Sharing Knowledge in Smallcaps

[timhyma]

For us gamblers-
NTSE
9278 Communications, Inc. is a value-added integrator of telecommunications services and technologies, specializing in the distribution of prepaid phone cards. The Company has a network of over 300 private distributors, retailing over 100 different prepaid card products, including 13 private label cards, primarily in the New York, New Jersey and Connecticut markets, through approximately 10,000 retail outlets. The Company was originally incorporated in December 1997 under the name Aquasol, Inc. 9278 is primarily a wholesale distributor of prepaid phone cards issued from over 60 telecommunications carriers. Generally, each type of prepaid phone card is available in $5, $10 and $20 denominations. With the exception of the private-label phone cards, which 9278 prints and activates itself, the Company purchases pre-printed, pre-activated phone cards from each of the applicable telecommunications carriers and distributes them through its network of distributors.

For the nine months ended 9/30/01, revenues totaled $142.8 million up from $53.8 million. Net income totaled $2.6 million vs. a loss of $284 thousand. Results reflect acquisitions and geographic expansion, and the absence of $363 thousand loss on the the disposition of assets.

From their website http://www.9278.com/
currently has a network of over 400 distributors, retailing over 100 different prepaid card products primarily in the New York, New Jersey, Maryland, Virginia and Connecticut markets

9278 plans to introduce new telecom related products such as prepaid wireless services, internet, and paging, as well as expanding upon existing business relationships with telcos and the large national prepaid card providers.
9278 plans to offer assistance in developing their consumer product / value-added service offerings based on 9278's billing and data management technologies and applications. 9278 plans to create private label prepaid card systems for select customers


Recent Price $0.255
Book Value (mrq) $0.18
Total Cash (mrq) $7.03M
Shares Outstanding 22.9M Float 8.90M
Insider and 5%+ Owners: 61%
2 institutions
Profit Margin (ttm) -0.3% Operating Margin (ttm) -0.3%

From the 10Q-
In the three months ended September 30, 2001 we reduced our allowance for bad debts by $50,000 since we received $50,000 from a customer for whom we had set up an allowance in full.

We had been involved in litigation with one of our suppliers since November 1999. The supplier had sued for non-payment of its outstanding bills. We counter-sued the supplier for canceling service on the telephone cards supplied by them. In order to avoid protracted litigation and additional legal costs, we agreed to settle the lawsuit. Under the term of the agreement, we will pay the supplier an aggregate amount of $250,000 over a period of four years in 4 monthly payments of $7,500 and 44 successive monthly payments of $5,000 beginning August 2001. We had not anticipated this settlement, and therefore had not provided for the payment in previous years. During the three months ended September 30, 2001, we have taken a charge of $207,000 representing the net present value of the settlement amount.

Starting July 2001, we began actively selling phone cards over the Internet. Internet sales accounted for $2,056,000 for the three months ended September 30, 2001.

FACTORS AFFECTING FUTURE RESULTS
We are actively looking for ways to increase sales and profitability. To achieve that goal, we are looking at various avenues for expansion. The first is geographical expansion, and to that end, we are currently negotiating opening three new locations, one in Toronto, Canada, the second in the London, United Kingdom and the third in Alexandria, Virginia area. These three new offices should be operating by December 2001. The second avenue for additional sales is "Internet E-Commerce" sales to the public. We unveiled our e-commerce website in May 2001 and began active sales over the Internet in July 2001. These sales are made utilizing consumer credit card payment and existing inventory. To date we have received a strong response to our web sales and are continuing to grow.

News release
5 Dec- 9278 Communications to Donate $1 Million in Phone Cards to Rescue Workers
http://biz.yahoo.com/bw/011205/52380_1.html

chart say- oversold
Support is .20
Resistance is .27

IMO- if it breaks .27 should run to .40.