Xcel Associates, Inc.
224 Middle Road, 2nd floor Hazlet, New Jersey 07730 Telephone: 732-264-3433 Facsimile: 732-264-5327
2517 Durango Drive Colorado Springs, Colorado 80910 Telephone: 719-391-1826 Facsimile: 719-391-4565
Website: XcelAssociates.com Email: EdTWhelan@aol.com
We strongly recommend purchase of Elast Technologies (OTC: BB - ESTG- $1.18) because the Company:
1. Has two truly innovative bioelectric medical products, both with patents.
-Their technology is based on the presence and flow of electricity in the human body.
-Its Electronic Allergo-Sensitivity Test (ELAST) Device is an allergy detection and testing instrument. Its functionality is superior to existing alternatives because it is: more accurate, quantifiable, faster, displayable, non-invasive, painless, and lower cost.
-Its Portic Electronic Bandage shortens healing time of tissue injuries by 20% - 30%.
2. Faces huge potential markets, estimated at $6 billion in U.S. and $12 billion worldwide.
-Allergy sufferers number in the many millions and frequently miss proper treatment because of inaccurate diagnoses.
-100,000,000 tissue injuries (soft and hard) occur annually in the U.S. and an estimated 40,000,000 would benefit from the therapy provided by its Electronic Bandage.
3. Has an impressive and complementary senior management.
-Chairman Robert D. Milne, M.D. is the inventor of the ELAST Device and the founder of ESTG.
-President/CEO Thomas F. Krucker has a strong record of business successes as a manager and entrepreneur.
-COO Andrew J. Whelan has outstanding credentials in financial management and health care entrepreneurship.
4. Is close to the commercial stage, we believe.
-We expect FDA approval for both bioelectric products, hopefully within months.
-While the invention phases were complex and lengthy, manufacturing should not be.
-Revenues could appear in mid-2001.
5. Is likely to develop a very attractive financial profile.
-Rapid revenue and EPS growth should occur, once the products are approved by the FDA and commercially introduced.
-On a proforma, post merger basis, we project revenue escalation from $4 million in 2001 to $190 million in 2005, with EPS tracking from near break-even in 2001 to $2.25 in 2005.
-A premium P/E is foreseen, supported by:
-Sustained rapid growth.
-“First to market.”
-Strong proprietary product position.
-Small equity capitalization (only 18 million shares post merger) and thin float.
-Long-run buy out potential is clearly present.
Xcel Associates, Inc.
224 Middle Road, 2nd floor Hazlet, New Jersey 07730 Telephone: 732-264-3433 Facsimile: 732-264-5327
2517 Durango Drive Colorado Springs, Colorado 80910 Telephone: 719-391-1826 Facsimile: 719-391-4565
Website: XcelAssociates.com Email: EdTWhelan@aol.com
Three research reports (all favorable) have been written: by Xcel Associates, Inc.; National Capital, LLC; and Donner International, Inc. All three are available at Xcel’s website: Xcelassociates.com.
William N. Walling, Jr., CFA
Director of Research
Although Xcel does not believe that its activities come within the purview of Section 17(b) of the Securities Act of 1933, in an abundance of caution and in the interest of full disclosure, we call the reader’s attention to the fact that Xcel recently purchased 100,000 shares of common stock of (“ESTG”) in a private transaction for a purchase price of $1.40 per share. Xcel also received 6,000 shares of ESTG common stock as reimbursement for expenses incurred by Xcel in its performance of due diligence relating to ESTG. As of this report, Xcel has purchased in the open market an additional 50,000 shares between $1.9375 and $2.75 per share. In addition, Xcel has reached an understanding with ESTG that ESTG will retain Xcel to perform certain financial consulting services on behalf of ESTG in consideration of the issuance to Xcel of options to purchase 1,000,000 shares of ESTG common stock at a purchase price of $1.00 per share. Xcel and its Associates are currently long 600,000 shares between $1.25 and $2.75
Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives, related to such securities ("related investments"). Xcel Associates, Inc. (“Xcel”) and its affiliates may trade for their own accounts in any securities of the issue(s) or in related involvements. Xcel, its affiliates, directors, officers and employees, may have a long or short position in any securities of this issue(s) or in related investments. Xcel or its affiliates may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any entity mentioned in this report.
This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objective, financial situation and the particular need of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Copyright 2000 Xcel Associates, Inc.
XCEL’S TRADING PHILOSOPHY!
When a stock has appreciated 50%, we sell 25% of our current position. When a stock has appreciated 75%, we sell another 25% of our current position. When a stock has appreciated 100%, we are usually out of our total position although we may hold a portion in the firm’s account or the principles’ accounts as a long-term investment. We always try to at least recover our cost of any trade that we do!
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