Companies featured in the current edition of the newsletter: ARGA, AVGO, CHIP, CYTR, GNBT, GSHF, HSOA, HYTM, IWEB, MBIF, PBIO, PCLI, PLKH, RTK, SCLL, USAT, VOII
The stock market experienced a volatile week of trading despite closing relatively unchanged on Friday. As the second quarter came to a close, the Dow rose 48 points for the week, increasing annual gains to 7.6%. The Nasdaq gained 14 points, equating year-to-date gains to 7.8%. The S&P was unchanged for the week remaining up 6% for the year. The Russell fell 1 point for the week with annual gains equaling 5.8%.
Late in the week, the Federal Reserve confirmed its stance on interest rates, leaving the federal funds rate unchanged at 5.25 percent for the eighth consecutive time. A year has passed since interest rates were last changed and there are many that believe the Fed may hold rates steady for another year to come. Housing weakness remains a concern but low unemployment is helping to support the economy during this period. Existing home sales for May fell by 0.3% and new home sales for May dropped by 1.6%. Consumer confidence declined to a surprising 103.9, lower than the 106.0 expected by analysts. Orders for big-ticket manufactured goods did nothing to offset the week’s dismal reports after posting a larger-than-expected 2.8% drop in May, versus the forecasted number of 1% by economists. Investors had some good news to focus on by the end of the week as consumer spending rose by 0.5% in May despite rising gas prices that ended above $70/bbl on Friday.
What should investors look for this week? There are no major earnings reports and the conference schedule is empty due to the holiday shortened week. The stock market will close early on Tuesday (1 p.m.) and be closed on Wednesday in honor of Independence Day. The economic calendar will be active with the June ISM Index being reported on Monday at 10:00 a.m. Tuesday morning, May Factory Orders and May Pending Home Sales will be announced at 10:00 a.m. Late in the afternoon on Tuesday, June Auto and Truck Sales will be announced. Prior to the opening on Thursday, Weekly Jobless Claims will be released followed by June ISM Services at 10:00 a.m. and Weekly Crude Inventories at 10:30 a.m. Friday morning, June Nonfarm Payrolls, June Unemployment, June Hourly Earnings and Average Workweek, will all be reported before the opening bell.
Shares of Home Solutions of America (NASDAQ: HSOA), a provider of restoration, construction and interior services to commercial and residential customers, ended the second quarter in quiet trading, leaving investors with several potential catalysts as the third quarter begins. The company said recently that it hoped to have a resolution on the FIGA receivable and Fireline Note by the end of the second quarter, with a favorable outcome significantly improving its balance sheet. Also, additional details on the New York and Tampa projects, including the announcement of a teaming partner, could serve as a catalyst for the stock as the current valuation is roughly equivalent to the company’s stock price prior to the announcement of the first contract. Short interest rose to 15.5 million, or roughly 38% of the float in June, the highest level since the company has been on the Nasdaq. Short interest jumped nearly 2 million shares last month. The stock ended the week at $5.98, down 36 cents.
Shares of healthcare services company Hythiam, Inc. (NASDAQ: HYTM) rose to their highest level since mid February last week, as investors anticipate several of the events that the company highlighted at its recently concluded Annual Shareholder’s Meeting. At the event, HYTM’s CEO noted that he expected to ink a deal with a country for PROMETA, the company’s protocols to treat drug and alcohol addiction, as well as continued penetration of states, municipalities and criminal justice organizations. Recently, The Blue Cross and Blue Shield Association’s National Labor Office said it had formed a strategic alliance with Hythiam, Inc. to provide substance abuse management information to labor members of Blue Cross and Blue Shield companies. The Blues’ network of healthcare providers offers health benefits for more union workers, retirees and their families than any other national insurance carrier. While short interest represents approximately 18% of the float, that level may not adequately reflect the actual float, as according to publicly available filings, the float includes concentrated ownership by five institutions owning approximately 11.5 million shares. Shares ended the week at $8.65, up 33 cents.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT), reported that it is preparing to commence a Phase III clinical trial of Generex Oral-lyn, the company’s proprietary oral insulin spray product before the end of the year in centers in the United States, Canada, and Europe. The six month trial is expected to include 750 patients with Type 1 diabetes mellitus. Patient enrollment is expected to begin during the third or fourth quarter of calendar year 2007 and expand to several global centers over the course of the study. The primary objective of the study is to compare the efficacy of Generex Oral-lyn and the RapidMist Diabetes Management System with that of standard regular injectable human insulin therapy as measured by HbA1c, in patients with Type-1 diabetes mellitus. This milestone represents the final step to achieving approval to market Generex Oral-lyn in North America and Europe as management is very optimistic about the outcomes due to the successful outcomes that patients have experienced in previous clinical trials and through current use (the product is being sold in Ecuador currently). The company has engaged Beckloff Associates, Inc., a Cardinal Health company, to assist the with the Generex Oral-lyn Phase III study through the design and implementation of efficient global scientific and regulatory strategies. Despite the news, shares ended the week at $1.77, down 3 cents.
