08/13/2006
VOLUME 251
Companies featured in the current edition of the newsletter: ADSX, ARSC, ASPN, ATWO, CLRI, EMIS, FMTI, FSN, GNBT, GSHF, HMWM, HSOA, HYTM, IMMG, ISON, ITRO, ITUI, IVOI, LEVP, LNXGF, NTST, POIG, PTCH, RGEN, RTK, SLS, SWTS, TAGS, TPPH, UDTT, USAT
Although the Federal Reserve held off raising interest rates last week, it was not enough to keep the bears at bay, as the Dow ended the week down 152 points, reducing year-to-date gains to 3.5%, the Nasdaq fell 27 more points furthering annual losses to 6.7%, while the S&P lost 13 points and is up only 1.5% so far this year. The small-cap Russell 2000 was the hardest hit last week, falling 22 points and barely staying in the black with a year-to-date gain of just 0.9%.
The Fed left rates unchanged for the first time since May 2004. The policy statement, however, was less comforting as it noted continued inflation risks and clearly left the door open for future rate hikes. Other notable news included a breakdown of oil flow from Alaska that led to a brief spike in oil to over $77 a barrel early on Monday, as well as news that UK authorities thwarted a plot to blow up US-bound flights. On Tuesday, second quarter unit labor costs were reported to have jumped at a 4.2% annual rate. This was due to a sharp increase in compensation in the second quarter. Another major economic release was an increase of 1.4% in June retail sales, suggesting that the consumer remains resilient. It followed two straight months of near flat sales.
What should investors look for? As earnings season concludes, earnings reports for the week include American Eagle (NASDAQ: AEOS), Deere (NYSE: DE), Home Depot (NYSE: HD) and WalMart (NYSE: WMT) on Tuesday before the bell. After the close on Wednesday, Hewlett-Packard (NYSE: HPQ) reports numbers. Thursday, after the bell, Dell Computer (NASDAQ: DELL) releases earnings along with Gap Inc. (NYSE: GPS). Additionally, Yum Brands Inc. (NYSE: YUM) announces its sales figures on Thursday.
The focus next week will be on the economic data. The market will be walking a tightrope since if the data is too strong, it could raise fears of further Fed tightening, but if it is too soft, fears of recession could surface. On Tuesday morning, the July PPI is released along with the August NY Empire State Index and June Net Foreign Purchases. Wednesday, before the bell, the July CPI is released along with July Housing Starts, Industrial and Capacity Utilization for July, Weekly Crude Inventories and July Building Permits. Before the bell on Thursday, Weekly Jobless Claims are reported followed by July Leading Indicators and August Philadelphia Fed Index shortly after the opening. The Preliminary Michigan Sentiment for August is released on Friday morning.
The conference schedule for the week includes Keefe, Bruyette & Woods, inc. hosting its two -day Large Cap Bank Conference starting on Monday in Wisconsin. On Tuesday, Credit Suisse holds its two-day Networking/Communications Equipment & Optical Componenents Conference in Boston.
Volume Alert: Shares of Netsmart Technologies, Inc. (NASDAQ: NTST), a leading provider of enterprise-wide software for health and human services organizations, traded over 3 times average volume after the company reported record results for the second quarter ended June 30, 2006. Revenue increased by 84% to $14.3 million for the three-month period. While the second quarter of 2006 represents Netsmart’s 32nd consecutive quarter of profitability, the company grew net income 64% with diluted EPS increasing to $0.11 compared with $0.08 for the same quarter last year. The company’s backlog of orders at the end of the second quarter-end was nearly $45 million, indicating that revenue should continue to grow in the future. In addition to strong organic growth, management is also executing on its growth strategy by winning strategic deals, such as the recently announced contract to provide a new statewide public health system for the State of North Carolina, and by acquisitions such as the recent purchase of QS Technologies. Shares were up 78 cents last week, closing at $14.03.
