Companies featured in the current edition of the newsletter: ACTC, BOKO, CBMC, CETG, CKGT, ECOI, FMTI, GCEH, GNBT, GSPG, HYTM, ICLK, ITUI, MBND, PLKH, TSX: SEE, SRRY, SWVC, TAGS, TKO
After gaining 8% from its July 15 low entering last week, it wasn’t a stretch to think the market was due for what technical analysts refer to as a consolidation period. That’s a fancy way of saying the market was probably due to go sideways. Setting the market parlance aside, sideways trading is basically what we got last week when it was all said and done. The Dow Jones Industrial Average dropped 74 points or 0.6%, increasing its year to date loss to 12.1%. The Nasdaq Composite Index gained 38 points or 1.6%, reducing its year to date loss to 7.5%. The S&P 500 gained 2 points or 0.1%, bringing its year to date loss to 11.6%. The Russell 2000 had the largest gain of the week of 2.6% or 19 points, bringing its year to date loss to 1.7%.
There were plenty of compelling story lines last week, the most prominent of which was the continued strength in the dollar and the continued weakness in commodities. There is a correlation factor between the two since commodities are dollar-denominated. When the dollar strengthens, they become less affordable for foreign buyers, reducing demand. However, the weakness in commodity prices, and particularly oil, is more than just a currency trade. In part, it reflects burgeoning concerns about a global economic slowdown. Those concerns were fed by weak data last week out of Europe andAsia.
The economic news in the U.S. last week was mixed. Industrial production rose 0.2% in July, but it was the trade deficit for June that brought particularly good news in terms of GDP calculations. It was reported that the real trade deficit, which is price adjusted, improved to $39.1 billion from $43.1 billion in May. The reduced deficit should lead to an upward revision for second quarter GDP and implies trade will once again provide a strong boost to third quarter GDP. The encouraging trade report was offset to an extent by a disappointing report that retail sales declined 0.1% in July. Excluding autos, they were up 0.4%. Overall, the retail sales report was on the soft side and it piqued concerns about the pace of discretionary spending. The weekly initial claims report did the same, as the 4-week moving average increased 19K to 440,500.
Retailers were a notable pocket of strength despite persistent musings about the consumer’s certain demise in the face of high food and gas prices, falling home values, rising unemployment and tighter credit conditions. For the week, the S&P Retailing Index jumped 4.8%, bringing its gain since the July 15 low to 28%. It was the financial sector, though, that was last week’s worst sector performer. It fell 2.8% on festering concerns about credit market conditions and low levels of business activity that saw several brokerage firms slash earnings estimates for leading investment bank Goldman Sachs. Additionally, a warning from JPMorgan Chase that it has seen a substantial deterioration in trading conditions since the end of the second quarter acted as another trigger for the selling interest.
What should investors expect for this week? The earnings reports will be on the lighter side and begin Monday with an announcement from Lowe’s (NYSE: LOW) coming before the bell. Coming Tuesday before the market opens will be earnings releases from Home Depot (NYSE: HD) and Target (NYSE: TGT), followed by Hewlett-Packard (NYSE: HPQ) after the bell. BJ’s Wholesale (NYSE: BJ) and Limited (NYSE: LTD) will report their earnings on Wednesday. Thursday morning HJ Heinz (NYSE: HNZ) and Tech Data (NASDAQ: TECD) will release their earnings, followed by an announcement from Gap Inc (NYSE: GPS) after the market closes.
On the economic front, July Housing Starts, July Building Permits, and July Core PPI will all be reported Tuesday before the opening bell. Weekly Crude Inventories will be reported Wednesday at 10:35 a.m. Weekly Initial Claims and July Leading Indicators will be announced Thursday, along with the Philadelphia Fed Index for August being reported at 10:00 a.m.
The conference schedule for the week includes the two-day Noble Financial Mad Max Equity Conference in Las Vegas and the two day Howe Barnes Hoefer & Arnett, Inc. Community Bank Conference in Chicago, beginning on Monday and Tuesday, respectively.
Volume Alert: Shares of Multiband Corporation, (NASDAQ: MBND), the nation’s largest DIRECTV Master System Operator for Multiple Dwelling Units, surged nearly 50% last week on more than four times average volume, after the company announced record 2008 second quarter financial results for the period ended June 30, 2008. The company recorded revenue of $10,805,707, an increase of 175.5% compared to $3,921,726 for the quarter ended June 30, 2007. Revenue increased as a result of organic growth and the acquisition of Michigan MicroTech, Inc., offset by a decline in subscribers as a result of previous subscription sales. Income from operations was $964,920 compared to a loss from operations of $1,253,006 in the year-earlier period. The company generated net income of $56,441, compared to a net loss of $1,279,979 in the second quarter of 2007. Shares rose by $0.55, to finish the week at $1.75.
