Companies featured in the current edition of the newsletter: ACTC, AFMI, CACN, CBMC, CLXS, CORG, CYTR, FMTI, GCEH, GNBT, HJHO, HYTM, IFSG, MBND, MSHI, NSMG, RVEP, SMGY, SWVC, TKO
Market moving headlines and news pertaining to the financial sector dominated the week, leading to a stunning bounce from deeply oversold conditions. Despite a mixed bag of financial news, banks and brokerage firms helped the financial sector lead the way, gaining 6.6%. The S&P 500 rallied with a gain of 55 points or just over 4.0% for the week, cutting its year to date loss to 6.7%. It was a striking move for the S&P, especially since it came on the heels of the worst quarterly performance since 2002. The Dow Jones Industrial Average posted a gain of 393 points, bringing its year to date loss to 4.9%. The Nasdaq Composite Index followed the positive trend for the week with a gain of 110 points, reducing its year to date loss to 10.6%. The Russell 2000 finished the week with an impressive gain of 31 points, reducing its year to date loss to 6.8%.
Treasury Secretary Paulson got things going Monday with an announcement of a plan to enact a sweeping overhaul of the U.S. financial regulatory system. The intent of the plan is to streamline the bureaucracy in the regulatory system and to modernize the system so that the U.S. financial sector can be more competitive in the global marketplace. Paulson’s plan provided plenty of discussion throughout the week, but the real buzz surrounded the market’s reaction to the largely negative news that included large write downs from a cadre of investment banks that included Swiss bank UBS, German bank Deutsche Bank, and the Wall Street firms Lehman Bros. and Merrill Lynch. The spin on these updates was that they were so bad that they stood out as indicators the financial sector must be nearing a bottom. The news that Lehman Brothers completed a large capital raise helped quell fears that investment banks could face a liquidity crunch.
On Wednesday Fed Chairman Bernanke told the Joint Economic Committee in his testimony on the economic outlook that he thought real GDP wouldn’t grow much, if at all, and could even contract slightly in the first half of 2008. That headline caused a stir, but the market took it in stride. Weekly initial claims rose for the week from 38K to 407K, well above the market’s expectation of 365K. Meanwhile, the Dept. of Labor revealed that nonfarm payrolls declined 80K in March and that the unemployment rate jumped to 5.1% from 4.8%.
What should investors look for this week? Earnings announcements kick off Monday with Shaw Group (NYSE: SGR) releasing numbers before the open, followed by Alcoa (NYSE: AA) after the close. Wednesday before the open Circuit City (NYSE: CC) and Progressive (NYSE: PGR) will post results. Bed Bath & Beyond (NASDAQ: BBBY) will announce its earning later in the evening. Rite Aid (NYSE: RAD) and WellCare Group (NYSE: WCG) will post earnings before the bell on Thursday, followed by Genentech (NYSE: DNA) announcement after the close. The week closes with General Electric (NYSE: GE) reporting results on Friday before the opening. With the quarter recently completed, watch for corporate earnings pre-announcements, which are usually negative.
On the economic front, February Consumer Report will be released at 3:00pm eastern time on Monday. February Home Sales will be reported on Tuesday at 10:00am with the attention of investors focusing on the release of the FOMC Minutes at 2:00pm later that day. Weekly Crude Inventories will be announced on Wednesday at 10:30am and February Wholesale Inventories at 10:00 am the same day. The February Trade Balance along with the Weekly Initial Jobless Claims will be released Thursday at 8:00am, followed by the March Treasury Budget in the afternoon. At 8:30am on Friday, March Import/Export Prices will be released, with Preliminary March Michigan Sentiment data being reported at 10:00am.
The conference schedule is relatively tame this week with the four-day Howard Weil Energy Conference in New Orleans and the three day Independent Petroleum Association of America 2008 OGIS New York Conference taking place Monday. Also taking place Monday is the America’s Growth Capital Information Security Conference in San Francisco. On Tuesday, the three day Credit Suisse Global Real Estate Conference will begin in New York.
