If you were to analyze at Execute Sports Inc. (OTCBB: EXCS) as a consumer-minded investor looking to put a few ducats on the table, you would likely be impressed. After all management announced today that the company's 2007 water sports sales increased nearly 37% over the prior year.

BUT if you were to look at EXCS as a corporate investor looking only for numbers and cycles, you would be even more impressed. Take into consideration the fact that EXCS stated that '08 water sports sales should improve at least another 40% on a year-over-year basis (and peak season- wise, they are just getting started), and you have an opportunity for every palette.

Why The Sudden Sales?

While this time of year may not strike you as the best time to buy summer sports equipment, it happens to be the best time of year to sell it. Retailers are establishing inventory and putting in their large orders months in advance. So while pool toys and swimsuits may be a bit more scarce this season, for EXCS summer has already started.

Making It With The "Who's Who's"

With big names like Kawasaki not ordering but RE-ORDERING and Execute products prominently featured on major television outlets including MTV, ESPN, and the E channel, the company is gaining widespread recognition for their brands just in time for the hungry summer customer.

Execute's aggressive executive sales team has placed their products with just about every conceivable action sports retailer but in actuality, they have only scratched the surface with regards to the average consumer. Sales are growing but mainstream recognition is on the agenda. In the meantime, however, capital is necessary to put Execute on the Christmas list of every 14 year old watersports enthusiast.

So in the spirit of diversification (and no-brainer income generation), it looks like they have also facilitated a large amount of growth on the OEM side of things. So even if OEM sales do not do much for market recognition, it not only cushions EXCS's bottom line but also puts them in the rolodex of watersport industry leaders. However, if TV channels and sports industry giants like Kawasaki aren't enough to make you go "hmmm", it will comfort you to know that Execute Sports products are selling quite well in both the online and in brick & mortar locations of leading retailers including: The Sports Authority, Dick's Sporting Goods, Joe's Outdoors, Sport Chalet, Modell's and MC Sports.

Just Acquire An Income Stream

In addition to a rapidly emerging water sports business, the recent acquisition of Sugar Sand Boats should help transition EXCS from a one-trick pony into a potential multi-million dollar aquatic sport conglomerate. Execute now lays claim to a pair of business units that provide more future sales potential than the company has been exposed to since its inception.

Remember, Challenger Powerboats Inc. has already received a 114, $2.4M order for Sugar Sand boats, most of which will be shipped during 2008. Sugar Sand's sales/distribution network, helped the company churn out 381 jet boats in 2006 and benefits from an elite market image born from stellar third-party reviews.

By aligning with Sugar Sand, EXCS now has access to a completely new group of consumers to which it can cross sell their rubber products. As we all know, boats in most regions must be equipped with one personal flotation device (PFD) for each passenger. That should equate to another nice new revenue stream for EXCS going forward, making the deal even more lucrative for the company.

My oh-so-Humble Opinion on Future Water Sports Sales

Based on data that I have compiled over the past couple of years of coverage on Execute, historical estimates from the company, as well as statements and expectations announced by the company today (not to mention a few assumptions I made after speaking with management during the summer of 2006), I have put together a little "hypothetical" scenario.

During the summer of 2006, I believed that water sports sales accounted for 44% of total annual revenues. So here's my thought process:

In 2006, EXCS water sports sales totaled $959,200 (44% of $2.18M);

In 2007, EXCS water sports sales totaled $1,314,104 (959,200 X 37% + 959,200);

In 2008, EXCS water sports sales total $1,839,746 with 40% growth ($1,314,104 X 40% + $1,314,104).

* These estimates, of course, come with the caveat that they have not been verified by the company.

Heading into 2008, Execute Sports Inc. appears to be better positioned for growth than ever before. Now sporting two solid business segments that hold the potential to bring 2008 revenues into the $10 million range (as previously stated by management) EXCS may bring a new hot streak to company profits and shareholders alike. So while it may not be the most logical time to stock up on Execute's wide array of watersports products, it may very well be the most productive time to load up on Execute stock.

As we are not likely to be communicating via newsletters over the next few days, we wanted to wish all of our faithful subscribers a wonderful Holiday Season and a joyful and abundant New Year!

2008 stands to be a good one!

Labels: Action Sports, Boating, Execute Sports, Execute Sports Inc., Water Sports

Challenger Powerboats Inc. (OTCBB: CPWB) Announces Another 5 Contracts With Distributors

More dollars, more distribution channels, that's the story at Challenger Powerboats Inc. (OTCBB: CPWB) these days. The situation gets more and more appealing as we go. Since its well-documented restructuring just a few short months ago, CPWB has built the brand recognition, dealer network, order log, and boating offering that many long-time market players have yet to establish.

