S A ADVISORY April - May 1999


S.A. Advisory
2274 Arbor Lane #3
Salt Lake City, Utah 84117

Precision Standard, Inc.

PCSN is engaged in aircraft maintenance and modification, design and manufacture of aerial target and guidance systems, aircraft cargo handling systems, precision springs and components and rocket launch vehicles.

1. 3,977,221 shares outstanding.
2. $6.8 million NOL
3. Revenue and earnings

  98 97 96
Sales 141.7mil 122mil 130 mil
Income/sh (loss) $2.53 ($9.19) ($1.27)

4. Cash flow - net income and depreciation - amortization for 1998 - $10mil & 2.4mil=$12.4mil - $3.10/share cash flow - trading at less than 1x cash flow.
5. Book value - negative $1.50
6. Net income/share before income tax benefit - $2.20
7. Current PE=1.8x
8. Backlog $187mil compared to $145mil
9. Firm but unfunded backlog $4.25mil compared to $37mil.
10. The company also estimates an additional $227mil will be derived from follow-up option years of its government contracts as compared to $185mil the previous year.
11. Market cap - $16mil
12. PSR - .11

Amazing - another super cheap stock that just sits around waiting to catch the next flight out. PCSN has nothing to do with “eyeballs” or “clicks”, but sure has something to do with transportation. If we had no transportation, how would all that internet “stuff” get from point A to point B?

PCSN obviously has had a troubled as well as turbulent past for the past few years, but 1998 came back like a rocket ship. Current PCSN only trades at 1.8x 98 earnings.

When you consider the strong showing with respect to revenue growth, earnings, cash flow and backlog, it is in our opinion that PCSN should trade at least 10 - 15x 98 numbers, not 1.8x! This would result in a share price of $26.40, not $4.00 - that is a 560% difference in what should be and what is! This situation has little risk in it, but a value investor should be flying high at the current valuations as well as the bright future that PCSN has in store for itself (must look at the backlog).

Broker contact: Mike Chesler at 1-800-890-1629
Corporate number: 1-303-371-6525.

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Current Price .31

Fairmount has 60 years experience in the manufacture and sale of specialty and fine organic chemicals, including pharmaceuticals and agriculture intermediates, chemicals used in the photographic and imaging industries, hydrazine derivatives and blends, and plastic additives. During this time Fairmount has developed expertise in the production of nitrogen and sulfur based chemicals. Fairmount manufactures its chemical products at its Newark, New Jersey facility.

  Fairmount’s major products and their markets include:
  Photographic and Imaging Chemicals

Fairmount’s photographic and imaging chemicals are used in the manufacture of photographic file, television tubes and lithographic printing plates. These chemicals include photosensitizers, stabilizers, anti-fogging agents, antihalation dyes and diazo resins.

The demand for certain types of chemicals used in photographic films is expected to decrease during the coming years as consumer demand changes due in part to new imaging technologies. Fairmount is aware of these possibilities and is taking steps to substitute new products and increase its market share of existing products. Hydrazine Based Products

Hydrazine Based Products
Hydrazine blends, salts and derivatives are used in the manufacture of many chemical products and for corrosion control in commercial boilers and power generators systems. These chemicals are also used in metal chelating agents, polymerization inhibitors, and pharmaceuticals. Fairmount intends to emphasize the market for hydrazine derivatives which it believes will be growing in the future.

Plastic Additives
Fairmount produces plastic additives including antioxidants, metal deactivators and UV stabilizers that are used in the production of plastics parts made from various plastic resins such as polycarbonate, polyolefins, PVC, and polyester resins. Its customers include manufacturers of plastic resins and compounders.

Specialty/Fine Chemicals
Fairmount’s fine chemicals are used as intermediates in pharmaceutical and agricultural chemicals. Fairmount also custom manufactures chemicals to customer specifications.

Custom Manufacturing
Fairmount uses its expertise and knowhow in chemical synthesis both for its own products and process and to develop and manufacture products under contract for other companies. Its equipment configuration, production flexibility and ability to efficiently produce in quantities from 10 kg to 500 M/T gives it an excellent position in custom manufacturing. Among the custom products which Fairmount manufactures are agricultural intermediates and photographic chemicals.

  1998 1997
Imaging chemicals 20% 18%
Hydrazine blends 17% 19%
Hydrazine derivatives 11% 12%
Plastic additives 28% 34%
Specialty chemicals 24% 17%
  100% 100%

Fairmount sells its products in the domestic and international markets and continues its efforts to expand both domestic and export sales. It had net sales of $12,805,500 in 1998 and $11,911,200 in 1997, including export sales of $5,636,600 in 1998 and $4,751,300 in 1997. Major foreign geographical areas contributed the following percentages to net sales:

  1998 1997
US 55% 60%
Europe 17.0% 24.9%
Asia 12.3% 8%
Other Export
(includes Canada, Columbia & Israel)
14.7% 14.2%

1. Fully reporting with SEC
2. 51 employees
3. Owns 13 acres of fenced in land within industrial area of Newark.
4. Operates plant on 24-hours day, five days a week.
5. 7.5% increased Operating Income 766K (385K)

Select Financial Data
  1998 1997
7.5% increased
12.8mil 1.9mil
Operating Income 766K (385K)
Net income/sh
before extraordinary gain
.055 (.046)
Shares outstanding 14,178,913 8,292,866
6. Cash - $2.4mil - .17/shares - fully diluted
7. Book value - $7,698,100 - .54/share - fully diluted
8. During Feb 99 FMTC received an additional cash payment from insurance totaling $375K, which would result in 20¢ in cash/share and a BK value of .57.
9. Trailing 12 month PE - 5.6x
10. Trading at 42% below stated Bk ending Dec 98
11. PSR - .34
12. Trading at about twice cash.

It is most likely that if companies like FMTC didn’t exist - that the computer - internet explosion of blood-shot “eyeballs” and “twitching fingers” would have to find other forms of information transfer, i.e., stock information, news, education, gaming and sex!

It is our opinion that FMTC is geared toward value oriented investor types. Not to be redundant, but many internet situations will never reach the company status as has FMTC. It has been in business for over 60 years.

We believe that with new management, new product development and the huge cash hoard that FMTC currently has that a bright future exists for the company to grow and enhance shareholder value. All of the fundamental variables that are usually important for investors to consider are extremely attractive. Presently, FMTC only trades at 5.6x trailing 12 months earnings. 42% below stated book value, price to sale of .34 (usually a value of 1 is considered extremely undervalued), has a huge cash hoard and growth in sales.

If we were to assign a conservative PE value of 15x, then our share price would be .82 (based upon trailing 12 months). This is very reasonable when one considers internet stocks trading at 100 to 1500 times earnings. Even at 3x book, which is very low, FMTC would be valued at $1.62/share. if FMTC were to trade at a PSR of 1x, we would have a share price of at least $1.00.

We know that most of our readers believe that the internet will and has changed the world, but keep in mind that without companies like FMTC our world would be dramatically different. Just review FMTC’s products. It is relatively easy to see how important they are to our every day routine.

We intend to monitor FMTC in our portfolio for percentage gain performance.

  Broker Contact: Mike Chesler at 1-800-890-1629
  Corporate Number: 1-973-344-5790.

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