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The Three N's: NetWork (OTC BB: NWIS),
NeWave (OTC BB: NWAV) and NuTech (OTC BB: NTDL): Quarterly Results Reviewed
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I have been holding off on doing
an edition reviewing the quarterly results of our current profile companies.
Of the seven, I believe the quarterly numbers are only important for three,
those being NWIS, NWAV, and NTDL. Today I finally
have the results for all three, so I can cover them in a candid manner.
The four that are not meaningful
include AMWS, FMLY, VTSI, and HYPD. The story on AMWS
will
unfold with the June numbers, which will reflect the sales at Wal-Mart.
Numbers before Wal-Mart are meaningless. FMLY is all about the movies
they are putting into production this year. A box office win represents
the opportunity for a 10 bagger in 2005. In the case of VTSI, initial
sales of the Judgemental-use-of-Force simulator is all that matters. Sales
equals market acceptance and better numbers down the road with multi unit
reorders.
HYPD is simply about the value of the Guinea concession
which is not reflected in the financial filings. As more evidence unfolds
of exploitable hydrocarbon resources, the stock should trade up.
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NetWork
Installation (OTC BB: NWIS) |
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NetWork Installation's business
relates to the nationwide build out of a wireless internet access infrastructure.
The best metaphor for the company is as follows: they are not mining for
gold in the gold rush- they are selling and installing the tools (picks
and shovels) all the miners require. They have a large corporate and municipal
customer base, and are expanding geographically.
The company delivered $.510 million
in revenues during the first quarter. This represents 41% of all of 2003's
revenue number, suggesting a 61% growth rate organically.
I believe this is just the beginning.
The top line growth rate should accelerate from here. The acquisition of
Del Mar Systems closed near the end of March. Del Mar has historically
generated about $1 million in annual sales. Therefore, Del Mar should contribute
about $.25 million in the June quarter. All things remaining the same,
the company should then deliver $.75 million in the June quarter assuming
zero organic growth, which represents a 150% annualized growth rate.
Since the demand for their services
is growing, their sales should be growing as well. New offices recently
opened in Las Vegas and Sacramento. I wouldn't be at all surprise to see
the company deliver $1 million in the June quarter, which would
equate to a 233% annual growth rate.
The company also reported a net loss
of $.03 per share. A high percentage of the losses were non cash- related
to issuance of shares. I expect the company to continue to deliver losses
for the remainder of this year as they continue to expand.
Despite the correction in the stock
along with the rest of the market, this has been a big win for OTC Journal
members.
I first began covering the company last August at $.80, so many of you
have notched nice profits in NWIS. The recent 20% correction coincides
with normal market fluctuations.
NWIS will probably continue
to grow rapidly for the next several years. This is just the beginning.
Hold this one for the long term, and add to your position as you are comfortable
doing so. Click
here to read the press release.
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NeWave
Inc. (OTC BB: NWAV) |
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NeWave is the one I have been
waiting for with the most anticipation. This is our first look at the company's
performance, and I can't make any comparisons because they never had to
file financials for the December quarter. Since the company first started
operations last August, the top line is quite impressive from a standing
start.
NeWave delivered $1.05
million in revenues during the March quarter. I guess you could say
their growth rate is infinite, as they had zero revenues until September
of last year.
The bulk of their revenues are derived
from subscriptions to their online service. They provide a cookie cutter
formula for creating your own online business. The numbers suggest they
are enjoying about $350,000 per month in revenues. This is very high margin
business, and implies they have over 12,000 paying members.
The company recently announced it
had to move and expand its facilities to meet skyrocketing demand for customer
service. It has also expanded its product line for paying members to "remarket",
thereby creating an even greater profit center.
NeWave is, simply put, kicking
butt. Not many online companies evolve from the concept stage to $350,000
per
month in seven months. Very impressive.
I am planning on visiting the company
on June 9th, and from there should be able to provide a better understanding
of the growth potential. I love this one, and would suggest accumulating
aggressively. Click
here to read the press release.
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NuTech
Digital (OTC BB: NTDL) |
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NuTech Digital released its
quarterly numbers back on May 17th. For the most part, the top line was
disappointing, especially in light of two press releases issued earlier
in the year suggesting the company was growing, as was suggested during
a subsequent conference call.
The company disclosed it delivered
$1.03 million in revenues, down from $1.08 million in revenues the same
quarter the previous year. The only positive to be derived from the results
are the gross margins- margins improved quite nicely from 67% to 86%. Therefore,
even though there was no top line growth, the profit picture improved.
As you can see from the chart, this
disappointing performance has already been priced into the stock, so improvements
from here should yield higher levels.
There are still two wild cards which
could help the stock trade to much higher levels. First, the DVD concert
series could offer an avenue for substantial growth. The right high profile
contract signings could put the stock back on track. Secondly, their DRM
technology which allows viewer to watch movies over the internet is very
exciting, and if the right deal is struck the stock could trade up.
For the time being, I would just
hold this one. You want to own microcap stocks for their growth potential.
If the company does not deliver any growth, there is no reason to hold
the stock. Even if you have to take a loss, your money could be better
invested elsewhere.
On the other side of the coin, sometimes
growth takes time. The company received a big cash injection in February,
and is putting it to work now. If there are no positive developments through
the end of June, I will probably drop this one in July. However, if the
company starts to deliver, it could get back on track. I suggest holding
it for now. Click
here to read the press release.
With the pending Memorial Day Weekend,
this could be the last edition until next week. I expect the market to
be rather quiet until June, so don't be surprised if I don't publish until
after Memorial Weekend has passed.
Charts Provided Courtesy
Of TradePortal.com |
