S A ADVISORY July - August 1997
High Risk Portfolio


High Risk Portfolio


Many of our readers have called or written, suggesting that we supply them with "Penny Stock" opportunities. These are the investment opportunities that everyone loves to hate. The risk can be high, but the huge reward potential lures even the most seasoned investor looking for the 10 banger.

The opportunities that we will be listing, in our opinion, are all unique and have the potential to reward the patient investor quite handsomely over the long term. Usually the best way to play this segment is to purchase a basket of stocks, which, or course, spreads out the risk and also develops a diverse portfolio. We intend to monitor this select group over the next 12 months and truly believe that results will be quite surprising.

Broker contact for all listed opportunities: Mike Chesler at 1-800-331-1355.

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Summer Portfolio 1997
Date: July 1997

Name			Exchange & Symbol    Featured Price Speculative

Visual Telephone Int.	(NASDAQ BB) VTPI	.10		B

Semicon Tools		(NASDAQ BB) SETO	.07		B

Platforms International	(NASDAQ BB) PLFM	.08		B

IEH Corp.		(NASDAQ BB) IEHC	.31		B

Dale Systems		(NASDAQ BB) DALE	.375		B

Diversified Corporate

  Resources		(PINKS) HIRE		$5.00		B

Industrial Technology	(NASDAQ) INTI		.18		B

We intend to track for percentage gain performance

High Risk Portfolio

  1. Visual Telephone International, Inc. (VTPI) - 52 week range $3.00 - .04 - outstanding shares around 8.4 million - roughly 2.5 million free trading. The company offers an affordable PC based video conferencing solution in the desktop video conferencing market with plug and play installation. At the recent ITCA 97 Exposition in Washington, D.C., VTPI introduced a new low cost, high performance desktop workstation. The new Visual 1100 is a small, low priced, high quality, fully integrated personal video conference station for the desktop. The Visual 1100 engine is a Pentium 100 MHz CPU with an 82430 VX PCI chip set and utilizes Windows 95 as its standard operating system. The Visual 1100 provides H.320 standards based video conferencing on a single ISDN BRI line offering TV quality in a space saving design on a 14" SVGA display monitor. (Cost/unit $5,699). Cash is tight, considering some sort of equity financing - - no reverse stock split likely. A great speculation at the current 10¢/share level. (Corporate phone: 201-525-0777 or 888 VIS-TELE).
  2. Semicon Tools, Inc. (SETO). The company sells small precision disposable diamond tools used to manufacture electronic components and devices which it either manufactures or purchases from exclusive suppliers. Through East Coast Sales Company, Inc., a wholly-owned sub, the company also serves as a distributor and fabricator of industrial ceramic products and a distributor of "clean room" materials and supplies primarily used by the electronics and defense industries. 52 week ranges .96 - .05. Currently around 11 million shares outstanding fully diluted. For the year ending January 31, 1997, net sales were $1.6 million and net income was $213K, an approximate increase of 28.4% over 1996 and a loss of $420K. Earnings were .024/share for the year ending January 31, 1997. These results are based upon 10 million shares outstanding. SETO is fully reporting. The current book value is .075. Trailing 12-month PE value based upon current price is 2.9x. Should be worth more than the current price of $.07. Corporate Phone No. 201-492-2208.
  3. Platforms International Corp. (PLFM) owns and is currently operating an optionally manned or unmanned high altitude aircraft to validate the software and hardware of unmanned operations in flight. At present, PLFM is in the final stages of negotiations with Teledyne Ryan Aeronautical to provide flight hardware for a NASA project. This project has a value of $10 million over 5 years. Other projects are at various stages of discussion. Management believes that PLFM will have sales of $4 million and net income of $3 million during the current fiscal year. Around 7.5 million shares at outstanding. Is management spaced out or is PLFM heading into space? We believe that the latter is the more likely scenario. The preliminary date for Platforms flight demo is August 1997. Current price is around $.08 - 52 week range $4.50 - .06 - could be a 20-banger. Corporate Number 909-795-9596 or 888-742-0770.
