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To OTC Journal Members:

Market Comment

1999 has been a very exciting year in the equities markets.  If the NASDAQ Composite finishes the year near the 4,000 level it will be the largest single year percentage gain ever posted by any Index in the history of stock markets.  This statistic is even more amazing when one considers that the majority of the gain has come since November 1st when the NASDAQ Composite was still below 3,000.

However, these stratospheric gains have been anything but broad based.  The gains have been primarily restricted to large cap technology stocks.  If you owned any pharmaceuticals, banks, financials, retail (non Internet), or consumer non-durables you have had a very poor year.

Many analysts are looking for a very strong January effect for the overlooked small cap area once the Y2K fears are behind us.  Nearly all fund managers are now predicting a 12,000 level for the DOW by March, and bullishness is quite wide spread.

The inclination towards bullishness conflicts with the outlook for interest rates.  Analysts are expecting additional interest rate increases from the Fed early next year in a continued pre-emptive strike against the inflation pressures brought on by our red hot economy.   A rising interest rates environment is generally considered negative for stocks.

We are cautiously optimistic about stocks in the near term.  A more broad based bull market would convince us that it's for real.  We have always viewed widespread optimism about the future of the market as an indicator of an imminent pull back.  We love it when everyone is pessimistic.  This means that stocks are trading at less risky entry levels.

As always, the market is displaying it usual propensity to pay large premiums for growth.  Look at Biotech versus Pharmaceuticals- Biotech companies that produce new drugs have had a spectacular year.  The major Pharmaceutical companies that market new drugs have done very poorly- where there is growth stocks tend to go up.

We are planning on making some changes in the focus of our newsletter in 2,000.  In January we will be bringing you three opportunities in IPO's from friends at one particular brokerage firm that has a very good track record in the small cap arena.  We will also place a greater focus on bringing you the best research and trading tools for active short term traders.  We are planning on presenting an idea in a Private Placement in a company that we expect to go public in Year 2,000.

We will of course continue to bring you ideas in the small and micro cap world.   Our profiles will feature the small, undiscovered stocks that are not covered by the major Wall Street Media.  We feel that this gives our members the competitive edge and allows them to establish positions in companies that will catch the eye of Wall Street at some point in the future if they are successful at implementing their business plan.  These situations are risky and long term.  Therefore, we recommend that you only set aside a small percentage of your investment capital for microcap stocks.

We are going to incorporate some new features into our newsletter which will allow you to give us some feedback concerning features you like, features you don't like, and features you would like us to include.

There is a link to the archive section on our web site in the header of each of our featured companies.  If you wish to review the editions we published on these companies, or read the disclaimer which discloses our compensation, please use the link to go to the archive section.

1st Net Technologies (OTC Pink Sheets: FNTT)        Click Here for 1st Net Archive

Year 2,000 should be an excellent year for 1st Net, our parent company.  As always we remind you that any comments that we make about 1st Net should be considered self-serving and a conflict of interest.

The Crayon Crawler, 1st Net's revolutionary new browser which makes the Internet safe for kids, was greeted with a great deal of enthusiasm at Comdex in November.  2,000 should be a break through year for this product.

1st Net will also commit a great deal of energy towards developing more E-Commerce joint venture relationships similar to the existing one with NO Fear©.  Their E-Commerce Web site was soft launched in November, and has received favorable review.  Visit the site at www.nofear.com yourself, and see if you don't agree.

The major problem that 1st Net faces in year 2,000 concerns their bulletin board listing.  The company may do extremely well, but until they manage to get through the regulatory process of getting their Form 10SB through the SEC, the stock may continue to struggle in the Pink Sheets regardless of how good the news is.  Look for this stock to do very well once re-listed on the Bulletin Board.

Engineering Power Systems Limited (OTC BB: EGPDF)     Click Here for EGPDF archive

We brought you this company on February 19th at $1.50.  The high since then has been $3.60, and the low is $.75, which is its current price level.

The Company is probably worth a good deal more than where it is currently trading, but fundamental developments are taking too long for investors.  Their 1/2 billion in India Power Projects are taking years to get started, and their funding has yet to close.

The acquisition of Innovative Steam Technologies should close in January, and this is the key to the future of the stock.  If they pull this off, the company will double in size overnight and become profitable.  From there, the roll out of their Power Projects in India should move forward.  Look for a bounce in the stock in January as it has been under pressure due to year end tax selling.  Investors with patience should do extremely well in this issue.

NetSol International (OTC BB: NTWK)     Click Here for NTWK archive

This one has been the biggest winner we have ever covered.  We started our coverage last January 15th at $3.88 when the company was Mirage Holdings.  After a name change and a jump from the Bulletin Board to the NASDAQ, this company is now trading at $18 per share for a net return of 360%.

