Companies featured in the current edition of the newsletter: ACTC, CETG, CHIP, ETGF, GMPM, GNBT, GSPG, HYTM, MBND, MNDL, PLKH, SRRY, SWYV, TKO, XCR
Amid continuous volatility, the market was under the control of the bears once again. For the week, the Dow lost another 451 points, further increasing its annual loss to 39.3%. The Nasdaq declined nearly 133 points, nudging its yearly loss to 47.8%. The S&P fell 73 points, equating to an annual loss of 45.5%, while the Russell lost 50 points, pushing its loss for the year to 46.9%.
There were several market moving developments last week. First,Detroit’s auto makers asked Congress for a multi-billion dollar bailout. However, Congress refused to provide the struggling domestic industry any relief funds at this time as it wasn’t clear if the auto makers had any long-term turnaround plans that would prevent them from simply burning through whatever assistance would be granted to them. While this issue is not going to go away in the near future, the struggling industry may continue to weigh on the market. Another major development was the almost rock-like drop in Citigroup’s (NYSE: C) share price as it fell from $9.52 to $3.77 throughout the week after the company announced that it plans to cut up to 52,000 jobs amid growing weakness in the commercial loan business. As a result, investor’s have started questioning the strength of Citigroup’s balance sheet and whether the company has to raise additional capital. The Fed added to the market’s concerns with sizable downward revisions to the central tendencies of its economic projections for next year. Additionally, the release of the minutes from the October 29 FOMC meeting revealed that the Fed feels that GDP growth in 2009 will be lower than previously expected. In other eco-political news last week, the market reacted positively following Friday’s announcement that New York Fed President Timothy Geithner is going to be nominated by President-elect Obama to be Treasury Secretary. Overall, it was another worrisome week with few bright spots.
What should investors look for this week? The stock market will be closed on Thursday for Thanksgiving, and will conduct a shortened trading session on Friday. Campbell Soup (NYSE: CPB) is scheduled to release earnings before the opening bell on Monday, with Hewlett-Packard (NYSE: HPQ) reporting numbers after the close (note company already pre-announced results). Deere & Co. (NYSE: DE) will report results on Wednesday morning.
On the economic front, Existing Home Sales for October will be reported at 10:00 a.m. on Monday. Preliminary GDP and Chain Deflator for Q3 will be announced at 8:30 a.m. on Tuesday with Consumer Confidence for November following later in the day at 10:00 a.m. On Wednesday at 8:30 a.m., look for October Personal Income and Spending, Durable Orders for October and the Weekly Initial Jobless Claims. Also on Wednesday, Chicago PMI for November will be released at 9:45 a.m. while New Home Sales for November and the revised Michigan Sentiment Index for November will be announced at 10:00 a.m.
There are no major conferences of note this week.
Capital City Energy Group, Inc. (OTCBB: CETG), a diversified oil and natural gas company with three separate divisions, will hold a conference call on Monday to update the investment community on its financial and operating results and growth strategy. The company recently reported that revenues increased to over $2 million for the first nine months of 2008 while total net oil and gas production realized from principal investments during this period was 10,439 barrels of oil and 63,136 thousand cubic feet of natural gas. The stock declined by $0.60 for the week to close at $1.50.
Volume Alert: Shares of VeriChip Corporation (NASDAQ: CHIP), a provider of radio frequency identification systems for healthcare and patient-related needs, traded sharply higher last week on over 10 times the average volume after the company announced a strategic alliance with Microsoft. Personal health record from the company’s VeriMed Health Link system will now be accessible through Microsoft HealthVault, an online platform designed to put consumers in control of their health information by offering them a way to store health information from many sources in one location, so that it’s always organized and available to them online. Through this agreement, Health Link members will have the ability to open free HealthVault accounts and input, store, view and interact with their health data. Furthermore, the data within Health Link members’ existing accounts will now be directly accessible through their HealthVault accounts. In a separate development, VeriChip also announced last week that, in conjunction with its development partner RECEPTORS LLC, the company has successfully completed Phase I development of an in vivo glucose-sensing RFID microchip. This is a significant milestone for the company as this self-contained, implantable bio-sensing device will, for the first time, have the ability to measure glucose levels in the human body through an external scanner, thereby eliminating the need for diabetics to prick their fingers multiple times per day. The stock rose $0.40 last week, to close at $0.74.
Element 21 Golf Company (OTCBB: ETGF), the manufacturer of advanced Scandium Alloy golf and fishing equipment, announced record results for its fiscal first quarter ended September 30, 2008 with revenue increasing by 323% year over year, even while first quarter has historically been a seasonally slow period for the company, to approximately $555,000 as a result of growing sales of both its golf and fishing equipment lines. Management believes that the company is well positioned for future growth due to the company’s ability to penetrate new distribution channels as well as growing recognition by leaders in the golfing and fishing industries. Shares closed at $0.23, down 10 cents for the week.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) expanded its global patent portfolio with the issuance of two new patents: one in Mexico and a similar one in New Zealand . Both patents are titled “Pharmaceutical Compositions for Buccal Delivery of Pain Relief Medications,” as the company seeks to expand the possible applications for its proprietary drug delivery platform to include the pain relief application. The stock ended last at $0.34, down 1 cent.
