Dow Jones 12342.56 +36.74 3:08 pm PST, November 17, 2006 NASDAQ 2445.86 -3.20 For info, visit access.smallcapnetwork.com S & P 500 1401.20 +1.44 Change your subscription status here Russell 2000 788.47 -2.28 VOLUME 06: ISSUE 92 Eagle's IPTV Rollout Begins a New Chapter  Would you believe there's a serious investment opportunity in the hatching of an eagle's egg? Nooo....obviously you can't invest in a real bird egg, but we think the analogy fits well with a corporate opportunity we've been following for a while. Eagle Broadband (AMEX: EAG) has just hatched its cable television egg, so to speak. The IPTV (Internet Protocol Television) enterprise that was incubating earlier this year has now been fully launched, making this a true ground-floor opportunity. Like a real eagle, we think this venture could be soaring very soon. So, we feel investors may want to move swiftly if they want a shot at fully benefiting from the potential we see ahead.  First things first though....what is IPTV? Without getting into the science of it, it's just television programming delivered through the Internet. It looks, sounds, and acts just like regular TV, because it is regular TV. It's just delivered digitally. However, in many ways it's superior to the kind of television options consumers had only a few years ago. We can't dwell on that though (at least not right now). Just keep in mind we think the IPTV industry's potential is enormous. Ergo, we feel companies with a superior IPTV offering will emerge as industry leaders over time. In our opinion, Eagle Broadband is such a company, which is why we want our readers to really understand the opportunity first...before the rest of the market does.    So How Do Ya' Make Money As An IPTV Company? In simplest terms, Eagle's revenue stream will be a split of the monthly subscriber fees paid to a local cable company affiliate. From Eagle's cut, a portion gets paid back to the stations creating and delivering the original TV content. The remainder of Eagle's payment goes straight into their own pocket. It's a simple and scalable model, which is nice for the company since they can control their overhead.  But in our opinion, one of the key competitive edges here is exclusivity. Their IPTV service offers 200+ channels of content, but Eagle owns the exclusive IPTV-delivery rights on many of them. So, if you want those premium stations delivered via IPTV, you have to go to Eagle to get them. We think that little detail could make a big difference for EAG owners when talking about bottom line results this time next year.  So, the two questions we'd be asking as investors are (1) 'Does the revenue plan make sense?', and (2) 'Do I think Eagle can indeed execute the revenue plan?'. In our opinion, the answer to both questions is a resounding 'Yes'! In fact, we think the recent affiliation with ANEW Broadband in Florida is outstanding early evidence that Eagle is ready to carry out its mission. ANEW was signed on as an affiliate shortly before Eagle's receiving station became operational. With the relationship now established, Eagle's sales team is now able to use it as a model when discussing their offer with other cable companies.    That Was Then, This Is Now If you're wondering why now may be the right time to own shares, we think there's one key theme to understand....to us, the company known as 'Eagle Broadband' today doesn't look anything like the 'Eagle Broadband' from a year ago, or even from three months ago. The key transition is indeed the paradigm shift into an IPTV outfit. Although IPTV is still new for now, Eagle expects to eventually be known first and foremost as an IPTV company.  Details? No problem. It wasn't until October 3rd that the company was able to receive and deliver their 200+ channels worth of TV content. The ink from the ANEW deal is still drying. It was only a few days ago they started to promote their new set-top boxes used to receive the IPTV signal. The clincher as far as we're concerned, though, is that Eagle can finally set their sales team in motion with a viable, tangible service to tout. In short, it looks like the revenue wheels are now spinning....and it's all happened in just the last few weeks.  Point being, we feel 'now' may be a good time consider owning shares simply because the venture is brand new, yet appears highly promising.    Not Apples To Apples The prompt for today's edition was largely the announcement of Eagle's full-year results, but obviously we think the compelling story is the opportunity for owners of EAG stock. The earnings press release appears below, but we'll put our two cents in right here.....  Last year (fiscal year ending on August 31st), Eagle Broadband saw an adjusted net loss of $9 million, versus a net loss of $23.9 million the year before. How'd that happen? Operating expenses were reduced from $21.4 million to only $8.3 million.  It's a major improvement, but one that we think at least requires more information. See, the change is partially the result of internal cost reduction, and partially the result of the divestiture of some enterprises. Specifically, Eagle got out of the residential security monitoring business, and also got out of the set-top box leasing business (the lease buyout paid $900K in cash to Eagle). Plus, they've outsourced the operation of their traditional cable television business to a third party, which should also help keep expenses down.  