Companies featured in the current edition of the newsletter: ACCP, ACTC, CACN, CBMC, CHIP, CLXS, CORG, CYTR, DIGA, HSOA, HYTM, MLSC, PLKH, PSTI, SWVC, TKO, USAT
While 2007 may have been a challenging year for many investors, after a dismal start to the year, many might be hoping for 2007 again. The stock market continued its slide last week, as the Dow fell another 194 points to end the week at 12606, resulting in a year-to-date loss of 5.0%. Similarly, the S&P 500 posted a loss of 11 points to end the week at 1401; its year to date performance is now down 4.6%. The malaise that has recently affected small-caps and tech stocks continued last week as the tech-heavy Nasdaq index lost 2.6% while the small company-based Russell 2000 index fell 2.3%. Both of these indexes are now down 8.0% in 2008.
The week started off in mixed fashion as the industrial stocks traded higher while tech stocks continued their descent as investors remained concerned about slower growth prospects. Geopolitical risk also added to investors’ nervousness after the Pentagon reported that 5 Iranian boats showed hostile intent toward 3 U.S. Navy ships over the weekend in the Straight of Hormuz, which is a significant shipping passage for global oil trade. The market finished lower on Tuesday after AT&T warned that a slower economy is hurting its consumer business. Shares of the Dow component fell nearly 5% on the news, and helped drive the broader market lower. Stocks rebounded on Wednesday, after Dow component DuPont lifted its profit forecast for fiscal 2007 and 2008. The chemical company revised its forecast due to strong growth from its agricultural and nutrition business segment and strong demand in all segments in emerging markets, which more than offset a slower U.S. economy. Thursday provided some relief for investors as a positive earnings report by Dow component Alcoa, along with a statement by Fed Chairman Bernanke that noted further policy easing may be necessary as the Fed responds to a worsening economy, helped fuel Thursday’s stock market gains. Stocks continued their slide on Friday, however, as more problems in the financial sector and ongoing credit market troubles came to the foreground. Specifically, the New York Times reported that Merrill Lynch & Co. may have to write-down an additional $15 billion in the fourth quarter due to bad mortgage investments, and American Express Co. said it increased its loan loss reserves to cover increased customer defaults and forecast continued weak conditions for 2008.
What should investors look for in the upcoming week? The earnings reports pick up in the coming week with a few significant announcements, starting with Genentech (NYSE: DNA) reporting results on Monday after the close. Tuesday morning brings a flourish of financial announcements as Charles Schwab (NASDAQ: SCHW), Citigroup (NYSE: C), State Street (NYSE: SST), and US Bancorp (NYSE: USB) are all set to release earnings before the bell. Also on Tuesday, Intel (NASDAQ: INTC) reports results after the close. AMR Corp (NYSE: AMR), JP Morgan Chase (NYSE: JPM), and Wells Fargo (NYSE: WFC) will make announcement before the market open on Wednesday. Thursday starts out with Bank of New York (NYSE: BK), Continental Air (NYSE: CAL), Merrill Lynch (NYSE: MER), and Novartis AG (NYSE: NVS) making announcements before the open, while IBM (NYSE: IBM) and Washington Mutual (NYSE: WM) will announce after the close. Friday concludes the busy earning week with General Electric (NYSE: GE) and Schlumberger (NYSE: SLB) releasing results before the bell.
The economic news for next week should provide investors a better insight into the current economic state. December Retail Sales, December Producer Price Index (PPI), and the New York State Empire Index for January will be released on Tuesday before the bell. Meanwhile, November Business Inventories are to be announced during late morning Tuesday. Wednesday morning will bring us the announcements of December Consumer Price Index (CPI), November Net Foreign Purchases, and December Industrial Production and Capacity Utilization. The widely anticipated Fed’s Beige Book will be released on Wednesday afternoon. Initial Weekly Unemployment Claims will be announced before the bell on Thursday at the same time as December Housing Starts and Building Permits, followed by Crude Inventories and Philadelphia Fed Index announcements later on in the day. Friday will conclude the week with Leading Indicators for December and the preliminary Michigan Sentiment for January announced in mid morning.
