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12-07-2006 FFI - Fortune Industries Inc

CURRENT PRICE: $4.20

MARKET CAP - $44.73 million
2006 REVENUE - $157.1 million
PRICE/SALES RATIO - 0.29
TYPE OF PLAY: EARNINGS GROWTH/MOMENTUM POTENTIAL

* 5 distinct operating divisions - each displaying revenue expansion

* Growing wireless infrastructure division to capitalize on national cellular system upgrade and build-out

* Expansion in Singapore and new China office for Ultraviolet division

* Ranked as fastest growing public company in Indianapolis for 3rd year in a row

* Greater than 900% revenue growth over these 3 years

Fortune Industries, Inc., through its subsidiaries, operates as a technology-based service company in the United States and employs 580 full time associates. There are an additional 7,800 co-employees under customer-contract relationships. It operates in five segments: Wireless Infrastructure, Business Solutions, Transportation Infrastructure, Ultraviolet Technologies, and Electronics Integration. Each division represents a distinct revenue stream for the company thus, providing diversification. Most importantly, each of these divisions is growing revenues on a year over year basis.

This is an expanding company as evidenced by the top position granted to them as the fastest growing public company in the Indianapolis area for the third straight year. The Company’s revenue rose from $15.5 million in 2003 to $113.1 million in 2005; a growth rate of 630%. This has further expanded to $157.1 million for 2006 placing the total growth rate for the last 3 years at over 900%. In their most recent report, an increase of 39% in revenues and 181% in net income was realized relative to the previous year. A key aspect for the full year of results is that organic revenue growth increased by $35,000,000 or ~29%. Commenting on the results, John Fisbeck (CEO) stated, "I am extremely pleased with our performance...Four out of five of our segments reported all-time record fiscal year revenues, and all five segments outperformed prior year revenue and earnings results...I believe we are in the best position since the Company was created in 2000."

Concerted effort by Fortune has focused on their wireless division. Specifically, the Wireless Infrastructure segment engages in the development, marketing, management, maintenance, and upgrading of wireless telecommunications sites; and offers services, including site acquisition, engineering, architecture and design, construction management, and technical consulting. The revenue and associated net income within this division has increased in step with the expansion of cellular networks in the united states. Five acquisitions completed between 2002 and 2006 in this division have allowed Fortune to shift sales efforts from sub- contractor niche markets to nationwide turn-key wireless infrastructure services. Of additional interest is the revenue increase in their ultraviolet technologies division which was a direct result of new product offerings and expanded revenue streams in the Asian marketplace. Fisbeck stated, "We will continue to push sales efforts in the Asian markets, largely due to our investment and expansion of our Singapore and new China offices." We see these efforts as evidence of a growing presence in key international markets.

Looking ahead to the coming year Fisbeck has stated, "I expect that our performance in fiscal 2007 will be focused on earnings growth, improvements to our leverage ratio, and integration of operations under each reportable segment through software conversion and operating environments."

LINKS FOR FURTHER READING:
FFI Homepage
Last Earnings Release
SEC filings for FFI