Dow Jones 11002.14 -46.58 1:40 pm PDT, June 6, 2006 NASDAQ 2162.78 -6.84 For info, visit access.smallcapnetwork.com S & P 500 1263.85 -1.44 Change your subscription status here Russell 2000 710.96 -2.96 VOLUME 06: ISSUE 43 NeWave - A Rising Tide The NeWave (OTCBB: NWWV) machine just keeps rolling. Only a few moments ago, NeWave announced that it had acquired One Source Imaging - a Santa Barbara-based media design and printing firm. Needless to say, we see this as a smart addition to NeWave's mix, and it's a pretty sweet enhancement for current shareholders too. What Would NeWave Want With A Printing Company?  We know what you're thinking... why is a perfectly good internet company getting involved in the printing business? Electronic information is the future, and paper is becoming obsolete! Ten years ago when computers started becoming commonplace, we probably would have agreed with you. But look around where you're sitting right now. Obviously you're near your computer - how much paper do you see? If you're like most of us, you're surrounded by more paper than you know what to do with (which really puts a wrinkle in the 'paperless life' theory suggested just a few years ago). Ironically, the electronics that should have removed all that paper from our lives has actually given us the ability to print more paper than we've ever had before. So no, paper and printing is far from obsolete. But that's not even the exciting part. As cliché as the word 'synergy' is (insert groan here), it's still an appropriate description of this merger. A printing and design company is an outstanding complement to NeWave's internet-marketing expertise. And truth be told, it's not like NeWave is just randomly building and marketing web sites - they actually do something, unlike too many dot-bombs of the late 90's. In fact, most of what they do does actually involve tangibles. It's just the marketing and order fulfillment process that is virtual. In simplest terms, NeWave establishes internet-based discount purchasing clubs. But the service they provide is soup to nuts. That means they'll do everything from establish a web presence for a customer, to setting up the wholesale supply chains needed to keep that client in business. Oh yeah, all of those same customers might need some printing work done too. In fact, it's a safe bet that all of those customers will need some sort of media design work at some point in time. Oh and by the way, the newest division of NeWave is more than able to handle the job... something that had been outsourced by NeWave until now. See the brilliance behind the idea? Besides the chemistry being right, there's a set of likely print customers already built in, which includes NeWave's own printing needs. Nice.  So What's In It For NeWave? Money. And ultimately, that's going to benefit shareholders. But there's never something for nothing. If this acquisition is like most acquisitions, NeWave has to actually shell out some cash - unless they're planning on bartering with their stash of chickens and antique jewelry. That means look for some sort of cash outlay from the NeWave change purse soon. Generally speaking, acquisitions are usually met with boos and hisses while that check is written, so we're not going to be shocked if the stock gives a little ground while the market digests the idea of this merger. Don't sweat it - those dips are usually short-lived, as investors figure out that the new combined company is even stronger than the old one. And in NeWave's case, the good far outweighs any bad. CEO Michael Hill expects a cost savings of 15% to 40% on printing costs, plus the complete flexibility of having in-house printing capabilities. So as far as we're concerned, the purchase of One Source Imaging isn't an expense - it's an investment, and a good one at that. Temporary Volatility  All that being said, the stock got 'interesting' this morning. If you're already in the trade, then you also probably know that shares surged from yesterday's close of 43 cents to today's average price of 48 cents. Now that's only a five cent move, but in terms of percentages, it's a hefty 11.6% gain. Like we discussed in yesterday's blog entry regarding Clearly Canadian Beverage (CCBEF), big run-ups can invite big reversals. Adding to that worry is the gap that was left behind today. Monday's high of 43 cents and Tuesday's low of 45 cents means there's two cents on the chart that the market just skipped over. That in itself is no big deal, except for one thing... the market hates gaps. In fact, more often than not, the market hates them so much that it will actually do everything in its power to close them before moving on. Ergo, NeWave shares are primed to pull back to at least 43 cents before getting the proverbial green light to move higher again. Bet you didn't know 'the market' had such a strong personality, did you? Conveniently, today's acquisition announcement may end up doing that very work for us. That's actually a better scenario if it's going to happen, in that it takes care of two problems with just one dent - the gap will be closed, and the likely dip due to the cost of the acquisition, will both be burned off simultaneously. After that, we're still looking for bigger and better things from NeWave, which has been on fire - in a good way - under CEO Michael Hill's leadership. For the unofficial and incomplete Michael Hill bio, be sure to keep reading below.  Michael Who? Michael Hill - the guy steering the ship at NeWave. He seems to know what he's doing, piecing together a pretty nice resume during his time there. Here are just some of his company's recent accomplishments... Reduced debt by 50% over the last five months (he was originally shooting to get it done in twelve) The company to its first-ever quarterly profit in Q1 of this year Increased membership by 72% in March (compared to February) Saw record revenues in 2005 (full year) One of its websites, onlinesupplier.com, surpassed a record of 10 million hits in January And the list could go on and on, but it doesn't need to - the guy just knows how to get the right things done. Maybe he took a Stephen Covey class. Maybe he's just incredibly lucky. But most likely, he's just in tune with a very specific need, and he's meeting that need perfectly. Kudos to Michael, and congratulations (in advance) to NeWave shareholders. Speaking Of The Stock  We're not going to dwell on the chart's gap, nor the potential effect that the acquisition may have on shares. That ship has already sailed. If you missed that boat, go back up about five paragraphs. Instead, we just want to take a step back and look at a bigger chart aspect. Specifically, we want to examine how NWWV shares have made a habit of taking two steps forward and one step back. Yes, we know we're running out of clichés, but when the shoe fits... never mind. The point is, that's just the way things are. But if we keep doing well in the grand scheme of things, we don't mind if that's the way things are.  