Shares of beaten-down healthcare services company Hythiam, Inc. (NASDAQ: HYTM) rallied more than 52% last week on strong volume. After the close on Friday, it was reported that one of the company’s directors purchased approximately 47,000 shares earlier in the week. The same director had previously purchased $5 million of the company’s stock. Still, shares are down more than 38% this year, possibly as a result of delays in the company landing a managed care contract for its PROMETA protocols. Note that the next level of resistance is likely $2.24, representing the gap from March 24th. Shares ended the week at $1.80, up 59 cents.
Rio Vista Energy Partners L.P. (NASDAQ: RVEP) provided an operational update and company overview in a regulatory filing made with the Securities and Exchange Commission on Form 8-K. The report focused on the progress being made in both the development of the recently acquired oil and gas assets in Oklahoma and the expansion of new contracts and growth opportunities in the company’s terminalling and transportation business in Virginia. Also under way are a number of projects in Oklahoma, including infrastructure improvements and additions, existing well tie-ins, workovers and new drilling. In addition a large drilling program is currently being organized for 2008 to continue to develop both the shallow Booch sand and the Hartshorne Coal. The company also continues to actively pursue new contracts and growth opportunities for its Virginia operations. Shares dropped $0.25 for the week, to close at $13.25.
Generex Biotechnology Corporation (NASDAQ: GNBT), the leader in drug delivery for metabolic diseases through the inner lining of the mouth, and SciGen, Ltd. announced that the parties have entered into a product licensing and distribution agreement under which SciGen will procure governmental approvals for the importation, marketing, distribution, and sale of Generex Oral-lyn, the company’s proprietary oral insulin spray product, in the People’s Republic of China, Hong Kong, and the following additional countries: Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The company also announced that it will issue 8% convertible notes and warrants to existing investors to raise nearly $20.7 million in gross proceeds, further strengthening its balance sheet which now includes more than $40 million in cash. Shares fell by $0.08 for the week, to close at $1.01.
CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical company engaged in the development and commercialization of human therapeutics, reported financial results for the 12 months ended December 31, 2007. Revenue for 2007 was $7.5 million, compared with 2006 revenue of $2.1 million, and consisted primarily of service revenue recognized from CytRx’s 2006 royalty transaction with the ALS Charitable Remainder Trust. Cash, cash equivalents and short-term investments totaled $60.4 million as of December 31, 2007, compared with cash, cash equivalents and short-term investments of $30.4 million as of December 31, 2006. During 2007 the company significantly advanced its molecular chaperone drug development programs and is currently focusing on addressing the challenge of a clinical hold on Phase IIb clinical trial in ALS. The stock rose by $0.03 for the week, to close at $1.21.
Multiband Corporation, (NASDAQ: MBND), the nation’s largest DIRECTV Master System Operator for Multiple Dwelling Units, announced results for its fourth quarter and 2007 fiscal year ended December 31, 2007. The company recorded revenue of $3.1 million for its fourth quarter of 2007, compared to $4.6 million in the fourth quarter of 2006. Fourth quarter 2007 revenue was impacted by the sale of approximately 23,000 owned Revenue Generating Units, which generated revenue included in the 2006 fourth quarter results. For the year ended December 31, 2007, Multiband had revenue of $15 million compared to $18 million in the same period in fiscal 2006. For the year ended 2007, the company incurred a net loss of $6.1 million compared to a net loss of $10.2 million for the 2006 fiscal year. We believe the catalyst for the stock is likely to come if the company completes the merger with DirecTECH, which would substantially increase revenue and improve operating results. Shares fell by $0.13, to finish the week at $1.86.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a company that engages in the research, development, and commercialization of products for the prevention and treatment of cardiovascular and related diseases, announced its financial results for the year ended December 31, 2007. The company reported total revenue of $9.4 million for year ended December 31, 2007 versus $7.2 million for year ended December 31, 2006, a 31% increase. The company also reported a net loss of $0.30 per share from continuing operations for the year ended December 31, 2007 compared to a net loss of $0.48 per share from continuing operations for the year ended December 31, 2006. In other fiscal year 2007 highlights the company continued to expand the market penetration for Reducol containing products with launches in Portugal, Finland, Taiwan and the Netherlands. It also furthered the development of early stage compounds focused on asthma and diabetes. Despite a weakening economy towards the end of 2007, the company was able to show continued growth in its ingredient business while maintaining progress on its development programs for the FM TP 2000 and 3000 series. Shares fell by $0.04, to finish the week at $0.85.
