To OTC Journal Members:

This is the second in a series of five new profiles we are bringing out between now and the end of July. Due to market conditions we issued no new profiles between mid February and the end of May. We knew a major market correction would create low risk entry points for small stocks. There are also many small companies introducing revolutionary new products and services in unique market niches, and it is our mission to find and present them to you while these stocks remain at ideal entry levels.

Wednesday's economic news showed new home sales dropped dramatically in April, which lent itself to the possibility that the aggressive interest rate increases by the Fed are working, and the economy is cooling off. The market responded with a nice rally in the technology sector, which increased our probability of a summer bull market. Friday's unemployment numbers were a big surprise to analysts. Unemployment was back up to 4.1%, and jobless claims increased. Most analysts now believe the FED will not raise rates in June, leaving the market wide open for a big rally. Friday was huge and large cap technology stocks were flying off the charts. In our opinion, there is now a high probability we will have a sustained summer rally. The small stocks we follow will participate. Invest now for summer profits.

The NASDAQ closed up 230.78 today on 1.9 billion shares. This was a huge rally on real volume and may signal the end of the Bear and beginning of a Raging Summer Bull. In only four trading days, the NASDAQ logged its largest one week gain in history.

Today's profile closed $.25 above its all time low since a recent merger, and the company's sales are now exploding. This leaves plenty of short term upside in this particular stock.

Every company we present to you will have technology of the future.  They will also be well financed. Photochannel Networks (OTC BB: PHCHF), our last profile, is firmly entrenched in the middle of the digital photography revolution and obtained $15 million in financing even in this weak market.

Today's profiled company has proprietary technology with a potential market size that staggers the imagination.  They have digital technology, which we believe will someday be viewed as a replacement for most printed marketing material.

As always, we profile companies we believe can provide significant returns to investors, if held over a six to eighteen month period of time.  The companies we feature have yet to be discovered by Wall Street, but each has the characteristics to garner a Wall Street following once certain fundamental benchmarks are reached. In the case of Bulletin Board stocks, we try to focus on companies that can make the jump to the NASDAQ.  NetSol International (NASDAQ: NTWK) made it, and the stock was our best profile of all time notching an 1835% return at the top ($3.75 in 1/99 to $75 on 3/3/00).  However, the biggest part of the move did not come until the stock had made the transition from the Bulletin Board to the NASDAQ.

Before the Bear Market came along, many of our members got used to having the ability to grab a quick profit within a week or two of the release of one of our profiles. In the market environment of the past three months, you would be wise to invest only if you want to be a long term shareholder. You should have a window in time of at least two months before an exit door with a reasonable profit will open. However, this NASDAQ market surge might just return us to the old pattern.

Currently two of our other profiled companies are close to making the jump to the NASDAQ. Envoy Communications (TSE: ECG) should start to trade on the NASDAQ next week, and Blue Zone (OTC BB: BLZN) is also very close to obtaining a NASDAQ listing.

The company we present to you today already meets all of the necessary criteria for a NASDAQ listing, and will be filing their application in the near future. This stock is at its absolute bottom of its trading range, and the company's sales are growing very rapidly.

June Profile:
 

iQROM Communications, Inc.(OTC BB: IQCO)

• Corporate Web Site: www.iqrom.com- Spend Some Time on Their Site
• Stock Listing: OTC BB: IQCO
• Estimated Shares Issued and Outstanding: 21 million
• Estimated Public Float: 12 million
• Closing Price and Volume: $10.0625 x $10.125 on 97,900 shares
• Market Capitalization: $200 Million
• 52 High and Low: $21/$9.875 (Post Merger Announcement)
• Click Here for a current stock chart.

IQROM designs and markets CD Roms the size of a business card. They are capable of containing 35 megabytes of data, video, sound, and animation. 35 Megabytes of storage equates to 5,000 pages of text, 1,000 web pages, 40 minutes of video, or 3 minutes of hi-tech multimedia video.

