American Water Star Conference Call

American Water Star hasn’t had much to say for a very long time. Since the late October conference call when Chairman Roger Mohlman boldly predicted the company was positioned to achieve the $80 to $100 million revenue mark in ’05, there has been little tangible news coming out of AMW.

They have announced several new distribution arrangements and a small acquisition, but there has been no disclosure of any kind concerning hard numbers.

The stock is not trading as if the company were achieving the predicted success. Year end numbers are due out very soon, and 1st quarter numbers should follow close behind.

Those who have been following my commentary know my view- I’m not really concerned about the last quarter of ’04. I’m relatively certain it will be better than q3, which was a disaster.

Q1 of ’05 is the benchmark quarter as far as I am concerned.  If the company does not achieve at least $10 million in sales, the predicted $80 million in ’05 will be very much in question in my view.

AMW’s Roger Mohlman is conducting another conference call this coming Tuesday, March 29th, at 4:14 PM eastern, 1:15 Pacific.  The dial in number is  800-977-8002, pin # 314935. For more information, here is a link to the press release:

As you can see from this chart going back to AMW’s listing on the AMEX, this stock has not been a lot of fun to own.  The institutional investors who financed the company at $.90 all bailed when the company fell on hard times last summer.

Tuesday’s call will be interesting. No doubt, it relates to year end numbers and hopefully some hard information concerning their current run rate. They have the infrastructure in place to deliver the sales, now we just have to find out if they are getting the job done.

If they aren’t, they have no one to blame but themselves. I am prepared to give them the benefit of the doubt and wait for the facts. 

VTSI Posts Year End Numbers

VirTra Systems posted its year end numbers yesterday. There was a lot to like about the company’s achievements in 2004, but not a lot to like about the numbers.

VTSI achieved $1.33 million in revenues, a 35% increase over the previous year. For a company of this size, 35% annual growth is relatively anemic in my view. Based on these numbers, I would have to guess they have not gotten the go ahead to start manufacturing the 17 unit order they received from the Mexican FBI.

VTSI turned a profit on paper, but this is far from a profitable company. $5 million of their profits came from forgiveness of debt. Most of their long term debt was converted to equity. I estimate their actual cash loss to be somewhere in the $2.3 million range after taking out all the non cash items.

On the plus side, VTSI seems to have made a some very saavy strategic decisions in ’04. The technology change to the 3D Hi-Def environment has the industry buzzing about the technology. Nobody has anything remotely like what they offer. They got a lot of very favorable coverage in the media- TV, print, et al.

In addition, Chairman Kelly Jones put together a very favorable arrangement on the debt conversion on behalf of the shareholders. They eradicated $5 million in debt with a dilution factor far in excess of the market value of the company. This is a huge win for shareholders, and sets the table for a financially healthy company as the top line grows. 

Here’s a look at the price performance of the stock on a weekly basis since the OTC Journal has been covering the company. We had a lot of fun in the first six months. Since that time, the stock has been grinding in a range without making much progress in either direction.

Despite the going concern letter from the auditor, I am not concerned about the company’s financial status. They have consistently raised cash from an equity line with an institutional investor. It is the least dilutive way to raise money with equity. They have renewed this relationship for another $8 million. They only draw cash when they really need it, thereby minimizing the toxic effect on the shareholders.

The DOD has a great deal of interest in their products. However, the US Military is simply out of money at this time. I believe order flow will begin when the supplemental budget passes, and they could get tremendous order flow from the US Military once they have the fiscal ’06 money in hand.

If you own stock in VTSI you are betting that the groundwork the company laid with the US Military in ’04 will translate into significant orders and top line growth in ’05.




NeWave Breaks Another Threshold

We haven’t heard a lot from our friends at NWWV for a while. Year end numbers are due out soon, and when they file their annual report I will provide a complete analysis of the company.

In the interim, the company was out with news today. Apparently, they have surpassed the 150,000 members serviced mark, which gives us some ability to gauge their growth rate.

One year ago today NWWV achieved the 40,000 serviced members mark. This past December the company achieved the 100,000 members mark. Today we learn they have surpassed the 150,000 members serviced mark.

