Dow Jones 12315.58 -12.90 2:03 pm PST, December 12, 2006 NASDAQ 2431.60 -11.26 For info, visit access.smallcapnetwork.com S & P 500 1411.56 -1.48 Change your subscription status here Russell 2000 788.41 -4.66 VOLUME 06: ISSUE 98 On The Go Gets Off To A Good Start  Well, it looks like they've done it again. On The Go Technologies (OTCBB: ONGO) just released their quarterly results. We think it was an impressive step in the right direction, even if for only one quarter. More on that in a second.....  The earnings news came on the heels of yesterday's press release, which was a nice recap of how far the company has come since 2004. We blogged it then, but we feel it's worth highlighting here in today's main portion of the SmallCap Digest. We think you'll be impressed by the long-term progress as well.  See if you spot the trend we spotted within yesterday's recap of On The Go's fiscal results.....  2004 Revenues: $3.0 million  2005 Revenues: $5.6 million  2006 Revenues: $30.0 million (thanks to the purchase of Island Corporation, and Solutions In Computing)  2007 Projected Revenues: $40 million  Now, we know this business of corporate acquisitions can be a shell game. We've all seen several companies spend two bucks to improve the top line by only one dollar.....effectively 'buying' their growth, What we want to see are acquisitions that make sense, and money. Has On The Go done that? From our point of view, yes, it appears On The Go is on track to do more with less, so to speak.  Last year's $30 million in revenue was accompanied by a net loss of $6.3 million. Before you jump to any conclusions, remember this... last fiscal year, On The Go spent $1.2 million in financing expenses, and $600K on a debt restructuring deal. The debt restructure was a one-time cost, and the financing cost is scheduled to decrease significantly in fiscal 2007. Subtracting those two amounts would have pared the loss to roughly only $4.5 million. On a percentage basis, that would have been a very large improvement over the prior year's loss.  Point being, no, we don't think the acquisitions were a liability, Rather, they seem to be shaping up as a pretty nice asset. In other words, we think shareholders should be pleased.  In the meantime, we think it's worth mentioning that since the addition of Island Corporation and Solutions In Computing, the total acquisition debt has been reduced by $2.8 million. So any lingering finance expenses should be shrinking as well. Staffing expenses have been reduced by $1.5 million. Those cost-saving measures are not entirely reflected in last year's figures, since they were only initiated post-acquisition. However, we think their absence or smaller impact on next year's books could be a significant help for On The Go's bottom line.    Today's Earnings Announcement So how did On The Go get their new fiscal year started (which began on August 1st)? We think pretty well. From the press release below, we see that total revenues for their first quarter (ended October 31) was $7,386,217, which is a gain of 19.2% from the $6,196,511 the company reported for the quarter ended October 31, 2005. The per-share loss was whittled down to $0.93 from a net loss of ($7.86) per share in 2005. And by the way, that loss included $424K in interest and financing expenses, which as we said, are scheduled to shrink progressively.  OK, by this point you may be pretty jazzed about the consistent improvement we're now seeing each quarter. But how do we feel about what we see?  Keep in mind this strictly our opinion, but, we tend to like what we see as well. Sure we'd rather see big profits now - who wouldn't? But that's not how things work. If earnings were positively huge - and growing - we doubt we'd see the same upside potential for shares here. Instead, with current earnings were positive, odds are that everybody and their brother would already own it...and the per-share trading level could be astronomically high relative to current levels.  The way we see it, this is the kind of scenario where trading levels are depressed largely because other investors only see where On The Go is now - not where On The Go is likely to be a year from now. However, in our opinion, the biggest sweet spot for a stock can be as the company 'turns the corner'. We've been keeping a close eye on this company, and it seems they may be on the right path here. Only time will really tell, and it may take a few more quarters until it becomes perfectly evident. At the corporate level though, we like what the company appears to be doing. Of course, we think at least a few other investors have to agree before the stock starts to move. And speaking of.........    There's Two Sides To Every Coin We don't think you should ever confuse a company with its stock. Sometimes the stock reflects corporate results, and sometimes not. Consistently assuming great fundamentals will always drive your stocks higher may take a toll on your bank account.  That's why we rely on technical analysis as much as fundamental analysis....because we feel timing can be everything. See, fundamental analysis can help you find the best-performing or most-improving companies over a long period of time. But, from our point of view, only technical analysis can fully illustrate the market's short-term opinion of those fundamentals. (That's why stocks of great companies can go lower, if the collective opinion of strong corporate fundamentals is still pessimistic.)  On The Go's shares, we feel, may be a classic illustration of this idea. Although still in the red, the company's top lines have been mostly growing for months, while the loss has been mostly shrinking. Yet, the stock has been moving lower.  Do we think On The Go's fundamentals will eventually be reflected in the stock's trading level? Well, if things continue to progress as they seem to be right now, we feel the news may eventually strike a chord with investors. However, to restate our stance, we think timing is everything.  In that light, we think the 'show me' crowd may not be very compelled by this chart...at least not yet. From a technical perspective, we see some obstacles that need to be overcome first before our idea of an appropriate risk-to-reward scenario is met. Perhaps we're being a little too conservative though; it should ultimately be the individual investors call.  