Earnings Preview: Home Solutions of America, Inc. (NASDAQ: HSOA), a provider of recovery, restoration and rebuilding/remodeling services, will release second quarter results and hold a conference call on Monday after the market closes. Since announcing Q1 results, when the company raised its full-year EPS guidance from 42-46 to 56-60 cents, shares have declined 42.6% and the short interest in the stock has more than tripled to approximately 12 million shares, or roughly 35% of the float. Given the high short interest, the stock is likely to be extremely volatile post earnings. The current analyst estimate for the company is for quarterly revenue of $25 million and EPS of $0.07. The company reported 2005 Q2 revenue of $16.1 million and EPS of $0.04 and 2006 Q1 revenue of $19.3 million and diluted EPS of $0.08 ($0.6 from continuing operations). What to Watch For: 1) Cash flow from operations: During Q1 the company reported a sequential quarterly decline in revenue, which was expected due to seasonal factors, but receivables increased slightly. Such increases occurred throughout the industry and HSOA was actually at the low-end of other providers of similar services. With funding finally allocated to the recovery activities in New Orleans, it could reduce the company’s days-sales-outstanding, and improve its cash flow. Note that the company said recently that it had paid $11.5 million in cash to acquire Fireline (also issued stock and a note), which would have been $4.3 million more than it had on its balance sheet at the end of Q1; 2) 2006 Guidance: HSOA’s 2006 revenue guidance of $160-165 million and EPS of 56-60 is heavily back-end loaded. However, in 2005, the company earned twice as much in the second half of its fiscal year as it did in the first six months. The current analyst estimate for Q3 is $51 million and diluted EPS of 20 cents. Although the company does not provide quarterly guidance, since the third quarter is nearly half completed, what it says about Q3 results to date could significantly influence investors. Also, the guidance was provided prior to the acquisition of Fireline, so the company is likely to discuss that acquisition in more detail and how it impacts results for the balance of the year. Fireline is a provider of recovery and restoration services throughout Florida, Louisiana and Mississippi. Fireline had unaudited revenue for the first six months of 2006 of approximately $21 million and EBITDA of $5 million. The company is also likely to discuss operating margins. Gross margin for the first quarter was 51.6% compared to 40% in the fourth quarter of fiscal 2005. The company previously said that margins were not likely to be sustainable at Q1 levels, and that its guidance assumed lower operating margins; 4) Financing of Fireline acquisition note: The $21.65 million seller note is due at the end of January, 2007. The analyst covering the company has already speculated that the company will fund the obligation through debt, which would seem plausible based upon the strong cash flow that Fireline generates and nominal HSOA indebtedness (company had an undrawn $10 million revolving credit facility as of the end of the first quarter). Shares have gained an average of 5.4% the day after the last 3 earnings announcements. Note that August and September last year were the months when Hurricanes Rita, Katrina and Wilma hit the U.S. From August 1st until the end of September, 2005, shares of HSOA gained 146%. The stock rallied strongly on Friday, paring its loss to 12 cents last week, as it closed at $6.20.
Hythiam, Inc. (NASDAQ: HYTM), a healthcare services management company that licenses the PROMETA™ physiological protocols designed to treat substance dependence, announced second quarter results for the period ended June 30, 2006 with revenue increasing 410% to $1.2 million. The increase in revenues was primarily due to the number of patients treated and the expansion of the number of revenue-contributing sites. In the second quarter of 2006, 175 patients were treated by 20 licensee sites, compared to 40 patients treated by six sites in the comparable period last year. Company’s average revenue per patient also increased by 17% to $6,700 in the 2006 second quarter primarily due to patients treated by the newly-opened PROMETA Center. Net loss for this year’s second quarter was $9.0 million or $0.23, per share versus a net loss of $4.7 million or $0.16 per share in the year ago second quarter. The Company ended the quarter with cash, cash equivalents, and marketable securities of $32.8 million, a reduction in cash reserves of $6.5 million for the 2nd quarter and $14.2 million since year-end. As the company continues to increase the number of active licensee sites using PROMETA™, sales growth should continue. Perhaps most significantly, the company provided details on revenue guidance for sales of Prometa from licensees and new Centers that would be opened next year, causing analysts to increase revenue expectations. The company also indicated it expected to consume less cash than previously forecast. Shares closed last week at $5.26, down 48 cents.