The conference schedule for next week will be relatively tame. The three-day Goldman Sachs 2007 Energy Conference in New York begins Tuesday. Tuesday also marks the beginning of the two-day Cowen and Company 6th Annual Consumer Conference in New York and the four-day Credit Suisse 2008 Auto Analysts of New York Conference in Detroit begins on Tuesday.
Hythiam, Inc. (NASDAQ: HYTM), a healthcare services management company that offers solutions for patients suffering from alcoholism and substance dependencies, provided a corporate update to its shareholders last week, saying that the recent media coverage of its PROMETA Treatment Program on 60 Minutes has generated significant patient awareness and was a major factor resulting in record monthly revenues for December 2007 as well as a record level of scheduled treatment bookings for January 2008. Additionally, Hythiam’s management anticipates that in addition to previously announced business relationships, new disease management agreements from labor unions, self-insured employers, and managed care health plans will add to the current private pay revenue base and result in significantly higher revenues for 2008. At the same time, the company is also streamlining its operations to focus on these disease management and managed care opportunities, which is expected to result in an overall reduction of 25% to 30% of operating expenses for 2008. Also last week, the U.S. Patent and Trademark Office allowed Hythiam’s patent application underlying the company’s PROMETA Treatment Program for reducing a person’s desire to drink alcohol. The patent represents a key piece of the company’s intellectual property, and provides additional an additional barrier to entry. The stock gained 39 cents last week, closing at $2.88.
Just one week after the Natixis analyst who covers CytRx Corporation (NASDAQ: CYTR) came to its defense, the analyst at Broadpoint Capital penned a favorable research note about the company as well. In his report he noted that, “We believe recent weakness on CYTR shares has created a buying opportunity/entry point into the CytRx story, and we believe it provides investors with the chance to get in at a point with very limited downside risk and the opportunity for significant upside. We expect the stock to appreciate considerably, especially near term, as details about the RXi story become publicly available following the end of the “quiet period” on the recently filed S-1 about the RXi spin-off.” He noted that, “we expect RXi to attract significant partnership interest from big pharma companies interested in getting into the RNAi space, and we would expect an agreement to be signed within 2008.” Shares ended the week at $2.42, up 33 cents.
VeriChip Corporation (NASDAQ: CHIP), a provider of RFID systems for healthcare and patient-related needs, announced that the American Medical Directors Association (AMDA) will initiate a study of the company’s VeriMed Patient Identification System. The Institutional Review Board (IRB)-approved study is expected to begin February 1. Upon completion of the study, the company intends to use the results to seek reimbursement approval from insurance companies and the Centers for Medicare & Medicaid Services. Despite the news, the stock ended the week at $2.01, down 34 cents.
Digital Angel (NASDAQ: DIGA), a company formed by the merger of Applied Digital Solutions Inc and Digital Angel Corp and a leader in the field of rapid and accurate identification, location tracking and condition monitoring of high-value assets, had a very busy week last week. First, the company announced that its Clifford and Snell division, a manufacturer of industrial and hazardous area audible and visual alarm products, is expanding its business to the U.S. Separately, it was also announced that its SARBE division has been selected to supply its latest generation Personal Locator Beacons (PLBs) to Pilatus Aircraft Ltd. of Switzerland. Pilatus will, in turn, provide these PLBs to the Republic of Singapore Air Force (RSAF). This contract, valued at more than $160,000, is to provide SARBE 6-406G PLBs that will be supplied with advanced turboprop training aircraft to the RSAF. Additionally it is anticipated that the contract ideally positions the company to capitalize on the RSAF’s requirement to replace their inventory of up to 1500 units of SARBE 6 PLBs that are now obsolete. Shares ended the week at $0.52, down 16 cents.