Healthcare services company Hythiam, Inc. (NASDAQ: HYTM) announced financial results for the second quarter ended June 30, 2008. For the 2008 second quarter, the company reported consolidated revenue of $11.6 million, which includes $2.0 million in revenue from Hythiam’s healthcare services business and $9.6 million in revenue from CompCare’s operations, compared to consolidated revenue of $11.3 million in the second quarter of 2007, which included $2.2 million in healthcare services revenue and $9.1 million in revenue from CompCare’s operations. As of June 30, 2008, the company had consolidated cash, cash equivalents, and marketable securities of approximately $26.6 million, including $1.3 million held by CompCare. The company said it expects to receive results from a key study being conducted by Walter Ling, MD at UCLA on Prometa’s impact on methamphetamine addiction this quarter. Shares rose by $0.03, to finish the week at $2.34.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) announced that it has enrolled over 150 patients in the company’s pivotal Phase III clinical trial of Generex Oral-lyn, its flagship proprietary oral insulin spray product. Of those patients, over 100 have been dosed. There are 55 sites in the United States, Canada, Bulgaria, Russia, Poland and Ukraine actively screening and enrolling patients, including 39 clinical trial sites where patients are being dosed. The Phase III study will involve up to 750 patients with Type-1 Diabetes Mellitus within centers in the United States, Canada, EU, Russia, Poland, Bulgaria, Romania and Ukraine. The objective of the six-month study is to compare the efficacy of Generex Oral-lyn and the company’s RapidMist Diabetes Management System with prandial injections of regular human insulin as measured by HbA1c. The stock finished the week unchanged at $0.70.
GoldSpring, Inc. (OTCBB: GSPG), the largest mineral rights holder in the Comstock Lode District in Nevada, announced that it has executed binding letters of intent to purchase properties in Nevada’s Comstock Lode Mining District, further consolidating its position as the largest mineral rights holder in the area. Some of the properties the company is acquiring have previously produced significant amounts of gold and silver. The company believes that these acquisitions will enhance its financial flexibility by securing interests that have historically contained notable amounts of gold and silver. Perhaps more significantly, the transaction, when completed, will further increase the company’s mineral rights position, and make it potentially a more attractive acquisition candidate for a larger company seeking a land position in the Comstock. Most of the land holders in the area currently have small holdings. The stock fell by a penny for the week, to close at $0.05, likely due to weakness in the precious metals sector.
China Kangtai Cactus Biotech Inc. (OTCBB: CKGT), a vertically integrated grower, developer, manufacturer and marketer of a variety of cactus-based consumer products in China, announced record second quarter results for the period ended June 30, 2008. The company reported revenue of $5.0 million, a 34.9% increase compared to $3.7 million in the 2007 second quarter. The increase in revenue was a result of growing acceptance of the company’s products such as Cactus Protein Nutrient, Cactus Calcium Peptide Soft Capsule and Cactus Shuxin Capsule by Chinese customers and expanded distribution. Gross profit for the three months period ended June 30, 2008 was $1.5 million, an increase of 12.3% compared to $1.4 million for the same period last year. This increase was mainly attributable to the increase in net sales. Shares fell by $0.14, to finish the week at $0.70.
ecoSolutions Intl (OTC: ECOI), a company that focuses on marketing and distributing non-PVC plastics and bioplastics as alternatives to plastic, PVC, rubber, and non-sustainable wood products worldwide, released its financials for the second quarter of 2008. For the three months endend June 30, 2008 the company reported total revenue of $244,679 compared to $183,848 for the three months ending June 30, 2007. The company also reported a gross profit of $42,193 for the second quarter of 2008 compared to a gross profit of $28,426 for the three months endend June 30, 2007. The stock finished the week unchanged at $0.75.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a life sciences company dedicated to the research, development and commercialization of innovative products for the prevention and treatment of life-threatening disease, announced its results for the second quarter of 2008. Total revenue was $2.74 million compared with $2.23 million for quarter ended June 30, 2007 and $4.82 million for the six months ended June 30, 2008 compared with $4.35 million for the six months ended June 30, 2007. This increase was due to the increase in sales of Reducol by Forbes. Cost of sales for the three months ended June 30, 2008 totaled $2.17 million on phytosterol revenue of $2.69 million, or 81% of phytosterol revenue, versus $2.01 million on phytosterol revenue of $2.11 million for the three months ended June 30, 2007, or 95% of phytosterol revenue. As of June 30, 2008, the company’s net cash and cash equivalents were $2.85 million compared with $5.23 million as at December 31, 2007. The stock fell by a penny for the week, to close at $0.91.
