Arkados Group OTCBB: AKDS $0.20
Research Report
Industry: Electronics & Engineering
Rating: Speculative Buy (Initial)
Price Target: $2.00
By: Robert S. Stoklosa
Arkados Group Speculative Buy Rating In Initiating Coverage; Compelling Way To Participate In A Newly Emerging Growth Market: In-Home Networking Over Electric Power Lines.
December 21, 2006. We initiate on Arkados Group (OTCBB: AKDS), a fabless semiconductor company engaged in the design, development and marketing of semiconductor solutions enabling broadband communications over standard electricity lines with a Speculative Buy rating. It has developed a re-configurable hardware and software platform for high-speed transmission of converged multimedia, voice, and data traffic over AC electrical wires. Arkados's initial products are System-on-Chip (SoC) semiconductors aimed at the in-home networking segment of this market. Arkados is an active contributor to the HomePlug Powerline Alliance, a standards setting organization. The Arkados SoC platform solution provides an OEM customer a rapid time-to-market advantage through its rich layer of software and firmware. The Company's chips are designed to allow OEM customers to produce sophisticated, full-featured products at lower cost, faster time-to-market, and with a high degree of programmability that insures a quality differentiated product. It is the only company to offer such a platform solution. Arkados provides the investor with a compelling way to participate in a newly emerging growth market: in-home networking over electric power lines. HomePlug has significant installation, bandwidth, security, reliability, and quality of service advantages over its alternatives. We stress that Arkados faces a substantial growth challenge. In addition to operational and sales issues, it has a sizable task of promoting end user awareness for in-home powerline networking.
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Amarillo Biosciences Inc. OTCBB: AMAR $0.55
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $1.90
By: Wayne M. Lottinville, CFA
Amarillo Biosciences To Start Phase 2 Oral Warts Study; Reiterate Speculative Buy
December 12, 2006. Amarillo Biosciences, Inc. (OTCBB: AMAR) says that four clinical sites are ready to enroll patients in a Phase 2 study to test low-dose interferon-alpha lozenges administered orally to HIV-positive subjects with oral warts. Patient enrollment is expected to begin after January 1. Viral lesions of the mouth in patients infected with HIV are common and may be indicative of disease progression. Two previous studies have been conducted and demonstrated the ability of interferon-alpha lozenges to significantly reduce oral-wart load in HIV-positive patients. If Amarillo Biosciences' new study demonstrates the efficacy and safety of this treatment regimen, the Company intends to conduct a Phase 3 study and seek approval from the FDA to market interferon-alpha lozenges for the treatment of oral warts in HIV-positive patients.
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American Mold Guard, Inc. Nasdaq: AMGI $2.35
Research Note
Industry: Industrial & Manufacturing
Rating: Strong Speculative Buy (Reiterated)
Price Target: $4.22
By: Mike Loughran
AMGI: Adjusting Our Model To Reflect A Longer Sales Process Than Originally Anticipated At AMG Scientific
December 26, 2006. Following discussions with several physicians affiliated with hospital networks, we believe our initial assumptions relative to the revenue growth rate of AMG Scientific could prove aggressive. Having spoken with additional hospital administrators, we now believe the process will be more involved than we originally had anticipated.
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American Mold Guard, Inc. Nasdaq: AMGI $2.35
Research Report
Industry: Industrial & Manufacturing
Rating: Strong Speculative Buy (Reiterated)
Price Target: $4.22
By: Mike Loughran
American Mold Guard Strong Speculative Buy Rating In Update Coverage; Expectation for Continued Market Penetration in the New-Home Construction Market and the Prospects for the New Surface-Treatment Business.
December 19, 2006. American Mold Guard (Nasdaq; AMGI) has established itself as a surface-treatment company, utilizing antimicrobial applications to protect surfaces from mold and other pathogens. The Company initially focused on the new-home construction market, providing mold prevention and restoration services to single and multifamily dwellings by marketing its services to homebuilders and homeowners alike. In October, American Mold Guard announced the formation of AMG Scientific, a new division targeting infectious- disease control through surface treatment utilizing the Company's antimicrobial applications. This new unit will leverage the existing service center infrastructure. We estimate revenues in FY2007 of $17.4 million, up from $9.9 million estimated in FY2006, while EPS (loss) should show a substantial reduction. In FY 2007, we expect EPS losses to be reduced to $(.29) versus the $(1.94) expected to be reported in FY2006.