Key to all this is the revenues being generated per member, and the member retention rate. Those numbers could be impressive when we get the year end figures with the 1st quarter coming shortly behind.

Despite an extremely shaky market over the past month, NWWV continues in the uptrend that began last August.  The stock made a low of about $.90 then, and has since seen almost $2 as a high.

Don’t forget about this one. It’s a sleeper right now, but the company is growing rapidly. This summer their infomercial with national spokesman Bob Eubanks will be coming to your TV. There’s a lot of great stuff ahead for NWWV.

BrandPartners Review

I’d be misleading everyone if I didn’t admit I was disappointed in the price performance of BPTR yesterday on the heels of their outstanding year end numbers. After all, the company delivered $.14 EPS on a 50% increase in revs. Awesome performance. I continue to believe the stock is absurdly undervalued, and have decided to wait it out with my holdings. If I hold the stock past October of ’05, the profits will become long term capital gains and reduce the tax consequences considerably.

BPTR traded the highest volume in the stock’s history yesterday, at least as far back as my chart goes. Clearly, some early buyer was off loading a very large block.

While this is disappointing in the short term, it is clear old shareholders are getting out and new shareholders are coming in.

The numbers are just too good to give up on this one despite the fact that I see a tough market ahead for the next few months.

For those who like to invest in value and earnings, and wait for others to recognize that value and be willing to pay more for it, this stock is for you.


ZAPZ Rolling Back Uphill

ZAPZ has reversed course is now rolling back uphill. Today, before the market opened, ZAPZ announced orders for the Smart Car had exceeded the $200 million mark.

I believe the market wants to know how the company is going to deliver all these cars before it takes the stock to new highs. I believe the market wants a timetable for delivery, and an understanding of how it will be done.

For those who have been concerned about the dilution issue, I have now spent enough time with the company to know it is not a big issue with this company. Warrants were extended so there wasn’t a non-cash hit to earnings if they allowed them to expire and then issued new ones. Nearly all the outstanding warrants are held by insiders, and not convertible into free trading shares. I will have an accurate table soon. There will be some supply, but not nearly as prolific as suggested in past commentary.

Technically, the stock now looks pretty good if you sort of ignore the anomoly of the stock falling below the 61.8% retracement level. This often happens. Market makers and traders know people look at these levels. Sometimes, they take the stocks just below the threshold to shake out all the weak hands.

My view: Despite a very tough market environment,  I believe there is a lot of money to be made in this one if you believe the company will figure out a way to deliver on these orders. That is your risk. If you are willing to bet they can do it, the stock is a buy.

Orders and inquiries are flowing into the company daily. This is just the beginning. If they tell us how they are going to deliver, the market might go crazy.

ZAPZ Out Of Gas and Rolling Downhill

ZAPZ is currently trading at $2.65 as  I write this BLOG entry. The stock has just been a disaster this past week. I first published on the stock at about $3.50, and we have lost nearly a point right out of the gates.

Technically there is nothing positive I can say about this chart.

The stock has broken down below the 61.8% retracement level as measured from the massive December surge. The red line, a technical indicator I rarely use, is the 50 day moving average. Stocks trading above their 50 day moving averages are generally considered to be in a short term uptrend. As you can see, it has dropped below the 50 DMA.

I believe the drop in the stock is more market driven than company driven. There is tremendous apathy by retail investors right now. Higher oil prices and interest rates are just weighing too heavily on investors minds, and there was probably a lot of hot money in this stock as it has been a great trader.

If you are a trader you should be out of this stock. If you want to own a piece of a company that has $100 million in orders in hand on a red hot product, and is probably trading well below where the stock is worth if they can figure out an effecient way to fill those orders, ZAPZ is for you.

Comments and questions are welcome as always.

GEPT Opens Above Downtrend Line

 GEPT has opened today above the downtrend line suggesting a trend reversal may be in the offing.

The stock is not trading with the velocity it had back in December, but we are in a much different market. Right now the market is wrestling with higher oil prices and rising interest rates. Commodity and commodity related stocks are all the rage.

