ININ (From wallstreetwest.com)
International Industries, Inc.
Research Report
Certain portions of this research report have been
re-printed or paraphrased from information
originally disseminated from International Industry's
investor relations firm, The Hawke Group, Inc. Said
re-printing has been done with permission from The
Hawke group, Inc.
Published by Wall Street West Communications,
LLC. July 8, 1998
Corporate Summary:
International Industries, Inc. (the Company or ININ)
is a diversified holding company. ININ trades on the
OTC:BB. Currently, the Company operates two
wholly owned subsidiaries: Mr. Cigar, Inc. and Mr.
Cigar Private Label.
Mr. Cigar, Inc., is an operating company company in
the business of marketing, manufacturing, and
distributing cigar humidor vending machines. This
subsidiary was acquired by ININ in February 1998.
The vending humidor is called Mr. Cigar. The
interior is lined with cedar. The interior temperature
is kept at approximately 70 degrees Fahrenheit with
70 percent relative humidity. This design will keep
cigars fresh and convenient to purchasers. Each
machine sells cigars from $ 2 - $ 35 per cigar. Also,
Mr. Cigar, Inc. is in the process of designing an
upgraded machine which will accept credit and debit
cards, thus increasing revenues.
This unique vending machine will be placed in
strategically targeted locations which have a large
number of potential customers. Locations will
include, but not be limited to: bowling alleys, golf
pro-shops, Gentlemen's clubs, casinos, lounges,
cruise-ships, country clubs, cigar bars, resorts, and
cigar-friendly restaurants.
Mr. Cigar, Inc. plans to realize a large growth
opportunity through several initiatives. This is to
include:
1.)To continue to develop and improve the cigar
vending machines.
2.)Capitalize on Growth Opportunities within the
exploding cigar industry.
3.)Expand mass market and premium cigar business.
4.)Broaden through cigar distribution channels.
5.)Continue to pursue strategic acquisitions.
6.)Grow through franchising.
(See further explanation in Initiative Section.)
ININ'S second subsidiary is Mr. Cigar Private Label.
This operating unit is in the business of creating fine,
personalized, hand-rolled cigars for promotions and
special occasions. These cigars are an excellent
conversational piece which can be used to enhance
weddings, new births, special events, or to help
promote a business. The cigars can have a label with
personalized fonts. Furthermore, the cigars can be
made with a corporate logo.
Mr. Cigar Private label will also distribute cigars for
use in Mr. Cigar's vending machines.
Together, both operating subsidiaries provide a
channel to profit from the thriving cigar industry.
ININ wishes to expand through additional
acquisitions of complementary and supplementary
lines of business. Management believes it has
adequate capital to continue growth, expansion, and
the ultimate obtaining of profitability.
Sources of Revenue
ININ has several different channels from which to
derive its revenue. They are as follows:
1.) Vending Humidor Sales- The company derives a
portion of revenue from the manufacture and sale of
its unique vending machine humidors.
2.) Vending Sales- ININ currently has several of its
cigar vending machines placed in strategic locations.
The associated revenues, of course, benefits the
Company.
3.) Private Label Sales- Mr. Cigar's personalized
label cigars are an additional source of revenue for
ININ.
4.) Wholesale Cigar Sales- The Company also derives
revenue through the wholesale distribution of its
cigars to vendors and franchisees.
5.) Franchising- ININ expects to derive a portion of
its revenue through the franchising of its vending
machines. This is a method which will allow wide
distribution, while retaining positive cash flows and
avoiding the company to be highly debt leveraged.
A.) Franchise Territory Fees- The Company will
attempt to sell territories or master franchises to
select areas around the country. The sale of these
territories will create revenues for the Company. B.)
Franchise Fees- Either through the territories
mentioned above or through individual machine
franchises, the Company expects to derive profit
from the fees required to become a franchisee.
C.) Franchise Royalties- Both "A" and "B" above
create on-going royalties as well as on-going
wholesale cigar distribution. This creates additional
revenue for ININ.
Management
International Industries has an impressive
management team which will help the company
achieve its goals. As with any company, this is an
integral part of its potential success.
Gary J. Schultheis- Mr. Schultheis is a founder of the
Company. He has an impressive background
including his current Presidency of Millennium
Holdings Group, Inc. Millennium Holdings Group,
Inc. is a corporate consulting firm. From March 1993
to February 1996, Mr. Schultheis was President of
Wall Street Enterprises. (Doing Business as Wall
Street Associates). This company specialized in
mergers and acquisitions. His past experience should
enable ININ to continue searching for acquisition
and merger strategies which could help propel the
company into profitability. Mr. Schultheis attended
the State University of New York at Farmingdale.