Alternative energy company Rentech, Inc. (AMEX: RTK) reported third quarter results for the period ended June 30th with quarterly revenues increasing to $19.7 million compared to $1.9 million for the corresponding period in 2005, reflecting, for the first time, the $70 million acquisition of the Agrium ammonia fertilizer facility in East Dubuque, Illinois. The company also reported a net loss of $12 million or $0.089 per share, compared to a loss of $11 million or $0.118 in the same period in fiscal 2005. Rentech has accomplished an extraordinary amount during its fiscal third quarter including: strengthening its balance sheet by completing a $112 million stock/debt financing in April, completing the $71 million acquisition of the nitrogen fertilizer facility, and executing on the company’s plans to convert its nitrogen fertilizer plant from natural gas to an integrated fertilizer and clean fuels production facility utilizing coal gasification. The company ended the third quarter in its strongest cash position since company inception in 1981 with cash and cash equivalents of $65.6 million and working capital of $72.5 million. Shares ended the week at $4.61, down 9 cents.
Drug delivery company Emisphere Technologies, Inc. (NASDAQ: EMIS) reported second quarter financial results and also reviewed highlights of the quarter, including continued progress in advancing its heparin and insulin development programs, a new multi-product research collaboration with Roche, receipt of a milestone payment from Novartis, and a successful financing. Emisphere reported revenue of $5.2 million for the quarter, as compared to $2.0 million for the same period last year, largely as a result of the $5 million milestone payment received from Novartis in connection with Novartis’ election to commence development of an oral form of recombinant human growth hormone (rhGH). The company also was able to reduce its net loss to $3.8 million from $5.8 million for the same quarter last year. Cash held as of June 30, 2006 was nearly $35 million. Management also expects a very active second half of 2006 across both internal and external clinical programs. The company will soon meet with the FDA to discuss how to proceed in its oral heparin program, based on the successful demonstration that orally delivered heparin is unchanged as compared to intravenously or subcutaneously administered heparin. EMIS is also initiating human testing of the eligen® technology with oral GLP-1 and oral PYY. The company is on track to announce results from its Phase II study in oral insulin later this year since “last patient last visit” will be in September 2006. This could serve as a significant catalyst for the heavily shorted stock (26% of float) as the company said on its conference call that in the blinded study one group was “doing very well”. EMIS should also receive considerable attention in the next month as Pfizer gets ready for the U.S. launch of its first generation inhaled insulin product, Exubera, in September. The stock gained 97 cents last week to close at $8.56.
Life sciences company Forbes Medi-Tech Inc. (NASDAQ: FMTI) announced that it is on track to achieve its 2006 core objectives in both pharmaceutical development and its revenue generating ingredient business. The company’s US Phase II trial for its cholesterol-lowering drug, FM-VP4, is on track for completion for the end of the third quarter with top-line results anticipated to be released in the fourth quarter. The market for cholesterol absorption inhibitors is illustrated by the success of Zetia, from Merck/Schering, with over $1.4 billion in sales in 2005. Successful results of the FM-VP4 trial would further enhance the company’s development program and help attract potential licensing opportunities from international pharmaceutical companies. Prior to results from the company’s first Phase II trial of the compound, shares soared in early 2004 to more than $8. Meanwhile, the company’s revenue-generating ingredient gained additional distribution last week with the launch of Heartfelt Plus Natural Cheese with Reducol through UK’s largest retailer, Tesco Stores. Heartfelt Plus is the first cheddar cheese in the UK to combine both low-fat and cholesterol-lowering benefits. Despite the news, the stock was down 10 cents last week, closing at $1.83.
