09/23/2007
VOLUME 318
Companies featured in the current edition of the newsletter: ACTC, CBMC, CGXP, CHIP, CVM, ENZ, GNBT, HSOA, HYTM, ILNS, IWEB, MLSC, MSHI, NTRN, PLKH, RVEP, SOMD, TKO, USAT, VOIC
A larger than anticipated 50 basis point interest rate reduction from the Federal Reserve was just what investors were looking for, as markets surged last week in response. The Dow rose 377 points for the week, driving its annual gain to 10.8%. The Nasdaq also surged higher, gaining 69 points for the week, bringing its year-to-date return to 10.6%. The S&P added 41 points, raising its yearly gain to 7.5%, while the Russell gained 29 points for the week, and is now up 3.2% for the year.
Although a rate cut for Fed funds of 25 basis points was already priced into the market, the larger-than-expected half percentage point move helped drive the major indices significantly higher on Tuesday. As a result the Dow achieved its largest one-day move of over 330 points in roughly five years. The reasoning behind such FOMC action stemmed from concerns about the overall health of financial markets and liquidity concerns. Other items grabbing headlines last week included earnings reports from leading investment banking companies that came in mixed, with Goldman Sachs easily surpassing consensus estimates and Bear Stearns releasing disappointing numbers. Despite the wide range in such numbers, market reaction was positive signaling confidence that such Wall Street firms were weathering the current credit market upheaval. Economic news did little to move the markets as the August CPI fell 0.1% versus an unchanged consensus, with August housing starts falling 2.6% to the lowest level in 12 years. Additionally, the Philly Fed showed a surprisingly strong reading of 10.9 versus estimates of 2.5 indicating manufacturing strength, with the weekly jobless claims coming in at a surprising decline of 9,000. With so much news to digest, it should not go unnoticed that the price of crude oil continues to rise into record territory, ending the week at over $81.00 a barrel.
What should investors look for this week? The corporate calendar is light. Bed Bath & Beyond (NASDAQ: BBBY) and Paychex Inc. (NASDAQ: PAYX) will announce earnings on Wednesday, and Jabil Circuit (NYSE: JBL), Rite Aid (NYSE: RAD), and KB Homes (NYSE: KBH) will report on Thursday.
On the economic front, Consumer Confidence for September and Existing Home Sales for August will be reported on Tuesday at 10:00 a.m. On Wednesday, look for Durable Goods Orders for August at 8:30 a.m., followed by Crude Inventories for the week at 10:30 a.m. Thursday morning at 8:30 a.m., the final GDP, and the Chain Deflator for the second quarter will be reported, along with Initial Jobless Claims for the week. At 10:00 a.m., the Help Wanted Index for August, and New Home Sales for August will also be announced. Personal Income, Personal Spending, and the Core PCE Inflation numbers for August will be reported on Friday at 8:30 a.m. The Chicago PMI for September will be announced at 9:45 a.m., with the Construction Spending for August, and the revised Michigan Sentiment for September coming at 10:00 a.m.
Enzo Biochem, Inc. (NYSE: ENZ) will present on Monday at 10:00 a.m. eastern time at the four-day UBS Global Life Sciences Conference in New York, followed by CytRx Corporation (NASDAQ: CYTR) at 10:30 a.m. Hythiam, Inc. (NASDAQ: HYTM) will present at the same event on Tuesday at 12:30 p.m. VeriChip Corporation’s (NASDAQ: CHIP) wholly owned subsidiary, Xmark Corporation, will present at the 6th RFID, Barcoding & Emerging Technologies for Hospitals and Health Systems Conference, being held in Philadelphia on September 24-26. Other notable conferences include the three-day J.P. Morgan Asia Pacific and Emerging Markets Conference beginning in New York on Monday. On Tuesday, the four-day Merrill Lynch Global Power & Gas Leaders Conference kicks off in New York, along with the three-day Credit Suisse 16th Annual Chemical Conference, and the two-day Jefferies 4th Annual Shipping, Logistics, & Offshore Services Conference, also in New York. Investors should also keep an ear on comments from the various Fed honchos being interviewed throughout the week.