Herbert Tabin- Mr. Tabin is a founder of ININ. He
has held the position of Vice President and Director
from its inception. Mr. Tabin is also currently the
Vice President of Millennium Holdings Group, Inc, a
corporate consulting firm. Previously, Mr. Tabin
served as Vice President of Marketing at an
investment banking and venture capital group named
LBI Group, Inc. His service at LBI was from April
1994 to December 1996. Mr. Tabin received a
Bachelor of Science degree in Economics from the
State University of New York in 1989.
Robert Wussler- Mr. Wussler is a Director of the
Company. He currently serves as the Chief Executive
Officer of Affiliate Enterprises, Inc. Affiliate is a
company owned by the ABC Television network and
The Walt Disney Company (NYSE: DIS). Mr. Wussler
also is serving as President of Wussler Group. The
Wussler Group is an international media company
that serves a broad spectrum of domestic and global
media organizations. Mr. Wussler has a very
impressive track record, and is experienced in all
areas of media.
He was responsible for major changes in the news
production and presentation at CBS News, CNN,
CBS Sports and Superstation WTBS Sports. Mr.
Wussler's 21 year tenure at CBS allowed him to serve
as President of CBS Sports and CBS Television
network. Furthermore, he was a founder and
organizer of CNN. Superstation WTBS and TNT. He
additionally served as a Senior Executive Vice
President and General Manager of Turner
Broadcasting.
Mr. Wussler was the President of the Atlanta Braves.
From 1989 to 1992, he was President and CEO of
Comsat Video enterprises. During his tenure he
totally revamped the organization and refocused its
strategies as the largest supplier of satellite-delivered
entertainment to the lodging industry. While at
Comsat, he managed the acquisition of the Denver
Nuggets.
Mr. Wussler has also received the 1992 National
Academy of Television Arts and Sciences Trustees
Award. Also, he has been presented with five national
Emmy awards, four Awards for cable excellence
(ACE) and numerous international awards.
He has served as Chairman of the National Academy
of Television Arts and Sciences. He is currently on
the Board of Governors of the National Cable
Association and the National Academy of Cable
programming. He serves on the Board of Directors
for of the Washington Performing Arts Society and
the Board of Regents of Seton Hall University.
Mr. Wussler has served as treasurer to the Board of
Governors of the National Cable Television
Association (NCTA) as well as serving on the Board
of Governors of the National Academy of Cable
Programming (NACP). He also serves as Senior
Advisor to the MetroMedia International Group and
is currently a board member of The Nostalgia
Channel, ED Net, The Food Court Network, the
National Captioning Institute, and Eurotelecom
(another WALLSTREETWEST member).
In summary, Mr. Wussler's credentials add a great
deal of credibility to ININ. His past experiences can
undoubtedly assist in decisions relating to the
Company.
Dr. Irwin A. Horowitz- Dr. Horowitz, is a Director of
the Company. He has been the Chairman of the
Board, President and CEO of Diversifax, Inc.
Diversifax is a NASDAQ publicly traded company
who specializes in providing the hospitality industry
with in-room fax systems, hotel PBX systems,
microform reader and printers, coin and credit card
operated automated photocopy equipment,
stand-alone automated business centers and screen
scan analog readers and printers. Prior, Dr. Horowitz
served as Chief Operating Officer of Diversifax from
July through October 1993.
For in excess of five years Dr. Horowitz has been
Chairman of the Board and President of IMSG
Systems, Inc. and other affiliated companies which
were acquired by Diversifax. Also, he serves as a
Director of the Langer Biomechanics Group, Inc., a
publicly traded company in the business of
manufacturing and distribution of orthotic products.
John R. Signorello- Mr. Signorello is a Director of
the Company. He has an impressive history. He was
the founder and served as the CEO of STMS-
(Solutions That Make Sense). STMS is a privately
held computer company specializing in networks,
information technology and systems integration. He
did an impressive job of growing STMS and was
ranked as number two in the Washington D.C. Fast
Fifty. (This is a list of the 50 fastest growing
companies in Washington D.C. ) Also, STMS was
listed as a growth company in the INC 500, VAR500
and LAN500. Eventually STMS was acquired by
Dunn Computer Corporation. Dunn Computer
Corporation trades on NASDAQ under the symbol
DNCC. Mr. Signorello received a B.A. in Marketing
from Radford University in 1988.
Joel C. Holt- Mr. Holt is a director of the company.
He was the founder and has been the President of
Keystone Laboratories, a leading drug testing firm,
since 1987. Previously, Mr. Holt was employed by
Proctor and Gamble Company. He was a member of
the sales and marketing department for 30 years. He
was also serving as Chairman of the Board for
Proactive Technologies in 1995. (Proactive
Technologies trades on the American Stock Exchange
under the symbol PTE.)
Mr. Holt received B.S. degrees in Physical Therapy
and Biology from the Medical College of Virginia.