You simply place the disc in the CD Rom drive on your computer, and push the drawer shut. The contents of the disc launch immediately and give you a high impact multimedia digital presentation.

The discs measure 3 1/4" x 2 1/4" and weighs 8 grams. Click Here to go to a picture and description of the disc. There are several manufacturers already producing their own version of the disc, but as we get into this profile you hope you will agree that iQROM has a significant advantage over their competition.
 

Potential Uses for the iQROM Discs

When one thinks of the potential uses for these down sized CD Rom discs your imagination overheats. Any catalog can be replaced by this disc. Any brochure or sales material can be replaced by this disc. Below is a brief list of the potential uses for the iQROM disc:

• Catalogs
• Brochures
• Academic Journals
• Periodicals
• Law Libraries
• Shareholder Reports and Prospectuses
• Brokerage Firm Research Reports and Promotional Materials
• Sports Cards

Digital marketing is the future. iQROM is at the forefront of the industry. Content changes are implemented dynamically. This technology will revolutionize traditional marketing as we know it today. In the future, when you walk out to your mailbox you will not receive a Victoria's Secret catalog. You will find an envelope with a small rectangular Victoria Secret's disc. You will put it in your CD Rom drive, shut the drawer, and the catalog will automatically launch with a multimedia fashion show. Then, when you click on an update button, the disc will automatically go out on the Internet and get the latest fashions, price list, and special sales for you. This is the future of direct marketing.

Another application that is easy to visualize is the collectible sports disc. Imagine the Michael Jordan version. You open the drawer, place the disc inside, and close the drawer. You then see a multimedia video presentation highlight video of Michael's greatest game winning baskets. Michael talks to you through the speakers on your computer. His career stats are displayed.  When you click the update button, the disc goes onto the Internet and loads the latest Gatorade or Nike ad with Michael in it (another revenue generator). Kids will collect these by the hundreds of thousands.
 

Competitive Advantage- The Intelligent Soft CD iQROM Disc It Updates Itself

Today's traditional CD Rom contains certain fixed data.  iQROM's disc contains intelligent technology. It can update the information on the card with more current information. When you load the iQROM disc into your computer it has an update feature. Simply click the Update Button that appears on your screen, and the card automatically launches your Internet access and goes out and grabs the most current files which it records on your hard drive. Now you have the content of the disc combined with updates. Again- the potential applications boggle the mind.

Catalogs can be published without prices. Insert the disc and get the latest prices and specials. CD Rom games can be updated with the most current edition. A Public Company can send one disc to their shareholders which accesses their annual report every year. Prospectuses can be updated with the most current filing. Corporate brochures can allow access to new information after producing one disc. Baseball cards for players can update the latest stats. Unlike printed material, this format is truly dynamic.

None of the other disc that are currently being manufactured have this capability. It is a feature that will accelerate this company's growth dramatically.
 

Corporate Structure

iQROM Communications, Inc does not manufacture the CD Rom discs. iQROM is a marketing and design company. The manufacturing arm is Diskexpress. iQROM has an exclusive long term supply agreement in place with Diskexpress. Current manufacturing capability is 25 million units per month. Diskexpress is in the process of looking for additional manufacturing capacity as they are anticipating substantial demand. They plan to have the capacity to manufacture up to 56 million units monthly by July of 2002.

iQROM has also obtained exclusive world-wide licensing rights to the patented software, which allows the card to automatically update via the Internet.

Furthermore, there is a wild card in the equation which could potentially obliterate any competition for the business card size CD Roms. There is special technology which allows the disc to remain centered and readable in your CD Rom tray. Diskexpress holds a worldwide and U.S. patent on this technology.

Management informs us that any other manufacturer of business card size CD Rom disc could very well be in violation of this patent. They have not taken the legal steps required to block other manufacturers, but it is an option open to them in the future.

The company is now positioned with the exclusive world wide right to distribute all the cards manufactured by Diskexpress. Diskexpress may have an enforceable patent on technology, which could eliminate competitors. iQROM also has an exclusive world-wide license to the software, which allows the Soft CD to update each CD's content. This company is positioned for substantial growth.
 

