07/02/2006
VOLUME 245
Companies featured in the current edition of the newsletter: ADSX, ARSC, ASPN, ATWO, CPPT, CYTR, ENZ, FLWE, FSN, GEPT, GNBT, HMWM, HOM, HYTM, ISON, ITUI, IVOI, LEVP, NTRN, NTST, NVLT, PEFF, PTCH, RTK, SLS, SOG.V, USAT
The stock markets surged higher this week as there was renewed optimism that the end of the Fed rate hike cycle is within sight. The Dow closed up 161 points for the week, boosting its year-to-date gains to 4.0%. The Nasdaq gained almost 51 points which helped narrow the annual losses to just 1.5%. The S&P was up 26 points, climbing back out from the red to post year-to-date gains of 1.8%. The Russell was arguably the most explosive index once again as it jumped nearly 35 points for the week, increasing its year-to-date gains to a relatively impressive 7.6%.
Stock investors may also want to look at other markets for additional clues. For instance, the benchmark 10-year Treasury note currently yields 5.14%, which is below the current Fed Funds rate of 5.25%. The dollar remained under pressure against its major rivals due to disappointment that the rate increases could end soon, as rising rates give the currency an advantage. Looking at the commodity markets, gold broke above the key $600 an ounce level to close at $616 while crude oil nearly reached $74 a barrel, as traders focused on gasoline supplies heading into the Fourth of July holiday, a time when many Americans take long driving trips.
What should investors look for this week? There are no market-moving companies reporting results this week as earnings season will only kick of on July 10th when Alcoa (NYSE: AA) reports numbers. Similarly, the conference calendar is quite as there are none scheduled due to the holiday shortened week. The stock market will close early on Monday (1 p.m.) and be closed on Tuesday.
The economic calendar is a little more active, highlighted by Friday’s June Employment Report, where non-farm payrolls are expected to increase by 168,000. On Monday, while financial and bond markets will close early before the Independence Day holiday, the ISM manufacturing index for June and Construction Spending for May will be released. When trading resumes on Wednesday, Detroit automakers will release sales figures for the month of June. Additionally, the May Factory Orders and the weekly Energy Inventories report will also be released on Wednesday morning. On Thursday, the weekly Initial Unemployment Claims and the ISM services index for June will be released.
Shares of Home Solutions of America, Inc. (AMEX: HOM), a provider of recovery, restoration and rebuilding/remodeling services, remained under pressure last week, as the company’s Nasdaq listing was delayed as more information was requested. While this announcement provided another distraction for investors, the stock trades at one of the lowest valuations we have ever seen based upon its growth prospects. Shares of HOM trade for less than 25 times 2005 results and less than 11 times the mid-point of the company’s 2006 guidance, which would result in EPS growth far in excess of 100%. With earnings season scheduled to begin shortly, at some point investors are likely to focus on the company’s financial prospects, and less on the distractions that we believe have been created by an overzealous group of short sellers (short interest approximately 29%). The company was added to the Russell 2000 after the close on Friday. Shares ended the week at $6.17, e down 82 cents.
Volume Alert: Shares of Enzo Biochem, Inc. (NYSE: ENZ), a developer of innovative health care products based on molecular biology and genetic engineering techniques, traded roughly 4 times average volume and rose another 16% as investors continued to react favorably to the company’s announcement about being granted a patent for the “Array and Non-Porous Solid Support Comprising Fixed or Immobilized Neucleic Acids” 2 weeks ago. This could be a very broad patent and it could be related to a number of products already on the market. The stock ended the week at $15.08, up another $2.08.
Hythiam, Inc. (NASDAQ: HYTM), a healthcare services management company that licenses the PROMETA™ physiological protocols designed to treat substance dependence, continued to further build its brand name as well as national awareness about its promising treatment as the company’s Chairman and CEO, Terren Peizer, submitted testimony to the U.S. House of Representatives Subcommittee on Criminal Justice, Drug Policy and Human Resources, on the availability and effectiveness of programs to treat victims of the methamphetamine epidemic. His testimony outlined the PROMETA protocols as well as cited positive results from programs at Gary, Ind. drug courts and the Pierce County Alliance. Additionally, clinical studies of PROMETA protocols, such as the recently concluded Dr. Urschel study and two double-blind studies currently underway at UCLA and Medical University of South Carolina, were mentioned. Additionally, the PROMETA Protocols were featured in an article in The New York Times Magazine titled “An Anti-Addiction Pill?” The article discusses the neuropathology of addiction, and potential solutions, including PROMETA. As a result of this testimony as well as positive clinical results and nationwide press, more and more public and private programs should adopt the PROMETA Protocols in the future, which in turn will lead to strong growth for HYTM. The stock was added to the Russell 2000 after Friday’s close. Shares ended the week at $6.97, down 2 cents.