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American Software Inc Nasdaq: AMSWA $7.17
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Buy (Reiterated)
Price Target: $8.00
By: David P. Soetebier, CFA
American Software Reports 6% Increase in Revenues For October 2006 Quarter
December 15, 2006. American Software (NASDAQ: AMSWA) a supplier of supply chain and enterprise management software reported favorable results for its October 2006 with a 6% increase in revenues. Operating earnings were off 2% year over year but with strong other income, net income and earnings per share were in line with our estimates (FD of $0.07 versus $0.03). The shortfall versus our estimate was primarily because of lower software license sales. A software license sale can range from an estimated $200,000 to $750,000 at Logility (88% owned by American Software) so if a sale closes are doesn't close in a quarter it can have a dramatic effect on reported results. We have revised our revenue estimate for FY 07 to $83.3 million down from our prior estimate of $87.5 million. Our fiscal (April) 2007) fully diluted earnings per share estimate remains $0.26. Our price target is $9.00 (no change) and our rating is Strong Buy. At the recent price of $7.62 the shares have a current yield of 4.2% based on the current quarterly dividend rate of $0.08 per
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Applied NeuroSolutions Inc OTCBB: APNS $0.29
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.00
By: Denise T. Resnik, M.S.
Applied NeuroSolutions Viewed as Beneficiary of Increased Interest in Biomarkers
December 28, 2006. Applied NeuroSolutions, Inc. (OTCBB: APNS) is a development stage biopharmaceutical company focused on diagnostics and therapeutics for the treatment of Alzheimer's Disease (AD). The Company's research has focused on the protein, phosphotau, which has been shown to circulate in blood and cerebrospinal fluid of patients with AD. The Company's data suggest that phosphotau may represent an important biochemical marker for AD. The identification of biochemical markers (or "biomarkers") is becoming increasingly exciting in the field of medicine. Biomarkers are chemicals - typically proteins - that circulate in blood or other bodily fluids and are surrogate indicators of underlying disease states. An indication of increased interest in biomarker research is the announcement of the third annual Biomarker World Congress (to be held in Philadelphia in May 2007). This Congress will include tracks not only in early drug development, clinical development, and molecular diagnostics, but a new track in biomarker assay development. We believe that the continued research and development activities of Applied NeuroSolutions in the area of biomarkers could significantly impact the field of AD diagnostics and therapeutics for the treatment of AD. We reiterate our Strong Speculative Buy rating on Applied NeuroSolutions shares.
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Applied NeuroSolutions Inc OTCBB: APNS $0.29
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.00
By: Denise T. Resnik, M.S.
Applied NeuroSolutions Poised to Participate in Increasing Acceptance of Diagnostic Testing for Alzheimer's Disease; Strong Speculative Buy Rating Reiterated
December 18, 2006. Applied NeuroSolutions, Inc (OTCBB: APNS) has made significant scientific progress in the development of diagnostic assays to detect biomarkers associated with Alzheimer's disease (AD) for both cerebrospinal fluid (CSF) and blood. The growing acceptance of a CSF assay capable of providing physicians with early diagnosis of AD was underscored in the December 12, 2006 Wall Street Journal article entitled "Detecting Alzheimer's Early." This article highlighted a CSF assay being used in Sweden and reported in the March 2006 issue of Lancet Neurology. The Applied NeuroSolutions CSF assay quantifies a different phosphylated tau epitope than the assay used by the Swedish group. As reported in the January 2004 issue of the Archives in General Psychiatry, it appears that the epitope studied by Applied NeuroSolutions shows superior sensitivity and specificity to discriminate between AD patients and those with other forms of dementia, which might prove to have an even greater impact on the diagnosis of AD. We reiterate our Strong Speculative Buy rating.
