Companies featured in the current edition of the newsletter: ACTC, CBMC, CETG, CGXP, CNLG, ENZ, GNBT, HJHO, ICLK, ITUI, LPHC, PCFG, PLKH, SRRY
Despite the extremely volatile week, stocks managed to end with gains for the five-session period, which included the Dow’s biggest one-day point gain on Monday and the second-biggest point loss on Wednesday. The market’s big rallies on Monday and Thursday gave all the major indexes gains of well over 3 percent for the week, but that was just a partial recovery from the devastating double-digit declines of the previous week. The Dow Jones industrial average ended the week up 401 points, or 4.7 percent, closing the week at 8,852. The S&P 500 gained 41 points for the week, or 4.6 percent, finishing at 940. The Nasdaq composite index ended the week up 62 points, or 3.7 percent, closing at 1,711. The Russell 2000 index finished the week up 4 points, or 0.76 percent, ending the week at 526. Year-to-date, the Dow, S&P and Nasdaq are all down at least 30%.
Last week got off to an eye-popping start as the market soared 11.7% in a snapback rally from greatly oversold conditions. Word that Morgan Stanley completed a deal to receive a $9 billion capital injection from Japanese bank Mitsubishi UFJ, central bank plans to provide as much dollar liquidity as needed for short-term funding markets, and news that several European countries were guaranteeing interbank lending provided the spark for Monday’s rally. In addition, speculation that the U.S. Treasury would be making a direct capital injection of as much as $250 billion in U.S. banks, that it would guarantee bank debt, and that the FDIC would guarantee deposits in non-interest bearing deposit accounts also fueled the buying efforts. The speculation turned to fact Tuesday when the Treasury formally announced like measures.
The economic concerns came home to roost on Wednesday in a battery of worrisome updates. Specifically, it was reported that retail sales declined 1.2% in September, with declines seen across all discretionary spending categories. That news, combined with a downtrodden Beige Book report that revealed slowing activity in all 12 Fed districts, and a reminder from Fed Chairman Bernanke that the economic recovery won’t happen right away, even with a stabilization of the financial system, helped drive the market 9.0% lower, marking one of its worst percentage declines in history.
The third quarter earnings reporting season also kicked in to full swing last week led by the likes of the likes of Citigroup, JPMorgan Chase, Wells Fargo, Merrill Lynch, Johnson & Johnson, PepsiCo, Intel, IBM, Google and eBay to name a few. Third quarter results themselves were largely mixed, yet the key consideration for the market was that few, if any, companies really extolled their near-term prospects. Several companies bemoaned a lack of earnings visibility. Both the earnings results and economic data last week were fairly unimpressive, yet the market still managed a 4.6% gain.
What should investors look for this week on the corporate front? Earnings season continues in earnest. On Monday morning, expect announcements from Halliburton Co. (NYSE: HAL) and Novartis AG (NYSE: NVS), followed by American Express (NYSE: AXP) and Texas Instruments (NYSE: TXT) after the close. Caterpillar (NYSE: CAT), DuPont (NYSE: DD), Lockheed Martin (NYSE: LMT), Pfizer (NYSE: PFE), Schering-Plough Corp. (NYSE: SGP), Western Union (NYSE: WU), US Bancorp (NYSE: USB), and 3M (NYSE: MMM) will report results on Tuesday before the bell. Meanwhile, Yahoo (NASDAQ: YHOO), Boston Scientific (NYSE: BSX), and Norfolk Southern (NYSE: NSC) will report after the close. On Wednesday morning, expect results from AT&T Inc. (NYSE: T), McDonald’s (NYSE: MCD), ConocoPhillips (NYSE: COP), Boeing (NYSE: BA), Northrop Grumman (NYSE: NOC), WellPoint (NYSE: WLP), GlaxoSmithKline (NYSE: GSL), Kimberly-Clark Co. (NYSE: KMB), Merck (NYSE: MRK), Wyeth (NYSE: WYE), Baker Hughes (NYSE: BHI), Travelers (NYSE: TRV), and Philip Morris (NYSE: PM); while Apple (NASDAQ: AAPL), Allstate (NYSE: ALL), Amgen (NASDAQ: AMGN), and Amazon (NASDAQ: AMZN) will report after the close. Dow Chemical (NYSE: DOW), United Parcel Service (NYSE: UPS), Union Pacific (NYSE: UNP), Xerox (NYSE: XRX), US Airways (NYSE: LCC), Eli Lilly (NYSE: LLY), Ford (NYSE: F), Xcel Energy (NYSE XEL), Altria Group (NYSE: MO), Potash (NYSE: POT), Starwood Hotels (NYSE: HOT), Coca-Cola Enterprises (NYSE: CCE), Raytheon (NYSE: RTN), Petro-Canada (NYSE: PCZ), L-3 Communications (NYSE: LLL), Bunge Ltd. (NYSE: BG), and Bristol-Myers Squibb (NYSE: BMY) will all report results before the open on Thursday. After Thursday’s close expect earnings announcements from Microsoft (NASDAQ: MSFT), American Movil (NYSE: AMX), AFLAC (NYSE: AFL), and The Chubb Corporation (NYSE: CB). Friday morning, LM Ericsson (NASDAQ: ERIC), Exelon Corp (NYSE: EXC), Ingersoll-Rand (NYSE: IR), ITT Corporation (NYSE: ITT), Fortune Brands (NYSE: FO), and T Rowe Price (NASDAQ: TROW) will report earnings, followed by Gannett (NYSE: GCI) sometime during the trading day.
The economic calendar will be quiet. Leading Indicators for September will be announced on Monday at 10:00 a.m. Weekly Crude Inventories will be released at 10:35 a.m. on Wednesday, while weekly Initial Jobless Claims will be announced at 8:30 a.m. on Thursday. Lastly, New Home Sales for September will be announced on Friday at 10:00 a.m. The conference schedule will be light for the week.
Enzo Biochem (NYSE: ENZ) , a leading biotechnology company, reported record revenue and significantly improved operating results for the fiscal year ended July 31, 2008. For fiscal 2008, total revenue advanced 47% to an all-time high of $77.8 million, reflecting both organic growth and the benefits of recent Life Science acquisitions Axxora in May 2007 and Biomol in May 2008 along with a 31% increase in royalty and licensing fee income. Gross profit advanced 27% to $37.6 million, while selling, general and administrative expenses, declined to 44.3% of revenues, from 50% last year, despite increased costs related largely to expanded Life Science activities. Fiscal 2008 revenues for Life Sciences, including a full year results from Axxora, totaled $35.7 million, up 186% from a year earlier, while gross profit margin advanced 117%, to $10.6 million, and SG&A improved to 35% of product revenues, from 45% in the previous year. Additionally, despite cash outlays for the two aforementioned Life Sciences acquisitions in the past 18 months, Enzo remains in a highly liquid position, with no debt and $92.4 million in working capital and $78.3 million in cash at year-end. Accordingly, the company is well-positioned to be able to opportunistically add to its growing market presence within Life Sciences. The company also commented on its two main product candidates currently in development, as Enzo anticipates concluding its Phase IIb trial for Alequel, its autologous individualized therapy for the treatment of Crohn’s disease, by the end of calendar 2008; and also continues to work toward filing an IND to begin US-based trials of Optiquel, its proprietary product for the treatment of autoimmune uveitis. In addition, a number of therapeutic products based on Enzo’s proprietary cell signaling, immune regulation, and gene therapy technologies are in various stages of development. Shares ended the week at $5.50, down 51 cents.
i2Telecom International, Inc. (OTCBB: ITUI), a developer of award-winning patented and innovative high-quality Voice-over-Internet Protocol products and services, has received a Notice of Allowance from the U.S. Patent and Trademark Office relating to a patent application involving its claims for Dynamically Adapting the Transmission Rate of Packets in Real-Time VoIP Communications to the Available Bandwidth (or DMTR) technology. i2Telecom was the first to file a patent application on DMTR several years ago. A Notice of Allowance is issued by the USPTO if one or more of the claims in the application are allowed. Based on the Notice of Allowance covering 4 claims, i2Telecom currently believes that the patent could be issued before the end of 2008. This is a very important development for the company as it believes that the DMTR technology is currently being used by a number of original equipment manufacturers that deploy softphones, microgateway devices, gateways, routers or switches along with a number of carriers that use the technology to improve the quality and eliminate degradation issues when transmitting voice packets over the Internet. As a result, the company now has an even stronger patent foothold as it continues to evaluate opportunities to monetize the value of its intellectual property assets. Shares ended the week at $0.08 unchanged.