Therefore, I’m not expecting anything like the four point move we had in December. However, the stock is much more reasonably priced and is giving you the opportunity to pick some up without charging up too rapidly.

The trend reversal has occured until proven otherwise. 

For traders- Pick it up here with a tight stop in the $3.30 range- if it falls back below that number the trend reversal will be in question.

ZAPZ Update; Stock Looking To Rebound

In light of the poor performance of the stock and some data contributed by OTC Journal members I decided to caution everyone to use a stop loss in the $2.80 to $2.90 range on ZAPZ. If, in fact, it turned out there were indeed millions of warrants exercisable at $1.20 in existance, it would have been a major technical problem for the stock.

The SEC filings were not specific concerning the number of warrants in each particular class, and there were some clues concerning total potential dilution. However, as is often the case, the SEC filings do not tell the entire story.

As the editor of the OTC Journal I have the advantage of being able to talk directly to management. They know once I have the accurate information, thousands of investors will know.

In the case of ZAPZ the number of warrants currently convertible at the $1.20 stike price is far smaller than the filings imply. In the next several days I will have complete dilution table, and know the accurate numbers.

The preliminary numbers indicate there are only about 400,000 warrants held by investors convertible into the stock at $1.20. This only represents a few trading days of volume, and therefore is not nearly as potentially harmful as originally envisioned. A much bigger problem is the warrant holder shorting the stock against his position, then covering instead of converting. This allows the investor to use the position to make money without converting and hurt the trading pattern simultaneously. It would not be an illegal naked short, as the short is “covered”.

As it turns out, most of the $1.20 warrants are held by management, and therefore subject to many trading restrictions. Most other warrant conversion prices are at $5 and $8.

Current estimate: Only 7 million shares in the public float at this time. Again, subject to confirmation in the next few days. 

The technical picture on the stock is improving, and I believe a rebound could be in the cards. As you can see, the stock did violate the diagonal blue uptrend line. However, once it dropped just a little below a perfect 61.8% Fibonacci retracement, the stock rebounded.

I believe the stock sold off once the news came out simply because a lot of investors knew the company would report a milestone, and had bought out in front of the news looking the sell. The old Wall Street adage “BUY on mystery, sell on history” would apply here.

On the fundamental side, the company has the potential to kick butt. I chose to be conservative on the dilution issue because of a couple of bad ideas last year with a similar problem.

I am reversing course now that I have more facts. I believe the stock is a buy right now.

NetWork Installation Cares About Shareholders

Dilution is pubic enemy #1 for shareholders. As small companies grow and their stocks begin to get an audience, sometimes companies enter into either moderate or severely toxic financings. We have seen this more times than I care to remember i.e. NTDL, FMLY, etc.

NWKI has once again demonstrated its commitment to shareholder value by announcing the retirment of 2.5 million shares by company founders. to read the story.

Despite the fact that we haven’t had a big move in this stock for a few months, it would seem the moves they are making are going to lead to higher levels sooner or later. The company is growing rapidly, and they just brought in the former CEO of PacTel to run the company.

More importantly, management has demonstrated its commitment to shareholder value by retiring its own shares. They are protecting shareholders by avoiding dilution. These guys really care.

NWKI simply continues to hold above the trendline which began last August. There have been a couple of low volume blips below that line, but in over all there is no reason to worry at this time.

The longer the stock continues to extend sideways, the more likely we will have a break one way or the other. Most likely up in my opinion if the company continues to deliver growth.

Right now, the market is focused on oil, commodities, and the dollar. When its attention turns back to growth, look for this one to get some legs.




ZAP Thoughts

 The first day of trading after introducing the ZAP idea was an absolute stunner for me. After hearing the company has surpassed the $100 million in orders mark I was certain the main problem with this idea would be buying the stock at a reasonable price. Much to my surprise, I was dead wrong. The stock actually backed up a little on the big day. So- what does this mean?