Pluristem Therapeutics Inc. (NASDAQ: PSTI), a leading bio-therapeutics company dedicated to the commercialization of non-personalized (allogeneic) cell therapy products for a variety of malignant, ischemic and autoimmune disorders, announced that it has identified a second clinical indication for its proprietary PLX cells and the expansion of its pipeline of PLX products. Pluristem’s PLX-PAD is expected to begin clinical trials in the second half of 2008 in Europe for the treatment of limb ischemia associated with peripheral artery disease (PAD). Management is very excited that PLX-PAD will join PLX-I, the company’s first product used as an alternative to bone marrow transplantation for treating hematological malignancies, in building a meaningful pipeline of PLX products. Shares ended the week at $3.45, down 80 cents.
Telkonet, Inc. (AMEX: TKO), the leading technology solutions provider for broadband networking, end-to-end service support and energy management, will hold a conference call on Monday, January 14th to discuss the introduction of its new Gen5 200 Mbps powerline communications (PLC) product offering. This Gen5 product is an important addition to the company’s already strong product line as it operates at 200 Mbps, provides TKO’s customers a feature-set that is unmatched in today’s marketplace. The implications of this product go well beyond basic PLC transport, as Telkonet has integrated this revolutionary technology into its other product initiatives in the areas of wireless high-speed Internet access, energy management, and electric utility substation monitoring. The stock closed the week at $0.92, gaining 9 cents.
USA Technologies (NASDAQ: USAT), a company that provides cashless, remote management, reporting, and energy management solutions to the unattended point of sale market, announced that its new “Quick Start” Program that eliminates up-front capital cost of installing the company’s ePort cashless payment products had attracted an immediate and growing response from vending companies. The company believes that the positive results currently being experienced by its customer base, as well as flexible options such as Quick Start which lower cost of entry, have contributed directly to continued adoption of cashless payment in vending, leading to accelerating sales of its ePort products and services. For example, USAT reported there were 7,123 ePort units shipped during the quarter ended December 31, 2007 vs. 1,982 units shipped during the same quarter last year, a 259% increase. The increased deployment of ePorts is driving additional revenue growth for USAT via high margin recurring revenue through monthly service and transaction fees. Also last week, the company launched eSuds Credit, an online laundry service for the nation’s multi-housing laundry industry. eSuds Credit enables residents in multi-family housing to go online to see what washers and dryers are available in their shared laundry facility, pay for their laundry services with a credit or debit card and be notified via email, PDA or cell phone when their wash or dry cycles are complete. By adding credit and debit, therefore eliminating the need for quarters, eSuds use of credit cards is a premium online offering that responds to the emerging demands of customers in the multi-housing market. The additional electronic feature of knowing when machines are available and when they are finished is just another convenient addition to the old laundry procedure. The stock gained 32 cents last week to close at $4.65.
Volume Alert: Shares of Advanced Cell Technology, Inc. (OTCBB: ACTC), a biotechnology company, that engages in the development and commercialization of human stem cell technology in the field of regenerative medicine, soared 78% last week on more than 15 times average volume after the company announced the development of five human embryonic stem cell (hESC) lines without the destruction of embryos. These new results have the potential to end the ethical debate surrounding the use of embryos to derive stem cells. In fact, the NIH report to the President refers to this technology as one of the viable alternatives to the destruction of embryos. The new method was published in the journal Cell Stem Cells, published by Cell Press. The peer-reviewed technique was initially carried out by ACTC scientists under the direction of Robert Lanza, M.D., and then independently replicated by scientists on the West Coast. Earlier last week, it was announced that the National Institute of General Medical Sciences at the National Institutes of Health (NIH) has awarded the company an SBIR Phase 1 Small Business Grant. The company will use the grant proceeds to conduct research that will allow for rapid labeling and purification of specific lineage restricted cells (LRCs) in cultures of differentiating human embryonic stem cells. If successful, the research will help the company more rapidly develop new regenerative therapies for a variety of indications including cardiovascular disease as well for commercialization of the LRCs and their peptide-targeting agents as research reagents. Shares gained 11 cents last week to close at $0.25.