USA Technologies, Inc. (NASDAQ: USAT), a developer of cashless vending and energy management products, is well-positioned to take advantage of the Federal Reserve Board’s recent approval of a final rule that creates an exception for transactions of $15 or less from Regulation E’s requirement that receipts be made available to consumers for transactions initiated at an electronic terminal using debit cards. Such news expands the customer base that USAT targets since many cashless vending machines are not equipped to generate receipts, limiting sales to just credit card sales. With this new authorization by the Fed, USAT’s machines will now be able take debit card purchases as well, which could represent a significant catalyst to expand adoption of the company’s ePort technology. Shares ended the week at $10.75, down 21 cents.
Shares of VeriChip Corporation (NASDAQ: CHIP), a leading provider of identification and security technology, could benefit significantly in the future as usage of radio frequency identification tags (RFIDs) continue to be more widely adopted. Last week it was reported that the American Medical Association (AMA) has adopted a policy stating that RFIDs can improve the “safety and efficiency of patient care” by helping to identify patients and enabling secure access to clinical information. Devices the size of a grain of rice that are implanted with a needle could give emergency room doctors quick access to the records of chronically ill patients, the nation’s largest doctors group. RFIDs are removable and designed to stay in place. Although there may be concerns about protecting the privacy of information that is stored on the devices as well as the possibility that such small devices could be allowed to move to other parts of a person’s body, the AMA concluded in its report that it is “likely that utilization of RFID devices for medical purposes will expand.” Additionally, the company reported that Xmark Corporation, its wholly-owned subsidiary, launched the By Your Side program for its Halo or Hugs infant protection products at the Association of Women’s Health, Obstetric and Neonatal Nurses (AWHONN) Convention in Orlando, FL. The program is designed to provide customers with close and continuing support throughout the product life cycle, from initial purchase to implementation to ongoing use. The AWHONN Convention is the nation’s largest gathering of nurses, nurse practitioners and nurse executives in the field of maternal/child care, hosting over 2000 decision-makers. Approximately one out of every three infant protection systems in the United States is an Xmark product. Shares ended the week at $8.59, up 61 cents.
CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical research and development company, last week reported safety and tolerability results from its previously announced double-blind, placebo-controlled, rising multiple dose clinical trial with its drug candidate arimoclomol, indicating that all four doses were safe and well-tolerated. Arimoclomol has been granted “orphan-drug” status by the FDA. The company also released promising data from its six-month, open-label extension of its completed Phase IIa clinical trial with arimoclomol in ALS volunteers, showing an apparent trend toward a slower decline in every disease progression marker compared with the historical placebo control. CytRx plans to begin its Phase IIb clinical trial of arimoclomal, with approximately 390 ALS patients in 30 to 35 U.S. and Canadian cities, in the second half of this year, and should be completed approximately 18 months after the beginning of patient enrollment. CytRx has recently announced plans to commence a Phase II clinical trial for arimoclomol in stroke recovery in the first half of 2008, and a Phase II clinical trial with its next drug candidate, iroxanadine, for diabetic foot ulcers, also in the first half of 2008, both subject to FDA clearance. Separately, it was also reported that Dmitry Samarsky, Ph.D., has joined RXi Pharmaceuticals Corporation, a majority-owned subsidiary, as Vice President of Technology Development, bolstering efforts to expand its RNAi-based therapeutics platform and promote leading programs. Shares ended the week at $3.12, down 43 cents.