VeriChip Corporation (NASDAQ: CHIP), a leading provider of identification and security technology, last week announced a $1.5 million stock repurchase plan, reflecting management’s confidence in the future of the companyThe purchases will be made over the next four months. Perhaps the reason for the confidence is that CHIP announced last week that the company hadgenerated revenue from its Implantable Operations earlier than expected, primarily due to a purchase of the VeriTrace system by a medical examiner’s office in New York, the largest purchase such sale in the company’s history. The company has also generated revenue from its PATIENT FIRST program, and will report this revenue with third quarter results. A recently published AP article citing possible health risks has helped fuel the slide to current levels, giving investors, and the company itself, a very attractive entry point, and continued sales and revenue gains should lead to higher returns in the near future. Shares ended the week at $4.30, down 37 cents.
Enzo Biochem, Inc. (NYSE: ENZ), a company engaged in the research, development and manufacture of innovative health care products, reported last week that studies of one of its small molecule compounds, Enzo-D58, when administered orally was shown to prevent alveolar bone loss in a rat periodontal model. The discovery was made during a preclinical study of small molecule compounds for the treatment of osteoporosis and other conditions resulting from bone loss. Alveolar bone loss is characterized by the reduction in height and volume of the maxillary and mandibular bones that underlie and support teeth, and is one of the most challenging problems in clinical dentistry. Industry sources estimate the market for treatment for bone disorders is in excess of $5 billion. Shares ended the week at $11.96, up 13 cents.
Hythiam, Inc. (NASDAQ: HYTM), a provider of comprehensive behavioral health management services, last week reported that Collin County, TX has adopted the PROMETA Treatment Program for the treatment of methamphetamine and cocaine dependent individuals within its probation, parole and re-entry programs, following a successful pilot evaluation. The pilot exceeded the expectations of Collin County, and compared favorably with other treatment programs. The county placed over 11,000 persons on probation last year alone, a large number of these due to drug-related crimes, and joins Denton County, TX as local jurisdictions adopting the PROMETA program, which has been earmarked $2 million in finding by the Texas state legislature. Hythiam expects increasing adoption of the PROMETA treatment program in Texas and Washington to serve as a catalyst for adoption of the program throughout the U.S., helping both patients and communities in dealing with the social and economic burdens of drug abuse. Shares ended the week at $6.51, down 37 cents.
Rio Vista Energy Partners LP (NASDAQ: RVEP), a master limited partnership focusing on the acquisition of oil and gas exploration and production assets, announced last week that the company has entered an agreement with TransMontaigne Partners L.P. to sell certain liquified petroleum gas (LPG) assets to TransMontaigne for $10.5 million. The assets include two pipelines, with all associated rights-of-way and easements, that run between Brownsville, TX and Matamoros, Mexico, and three subsidiaries affiliated with the pipelines. A $6.5 million initial deposit has already been received by Rio Vista, with the remaining $4.0 million to be paid at the closing of the transaction. The sale represents a shift to U.S.-based projects, and the company plans to use the proceeds from the sale to make additional acquisitions of qualified oil and gas assets. Recently, the company reported it has entered into letters of intent to acquire interests in certain oil and gas producing properties and associated pipeline gathering systems from four privately held companies based in East Central Oklahoma. The company also announced the appointment of Douglas G. Manner as Chairman of the Board of Managers of Rio Vista GP LLC, the general partner of Rio Vista. Mr. Manner has served as a member of the Board of Managers of Rio Vista GP since August 2004, and has more than 25 years of experience in the oil and natural gas industry. Shares ended the week at $16.00, up $1.61.
Home Solutions of America (NASDAQ: HSOA), a provider of restoration, construction and interior services to commercial and residential customers, said last week that it will hold a conference call originally scheduled for September 20th on September 27th at 10 a.m. eastern time. On the call, the company is expected to discuss the Tampa and New York Projects in greater detail, new business opportunities, status of the FIGA receivables, as well as other relevant financial information. If the company is able to reassure investors that it has sufficient liquidity to fullfill the significant backlog of work it has under contract, it could serve as a catalyst for shares to move higher. The stock turned in one of its best percentage gains in months last week, rising 29 cents to $3.03.
