Companies featured in the current edition of the newsletter: CBMC, CETG, ETGF, GMPM, GNBT, GSPG, HYTM, IASCA, ITUI, MBND, PLKH, SWYV, TKO, VYTR
In yet another volatile week for the stock market, the major indices continued to exhibit large percentage swings with almost daily changes of direction. However, when the dust settled, the Dow lost another 245 points last week, extending its annual loss to 16.0%. The Nasdaq slipped 91 points, bringing its year-to-date loss to 17.7%, while the S&P gave up 42 points and now exhibits an annual loss of 17.4%. Meanwhile the small-cap Russell lost nearly 49 points, and is now down 8.0% for the year, which is still significantly better than its larger-cap counterparts.
The market’s collective attention remained focused on Washington D.C. throughout the past week as politicians debated the future of the $700 billion bailout package that the Treasury, the Fed, and the President are asking Congress to pass. So strong was investors’ fixation on the future of this proposed relief package that the market seemed to ignore the weaker-than-expected reports of new home sales, durable orders and weekly initial claims that were released on Thursday. Furthermore, third quarter and full-year earnings warning from General Electric (NYSE: GE) and news that Washington Mutual (NYSE: WM) was seized by regulators, marking the largest bank failure in U.S. history, also had only a muted impact on the market. JPMorgan Chase (NYSE: JPM) was able to continue to acquire assets at bargain basement prices as it struck a deal to acquire the deposits, assets and certain liabilities of WaMu’s banking operations for just $1.9 billion. Another value investor also made the news last week as Warren Buffet’s Berkshire Hathaway (NYSE: BRK.A) agreed to buy $5 billion of Goldman Sachs’ (NYSE: GS) preferred stock and acquired warrants that allow it to buy $5 billion worth of Goldman’s common stock over the next 5 years.
Developments late Friday and over the weekend are likely to significantly influence trading on Monday and throughout the week. Foremost among investors’ attention is the bailout package, as politicians rushed to put the final details into place. At press time, reports suggested that a deal was imminent and would be finalized Sunday evening prior to trading commencing on Monday. However, even if such a deal is consummated, there are still challenges, although less publicized, that markets will need to digest. Wachovia (NYSE: WB) was actively trying to sell itself, as the troubled bank copes with mounting loan losses. According to published reports, potential buyers include Citigroup, Wells Fargo and Banco Santander. European markets could be roiled by reports that the British government will nationalize troubled lender Bradford & Bingley – taking on its 50B pounds in loans, including 41B pounds of residential mortgages. Finally, there are reports that Belgium’s Fortis is this weekend poised to become the first large continental bank to fall victim to the credit crunch. The Belgian central bank and the country’s regulator are paving the way for a bailout of the huge banking and insurance group, which has a 540 billion pound balance sheet and a market value of 12 billion pounds.
What should investors look for this week on the corporate front? The corporate calendar remains relatively light. Walgreen (NYSE: WAG) will report earnings before the opening bell on Monday while Circuit City (NYSE: CC) will report later during the day. Pepsi Bottling (NYSE: PBG) will announce earnings before the bell on Tuesday. Micron Technology (NYSE: MU) will report earnings during the day on Wednesday. Marriott International (NYSE: MAR) reports Thursday morning before the opening. Family Dollar Stores (NYSE: FDO) releases results before the bell on Friday.
On the economic front, Personal Income and Spending for August will be reported on Monday morning at 8:30 a.m. On Tuesday, Chicago PMI for September will be released at 9:45 a.m. followed by Consumer Confidence for September at 10:00 a.m. On Wednesday, Auto/Truck Sales for September will be announced early in the morning, while the ADP Employment statistics for September will be released at 8:15 a.m. Also on Wednesday, August Construction Spending and the ISM Index for September will be released at 10:00 a.m., followed by the Weekly Crude Inventories at 10:30 a.m. Initial Jobless Claims for the week will be released at 8:30 a.m. on Thursday, along with Factory Orders for August at 10:00 a.m. Friday morning at 8:30 a.m., the Unemployment Rate, Non-Farm Payrolls, Hourly Earnings, and the Average Workweek numbers for the month of September will be announced. Rounding out the week is the ISM Services for September being reported at 10:00 a.m.