Our opinion of these numbers is two-fold. We'd love to see profits, yet we also did love to see expenses shrink as they did. But truth be told, we're not entirely sure it matters either way...at least not in this instance. This year and next year aren't exactly 'apples-to-apples'. Heck, we're not even sure the comparison is apples to any other kind of fruit at all.  Perhaps more to the point, the way we see it, the company a potential stock buyer would be investing in today isn't the same company these results represent. Would we be saying the same if profits were instead through the roof? Yeah....we would. Fruit-based analogies aside, we think today's buyers should understand the overhauled Eagle appears to be leaner, and seems to have a significant opportunity to grow IPTV market share...a business that didn't even exist last fiscal year. Oh, did we mention we see it as a ground-floor opportunity?    An Investor's Perspective  As for the opportunity in being a shareholder, would you rather invest at a lower trading level or a higher one? Hopefully you said lower....you know, the whole "buy low, sell high" thing. If you did, we think you'll like EAG's chart as well as we do. It's now at a one-month low, and just off of multi-year lows. But, being stochastically oversold right now on the daily chart, we feel the window of opportunity to own at these low levels may not last long, especially if Eagle's re-invention story gets more traction within the investing world.  Obviously only the future can tell with any absolute certainty where this new direction will take Eagle next. While we'd be the first to acknowledge the term 'ground-floor' has become somewhat gratuitous (ok, painfully abused), in Eagle's case, we really do see it as a fitting description. Why? With the exception of ANEW, Eagle can't lose any affiliate cable companies - they can only add them. In other words, at the corporate enterprise level, Eagle's IPTV division seems to have nowhere to go but up. With hundreds of cable companies out there, we think even capturing a small share of the potential market could still translate into significant revenues for Eagle.  Based on everything we've discussed here today, relative to their risk, we think EAG shares offer very nice upside potential. And simultaneously, we feel most of any potential could be realized - in the form of gains - during these early stages of Eagle's IPTV business.  Don't Forget....  If you want to learn more about Eagle, be sure to listen in on Eagle Broadband's conference call today (Friday, November 17th). They'll be discussing their full-year results as well as reviewing plans for their future. The call will begin at 5:30 PM EST, so hopefully you get this in time. If not, fortunately the call is actually a Web-cast and can be replayed later. It's accessible through the corporate web site (http://www.eaglebroadband.com/), and requires Windows Media Player or Real Networks RealPlayer to listen in or replay.    Eagle Broadband Reports Year-End Results  LEAGUE CITY, TX, Nov 17, 2006 (MARKET WIRE via COMTEX News Network) -- Officials with Eagle Broadband, Inc. (AMEX: EAG), a national provider of broadband, Internet Protocol (IP) and digital communications technology and services, today announced that the company has filed its Form 10-K with the Securities and Exchange Commission reporting results for the fiscal year ended August 31, 2006.  "Fiscal year 2006 was a year of transformation and rebuilding," said Dave Micek, president and CEO of Eagle Broadband. "We significantly cut expenses, shed unprofitable non-core businesses, hired key managers, and have successfully transformed Eagle into an IPTV company focused on our end-to-end, turnkey IPTV video solution: IPTVComplete(TM) and our MediaPro IP set-top boxes. We have completed the construction of our super-headend in Miami, and are currently delivering almost 250 channels of television and music content to ANEW Broadband."  For the most recent fiscal year, the company reduced its adjusted net loss by 62% to $9 million from $23.9 million in the previous year. Adjusted net loss, a non-GAAP financial measure, is calculated as the loss from operations before impairment charges, loss from discontinued operations, other income/(expense) and depreciation.  The company calculated adjusted net loss as follows:  Fiscal years ended August 31, 2006, 2005 --------------------------  Net loss (GAAP) $ (26,933,000) $ (57,010,000) Adjustments: Income (loss) from discontinued operations (657,000) 752,000 Other income/(expense) (1,293,000) (638,000) Depreciation expense (2,090,000) (4,367,000) Impairment charges (13,876,000) (28,815,000) ------------- ------------- Adjusted net loss $ (9,017,000) $ (23,942,000)  ============= =============  Adjusted net loss is not comparable to earnings determined in accordance with generally accepted accounting principles. Accordingly, adjusted net loss as determined by the company may not be comparable to similarly titled measures reported by other companies. The company believes that this computation is useful in analyzing operating performance, but should be used only in conjunction with results reported in accordance with generally accepted accounting principles.  