Volume Alert: Shares of Telkonet, Inc. (AMEX: TKO), the leader in providing in-building broadband access over existing electrical wiring and innovative energy management systems, traded over 3.2 times average volume last week after the company reported that its proprietary iWire System has been deployed by electronic point-of-sale display specialist POP-Vision, to deliver data for in-elevator installations. POP-Vision, headquartered in Argentina, had the iWire system installed in three office-building locations in San Juan, Puerto Rico, taking advantage of the wiring already supplying electricity into the elevators. The installations, which took less than four hours each, enable POP-Vision’s display screens to carry news, financial reports and advertising in a much more cost-efficient and more reliable manner than other solutions, including wireless (Wi-Fi). POP-Vision reported excellent connectivity with the system as soon as everything was installed, and is already planning to roll out this solution at other locations. As the budget share for digital advertising increases in the corporate world, Telkonet’s unique ability to deliver broadband media quickly and efficiently should provide the company with many opportunities in the future. Shares ended the week at $1.64, up one cent.
Drug delivery company Generex Biotechnology (NASDAQ: GNBT) presented a a podium presentation at the 43rd Annual Meeting of the European Society Association for the Study of Diabetes (EASD) in Amsterdam last week. The paper entitled Ii-Key/MHC class II epitope hybrid technology to detect T cell response to insulin and GAD in type 1 diabetes. The technology discussed facilitates detection of autoimmune responses that underlie Type-1 Diabetes Mellitus. The specific targets of this autoimmune response are the insulin protein itself or glutamic acid decarboxylase (GAD). The studies showed that Ii-Key modified peptides derived from either insulin or GAD can detect this autoimmunity with greater sensitivity than the unmodified peptides. These findings have implications both for the diagnosis and the treatment of Type-1 diabetes. Early detection of Type-1 diabetes greatly increases the quality of care for such patients. The appearance of cellular immunity, as detected by specific Ii-Key hybrids, would catch people at the earliest possible stages. Shares of the stock, which have been range-bound since late July, closed at $1.53, down 9 cents.
USA Technologies, Inc. (NASDAQ: USAT), a developer of cashless vending and energy management products, stands to benefit significantly from the recently enacted Texas state law requiring vending machines in public buildings to be equipped with energy saving devices. USA Tech’s EnergyMiser technology cuts electrical consumption in traditional refrigerated vending machines virtually in half, reducing operating costs, as well as benefiting the ecology. The cities of Austin and Houston have already begun installing EnergyMiser products as part of other cost and energy-saving initiatives, similar to recent deployments in Phoenix and Tucson, AZ and in approximately 20 cities in northern and southern California. With global warming and higher oil prices dominating the world’s headlines, many more municipalities and legislatures can be expected to follow suit. The General Services Administration (GSA), the Federal Government’s purchasing arm, has approved the EnergyMiser product line, allowing State and Federal governments and agencies to purchase directly from USA Technologies. USA Technologies estimates that outfitting the nations four million refrigerated vending machines and 10 million coolers with EnergyMisers would result in an annual savings of over $1.3 billion in electricity costs, a reduction of almost 23 billion pounds of CO2 entering the environment, and the saving of over 7 million tons of coal. The company also announced the appointment of Bruce Shirley, formerly of First Data Corp., to the position of Vice President, e-Port Connect Services, and the appointment of Len Crosson, formerly of Sprint Nextel, as Vice President, Global Sales and Business Development. Shares ended the week at $8.31, up four cents.
CEL-SCI Corporation (AMEX: CVM), developer of new immune system based treatments for cancer and infectious diseases, reported last week that that its CEL-1000 immunomodulator was able to trigger the immune response against the recombinant hepatitis B virus protein quicker than other vaccine adjuvants. CEL-1000 is a modified version of a human immune-based protein known to bind to both human and mouse immune cells and appears to activate innate and Th1 type (cellular) immune responses to induce a broad-spectrum protection against infection in animal models. CEL-1000 has also been shown to protect animals against infection against viruses and other unrelated diseases, specifically herpes simplex virus, viral encephalitis and malaria. In the most recent study, a single dose of CEL-1000 led to a 40% increase in antibody signal in 28 days, and suggested that the timing and dosage also played a significant role in the immune response. A more rapid response is critical in the development of drugs for a biodefense role, or for a pandemic flu setting, and CEL-1000’s promise as an adjuvant in combating other illnesses should not be overlooked. Shares ended the week at $0.65, up two cents.
