile covers Envoy Communications, a Company you probably were not aware of.  Envoy is listed on the Toronto Stock Exchange under the ticker symbol ECG.  The Company has filed the necessary documentation with the SEC to obtain a listing on one of the US Exchanges, and will begin trading on a US Market within ninety days.

We were anxious to release this information as quickly as possible because when we reviewed Envoy's financial results we were astounded.  This Company has turned in one of the most exciting and prolific growth performances we have seen in quite some time for such an unnoticed opportunity, and we believe that when Wall Street finds out about this Company much higher levels are inevitable.  Several unbiased analysts agree with our view, and we will bring you this information.

For those readers that are wondering about purchasing this stock through their brokerage account, the answer is YES, you can.  You will have to phone in your order because most firms don't handle Internet trades in foreign securities.  However, most brokerage firms will accept trades for the Toronto Stock Exchange.

Tracking the price of the stock is another issue.  You can obtain a 15 minute delayed quote at our favorite financial portal: Yahoo!.  Simply go to the following web address: http://quote.yahoo.com, and enter the following ticker symbol: ECG.TO.  Almost all the other quote sites on the Internet will carry it, but some use a different suffix for a TSE stock.  If you go to http://www.quote.com/, you enter the symbol as follows to get a quote: TSE:ECG.

Click Here for a link directly to the quote, and then save it in your favorites.  Hit your refresh button when you want updated prices.

• Corporate Web Site: http://www.envoy.to/
• Toronto Stock Exchange Ticker Symbol: ECG
• Estimated Shares Issued and Outstanding: 18 million
• Estimated Public Float: 9 million
• Closing Price and Volume: $8.90 on 174,523 shares
• Market Capitalization: $160 million (CDN)
• 52 High and Low:$3.30/$8.85 (CDN)

Envoy is the largest purchaser of Internet Advertising in Canada for major Corporate Clients, and derives about 50% of its revenues in the U.S. from Companies such as Microsoft, National Discount Brokers, Fedex and Adidas.  Geoffrey Genovese, the President of Envoy, describes the Company as follows:

    "As a New-Breed Company, Envoy is an integrated e-marketer, digitally driven and committed to
     building global brands, both off- and on-line."

The following is short list of Envoy's current client base:
 

The Companies in the table above are just a small representation of Envoy's client base.  Envoy also represents many other well known clients worldwide.

Over the last year, Envoy has experienced dramatic growth which has been achieved through a combination of a 25% internal growth rate and three very significant acquisitions.

Envoy's fiscal year coincides with the third calendar quarter, the end of September.  The numbers speak for themselves in the following table:
 

Sales measured from the 1st half of 1998 to the 1st half of 1999 were up nearly 400%.  Profits were not up proportionally, but the costs associated with the acquisitions along with diversifying into lower margin products and services account for the difference.

Margins are expected to improve over coming quarters as economies of scale and increasing efficiencies enter into the results for future quarters.

It is projected that Envoy Communications is on track to enjoy over $125 million in revenues in fiscal 1999, up from $23.5 million in just two short years.  More than a 500% increase.

This outstanding growth has been achieved through a combination of acquisitions and internal growth.  The following acquisitions were completed in the last year:

• Hampel Stefanides was acquired on November 9th, 1998.  Hampel is a New York based Advertising Agency whose clients include Castrol Motor Oil, National Discount Brokers, CDnow, BASF Corporation, and Aer Lingus.
• The Devlin Group was acquired on February 9, 1999.  This company is an Internet Specialist with a number of Fortune 500 Companies as clients which include IMAX Corp, IBM, Federal Express, and Health Canada.
• The Watt Group acquisition was consummated on June 9th, 1999.  This advertising agency specializing in servicing large retail chains, and their customer base includes Wal-Mart, Safeway, and PETsMART.

In May of this year, Envoy completed an $18.5 million equity financing at $5.50 per share with sophisticated Institutional Investors.  This strengthened Envoy's balance sheet, eliminated all the debt associated with the acquisitions, and left the Company with over $13 million in working capital for corporate expansion.

Approximately 3.4 million shares were issued at a discount to today's market.  However, with the stock averaging over 300,000 shares per day in volume, these shares could be absorbed by the market in ten trading days if they were all for sale.  With the financial performance this Company has demonstrated, it seems unlikely that all these shares would be have to be absorbed by the market anytime soon.

We took a quick look at the market valuations of other comparable companies which trade publicly.  Members that want to do their own, more comprehensive research can Click Here for a complete list of Comparable Companies with links to their financial performance and market capitalization.

The following table provides you with a sampling of several companies within the same industry group.  Although no companies in this table are identical in annual sales volume to Envoy, compare the Market Capitalization.

There are no companies on this list with Market Capitalization much less than $1 billion.  However, Envoy has only achieved a $162 million market capitalization, suggesting that the Company is grossly undervalued as compared to other companies of similar proportions.
 

