Here is another stock similar to TRLK. It is EZCL. It's one of the RedHot Stocks. It went up 100% today. I'm waiting for news to get out about our TRLK.
Check out the similarities.
Subject:
HotStocks: May RedHotStocks Newsletter
Date:
Fri, 30 May 1997 17:33:59 -0700
From:
RedHotStocks <samiam@redhotstocks.com>
To:
Hotstocks@redhotstocks.com
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RedHotStocks - redhotstocks.com - email info@redhotstocks.com
May 30, 1997. This publication released for opening of trading June 2, 1997.
The contents of this publication intended solely for RedHotStocks subscribers.
Copyright (c) 1997 RedHotStocks. All Rights Reserved.
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RedHotStocks would like to thank you for your interest! We are one of the
fastest-growing investment sites on the Web and are undertaking several
projects that will enhance your experience as a RedHotStocks subscriber. We
are committed to providing the most complete information on the best
investment opportunities.
As we did a full update of our past four picks on the 20th (new subscribers,
please go to redhotstocks.com we'll refrain from
making another a review of those profiles in this newsletter.
We've received quite a bit of email from subscribers asking us to "put your
money where your mouth is" and invest in the companies we profile. Well, we
originally refrained from doing so, but OK. As reflected in changes made to
the disclaimer at the bottom of this newsletter, from now on RedHotStocks
employees, owners, agents, associates, and their families and friends may or
may not have a financial interest in the companies we profile.
Our profiled company for May meets all the financial and potential for
growth requirements for companies featured by RedHotStocks. This company is
undiscovered emerging growth company, has strong, experienced management and
terrific long-term growth potential. We are the first to bring you a profile
of this company.
Furthermore, we have tracked this company since its incorporation in the
first quarter of 1996 and have followed the industry very closely since mid
1996. Recent developments allow us to rate the stock a STRONG BUY.
The industry is residential and cellular telecommunications and the company
is Easy Cellular. Easy Cellular trades on the NASDAQ bulletin board under
the symbol EZCL.
THE COMPANY
-----------------------------------------------
Have you ever missed a payment to your phone company? Or been involved in a
billing dispute with your long-distance or cellular carrier? Or even moved
out of your old carriers service area and found that your good credit
history did not follow you? Many of us have. You probably found that when
you tried to have service connected after a dispute or a interstate move,
you were faced with a required deposit ranging from $200 to $500.
Simply put, Easy Cellular is taking the wildly successful prepaid calling
card business to the next level by making residential and cellular local
calling and long distance available to just about everyone. And they can
accomplish this with very little risk to the company.
Easy Cellular, Inc. was organized as a Nevada corporation on March 22, 1996
to provide pre-paid cellular service to customers who have applied for
cellular service and have been declined because of a lack of credit or bad
credit.
Following an extremely strong showing in the cellular business, the company
quickly realized that there existed a broad market in residential phone
service as well, and broke into the residential market following the
deregulation of the industry effective January 1, 1997.
CELLULAR SERVICE
-----------------------------------------------
An interesting characteristic of the traditional cellular industry is that
approximately 2/3 of the people who apply for cellular service are declined
for credit reasons. Major cellular companies do not have the desire or the
expertise to offer cellular service to those who have had previous credit
problems. Collection becomes a major issue for most cellular companies.
Since the cellular industry is so profitable overall, the poor credit-risk
customers are ignored. EZCL's management is going after the rejected
two-thirds of the market.
The Company has signed an agreement with 360 Communications Company, one of
the largest cellular companies in the country (formerly of Sprint
Communications) and has the rights to resell cellular service to end-users
in Las Vegas and twenty-six other markets.
EZCL's management has established a cellular debit system whereby users
prepay for their cellular service. The end user picks up the cellular phone
at one of the Company's locations. Cellular service is only authorized with
an approved credit card, cash or approved check. At this point, the customer
prepays for a specific amount of time on the cellular phone. However, the
phones do not have roaming capability. They can only be used in the market
served by the cellular provider, which covers 95% of the average end-user's
calling patterns. Time is used is deducted from the customer's account in
real time. At the point that only five minutes remain, an audible signal is
given to the user to alert the user that the account is about to expire.
This is continued each minute until the remaining five minutes are utilized.
At any time the user can call the Company with a credit card number to
"recharge" the account, or the user can stop by any location to pay for
additional minutes with cash or check.
