S A ADVISORY Sept - Oct 1997
New Buy Recommendation

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Summer Portfolio #2 1997

  1. Computer Devices Inc. (CTDVB - NASDAQ BB). Our 900# and E-mail subscribers were informed on August 6, 1997.

    The opportunity listed below offers unknown upside potential with limited downside. The company has introduced a product that can be easily understood, due to the fact that all investor types receiving this E-mail via the internet can easily figure out what hands-free means. Physically disabled persons can also benefit from this product and for that matter, stand to benefit the greatest. This investment is relatively unknown, under-followed and totally obscure. As the herd becomes more acquainted with this situation, we believe that the upside potential will become more and more positive.

    The company, Computer Devices (CTDVB- NASDAQ BB) has introduced an internet product that deserves serious consideration by investors. The product, VOICE POWER, is the world’s only voice control system for personal computers which enables the user to both “surf” the internet and completely control application programs using only verbal commands. In addition to all keyboard and mouse functions, the system provides verbal control of Netscape Navigator and Microsoft Internet Explorer and retails for less than $100.

    On July 30, 1997, Computer Devices announced that its wholly owned subsidiary, VoiSys International, had signed a marketing agreement with CompUSA. In the agreement CompUSA will sell the product through its chain of 130 Computer Superstores located in various areas within the US.

    On August 7, 1997, Computer Devices announced that its new product, Voice Power, will be distributed by Best Buy Co., Inc. through its chain of more than 270 stores located in 32 states.

    On August 29, 1997, CTDVB announced that its product, Voice Power, will be distributed by Cyberian Outpost through its global internet retail operations in 135 countries. Its web site is accessible in 11 different languages and daily home page hits average 22k.

    The product was well received at the most recent Internet Expo and has had extremely positive reviewed from major trade magazines.

    The product, which is completely voice activated, will surely be a blessing for those who suffer such ailments as Arthritis, Carpal Tunnel Syndrome, Repetitive Stress Injury, or a host of other injuries or physical conditions. It even can be used by the person who is just tired of the hands-on method of surfing the net!

    In addition, the user can check their E-mail, jump from hot link to hot link, search the net, open URLs, or do anything else on the internet without ever touching the manual move or keyboard.

    For less than $100 you can get a headset microphone, software, and proceed to just plug it in. No initial training is required; you simply "plug'n Say."

    Upon our search of similar products, we found “Naturally Speaking”, which retails for $695, but you need heavy duty hardware to run it. And we are not sure that it is designed for the internet.

    Computer Devices (CTDVB) at present has around 3.7 million shares outstanding. Management controls around half of that amount and has recently exercised an option to purchase 500K.

    If you would like to review the product, go to http://www.voisys.com.
    At present CTDVB trades at round 40¢.
    Food for thought: from a base of 100K internet users at the end of 1994, internet membership grew to 10 million by the end of 1995, and is approaching 40 million today. By the year 2000, membership is expected to top 160 million.

    The above information tells all. This is why investors must consider any tool that simplifies the use of the internet. The product, and for that matter the investment, deserves a serious look. This issue is speculative in nature, but attractive upside potential exists. With only a few shares outstanding earnings/share could expand quite rapidly. Again, at 40¢ the total market cap is less than $2 million.

    Upon review of pie chart A and graph A it is easy to conclude that CTDVB has huge market penetration available due to the growth of the PC market just during the next four years, and in addition the relatively untapped home internet market that exist today and the huge untapped market that still exists.

    In our opinion, if everything gels, which at present looks extremely promising and the consumer warms up rapidly to the product, this could be a $2.00 stock very rapidly. The profit margins in this product is huge.

    We have heard, but not confirmed that the next generation is even more advanced than the current product.

    Bottom line: we have a very unique and very inexpensive product that has great appeal to internet users, can greatly benefit disabled users, profit margins are huge, competition to date is very slim, the company is under-followed and unknown and the market cap is only $2 million.

    In our opinion, this one smells like a big winner.
    Broker contact: Mike Chesler at 1-800-331-1355. Company 508-663-4980.

  2. Inotek (NASDAQ - INTK). Our 900# investors and E-mail subscribers were informed about this undervalued situation on August 9, 1997 @ 15/16. INTK is not a new situation to us. We initially recommended it on 10-8-93 @ .875 and is monitored in our 900# portfolio and we are also monitoring it in our 100K Master Portfolio. (5000 shares @ .875). Since that time INTK has fluctuated between .50 and $2.50. Finally, now it looks ready to really rock and roll.

    INTK is a marketing and service company for instrumentation, process controls, information management, and test and measurement equipment.