The conference schedule will also be light next week. Merrill Lynch will host its two-day Global Energy Mid and Small Cap Conference starting on Wednesday in New York. Cowen & Company hosts its 11th Annual Therapeutics Conference in New York on Thursday and Friday. Also starting on Thursday, Oppenheimer & Co will hold its two-day 3rd Annual Industrials Conference in New York.
Multiband Corporation, (NASDAQ: MBND), the nation’s largest DIRECTV Master System Operator for Multiple Dwelling Units, announced that its U.S. Install business division, a national home theater and video surveillance installation company which Multiband acquired earlier this year, has continued its rapid growth through a new relationship with a leading consumer electronics retailer, resulting in expansion into several hundred new retail locations. The company expects to be in all of the locations by the end of the year. In just six months since Multiband has completed the acquisition of U.S. Install’s assets, the company has expanded rapidly, securing agreements with several national retailers to provide installation services. With strong demand for qualified electronics technicians, management is confident that U.S. Install is uniquely positioned to continue its growth. Shares closed at $1.48, down 10 cents for the week.
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, signed an agreement to partner with National Advertising Partners (NAP), the Fox-owned sales unit that represents sports networks across the country. NAP will represent and sell a variety of ProLink’s GPS media inventory, with a focus on integrated advertising campaigns, offering advertisers broad on-course, on-air, and on-line opportunities. ProLink expects to begin recognizing revenue under this agreement beginning in first quarter of 2009. This is a very promising agreement for ProLink as Fox has extensive relationships with widely respected national brands, and the exposure generated will offer advertisers the unique ability to reach affluent audiences with a target message. The first media and advertising opportunity which is planned to be launched in early 2009 is a television program highlighting America’s great public golf courses that also use ProLink’s GPS System. The show would feature the best the courses have to offer, along with tips and strategies, as well as the amenities offered by the club and location. ProLink also continues to expand the number of golf properties that feature the company’s systems as it has partnered with Total News Golf to install the ProLink system at upscale golf courses and resorts throughout South America. Based in Buenos Aires, Total News Golf operates Argentina’s most-visited golf web site (totalnewsgolf.com). Under the agreement, Total News Golf will install and service ProLink’s industry-leading GPS system at golf courses and resorts in countries including Argentina, Brazil, Colombia, Paraguay, Uruguay and Chile. Total News Golf and ProLink will partner on the advertising platform on ProLink-installed courses throughout the continent. The stock closed at $0.31, down 12 cents.
Shares of healthcare services company Hythiam, Inc. (NASDAQ: HYTM) fell to their lowest level since March on Friday, perhaps due to concerns that the results, which have yet to be announced, related to a clinical study for testing efficacy for treatment of methamphetamine dependence at UCLA’s Integrated Substance Abuse Program, would be disappointing. We checked with the company, which indicated that it has not received the results yet, and that the clinical investigator could be analyzing the data for another two weeks. Shares ended the week at $1.48, down 62 cents.
Calypte Biomedical Corporation (OTCBB: CBMC), a developer, manufacturer and marketer of HIV diagnostic tests, raised $700,000 last week in a private placement of its common stock with a single institutional investor. Calypte issued 20 million shares to the investor at a purchase price of $0.035 per share. The company intends to use the proceeds of this private placement for general working capital purposes. The stock ended the week unchanged at $0.03.
Capital City Energy Group, Inc. (OTCBB: CETG), a diversified oil and natural gas company with three separate divisions, announced that its wholly owned subsidiary, Avanti Energy Partners LLC, will complete plans for a five-well natural gas drilling program in the fourth quarter of 2008 and commence drilling in the first quarter of 2009. The drilling package will target the Clinton Sandstone, which is less than 4,000 feet deep and will be drilled on 20-acre spacing. The target area is surrounded by other wells currently in operation that have produced an average of approximately 35 million cubic feet of natural gas per well during their first year of production. Overall, the cumulative life of each well is expected to produce approximately 175 million cubic feet of natural gas. Avanti is currently working on securing a total of 2,000 to 3,000 acres in the target area with company officials anticipating the drilling and operating a total of 250 wells in the target area, completing 25 wells per year. Based on the current natural gas prices and surrounding well-production data, 25 completed wells could generate gross revenues of $7.5 million in the first year. Shares ended the week at $2,00, down 20 cents.