Clearly there is stock for sale in this idea, which is no big deal. In this case, it is clearly someone close to the company who was waiting for this news as an opportunity to dump their shares. This is what I like to call “selling stupid”. A smart seller will sell some then let the stock go up a little before selling anymore. They sell a little all the time, instead of a lot in one day. Clearly, we have a stupid seller in this stock, and they sabotaged would could have been a very exciting day for those who already held the shares.

This is the best of all worlds for OTC Journal members. This stupid seller gives us the opportunity to accumulate some shares in the right price range before the stock takes off.  Here’s a look at the chart, including yesterday’s action:

The angular blue line is the current trend line. As you can see, the stock has a ways to go to the downside for a trend reversal- bottom line- the current uptrend is still intact.

A short term look at the Fibonacci retracement would suggest we are currently in between a perfect 38.2% retracement and a 61.8% retracement from the move which began about a week ago.

Against a backdrop of the company with $100 million in orders of the trendiest, hottest little new yuppie car on the market, this is a heaven sent entry point. If this company were GM, Daimler Chrysler, or Ford, this new car would be no big deal. Against a company with $6 million in annual sales, this is huge.

I don’t know exactly what the market is looking for to believe in this one. Perhaps the market wants to know how they can fill these orders- they are working to put the infrastructure in place. Perhaps the market wants to see them deliver the first cars, which is coming soon.

I’m not sure, but I definately like our chances better at $3.30 than at $4.30. This one is a buy with a stop in the $2.80 to $2.90 range.





FMLY- Some Additional Thoughts

Family Room has been on fire this year as regards new movies going into production.  There is reason to believe this trend will continue.

The following was stated in Friday’s press release on the new movie with Nicolas Cage:

  This announcement follows Family Room’s announcement last week (February 25, 2005) that it had been diligently developing and packaging new projects to announce in the near future. “THE WICKER MAN” is the first of those projects to be announced.

I bring this to your attention because it is important everyone know the raft of films going into production this year announced to date is just the beginning. I believe there are several more in the pipeline, some quite large in scope.

Clearly the company has attained a whole new level of project that rivals many of the major Hollywood Movie Studios for the low to mid range budget movies. Hard to believe this is a $.07 stock. We can only hope this leads to higher prices.

I am encouraging the company to provide investors with an update on FMLY’s upside in each of these projects. The big upside in this stock will come from residuals in a hit movie. Investors need to understand the potential.

For the most part, if any of the movies currently in production exceeds $40 million at the box office, FMLY could make substantial windfall profits.

As we wait for further developments I invite you to post a comment or question- either positive or negative- associated with this BLOG entry. I believe a lively dialogue amongst subscribers helps us all. I just report the facts and share some thoughts. Ultimately, we are all in this together.

BPTR Poised For Higher Levels

 Several members have recently sent emails with questions on BPTR. Since I haven’t written any editions on the company recently, many are wondering where I stand on the stock.

This stock is 100% about the numbers and valuation. Since they are on a calender year, we haven’t seen year end numbers on the company yet. I believe the company will be putting out their year end numbers in the next week to 10 days.

The stock has been kind of quiet over the last month while the market waits to see if they are still on track. As we approach E Day (earnings), the stock is starting to behave a little better.

This past Friday the stock printed at a new all time post OTC Journal coverage high of $1.10. Everyone who owns this stock should be making money. The stock is sneaking higher on moderate volume out in front of their earnings release.

I’m not sure how anyone could look at this chart and not recognize a stock you want to own. Since the August low, the stock has done nothing but make a series of higher lows and higher highs.

Unless some sort of major surprise comes out of the earnings release, this is the chart of a stock that wants to go higher.  I believe it is setting up to surge on earnings if they are as expected.

I think the market simply believes the numbers are too good to be true, but they are. This company is rocking.

With regard to our 100,000 share position we bought at $.60- We still own the entire position and have not traded around it. The company’s numbers are too good to play with this one. I might consider selling half in the $1.30 range so that the remaining 50,000 shares have a zero cost basis.

If the company delivers $.12 per share in earnings for ’04 or better, I believe you will see a renew enthusiasm for the stock, particulary if they give a positive growth outlook for ’05.  There is still plenty of upside left here, but I hope everyone picked some up when I first covered it in the $.65 to $.75 range.