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Biophan Technologies, Inc. OTCBB: BIPH $0.51
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.00
By: Richard W. West, CFA
Biophan Technologies, Inc. Releases Results of Animal Study On its MYO-VAD System;Strong Speculative Buy Rating Reiterated
December 14, 2006. Biophan Technologies, Inc. (OTCBB:BIPH), a developer of medical technology, released today, December 14, 2006, the results of animal studies indicating the potential of the MYO-VAD™ cardiac support system in improving the treatment of heart failure. We reiterate our Strong Speculative Buy rating and our $2.00 per share 12-month price target
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Baldwin Technology Company Inc AMEX: BLD $4.99
Research Note
Industry: Industrial & Manufacturing
Rating: Buy (Reiterated)
Price Target: $6.15
By: Wayne M. Lottinville, CFA
Baldwin Restructures To Integrate Oxy-Dry Acquisition: Reiterate Buy
December 27, 2006. Baldwin Technology Company, Inc. (AMEX: BLD), expects to record a $1 million pretax charge in the its fiscal second quarter ending December 31 for a restructuring to integrate its recently acquired Oxy-Dry Group with existing operations. The total cost of implementing the restructuring and integration plan is expected to be $4.6 million. An additional $3.0 million will be recorded as liabilities in the Company's allocation of purchase price in connection with the acquisition. The estimated savings from plan is estimated to be $3.7 million annually.
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Baseline Oil & Gas Corporation OTCBB: BOGA $0.64
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.40
By: Richard R. Wolfe, CFA
Baseline Acquires Producing Properties; COO Hired
December 21, 2006. Baseline Oil & Gas Corporation (OTCBB: BOGA) announced today both a $28 million acquisition of Texas producing properties and the hiring of an experienced President and Chief Operating Officer, Thomas Kaetzer. The events, in our view, considerably advance the Company's stature and constitute tangible progress in the execution of Baseline's corporate strategy.
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Baseline Oil & Gas Corporation OTCBB: BOGA $0.64
Research Report
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.40
By: Richard R. Wolfe, CFA
Baseline Oil & Gas Strong Speculative Buy Rating In Update; Our Bullish Outlook For The U.S. E&P Sector, Coupled With High Expectations For Follow-On Transactions From A Very Experienced And Highly Accomplished Management Team.
December 14, 2006. Baseline Oil & Gas (OTCBB: BOGA) is a U.S. oil and gas exploration and production company founded in 2005 by a management team with several decades of successful experience in building and acquiring independent oil companies. Baseline presently has interests in 177,000 gross leasehold acres in southern Indiana locations containing shale-gas prospects associated with the Illinois Basin New Albany Shale formation. In view of success rates in excess of 95% in shale-gas drilling, Baseline's acreage has an estimated ultimate resource potential of 160-170 billion cubic feet (Bcf) in our most-likely scenario (110-120 Bcf in the event that produced-gas volumes fall 20% short of Schlumberger-authored engineering reports, 200-220 Bcf if estimates turn out to be too conservative). With development of one-quarter to one-third of the Company's acreage likely to be completed by year-end 2008, management has indicated that it would consider monetizing Baseline and/or its New Albany Shale resource while it is still being proved up. Our rating is based on solid prospects for developing low-risk New Albany Shale acreage and expectations of favorable U.S. natural gas markets. We have set a 12-month target price of $2.40 per share, however, longer term, our bullish outlook for the U.S. E&P sector, coupled with high expectations for follow-on transactions from a very experienced and highly accomplished management team, indicates a potential share price range of $5-$12 per share.
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Clearant, Inc. OTCBB: CLRI $0.31
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Clearant, Inc. Announces Second Distribution Agreement.
December 14, 2006. Clearant, Inc. (OTCBB: CLRI) announced an agreement with JPS Surgical, a leading distributor of orthopedic supplies, to represent and distribute CLEARANT PROCESS(R) Sterile Implants for allograft sports medicine surgeries. JPS Surgical's 20 sales representatives will market the implants to sports medicine specialists in Oklahoma and Arkansas. This is the second distribution agreement announced by Clearant this week. We view these agreements as positive developments because they expand Clearant's distribution geographically, substantially increase the number of sales representatives marketing CLEARANT PROCESS Sterile Implants, and add high-quality, experienced sales representatives. Further, we believe that these distribution agreements complement Clearants own direct sales initiatives, could result in faster adoption of CLEARANT PROCESS Sterile Implants by sports medicine surgeons, and increase the Company's revenue and earnings potential. We rate Clearant's shares Neutral. Despite the promise of the Company's sterilization technology and the initial success of its new direct distribution strategy, we believe that it is imperative that the Company raise additional capital before year end and that it faces significant near-term financial and operational risk if unable to do so.
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Clearant, Inc. OTCBB: CLRI $0.31
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Clearant, Inc. Signs Distribution Agreement For Northeast.