Element 21 Golf Company (OTCBB: ETGF), the manufacturer of advanced Scandium Alloy golf and fishing equipment, has added Gander Mountain Co. chain of stores as a distributor of its Carrot Stix line of fishing rods. Gander Mountain has 115 locations in 23 states and is another high profile distributor that will now carry the company’s Carrot Stix brand. Concurrently, ETGF also announced that it has expanded the Carrot Stix line of rods to over 90 different SKUs. Since the introduction of the first Carrot Stix on the market 12 months ago, Element 21 has emerged as a real competitor in the fishing rod industry. The stock ended the week at $0.71, up 3 cents.
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, announced the signing of new contracts with 3 major distribution companies in China for the distribution of Gamma’s Brilliant Choice Vitamins in Shandong and Zhejiang Provinces and Beijing, the Chinese capital City. Together these distributors cover over 1,000 outlets and Gamma expects approximately $3 million in annual sales from these contracts. This is an important step for Gamma as the company continues to work on finalizing a significant number of additional distribution and sales agreements in both China and the United States. Shares ended the week at $0.70, down 19 cents.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) received payment of the $500,000 license fee following execution of the product licensing and distribution agreement that the company signed with Dong Sung Pharm Co. Ltd. last month for the sale of Generex Oral-lyn, its flagship proprietary oral insulin spray product, in South Korea. Generex has already begun preparations for procuring regulatory approval for the importation, marketing, and sale of Generex Oral-lyn in South Korea. Once such approval is obtained, the company will be due another $500,000 milestone payment from Dong Sung Pharm. Shares fell by $0.17 to finish the week at $0.51.
GoldSpring, Inc. (OTCBB: GSPG), a North American precious metals mining company, focused in Nevada, with extensive, contiguous property in the Comstock Lode District, announced that recent assay results confirm strong gold mineralization 1,150 feet northwest of the known resource area in the Hartford Complex, potentially increasing the known gold and silver resource footprint by 50%. This ore body, based on geological data, is a continuation of the prolific Silver City fault mineralization, which runs directly through the known Hartford Complex resource area. In addition, the precious metals rich zone appears to gain depth to the east and shallows to the west indicating the direction of the deposit. The company performed step-out drilling to verify strong gold mineralization results identified in two historic holes drilled in 1991 (Jim Golden, GoldSpring’s COO, helped plan the drilling of these 2 holes with Rea Gold in 1991). The results from the company’s four drill holes, coupled with the historic drill holes, show significant mineralization in this area. Shares ended the week at $0.02, down 1 cent.
i2Telecom International, Inc. (OTCBB: ITUI), a developer of award-winning patented and innovative high-quality Voice-over-Internet Protocol products and services, continues to receive positive publicity and exposure for its recently-launched MyGlobalTalk application, which allows users to take advantage of the benefits of IP telephony to make international and long distance cellular calls independent of wireless carrier, smartphone handset make, or voice/data plan for as low as two cents per minute anywhere in the world. Just this past week, MyGlobalTalk has been named winner of a Best of Show Award for “Most Innovative Product” at Technology Marketing Corporation’s INTERNET TELEPHONY Conference and EXPO West 2008. According to the company’ management team, interest in MyGlobalTalk has exceeded their expectations, and the company plans to announce a number of new distribution and strategic relationships that will generate revenues in the near future. The stock closed the week at $0.08, down 1 cent.