On the other hand, we feel aggressive speculators may find the currently-low trading level attractive, provided you've added this year's persistent weakness into the thought process. ....this stock may well end up moving even lower. Yet while we still see the chart as something of a question mark, we also feel the need to point out the high-volume churning we've seen since early November. That can be a sign of a bottom. Of course, it doesn't have to be a sign of anything. We think this sort of approach can be fruitful, but can simultaneously be nerve-racking.  So there you go....the earnings news, the recap, and some of our thoughts on the opportunity of being a shareholder. We feel ONGO is at least worth a look, short-term, and long-term. However, as of right now we also have no target and stop (although we might initiate one at a later date if we see something new materialize). For now, we think the individual investor has to determine how or if this trading idea is a fit with your overall strategy.  In any case, here's the full press release.   On The Go Reports October 31, 2006 Quarter Revenue Up 19.2% to $7.38M from Year Previous  CONCORD, ON - December 12, 2006 - On The Go Technologies Group (OTC Bulletin Board: ONGO, 'the Company'), a leading multi-industry computer hardware, software and systems integrator, announced today that total revenue from sales for the quarter ended October 31, 2006 was $7,386,217, a gain of 19.2% from $6,196,511 reported for the quarter ended October 31, 2005.  Net loss for the quarter from continuing operations was ($0.93) per share, compared with a net loss of ($7.86) per share in 2005. This quarter's loss is inclusive of $424,350 in interest and financing expenses due primarily to new convertible debentures, deemed beneficial conversion features, which resulted not only in normal interest expense, but also expense related to that conversion feature.  As of October 31, 2006, the Company had current assets of $8,534,074 and current liabilities of $6,709,438 producing a working capital surplus of $1,824,636, as well as $988,153 in cash.  On The Go Technologies CEO Stuart Turk noted, 'Much like our recent July 31st year end results, the Company's sales growth is largely reflective of the revenue potential that our most recent acquisitions: Infinity Technologies, Island Corporation and Solutions in Computing, have brought to the corporate table. The Company also incurred certain expenses associated with those acquisitions, including new convertible debentures.  Mr. Turk continued, 'Our focus remains on achieving profitability in 2007, and, with the strength of the revenue generation capacities of all of our divisions' additions to both organic and new customer growth, On The Go remains well positioned to move confidently into the rest of the fiscal year. Coupling the sales appreciation with our effective cost-cutting measures, we believe our goal of $40 million in revenue for 2007 is strongly underway.'  About On The Go Technologies Group  On The Go Technologies Group is a North American corporation focused on acquiring versatile and profitable companies in the IT sector. OTG has established itself as a respected industry competitor through its four main divisions: OTG Enterprise, catering to Fortune 1000 and SME clientele and vendors such as HP, Apple, IBM, SGI, Extreme Networks and Adobe; OTG Creative, a prominent systems integrator in the U.S. and Canadian digital entertainment industry; and OTC Healthcare and OTG Research compiling sophisticated digital solutions and networks for the diagnostic medical community and the education and scientific research communities respectively. The company's intention is to maintain sustained growth in the years to come via continued development in its existing divisions and an aggressive acquisition schedule.  For more information, visit http://www.otgtech.com or http://www.otgtech.com/video.  To view a company profile, visit http://www.otgtech.com/pp.pdf . To be added to On The Go Technologies Group's e-mail list for company news, visit http://www.otgtech.com/new_site/inv_pkg_form.htm This press release contains forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements contain words such as "expects," "believes," "anticipates" and "intends." Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, economic conditions affecting the B2B environment; continued ability to obtain hardware, software and peripherals at competitive costs; the company's ability to finance its planned expansion efforts; the company's ability to manage its planned growth; and changes in regulations affecting the company's business and such other risks disclosed from time to time in the company's reports filed with the Securities and Exchange Commission. The company does not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in management's expectations, except as required by law.    We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Eagle To Acquire Connex Customer Base We recently learned Eagle Broadband (AMEX: EAG) has acquired Connex Services' customer base, which is expected to add about 50 I.T. clients to Eagle's current base, as well as push I.T. revenue up by about $600,000. It's a good fit, as Connex offers something along the same lines Eagle.....management of broadband-based data, voice, and video services.  Anything to boost revenues is good - even if it's a modest $600,000. However, it appears as if Eagle CEO Dave Wicek sees the same bigger picture we do. In our opinion, the 'first' customer is usually the toughest to get. Every one after that seems to be easier to get on board. So, the current Connex customer base can also act as a springboard to introduce other services Eagle provides. We think the company should be able to take this relatively small foothold and expand its footprint by quite a bit.  The deal is doesn't require Eagle to assume any of Connex's debt. Instead, Eagle will be issuing about 1.2 million unregistered EAG shares to Connex.  For more details, click here.   Web2 Corp. To Launch Video-Based Job Search Board Capitalizing on what we feel is a broad range of Internet-know-how, Web2 Corporation (OTCBB: WBTO) announced yesterday they'll be launching a job search site....with a novel twist. Rather than an employer just posting a simple job description, a prospective company can upload a video regarding the opportunity. Likewise, a job-seeker will be able to upload a video of him or herself as part of a multimedia job application.  