Access Pharmaceuticals, Inc. (OTCBB: ACCP), a biotechnology company that leverages its proprietary nano-polymer chemistry expertise to develop proprietary products, said it has completed the previously-announced acquisition of Somanta Pharmaceuticals, Inc. through the issuance of 1.5 million shares of its common stock. Somanta’s broad portfolio of drug candidates features four novel anti-cancer compounds in development, each of which acts by a unique mechanism of action and has the potential to target a wide range of different cancer types. The Somanta product candidate portfolio includes Angiolix, a humanized monoclonal antibody with a unique target, Prodrax, a novel prodrug and platform technology that enables compounds to reach the hypoxic region of tumors, Alchemix, a multi-target inhibitor that is specifically designed to be effective against cancer cells resistant to conventional chemotherapy, and sodium phenylbutyrate, an HDAC inhibitor, that is currently in Phase 2 clinical development. The acquisition of Somanta adds 4 high-potential product candidates and one platform technology into the Access pipeline. Together with the ongoing development efforts with ProLindac and the Cobalamin oral insulin programs, management feels that the Somanta product candidates position the company extremely well for the immediate future. The stock ended the week at $3.25, up 15 cents.
Customer Acquisition Network, Inc. (OTCBB: CACN), an emerging Internet multi-channel network, completed the previously-announced acquisition of Options Newsletters, Inc., including Options Media Group, an e-mail marketing and delivery specialist based in Florida, for a combination of $1.35 million in cash and 1 million restricted shares of CACN stock. The company is planning to build-out a full-service email network over the coming months, including offering permission-based Data Management services to its clients. This means that advertisers looking to generate customer leads in volume will be able to work on an integrated basis with both the email network at Options Media Group, as well as Customer Acquisition Network’s Ad Network interCLICK. Shares ended the week at $5.70, down 25 cents.
Collexis Holdings, Inc. (OTCBB: CLXS), a company that develops software that supports the market-building tools to search and mine sets of information, launched BioMedExperts, the first online social network of its kind to improve collaboration among researchers and advance medical science in collaboration with computer giant Dell. Dell supplied the computer hardware for the service and will help market BioMedExperts, representing a powerful validation from a widely respected and well capitalized company. Collexis launched the new service with more than 1.4 million pre-generated profiles of its expected users from across 120 countries and expects to grow by another two million profiles over the next few months. The ability for researchers to collaborate across scientific disciplines is becoming more and more critical. By connecting biologists, chemists, clinical researchers and other scientists from across the globe, BioMedExperts can play a key role in enabling a new wave of modern science and have tremendous impact on progress in biomedical research. Where first generation social networks like Facebook and LinkedIn require users to enter data, BioMedExperts is a life science open platform that goes to the next level “it continuously captures the research activity of experts worldwide, serving as a definitive source to identify relationships to others within the community, either by topic or geography. BioMedExperts is based on Collexis proprietary Fingerprint technology, an enterprise research tool that serves as the basis of search and retrieval solutions for such leading organizations as Harvard University, Johns Hopkins, the Mayo Clinic and The National Institutes of Health. Management has announced that this is the first in a series of professional social networks that the company plans to introduce over the next couple of years that utilizes the proprietary technology. The stock ended the week at $0.51, down 6 cents.
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, announced that its Chinese manufacturing subsidiary, Beijing Marr Bio-pharmaceutical Co., Ltd., has received a permit to manufacture medical devices issued by the Beijing branch of the Chinese Food and Drug and Administration. The permit is required before Beijing Marr can sell an approved product within the country. Beijing Marr is currently awaiting approval from the China State Food and Drug Administration (SFDA) to distribute and sell Calypte’s Aware HIV-1/2 OMT rapid diagnostic test within China. The Aware HIV-1/2 OMT product is a rapid test using oral fluid to diagnose HIV-1 or HIV-2 infection in as little as 20 minutes with an accuracy comparable to that of U.S. FDA approved blood based laboratory HIV EIA tests. This permit is another significant milestone that brings the company much closer to its objective of manufacturing and marketing the rapid test product for the Chinese market. The stock closed the week unchanged at $0.10.