Seaway Valley Capital Corporation (OTCBB: SWYV), a diversified holding company, announced that it has completed a one-for-five reverse stock split and that its stock now trades under the new symbol SVYV. Seaway Valley has successfully undertaken a number of acquisitions over the past 15 months, including WiseBuys Store, Patrick Hackett Hardware Company, Sackets Harbor Brewing Company, Seaway Restaurant Group, and Alteri Bakery; and now has projected pro forma annualized revenues of $36 – $40 million. Separately, the company also announced that Hacketts, its wholly-owned subsidiary, has executed an agreement to open its 11th retail store location in Lake Placid, NY. The opening of this new store is targeted for the Spring of 2009 and would feature a large selection of clothing, footwear, gifts and other merchandise. Hacketts’ management is very excited about the prospects of a Lake Placid store. With its millions of annual visitors and the seasonal and local residents of Lake Placid and nearby Saranac Lake, this newest Hackettshas the potential to reach a new customer base for the company. Shares ended unchanged at $0.01.
Telkonet, Inc. (AMEX: TKO), the leading provider of innovative, centrally managed solutions for integrated energy management, networking, building automation and proactive support services, solidified its leadership position within the powerline communications (PLC) and energy management technology segment as the company has been granted 4 new patents, increasing its overall total to 12. The PLC patents reflect Telkonet’s development of innovative networking methods, using PLC in commercial and residential multi-dwelling properties. Telkonet has also received a patent for its advanced thermostat design, incorporated within the leading edge Telkonet SmartEnergy in-room, occupancy-driven energy management system, which reduces HVAC costs by eliminating wasted heating and cooling of vacant rooms. These new patents are important additions to an already solid portfolio and are good examples of the company’s strong commitment to innovation. Additionally, Telkonet was named as the second fastest growing company in Deloitte’s prestigious Technology Fast 50 Program for Maryland, reflecting Telkonet’s continuing market success. Shares were down 3 cents last week, closing at $0.29.
Vyteris, Inc. (OTCBB: VYTR), the manufacturer of the first U.S. Food and Drug Administration-approved active patch transdermal drug delivery system, announced the establishment of the Vyteris Business Development Team, which will focus on attracting opportunities with biopharmaceutical companies to jointly develop products involving delivery of compatible drugs with Vyteris’ patented Smart Patch transdermal drug delivery technology. Following the current female infertility project with Ferring Pharmaceuticals, the company’s current goal is to expand the availability of its proprietary technology to compounds that may benefit through the potential for optimized dose scheduling, improved patient compliance efficacy and extended patent protection when combined with the Smart Patch technology. The stock ended the week at $0.35, down 5 cents.
IAS Energy, Inc. (OTCBB: IASCA), which has an option to acquired up to a 100% interest in an Chinese Internet company, continues to rapidly progress toward transforming itself into a leading Web 2.0 company. The Board of Directors has already approved the proposed name change from IAS Energy, Inc. to Video1314.com, Inc, with the official name change subject to shareholder approval at the next annual meeting. Additionally, the Board of Directors has also appointed Samuel Kam, who founded Video1314.com, as Chairman of the company. Furthermore, Video1314.com reported a record daily hit rate of 934,147 hits to its web site, which indicates that the website should be able to pass the 1,000,000 hits per day milestone in the very near future. Shares slipped 1 cent last week to close at $0.17.
On the Wires: Capital City Energy Group, Inc. (OTCBB: CETG) hired Chuck Kendall as Director of Business Development and Land Management. Mr. Kendall’s expertise lies in supervising land leasing, right-of-way acquisitions, drill site surveying and permitting of new wells and large lease-acquisitions programs including an 80,000-acre program for Belden & Blake Corp. in Eastern Ohio. i2Telecom International, Inc. (OTCBB: ITUI) appointed David Reese to its Board of Directors as Chairman of the Audit Committee, increasing the number of Board members to six. Mr. Reese has been a member of the company’s Advisory Board since December 2006. Previously, he was Chairman and chief executive officer of ACTV, Inc., a New York City-based digital media company that developed proprietary applications for digital television and the Internet. Healthcare services company Hythiam, Inc. (NASDAQ: HYTM) drew down the available $5.4 million under the demand margin loan facility it obtained from UBS Financial Services in May 2008 as was previously planned and as discussed in the company’s second quarter conference call.