The Company monitors each customer's usage of minutes to provide the
greatest opportunity to add minutes before service is temporarily
interrupted. In this system, the credit risk is reduced to none. The
customer pre-pay only for what they use and service is terminated when the
account reached a zero minute balance. The debit system is specifically
configured to work in conjunction with any analog or digital cellular phone
compatible with U.S. cellular systems.
RESIDENTIAL SERVICE
-----------------------------------------------
Easy Cellular has created a parallel plan to service residential customers
as well.
The Company has established itself as a reseller of local dial tone phone
service in the expanding market for high-risk customers. This group includes
undocumented aliens (30 million nationwide), persons moving into or out of
the service area, persons with little or no credit, bad credit, etc.
Easy Cellular offers local dial tone service on a prepaid basis, just like
the company's cellular service. Easy Cellular owns their own switch, so if a
customer moves or does not renew the service when the account runs "dry",
service can be disconnected immediately. Residential local service was
EZCL's second service offered, after local cellular calling, and is provided
through Easy Phone, Easy Cellular's wholly-owned subsidiary.
In a single bold step, the Company has started providing long distance
prepaid service to residential and cellular customers. The residential and
cellular services are offered for the telephone end users who do not have
long distance carriers because of credit considerations. This market is
currently being served through prepaid calling cards. Easy Cellular
management believes their customer service will be superior to that of
prepaid cards (obviously) and the Company believes it will be able to offer
lower rates than those provided by prepaid cards. Furthermore, perceived
value is greater and customer retention is much higher with residential
service than with prepaid long-distance cards.
THE DEALS
-----------------------------------------------
360 Communications is the product of the division of Sprint residential and
cellular servce. When the split occurred, 360 Communications became a
separate company. It is with this new company that Easy Cellular has
contracted to provide prepaid cellular in all of the 360 Communications
territories. The contract gives Easy Cellular access to 26 additional
markets and offers significant savings on rates. The company plans to open
in the Tidewater area of Virginia within the next 60 days with additional
market openings every 45 to 60 days thereafter.
For residential service, the Company contracts with the local phone company,
allowing the local company to tap a large segment of business it may have
otherwise neglected.
Here's how it works: Where a big residential phone company such as Bell
Atlantic, would be hassled by trying to collect from thousands of slow-pay
or no-pay customers, Easy Cellular can contract with the established phone
company to resell the residential service to the very same "problem"
customers. Easy Cellular collects monies in advance which eliminates the
risk of nonpayment while making cash available to pay the established phone
company. All parties win. The phone company benefits in two ways. First, the
phone company can profit from customers previously out of reach. And second,
the phone company can enjoy the ease of dealing with one reliable account
(Easy Cellular) instead of thousands of marginally-reliable end users.
The customer is happy because he/she is able to obtain phone service where
affordable service may have been unavailable in the past.
Finally, Easy Cellular profits by marking up the services they provide. The
Company enjoys a monopoly of sorts, because in many cases there is no
alternate phone service available except with a substantial deposit.
THE MARKET
-----------------------------------------------
EZCL is leapfrogging its initial sales and revenue projections, and with
good reason. The 360 Communications agreement allows EZCL access to the Las
Vegas market, among other areas across the nation. Las Vegas is the second
largest market for cellular communications in the world, after Tokyo, Japan.
This is partially due to the continued boom in the Las Vegas area, where
approximately 50,000 construction workers are trying to house the 3,000 new
residents arriving monthly.
Las Vegas, for obvious reasons, is also home to a large number of
high-credit-risk and transient persons. Those people need phones and can be
served by Easy Cellular's prepaid cellular and residential plans.
In just six months, EZCL signed up 1,800 new cellular customers, billing at
an average of $100 per month per end user ($180,000 monthly). The company
also signed 200 local telephone service customers (another $4000 in profits)
in the first month residential service was available.
The Company's Orlando center experienced a flood of business from opening
day. Easy Cellular was forced to hire additional representatives to handle
the daily average of thirty to forty new accounts. (Each of those new
accounts, just dialling locally, generate an estimated $20 in profits each
month.)
The success of this market is a harbinger of things to come. The company is
moving quickly to establish a similar presence throughout the nation.
Industry experts estimate that 3% to 5% of all homes are without residential
service, and 10% do not have 1-plus long distance dialing capability.
