Newsletter

Trading Alert On QT5

May 28, 2003
Volume VI, Issue 51
Email : info@otcjournal.com
URL : http://www.otcjournal.com

To OTC Journal Members:
 

Trading Alert- QT 5 Inc. (OTC BB: QTFV)

Last Thursday shares of microcap stock QT5 inexplicably exploded up the charts on 10 times normal volume. Over the past four months QT5 has drifted down from nearly $2 to a mere $.10, averaging about 100,000 shares per day. Two trading days later the stock peaked at 1.8 million shares and made a high of $.45, a 450% move off the bottom.

Today, just as the market closed, QT5 made an announcement which clears up the mystery surrounding the resurgence of interest in the stock. QT5 announced their highly anticipated product has been made available at a store near you, and investors are buying up shares as quickly as product is rumored to be disappearing off the shelves.

QT5 revealed its highly anticipated smoking substitute, NICOWater™, had been rolled out for sale on a nationwide basis. NICOWater™  is a homeopathic formula developed for adult smokers who suffer from the symptoms of tobacco cravings and find themselves in situations and/or environments where smoking is prohibited or discouraged.

QT5 has introduced a non carcinogenic beverage which satisfies the craving for a cigarette. The size of the market is staggering.
 

NICOWater™- The Product and Market

Pictured here is a display you will probably be able to find in your neighborhood grocery store or pharmacy chain in the near future. NICOWater™ is not to be confused with a smoking cessation product. It does not replace a patch or a gum designed to help people quit smoking. 

NICOWater™ is a smoking substitute. It is a beverage you can enjoy in any environment where smoking is prohibited or discouraged. Smokers can drink this beverage in bars, restaurants, airplanes, and offices. It satisfies their craving for a cigarette without offending others.

It is estimated there are still 47 million smokers in the United States. In 1985 there were only 200 municipalities with clean air ordinances. Today there are 1609, and the number is growing at the municipal, state, and nationwide levels. Massachusetts is the most recent state to ban smoking in public buildings.

Anti smoking forces have set a target date of 2010 to ban smoking in every public building in the United States. Therefore, the 47 million Americans who still smoke will need to satisfy their craving without spending too much time on the sidewalk or suffering on a five hour plane ride. Bars and restaurants would prefer to have their customers stay on their property. Employers want employees to stay at their desks. Airlines want another source of revenue in the form of a beverage they can sell to a captive audience for the duration of a flight to a happy traveler.

Americans spend approximately $200 billion annually on tobacco products. 1% of the market would equate to $2 billion in annual sales, which seems overly optimistic. 1/10th of 1% out of the gates seems a more realistic expectation, which still equates to the possibility of $20 million in sales for the near term.
 

High Profile Publicity

Investors pounced on shares of QT5 because the product has already generated a great deal of high profile publicity, and there are high expectations for sales. The media has set investor expectations high for major product acceptance in the early stage of introduction.

In fact, NICOWater™ has already been the subject of major coverage in the main stream media including:

  • USA Today
  • CNBC
  • CNN
  • The Wall Street Journal
  • Time Magazine
  • The New York Times
  • Newsweek
  • Business Week
  • The LA Times
  •  Forbes
This is only a partial list of the publicity the product generated before it was introduced. As it appears on shelves in stores, expect to read or hear about NICOWater™ in all sorts of nationwide and regional media. A major nationwide marketing campaign is planned, which includes regional advertising like the sign shown on the taxi cab.

QT5 has established relationships with 6 regional bottlers covering every major metropolitan area in the United States, each of whom has the capability to bottle approximately 1 million bottles per month. 

Initially, the company is focusing its marketing energy on Chain Drug outlets. Over the next several weeks I expect the company to issue several press releases disclosing the identity of initial customers on the size of initial orders. I hope to publish information on projected revenues and profit margins. Perhaps you will be able to visit a store near you and see the product on display.
 

Conclusion

Last week QT5 rocketed from $.10 to a high trade of $.45 in just three trading days as the rumor spread that this long awaited product was finally being shipped to stores.