Global Clean Energy Holdings, Inc. (OTCBB: GCEH), a renewable energy company in the biofuels industry, released its financials for the three months ended June 30, 2008. Global Clean Energy is a development stage company, and has not had significant revenues from its operations or reached the level of planned operations. The company discontinued prior bio-pharmaceutical operations during March 2007. In September 2007, it commenced operations in its new Jatropha business, but is still in the pre-development agricultural stage of operations and, therefore, does not anticipate generating significant revenues from the sale of bio-fuel products until 2009. However, the company is attempting to generate cash in 2008 from the forward sale of carbon credits and possibly from future oil delivery contracts. The company did not recognize any revenue in the three months or six months ended June 30, 2008. The stock traded around $0.04 for the week.
ProLink Holdings Corp. (OTCBB: PLKH), the world’s largest provider of digital advertising screens for the golf course market and Global Positioning golf course management systems, announced financial results for its second quarter ended June 30, 2008. The company reported that total revenue for the 2008 second quarter of $6.7 million increased 22.1% compared to $5.5 million in the 2007 second quart The company also generated EBITDA plus adjustment for non-cash 123R compensation of $394,859 which compared to a loss of $1.3 million in the year-earlier period. Shares rose by $0.05, to finish the week at $0.53.
Tarrant Apparel Group (NASDAQ: TAGS), a design and sourcing company for private label and private brand casual apparel, announced financial results for the three months ended June 30, 2008. The company reported net sales of $51.3 million in the second quarter of 2008, a 14.6% decrease compared to $60.1 million in the same period in 2007. Private Brands sales were $16.1 million in the 2008 second quarter, compared to $12.2 million in the second quarter of 2007. Private Label sales in the quarter were $35.2 million, as compared to $47.9 million reported in the same period last year. The decrease in Private Label sales in the second quarter of 2008 resulted primarily from decreased sales to Kohl’s and Mervyn’s due to the poor retail environment. Gross profit decreased by $1.6 million or 12.6% to $11.0 million in the second quarter of 2008 from $12.6 million in the second quarter of 2007. The decrease in gross profit was primarily due to a decrease in sales. As a percentage of total net sales, gross profit increased from 20.9% in the second quarter of 2007 to 21.4% in the second quarter of 2008. Shares fell by $0.04, to finish the week at $0.67.
Telkonet, Inc. (AMEX: TKO), the leading provider of innovative, centrally managed solutions for integrated energy management, networking, building automation and proactive support services, announced second quarter results for the period ended June 30, 2008. The results of operations include the acquisitions of EthoStream, LLC, Smart Systems International and Newport Telecommunications Co. For the 2008 second quarter, Telkonet, Inc. had revenue of $5.6 million, an increase of 53% compared to $3.7 million in the 2007 second quarter. The increase was a result of organic growth in the company’s energy and hospitality management businesses compared to the prior year period. Excluding revenue from its MST subsidiary, Telkonet had revenue of $4.6 million, an increase of 44% compared to $3.2 million in the year-earlier period and $4.0 million in the 2008 first quarter. Telkonet, Inc. reported gross margins of 34% for the second quarter of 2008 compared to the prior year period of 18%, and 23% in the first quarter 2008. All of the profit was generated from the Telkonet segment’s operations. Excluding gross margins from MST, the company reported gross margins of 42% for the second quarter of 2008 compared to the prior year period of 30%, and 28% in the first quarter 2008. Shares fell by $0.05, to finish the week at $0.39.
interCLICK, Inc. (OTCBB: ICLK), the fastest growing advertising network in the US according to comScore, announced results for the second quarter ended June 30, 2008. Second quarter revenue of $4,673,629, which excludes the financial results from the Options Media operations which were sold during the second quarter, increased 170% compared to pro forma revenue for the second quarter ended June 30, 2007 of $1,730,708. interCLICK’s 2008 second quarter revenue increased 31.2% sequentially on a pro forma basis. Gross profit for the three month period ended June 30, 2008 was $1,261,088 or 27.0% of revenue compared to gross profit of $854,429 or 24.0% of revenue in the 2008 first quarter. Since the end of the first quarter, interCLICK has also improved its balance sheet through the repayment of approximately $2.9 million of debt, further increasing its flexibility to grow its business. The company forecast that 2008 full-year revenue would exceed $20 million and that the company would be cash-flow break-even by the end of the year. The stock rose by $0.02 for the week, to close at $2.12.
i2Telecom International, Inc.(OTCBB: ITUI), a developer of award-winning patented and innovative high-quality Voice-over-Internet Protocol products and services, announced record second quarter results for the period ended June 30, 2008. The company reported net income of $2,927,123, or $0.02 per share, compared to a loss of $(2,130,331) or a loss of $(0.02) per share for the same period in fiscal 2007. This was the first quarterly profit in the company’s history. The company expects revenue from the sale of VOIP products and related services to increase by more than 400% this year. The stock fell by $0.02 for the week, to close at $0.12.