Conolog Corporation (NASDAQ: CNLG), an engineering and design company that provides digital signal processing solutions to global electric utilities, announced that it has booked a total of $668,000 in new orders for scheduled deliveries during the months of August and September, 2008. The company’s products continue to gain market acceptance following multiple field installations as its PTR/PDR systems allow electricity generators to greatly improve efficiency while significantly reducing down time. It should also be noted that the aforementioned orders do not include Conolog’s new CM-100 multiplexer product, which is expected to be introduced by the end of this year. As a result, investors should not be surprised to see Conolog continue its recent revenue growth in the near future as the company adds the CM-100 multiplexer, which will provide utilities with the added communication field link, to its product offering. Shares ended the week at $0.30, down 8 cents.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) has commenced the enrollment of subjects in its bioequivalency clinical trial of MetControl, the company’s proprietary Metformin medicinal chewing gum product. A study is currently being conducted in the US comparing MetControl and immediate release Metformin tablets in healthy volunteers. Metformin is a generic drug used to regulate blood glucose levels by reducing liver glucose production and improving the insulin sensitivity of cells. Metformin is the backbone of almost all treatments for Type 2 Diabetes, but despite this fact, there are still millions of patients who do not use it because of a variety of factors, including gastrointestinal side effects, large pill size and bitter taste (especially within a growing population of children with Type 2 diabetes). The delivery of Metformin in a good tasting chewing gum format may make the drug more acceptable to these patients and may thereby increase compliance with the therapy. Shares ended the week at $0.30, up 1 cent.
interCLICK, Inc. (OTCBB: ICLK), the fastest growing advertising network in the US according to comScore, announced preliminary revenue and results for its third quarter ended September 30, 2008 with expected revenue exceeding $5.7 million, representing a 22% sequential quarterly increase compared to the 2008 second quarter. Gross margin is expected to exceed 30%, compared to 27% in the 2008 second quarter. This impressive growth and improved margins were primarily a result of the company extending its reach to 65% of the U.S. Internet population from 60% in the 2008 second quarter. The company also said it had entered into a $3 million revolving credit facility with Silicon Valley Bank to finance up to $3.75 million of its accounts receivable. This financing is expected to support working capital requirements as interCLICK enters the seasonally strongest fourth quarter of its fiscal year as well as provide a foundation for continued growth in 2009. The company now has not only the financial strength to pursue revenue growth in the fourth quarter but also to execute its 2009 strategic plan that calls for sustaining its growth trajectory. Shares ended the week at $1.60, up 10 cents.
Volume Alert: Shares of junior energy company Capital City Energy Group (OTCBB: CETG) jumped 11% on Friday on more than three times average volume. The company’s unique business model, which includes both an exploration and product division and a services business, appears to be gaining traction with investors. Shares ended the week at $2.45, up 75 cents.
Calypte Biomedical Corporation (OTCBB: CBMC), a developer, manufacturer and marketer of HIV diagnostic tests, has received a large order for 50,000 tests of its Aware HIV-1/2 OMT product from LifeLine Scientific, its newly appointed distributor for the United Arab Emirates (UAE) and several other countries in the Middle East region. The purchase is the first large order resulting from a newly implemented sales initiative in Africa, the Middle East, India and numerous other countries around the world to close more deals and build on the momentum Calypte is gaining. Additionally, this order shows the growing market acceptance of the company’s Aware HIV test as testing with oral fluid is preferred by patients, easier to do, and safer than testing with blood. Shares ended the week at $0.024.
