S.A. Advisory E-Mail Update From http://www.saadvisory.com

February 11, 1998

Dear E-mail Subscribers:

  1. Recommended: Digital Products Corp ( dipc---nasdaq bb) on or about 7-28-95 @ .44/share. At presents shares are changing hands at around .15 The company is coming out of chapter 11 very soon and we believe that shareholders will be diluted by 90%..We will take the loss.

    Spectrum Laboratories, Inc.
    (sptm--nasdaq bb) current price .25 SPTM develops, manufactures, and sells medical products through its SLI Acquisition (systems used for cell therapeutics), and Hydro-Med Products (surigal drapes, sterile container systems) subsidiaries.

    On October 1, 1996, the company purchased certain assets of Cellco, Inc. Cellco provides artificial capillary systems to academic, pharmaceutical, laboratory and clinical research markets involved in the expansion and maintenance of human and animal cells.

    Hollow Fiber Membrane Devices
    The company has over 225 active customers, comprised of pharmaceutical and diagnostic manufacturers, medical device manufacturers and laboratories.

    Cell Expansion Cello
    The company has over 300 active customers.

    Medical Disposable Devices
    Hydro-Med has over 600 active customers, the most active of which are 450 hospitals and 100 hospital supply dealers.

    Select Financial Data
    1. For 9-months ending Sept 30, 1997--sales reached $6,135,000.00 with net income of .02/share--bases upon 12.8 million 2.
    2. Year end number won't be available until March 1998.

  3. For 1998E sales will reach $8.6 million and net income should reach around $600,000.00 or .05/share.
  4. Third quarter ending Sept 1997 --net loss due to extra-ordinary charges
  5. Management is acquisition oriented.
  6. As of Sept 30, 1997--cash over $1,000,000.00
  7. Huge NOL---$3,500,000.00
  8. Management owns 90% of the company--public owns 10% (1.2 million shares)
  9. Fully reporting with the SEC--and also is current.
  10. Current book value around .09
  11. 25 million shares are authorized--Plenty of stock available for an aquisition if it is needed.
  12. Trading at its 52-week low.
  13. Current price .25 A. PSR--.37 ( price to sales ratio). B. PE est. for 1998--5X (based upon est. of .05/net income/share. C. Large NOL will reduce tax exposure dramatically. D. Small stock float. E. Unique and diverse medical company that may fit in risk oriented stock portfolio. F. Long term growth potential.
  14. Corporate phone # 1-714-581-3880
  15. Brokerage --Mike Chesler--1-800-331-1355
  1. SETO --firming --earnings coming very sooooon--heading for new highs!
  2. PCSH---flat--We like very much at current levels!
  3. Many of our recent "penny-stocks" firming --plfm, vtpi,bnswf,gegi,ctdvb, iehc.
  4. New recommendation CYMI @ $17.625--has firmed to around $20--long term BUY!!See E-mail for Feb 2 and 3 for story. This has huge potential!
  5. We also like PAIR and SFAM--both should be watched!!
  6. CS and WDC acting better!
  7. The Biggest DOOOG --APM--We remain killed!

Yours Truly,
William Velmer


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