Junior oil & gas company, Strategic Oil & Gas Ltd. (TSX VENTURE: SOG), provided a drilling update last week. The company has now participated in the drilling of 4 wells in its current 6 well Alberta program. Two were in the foothills of central Alberta and are now on production. The third well, located in the Minnehik Buck Lake area of central Alberta, encountered multiple gas zones and was cased in late-May. The fourth well, near the town of Sylvan Lake, Alberta, also encountered multiple pay zones and was cased on mid-June. Multiple zone completion programs for each of these two new wells will be initiated soon. Strategic is paying 35% of the drilling and completion cost to earn 26.25% in all 4 wells that have been drilled to date. The company has also made significant progress on its 22.5% owned multi-well program with Jed Oil Inc. (AMEX: JDO), in the Pinedale/Jonah area of Wyoming. Progress on the well has been as planned and is currently drilling at approximately 12,000 feet, with intermediate casing having been set at 8,500 feet, and with a target depth of 13,000 feet. We believe for those investors who can purchase stock on the TSX Venture exchange that the stock represents a compelling oil and gas play. The stock closed at $1.65, up 13 cents.
Volume Alert: Shares of Applied Digital (NASDAQ: ADSX), a leading provider of identification and security technology, traded over 9 times the average volume after the company hosted a webcast where the CEO made several bullish comments about the company’s business prospects, including VeriChip Corporation which is scheduled to go public sometime this year. He also noted that the company’s majority owned subsidiary Digital Angel had made significant progress improving its business. The stock rose 21 cents to end the week at $1.89.
Volume Alert: Shares of CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical company focused on developing products primarily in the area of small molecus and ribonucleic acid interference (RNAi), traded over 3 times average volume. The stock joined the Russell Microcap Index after the close of trading on Friday. Shares ended the week at $1.32, up 4 cents.
Fusion Telecommunications International, Inc. (AMEX: FSN), a provider of voice over Internet protocol (VoIP) and other Internet services in Asia, the Middle East, Africa, the Caribbean, and Latin America, announced that Dina Bonnevie, a famous Filipino film and television personality and businesswoman, has joined the company as Director of Overseas Market Development. Ms. Bonnevie’s primary focus will be on developing strategic VoIP business opportunities for Fusion within the Philippines and the global Filipino community. The Philippines has a population of over 84 million and there are an estimated seven million Filipino expatriates living around the world. This announcement comes just one week after FSN launched its free and paid efonica VoIP services and established the Worldwide Internet Area Code. The stock ended the week at $2.00, down 40 cents.
Homeland security company Global ePoint, Inc. (NASDAQ: GEPT) continues to benefit from growing business at its recently-acquired Tops Digital subsidiary. Last week, Tops was awarded a contract valued at approximately $426,000 to upgrade the video surveillance system at the new $250 million Morongo Casino, Resort and Spa in Cabazon, California. Tops has been particularly strong in providing innovative security solutions to the gaming industry, and Morongo’s decision to upgrade its system reflects the positive user experience it has had after trying out Tops’ solutions. Overall, the acquisition of Tops should be a significant contributor to present and future growth for GEPT. Shares gained 11 cents, ending the week at $2.00.
Volume Alert: Shares of Rentech Inc. (AMEX: RTK), a developer of alternative energy sources, traded over 5 times their usual volume as the stock was added to the Russell 2000 Index after Friday’s close. Shares ended the week at $4.65, up 24 cents.
Volume Alert: Share of SLS International (AMEX: SLS), the leading provider of premium quality sound systems for professional, cinema and home entertainment markets, traded nearly 5 times the average volume after the company announced that it entered into a License Agreement with DGM Audio under which DGM was granted exclusive worldwide rights to manufacture, market and sell headsets and headphones using SLS’s ribbon-driver technology. DGM intends to immediately provide the necessary capital to produce and market the headphones and expects to have product in retail stores by the fourth quarter of 2006. This license agreement is part of a plan to focus on the company’s core business, which will allow the company to reduce annual consulting and managerial expenses by an estimated $1.2 million. Additionally, SLS will receive high royalties which should lead to rapidly growing revenues. For example, under the guidelines of the license agreement, if DGM sells just 100,000 pieces of a high end noise cancelling headphones, SLS estimates that it would receive royalties of approximately $1.5 million. This license is pivotal in SLS’ strategy to bring its technology and products to the consumer marketplace. The company has already established significant momentum in the professional and commercial marketplace, which has resulted in double-digit growth year-over-year. With the new headphone products, SLS has the potential to add to this momentum. While the company was previously limited in its ability to fund the rollout of the headphones for retail sale, this license will allow SLS to focus its efforts on its core business – the professional and commercial marketplace – while still capturing much of the potential for its headphones in the retail market. The stock rose 27 cents to close the week at $0.67.