Pressure BioSciences, Inc. (NASDAQ: PBIO), a developer of enabling technology called Pressure Cycling Technology (PCT) for sample preparation and other life sciences applications, last week launched its first pressure cycling technology (PCT)-dependent research-use only kit, the ProteoSolveLRS, at the 67th Scientific Sessions of the American Diabetes Association (ADA) in Chicago, Illinois. Designed for use with the company’s Barocycler, the kit will help the thousands of scientists worldwide who have the difficult task of extracting proteins from important lipid-rich samples, such as brain tissues, organelles, and membrane preparations, for use in clinical studies. An estimated $80 billion, or 12% of total health-care spending in the U.S. annually is related to diabetes, and adoption of PCT technology by researchers could provide Pressure Bio with significant revenue, both in the sales of kits, and in the sales and leasing of its Barocycler instruments. Additionally, due to interest from laboratories with multiple sites, limited space, low sample throughput volumes that don’t require the larger NEP3229, and laboratories with budgetary constraints, the company announced that it has ordered 40 Barocycler NEP2320 units from Source Scientific LLC, the manufacturer of the company’s PCT equipment and disposables product line. Originally designed to be a demonstration unit for the larger NEP3229, the company’s existing Barocycler instrument, the NEP2320 system weighs approximately 75 pounds, compared to the NEP3229’s 350 pounds. It also processes one sample at a time, verses three for the NEP3229. Shares ended the week at $4.85, up 21 cents.
Rentech, Inc. (AMEX: RTK), a developer of technologies that transform under-utilized energy resources into valuable and clean alternative fuels, last week announced an agreement with Denbury Resources Inc., for the sale, transport and use of all captured carbon dioxide from Rentech’s proposed ultra-clean synthetic fuels plant to be built in Natchez, Mississippi. Denbury will use the captured carbon dioxide product for oil-recovery efforts in the region, and is expected to purchase between 350 million and 400 million cubic feet per day at a slightly higher cost than the base price of carbon dioxide from its two other contracted synthetic sources, and will share the value of any carbon dioxide emission reduction credits available as a result of the deal with Rentech. Shares ended the week at $2.59, up 6 cents.
Avicena Group, Inc. (OTCBB: AVGO), a biotechnology company focused on diseases of the central nervous system, last week announced the selection of the optimal dose of HD-02, its novel drug candidate for the treatment of Huntington’s Disease. Based on the findings of a dose escalation study, Avicena and its collaborators Dr. Steven Hersch of Massachusetts General Hospital, and the Huntington Study Group have developed a double-blind, placebo-controlled Phase III clinical trial expected to start early next year, following completion of a chronic toxicology study that is currently underway. The study will be one of the single largest trials for Huntington’s patients. HD-02, which has been awarded “orphan drug” status in the U.S., was recently selected as one of the “100 Great Investigational Drugs of 2007” by R&D Directions magazine. This trial will be the third different indication of HD-02 being advanced into Phase III trials, including some of the largest trials to date in both Parkinson’s and Huntington’s diseases. 35,000 Americans suffer from Huntington’s disease, and approximately 150,000 more carry the Huntington’s gene, and will develop this disease during their lifetime. Shares ended the week at $4.60, up 15 cents.
Volume Alert: Shares of GreenShift Corporation (OTCBB: GSHF), a company devoted to facilitating the efficient use of natural resources, traded roughly 13.5 times average volume after it was reported that its majority-owned subsidiary, GS CleanTech Corporation, has begun to extract, buy and sell crude corn oil that it has extracted from Utica Energy, LLC’s Oshkosh, Wisconsin 52 million gallon per year ethanol production facility. GS CleanTech Corporation also announced last week that it executed a new agreement to extract about 1.5 million gallons per year of crude corn oil from the distiller’s grain co-product from a new 50 million gallon per year dry mill ethanol plant scheduled to commence operations early next year. GS CleanTech’s patent-pending Corn Oil Extraction Systems have been engineered to help ethanol producers increase cash flows through corn oil. In all, GS CleanTech’s publicly announced corn oil contracts will produce about 31.5 million gallons per year of crude corn oil for conversion into biodiesel fuel as GS CleanTech successfully deploys the relevant corn oil extraction systems during 2007 and 2008. Separately, GreenShift Corporation held a webcast last week discussing recent corporate developments including merger, liquidation, restructuring and refinancing plans. Cornell Capital Partners, and GreenShift agreed to use their best efforts to restructure the terms and conditions of GreenShift’s debts due to Cornell in a way that facilitates the completion of the GreenShift’s pending merger with GS CleanTech Corporation. Cornell also agreed to waive on a one-time basis the past defaults under certain provisions. GreenShift plans to hold a live conference call in July to further address shareholder questions as it continues to build upon its shareholder awareness campaign. Shares ended the week at $0.06, up 3 cents.