I believe this stock has just begun to capture the imagination of investors. As the product appears in stores around the nation, and sales figures begin coming in, this stock will probably gain momentum. After all, the size of the market is staggering and there is virtually no competition. Gums and patches are smoking cessation products used by those wishing to quit tobacco. NICOWater™ is a smoking substitute people will use in places where smoking is prohibited or discouraged.

There are only 32 million shares issued and outstanding, giving the company a market value of about $10 million at the $.30 level. However, only 8 million of those 32 million shares are publicly traded, which could lead to dramatic price swings if demand far outpaces supply.

The stock has pulled back to about $.30 after last week's prolific surge to $.45, which in nearly a perfect 50% retracement of the move. Taking into account that sales are just beginning, and the potential high profile publicity this product could generate, here is my recommendation:

  • Buy QTFV up to about $.40.
  • Target price- The stock is entitled to rebound into the $1 range as the midpoint of its four month drop. Therefore, I am setting a more moderate target of $.75 (the low end of the range) over the next 30 days. By then we will be able to gauge the momentum of product sales and re-evaluate.
  • Stop Loss- $.20- With the upside here definitely worth the risk of 33% to 50% of the capital you invest in this one.
I hope to see several news releases on the product roll out in the near future, and intend to publish follow up editions if and when they come out.

Here is the complete text of today's press release for your review:
 

Press Release Source: QT 5, Inc. 

QT 5, Inc. Announces National Launch and Rollout of NICOWater(TM)

Wednesday May 28, 4:01 pm ET 

Multi-Million Dollar Development Program Culminates in Breakthrough Homeopathic Product 

WESTLAKE VILLAGE, Calif., May 28 /PRNewswire-FirstCall/ -- QT 5, Inc. (OTC Bulletin Board: QTFV - News), manufacturer and marketers of NICOWater(TM), the breakthrough Homeopathic nicotinum (nicotine) product designed to relieve symptoms of tobacco cravings, announced today the national launch and roll-out NICOWater(TM). NICOWater(TM), the result of a multi-million dollar investment program over a year in development, is now being rolled out nationally. 

"This is a very exciting threshold moment in QT 5's history as this revolutionary Homeopathic product -- over which the management, employees and our partners have labored intensively for a year -- now comes to market," stated Steven Reder, QT 5's President. "Our breakthrough product -- specifically targeting the extraordinarily attractive $200 billon market for tobacco and tobacco products -- has been engineered to satisfy smokers' cravings when they can't smoke or shouldn't smoke, an increasingly common dilemma for smokers in today's restrictive public and private environments." Mr. Reder went on to say, "QT 5 is populated by a dynamic management team which has defined a compelling opportunity to capitalize on a market populated by over 25% of all Americans. Our burgeoning company, which sustained significant losses in the development and manufacturing of this state-of-the-art Homeopathic product, will now begin to reap the rewards of its labor by addressing the needs of these millions of American smokers."

About QT 5, Inc.

QT 5, Inc. is a Delaware corporation formed in April 1999 as a manufacturer, distributor and marketer of Bio-Med testing and Homeopathic products. QT 5, Inc. is continuing its clinical research and development of future products for lifestyle enhancements. QT 5, Inc. is headquartered in Westlake Village, California. For more information please visit: www.qt5inc.com. NICOWater(TM) is sold under the FDA's Compliance Policy Guide Conditions Under Which Homeopathic Drugs May Be Marketed. For additional information on QT 5, Inc. contact Bernadette Cusack, Vice President -- Investor Relations, Trilogy Capital Partners, bernadette@trilogy-capital.com.

Cautionary Statement

This release contains forward-looking statements that involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and performances, or achievements expressed or implied by the forward-looking statement. Actual future results and trends may differ materially from those made in or suggested by any forward-looking statements due to a variety of factors, including, for example, our ability to compete with other products in our space; the risk of unfavorable federal regulation; and the fact that our status as a development state company makes our future unclear. Consequently you should not place undue reliance on these forward-looking statements. We discuss many of these and other risks and uncertainties in greater detail under the section entitled, "Risk Factors That May Affect Future Results" in Item 1 of the Company's Current Report on Form 8-K as filed with SEC on January 24, 2003 (the "Merger Form 8-K"). 

--------------------------------------------------------------------------------
Source: QT 5, Inc.


 


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