Advanced Cell Technology, Inc. (OTCBB: ACTC), a company applying stem cell technology in the emerging field of regenerative medicine, last week reported that the National Institutes of Health (NIH) will begin exploring methods to expand the number of approved pluripotent stem cell lines “without creating a human embryo for research purposes or destroying, discarding, or subjecting to harm a human embryo or fetus,” as per President George W. Bush’s Executive Order. Advanced Cell Technology’s single cell blastomere technology directly addresses the President’s ethical concerns, and should it satisfy the NIH’s qualifications, could qualify for federal funding. In August 2006, the company published a paper documenting this technique, which the NIH referred to in its implementation plan, and in June 2007, the company reported it had successfully produced 4 human embryonic stem cell lines without destroying the embryos, thus validating the company’s technology. Approval for federal funding could lead to Advanced Cell Technology being a major supplier of stem cells for research, which would most assuredly be a boon for investors. Shares surged last week in heavy volume, rising 2 cents to close at $0.30 for the week.
Calypte Biomedical Corporation (OTCBB: CBMC), medical diagnostic tests manufacturer for the rapid detection of antibodies to the human immunodeficiency virus (HIV), last week announced that its Aware HIV-1/2 OMT oral fluid rapid test has been approved by the U.S. Agency for International Development (USAID), and has been placed on its waiver list, which permits the use of the test in USAID-funded projects. This approval gives Calypte access to the largest source of funding for rapid HIV tests in the world; the President’s Emergency Plan for AIDS Relief (PEPFAR), which was first announced in 2003, and has committed $15 billion over the next five years to combat AIDS, the largest commitment ever by any nation for an international health initiative dedicated to a single disease. This approval also validates the fact that the Aware test is a highly accurate test, which holds its own against some of the best rapid blood tests in the world. The company believes that the test simplicity, and ease-of-use will help drive sales where PEPFAR funding is now available, such as South Africa, Kenya and Uganda, and help pave the way for expansion into other regions where governmental, as well as private funding is being used to help combat this deadly disease. Shares ended the week at $0.17, down one cent in heavy and volatile trading.
Ceragenix Pharmaceuticals, Inc. (OTCBB: CGXP), a biopharmaceutical company focused on infectious disease and dermatology, last week reported that the company made five poster presentations of its Ceragenin technology at the annual meeting of the American Society for Microbiology’s Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) in Chicago, Illinois. Particularly of note was the indication that Ceragenin CSA-13, one of Ceragenix Pharma’s lead compounds, was effective against a large collection of bacterial strains in cystic fibrosis patients, including a highly transmissable virulent clone, and may lend itself to delivering anti-bacterial compounds directly into the lungs, as an aerosol-administered drug. Shares ended the week at $1.17, down seven cents.
Intellect Neurosciences, Inc. (OTCBB: ILNS), a biopharmaceutical company focused on development of disease-modifying therapeutic agents for the treatment and prevention of Alzheimer’s disease and related disorders, last week announced that European Patent No. 1237930 covering chimeric peptide vaccines has been validated in nineteen European countries. Intellect Neurosciences is the exclusive assignee of the patent, which relates to the company’s RECALL-VAX technology, and has also been approved in several countries outside Europe. The patent enables the technology to potentially be used to treat patients suffering from Alzheimer’s disease and possibly to prevent or delay the onset of this devastating disease. An estimated 12 million people worldwide suffer from Alzheimer’s disease, and currently marketed drugs merely treat symptoms, and do nothing to slow or arrest the eventual progression of the disease itself. Approximately $4.0 billion will be spent on symptomatic drugs in 2008, highlighting the need for effective vaccines or treatment. Additionally, Intellect Neuroscience reported that it has entered an agreement with non-profit organization CHDI, Inc. to assess Intellect’s OXIGON as a potential therapy for Huntington disease. OXIGON is a chemically synthesized form of a naturally occurring molecule that has unique neuroprotectant and antioxidant properties, and is scheduled to begin Phase II testing in Alzheimer’s patients in 2008. The company believes that data from the CHDI study could lead to clinical trials for the treatment of Huntington disease as well. It is estimated that one in every ten thousand people carries the HD gene, and currently there is no cure or treatment to slow the progression of symptoms. Shares ended the week at $0.64, up three cents.
IceWEB Inc. (OTCBB: IWEB), a software services provider, last week reported favorable coverage in DM News, a widely circulated publication covering direct, database and Internet marketing. The article cites IceWEB’s trial by partnering marketing strategy. A recent partnering with Research In Motion, the maker of the Blackberry, offered a free 90 day trial of IceWEB’s email service, and a free synchronization for Blackberry users. IceWEB reported hundreds of clients signing up, and most staying on after the trial period ended. A recent press release by the company after the launch of Apple’s iPhone indicating its compatibility with IceWEB’s service generated a 6,000% spike in the company’s web traffic. Shares ended the week at $0.63, up four cents.