December 13, 2006. Clearant, Inc. (OTCBB: CLRI) has signed an agreement with OR Specialties, a leading distributor of orthopedic surgical supplies for OR Specialties' 13 sales representatives to market CLEARANT PROCESS(R) Sterile Implants to sports medicine specialists in New York, northern New Jersey, Connecticut, Rhode Island and western Maine. Currently, Clearant has no sales representation in the Northeast. Therefore, this arrangement complements and expands the Company's existing direct sales efforts and, as a result, it should boost its revenue and earnings potential. Since introducing the direct sales initiative in late June, Clearant has taken a number of steps to strengthen and support this effort, including hiring experienced sales representatives and signing supply agreements with two leading tissue banks. This strategy already is paying off, as indicated by growth in the number of allografts sold by the Company's sales force to a record 47 in November, up from 26 sold in October. We rate Clearant's shares Neutral. Despite the promise of the Company's sterilization technology and the initial success of its new direct distribution strategy, we believe that it is imperative that the Company raise additional capital before year end and that it faces significant near-term financial and operational risk if unable to do so.
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BluePoint Energy Inc. OTCBB: CPEU $3.50
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $2.80
By: Richard W. West, CFA
BluePoint Energy, Inc. Announces Additional Projects Under Macy's Master Agreement;Reiterate Strong Speculative Buy and Raising Price Target
December 22, 2006. Chapeau, Inc., d/b/a BluePoint Energy, Inc. (OTCBB:CPEU), announced that it has signed two additional Discount Energy Purchase Agreements with the Macy's East Division of Federated Retail Holdings, Inc. (Macy's East). Completion of these projects could provide approximately $5.2 million in additional project revenue to BluePoint Energy in 2007. We reiterate our rating of Strong Speculative Buy and are raising our 12-month price target to $2.80 per share.
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BluePoint Energy Inc. OTCBB: CPEU $3.50
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $2.80
By: Richard W. West, CFA
BluePoint Energy Plans To Eliminate All Debt; Gives Revenue and Earnings Guidance for FY6/30/2007; Reiterate Strong Speculative Buy
December 14, 2006. Chapeau, Inc., d/b/a BluePoint Energy, Inc. (OTCBB:CPEU), announced plans to convert all its long-term debt to common stock. This quarter, BluePoint Energy will sign DEP contracts in excess of $15.0 million. We reiterate our rating of Strong Speculative Buy and our recently raised 12-month price target of $2.40 per share.
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BluePoint Energy Inc. OTCBB: CPEU $3.50
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $2.80
By: Richard W. West, CFA
BluePoint Energy, Inc. and Starwood Hotels Expand Relationship; Strong Speculative Buy Reiterated; Raising Price Target
December 13, 2006. Chapeau, Inc., d/b/a BluePoint Energy, Inc. (OTCBB:CPEU), announced a master form of agreement to provide energy conservation services for a significant number of properties owned by Starwood® Hotels & Resorts Worldwide, Inc. (NYSE:HOT-$64.00). We reiterate our rating of Strong Speculative Buy and raise our 12-month price target from $2.10 to $2.40 per share.
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BluePoint Energy Inc. OTCBB: CPEU $3.50
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $2.80
By: Richard W. West, CFA
BluePoint Energy, Inc. and Starwood Hotels Expand Relationship;Strong Speculative Buy Reiterated; Raising Price Target
December 12, 2006. Chapeau, Inc., d/b/a BluePoint Energy, Inc. (OTCBB:CPEU), announced a master form of agreement to provide energy conservation services for a significant number of properties owned by Starwood® Hotels & Resorts Worldwide, Inc. (NYSE:HOT-$64.00). We reiterate our rating of Strong Speculative Buy and raise our 12-month price target to $2.40 per share.
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DXP Enterprises Inc Nasdaq: DXPE $35.96
Research Note
Industry: Industrial & Manufacturing
Rating: Strong Buy (Reiterated)
Price Target: $50.00
By: Paul J. Resnik, CFA
DXP Enterprises Stock Volatility Appears Technically-Driven; Reiterate Strong Buy Rating Based on Attractive Fundamentals
December 13, 2006. DXP Enterprises (Nasdaq: DXPE) shares have shown unusual volatility in recent days despite the absence of new corporate developments (confirmed by our contact with the Company) or even significantly above-average volume. DXP shares, based on our earnings per share estimates of $2.04 for 2006 and $2.73 for 2007, are trading about in line with the S&P 500 multiple based on 2006 earnings and at a discount based on 2007 earnings. Given that the Company achieved an earnings gain of almost 100% in 2005 and is expected to achieve gains of over 100% in 2006 and more than 30% in 2007, we believe a higher valuation is warranted. Our current 12-month price target of $50 assumes the shares trade at 18.3 times 2007 EPS, a moderate premium to the market. We believe investors would do well in focusing on the longer term fundamental prospects for DXP in evaluating the appeal of the stock rather than the daily stock price fluctuations. We reiterate our Strong Buy recommendation.
