"WALL STREET CORNER"
BY WALLSTREETCORNER.COM, INC.
www.WallStreetCorner.com
Technology Connections, Inc.
Integrates Latest Technologies & Pre-wire into New & Existing Homes
Security, TV, Audio, Video Surveillance, Internet Connectivity
High-Tech Monitoring Systems & Automation Equipment
ESSENTIALS
Business: Custom Pre-Wiring Systems for Homes
Listed: OTC Bulletin Board
Symbol: TGYC
Shares Out (at 9/30/2002): 25,157,860
Approximate Float: 5.2 million shares
Market Cap (at 1/24/2003): $3.52 million
TGYC's Service Results in an Unparalleled Value-Added Feature
for the Homeowner, as Well as for the Homebuilder
TGYC installs high-tech structured wiring systems in newly constructed homes, & retrofits existing structures with the same integrated technology components & systems. Its systems integrate security, computer/Internet, high-speed Internet access, satellite or cable TV, home theaters, indoor/outdoor lighting, vacuum systems, solar energy systems, entertainment/communication, & various automation capabilities & home electrical improvements throughout the home.
SUMMARY
We interviewed CEO Kevin Kyzer -- he founded TGYC, got it through its development phase, developed a marketing strategy, took it public via an IPO, & moved it to profitable operation, all in less than two years. Kyzer began with one person & one pickup truck on 5/23/2001. His customers responded with enthusiasm. His company is prospering. TGYC actually provided planning, installation, & support of its products to over 500 homes in its first year of operation. This represents a crucial, successful beginning for TGYC's strategy to become the key player in a new industry -- one based on an important new trend.
The Trend
There's an important trend taking place in this country. It's at an early stage. We explain how it was recognized by TGYC management in the following "Background" section.
We like situations that are based on a trend -- especially one that promises huge marketing opportunities. The best time to begin taking advantage of a trend is near its beginning. If a company can do that, it can establish itself as the trend's key player. That's exactly what TGYC is doing. Management not only recognized the trend & based its operations on it, management took the company public. It is now the only publicly traded entity that offers TGYC's comprehensive turnkey solution of products & services. That gives TGYC a real edge.
The popularity of a home that has networking capability is demonstrated by a news release issued on 1/20/2003 by Best Buy (NYSE/BBY). It tells about Best Buy's assortment of home networking packages that will be used in 350 homes in the Twin Cities area of MN to be built by Pulte Homes, one of the largest home builders in the U.S.
Background
When the telephone was first introduced, only the wealthy had one. Then, as the cost came down, others installed one. Then as people understood why they needed a phone, almost everyone got one. The key word is "one." People had one phone in their house. As the phone's usefulness became apparent, people installed more than one phone in their homes. Now just about every new house has the wiring & phone jacks already installed in at least the kitchen, living room, & master bedroom. That describes how the first of this trend series developed.
A second similar trend was repeated with television. As the cost of a TV set came down, more people bought one. Then as people understood the advantages of TV, they began to install a second set in their bedroom. That trend continued. Today, almost every new home has TV jacks (or at least TV wiring to boxes with blank covers) installed in the living room, bedroom, kitchen, & lately in a room that may be used as one's "media room," or "home theater."
A third similar trend is being repeated with computers. As the price of computers continues to become more affordable, more people want one. As people understand the usefulness of computers, families want more than one computer. Each child now wants his or her own computer for homework, games, & email. And -- they all want access to the Internet.
That brings us to the similar fourth trend -- broadband's arrival. It is in key areas now. Soon it will be almost everywhere. Now that I have it, I would never live in a place where it was not available. A key to this fourth trend is the fact that besides speed, broadband makes it possible for each person in a household to have simultaneous yet separate access to the Internet without needing multiple phone lines. This is accomplished through a home computer network, one of the elements of TGYC's package of products & services.
TGYC's Business
Kevin Kyzer recognized this series of trends, & the beginning of this fourth trend. He saw the coming need to have not only phone & TV hookup capability at several locations in one's home, but broadband computer connections as well. Our opinion is that this trend will progress in the same way as the first three. In areas where broadband is available, more & more people are taking advantage of it. As they understand the convenience, speed, etc. that broadband provides, they will want it to be available in several places in their homes. Another aspect related to this fourth trend -- people will want to incorporate other elements of home automation into their lifestyle.