The most ridiculous comparison is to Double Click (NASDAQ: DCLK).  This company is losing money on only $89 million in annual sales.  Yet the Company trades at nearly a $4 billion market valuation.  Envoy, a Company which derives most of its revenues in Internet Related Advertising Sales, isn't even trading at a fraction of the market value, yet has much stronger sales and profitability.

Nearly every major brokerage firm based in Canada has research following on Envoy Communications with buy or strong buy recommendations.

Cannacord Capital, one of Canada's largest brokerage firms, issued a Buy Recommendation on May 4th with a 12-Month target price of $15.30.

During our research on Envoy, we found a published round table discussion by analysts and money managers concerning the Company and its phenomenal management performance.  This discussion took place on May 21st, and if you wish to read the entire reprint simply Click Here.

The participants in the discussion were David Wong of Canaccord Capital Group, Steve Mizener of BPI Small Cap Funds, Ed Ho of the Dynamic Small Cap Fund, and Gene Vollendorf, a portfolio manager at Bissett & Associates Investment Management Ltd.

Here are the key excerpts which should concern investors:

• Gene Vollendorf: "Envoy, with their acquisitions consolidated now, I think you're going to see explosive growth opportunities. Again, no reason why it can't be in the $15 range, sooner rather than later, and beyond that, $20."

• Ed Ho: "I think that's being a little promotional. I'm a value investor so I try to be ultra conservative with my numbers. I ultimately may set numbers - expectations a little bit lower - and if I reach those expectations, then I'll revisit or maybe I'll adjust it then. My hurdle rate for an investment is sort of 50% in 12-24 months before I'll even buy something. I think I'd be negligent to say I think it should be a $30 stock or a $20 stock or even a $15 stock, but when it gets to $12 in the near term I will review that and see where the progress has been. That's one stock where I sort of have to watch as it develops because it's developing so fast."

• Steve Mizener: "I'd say our expectations are perhaps a little more modest than some, but we still see great upside in the stock"

Other Research Reports can be obtained directly through Envoy's Corporate Web Site found at http://www.envoy.to/. Click Here to go directly to the Research Reports.

There is already very significant Institutional Participation in the stock.  The following is an abridged list of the current Institutions which have a position in Envoy Communications: (This information was provided for us by the Company)

• Templeton Funds
• Pembroke Mutual Funds
• Bisset and Associates Mutual Funds
• Altamira Management
• BPI Capital Management
• Van Berkom Mutual Fund
• Elliot & Page Advisors

If you like investing in Internet Stocks, but want to avoid the risks associated with the high flyers that have great potential technologies, but no real sales or earnings, the you need to take a strong look and Envoy Communications.

If you decide to invest in Envoy, remember that the quote you see on your screen is in Canadian Dollars.  Therefore, if the stock is in the $9 range, you will end up investing at about $5.85 in US Dollars, because the Canadian Dollar is worth about $.65 in US Money.

All the financial information we have published on the Company in this profile is in Canadian Dollars, but it is all relative and doesn't change the valuation picture at all.

You won't find all the information or research tools that you normally would on the Internet on U.S. Companies for Envoy Communications.

As long as Envoy Communications continues to trade on the Toronto Stock Exchange only, the Company will get limited exposure to the investing community.  It is commonly accepted amongst International Money Managers that the two most liquid markets where stocks tend to get the best valuations are the New York Stock Exchange and the NASDAQ NMS.

However, Envoy will be making the jump to a dual listing in the US Markets and the Toronto Stock Exchange.  The Company filed its SEC Form 20-F to trade in the US markets on June 2nd.  They anticipate trading on the NASDAQ NMS.  We spoke with sources at the Company yesterday, and they anticipated approximately 90 days from now they will trade on the NASDAQ NMS along with Microsoft, Intel, Sun Microsystems, and all the other big boys.

This is the reason that we have published this profile now.  We are trying to give our members some valuable information on Envoy Communications ahead of a big Wall Street following.

• 1st Net and InterVu Audience Manager Software
• InterVu EyeQ Multimedia Manager

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. All statements and expressions are the sole opinions of the editors and are subject to change without notice. This profile is neither an offer nor solicitation to buy or sell any securities mentioned. This newsletter is owned by SSP Management, Inc, a wholly owned subsidiary of 1st Net Technologies, Inc ("1st Net").  While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The editor, members of the editor's family, and/or entities with which they are affiliated, may own stock in and have other financial dealings with the companies who appear in the publication.  To that degree, this newsletter should not be regarded to be an independent publication.   SSP Management has been paid a one-time fee of $50,000 for representing Envoy Communications for a period of one year.  The fee has been paid by BG Capital Group acting on behalf of Envoy Communications.  SSP Management has not been retained by, nor has any formal relationship with Envoy Communications.  The OTCjournal.com critiques may contain forward looking statements relating to the expected capabilities of the companies mentioned herein.

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF THE EDITORS OF OTCjournal.com.

We encourage our readers to invest carefully and read the investor information available at the web sites of  the Securities and Exchange Commission ("SEC") at http://www.sec.gov/ and/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com/.   We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at  http://www.sec.gov/consumer/cyberfr.htm.   Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.