Apparently, Cordia Corporation (OTCBB: CORG), a global communications service provider of traditional CLEC and Voice over Internet Protocol technologies, continues to believe that its stock is undervalued as it reported purchasing 28,200 shares of Cordia’s common stock so far in 2008 pursuant to a stock buyback program the company has. Shares gained 8 cents last week to close at $0.65.
Home Solutions of America (OTC: HSOA), a provider of restoration, construction and interior services to commercial and residential customers, said late Friday that the company failed to make the required quarterly installment to its bank lending group in the amount of $1,250,000. In addition, HSOA did not pay accrued interest totaling $885,074. As a result, the bank group has the right to declare an event of default under the credit facility, although it has taken no action to date. The Company said it was in discussions with its bank lending group regarding the terms of an extension (bank loan was expected to be refinanced prior to year-end) and amendments that will address the missed payment. The company’s ability to survive appears to hinge on whether it receives an insurance payment from the Florida Insurance Guarantee Association (FIGA), which could generate gross proceeds of as much as $40 million. The stock fell another 19 cents to close the week at $0.76.
Medical Discoveries, Inc./Global Clean Energy Holdings LLC (OTC: MLSC), a biofuel feedstock development and operations company, has taken important steps to relist its common shares on OTC Bulletin Board. The company has recently filed with the SEC its annual report for 2006 as well as quarterly reports for the first 3 quarters of 2007. With these filings, MLSC is now current with all of its SEC reports and is eligible to reapply to have its common stock listed for trading on the OTC Bulletin Board. Management remains excited by the progress the company has made in the relatively short time since it commenced its new biofuels business and acquired Global Clean Energy Holdings, LLC. As a fully-reporting company, MLSC will create greater transparency for investors while a listing on the Over-The-Counter Bulletin Board will increase interest among the investment community in its efforts to develop alternates to food based feedstocks for biofuels production. The stock closed the week at $0.04, down one penny.
ProLink Solutions (OTCBB: PLKH), the leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced that it will exhibit its products and services at the 2008 PGA Merchandise Show on January 17-19 at the Orange County Convention Center in Orlando, FL. The PGA Merchandise Show offers a great opportunity to exhibit the company’s category-leading technology and advertising programs to key members of the golf industry. This will be a perfect venue to educate golf industry professionals about the opportunities the ProLink Network can generate for their facilities. Separately, the company also announced that it has terminated its previous agreement to acquire Elumina, one of its distributors. The acquisition would have resulted in significant dilution. Shares gained 6 cents last week to close at $0.60.
Seaway Valley Capital Corporation (OTCBB: SWVC), a company that invests in equity, equity-related, and debt in companies that require expansion capital and in companies pursuing acquisition strategies, announced that its wholly owned subsidiary, Patrick Hackett Hardware Company, has received a Term Sheet and Commitment Letter from Wells Fargo Bank for inventory-based financing of up to $5 million. With this line of credit arrangement, Hacketts should have a vehicle to initiate the repayment of certain debt, help with transitioning the existing WiseBuys stores to Hacketts stores and begin the exploration of possible new locations. After the store conversions, Hacketts will operate nine locations in New York State. Shares were unchanged, closing at $0.01.
On the Wires: Medical Discoveries, Inc./Global Clean Energy Holdings LLC (OTC: MLSC), a biofuel feedstock development and operations company, has appointed Richard Palmer, its current President and Chief Operating Officer, to the additional position of Chief Executive Officer. As part of a pre-planned transition of management, the company accepted the resignation of Judy Robinett, the company’s previous Chief Executive Officer. Ms. Robinett also resigned from the Board of Directors.