The Networked Home
TGYC enables new homebuyers & even owners of existing homes to have a networked home. A networked home is somewhat like the home Bill Gates built for himself. It is based on a structured cabling or wiring system controlled from an impressive central panel in a closet, laundry room, or other convenient inconspicuous location.
Homeowners are provided with the ability to distribute all of the networked systems throughout the home. They can select the modules & services that reflect their lifestyle. Additional capability can be added-on efficiently at a later date as their needs & desires to create a total home environment become better defined.
At the central panel, TGYC can provide the homeowner (in addition to such systems as security, central vacuum, solar power, home theater, indoor lighting, landscaping lighting, etc.) the ability to manage such additional capabilities as:
o Monitoring the baby & other video cams around the house from any TV in the house.
o Internet connectivity anywhere in the house, by the pool, or even while at a neighbor's house.
o Video distribution from VCR, DVD, cable, or satellite; accessed anywhere in the house.
o Home automation integrated into the network & set up to monitor & change remotely.
o One DVD player or VCR can be used to view movies from any television in the house.
o Signals from a video camera positioned at the home's entrance can be viewed from any television set.
o Intercom system to communicate directly with people in or outside the home.
o Great sound in & out of the home with remote controlled multiple source audio distribution system.
o Enabling all computers to share the same printer &/or a single internet connection.
MARKET
In 2000, only 4% of 1.5 million new homes constructed came with structured wiring. That has been increasing these last two years. In four to five years, it is expected that 45% of new homes will have a structured wiring foundation.
Cahners In-Stat Group estimated that the home networking integration business would increase from $600 million in 2001 to $5.9 billion by 2004.
According to management's studies, about two-thirds of Americans own their own homes, & about 1.5 million new homes are constructed each year. Despite general slowdown in the American economy over the last year, the housing market has been relatively resistant to recession. For example, TGYC's home area, Charlotte, NC & Mecklenburg County were among the few areas in the country that experienced real growth in economic & housing activity over the last 10 years. Charlotte became the 32nd largest city in the country & the 5th largest urban region.
In a typical $300,000 home, between $3,000 & $6,000 (1-2%) on average would be used toward a "wired" home.
TGYC is taking advantage of the trend. It is beginning to work with large home developers to provide the structured wiring system in the new homes they build.
TGYC structured this part of its business in a way those of you who have had a new home built by a big developer are familiar with. They have a showroom that the developer's buyers visit -- similar to the builder's showroom they visit when they pick out floor coverings, colors, counter top materials, lighting fixtures, etc.
The buyer works with the TGYC certified technical consultant who is specifically assigned to handle that builder's customers. He explains all of the great things that can be included in the home, & with the customer, creates a system that suits the customer's present needs, & has the capability to suit a great many future needs as well.
A recent example: On 1/9/2003, TGYC signed a new vendor agreement with Brookwood Home Builders, Inc., one of the country's fastest growing home developers & contractors. TGYC will manage the installation of custom security systems including pre-wire, all equipment, & monitoring, beginning with the new Bonterra $150 million development of 1,391 homes in Charlotte, NC. TGYC builder relations manager Steve Meredith says: "We are committed to finding new ways to satisfy our builders. We strive to support & maintain the personal relationship between the builder & homebuyer to make the construction process more comfortable."
Another example: On 1/16/2003, TGYC reached a new vendor agreement with HomeLife Communities to manage & install home security system pre-wire & equipment. HomeLife has built thousands of homes during the past 25 years in Atlanta, GA & Charlotte, NC. Steve Meredith said: "Added value is something that homebuyers expect in their purchase & our combined efforts provide the benefits of top quality home security services at the most affordable pricing."
TGYC's Business Strategy
The homebuilder sub-contracts all lowBvoltage wiring systems & associated equipment with one company -- TGYC. That saves the builder money, & helps the builder to generate a reputation for homes that have the newest features -- a very important sales advantage. In addition to a great sales advantage, TGYC increases the builder's profit by having upgrades & ad-ons that it sells to the homebuyer, include the builder's markup.
TGYC really helps the homeowner create a "home" rather than a "house" -- a home that the homeowner can brag about to friends & family -- one where they can demonstrate all sorts of the latest technology. TGYC's certified technical consultants (really smart, well trained sales people) help them decide exactly the features they need, both present & for any future needs they may contemplate. A key aspect of the strategy is having the payment for all the pre-wiring & most of the associated equipment included in the mortgage, the homebuyer can get a lot more of the technology features they want, & spend much less up-front.