Healthcare services company Hythiam, Inc. (NASDAQ: HYTM) announced that Dr. Sheryl Smith, a leading researcher in the field of neurosteroids, presented her findings earlier this week at the 2008 Society for Neuroscience annual meeting that further support a mechanism of action underlying the company’s PROMETA Treatment Program. The current study shows that a component of the PROMETA Treatment Program reverses the increase in both alpha-4 and delta subunit expression in chronic methamphetamine treated rats. Shares ended the week at $0.49, down 9 cents.
Multiband Corporation, (NASDAQ: MBND), the nation’s largest DIRECTV Master System Operator for Multiple Dwelling Units, commented on strong financial results for Q3 when the had a record quarter with over $12.3 million in total revenue and net income of $0.85 million. The company earned nine cents per share for the period. MBND believes that the challenging economic environment will continue to drive consumers to seek cost-effective alternatives that companies such as Multiband provide by offering in-home entertainment. Looking ahead, work order activity reached its year-to-date high in October 2008, continuing the trend the company has witnessed throughout the first 3 quarters of the year. Furthermore, Multiband expects to complete the acquisition of the balance of DirecTECH’s operating entities early next year and believes the transaction should be accretive while creating synergies for future growth. Shares closed at $1.31, down 24 cents for the week.
Mandalay Media, Inc. (OTCBB: MNDL), an emerging new media distribution and content company, announced its fiscal Q2 results for the period ended September 30, 2008. The company reported quarterly revenue of approximately $5 million. However, investors should keep in mind that such results do not include last month’s acquisition of AMV Holding Limited, a European leader in direct-to-consumer mobile Internet content and services, as this acquisition occurred subsequent to the end of the quarter. On pro forma basis, Mandalay would have reported $14.5 million in combined revenue for the quarter, assuming the AMV acquisition occurred at the beginning of the quarter. Some of the highlights for the quarter included expanded distribution with major mobile operators in U.S., Brazil, and Italy, strong growth in key monthly operating metrics (such as a 33% quarterly increase of “page views” to approximately 30 million), and improved operating margins. Furthermore, the acquisition of AMV has enhanced Mandalay’s ability to reach consumers directly. The combination of Twistbox’s global on-deck distribution with AMV’s direct-to-consumer expertise uniquely positions the company to maximize revenues for its wireless operator and content partners. The stock closed the week at $0.60, down 40 cents.
ProLink Holdings Corp. (OTCBB: PLKH), the world’s leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, commented on its Q3 results when total revenue declined by 13.7% to approximately $5.7 million as a result of a drop in international sales after the relationship with the company’s international distributor was terminated in February 2008. While the company continued to demonstrate strong growth domestically with a 94% increase in new domestic system sales during the quarter, ProLink also expects international sales to increase substantially in the coming quarters as it announced two major global partnerships last week as it continues to expand the list of its international distributors. The company has partnered with Synergy LLC for the Middle East and India region and Raydant International for the Southeast Asia and Australasia region. Under these new agreement, Synergy will install and service ProLink’s industry-leading GPS system at golf courses and resorts in Oman, United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Kuwait and India; while Raydant will do the same in Thailand, Vietnam, Laos, Malaysia, Singapore, Indonesia, Cambodia, the Philippines, Burma, Brunei, Australia and New Zealand. Both Synergy and Raydant will partner with ProLink on the advertising platform for ProLink-installed courses throughout their respective regions. Synergy and Raydant join ProLink’s other recently added international distributors in South America (Total News Golf), Spain (Golf Consulting Services) and France (Sport Business Group), while ProLink’s European subsidiary serves markets in England, Scotland, Ireland and Wales. Shares ended the week at $0.065, down 3.5 cents.
Sancon Resources Recovery, Inc. (OTCBB: SRRY), a rapidly growing Chinese environmental services and waste recycling company, commented on its record quarterly revenue of approximately $3.9 million for the three months ended September 30, 2008 which was also the company’s third consecutive quarter of profitability. Despite a challenging economic environment, management maintains that the current investments Sancon is making in infrastructure will dovetail the Chinese government’s environmental initiatives which should lead to continuous growth for the rest of the year as well as into 2009. Additionally, Sancon reiterated its previous guidance of 2008 revenue totaling between $11 million and $12 million while it reduced its full-year net income forecast to between $1.9 to $2.0 million, or $0.08 to $0.09 per share from $2.0 million to $2.1 million and $0.09 to $0.1 per share. However, even at the lower-end of the reduced EPS guidance, the company would be trading at a bargain-level P/E multiple of less than 3. Shares ended the week at $0.23, down 9 cent.
Telkonet, Inc. (AMEX: TKO), the leading provider of innovative, centrally managed solutions for integrated energy management, networking, building automation and proactive support services, continues to generate positive publicity as the company has been named as one of the country’s top 500 fastest growing organizations, achieving 23rd place in the Deloitte Technology Fast 500, an annual listing of the 500 fastest growing technology, media, telecommunications and life sciences companies in North America. Telkonet’s ranking is based on the company’s percentage revenue growth over five years, reflecting its consistent performance and technology leadership in energy management and broadband networking solutions. Just last week, Telkonet reported 24% revenue growth for its Q3 2008. Shares finished the week at $0.18, down 7 cents.