Neutron Enterprises, Inc. (OTCBB: NTRN), a developer of digital media solutions, last week reported that it has entered into an agreement with The Motley Fool, Inc., a leading financial services portal. The Motley Fool will promote Neutron’s Wall Street Survivor competition through its CAPS web site, and will provide CAPS content as well as TMF news headlines to Neutron for inclusion on NTRN’s contest and education-focused web sites. The company reported that the recent success of the beta version of its fantasy stock market game has begun attracting leading brokerage firms and content providers seeking partnerships, and believes that this agreement with The Motley Fool will give the company even more exposure, due to its popularity in the Wall Street community. Registrations for its current contest, which began August 1, were expected to significantly exceed the number of registrations for the June/July contest. Shares ended the week at $0.50, unchanged.
ProLink Holdings Corp., (OTCBB: PLKH), the world’s largest provider of Global Positioning System golf course management systems and on-course advertising, last week announced it has entered a definitive agreement to acquire 100 percent of the outstanding shares of Elumina Iberica SA, Elumina Iberica UK Ltd, GP Ads SL, and GP Ads Ltd. (Elumina), ProLink’s international distributor since 2005. In that time, Elumina has installed ProLink’s system at more than 150 golf courses in Europe and the Middle East, and generated over $11 million in revenue in 2006, including $1.5 million in advertising revenue. 2007 revenues are expected to be over $16 million. Elumina currently has a presence in 13 countries and is actively opening new territories worldwide, giving ProLink significant potential for growth not only in Europe and the Middle East, but perhaps in Asia and Pac-Rim countries as well. ProLink will issue 30 million shares for the purchase, which is expected to be completed by November 30, 2007. Additionally, ProLink announced that Elumina has has secured 100% of the advertising rights and has installed the ProLink system at all 32 up-scale U.K. properties of Crown Golf, Europe’s largest golf course owner and operator. The St. Mellion course in Saltash, Cornwall, host of numerous professional events, is among Crown Golf’s British clubs featuring the ProLink system. ProLink also reported that Elumina has secured a five-year commitment from the De Vere Group, one of the United Kingdom’s most exclusive hotel and golf course operators, and has installed the ProLink system at its nine properties. Additionally, the company reported that the Arizona Biltmore Golf Club in Phoenix, AZ now features the ProLink Solutions ProStar GPS system. The club’s two courses are adjacent to the 738 room Arizona Biltmore Resort & Spa, a well-known world-class resort. There are currently over 500 golf clubs worldwide featuring the ProLink system. Also of importance to investors, CEO Lawrence Bain exercised options on 655,903 shares of common stock, bringing his holdings to a total of 2.3 million shares, an indication of his confidence in the company’s future. Shares ended the week at $0.80, down two pennies.
Volume Alert: Shares of Studio One Media Inc. (OTCBB: SOMD), a company engaged in the development of entertainment-related businesses, traded over 4.2 times average volume last week after the company announced it has retained the Lexicomm Group, a New York City based communications consulting firm, to develop and manage marketing related to the highly-anticipated roll-out of its interactive MyStudio video recording studios. The self contained audio/video recording studio, designed to be installed in shopping malls and other high-traffic areas, enables the public to record their video and voice images in a portable, high definition, state-of-the-art recording studio environment. The first phase of the roll-out will be the launch of the MyStudioMedia.com website, designed to familiarize users with the MyStudio world, including include a virtual tour of how to use the studios, personal profile pages, contest information and planned studio locations. The second phase will be the unveiling of studios in various locations across the country. Given the popularity of websites such as MySpace and YouTube, Studio One Media appears to be in the right place, at the right time. Shares ended the week at $5.50, up 66 cents.