What’s wrong with this picture? Advanced Cell Technology, Inc. (OTCBB: ACTC), a biotechnology company applying cellular technology in the emerging field of regenerative medicine, received the kind of favorable media coverage last week that many small companies can only dream of. The company was featured on a Barbara Walters special “Live to 150 Can You Do It? Secrets to Live Longer” in which the show identified promising technologies to extend life. The show discussed ACTC’s research platforms including its blastomere program for creating human embryonic stem cell lines without impacting the developmental potential of embryos as well as the company’s research into developing a universal O negative red blood cell bank using human embryonic stem cell science. Despite this coverage and huge trading volume, shares fell heavily for the week. We suspect it had to do with the company completing a private placement of $3.8 million in amortizing senior secured debentures with institutional and other accredited investors. The company intends to use the proceeds of the offering for general corporate purposes, including additions to working capital, and to finance the further development of the company’s clinical programs. As a result of the new financing, previous transactions with some of these investors were reset to allow the investors to convert debt to shares at $0.15. The company also reported on a large-scale differentiation process that has generated panels of differentiating human progenitor cell lines from human embryonic stem cells. The research represents a breakthrough in the mapping and characterization of the cells of early human development and is a big leap forward in embryonics. Another important finding in this publication is that these normal embryonic progenitor cell types show the expression of certain genes often associated in the literature with malignant cancer. The process allows the company to provide differentiated embryonic progenitor cell lines from its ACTCellerate Platform for therapeutic applications, research tools, and drug discovery. Shares fell by $0.06, to finish the week at $0.11.
Customer Acquisition Network Holdings, Inc. (OTCBB: CACN), a fast growing Internet multi-channel network, announced record fourth quarter and year-end results for the period ended December 31, 2007. Results included the acquisition of interCLICK on August 31, 2007. In the fourth quarter ended December 31, 2007, the company posted record revenue of $5.5 million. Quarterly revenue grew 57% on a sequential basis when compared to pro forma third quarter 2007 revenue of $3.5 million. Gross margins for the fourth quarter ended December 31, 2007 improved significantly compared to pro forma third quarter gross margins for the period ended September 30, 2007. Gross margins increased to 23% from 17%, primarily as a result of expanding interCLICK’s agency sales force during the fourth quarter, resulting in the addition of several Fortune 500 advertisers. As a result, during the fourth quarter, the majority of revenue was derived from cost-per-thousand advertisers. Previously, a majority of revenue had been generated from direct response advertisers on a cost-per-action basis. Shares rose by 5 cents, to finish the week at $3.63.
Affinity Media International Corp. (OTCBB: AFMI), a special purpose acquisition company, filed its annual report for the year ended December 31, 2007. For 2007 the company reported net income of $37,219, compared to $94,294 in 2006. Net cash provided by operating activities was $126,612 and net cash used in investing activities was $171,834 for the year ended December 31, 2007. For the year ended December 31, 2006, net cash provided by operating activities was $22,815 and net cash used in investing activities was $19,091,545. In 2007 the company also entered into an agreement and plan of merger with Hotels At Home, Inc., an industry leading publisher of in-room retail catalogs and hotel-branded e-commerce. Assuming the merger is consummated, Hotels would become a wholly-owned subsidiary of the company. The stock remained unchanged for the week at $5.90.
Cordia Corporation (OTCBB: CORG), a global communications service provider of CLEC and Voice over Internet Protocol technologies, announced the results of operations for the fiscal year ended December 31, 2007. The company reported revenue of approximately $43.8 million for the twelve months ended December 31, 2007, an increase of approximately $6.3 million from the reported revenue for the same period last year. The company also reported a net loss for the year of approximately $3.1 million or $0.55 per share for the year ended December 31, 2007. The company’s revenue growth was 17% for 2007, as compared to 2006. Cordia continues to believe that its shares are undervalued and during 2007, and continuing into January 2008, the company bought back more than 400,000 shares of its common stock. Shares remained unchanged at $0.52 for the week.
Global Clean Energy Holdings, Inc. (OTCBB: GCEH), a company that operates as a renewable energy company in the biofuels industry, had its common stock relisted on the Over-the-Counter Bulletin Board. The stock remained unchanged at $0.05 for the week.