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Fushi International, Inc OTCBB: FSIN $4.90
Research Note
Industry: Industrial & Manufacturing
Rating: Strong Speculative Buy (Reiterated)
Price Target: $11.64
By: Stanley Ng
Fushi International, Inc. Completes Several Strategic Initiatives to Further Strengthening its Position in the Chinese Bimetallic Market; Strong Speculative Buy Maintained
December 16, 2006. Fushi International, Inc. Further Strengthening its Chinese Bimetallic Market Position Through Completion of Several Strategic Initiatives
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George Foreman Enterprises Inc. OTCBB: GFMEE $3.50
Research Note
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated)
Price Target: $4.00
By: Gerald F. LaKarnafeaux, CFA
George Foreman Enterprises Has Been Put On Notice that a Trading Halt May Be Imposed Due to a Late Filing of Its 10Q for the Period Ending September 30, 2006. The Company Has Requested a Stay in the Trading Halt Order Subject to a Hearing.
December 27, 2006. George Foreman Enterprises Inc. (OTCBB; GFMEE.OB) has been put on notice by the NASD that the Company's stock is subject to a trading halt due to a late 10Q filing. The Company has requested a stay in the trading halt order subject to a hearing. The delay in filing is due to a dispute between the Company's former and its new auditing firm that deals with the accounting treatment of a material transaction.
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Global Alumina Corporation TSE: GLA.U $0.90
Research Report
Industry: Metals & Mining
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $2.45
By: Les W. Childress
Global Alumina Corporation Strong Speculative Buy Rating In Continuing Coverage; Pre-Revenue Mining Company Whose Sole Focus Is Construction And Operation Of One Of The World's Largest Alumina Refineries
December 20, 2006. Global Alumina (TSE: GLA.U) holds a long-term (minimum 75-year) mining concession in the Republic of Guinea in West sub-Saharan Africa covering 690 square kilometers containing over one billion tonnes (metric tons) of some of the highest-quality and most prolific bauxite ore reserves in the world. Global is a pre-revenue mining company whose sole focus is construction and operation of one of the world's largest alumina refineries. Global's reserves consist of proven and probable bauxite reserves of 188 million tonnes equivalent to a 25-year supply at estimated production. However, it is possible the reserves are at least four times this figure because Global's 25-year development plan is predicated on only three of 19 resource plateaus. Guinea, itself, is believed to hold 30%-70% of the world's known reserves of bauxite. In a significant financial development, the Company recently announced it had entered into an exclusive agreement for equity and debt financing for its flagship refinery and mining project. If consummated, the Company will have the financing in hand to accelerate construction of the project. Given the financing commitment delay until December 31 and what is bound to be a later-than-hoped-for ramp up in project construction, we have lowered our short-term price target from $3.00 to $2.45 per share.
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Green Plains Renewable Energy NasdaqNM: GPRE $23.90
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $60.00
By: Paul J. Resnik, CFA
Green Plains Renewable Energy Shares Trading at Depressed Levels Despite Rise in Ethanol Prices: Reiterate Strong Speculative Buy Rating
December 28, 2006. Green Plains Renewable Energy (NASDAQ: GPRE) shares are trading at their lowest levels since early October despite a steady rise in ethanol prices. Our estimates for Green Plains are based on $2.00/gallon ethanol; the near contract, January 2007, is now at $2.426. Despite rising corn prices, the ethanol/corn price relationship for Green Plains is largely unchanged (even without adjusting for higher prices for the dry distilled grain by-product and somewhat lower-than-expected natural gas prices). We continue to rate Green Plains shares, now trading at less than four times projected 2008 EPS, a Strong Speculative Buy.
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HydroGen Corp OTCBB: HYDG $5.00
Research Note
Industry: Oil, Gas & Energy
Rating: Speculative Buy (Reiterated)
Price Target: $8.25
By: Sally H. Wallick, CFA
HydroGen Corporation: Presentation Highlights 2006 Accomplishments and 2007 Objectives. Speculative Buy Reiterated.