Medical device company Xcorporeal, Inc. (AMEX: XCR) reported its Q3 2008 financial results. While the company currently does not generate any revenue, it continues to work on developing a Wearable Artificial Kidney as well as the recently announced XCR-6 Dialysis Platform, which is expected to be the smallest, lightest, and easiest to use dialysis machine ever conceived. In the meantime, Xcorporeal had approximately $6.0 million of cash on hand as of September 30, 2008, while its cash burn rate is approximately $1.1 million per month. Shares ended the week at $0.27, down 14 cents.
GoldSpring, Inc. (OTCBB: GSPG), a North American precious metals mining company, focused in Nevada, with extensive, contiguous property in the Comstock Lode District, continues to receive positive results from its drilling program as the company announced that the recent assay results from nine drill holes indicate strong gold mineralization in areas surrounding the known resource footprint. In an effort to accelerate the timeline to define the entire deposit, GoldSpring has increased the number of operating drills from two to four. Additionally, the company has also added Larry Martin as Chief Geologist to oversee its developmental and exploratory drilling. Mr. Martin has over 30 years of geological experience, including work at a number of Nevada gold mines. The stock ended the week at $0.013, down 0.005 cent.
Advanced Cell Technology, Inc. (OTC: ACTC), a developer of stem cell-based treatments, commented on its technology platform, said that that it believes it has the only technology that can produce stem cell lines of all types without the destruction of the embryo. This should enhance the company’s ability to receive funding for development activities at a time when the administration in Washington is changing and opportunities for funding stem cell companies are increasing. In addition, one of the company’s licensees, International Stem Cell Corporation, is using Advanced Cell’s parthenogenesis technology, which has the capability of developing some types of stem cells using genetic engineering. Overall, the next couple of years may prove to be a very exciting time for the stem cell industry in general and ACTC in particular. Shares remained unchanged last week, closing at $0.03.
Seaway Valley Capital Corporation (OTCBB: SWYV), a diversified holding company, released its quarterly report 10Q for the three-month period ended September 30, 2008. While it is difficult to make year-over-year comparisons since the company had no operations in the third quarter of 2007, Seaway’s net sales were over $5.7 million during the most recent quarter as a direct result of earlier acquisitions of WiseBuys, Hackett’s, and North Country Hospitality. Additionally, gross profit margin was over $2.1 million while operating loss was less than $1.5 million for the three months ended September 30, 2008. Also last week, Seaway provided an update report to its shareholders in which it announced that management has begun exploration of restructuring the company’s portfolio and share structure to increase shareholder value. Among other areas being explored, a restructuring may include partially monetizing certain investments to repay Seaway’s convertible debentures in an effort to limit additional share dilution. In the meantime, the company’s wholly owned subsidiary Sackets Harbor Brewing Company continues to expand its brand awareness as it was one of the only twelve national and international brewers who were chosen to participate in the grand opening of the first ever Syracuse Beer Week. The private invite-only event was attended by hundreds of the region’s top restaurateurs and retailers. Separately, Seaway’s management was also part of a delegation from New York State that participated in the “Invest in New York Trade Mission” with China . In particular, Seaway Valley focused this mission on raising investment capital, sourcing merchandise for resale at Hackett’s, and exploring the possibility of marketing its beer products in Asia. Shares closed unchanged at less than $0.01.
Gamma Pharmaceuticals Inc. (OTCBB: GMPM), a marketing and product formulation company focused on innovative product lines of nutritional supplements, personal care products and OTC pharmaceutical products in Greater China and the United States, received purchase orders from a national retail pharmacy chain following the launch of the company’s annual private label program for 2008-2009. This private label program is a continuation and expansion of the company’s highly successful 2007 rollout of a gumdrop-based immune booster with a national retail pharmacy chain. This private label immune booster reached the rank of top new product in the cough and cold category at this retailer and consequently Gamma has agreed to selectively manufacture certain house brands or private label programs for retailers. The company expects that each individual product (SKU) will achieve $250,000-$350,000 per SKU for house brands. Shares ended the week at $0.40, down 16 cents.
Dynamic Response Group, Inc. (OTCBB: DRGP), an innovative strategic marketing company, announced financial results for the third quarter ended September 30, 2008, with revenues increasing by 183% to approximately $9.7 million compared to $3.4 million during Q3 2007. Similarly, revenue increased 181% to $24.9 million for the first nine months of 2008. The increase was primarily the result of Riddex Plus, the leading method for pest control, sales. Shares ended the week unchanged at $0.01.
On the Wires: VeriChip Corporation (NASDAQ: CHIP) received notice from The Nasdaq Stock Market indicating that its stockholders’ equity at September 30, 2008 was less than the $10 million required for continued listing. The company intends to submit a plan to achieve and sustain compliance with the continued listing requirements to Nasdaq before December 2, 2008 to maintain its listing.