Centers are slated to be opened in Texas and Los Angeles. LA county is home
to an estimated seven million undocumented aliens. Signing just 5% of these
otherwise-unserviceable customers to the Easy Cellular prepaid residential
service plan will bring nearly $14 million in profits on $32 million in
revenues. That $14 million, by the way, is a monthly profit figure from Los
Angeles County alone. Even if Easy Cellular attains only 1% of the market,
the company can expect $33.6 million in yearly profits or six-dollars-plus
per share
GROWTH PROJECTIONS
-----------------------------------------------
In the Las Vegas market the company originally projected first-year profits
of $781,000. However, actual sales figures are already pushing profit
projections skyward. In addition, the company has already opened a location
in Orlando and is gearing up for a Texas location as well. Openings are
slated for the entire state of California, (beginning with Los Angeles
county), Virginia, New York, New Jersey and Massachusetts.
A spokesperson for the company said, "If the Nevada results were any
indication of the acceptance of our product, Easy Cellular would be one of
the country's largest resellers in two years."
TECHNOLOGY
-----------------------------------------------
Easy Cellular operates it's own switching platform with a real-time rating
engine. This allows the company to track, in real time, the charges incurred
by any customer at any time. It also enables them to quickly disconnect
customers who do not renew their accounts.
The company operates a local loop, just as your regular phone does now. Easy
Cellular contracts with large, established phone companies to resell service
through Easy Phone, EZCL's wholly owned subsidiary.
EZCL enjoys a high level of control over the service they provide. For
instance, the company can issue phones to business owners that only dial a
limited selection of numbers. This prevents unauthorized use by employees of
business end-users. Also, the company will not allow any long distance
carriers other than those who have signed agreements with EZCL. Dime line,
beware! Vice President Ri Bucchieri is a regular tigress when dealing with
unauthorized carriers!
MANAGEMENT
-----------------------------------------------
EZCL's management team is no stranger to the business of providing goods and
services to "second chance" customers.
Richard Pollara, age 42, is the President of EZCL and Robin E. Caldwell, age
44, is a director of the Company. Since 1980, Mr. Pollara and Ms. Caldwell
have been involved in the Rent-to-Own business for the mid-low to low income
groups who do not have access to traditional forms of credit such as credit
cards or bank loans. Mr. Pollara and Ms. Caldwell opened ten locations in
Pennsylvania for the Colortyme franchisees that they worked for. In July of
1982 they opened up their first store in Delaware, and then grew from that
one store to forty locations in just five years. In 1987, they opened
another rental store in Largo, Florida with the intent to combine the rental
business with retailing of cellular phones and service.
It soon became apparent that Rent-to-Own and traditional cellular were not a
good mix. The store had to reject 90% of hundreds of cellular applicants,
largely due to poor credit histories.
Lorinda C. Bucchieri, age 33, is Vice President, Secretary and Treasurer of
the Company. In 1986, Mrs. Bucchieri joined Bucchieri Asset Management, a
financial services business, based in Orleans, Massachusetts. In 1995, Mrs.
Bucchieri joined National Investment and Tax Managers, Inc., becoming
President in April of 1996. Mrs. Bucchieri is responsible for much of the
success of EZCL's three Las Vegas stores and will be responsible for
developing its ongoing marketing strategy.
STOCK ANALYSIS
-----------------------------------------------
EZCL has 25,000,000 shares authorized, with 5,200,000 issued and
outstanding, and less than 700,000 in the actual trading float. The company
has not yet attracted the attention of industry analysts, although the
performance of this new entity is rumored to be a hot topic within the
industry itself.
The company went public in 1996 through a regulation 504 offering, selling
600,000 shares at 25 cents per share. The company realized $150,000 in cash
that has been applied to various expenses incurred during the startup of the
business. The company's stock began trading approximately 30 days ago,
opening at 50 cents per share. As of this writing, the stock has reached
the two- to three-dollar range. Word is getting around.
We see no reason why EZCL shouldn't maintain their growth rate and post
earnings of at least $5,000,000, or $1 per share. Industry multiples are
running from 10 to 45, averaging around 25. Our long-term target price for
this company is $25 per share with a short-term buy limit of $10.
DEBT
-----------------------------------------------
None. EZCL carries no long or short-term debt.