VoIP, Inc. (OTCBB: VOIC), a provider of turnkey Voice over Internet Protocol (VOIP) communications solutions for service providers, reported last week that the company has doubled the size of its existing national network infrastructure to accommodate additional customers and increased traffic. VoIP, Inc. recently reported that monthly revenue from August was over $1 million, a 17% increase from July, and that year-to-date revenue is now approximately that of the entire fiscal year 2006. The company has begun new network deployments in four states, and has plans to expand into an additional 21 states, making the company’s services available to more that 200 million customers by year-end. VoIP, Inc. said the build-out will enhance market penetration, improve quality of service and reduce its overall cost of goods for products and services sold by as much as 50%. Shares ended the week at $1.25, down 39 cents.
SPECIAL SITUATIONS:
MSTI Holdings, Inc. (OTCBB: MSHI) $0.65
Last week Apple reported it has sold over one million iPhones in 74 days, despite a comparatively lofty retail price. Wireless connectivity to the Internet has become a priority worldwide, no longer considered a luxury. Demand for High-Definition Television and satellite radio seems to be following that trend as well. MSTI Holdings, Inc. has developed a solution to all these consumer needs and wants, and more.
Founded in 1982, Microwave Satellite Technologies has been on the cutting edge of satellite communications since its inception, having designed, constructed and maintained systems for such Fortune 500 companies as IBM, AT&T, Lucent, and others. With Telkonet Inc. (AMEX: TKO) having acquired a controlling interest in January 2006, MST was transformed into a carrier-class communications company that could become a key participant in the multi-tenant unit (MTU) and the multi-dwelling unit (MDU) market in the highly populated New York City metropolitan area.
MSTI Holdings offers Quad-Play services under the trade name NuVisions. Quad-play refers to video, voice, high-speed Internet, and wireless fidelity (Wi-Fi). Currently, NuVisions offers over 500 channels of television, including 40 HD channels, and over 100 ethnic channels, in a variety of packages. Video On Demand (VoD) of first-run feature films as well as Sirius Satellite radio are also available to customers, as well as Voice over Internet Protocol (VoIP) phone service, and high-speed internet access, for both wired and wireless users. What makes MSTI Holdings a unique opportunity for investors is the unique method the company uses to deliver the goods, and the potential of the company’s planned expansion into the NYC market.
MSTI is able to provide quad-play to the MTU/MDU market at a considerably lower cost basis per customer than other service providers who are limited to traditional communication vehicles. MSTI, in addition to delivering its services through Cat 5 cable and other commonly used methods, uses PLC technology, which eliminates the need to hard-wire the entire building. PLC technology turns every electrical outlet in a building into an access point for TV, video, voice, and the Internet. The company’s strategy is to acquire access agreements with high profile MDU’s and property owners as a preferred provider, thereby increasing its customer base, as well as acquiring the subscribers of private cable operators that would find the costs of rewiring prohibitive. PLC technology also offers property owners the advantages of network connectivity, allowing for the monitoring of electrical usage, air conditioning monitoring, and security systems, as well as providing a messaging service between residents and staff.
MSTI Holdings’ NuVision offers its customers secure Wi-Fi access from common spaces on the property, and in various hot-spots throughout Manhattan. Current coverage includes the southern-half of Central Park, Riverside Park from 60th to 79th streets, and such high-profile locations as Dag Hammarskjold Plaza, and the United Nations Plaza, Trump Tower on Fifth Avenue, Trump World Tower on First Avenue, the Trump Place properties located on Riverside Boulevard, Trump Palace, Trump Parc, Trump Parc East as well as portions of Roosevelt Island surrounding the Octagon residential community. Future plans call for a virtual cloud of Wi-Fi coverage over most of New York City, free to NuVision subscribers, and available for an hourly or monthly fee to other users.
In July 2007, the company acquired 2,000 subscribers in Jersey City, NJ, effectively doubling its customer base and providing the company with a continuing, and growing revenue stream. MSTI Holdings had revenues of approximately $1.9 million in 2006. The company is projecting revenues of $3.5 million in 2007, and $8.0 million in 2008. With the current market for media, wireless, and internet-based services becoming larger and more demanding daily, MSTI has the tools necessary to create its own niche, and capitalize in a constantly expanding marketplace.
Medical Discoveries, Inc. (OTC: MLSC) $0.07
With crude oil prices continuing the inexorable climb towards $100 per barrel, the quest for alternative energy sources has become a major priority in the U.S., as well as internationally. While most of the recent headlines regarding renewable energy resources have focused on the production of corn-based ethanol, Medical Discoveries, Inc. (MDI) offers an alternative that is rapidly gaining recognition as a solution to the problem of expensive feedstocks, which is plaguing the bio-fuels industry, and the overall economy as a result. The solution could be low-cost feedstock from the Jatropha plant.