Volume Alert: Shares of MBI Financial, Inc. (OTCBB: MBIF), a rapidly expanding national financial services company, traded over 5.3 times average volume last week as investors showed confidence in management’s ability to continue the company’s rapid expansion into new marketplaces, and continuing to secure new warehouse lines of credit, thereby increasing its loan capacity. Shares ended the week at $0.60, up 5 cents.
Protocall Technologies Incorporated (OTCBB: PCLI), a leading provider of DVD on-demand systems for retailers and etailers, last week reported that its TitleMatch Entertainment Group division and Primera Technology, Inc. became the first companies to publicly demonstrate a completely functional and fully-integrated DVD On-Demand solution that includes Qflix copy protection from Sonic Solutions. The demonstration took place at the Entertainment Supply Chain Academy’s Digital Supply Chain Developers Conference, in Los Angeles. Primera Technology is the world’s leading developer and manufacturer of CD, DVD and Blu-ray Disc duplication and printing equipment. TitleMatch DVD On-Demand service allows customers to choose and purchase DVD movies and home entertainment directly from a touch screen. Content is automatically recorded and printed using a Primera Bravo-Series Disc Publisher for immediate delivery at point-of-sale, eliminating the need for inventory. Complete TitleMatch DVD On-Demand systems are available to retailers with a local server, external storage, touch screen, DVD case printer and Primera Bravo-Series Disc Publisher, starting at $4,995. Shares ended the week at $0.04, down 3 cents.
Cell biology company Stem Cell Innovations, Inc., (OTCBB: SCLL) last week reported that it has entered into a two-year R&D alliance with the High Q Foundation Inc., a foundation that supports research aimed at finding treatments for Huntington’s disease. Huntington’s Disease results in emotional disturbance, loss of intellectual faculties and uncontrolled movements. Approximately one in ten thousand persons carry the gene for Huntington’s disease, and at present there is no cure or treatment to slow the progression of symptoms. Stem Cells’ PluriCells will be used to develop specific human cell systems for the purpose of drug discovery, with the company receiving up to $1.1 million from High Q upon completion of certain milestones, as well as retaining the right to further use, develop and commercialize the outcome of the project. Shares ended the week at $0.02, down 1 penny.
VoIP, Inc. (OTCBB: VOII), a leading provider of Voice over Internet Protocol (VoIP) communications solutions for service providers, reported last week that its VoiceOne subsidiary continues to generate substantial increase in monthly minutes of use. Since September, monthly minutes carried over the its proprietary Voice One network have increased by approximately 375% due to increased customer usage and the expansion of its facilities based network, and revenue has also increased by approximately 400% compared to the previous year, due to a higher billable rate per minute. In addition to higher revenue, the company has also significantly reduced costs through investments that it has made in its network. VoIP’s network currently allows it to service more than 50 million households and business subscriber lines in New York, Florida, Massachusetts and Georgia, and is expected be able to offer its services to 200 million customers in an additional 21 states by year end. Shares ended the week at $0.07, down 2 pennies.
On the Wires: Auriga Laboratories, Inc. (OTCBB: ARGA), a specialty pharmaceutical company with products for the treatment of acute respiratory diseases and dermatological conditions, announced last week that it has appointed Leonhard Dreimann and Thomas Heck, two experienced and accomplished business executives, to its Board of Directors. Mr. Dreimann has over 35 years experience in consumer goods sales and marketing, and Mr. Heck has over 14 years of specialty pharmaceutical experience. ProLink Holdings Corp. (OTCBB: PLKH), the world’s leading provider of GPS golf-course management systems and on-course advertising, last week announced that Andy Batkin has been named CEO of its ProLink Media division. Mr. Batkin, who helped found the interactive media industry in 1983, has over 25 year of experience creating marketing campaigns for companies and brands such as Anheuser-Busch, BASF, CBS, Pepsi-Cola, Walt Disney, NBC, Nickelodeon and ESPN.