Earnings Preview: Shares of Fusion Telecommunications International, Inc. (AMEX: FSN), provider of voice over Internet protocol (VoIP) and other Internet services in Asia, the Middle East, Africa, the Caribbean, and Latin America, traded over 8 times average volume ahead of the company’s second quarter earnings report before the market opens on Monday. More significant than the actual quarterly results will be what the company says about new subscribers to its recently launched efonica VoIP services. The company has already landed 250,000 subscribers in less than 45 days. FSN is likely to discuss its marketing plans and when it expects to begin to generate revenue from paid services. Shares ended the week at $2.38, up 48 cents.
Repligen Corporation (NASDAQ: RGEN), a biopharmaceutical company committed to being the leader in the development of novel therapeutics for profound neuropsychiatric disorders and autoimmune disease, reported results for the first quarter of fiscal year 2007, ended June 30, 2006. Total revenue for the first quarter consisting primarily of Protein A and SecreFlo sales was $3.6 million compared to total revenue of $4.2 million for the first quarter of fiscal 2006. Net income also decreased to $0.1 million from $2.1 last year. However, the company exhibits a very strong balance sheet with $22.5 million of cash and investments as of the end of the quarter and management is committed to building shareholder value through a prudent business strategy in which the growing profits from current product sales enable the company to develop its intellectual property and pipeline of neurology drugs without the financial risks typically associated with an emerging biotech company. Management also provided an update on product development programs. Regarding Protein A, the company has completed construction of a new fermentation suite, which will allow it to decrease its reliance on external fermentation contractors, enhance the security of supply and potentially increase its ability to control costs. This facility should be operational by the end of September. Regarding Secretin, Repligen initiated in June a clinical trial to evaluate the use of secretin to aid in the detection of structural abnormalities of the pancreas. Most of the clinical sites in this study have been initiated and it is anticipated that all patients will be enrolled in approximately 6 months. Regarding Uridine, the company initiated a Phase II clinical trial of this drug in bipolar disorder in order. To date, the company has enrolled approximately 25% of the patients and expects to complete enrollment in this study by June 2007. The stock closed the week at $3.00, up 22 cents.
Generex Biotechnology Corporation (NASDAQ: GNBT), a leader in the area of buccal drug delivery, has entered into an agreement with the Euroclinic in Athens, Greece to commence clinical trials on a novel immunotherapeutic vaccine being developed by its wholly-0owned subsidiary Antigen Express, Inc. This compound, AE37, has been in clinical trials for more than a year at the Walter Reed Army Medical Center in patients with breast cancer and has shown good immune stimulatory activity. Because of these positive results, it was deemed appropriate to expand studies into patients with prostate cancer. Separately, Generex also demonstrated its diabetes pipeline at the American Association of Diabetes Educators 33rd Annual Meeting & Exhibition in Los Angeles this past week. The company introduced its new over-the-counter Glucose RapidSpray product, which it expects to position as companion product to its proprietary oral insulin spray product, Generex Oral-lyn, in the diabetes management field. Glucose RapidSpray, which is expected to be in stores within 2 months, is an innovative alternative for people who require additional glucose in their diet as it delivers glucose directly into the mouth where it is rapidly absorbed. Overall, this conference was an ideal forum for the exhibition of the Generex diabetes products as it presented a focused audience responsible for training people who live with diabetes on the various diabetes products available to improve their quality of life. Shares ended the week at $1.27, down 7 cents.
Volume Alert: Shares of Isonics Corporation (NASDAQ: ISON), developer of innovative solutions for the homeland security and semiconductor markets, rose on over 10 times the average volume last Thursday after British authorities prevented a terrorist plot to blow up several airplanes en route from Britain to the U.S. Isonics previously announced that production of its new handheld and portable Ion Mobility Spectrometry (IMS) units has begun and hosted a demonstration for law enforcement and other officials of the devices, which will be available for commercial sale later this month.The IMS units can quickly identify dangerous substances such as homemade explosives often used by terrorists. The stock ended the week $0.75, up 14 cents.