RISK
-----------------------------------------------
The Company is enjoying considerable success in its first markets of Nevada
and Florida. Take into account that personal debt is at an all time high, a
larger percentage of the population is having trouble paying bills, and
bankruptcies and chargeoffs are losing their stigma. EZCL is expanding into
markets richly populated with individuals that fit the potential customer
profile.
As important as instant communication has become, a phone is a necessity for
everyone.
Easy Cellular's telephone reseller contracts are in place, with new
territories being added periodically. There is no waiting for oil drilling,
deregulation, FDA approvals, or what have you. This is happening now. The
Company is simply using an innovative approach to service a pent-up demand.
Finally, the EZCL prepayment policies allow strict controls on cash flow.
All these factors combined tell us that downside risk is minimal.
SUMMARY
-----------------------------------------------
Everyone needs a phone. EZCL's residential and cellular customers are among
some of the most loyal in the industry, largely due to the fact that other
providers have written them off as poor risks. EZCL can practically the
eliminate bad debt common to the industry through its pre-pay requirements
and system of safeguards. Double-digit growth, experienced management,
inexpensive stock, some of the most powerful business partners in the
industry.what more could you ask for? At prices up to $10 per share-BUY!
STOCK MARKET UPDATE
-----------------------------------------------
This month, our guest writer is Richard Mojena from the Mojena Market Timing
Newsletter. The following was published earlier in the month, but given the
political position taken by the Fed, we feel that Mr. Mojena's comments are
still applicable. He has interesting theories and moreover, he's not afraid
to admit when he's wrong. For additional information about Mr. Mojena's
market commentary, visit members.aol.com .
SWITCH ALERT Mojena Market Timing
BUY Signal!
The stunning rally this past week propelled the model from 49 to 70, thus
tripping a buy signal, after spending just four weeks on a mistaken sell
signal. The model's standard portfolio now moves from cash (T-Bills) to
stocks (SPX); the aggressive portfolio switches from 100% short the SPX to
150% long the SPX.
This sell signal looked okay until last week, but fell flat on its face
following the best weekly advance in six years for the SPX (6%) and ten
years for the Nasdaq (8%), a lesson that will not be lost in the next
revision of the model. Over this sell phase the model gave up gains of 8%
on the Dow, 7% on the SPX, and 6% on the Nasdaq.
The spectacular rebound came on the heels of reports that revealed a series
of positive surprises: robust corporate earnings, tame wage inflation based
on a closely-watched employment cost index, a drop in hourly earnings, less
than expected gains in payroll employment, a modest advance in the index of
leading indicators, and a pre-announced balanced-budget compromise in
Washington. Bonds also rallied strongly, thereby helping stocks by offering
lower interest rates, yet both markets chose to ignore evidence to the
contrary: very strong quarterly GDP growth and a jobless rate of 4.9% that
hasn't been seen since late 1973, a milestone in the midst of a bear market
and followed by one of the three worst inflationary years in the 1970s.
At this time the jury is still out on the current pullback. The market
remains within a trading range defined by the 816 SPX high in mid-February
and the 738 low in mid-April, a nearly 10% decline from top to bottom. This
decline was at the model's design limits, an ambivalent event that presents
difficulties for the model. Are we looking at a blowout top as prelude to a
possible bear market, as in 1987 and 1990? Or will we remain in a trading
range for some time, as in 1994? Or are we poised for a decisive upside
breakout, as in 1995? A pullback would not be surprising at this time, as
traders examine the data tea leaves, digest the plump gains from last week,
and start fretting anew about what the Fed will do at its meeting on May 20.
The model's renewed strength is due mostly to technicals on steroids from
last week's trend, advance/decline, and volume numbers. Its monetary
indicators remain low neutral, its sentiment indicators are neutral, and its
fundamental indicators are rock bottom. On balance, the model says we're
heading up, but if a pullback is steep enough, about 6%, the model will
likely change its mind again.
Gains regretted is a price that we pay for using a timing model that is on
the sidelines when the market moves up. The 7% foregone gain during this
last sell phase is a much higher penalty than the 2% average, although just
beyond the model's historical error limit. The avoidance of significant
losses is a key advantage of a good timing model, a benefit we haven't seen
since the last bear market in 1990. Contrary to what we hear and read,
future bear markets are neither banished nor legislated from this "new" era.
READ THIS!