Business Model and Profit Marginsl

iQROM tells us the Hard CD will sell for about $.90. This is the version that does not have the updatable feature. The Soft CD, or updatable version will sell in the $2 range, and the business model for the Soft CD is substantially more exciting. This pricing makes the CD competitive with the cost of printed marketing material. Oftentimes, high-end corporate brochures and other marketing materials cost much more than $2 to produce.

Gross margins on the hard CD run about 20% to 30%. However, margins will be much higher for the Soft CD and could run upwards of 60% to 70%. This is because the Soft CD version has a "Razor-Razor Blade" business model.

The Soft CD version will be permanently updatable. The updated content has to be created and hosted. Therefore, as more updatable cards get out in the market, more trailing business will accrue to iQROM over time. For example, if a baseball card needs to be updated with the latest stats, someone will have to input the stats on the Internet and host the file. This will be a fee based service. Therefore, the more cards out in the market, the more high margin maintenance business iQROM will experience. Hence, the Razor-Razor Blade model.

Ultimately, the company will have three sources of revenue. First, there is the basic sale of the card size CD Roms. Secondly, there is the design work associated with the content on the card, and the ongoing revenue stream from updated files. Thirdly, there is the potential for licensing fees which the company will explore as it applies to their patents.
 

Growth Potential

There were approximately 10 million business card sized CD Roms produced in the U.S. in 1999. Industry experts estimate that the demand will grow to 90 million units this year. This represents a 900% annual growth rate for this product's market.

With its patent protection and updating Soft CD technology, iQROM is in a position to grab a significant portion of the business. The company has it roots in the U.K., and began manufacturing and sales in the fall of 1999.

A U.S. office has been opened in Orlando, Florida, and the first U.S. sales are anticipated by August.

The U.K. division began production in the latter part of 1999. Sales were robust right out of the gates. In April alone iQROM distributed 1.2 million discs. Their primary customers were an on-line brokerage firm and the Euro 2000 Football Tournament (soccer to us). These sales will be reflected in their next quarterly 10Q filing. Their fiscal quarter ended in May, so we should see real numbers by mid July at the latest. The company does not anticipate profitability until 2001 because they will be reinvesting all available capital into their infrastructure.

We don't know how much money is spent annually on advertising and direct marketing in the U.S., but we would imagine the number is mind boggling. We believe this new digital content delivery mechanism can become a significant part of those advertising dollars.

We have read the company's projections for sales through Year 2002. We don't have the company's permission to share them publicly as they contain forward looking statements. However, this company anticipates substantial growth over the next several years, and a $1 billion market capitalization for the stock is easily foreseeable in the near future as long as they can attain the sales and profits within their projections.  In our opinion, these numbers are achievable.

The company anticipates introducing a DVD version of the disc by August. This will also have many powerful potential applications.

We believe this new digital format will be embraced by Corporate America. It will be adopted early by large technology companies who realize the power of delivering content in this fashion. This is one of the key reasons we like the stock. We expect contract announcements with large high profile public companies, thus bringing interest to the stock. Demo discs have already been created on behalf of several household name technology bell weathers, and the first major sales announcements could be just around the corner.

Just prior to the merger in April, iQROM completed a $12.375 million private placement. They are well funded now to fuel their aggressive expansion plans, and the capital gives them the required assets to qualify for a NASDAQ listing.
 

Conclusion

This stock was under $11 on May 4th after dropping from $20 on March 22nd. The NASDAQ dropped from 3900 to 3100 during May, and many small cap stocks got pounded. iQROM only dropped one point from there, and has held its ground in a nasty bear market.

The stock is at the bottom of its trading range and poised for a move to the upside. With the potential for high profile contracts, sales booming overseas, and unique proprietary technology, this is just the type of situation we look for.

We don't believe this stock will stay off the radar screens of Wall Street for long. They will find their way into the offices of Wall Street through demand for their product. Look for this stock to trade up with the market over the coming weeks.

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.