Challenger Gaining Territory

News earlier this week highlighted recent corporate growth, and stated that Challenger has signed on five new dealers located in the West Coast, Midwest, Southeast and Mid-Atlantic regions. These agreements should soon bear fruit in a big way since these dealers will only sell CPWB's high-end, 'go fast' offshore racing series and family performance series lines. This agreement, noted by CPWB as a direct result of the exhibitions at the Ft. Lauderdale, Los Angeles and Miami Boat Show, is one that would simply not have existed a few months back when Challenger had NO sales/marketing strategy in place.

What a Difference a Few Months Can Make

After taking a gander at Challenger's most recent news it occurred to me that CPWB's new contract for approximately $330,000 exceeds the company's prior two quarters of revenues COMBINED! While the company brought in $0 and $70,000 worth of revenues for the 3-month periods ending 9/30/06 & 6/30/06 respectively, Challenger's recent agreement dwarves recent sales by moving only 3 units, two of Challenger's go fast DDC-33s and one Family Performance Series (FPS).

As mentioned in prior editions, recent profiling in industry periodicals has established Challenger's boats as a legitimate industry competitor that goes head-to-head with leaders such as Fountain Powerboat and Brunswick Corporation. Commenting on the profiles, CEO Laurie Philips stated "Clearly the recent profiles of our performance results in Powerboat and Hot Boat magazines are beginning to have a quantifiable impact on sales. We believe that the value proposition offered by our Challenger high performance go fast DDC and FPS series is second to none in terms of quality, performance and pricing, and look forward to widening the distribution of these product lines"

Big Toys for Big Money

Although a number of boating industry experts are optimistic at best that overall boating industry sales will remain flat in '07, here is some food for thought:

#1 the industry remained flat or grew in '05 and '06, depending on what segment of the boating market you are interested in. The market also exhibited strict resistance to unfavorable market conditions brought on by rising inflation rates, high oil prices and unforeseeable natural disasters which crippled key regions vital to boating industry growth.

#2 the U.S. population of High Net-Worth Individuals, one of CPWB's most vital demographics, continues to gain steam. Exemplifying this point, the 10th Anniversary Edition of the World Wealth Report ("The Report"), released in June by Merrill Lynch (NYSE: MER) and Capgemini reveals that the number of HNWIs grew by 6.5 percent over 2004, to 8.7 million, and that the number of Ultra-HNWIs, those who have financial assets of more than U.S. $30 million grew by 10.2 percent, to 85,400 in 2005.

As boating season approaches, it is worthwhile to spend a half hour looking into Challenger Powerboats Inc. (OTCBB: CPWB), priced at $.11. This is in direct competition with stocks in the $3.00 to $40.00 range. The reward is worth the effort.

Labels: Boating, Boating Industry, Challenger Powerboat, CPWB, Micro-Stock, Small Cap Gem, Speed Boat

After closing out 2006 on a very positive note (signing a new dealer contract and shipping 7 boats), Challenger Powerboats (OTCBB: CPWB) took some time yesterday to brief the world on how far it has come and where it is going. As we have mentioned before in prior editions, CPWB has emerged from an intense corporate restructuring smelling like a rose. Here is a link to the company’s most recent news: (http://biz.yahoo.com/prnews/070109/nytu089.html?.v=78)

It seems to me that gone are the days of a company with some cool boats and ideas, but no sales force, significant revenues, and competent personnel. In a nutshell, CPWB has set itself up for a 2007 that could prove to be more successful that its entire history of operations combined. Underperforming business segments have been shaved off, new executives with documented success have been brought on, and solid distribution channels have been established.

Although many industry experts predict that the higher end of the boating market is softening (http://www.boating-industry.com/output.cfm?id=1191331), many leading players such as Fountain Powerboats and Brunswick Corporation are still optimistic of what 2007 has in store. Challenger is ramping up for what it hopes will be a banner year and recently outlined its strategic initiatives for the’07. These include:

- “Expanding our distribution channels by aggressively adding new dealers and distributors throughout the U.S. “

- “Continue to expand our brand awareness through boat show performances, ad campaigns, boat testing, and publications in national boating magazine”

- “Continue to allocate a portion of our budget for capital expenditures required to add further efficiencies to our overall production process and increase our profit margin”

- “Targeting a strategic acquisition that would both significantly accelerate our top-line growth as well as add accretively to earnings”

Challenger seems to be on course for some fairly significant growth with restructuring now in its rearview mirror. Need a little more info on these guys? Check out recent research on the company from Amalfi Research Group (http://www.amalfiresearch.com/report/XTME1.pdf).

Labels: Boating, Challenger, CPWB, Powerboats