Micek continued, "In executing our strategy of positioning Eagle to capitalize on the growing IPTV market, we significantly streamlined our operations, as evidenced by a significant reduction in our adjusted operating expenses."  Adjusted operating expenses, a non-GAAP financial measure, declined from $21.4 million to $8.4 million; a reduction of more than 60%. Adjusted operating expenses are calculated as operating expenses excluding impairment and depreciation. The company calculated this adjusted operating expenses measure as follows:  Fiscal years ended August 31,  2006, 2005  ------------ ------------  Operating expenses $ 24,341,000 $ 54,586,000 Adjustments: Impairment charges 13,876,000 28,815,000 Depreciation expense 2,090,000 4,367,000 ------------ ------------  Adjusted operating expenses $ 8,375,000 $ 21,404,000  ============ ============  Additional information on the financial condition and results of operations can be found in the company's Annual Report on Form 10-K for the fiscal year ended August 31, 2006, filed with the Securities and Exchange Commission on November 17, 2006.  In connection with the audit of the fiscal year 2006 financial statements, the company's independent registered public accountants have rendered a report that expresses substantial doubt about the ability of the company to continue as a going concern. A summary of highlights for fiscal year 2006 includes:  -- Adjusted net loss, a non-GAAP financial measure, was reduced from $23.9 million in fiscal 2005 to $9 million in fiscal 2006, a 62% reduction.  -- Reduced adjusted operating expenses, a non-GAAP financial measure, by more than $13 million, or 61%, as compared to fiscal 2005.  -- Strengthened the management team with the appointment of Brian Morrow as chief operating officer and general manager of the IPTV division.  -- Signed ANEW Broadband as an IPTVComplete customer.  -- Significantly added to the company's extensive inventory of IPTV studio content contracts.  -- Brought to market a new high definition set-top box, the IP3000HD, which is a highly capable, yet inexpensive solution for both hospitality markets and IPTV customers.  -- Received a patent on SatMAX(R) technology.  -- Introduced the SatMAX Alpha Emergency Communications System, a portable Iridium-based satellite phone emergency communications system designed for disaster recovery, crisis management and emergency preparedness.  -- Received SatMAX orders from Norfolk Southern and Textron Systems.  -- Completed municipal Wi-Fi installation projects for the cities of St. Cloud, Florida, and Franklin, Tennessee.  -- Received a three-year IT services contract with one of North America's largest independent oil and gas producers.  -- Exited residential security monitoring, as management determined that this component of the monitoring business was not synergistic with the company's core competencies.  -- Entered into an operations agreement with a third party to operate the majority of Eagle's traditional cable business, thereby significantly reducing operating expenses and headcount.  -- Entered into a $5,000,000 equity line of credit with Dutchess Private Equities Fund.  -- Secured over $4 million of traditional, non-convertible debt financing to enable the company to quickly proceed with building its Miami super headend to provide IPTVComplete to the southeastern region of the United States.  Subsequent to year end, Eagle has:  -- Completed the construction of Miami super-headend.  -- Reduced debt obligations by more than $2.7 million.  -- Completed a site survey for a third municipal Wi-Fi installation project.  -- Received and shipped an order for five portable SatMAX Alpha units.  -- Sold certain equipment leases held by an Eagle subsidiary for $900,000.  "Our management team believes the company is well positioned to capitalize on the fast-growing IPTV market," concluded Micek. "We will continue to execute on our business plan with the expectation of improving the company's financial position."  For more information on Eagle Broadband, visit www.eaglebroadband.com.  About Eagle Broadband, Inc.  Eagle Broadband is a technology company that develops and delivers products and services in three core business segments:  -- IPTV -- Eagle Broadband's IPTVComplete(TM) provides direct access to more than 200 channels of high-demand programming from popular entertainment providers, often using Eagle's high-definition, set-top boxes.  -- SatMAX(R) -- Eagle Broadband's SatMAX provides indoor/outdoor communications utilizing the global Iridium-based (www.iridium.com) satellite communications system. It offers both fixed and mobile solutions, including the emergency first responder SatMAX Alpha "SatMAX-in- a-suitcase" technology.  -- IT Services - Eagle Broadband's IT Services Group is a full-service integrator offering a complete range of network technology products including VoIP, remote network management, network implementation services and IT project management services.  