Digital Angel Corporation, a majority-owned subsidiary of Applied Digital (NASDAQ: ADSX), a leading provider of identification and security technology, announced that it signed a distribution agreement with a Brazilian company, Digitaltronic, to begin selling electronic RFID (radio frequency identification) livestock tagging systems throughout Brazil, the largest beef exporting country in the world and home to nearly 200 million cattle, which is twice the size of the U.S. market. Digital Angel also announced that it has begun manufacturing livestock tags in Argentina. The company had already received two orders whose combined valued is more than $200,000 from Digital Angel continues to make steady progress penetrating the rapidly expanding South American market and now has a very strong footprint in Brazil thanks to Digitaltronic’s executives having strong ties to the country’s cattle industry. Separately, ADSX’s wholly-owned subsidiary VeriChip Corporation has hired William J. Caragol as its Chief Financial Officer as it continues to work towards an IPO latter this year. Shares ended the week at $1.56, down 8 cents.
Earnings Preview: Tarrant Apparel Group (NASDAQ: TAGS), an innovative design and sourcing company for private label and private brand casual apparel, will report results for its second quarter ended June 30th on Monday after the market closes. TAGS will look to continue the momentum established in the first quarter when sales increased 37% to approximately $61 million and the company returned to profitability with net income of $836,000, or $0.03 per diluted share. At that time, management expected full year sales to be in the range of approximately $220 million to $230 million. Investors should listen to see if such guidance is reaffirmed. TAGS also continues to see strong sales growth and improving margins from its private label division, which designs and manufactures store-branded clothing for large retailers including Kohl’s, Macy’s, and Wal-Mart. The stock closed the week at $1.73, down 2 cent.
Tapestry Pharmaceuticals, Inc. (NASDAQ: TPPH), a developer of proprietary therapies for the treatment of cancer, reported financial results for the second quarter ended June 28th with net loss declining to $4.2 million, or $0.28 per share from prior year’s net loss of $4.4 million, or $1.29 per share. As of the end of the most recent quarter, the company also had nearly $32 million in cash, which should help finance the planned Phase II studies of its lead anti-tumor compound, TPI 287. Tapesty is in the process of recruiting sites for these Phase II studies, which should be initiated in the first quarter of 2007, and said it is pleased with the progress in its ongoing Phase I studies. The stock gained 13 cents, closing the week at $2.95.
SLS International (AMEX: SLS), the leading provider of premium quality sound systems for professional, cinema and home entertainment markets, reported revenue of $2.7 million for its second quarter ended June 30th, an increase of 218% due to increased demand for the Q-Line product line and an increase in sales from its Cinema product series. For the six-month period, revenue increased 120% to $3.7 million. Additionally, net loss from operations for the second quarter was reduced to $2.2 million from $2.4 million in the year-earlier period. Management believes that retail consumers will soon recognize the obvious difference that company’s ribbon-driver technology offers, as the commercial and professional markets have done for years. Notably, the company said that it continues to explore several new consumer retail distribution methods for its Q Line and other Home Theater products to add to its current Best Buy relationship. Shares closed the week at $0.33, down 6 cents.
Clearant, Inc. (OTCBB: CLRI), the developer of the patent-protected CLEARANT PROCESS® for pathogen inactivation, announced that 17 Clearant Sterile Implant cervical spinal and soft tissue allografts were distributed for upcoming surgeries in July, the first full month of the company’s new direct sales initiative. Furthermore, cervical fusion and sports medicine surgeries using Clearant Sterile Implants were successfully performed at five leading medical institutions across the country in July. Throughout the month of July, Clearant received 75 interest requests from spinal and sports medicine surgeons. The company is now aggressively entering the next phase of its direct sales initiative as the sales team is working with these surgeons to convert requests for information into additional sales. Despite the news, the stock lost 8 cents last week, closing at $0.45.
