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Nothing new in the BLOG over the last few days. I like to use the BLOG in moving markets, and the markets are very quiet now as we roll into the Christmas Holiday. The Q4 rally did not come this year in the microcap world. Ever the eternal optimist, I believe microcap stocks will trade much better in '06. A lot of America's "hot money" is in real estate. Condo flipping is coming to an end, and that money will find its way back into the markets.

Next week I will publish a year end edition. I'm planning on giving you an inside look at my side- I will reveal what some of the failed companies told me about their future when I first talked to them. You will find it eye opening. For some reason, there has been a plague of over promising and under performing this year. 

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 reasonable question.

Today's edition covers two very positive events for two microcap companies I would consider "value" ideas. Both companies expect to be cash flow positive in 2006, and both look to surpass the $25 million mark in sales with game plans to achieve $100 million. 

Owning value is a good way to minimize risk, but value is the single worst predictor of price performance. Ask Warren Buffet. To make big returns on these stocks you have to be prepared to wait until the market turns its attention back to the telecom sector. 
 

TelePlus (OTC BB: TLPE) Sets Stage For Next Big Acquisition

Teleplus made a very significant announcement today which I believe sets the stage for the company to deliver on promised performance for 2006. TLPE announced it had restructured its long term debt of $5.85 million, and rolled it up into a single debt instrument of $9.225 million. 

TLPE now carries long term debt of $9.225 million, and has restructured the note to very favorable terms for shareholders. TLPE will pay a 10% coupon, and the note can be converted into common stock at a reasonable 5% discount to the prevailing market, leading to minimal dilution at some point down the road. There's icing on the cake in this financing. TLPE has the option of allowing no conversions for the next three years, and simply paying off the note at the end of that time frame. All we need is a strong patch in the telecom market in the next 36 months, and TLPE can do a different equity financing with no conversion feature, and simply pay off the note. No dilution for shareholders for three years- outstanding.

Or, in an even wilder and more potent possibility, TLPE could make enough profits to pay off the note. One current research report forecasts the company will make enough in '06 to pay off about 1/2 the note.

This now leaves TLPE with excess cash of $3.375 million that the company really didn't need. If history repeats itself, TLPE will soon be announcing a key strategic acquisition, and I'd be willing to be it will be for a very profitable company.

TLPE has formally predicted it will achieve $55 million in sales in '06. Factoring in a reasonable organic growth rate, $55 million can realistically be achieved if TLPE can acquire about another $15 million in annual sales.

This representation is becoming very refreshing. A company that is delivering on promised performance. Be still my heart. More to come from this one. Own for a higher valuation.
 

NetWork Installation (OTC BB: NWKI)- $1 million in New Business in Vegas

NWKI is rapidly becoming another microcap value play in the telecom arena. The company made the corner into 2005 with about $3 million in annual sales, and a $2 stock price.

As we turn the corner into 2006, NWKI will be sporting about $22 million in annual sales and a $.70 stock price. Oops- make that $23 million- I forgot they just landed another $1 million in business today. What's wrong with this picture?

The press release makes for interesting reading. Apparently, Vegas is becoming like NY. They are building up, not out. High rise MDU's (Multi Dwelling Units) are going up along the strip, equating to $14 billion in construction for 44,000 new residences. NWKI is getting a big chunk of the infrastructure installation work. The company announced this morning that it has landed another $1 million in business on the strip. 

Both of these telecom stocks are great value plays in the microcap arena. Value is the worst timing indicator, but the best protection against downside risk. When money flows back to the telecom sector, these two should benefit greatly along with shareholders who have the contrarian mentality - accumulate when everyone is on the sidelines.

No weekend edition this week. Next week- year end wrap up. 

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