The Jatropha curcas, is a hardy, fast-growing non-edible perennial plant native to Mexico and Central America, and now found throughout tropical and subtropical climates worldwide. Until recently, its few uses included being planted as live fencing for animals, for candle-making, and as a homegrown medicinal remedy. This plant can be grown in the poorest environments, deserts, landfills, rockpiles, etc., and requires much less nutritious soil than other crops. Jatropha can be grown on land not suitable for food crops.
MDI announced that on September 17, 2007 it acquired all of the equity interests in Global Clean Energy Holdings LLC, a Los Angeles-based biofuel feedstock development and operations company with international capabilities in eco-friendly biofuel feedstock research, and sustainable agriculture cultivation, production, and distribution. MDI intends to change its name and ticker symbol to reflect its new focus on the bio-diesel alternative energy market. MDI also intends to relist on the Over-the-Counter Bulletin Board.
Global Clean Energy recently submitted a $42 million proposal to demonstrate the beneficial effects of integrating a Jatropha plantation with a biodiesel and synthetic diesel production facility. This proposal was in response to a $200 million Dept. of Energy request for proposals for integrated biofuels production facilities utilizing non-food based lingo-celluostic (cellulose) feedstocks. The plant will be self-sufficient, utilizing zero fossil fuels, be carbon-neutral, and will contain a state-of-the-art biorefinery and biomass thermo-chemical processing system, generating its own power and heat while producing 100% renewable biodiesel and synthetic diesel. The integrated development will generate its own power and heat while producing 100% renewable biodiesel and synthetic diesel. Due to the Jatropha plants’ ability to convert large volumes of carbon dioxide to oxygen through photosynthesis, the development is expected to generate carbon credits the company can sell to other companies unable to meet their requirements under the Kyoto Accord. The development will be built and operated in cooperation with Blue Sun Biodiesel, Community Power Corp., and the National Renewable Energy Laboratory in Golden Colorado.
A newly proposed Federal renewable-fuels target calls for a mandate to supplement 15% of the country’s gasoline supply with corn-based ethanol by 2017. Currently, U.S. farmers only have enough capacity to meet a 7% target. This has created an increased competition for for food crops used as a feedstock for biofuels which in turn has caused all corn and oil seed commodity prices to rise significantly, dramatically raising feed costs to livestock farmers and other food producers, ,This has effected consumers in many ways by increasing many food costs. Switching to Jatropha based biodiesel could enable the United States. to meet its renewable-energy goals, while ensuring productive farmland can continue to be used for food crops. The European Union (EU) has proposed a binding 10% target for the amount of biofuels to be contained in all fuel products sold in each EU Member State. As a percentage, Europe utilizes much more diesel as a transportation fuel than the U.S. due to its increased fuel efficiency. The trend in the U.S. is expected to follow.
There are many attractive qualities of the Jatropha plant. The end product, biodiesel, produces 80% less carbon dioxide than petroleum diesel. The plant converts carbon dioxide and produces oxygen through photosynthesis. The plant is a perennial and does need to be replanted every year. It is excellent at preventing soil erosion and the plant improves its own soil by shedding its leaves, adding nutrients to the soil. The plant prefers alkaline soils, otherwise unsuitable for most food crops. A Jatropha tree can live up to fifty years, and produces fruit in as early as 18 months. The seeds from the fruit are harvested and pressed for their oil content, which can exceed 40%, Jatropha is very hearty s, and can survive up to three consecutive years of severe drought.
Goldman Sachs recently lauded Jatropha as one of the best candidates for future biodiesel production. The seeds of the Jatropha contain as much as 40% oil. Because it doesn’t require much water or fertilizer, Jatropha uses considerably less resources, and is considerably less expensive to produce than corn, rapeseed, or soybeans, the most widely used crops in biofuel production. Estimates put the cost of Jatropha based biodiesel at less than $45 per barrel, compared to $132 per barrel for rapeseed (canola) based biodiesel, and roughly $128 per barrel for soy based biodiesel. Such comparisons make the Jatropha plant and MDI a very attractive alternative. Since the announcement of the acquisition of Global Clean Energy, MDI shares have increase over 150% with a 1,000% increase in trading volume. Stay tuned.