Environmental business development company GreenShift Corporation (OTCBB: GSHF) announced that its majority-owned subsidiary GS CleanTech Corporation executed an agreement with a Wisconsin-based ethanol producer to extract about 2.75 million gallons per year of crude corn oil from the producer’s distillers dried grains for conversion into a biodiesel feedstock using GS CleanTech’s proprietary corn oil extraction technology. Under the terms of the agreement, GS CleanTech will install both stages of its Corn Oil Extraction Systems on-site at the ethanol facility. GS CleanTech expects to initially generate an estimated $1.4 to $1.8 million in annualized revenues by purchasing and selling the ethanol facility’s extracted corn oil as a biodiesel feedstock. This amount is expected to increase to more than $4.0 million per year once the second stage of the technology is brought on-line. Additionally, GS CleanTech Corporation announced its plans to bundle its modular, small-scale corn oil and animal fat extraction technologies with applications of its patent-pending continuous-flow, multi-feedstock biodiesel process technology. Shares were unchanged at $0.16.
IMPART Media Group, Inc. (OTCBB: IMMG), an innovator in the creation of out-of-home digital advertising content and information network management, announced the installation of a new digital signage menu board system that will be piloted by Aventura, a premier catering company with restaurants located in the Phoenix Convention Center. This is the first installation of Impart’s new menu board application, which eliminates the typically high costs associated with the printing and updating of traditional menu boards. The dynamic menu board application was recently installed in the Aventura restaurant, and is powered by Impart’s new IQ Box. Using the IQ Box in providing relevant and visual exciting information on restaurant menu boards is yet another example of how a variety of industries can benefit from using Impart’s new technology. The stock closed the week at $1.15, down 50 cents.
Volume Alert: Shares of i2Telecom International, Inc. (OTCBB: ITUI), pioneer in ultra-portable high quality Voice-over Internet Protocol (VoIP) products and services, traded over 6 times the usual volume as investors are taking notice of the recently-signed agreement with Global Voice Technologies, (GVT) under which i2Telecom has been appointed as the exclusive provider of VoIP services through GVT’s global marketing network. This deal is expected to be lucrative for i2Telecom as GVT expects to have more than 8,000 agents in place prior to the end of the third quarter of 2006 where GVT anticipates roughly 750,000 subscribers will be generating annualized sales revenues of more than $75 million within the next twelve months. Products will be distributed under the VoicePal™ name commencing by the end of September 2006. The stock doubled last week to $0.06.
Volume Alert: Shares of iVoice, Inc. (OTCBB: IVOI), a developer and licensor of proprietary technologies, traded over 10 times the average volume after the company announced that its wholly-owned subsidiary Thomas Pharmaceuticals has received a re-order from Rite Aid Corporation, one of the nation’s leading drugstore chains, for its new upscale antacid tablet product line Acid + All. Rite Aid placed the re-order due to the success of the initial launch of the product in more than 3,300 Rite Aid stores in 27 states. Rite Aid’s reorder reflects the strong sales exhibited by drugstores throughout the country for this unique antacid table. With robust consumer demand, Thomas expects to continue to expand its distribution among leading drugstore chains throughout the country. Thomas Pharmaceuticals plans to introduce Acid + All(TM) line extensions later this year along with other new over-the-counter products. Shares closed last week at $0.08, up one cent.
Lev Pharmaceuticals, Inc. (OTCBB: LEVP), a developer of therapeutics for inflammatory diseases, filed quarterly report for its second quarter ended June 30, 2006. Since the company still does not have any commercially available products, there were no revenues. However, Lev is a solid late-stage biotech company as it is continuing the currently-ongoing Phase III clinical trials of its lead product candidate, C1-inhibitor for the treatment of hereditary angioedema (HAE), and has nearly $3 million of cash available. Shares closed at $0.63 last week, down 5 cents.