-----------------------------------------------
RedHotStocks urges investors to protect themselves by ALWAYS specifying
limits to buy and sell orders. In addition, we recommend specific limits to
orders for each of our profiled companies. And as always, demand delivery of
your shares. (see "Protecting Your Investment" below).
We wish to restate that we are not compensated by companies we profile, and
we have no relationship whatsoever with any brokers or market makers.
We are working on other revenue-producing projects and in the meantime we
have made RedHotStocks a voluntary-pay subscription service. This means that
if you use RedHotStocks research reports and profit by them, donations can
be made to our parent company at:
Net Income
1280 Terminal Way
Suite 3
Reno, Nevada 89502
We suggest $30 per month or $300 per year. Of course, no fee is required and
we certainly won't bill you but any contribution is greatly appreciated.
If you happen to not receive a release in the future, we place our latest
newsletter at redhotstocks.com . This page is not
linked from our main page, to keep it hidden from non-subscribers. Please do
not disclose this URL to non-subscribers.
Our next full Newsletter will be delivered on June 27, 1997 and will contain
market commentary and a profile on a very exciting, high-performance company!
Check back at the RedHotStocks site, and be sure to hit your "reload" button
often, as we are regularly updating our pages.
Please tell your friends about RedHotStocks!
PROTECTING YOUR INVESTMENT
-----------------------------------------------
At RedHotStocks, we understand the dynamics of the stock market. However, we
do not appreciate nor do we approve of the practice of undeclared
short-selling. The following is an excerpt from an article from Copley
Pacific on that subject. The author defines short selling, explains the
negative effects, and outlines a program to help eradicate undeclared short
sellers. We at RedHotStocks urge you to read the following and be sure to
demand delivery of your shares.
Understanding Undeclared Short Selling and How It May Be Impacting Your
Company's Stock
Does it sometimes seem that no matter what you do your stock has trouble
climbing in price? If this is the case, your company's stock may be facing
downward pressure as a result of undeclared short selling.
Short selling can be divided into two categories, declared and undeclared.
Undeclared short selling has damaged many dynamic growth companies. Created
by market professionals, the practice consists of creating stock that
doesn't exist. It isn't borrowed but created and it creates enormous
negative pressure on a stock price.
The mechanics of undeclared short selling are as follows:
Nonexistent stock is sold short. This nonexistent stock increases a
company's float. The nonexistent stock makes it difficult for investors to
profit from their risk capital speculations. The short sellers make the
profit. The practice hurts the public companies, themselves. It adds massive
costs to maintaining a market in a stock and it reduces a company's business
options.
The basis of declared short selling is borrowed stock. A short seller
provides 50% or more of the value of the stock to his or her broker. This is
done in a margin account. The margin protects the broker against any
increase in the share price. The broker borrows the stock from a depository
trust company. He then sells the stock and adds the money to his client's
margin account. Later, the client buys stock (covers) to replace this
borrowed stock. The difference between the price the client sold the
borrowed stock and the price the client paid to replace the borrowed stock
(covered) is the profit or loss from the transaction.
Most declared short players are institutional money managers and fringe
group market professionals, not small capital public investors who seldom
participate. Declared short positions risk being squeezed. If the company
can double its share price, the short seller will be forced to increase his
margin collateral in order to maintain the short position. At such time, the
short seller may elect to buy (cover) the stock instead of adding to his
margin. This adds to the upward movement of the share price.
Undeclared short sellers don't borrow stock. They don't margin the sale of
their short position. Because they are market insiders they can use various
techniques to sell stock short that doesn't exist.
Is there money to be made by undeclared short sellers? Estimates are that
undeclared short sellers make multi- millions of dollars annually.
Complaints to regulatory agencies haven't stopped the practice of undeclared
short selling. However, one way companies can protect themselves is to
recommend to shareholders that they take physical delivery of their stock
certificates. When physical delivery of stock certificates is demanded by a
significant number of shareholders, the creators of non-existent stock can
be squeezed. The short sellers won't have stock certificates to deliver and
thus they will be forced to go into the open market to buy the stock. This
will cause losses for them and will cause them to move their undeclared
short activities elsewhere.
For other ideas on battling professional short sellers, contact Ray Bary at
the financial public relations firm of Copley- Pacific at (214) 702-7009.
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For more information about Easy Cellular, please call 1-702-228-7869
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This report will be available to the public on June 5, 1997 at
redhotstocks.com .
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