Prior to his educational training, he serves a tour of
duty in the U.S. Navy.
In Summary, the Management Team is derived from
resources of varying experience and specialties. This
is very important as ININ continues to grow and
expand. The diversity among its team will allow input
regarding the several different aspects in attempting
to successfully succeed in growing the Company.
The Industry
In the past few years, cigar smoking has gained
popularity in extreme numbers. This popularity is
partially attributable to the large number of
Americans who demographically fall into the aging
population. Also, there is a large number of younger
Americans who have begun to smoke cigars. Most
nightclubs and bars have their own cigar bars where
the young generation has decided to smoke cigars.
Even more noticeable, is the fact that it has now
become socially acceptable for women to smoke
cigars. This is apparent at any nightclub or bar who
has caught on to this fad.
From 1964 to 1993 the industry saw a major decline
in consumption. Cigar consumption increased from
3.4 billion units in 1993 to 4.0 billion units in 1995,
according to the Cigar Association of America.
Recent statistics predict that consumption rose to 4.5
billion units in 1996. Preliminary industry statistics
suggest that consumption of premium cigars
increased at approximately 67% from 1995 to 1996.
Retail sales in the cigar industry declined from 1964
to 1987. The sales grew slowly from 1987 to 1993.
From 1993 to present, the total revenue derived from
the sales of cigars has been significant. Although the
recent boom in sales can't be guaranteed, it is
definitely on an up-trend. Listed below is a table
which highlights the industry during the last few
years: (Sources available upon request)
Year
1992
1993
1994
1995
1996
Retail Sales (millions)
$715
$730
$860
$1,005
$1,250
International Industries, Inc. Initiatives
The Company believes that through the following
initiatives, together with its competitive strengths, it
will attain profitability and develop market share:
1.) Continue to Develop and Manufacture Automated
Cigar Vending Humidors. Mr. Cigar intends to
constantly improve and upgrade it humidor vending
machines. (Also see recent news articles regarding
new compact machine).
2.) Capitalize on Growth Opportunities within the
Cigar Industry. The Company intends to capitalize
on the booming cigar industry by the introduction of
its fully automated, climate controlled vending
humidors. These vending machines will accept dollar
bills and credit cards.
3.) Expand Mass Market and Premium Cigar
Business. The Company seeks to expand the mass
market and premium cigar industry through the use
of its vending humidors. This is a win-win situation
which assists cigar vendors and manufacturers alike.
4.) Broaden Cigar distribution channels. The
humidor vending machines is a significant step
towards broadening the distribution channels for
cigars. These will be placed in casinos, night clubs,
country clubs, cruise ships, etc. The Company also
plans to develop new relationships with mass-market
retailers, master franchisers and franchisees.
5.) Pursue Strategic Acquisitions. The Company
intends to pursue acquisitions in the cigar and pipe
tobacco industry. This will help to expand market
share and will complement and supplement current
business. Management has an extensive background
in mergers and acquisitions. This experience will
assist in this process.
6.) Growth through Franchising. The Company
intends to grow its business by utilizing the
franchising concept. (Please see section below on
franchising details.)
Mr. Cigar, Inc.- Franchising
The Company plans to offer a full-scale franchising
program which will assist with the growth needed to
capture a larger market share. The program will be
developed to keep the initial out-of-pocket costs as
low as possible. Mr. Cigar intends to lead-the-way in
the franchising of this type. The Company will offer
operational support, marketing support, site selection
assistance, etc.
Mr. Cigar, Inc., has employed the services of a
franchise advisor. The selection Mr. Cigar, Inc. made
was National Franchise Associates, Inc. The advisor
provides many services to the Company.
- Feasibility Studies and Analysis
- Franchise Agreements
- Offering Circulars and State Registrations
- Operations Manuals
- Franchise Sales Programs
- Marketing Brochures
- Advertising and Public Relations Campaigns
- On-going Consulting
Franchising is a complex subject which requires
continual expert consultation. The Company believes
that the advisor hired will assist with the entire
concept. Franchising is an excellent method by which
the Company can gain a greater market share, with
minimal costs, initial franchisee fee revenue, on-going
royalty revenue, on-going wholesale distribution
revenue, and name recognition, while offering
independent franchisees an excellent business
opportunity.
Mr. Cigar, Inc.- Vending Humidor Specifications
1.) Climate controlled (70 degrees Fahrenheit) and
humidity controlled (70% relative humidity).
2.) Cedar interior.
3.) Capacity- 200 cigars.
4.) Vends up to ten different types of cigars, each
with its own price.
5.) Vends cigar lighters and cigar pierces if desired.
6.) Bill validator accepts US currency up to twenty
dollar bills.
7.) Credit card and debit card acceptance to become
available with some Vending Humidors.
8.) Humidors record consumer purchase patterns.
9.) Anti-theft features.