Ceragenix Pharmaceuticals Inc. (OTCBB: CGXP), a biopharmaceutical and medical device company focused on infectious disease and dermatology, announced that its US-partner Promius Pharma, a wholly owned subsidiary of Dr. Reddy’s Laboratories (NYSE: RDY), officially launched the company’s first product, EpiCeram Skin Barrier Emulsion. This product is a novel prescription therapy for the treatment of atopic dermatitis, a skin disease that affects more than 15 million Americans at an estimated cost of $1 billion annually. The product was introduced last week by Promius Pharma at the 27th Annual Fall Clinical Dermatology Conference, attended by over 400 dermatologists and healthcare providers. This represents the commercialization of Ceragenix’s first product and will allow the company to focus its efforts on furthering the development of its pipeline. Shares ended the week at $0.45, down 5 cents.
Advanced Cell Technology, Inc. (OTC: ACTC), a developer of stem cell-based treatments, reported that the company’s Chief Scientific Officer, Dr. Robert Lanza, M.D., was Conference Co-Chair of the International Forum on Stem Cells that was held this past week in Tianjin, China. The conference was organized by the Chinese Academy of Medical Sciences and the National Science Foundation of China in order to offer new exciting opportunities to launch joint international efforts on stem cell research and applications. The conference included renowned speakers and presenters from stem cell companies and leading academic researchers. Additionally, ACTC’s Director of Stem Cell Differentiation, Dr. Shi-Jiang Lu, Ph.D., discussed the biological properties of hemangioblasts derived from human embryonic stem cells at the conference. The company also announced that it has received the initial $250,000 in funding from Transition Holdings Ltd, an Irish institutional investor. The proceeds will be used for working capital and general corporate purposes and will support operations while the company seeks strategic partners for its advanced clinical programs. Shares ended the week at $0.025, unchanged. ACTC also said it received the initial $250,000 in funding from Transition Holdings Ltd, an Irish institutional investor. The Company previously announced that it would sell $500,000 of one-year 7% convertible debentures over the next 90 days. The proceeds will be used for working capital and general corporate purposes and will support operations while the Company seeks strategic partners for its advanced clinical programs.
LocatePLUS Holdings Corp. (OTC: LPHC), a business-to-business and business-to-government providers of public information, announced that its Employment Seeker Self Verification subscriber base has exceeded 40,000 members, contributing to over $500 thousand in revenue. Self Verification allows potential employees to certify their credentials through online resume posting sites prior to the interview process, thus giving these potential employees superior positioning in their job search process. Once a subscriber initiates a paid subscription, they continue to remain a customer indefinitely with access to basic job seeker resources. This “Customer for Life” relationship lends itself to follow-on purchases of the product. Management is enthusiastic about sales of this self verification service into the foreseeable future given the current economic outlook, with a substantial increase in unemployment. With more competition for jobs, job seekers are looking to gain advantages in competing for the reduced number of jobs available. Shares ended the week at $0.03, unchanged.
ProLink Holdings Corp. (OTCBB: PLKH), the world’s largest provider of digital advertising screens for the golf course market and GPS golf course management systems, is opening an office in the United Kingdom to serve markets in England, Scotland, Ireland and Wales. The new subsidiary will be able to directly support ProLink’s existing footprint of more than 120 golf courses within the territory. Together, England, Scotland, Ireland and Wales form the world’s largest golf market outside the U.S. and ProLink’s industry-leading technology has been adopted by many of the region’s finest courses, including 2006 Ryder Cup host the K Club (Ireland), the 28 properties of Crown Golf, and Roxburghe Golf Course (Scotland), ranked among the country’s top five inland layouts. Concurrently, ProLink has also announced that its systems have been added to two more courses in the U.S. as LakeRidge Golf Course of Reno, NV and Broad Run Golfer’s Club of West Chester, PA will now feature the ProLink Solutions GPS system. Overall, the company’s GPS system is now featured at more than 700 golf properties on five continents; more than 600 of these courses are equipped with media-ready systems to support on-screen content and advertisements. Prolink ended the week at $0.19, down 7 cents.