Junior energy company Petrol Oil and Gas, Inc. (OTCBB: POIG) announced its second quarter results with revenue increasing by 1% to over $1.8 million. The increase in second quarter revenue was moderated by delays in connecting new wells in company’s Coal Creek Project to the regional interstate pipeline, along with the extensive de-watering required in order to efficiently liberate gas from the coals in this new project. Management expects gas production from the Burlington and Waverly areas of the Coal Creek Project, which contributed nominally to company’s second quarter results, to increase significantly as more production wells are hooked up to the sales pipeline. To date, Petrol has drilled 45 production wells and 5 saltwater disposal wells in the Coal Creek Project, and has filed drilling intents for 10 additional wells that should come on line late in the third quarter. The entire Coal Creek development plan includes the drilling and completion of about 540 production wells, along with the completion of three gas gathering pipelines and gas processing systems over a two to three year period. Petrol ended the second quarter with approximately $11.4 million of cash, compared with $8.4 million at the end of 2005. The stock closed the week at $1.33, down 2 cents.
Sweet Success Enterprises, Inc. (OTCBB: SWTS), which has relaunched a product line made popular by Nestle’s to tap into the rapidly growing demand for convenient and nutritious beverages, announced the launch of two new immunity shakes targeted for both the adult and children’s markets. On August 28th, the company will begin the initial production run for ChocKoala for children, while on September 13th, it will commence production on Chocolate Immunity Infusion, targeted for adults. Management believes that the market opportunity is substantial, as there is a major unmet need to offer beverages that enhance the immunity. With the launch in the Fall, ahead of the flu season, SWTS expects interest in these products will be high among both adults and children. The stock gained 5 cents last week to close at $0.98.
USA Technologies, Inc. (OTCBB: USAT), a developer of cashless vending and energy management products, continues to successfully penetrate the market with its energy management product VendingMiser. The company announced that the South Bay Cities Council of Governments had deployed VendingMiser devices on vending machines throughout 15 cities in Southern California as well as several school districts. This program is estimated to save the cities 260,000 kilowatt hours of electricity and more than $40,000 in annual energy costs. The Council is also considering further expanding the VendingMiser program to additional vending machines to save more than one million kilowatt hours of energy, and in excess of $150,000 in annual energy costs. Despite the news, the stock lost 56 cents last week to close at $7.48.
Junior oil and gas producer, Patch International Inc. (OTCBB: PTCH), received very impressive results on its Alberta oil sands properties outlined in a reserve report prepared by independent petroleum engineers. The report showed a contingent resource potential of 59 million barrels (high) to 23 million barrels (low) across all the lease sections in which Patch has an ownership interest. A contingent resource is defined as those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from known accumulations and will require additional work and success to be commercially recoverable. Going forward, PTCH’s strategy is to undertake a work program to prove up the contingent resource reserves indicated in the reserve report. It will consist of both a 2D and 3D seismic program as well as a test well program on the Lesimer 19 lease. It is scheduled to commence in the fall 2006. The indicated resource potential is very impressive and extremely encouraging for the company’s future as PTCH’s 75% interest in this contingent resource of up to 59 million barrels has the potential value of $3.1 billion. The company must now execute a strategy to prove up reserves, particularly at Leismer 19 well which is located in a producing area in the Athabasca oil sands and is in very close proximity to major oil sands projects by Petrobank, Encana, and Conoco Philips. The stock gained 2 cents to close the week at $1.20.
American Security Resources Corporation (OTCBB: ARSC), a holding company that acquires and develops technologies that will advance the development of alternative energies, filed a 10-Q report for its second quarter of 2006. While the company still does not generate any revenue, management continues to provide funding and oversight to its wholly-owned subsidiary, Hydra Fuel Cell Corp., which is developing proprietary HydraStax fuel cells. The stock gained 3 cents last week, closing at $0.11.