EAGG  Forward-looking statements in this release regarding Eagle Broadband, Inc., are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, the company's ability to continue as a going concern, the company's liquidity constraints and ability to obtain financing and working capital on favorable terms, the continued acceptance of the company's products, increased levels of competition, new products and technological changes, the company's dependence upon third-party suppliers, intellectual property rights, and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission.  Media Contacts:  Jackie Hutto  Griffin Integrated Marketing  (281) 335-0200  Jesse Blum  Friedland Corporate Investor Services LLC  (866) 356-0651 SOURCE: Eagle Broadband    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 On The Go Lands Another Large Order The register is ringing again for On The Go Technologies (OTCBB: ONGO). Yesterday the company reported a $60,000 sale was made to a major Toronto-based broadcasting company. The company is a long-term customer for On The Go.  You can add this shipment to the growing revenue tally we've been monitoring for On The Go, which has become pretty large in the early portion of their fiscal year. Just take a look at some of the recent sales results by clicking here.    Early Traffic Results For Web2's 'ByIndia.com' After its official launch just three week's ago, ByIndia.com has started to draw a crowd...so to speak. The owner and developer of ByIndia.com, Web2 Corp. (OTCBB: WBTO), announced yesterday ByIndia.com's Alexa ranking - a site popularity measurement service - had risen from 750,000th to 12,745th. Considering there are literally millions and millions of Web sites out there to compete with, that's a very impressive move. Alexa also indicates 85 out of every 1 million Internet users visits ByIndia.com. Again, it may seem like a tiny fraction (and it is), but it's actually very impressive by Internet traffic standards. For an idea of how quickly this site is becoming popular, only 20 out of every 1 million Internet users visited ByIndia.com last week. Once they got to the site, the number of pages viewed per visitor increased by 50% since the launch.  We think this is a good sign for the enterprise. While there's still no word on revenues yet, we feel being able to gather 'eyeballs' as they have is at least a step in the right direction. We're looking forward to seeing how the site continues its development. For the full press release, click here.    Xtreme's Taking Their Boats On The Road Even still hearing the echoes of their Q3 earnings announcement, Xtreme Companies (OTCBB: XTME) is hard at work on their Q4 results. This weekend they'll be showcasing their Challenger Powerboat line at the annual St. Petersburg (Florida) boat show. A big venue? You bet...the St. Petersburg show is the largest show on the gulf coast. And why shouldn't it be? After all, Florida claims the 'most registered boats' title, with St. Petersburg being at the heart of the boating world for the panhandle state.  These shows are a big deal for boat manufacturers, and especially for Xtreme since they have a new powerboat focus to tout. Of course, as well as their Challenger line performs on the racing circuit, we don't think they'll have much of a problem creating a buzz at the booth. The exciting part about the St. Petersburg show in particular is knowing that the Florida boat market represents about 10% of the total market in the United States.  For the full press release and show details, 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. 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. To ensure newsletter delivery, you can add any additional email addresses you may have to the SmallCapDigest Member List. Receiving the SmallCapDigest Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the SmallCapDigest recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery. Subscribe Here Note: Your email address will be kept strictly confidential, and will not be shared with any other entity for any purpose at any time. If you no longer wish to receive the SmallCapDigest, simply follow the instructions located at the bottom of every SmallCapDigest Newsletter Edition. 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 $25,000 cash and 115,000 shares of newly issued restricted stock by Eagle Broadband for coverage of the Company. TGR Group, LLC has been paid a fee of $30,000 cash and 20,000 shares (reverse split adjusted 08/09/06) of newly issued, restricted stock by On the Go Technologies Group for coverage of the Company. TGR Group LLC has been paid a fee of $25,000 cash and 500,000 shares of newly issued restricted stock directly by Xtreme Companies for coverage. The aforementioned shares have become free trading under Rule 144. On March 7, 2006, TGR Group LLC entered into a contract extension whereby TGR could receive as much as $65,000 cash and 1 million, newly issued restricted shares over the next one year period from Xtreme for coverage of the company. To date, TGR has received an additional $20,000 and 250,000 newly issued restricted shares. 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. From time to time TGR sells shares received as compensation for coverage of client companies. 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