Advanced Cell Technology, Inc. (OTC: ACTC), a biotechnology company applying cellular technology in the emerging field of regenerative medicine, announced that it has granted an exclusive license to Embryome Sciences, Inc., a wholly owned subsidiary of BioTime, Inc., to use “ACTCellerate” embryonic stem cell technology and a bank of over 140 diverse progenitor cell lines derived using that technology. Under the agreement, ACT received an upfront payment of $250,000, and is eligible to receive an 8% royalty on sales of products, services, and processes that utilize the licensed technology. Once a total of $1,000,000 of royalties has been paid, no further royalties will be due. ACT also has an option to reacquire rights to use the ACTCellerate technology for the development of certain types of stem cells for human therapeutic use in fields related to its core business. The stock fell by $0.02 for the week, to close at $0.04.
Boo Koo Holdings, Inc. (OTCBB: BOKO), a company that develops, produces, markets, and distributes alternative beverage category energy drinks under the Boo Koo and Gazzu brand names, released its financials for the three months ended June 30, 2008. In the second quarter the company reported gross sales of $822,001. During the quarter, the company appointed a new management team, with significant successes in the beverage business and announced plans to change its name to Performing Brands. The company also said it was changing its focus to health, wellness and functional beverages from energy drinks. The stock finished the week unchanged at $0.25.
Calypte Biomedical Corporation (OTCBB: CBMC), a company that engages in the development, manufacture, and distribution of in vitro diagnostic tests primarily for the diagnosis of human immunodeficiency virus infection, reported financial results for the second quarter of 2008. Calypte’s revenue for the second quarter of 2008 totaled $95,000 compared with $282,000 for the second quarter of 2007, a decrease of $187,000 or 66%. Sales of the company’s BED Incidence Test accounted for 73% of sales in the second quarter of 2008, compared with 55% in the second quarter of 2007. The stock traded around $0.04 for the week.
SeaMiles Limited (TSX VENTURE: SEE), North America’s premier cruise loyalty provider, announced that it has completed transactions which eliminated $624,000 of pre-acquisition debt of SeaMiles, LLC from its books. Under the agreements, approximately $380,000 of debt was exchanged for 190,000 shares of the company at a price of $2.00 per share, with the remaining debt of approximately $244,000 being forgiven. The stock rose by $0.05 for the week, to close at $2.95.
Sancon Resources Recovery, Inc. (OTCBB: SRRY), a rapidly growing environmental services and waste recycling company, with operations in both China and Australia, announced that it has entered into an agreement with China’s largest manufacturer of personal computers to collect and process all waste packaging materials resulting from the delivery and installation of computers at all of its corporate clients in China. Sancon will provide on-site collection of the materials, and recycle the waste packaging into reusable packaging materials. The computer maker will also share the profit from the sale of the recycled materials. The company also reported its second quarter results. The sales in Q2 2008 were $2,570,531, representing a 207% increase compared to the sales of $838,658 in same period of 2007. The sharp increase was mainly due to the significant sales amount contributed from Sancon SH and CS, which started their operation in Q3 2007 and Q1 2008. In Q2 2008, the cost of the recyclable materials was $1,181,097. It is 72% increase as compared to the cost of sales of $687,689 in Q2 2007. The company has earned six cents for the first six months of the year. The stock fell by a penny for the week, to close at $0.45.
Seaway Valley Capital Corporation (OTCBB: SWVC), a company that makes equity, equity-related, and debt investments in companies that require expansion capital, reported results for three months ended March 31, 2008. The company’s net sales increased to $3,136,212 for fiscal period ended March 31, 2008 from $0 for fiscal period ended March 31, 2007, an increase of $3,136,212. The increase in sales was the result of the acquisition of WiseBuys and Hackett’s. The company’s cost of goods sold also increased from $0 for the first three months of 2007 to $2,397,841 during the same period in 2008. This led to a $738,371 increase in the company’s gross margin to $738,371 for fiscal period ended March 31, 2008 from $0 for fiscal period ended March 31, 2007. The company expects to fund its operations and capital expenditures from internally generated funds as well as additional outside capital, which may come in the form of equity or debt. Management believes that its existing cash balances will be sufficient to meet its short term working capital, capital expenditures, and investment requirements for at least the next 6 to 12 months. The stock traded below $0.01 for the week.
On the Wires: ProLink Holdings Corp. (OTCBB: PLKH) said it appointed Anthony S. Vitagliano as Senior Vice President, General Counsel and Corporate Secretary of the company. Capital City Energy Group, Inc. (OTCBB: CETG) announced that its Chief Executive Officer Timothy W. Crawford has elected to forego his salary and any stock-based compensation for 2008