    The industrial marketplace includes: (1) Process controls and instrumentation - products utilized in the manipulation of pressures, temperatures and flows and the measurement of their physical properties; (2) Test equipment - portable instrumentation used in diagnostic evaluation of electronic, process, or automation equipment; and (3) Information management - the computer hardware and software, the programmable logic controller, sensors, and final control devices responsible for the master control of a factory process. Among INOTEK’s major product lines are IBM industrial computers, Reliance programmable controls, OPTO 22, Fluke electronic test equipment and Tektronix oscilloscopes.

    For the year ending May 30, 1997, sales reached $25 million and net income/share equalled .12. At present there are only 4.4 million shares outstanding. Even at the present share price of $1.12, INTK sports a trailing 12-month PE actual of 9.3x - currently the book value equals $1.38, so presently INTK trades at 23% below its stated book . The company also has no long-term debt. If we examine PSR (price to sale), the numbers are equally impressive; that is, INTK is only trading at 20% of sales. The current float is only 2.4 million. When one considers the current fundamental, it is easy to conclude that there is almost no risk in purchasing this opportunity at current prices. This is a no-brainer. Only draw back is that management does not spend much time promoting the undervalued nature of INTK. So patience may be necessary. INTK, in our opinion, should be worth around $2.00.

    Broker: Mike Chesler at 1-800-331-1355. Corporate#: 972-243-7000.

  3. Global Spill Management, Inc. (GEGI - NASDAQ BB). On August 20 our 900# and E-mail investors were notified about this potentially huge winner - not only a cash distribution, but dramatic price appreciation.

    The company is what one would call a ‘shell’ corporation, that is, the company has no current business operations and is looking for an acquisition/merger. The advantage of a ‘shell’ is that it allows a usual reverse-merger of a private business into a public entity for lower costs and much faster than the usual procedure that must be undertaken when filing an IPO with the SEC. During the past 5 years or so the availability of ‘shell’ corps have become more scarce and for that reason alone, it has made ‘shell’ corps like GEGI extremely valuable.

    The reasons why we believe that GEGI offers investors a very attractive upside potential with a very limited downside.

    1. The ‘shell’ is ready for sale.
    2. The size of the issue is extremely attractive, that is, only 2.9 million shares outstanding. It is estimated that there are over 1000 shareholders. The stock price has from 1995 to present ranged from a high of $45.00 to a low of $.125. This alone is extremely bullish due to the fact that most shareholders purchased this issue when the company was in full operation and at much higher prices. When an acquisition is announced, this stock will find little resistance on the upside, which of course is what we like!
    3. At present there is at least 14 market-makers in this issue. This is very positive for visibility as well as liquidity.
    4. At present the company has $11 million NOL. This could be extremely attractive for a merger candidate due to the ability to reduce taxes for many years.
    5. The company has an asset that could be sold and adds to the attractiveness of the ‘shell’. The property is located in Camden, N.J. on the water front - there is a building as well as 10 acres of land. On the books this property is valued at $.00. This is very attractive - estimated worth $350K.
    6. The company has a sued a firm, CRG in FL for the sum of $677K. We do not know whether any of this money will ever be recovered, but if it is, shareholders of record prior to a merger will receive any funds that are recovered prior to a merger as well as after a merger is announced (one must be a shareholder now in order to take advantage of this unique twist). We have heard that an initial proposed settlement of 330K was not acceptable and turned down.
    7. The company is also the plaintiff in litigation against certain parties with respect to the illegal sale of two S-8 registration statements filed with the SEC during 8-2-96 to 9-19-96. The amount of shares that were sold illegally is in excess of 1 million shares. The actual amount of money that potentially could be recovered is in excess of $3.8 million (this could also include the purchase of large amounts of stock from the open market). Again, any monies that are recovered would be distributed to shareholders of record prior to an announced merger or acquisition. This works out to be over $1.00 in cash/share. This has the potential to be extremely rewarding for shareholders.
    8. The company is fully reporting and is current with its filings. The latest 10K will be filed by the 10th of September, 1997.
    9. The company has announced that numerous merger candidates have been located and reviewed and that during the fourth quarter of 1997 that a choice will be made. The current shareholders will own at least 20% of the new company. We are now hearing that by the end of September a letter of intent will be signed.
    10. GEGI had a 30 for 1 reverse stock-split during June 1996.
    11. The Camden property is worth at least $350K. Upon sale of the property shareholders of record prior to a merger are entitled to any monies that are received from the sale thereof. This works out to be around 13¢/share.
    12. If all monies are recovered- the amount equals over $1.60/share, which would be distributed to shareholders of record prior to an announced merger. When one considers all the above positives that are presented, one has to take a serious look at the potential upside, not only dramatic stock appreciation, but also the potential of a monetary distribution. This situation is not for everyone, but for those that like calculated risk investment opportunities- this one has all the thrills!

      Corporate #: 212-755-1122
      Broker: Jay Taylor at 1-800-268-2578

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