  4. IEH Corporation (IEHC). The company is engaged in the design, development, manufacture and distribution of high performance electronic printed circuit connectors and specialized interconnection devices. The company serves both the commercial and military marketplace; manufacturing connectors for avionics, electronics, satellite, radar systems, test equipment, medical electronics and related industries. As of June 23, 1997, there were 2.3 million shares outstanding. The company employs 65.
    For the year ending March 1997, revenues expanded quite rapidly to $4.8 from $4 million, while earnings exploded to .05/share from a loss of (.03). IEHC currently trades at a PE of 5x trailing 12 months. Current book value is around $.24. Backlog of orders slightly above last; that is, $1.3 million. First quarter looks strong - company anticipates even stronger results for current fiscal year with respect to revenue and earnings. The company is fully reporting. The trailing 12 months PSR is only .15 (that's 15% of 1x sales - very cheap) and as mentioned, it only trades at 6x earnings. This one is a definite winner. Corporate Number 718-492-4440.
  5. Dale Systems (DALE). This could be the cheapest of the cheap! The company has 235,000 shares outstanding with options at .625 to purchase an additional 200,000 shares by management. The company has 450 employees. It rents out security guards. The company reports only once a year. Total revenue ending May 1996 equalled $6.9 million versus $5.9 million for 1995 losses narrow to ($.39) from ($.67). Sales at present are growing by at least 10%/year according to management. For fiscal 1997, revenues surpassed $7 million and losses narrowed even more. Management is optimistic that profitability is at hand. Book value around $.57, PSR value .01 (that is only 1% of 1x sales). Could be a target for a buy out. The company has been around since the 1930s. The company also is involved in mystery and integrity shopping, undercover operations, substance abuse testing, polygraph and background investigations and entertainment checking. Corporate Number 516-794-2800.
  6. Diversified Corporate Resources (Pink Sheets and NASDAQ BB - HIRE). If you want cheap, this one offers it all. The company act as an employment service firm for high-end professionals. Last year ending December 1996, sales reached $27.4 million and net income of .83/share (based upon 1.8 million shares outstanding). Book value around .85 - revenues up first quarter - earnings a little weak, but we are not worried - forward split coming during July 1997 (2 for 1) current price around $5.00 - anticipate new listing. This company is very secretive. We believe that acquisitions are possible or even a buy out. Trailing 12 months PSR is .32 - based upon December 1996 year end HIRE trades at only a PE of 6x. This investment opportunity offers long-term appeal. As mentioned, first quarter was a little weak, revenues were $7.2 million versus $6.2 million, while net income was .11 compared to .19. We believe that this opportunity is a sleeper. Corporate Number 972-458-8500.
  7. Industrial Technologies (NASDAQ - INTI). The company develops sensing, monitors, processing and inspection technologies that operate under the demanding factory floor conditions encountered in a range of industries. The company's industrial computer group offers a full line of industrial strength processors, displays and peripherals designed to operate under harsh temperature, humidity and shock conditions found in factory environments. For the six months ended 3/31/97, net sales increased 25% to $4.2 million. Net loss decreased 10% to $177K. Revenues reflect improved INTI sales performance. Loss reflects an increase in gross profit and a decrease in S/G/A expense as a percentage sales. At present there are only 5.5 million shares outstanding. The book value is around .57 - company had no long term debt. The company recently was awarded a $500K term loan from the Connecticut Development Authority, which will be utilized for working capital purposes devoted to internal growth and development in both its INTEC Inspection Division and its AMDEX Industrial Computer Division. 52 week range .15 - $1.00 - current price .18 - trading at 1/3 of book - estimated PSR based fiscal 1997 is a mere 12% of sales. At current price, this one looks super cheap, especially if they turn profitable. Losses are narrowing. Finally, recently hired regional brokerage firm to aid in acquisitions and increasing shareholders value. Corporate Phone Number 203-268-8000.

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