IceWEB Inc. (OTCBB: IWEB) $0.75
As the use of the Internet continues to become an integral part of business communications and functions, the need for reliable and secure hosted software applications is crucial. As many small and medium-sized businesses recognize the cost-savings and convenience of outsourcing such services, companies like IceWEB Inc., that offers enterprise email solutions, private intranet portals, web hosting and virtual servers to this business segment, can realize significant revenue and earnings potential. With nearly half of all small and medium-sized business expecting to see their Information Technology (IT) budget growing in the near future, and the fact that this group far outnumbers large enterprises, IceWEB is in the enviable position of offering its products and services to a customer base that is large and growing.
On Thursday, IceWEB continued to build upon its goal of pursuing large, long-term Federal contracts, announcing it received an Indefinite Delivery/Indefinite Quantity (ID/IQ) type contract with a ceiling of $10 million from the U.S. Patent and Trademark Office (USPTO), that allows all USPTO employees to use the contract for a broad range of IceWEB’s IT products. The company was also awarded a contract last week valued at $483,000 to provide advanced Layer-7 Firewalls to the U.S. Government. Equally as impressive is the company’s world class technology partnerships including Microsoft, Juniper Networks and McAfee, and well-known distribution partners including CompUSA, Simply Wireless and Intelligent Office. In addition to landing large contracts, IWEB appears to finally be grabbing the attention of the investment community. Shares surged last week, trading record volume (more than 15 times average), after the company announced the $10 million deal. Despite the move, and the stock nearing its 52-week high, the company has a valuation less than $10 million.
At its current valuation, the company appears to trade at less than one times revenue, a significant discount to other small competitors. Revenue for the second quarter ended March 31, 2007 was $5.9 million, compared to $642,000 in the second quarter of fiscal 2006, representing an increase of 915%. EBITDA was $170,694 for the second fiscal quarter. Net income for the second fiscal quarter 2007 was $16,904, including a $14,733 gain from a sale of assets. For the six months ended March 31, 2007, revenue was nearly $8.5 million, suggesting that the company is well on its way to meet its $17 million revenue target for the current fiscal year. At such level, the company is value at just half of fiscal ’07 revenue.
So how does IWEB generate its revenue? IWEB targets the software-as-a-service (SaaS) market. SaaS is a software application delivery model where customers do not pay for owning the software. Instead, they are charged for actually using it. It can be thought of as a low-cost solution for companies to receive the advantages of internally operated software without incurring significant costs of software design, installation, upgrades and services. In addition to the huge cost-savings from this type of service offered by IceWEB, other benefits realized by those adopting this strategy include improvement in ROI, reduction in operational risks and scalability that caters to the individual needs of individual customers through a user-friendly a-la-carte menu.
The branded product family offered by the company consists of three major segments which consist of: IceMAIL, a service that offers enhanced email, calendaring, data management, back-up and storage solutions; IcePORTAL , a service that offers Intranet portal applications, document management and application integration; and IceVISTA, a service that can be used with Linux or Windows Web systems and offers development/hosting services, DNS hosting multimedia production and managed servers. The company’s brand has been adopted by a list of impressive customers including the U.S. Department of Defense, Homeland Security, National Aeronautics and Space Administration (NASA), British Telecom, Lockheed Martin, Northrup Grumman, General Dynamics, and GS Technical (IBM), to name a few.
It is estimated by IDC that the market for SaaS in 2007 will reach $8 billion in 2007 and $10.5 billion in 2009. Looking ahead, IceWEB plans on forming additional partnerships with world-class technology firms with complementary solutions and will continue to refine its technology, resulting in continued customer loyalty. Furthermore, the company plans on increasing marketing and sales efforts to expand its market presence and win new customer business. Investors cannot overlook IWEB’s key attributes that include a recurring revenue model and substantial near-term sales growth as IceWEB moves closer towards profitability. With solid second quarter results and significant contracts announced recently, investors may be finally beginning to recognize the potential for the company.