We have published 25 editions on this company during the course of 1999.  In our last edition we suggested that it might be a good idea for investors to consider selling one-half their position at these levels.  This allows most investors to recoup their initial capital along with a profit, but still be invested if the stock goes higher.

Bear in mind that this is still a young company with tremendous growth potential, so investors might be looking at the beginning of this stock's move.  We believe that there will be additional positive fundamental developments in January, and when compared to Infosys (NASDAQ: INFY) the stock still seems cheap.

US Microbics (OTC BB: BUGS)    Click Here for BUGS Archive

US Microbics has taken about 9 months longer to begin the commercial roll out of their product line than we originally anticipated.

The stock was $4.375 back in April when we originally released the profile.  It is currently in the $2.50 range.  We visited the company in early December, and are convinced that they will have a many major commercial breakthroughs in 2,000.  This stock is trading at an excellent entry level.  If you don't own please spend some time in our archive section on this one and decide for yourself if you like the company.  We love it at its current level.

Envoy Communications Group (TSE: ECG)          Click Here for ECG Archive

Envoy Communications is the largest buyer of Internet Advertising space in Canada.  Their sales grew from $38 million(CDN) in fiscal 1998 to $139 million(CND).  They finished 1999 with $.20 per share in earnings.

We brought you this one on July 16th at $8.80 (CDN) just prior to a serious pull back in small and micro cap stocks.   The stock traded to a low of $4.80, but has since rebounded nicely.  By November 29th the stock had hit a high of $10(CDN).

In our opinion the investment community is grossly underestimating the value of their relationship with IBM (NYSE: IBM) which was announced on November 29th.  They will jointly market a web based project management software called "Decision Room".

If this stock were trading on the NASDAQ, with their growth rate and industry group, it would draw a P/E multiple of at least 50, which would put the stock at $10(CND).  They applied for a NASDAQ listing, and should be trading there by the end of January.  This stock should do extremely well in year 2,000.

StockGroup Holdings (OTC BB: SWEB)    Click Here For SWEB archive

This Company is in much better shape than their stock.  We liked the Company because we believed that they fill a niche in Investment Portals where there is a great deal of demand.  There is no quality, central Investment Portal site devoted to the 25 million micro cap investors in North America.

They completed and launched their new supersite at http://www.smallcapcenter.com, and they are advertising it with the major Investment media.  They have also beefed up their management team.

We introduced you to the stock on August 28th at $3.   The stock surged to $4.50 quickly, but it has been downhill ever since.  The stock is currently trading in the $1.50 range for no reason that we can discover.  We believe that this stock has a technical problem as there seems to be an unlimited supply whenever there is volume.  Once this cancer is eradicated from the stock, it should trade better.  This stock could prove to be a great buy at current levels.

The Neptune Society, Inc (OTC BB: NPTN)    Click Here for NPTN Archive

We didn't get much of a response from our members on this stock.  The timing of the release of our profile wasn't great due to market conditions, and the nature of the company's business is not very appealing to individual investors.  They are the largest and fastest growing pure Cremation Company in the world.

If you like fundamentals this is stock you should own.  Demographics are heavily in their favor, they have their next 15 years of business pre-booked and pre-paid, and they will make extraordinary amounts of money.  Look for this one to make the jump to a NASDAQ listing in 2,000, and for the stock to get a serious institutional following.

Blue Zone, Inc (OTC BB: BLZN)       Click Here for BLZN archive

We brought you this one at $5 on November 12th, and it is currently trading at $8 for an outstanding gain.  We believe that this is just the beginning of what will continue to be an excellent performer.

Since releasing our profile they have retained Allen & Co. as their Investment Banker and announced a contract with the largest TV network in Canada.  Look for this stock to do extremely well in year 2,000 and make the jump to the NASDAQ.

Pawnbroker.com (OTC BB: PBRR)               Click Here for PBRR Archive

We brought you Pawnbroker on December 10th at $7, and the stock hit $9.125 three trading days later.  They are projecting mid February for the launching of their site which we believe has the potential to rival E-Bay, Inc. (NASDAQ: EBAY).

With 200 million items for sale in Pawn Shops nationwide, we believe that this company has the potential to bring some of the high end merchandise for sale by Pawn Brokers onto the computers of people that might not normally go to a Pawn Shop.

Look for a lot of press coverage on this site at its launch, and look for a NASDAQ listing application soon.  With Jeffries & Co. as their Investment Banking firm a Wall Street following is inevitable if they have any measure of success.  The stock has drifted back down to its originally profiled price providing an excellent entry level for investors.

• 1st Net and InterVu Audience Manager Software
• InterVu EyeQ Multimedia Manager
• Crayon Crawler - Web safe environment for Children

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.  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.