Despite all the gaps that we've made over the last few months, we're still not overly concerned abut a major pullback. True, we just mentioned a moment ago that gaps are engraved invitations for corrections. That hasn't changed. But we'll also point out that NeWave shares have defied the odds and left several gaps unfilled. The only point we were trying to make previously was that the gaps could result in some selling pressure. The flipside is that, even if those gaps do get filled, that's still not reason to panic. As the chart illustrates, this stock has continued to hit higher highs, and avoided moving to lower lows, since hitting a long-term bottom in mid-March. And the 50 day moving average line that was resistance early in the year has now turned into a support line, pushing shares higher each time it's retested. Did we mention that today's high of $0.48 was a new multi-month high? Yeah - we'll tolerate a little volatility for any stock that can move 147% higher in three months. By the way, note the multiple high-volume rallies for NeWave shares. That's an indication of growing interest in this opportunity, as more and more investors are discovering this opportunity (good thing we've been on board since March 22nd). Although we already have a 147% gain under our belt, the best may be yet to come if we keep seeing this growth in buying volume.   NeWave Closes Acquisition; Broadens Media Fulfillment Capabilities Goleta , CA - Jun 7 Newswire / NeWave, Inc. (OTCBB: NWWV) today announced that it has acquired Santa-Barbara-based One Source Imaging (OSI). OSI is a business to business media design firm offering a full range of services including graphic design, printing services, data merge, mailing and finishing.  NeWave CEO Michael Hill stated, "The acquisition of OSI allows us to now fully control the printing and fulfillment process in-house as well as realize significant cost savings of approximately 15% and 40% respectively within these areas. The fact that OSI is a local firm with a solid reputation makes for easy logistical and cultural assimilation." He added, "Our strategic decisions are based upon their potential impact on both top line growth as well as earnings and believe that this acquisition falls within those parameters."  About One Source Imaging One Source Imaging (OSI) is a full service business to business media design firm offering a range of services including graphic design, printing services, data merge, mailing and finishing. To find out more about OSI you may visit www.osimaging.com.  About NeWave, Inc. NeWave, Inc. through its websites 'onlinesupplier.com', 'buydiscount.com' and mysoftwaretutor.com, provides ecommerce solutions and thousands of high value products at significant savings to its online loyalty club customers and members.  To find out more about NeWave (OTCBB: NWWV), visit our websites at www.newave-inc.com, www.onlinesupplier.com and www.buydiscount.com. The Company's public financial information and filings can be viewed at www.sec.gov.  Forward Looking Statements This release contains forward-looking statements, including, without limitation, statements concerning our business and possible or assumed future results of operations. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including: our ability to continue as a going concern, adverse economic changes affecting markets we serve; competition in our markets and industry segments; our timing and the profitability of entering new markets; greater than expected costs, customer acceptance of our products and services or difficulties related to our integration of the businesses we may acquire; and other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do 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 our expectations, except as required by law. Contact: Michael Novielli Chairman NeWave, Inc. mnovielli@newave-inc.com ph (845)575-6770     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 Fashion House To Be Removed From Coverage After having ample time to make progress for share owners, Fashion House (OTCBB: FHHI) is going to be removed from coverage in the Small Cap Network. The stock was picked up in early April, as we anticipated its potential to come to fruition. But after two months of weakness and limited interest, we've decided to move on to better opportunities. There is no bullish catalyst on the horizon, neither from the company's management, nor from the market.    Xtreme Companies (XTME) Undergoes Temporary Ticker Modification Note that the usual ticker symbol of 'XTME' for Xtreme Companies will be trading under the ticker symbol 'XTMEE' on a temporary basis. The extra 'E' was added by the exchange, as required by the Securities Exchange Commission, to indicate that the company was late in filing their required 10Q (quarterly) update with the commission. THIS IS NOT A RED FLAG OF BIGGER PROBLEMS. In fact, it's more common than you might think. The SEC just requires the denotation to let other investors know that a report or required filing has not been reviewed by them as originally scheduled. Once the SEC reviews and accepts the 10Q, the extra 'E' will be removed. This does not affect any other trading aspect of the stock. That said, we still want to do our due diligence on our holding, and have examined the submitted 10Q ourselves. Overall, it was satisfactory, but with room for improvement (as always). Revenue was up by more than 1000% relative to the first quarter of last year. However, the company still took a loss, with the cost of goods sold alone exceeding net sales. That, needless to say, is a bit disappointing. It appears Xtreme will likely take some time to get things turned around. With the recent change in management, we would not suggest adding to any existing positions at this time. As a matter of fact, for those with little patience or risk tolerance for a stock like Xtreme, it may be best to move on. However, knowing these situations often take time to come to fruition, we will continue to inform readers should anything exciting develop over the next few months. 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. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the SmallCapDigest Email Newsletter on a regular basis. 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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 $60,000 by NeWave for coverage of the company. In addition, one of the principles of TGR Group LLC is also a principle of MarketByte LLC. In a separate contractual relationship in 2004, MarketByte LLC was paid a fee of $25,000 in cash and 750,000 newly issued, restricted shares by NeWave for coverage of the company. The aforementioned shares are all currently eligible to be free trading. The term of MarketByte's obligation to NeWave has expired. 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