10.)Vending Humidor Specifications estimated
Height: 726, Width: 368, Depth: 348, Weight 703 lbs.
Vending Humidor Benefits-
1.) Provides a secure, attendant-free, location to
purchase, fresh, premium cigars, 24 hours-a-day, 7
days-a-week.
1.) Mr. Cigar is maintenance free.
2.) Prevents pilferage.
3.) Builds foot traffic.
Financial Information
International Industries, Inc. is basically a start-up
venture. It has raised most of its start-up capital
through a private offering. Now, of course, the shares
are traded publicly on the OTC:BB. The company
currently operates with no liabilities. Due to the
start-up nature of this business, the revenues have
been minimal. The expenses associated with the
start-up have been used for the administration,
research and development, advertising, and other
typical start-up costs.
The following table summarizes the key financial
projections.
Year
1998
1999
2000
2001
Revenues
$8,000,000
$22,000,000
$45,000,000
$80,000,000
Pre-Tax
Income
$400,000
$1,205,000
$2,500,000
$4,000,000
EPS
.06
.20
.40
$.63
Conclusions
International Industries is involved in an explosive
market. While cigars were once typically smoked by
an older male population only, the latest trend has
shown great strides towards younger, affluent, male
and female consumers. The industry potential is
phenomenal. ININ with its two operating
subsidiaries, Mr. Cigar, Inc. and Mr. Cigar Private
Label are positioning themselves to take full
advantage of this boom in the industry.
Its management includes top-notch personnel who
are especially savvy in the merger and acquisitions of
companies. This will be a great advantage to continue
to add profitable complementary companies to
ININ'S holdings. The management team has the
vision to make a company such as this one to thrive
in its industry.
ININ'S Mr. Cigar, Inc. has a unique vending machine
which create a market niche. The machines are priced
at a rate which beats the prices of competitors'
machines. The consumers are given access to fresh,
premium cigars on a 24 hour-a-day basis. Mr. Cigar
Private Label will also allow ININ to capitalize on
this booming industry with its ability to provide
personalized labels for the customer's needs.
With the no liabilities, the company is in an ideal
position to capitalize on the future which this
explosive industry holds.
We believe this company to be a buy. It is currently
trading at a price which is less expensive than the
original $2.50 per share private offering price. This
price will allow an investor to accumulate a large
number of shares for an excellent value. We expect it
to reach the $2.50 to $3 area in the near term and
longer term $6 to $7. Once the franchising, new
compact machines, and private label revenue streams
kick-in, this company should offer a great return on
investment.
Risk Factors- This material was prepared by Diversified
Marketing Concepts, LLC, DBA Wall Street West
Communications, LLC. (WSW) The data presented herein has
been based upon information supplied to WSW by sources
believed to be reliable. The information is not guaranteed by
WSW for accuracy or to be all-inclusive. Investments in
start-up companies is risky. There is no guarantee of
performance. As with any investment, you should consult a
professional advisor before making a decision to invest in this
company. This material is presented for information purposes
only. This is not an offer or solicitation for the purchase of
these securities. Forward looking statements are made
pursuant to the Safe Harbor provision of the Private Securities
Litigation reform act of 1995. These forward looking
statements are subject to certain risks and uncertainties and
actual results could differ from those discussed. The following
list is not an all-inclusive list of risks, but is simply a list of
general risks associated with this stock. WSW its affiliates,
officers, directors, and/or employees may from time to time
hold a position in these securities. WSW has been
compensated by International Industries, Inc. for the
dissemination of this research report.
1.) Competition- There are two competitors who also produce
cigar vending machines. According to management, the
Company's machines will cost between $ 5,000 and $ 6,000
which is much lower than the competition's $ 14,000 to $
200,000 machines. Also, bars, liquor stores, convenience
stores, smoke shops, etc., all retail cigars to the public. These
are competitors which are very convenient to the buying
public. However, they do not typically offer climate controlled,
fresh, 24 hour access to cigars, which Mr. Cigar provides.
2.) Industry- There is no guarantee that the cigar industry will
continue to grow at its same pace, or even maintain its current
status. Recently there has been negative press regarding the
health risks associated with cigar smoking. However, the
current trend has shown dramatic upward movements in this
industry.
3.) Start-up Company- This company is a start-up company.
Although management believes there is adequate capital to
attain profitability, there can be no guarantee that these
reserves will be adequate to sustain growth. A major
component of the company's strategic plan is to acquire
complementary companies. Similarly, it is unknown whether or
not there are adequate reserves to accomplish this task.
4.) Liquidity- Although the company trades on the OTC:BB,
there can be no guarantees as to whether or not there will be a
market for the shareholders to sell their stock. However, there
is a relatively small amount of shares which are held by the
public. This should help the investor's liquidity if the company
attains its goals of profitability. |