Generic Biotechnology Corporation (NASDAQ: GNBT), a leader in the area of buccal drug delivery, made two poster presentations of clinical data at The Endocrine Society’s 88th Annual Meeting that took place in Boston last week. The first poster reported clinical results comparing the effectiveness of metformin (used for the treatment of Type-2 diabetes in adults and children) administered by both traditional tablets and by the Generex Metformin Gum product that can be chewed. The second poster reported observations from the initial phase of an on-going long-term study comparing the effects of replacing the lunchtime dose of regular insulin injections in Type-1 diabetics with Generex Oral-lyn buccal spray. Shares closed at $1.81, down 8 cents for the week.
Netsmart Technologies, Inc. (NASDAQ:NTST), a leading provider of enterprise-wide software for health and human services organizations, has been named to the FORTUNE Small Business 100 List of America’s Fastest- Growing Small Public Companies for the third consecutive year; the list appears in the July/August issue of FORTUNE Small Business magazine. Despite the news, the stock lost 59 cents last week, closing at $12.96.
USA Technologies, Inc. (OTCBB: USAT), a developer of cashless vending and energy management products, has teamed up with MasterCard and The Philadelphia Coca-Cola Bottling Company to deploy 1,000 Coca-Cola vending machines enabled with the e-port cashless transaction solution which will accept MasterCard PayPass. The deployment is considered to be the largest rollout of contactless technology in vending machines in a U.S. market to date. To use this technology, consumers simply tap their MasterCard PayPass-enabled card or device on the vending machine’s e-Port payment terminal and within seconds, the terminal will flash a light and produce a tone signaling the transaction is complete. Shares ended the week at $7.80, down 5 cents.
Junior energy company Aspen Exploration Corporation (OTCBB: ASPN) announced completion of another successful well. The Ridge #1-15 well, located in the Sacramento Valley gas province of northern California, was drilled to a depth of 5,755 feet and encountered over 100 feet of gross gas pay in several intervals. This was the seventh successful gas well out of eight attempts by Aspen in this field and the company plans to drill two more wells in this field this year and has a 23.33% operated working interest in this field. Additionally, gas sales are anticipated to commence this week from five recently drilled gas wells. The stock gained 30 cents, to close the week at $4.75.
CompuPrint, Inc. (OTCBB:CPPT), an energy technology company that combines satellite-based technology with traditional exploration services, which does business through Terra Insight Corporation, its wholly owned subsidiary, achieved two important milestones last week. First, the company completed a $1 million private placement of convertible debentures maturing in 2008 with Kiev Investment Group. These debentures will be convertible into CPPT common shares at various prices ranging from $1.00 per share to $2.00 per share – levels significantly above the current price. This additional funding will be helpful in CPPT’s pursuit of oil and gas properties in which to deploy its promising technology and to further the development of existing properties. One such existing property is located in Nevada and the company has initiated drilling of its first well there. This project is CPPT’s first independent U.S. exploration project. While the company is optimistic about this prospect, it is too early to tell whether it will result in a productive oil or gas well. Despite the news, shares fell 2 cents last week, closing at $0.18
American Security Resources Corporation (OTCBB: ARSC), a holding company that acquires and develops technologies that will advance the development of alternative energies, announced that it has retained M&A and business development specialists, Colebrooke Capital of New York City, to assist it with acquisitions and strategic funding options. Colebrooke is expected to assist ARSC in completing the acquisition of the solar and wind energy companies with which the company has already begun negotiations. Shares ended the week at $0.12, down 1 cent.
Volume Alert: Shares of junior energy company Fellows Energy Ltd. (OTCBB: FLWE) traded over 6 times average volume as the company continues the workover programs on its Carbon County and Creston projects in Utah. Shares gained 14 cents last week, closing at $0.39.
i2Telecom International, Inc. (OTCBB: ITUI), a provider of globally ultra-portable high quality Voice-over Internet Protocol (VoIP) products and services, received some nation-wide publicity last week as the company’s VoiceStick technology was discussed in an article in Wall Street Journal. While the article focused on Vonage’s planned V-phone for business travelers, it mention that ITUI’s VoiceStick has many of the same features as the device that Vonage is expected to release. It is important to note that ITUI has submitted VoiceStick for a patent, possibly giving it an intellectual property edge. Additionally, VoiceStick is the core technology behind a series of broadband products and services that i2Telecom is prepared to launch, possibly including remote file backup, Web 2.0 desktop and applications, secure transactions and accounting. These are all revenue producing applications that can be delivered on a simple appliance such as the VoiceStick. The stock closed at $0.05, down 1 cent for the week.
iVoice, Inc. (OTCBB: IVOI), a developer and licensor of proprietary technologies, reported that its wholly owned subsidiary, Thomas Pharmaceuticals, has entered into an agreement with Bellco Drug Corporation, a full-service wholesales distributor of over 20,000 branded, generic, biotech pharmaceuticals, vaccines and health and beauty care products, to distribute its Acid + All product lines. In the short time since launching the product, Thomas Pharmaceuticals has secured distribution with several leading drugstore chains and distributors, reflecting the strong interest in the product.Shares ended the week unchanged at $0.06.