Volume Alert: Shares of diversified sports media company HumWare Media Corporation (OTC: HMWM) traded over 15 times the average volume as the company was very busy last week with several strategic announcements. First, the company announced that it is preparing to enter the estimated $150 million digital signage equipment manufacturing market by signing a Letter of Intent to merge with Audio Video Interactive, Inc., (AVI), whose customers have included industry leaders such as Best Buy, Nike, Radio Shack, Samsung and Verizon. Between the two organizations, HumWare can rapidly increase the Boondoggle Sports Network brand awareness within the hospitality industry and also be able to cross sell AVI’s digital signage products throughout the country. According to management, this merger will give the company complete ownership of both the network and the hardware, including new kiosks and media players that are currently under development. Secondly, Humware also took important steps to capitalize on the expanding memorabilia market as its wholly-owned subsidiary, Timeless Sports, will be opening its first retail location in the exclusive Flat Iron Crossing Mall just outside of Denver on September 2nd. Timeless Sports plans to open an estimated thirty-two additional retail locations over the next three years, where they will sell a wide variety of sports memorabilia. Lastly, the company announced the signing of an agreement to run Boondoggle Sports Network’s Fantasy DayGame in 47 Champps Restaurants across the United States. The contest will mark the 4th year in a row Boondoggle will have provided the service to Champps. The stock gained 3 cents last week to close at $0.11.
Universal Detection Technology (OTCBB: UDTT), a developer of early-warning monitoring technologies to protect people from bioterrorism and other infectious health threats, expanded its relationship with the California Institute of Technology (Caltech)by licensing additional cutting edge technologies in the fields of Microbial Monitoring and Sterility Verification. Commercializing the new technologies will allow UDTT to expand its range of products from bioagent detection to the fields of cleanup verification and Monitoring of Total Microbial Concentration. Additionally, UDTT reported its listing on the Commercial Service’s list of Featured US Exporters (FUSE) in Australia as its BSM-2000, Bio-terror Detection Unit, is featured on US Department of Commerce’s Website. FUSE gives US companies a valuable opportunity to target specific markets in the local language of business creating additional exposure to such companies. The stock closed the week at $0.01, down one cent.
Itronics, Inc. (OTCBB: ITRO), a “Creative Environmental Technology” company and a world technology leader in photochemical recycling, announced that at its presentation last weekend at Southern California Small Cap Investor Conference, company’s President, Dr. Whitney, said the combined market for Itronics’ services and products is approximately $1 billion and Itronics is targeting a 35% gross profit margin. Whitney explained that after 15 years of research and development and having invested over $24 million to-date, his company is poised to start showing significant growth. The stock ended the week unchanged at $0.02.
a21, Inc. (OTCBB: ATWO), a leading online digital content marketplace for creative professionals, announced a series of strategic initiatives to strengthen the organization and create the corporate structure necessary to support continued growth of the company both organically and through acquisition. These initiatives included the appointment of Laura B. Sachar of StarVest Partners to the Board of Directors, CEO Search Committee engaging DHR International to lead a national search for a CEO for the next phase of a21’s growth, and re-incorporating the company in Delaware while increasing the number of authorized shares. With these initiatives, a21 strengthened its Board of Directors while establishing the corporate flexibility to pursue its next growth phase. The stock closed the week at $0.29, down 1 cent.
On the Wires: IMPART Media Group, Inc. (OTCBB: IMMG), an innovator in the creation of out-of-home digital advertising content and information network management, has hired Robert J. Grawet as its Global Director of Digital Media. Mr. Grawet, who has over 30 years of industry experience, will be responsible for expanding global distribution channels for Impart’s IQ digital signage product lines. Junior energy company Aspen Exploration Corporation (OTCBB: ASPN) announced that Robert F. Sheldon, one of its directors, passed away on August 6, 2006. Aspen has not named any person to fill the board vacancy created by Mr. Sheldon’s death. Junior mining exploration company Linux Gold Corp. (OTCBB: LNXGF), appointed Michael Baybak as Vice President of Financial Development, and Garry Pollack as the Assistant Financial Advisor.