Sancon Resources Recovery, Inc. (OTCBB: SRRY), a rapidly growing Chinese environmental services and waste recycling company, is expected to greatly benefit from the recently-passed recycling law in China, designed to promote resources recovery and recycling economy. Effective January 1, 2009, new legislation will boost energy saving measures and support environmental initiatives. Under the law, government departments will outline a system for recycling and waste-recovery standards. Companies participating in the programs will receive government support through funding and tax incentives. Meanwhile, industrial companies in China will now be required to introduce waste-saving technologies, install energy-saving equipment in new buildings and projects and should recycle and make comprehensive use of recyclable wastes and other waste materials. This new legislation is expected to support Sancon’s next phase of growth as the company has already received interest in its services from existing and new customers in anticipation of the law becoming effective in less than three months. Shares ended the week at $0.29, up 5 cents.
On the Wires: ProLink Holdings Corp. (OTCBB: PLKH) has added retired United States Air Force Lieutenant General Norm Lezy to its Strategic Advisory Board. General Lezy served in the Air Force from 1964 to 1999, and was also a member of the PGA of America’s Board of Directors from 2004-2007. Halcyon Jets Holdings, Inc. (OTCBB: HJHO) filed a lawsuit against Jet One Jets, its executives and other parties, for defamation.
SPECIAL SITUATIONS:
PACIFIC GOLD CORP. (OTCBB: PCFG) $0.0035
The fear surrounding the disastrous credit crisis, which has dropped stocks about 36% from their all-time highs set around this time last year, the weakening of the U.S. dollar, and the troubled real estate sector have left investors looking for other investment opportunities. With the depreciating currency exacerbated by government deficits and uncontrollable spending, investing in gold and base metals in general may be tantamount to taking out an insurance policy in a troubled economy. The demand for gold is also likely to increase with an increase in national wealth in India and China where most gold consumption is done. In these troubling economic times well established gold mining companies may turn the financial crisis in their favor if they are able to meet the increased demand with supply.
Pacific Gold Corp. engages in the identification, acquisition, exploration, and mining of mineral properties, primarily gold and tungsten, in the United States. The company, through its subsidiaries, owns interests in various claims, properties, and leases that are located in Nevada, Oregon, and Colorado. Pacific Gold Corp. currently owns four operating subsidiaries. Nevada Rae Gold, Inc. owns and operates the Black Rock Canyon gold mine, located in north-central Nevada. Pilot Mountain Resources, Inc. owns Project W, a large tungsten based deposit. Fernley Gold, Inc. has acquired the exclusive lease rights to mine the Lower Olinghouse Placers. Oregon Gold, Inc. owns the Bear Bench claims and Defiance mine, located in south-western Oregon.
The company’s business plan calls for the acquisition and development of production ready and in-production mining operations primarily focused on gold recovery. PCFG is pursuing its mission and aggressive strategy of acquiring mining claims and leases, collectively containing a minimum gross market value of $2 Billion, and to develop the acquired deposits into producing mines as soon as possible following acquisition.
PCFG estimates its proven, probable and possible resources at its existing Nevada, Colorado and Oregon projects at a gross in ground value of up to $1.6 Billion. The company is currently involved in six projects which it projects will yield up to 1 million ounces of gold. The company estimates that at $825 an ounce it will have revenue of $5.4 million in year 1, $19 million in year 2, and $32.6 million in year 3, assuming new mines come on-line in the second and third year. PCFGs Tungsten property alone has an estimated over $800 million of in-situ resource and is currently looking to begin the process of permitting its second mine, Fernley Gold’s Butcher Boy Mine. As of June 30, 2008, the company’s assets totaled $3.2 million, which consisted primarily of mineral rights, land and water rights, state bonds and related equipment.
Pacific Gold separates itself from other junior miners because it is a fully permitted mine with all bonds in place and full water rights. The company also distinguishes itself from its competitors by having lower production costs as a result of years of working out the kinks and perfecting its plant, giving it a both a great potential profit margin and a lot of room for the up and down prices of gold in today’s markets. The company has proven itself to be a long term player with high future growth prospects and resources of up to $1.6 Billion. With its vast properties and available resources the company appears to be extremely undervalued. As it begins to tap into its probable resources, PCFG should easily able to grow at a double digit rate.