As indicated, one TGYC consultant is assigned & dedicated to a particular builder's customers. That promotes an atmosphere of familiarity & confidence. Each project is inspected by TGYC's quality assurance manager within 24 hours of installation, & any changes needed are made instantly.
TGYC focuses on four market segments: (1) Residential new home construction; (2) Existing residential dwellings; (3) Multiple dwelling units; & (4) Small commercial buildings.
TGYC's future expansion goals include offering its services in other regional fast-growing cities where annual new building permits are high. Its Southeast regional plans are to begin with Greensboro, Raleigh, & Wilmington, NC; Greenville, Columbia, Charleston, & Myrtle Beach, SC; Atlanta, GA; & Orlando & Tampa, FL. Its national expansion will be focused on the top 10 fastest growing cities in the U.S., as a large portion of their growth is new construction.
Competition is fragmented & consists primarily of sole proprietor installers & home electronic stores. We are not aware of any direct competitor that markets a complete turn-key technology package like TGYC to
homeowners.
MANAGEMENT
Kevin G. Kyzer is president & a director. He was CTO (chief technical officer) at Lifestyle Technologies, where he implemented communications systems, including computer & telecommunications for all office locations, & advised the board on all technology aspects of the business. He was CTO at Pilot Home Technologies, designing & implementing the company's telecom & data network, & doing R&D for new products & services. He owned & operated a computer consultant business in the New York Metropolitan area, known as Data Resources. He was an account executive at CompUSA, acting as liaison between CompUSA & Siemens to facilitate over $10 million in annual computer hardware & software purchase orders. He is a Gulf war veteran.
Stacey A. Kyzer is VP, secretary, & director. She is currently a pharmacist at Walgreens, & served as a pharmacy manager at Walgreens. She is the wife of Kevin Kyzer.
Michael E. Durbin is executive VP, operations. He was an aviation line maintenance supervisor at US Airways, responsible for manpower scheduling & budgeting, & performed troubleshooting functions on aviation electrical & mechanical systems. He was responsible for the AC-130 entry service project, coordinating the airplane's operational review with the factory.
FINANCIAL STATUS
Current Assets: $78,360*
Total Assets: $112,510*
Current Liabilities: $219,131*
Long-Term Debt: $45,000*
Accumulated Deficit: ($744,051)*
Shareholders Deficit $151,621*
Gross Revenue (Q3 ended 9/30/2002): $82,275
Net Income (Q3 ended 9/30/2002): $15,594
Gross Revenue (9 Mos. ended 9/30/2002): $265,105
Net Loss: (9 Mos. ended 9/30/2002): ($538,410)**
* At 9/30/2002
** Includes $462,930 value of common stock issued for services associated in connection with the
SB2 IPO. We like the fact that TGYC didn't go public via a reverse merger -- management
chose to do it the really clean way, even though it took the better part of a year.
ADVANTAGES
We like the fact that TGYC has the ability, background, structure, & a great many successful installations under its belt to take advantage of the fourth trend we described. Its strategy of working with top home developers is a very sensible approach. Having the cost of TGYC's services & equipment sales included in the home's mortgage is another sensible strategy.
Here's a company that began 5/23/2001, determined the best way to work with builders, started the IPO process January 2002, was initially approved in October 2002, & just began trading 12/7/2002. This is as close to the beginning that you can usually get, a great advantage when you are dealing with an emerging growth company.
We see this situation as having excellent long-term appreciation potential. We are favorably impressed with management, & expect TGYC to move ahead at a reasonably rapid pace. As significant milestones are reached, we will update this profile.
LOCATION
Call 866-266-2832 or 704-341-0698, Fax 704-341-0751, Email consult@connect2technology.com, or write 4421 Stuart Andrew Blvd, Suite 102, Charlotte, NC 28217.
www.connect2technology.com
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this document looking forward in time involve risks & uncertainties, & therefore actual results may be materially different. Factors that could cause actual results to differ include activity levels in the securities markets & other risk factors such as customer order rates, cancellations, late delivery of customer components, late system delivery, production delays, dependence upon certain customers, dependencies upon key executives, competition, product liability risk, control by management, & other risks detailed in the applicable U.S. Securities & Exchange Commission requirements.