Your first thought might be that this is just too radical to be of interest to either side of the equation. However, we've observed - even in just the last few months - how the use of multimedia (video, audio, with written word) has become mainstream. YouTube and Yahoo Video are just a couple of examples of how Internet users are looking to become more digitally creative. So, we see it not so much as cutting-edge, but rather as pioneering....Web2 Corporation appears ready to lead the way in the next evolution of Web-based job searches. We'll be excited to see where it all leads.  The service is scheduled to be launched in January, and will be aptly named JobMatchPro.com. For more on Web2's newest venture, click here.    Immune Response Sets Date for Reverse Split On Friday, we finally got word on the long-awaited reverse-split (1:100) of Immune Response Corporation (OTCBB: IMNR) shares. The stock will first trade on a post-split basis on December 20th.  Note that the ticker symbol will temporarily switch to 'IMNRD' to denote that the stock is trading on a post-split basis, as the highly elevated trading levels could make an investor think shares had gone ballistic....if they weren't aware of the split. Around the middle of January, the ticker will revert back to the old IMNR symbol. If you're following the company's stock, we'd just recommend using both tickers until the whole deal is done later in January. That way you'll be sure to receive accurate quotes and all the news, no matter how your data provider handles the switch.    Eagle to Submit Plan to Maintain AMEX Listing Maybe you already heard, or maybe not, but Eagle Broadband (AMEX: EAG) received an official notice from the American Stock Exchange - where Eagle's shares are publicly traded - that the company may not fully meet all if their listing requirements. Specifically, the AMEX notice to Eagle states that shareholder equity and continuing losses from operations fall short of the exchange's standards....as of right now.  As you might imagine, this announcement made on December 5th pulled shares lower on the 6th.  While investor's concerns are understandable, we also think it maybe a case where the market reacted quickly without really absorbing all the details they may want or need to. Having had some time to review all the news and digest, here's our take....  No, we don't necessarily think this is good news.....because it's not exactly news at all (meaning it's not exactly bad news higher). The satisfaction of the AMEX's requirements have been in question for a while - it's simply that the official August 31st year-end filing had to be reviewed by the AMEX before the official notice could be delivered. So, it seems as if the panic selling may have been from those owners who didn't fully know Eagle's story. Fine. Now that they're getting out of the way, the more serious investors may be able to scoop up shares at a lower trading level.  The other key reality we see is simply the 'current' Eagle is not the 'old' Eagle those past filings represent. Remember, we think Eagle is likely to become a major IPTV player just as the company describes, but that enterprise was only started in October. Given enough time, we think Eagle may well indeed meet the AMEX's requirements using IPTV as the revenue vehicle.....which was not in place last fiscal year.  Plus, we don't think other investors read the news too closely. The American Stock Exchange never said EAG shares were getting de-listed. The exchange said they might get de-listed if certain requirements continue to go unmet. Any de-listing wouldn't take place until May 29th of 2008. So, there's a pretty big window there for Eagle to get things pointed in the right direction....which we feel they're certainly capable of. As mentioned in the title, Eagle will be submitting a plan to the AMEX about how they'll go about meeting those specific AMEX standards in the future. For the time being, an acceptable plan of action will keep Eagle in good standing with the exchange, as long as the company does indeed proceed according to that plan.  Ultimately, yeah, we - and probably any shareholders - would have rather not had to contend with some rough publicity. However, we think a little perspective is on order on the matter. From our point of view, Eagle is still a viable opportunity, regardless of where it's listed. In the meantime, the AMEX listing is still likely to be in place for at least another 18 months. We think that's more than ample to time for the company to prove itself.  For more details on the AMEX notice, click here. Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. 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Unsubscribe Here D I S C L A I M E R: The Small Cap Digest, the Small Cap Network, its website and email newsletter (hereafter, cumulatively referred to as "SCD") , is an independent electronic publication committed to providing its readers with factual information on select publicly traded companies. SCD is owned and operated by TGR Group, LLC ("TGR"). TGR is not a registered investment advisor or broker-dealer. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. Moreover, as detailed below, TGR accepts compensation from third party consultants and/or companies, which it features in the publication and circulation of SCD. To the degrees enumerated herein, SCD should not be regarded as an independent publication.  Click Here or go to http://access.smallcapnetwork.com/compensation_disclosure.html to view our compensation on every company we have ever covered, or visit the following web address: http://www.smallnetwork.net/profile_disclosure.html for our full profiles and http://access.smallcapnetwork.com/short_term_alerts.html for Trading Alerts.  TGR Group, LLC has been paid a fee of $30,000 cash and 10 Million shares of newly issued restricted stock by Immune Response Corp. for coverage of the Company.  TGR Group, LLC has been paid a fee of $25,000 cash and 75,000 shares of newly issued restricted stock by Web2 Corp. for coverage of the Company. TGR Group, LLC has been paid a fee of $25,000 cash by Eagle Broadband for coverage of the Company. 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