S A ADVISORY Sept - Oct 1997
New Buy Recommendation

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Technology General Corp.
(NASDAQ BB - TCGN)

On September 2 our Super Fast Phone was informed to purchase shares in TCGN @ 31˘ and our new 888# investors were also informed to purchase shares. We will monitor this situation in our 100K Master Portfolio (adding 15K shares @ 31˘/share) and our 888# and Summer Portfolio #2 1997 for percentage gain performance.

    The company has three divisions and one subsidiary.
    Divisions:
  1. Precision Metalform is engaged in the manufacture of a variety of deep drawn metal components used primarily in the writing instruments and cosmetic industry.
  2. Eclipse Systems manufactures numerous products, including spray coating systems and industrial air-driven mixers. Their spray coating systems are used mainly for coating industrial products, and the industrial air-driven mixers are used primarily in the chemical and food processing industries.
  3. Clawson Machine is engaged in the manufacture of a line of ice crushing equipment that is used by hotels and restaurants.
The Precision Metalform is believed to be one of two companies within the U.S. who supply in excess of 80% of the major components for domestic writing instrument manufacturers. The Eclipse System is one of several companies in the U.S. and abroad engaged in the manufacture of spray coating systems. The Clawson Machine Division is one of several small companies that is engaged in ice-crushing equipment for both hotels and restaurants.

The subsidiary that is 100% owned by Technology General Corp, namely Transbanc International Investors Corp., has established a substantial rental income base developed from five industrial tenants - rental income alone through march 31, 1998 will equal $500K.

The real jewel or diamond that can be found as a hidden asset that TCGN has on its books for $365K is in excess of 162 acres of land in a prime industrial park located in Franklin, NJ.

The largest potential in stock appreciation in our opinion rests on the sale of this property or development. The appraised value for the land is in excess of $7.5 million dollars and that number is probably conservative.

At present TCGN has 5.6 million shares outstanding and shareholders equity of $1.6 million. The land is valued at $365K, so the stated book value is 29˘, but this does not take in account the appraisal value of the land. If we were to assign a very conservative value, the true value of this property would not be $365K, but a staggering $7.5 million. As stated in the 10K, the company continues to evaluate various underwriting concepts in order to acquire public financing for acquisition purposes and development of plant sites located at the company’s industrial complex. As stated, part of 162 acres, namely, the 106 acres located in Franklin, N.J., has been approved for 15 planned plant sites. This site includes an 86,000 gallon/day server allocation and has a main water line installed through the property. Adjoining this acreage is a 107K square foot industrial building. The company’s Aerosystem Technology division owns a 24K square foot industrial building located on 22 acres in Franklin, N.J.

When we consider that at present there are currently 5.6 million shares outstanding and land worth $7.5 million on the books at $365K, even an idiot can see that the stated book value due to standard accounting methods is 29˘, but if you take in account the marketable appraised value of the land, the real book value is $1.33 plus 29˘ or $1.61. Note: the value is probably 20% higher due to building and upgrades on the properties. This is only a conservative estimate! NOW LOOK HARD AT THE PRICE OF THE STOCK!

Just based upon the land, TCGN would be a screaming BUY to any and all value players, but there is more. TCGN had sales of $2.9 million and net income/share of 2˘ for the year ending March 31, 1997. Based upon the current price of 31˘, TCGN is trading at 15x trailing 12 months, only 17% of real book (realizing real land value) and a PSR value .57. Management owns about 3 million shares of 5.6 million. So the public float is a mere 2.6 million and there are probably 750 shareholders. The company has been around since 1957.

    Bottom line: This opportunity is the steal of steals.
  1. Fundamentally cheap as an ongoing concern.
  2. Land worth 6 - 8 times the price of the stock.
  3. Management has to change sooner or later due to age of principles.
  4. Company pursing investment banking firms in order to capitalize on huge land cache - possible spin-off to shareholders.
  5. Introduction of new products during fiscal 1998 that could dramatically increase sales.
  6. The total market cap is only $1.7 million. This company is truly worth substantially more due to land, technology, ongoing businesses and new product introduction.
  7. Finally - only trading at 15x trailing 12 months - 48% of sales and 17% of a real and believable book value.
In our opinion, a value investor type, as well as low-priced speculator, should be jumping all over this one. We see actually no risk at current level if you are geared towards long term investing. Even a small position of 10K shares could be worth 10 times the amount during the next few years.

Remember this, they are not making any more land. The area of New Jersey where TCGN owns its property is an extremely valuable and is seriously understated in value and marketable potential that equals in our opinion a much higher share valuation.

For more information: TCGN - 973-827-4143. Broker contact: Mike Chesler at 800-331-1355.

On September 2, Superfast and personalized phone services were notified about TCGN at 31˘. See recommendation. On September 3 our new 888-711-7338# investors were notified. To listen, call 1-614-439-7375 and open an account for the S.A. Advisory Hotline. Only $2.00 per minute and $10.00 setup fee.

When we introduced the Summer Portfolio 1997, we mentioned that many of the listed situations were not only unknown and under-followed, but also fundamentally undervalued. Even though these listed companies fall in the micro-mini category, most were screaming BUYs at the featured prices. The performance to date, to say the least, has been explosive. For the two months that we have monitored VTPI, SETO, PLFM, IEHC, DALE, HIRE and INTI, our overall gain has been eyeball popping; that is, 141.2%gain.

Most professionals may hate them, give them no respect, and don’t understand them, but to avoid this class or group of stock is just plain moronic.

Due to our wonderful regulatory agencies, i.e., SEC and NASDAQ, these low-priced gems become more and more obscure due to the “let’s cover them up” so no one will find them. What this does is allow us a fertile pasture of emerging companies that everyone hates, but would love to own.

We are not saying that every low-priced stock is a bargain that should be purchased aggressively. What we recommend or feature are opportunities that are either fundamentally cheap and undervalued; i.e., SETO, IEHC, INTI, HIRE or DALE, or possesses unique technology, such as VTPI and PLFM.

Being a smart investor means knowing when to BUY and when to take profits. Both VTPI and PLFM have skyrocketed from their initial 10˘ and 8˘ levels. Prudent investors should consider harvesting some of their gains and let the rest ride and continue to feed the market as volume accelerates, because when the volume dries up, you could get fried.

Remember, BULLs and BEARs make money. PIGS get slaughtered.

As profits are secured, funds should be directed into additional low-priced opportunities. Diversification not only spreads out exposure, but also limits risk. As the basket of opportunities gets larger and larger, the return potential expands. We never profess that they all will be winners, but just one or two huge winners easily make up for losses and laggers.

The four low-priced opportunities that will be briefly introduced in this edition have in our opinion equal and possibly greater upside potential that the seven stocks that we mentioned in our last newsletter have already returned in two months - 141% gain.

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