Lev Pharmaceuticals, Inc. (OTCBB: LEVP), a developer of therapeutics for inflammatory diseases, received positive media exposure last week when its drug candidate for the treatment of hereditary angioedema (HAE) was the focus of a news story that aired on the WB11 News. During the segment, a clinical investigator at Mt. Sinai and a patient with HAE both spoke about LEVP’s C1-esterase inhibitor (C1-INH), which is in Phase III trials and has been used in Europe for over 30 years. Shares gained 4 cents to close the week at $0.64.
Volume Alert: Shares of Novelos Therapeutics, Inc. (OTCBB: NVLT), a biotechnology company focused on oxidized glutathione for use in fighting cancer and hepatitis, traded over 3 times the usual volume after the company announced that U.S. Government (more specifically, the Department of Health and Human Services) has approved NVLT’s “Dirty Bomb” treatment proposal for Round 2 evaluation. The company believes that its NOV-002 drug candidate, which is currently in Phase III development for non-small cell lung cancer, can also be used to treat subjects that may develop Acute Radiation Syndrome after exposure to high levels of penetrating radiation. The Government agency estimates that contract awards in this program will be made in September of 2006 and accordingly NOV-002 can possibly be added to our country’s Strategic National Defense Stockpile at that time. Shares ended the week at $1.03, up 3 cents.
Power Efficiency Corporation (OTCBB: PEFF), a developer and manufacturer of advanced energy savings technologies for electric motors, has successfully completed development of a prototype digital power controller which successfully reduces the current and voltage supplied to a single phase motor, similar to those found in many appliances and light commercial equipment. For example, there are over 14 million refrigerators and freezers and 8.5 million washing machines sold in the United States each year. This digital controller may become the simplest and most cost-effective technology to reduce the energy consumed by many of these appliances. With the completion of this prototype, the company now anticipates having commercialized units ready for market in the first quarter of 2007. Shares closed at $0.30, up 1 cent for the week.
Junior oil and gas producer, Patch International Inc. (OTCBB: PTCH), has started the drilling of its gas prospect at Halkirk, Alberta, which is expected to last two days with the well being cased to depth immediately thereafter and before evaluation. This first well will target the Edmonton formation at a depth of approximately 1,840 feet with PTCH holding a 100% working interest. In addition upon completion of the test well, the company will earn a 50% working interest in the remainder of the lands comprising this prospect. This marks the official kickoff for PTCH’s busy summer drilling season. Separately, the company has also added a new core area located next to the City of Red Deer in Central Alberta by entering into an agreement with privately-owned Highview Resources. It is anticipated that a seismic program on this area will be completed the latter part of July. This new opportunity, with its possibility of multi-potential zones and multiple locations, allows Patch to develop a new core area providing for potential development of cash flow and reserves. The stock closed at $1.35 last week, up 4 cents.
Diversified sports media company, HumWare Media Corporation (OTC: HMWM), continues its aggressive marketing campaign for its Boondoggle Sports Network as the company has added licensed sales representatives in San Diego, Sacramento, and Orange County. HMWM is now rolling out the Boondoggle Sports Network by licensing local territories to experienced marketing and sales representatives in the top 108 markets in the United States and Canada. Management believes that these territories will offer HMWM the best opportunity to make a significant impact and generate immediate revenues. The stock ended the week at $0.16, down 2 cents.
On the Wires: a21, Inc. (OTCBB: ATWO), a leading online digital content marketplace for creative professionals, named Philip Garfinkle as interim President and Chief Operating Officer, replacing Thomas V. Butta. Previously, Mr. Garfinkle was Chairman, CEO and President of PictureVision, Inc., a digital imaging concern he founded that was a pioneer in digital photography and introduced online photo processing to the consumer, which was acquired by Eastman Kodak. Neutron Enterprises, Inc. (OTCBB: NTRN), a developer of digital media solutions, has appointed Rory Olson as its new Chief Executive Officer, replacing Andrew Gertler, who will remain as a Chairman of the Board of Directors. Isonics Corporation (NASDAQ: ISON), developer of innovative solutions for the homeland security and semiconductor markets, received a letter from the Nasdaq Stock Market advising the company that it fails to meet the requirements for continued listing, however, ISON believes that when it files its 10-K for the fiscal year ended April 30th, it will meet the stockholders’ equity requirement and therefore be deemed in compliance with the Continued Listing Rule.