Halcyon Jets Holdings, Inc.,(OTCBB: HJHO), operating through its wholly owned subsidiary Halcyon Jets Inc., a leading broker for on-demand charter aircraft services, announced record unaudited revenue for the months of January and February, 2008. The company generated revenue of approximately $6.1 million for the period, the highest revenue for a two-month period since its inception approximately one year ago. Revenue was driven by strong demand for corporate jet travel and increasing success of the company’s marketing initiatives. Halcyon previously announced that it generated net unaudited revenue of $4.7 million for November and December 2007. The company has continued its rapid growth in March, which is expected to be the largest revenue month since its inception. The stock rose by a penny for the week, to close at $0.40.
InfoSmart Group, Inc. (OTCBB: IFSG), a leading recordable digital versatile disc manufacturer in Hong Kong and Brazil, announced financial results for the fourth quarter and fiscal year ended December 31, 2007. Revenue for the year ended December 31, 2007 increased 287% to $105 million compared to $27.1 million for the period ended December 31, 2006. Gross profit for 2007 totaled $14.8 million, an increase of 96% compared to $7.5 million in 2006. Revenue for the fourth quarter ended December 31, 2007 increased 646% to $52 million compared to $7 million for the period ended December 31, 2006. Gross profit for the fourth quarter of 2007 increased 75% to $3.3 million compared to $1.9 million for the same period in 2006. Looking forward into 2008, the company’s main focus will be to continue to take advantage of the various tax incentives in Brazil while leveraging its current distribution channels by expanding production capacity and product portfolio. The stock fell by $0.04 for the week, to close at $0.23.
National Storm Management, Inc. (OTC: NSMG), a national construction company, announced that it has opened a new office in Alpharetta, Georgia, a suburb of Atlanta, to capitalize on recent storm activity in the area. As a result of recent tornadoes and hail damage, metropolitan Atlanta sustained approximately $250 million in damage. To support the cleanup effort, the company plans to mobilize operations through this new office, as part of its national expansion strategy. National Storm expects to open two new branch offices annually to capitalize on opportunities created by storm activity. The company currently has offices, through its affiliates, in Illinois, Indiana, Kentucky, Florida and Ohio. The stock rose by a penny, to finish the week at $0.05.
Smart Energy Solutions, Inc. (OTCBB: SMGY), a developer and manufacturer of the innovative Battery Brain product line of vehicle and marine devices, said last week that it had signed an agreement with West Marine, the world’s boating supply leader, to offer the Marine Battery Brain in its master catalogue. The company also filed its annual report for fiscal year ended December 31, 2007. The company recorded revenue of $1.2 million in 2007, compared to $1.8 million 2006. The stock fell 3 cents for the week, to close at $0.20.
Seaway Valley Capital Corporation (OTCBB: SWVC), a company that makes equity, equity-related, and debt investments in companies that require expansion capital, announced satisfaction of certain outstanding debentures. The company has been given notice that all $498,074 of October 2006 convertible debentures have been satisfied, and that the majority of the remaining balance of $1,117,719 of legacy debt has been satisfied as well. The elimination of the convertible debt could reduce some of the selling pressure on the stock. The stock remained under $0.01 for the week.
Tarrant Apparel Group (NASDAQ: TAGS), a design and sourcing company for private label and private brand casual apparel, announced that it was notified by The Nasdaq Stock Market that it is not in compliance with Nasdaq Marketplace Rule 4450(a)(5) because shares of its common stock had closed at a per share bid price of less than $1.00 for 30 consecutive business days. In accordance with Nasdaq Marketplace Rule 4450(e)(2), the company will be provided with 180 calendar days to regain compliance. This notification has no effect on the listing of the company’s common stock at this time. Shares fell by $0.12, to finish the week at $0.55.
On the Wires: Collexis Holdings, Inc. (OTCBB: CLXS), a leading developer of high definition search and knowledge discovery software, announced the appointment of Lenerl Sharp as the company’s European Director of Sales.
Looking for an interesting diversion from these volatile markets? We came across a web site located at www.Tippytales.com, which is an entertainment and educational site for children. Currently, kids can read interactive books in a variety of categories, listen to the narration and follow along, download the narration for iPods or to burn to a CD, and download them as PDF files to print out and read offline. Might be worth a click!