December 13, 2006. HydroGen Corporation (OTCBB: HYDG) held an invitation-only plant tour on December 12 at the Company's manufacturing and test facility in Versailles, Pennsylvania and hosted a live Web cast of a presentation in which management highlighted the Company's 2006 accomplishments and set out its 2007 objectives. HydroGen's business plan is aimed at generating significant returns for shareholders by making the Company the leading manufacturer of stationary fuel cells for power generation in multi-megawatt applications. In 2006, we believe that HydroGen made significant progress toward achieving these goals. Looking forward to 2007, management plans to build on its 2006 accomplishments as it progresses toward commercializing its technology. Objectives for the year include: (1) Completing successful demonstrations of full-scale plants in Versailles and at ASHTA Chemicals; (2) Achieving two MW power island(s) unconditional sales and multi-megawatt conditional sales; (3) Continuing advanced manufacturing development; and (4) Raising additional capital (although management believes that the Company has sufficient cash to fund operations and pursue its businesses strategies through the end of 2007). We reiterate our Speculative Buy rating on HydroGen's shares.
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Hydrogen Power International, Inc. OTCBB: HYDP $1.51
Research Note
Industry: Oil, Gas & Energy
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Hydrogen Power, Inc.: Hydrogen Appears As A Promising Clean Alternative For Powering Automobiles Long-term, But, In Near Term, Limited Refueling Infrastructure A Significant Hurdle. Hydrogen-on-demand Could Be One Solution.
December 27, 2006. Hydrogen Power, Inc. (OTCBB: HYDP). Hydrogen appears to be a promising clean alternative for powering automobiles long term. However, the limited number of hydrogen filling stations to refuel such vehicles is a significant hurdle to widespread adoption of this technology. One solution being explored by some companies, among them General Motors and Honda, is home refueling units. We believe that another option is hydrogen production-on-demand technology, such as Hydrogen Power's patented hydrogen-production technology, which uses a chemical reaction between water, aluminum and an environmentally friendly catalyst to produce hydrogen on-site and on-demand without electricity. In June, the Company announced conversion of a 2006 Ford Ranger XL truck to a hydrogen hybrid with a dual fuel system that can shift between gasoline and hydrogen. We believe that this achievement is an important validation of Hydrogen Power's technology as an alternative power source for vehicles on the road today and in the future. While we are optimistic about the commercial potential of Hydrogen Power's technology, as a development-stage company, the Company faces many execution, financial and competitive risks and challenges. Therefore, we consider Hydrogen Power shares appropriate only for risk-oriented investors. We rate Hydrogen Power shares Neutral.
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Hydrogen Power International, Inc. OTCBB: HYDP $1.51
Research Note
Industry: Oil, Gas & Energy
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Hydrogen Power Inc.: Company-Specific and Industry-Related Factors Believed to Contribute to Pullback in Share Price. Neutral Rating Reiterated.
December 18, 2006. Hydrogen Power Inc. (OTCBB: HYDP): We believe that a 59% decline in Hydrogen Power's share price since we picked up coverage on May 25, 2006 is attributable to several factors including: (1) An average decline of 34% in the share prices of 13 other hydrogen-related companies; (2) Changes in Hydrogen Power's trading status: when we picked up coverage, it traded on NASDAQ, then went to the pink sheets and now is on the over the counter bulletin board; and (3) Uncertainties overhanging the stock, including the potential for a change in control of the Company's board of directors and a change in the Company's management. While Hydrogen Power has moved forward on its business plan this year, which is aimed at commercializing its hydrogen technology, progress has been measured and gradual. The Company has developed a slow-release reactor capable of producing hydrogen at various release rates and wattage levels and an AlumiFuel generator that is integrated with small, lightweight fuel cells as an alternative to portable batteries. Also, in June, it announced that the conversion of an internal combustion engine vehicle to a hydrogen hybrid with a dual fuel system. We are optimistic about the commercial potential of Hydrogen Power's technology. On the other hand, as a development-stage company, Hydrogen Power faces many execution, financial and competitive risks and challenges and visibility on the timeline for commercialization of its technology is limited. We rate Hydrogen Power shares Neutral.
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ICOP Digital Inc. Nasdaq: ICOP $5.44
Research Note
Industry: Electronics & Engineering
Rating: Neutral (Reiterated)
By: Mike Loughran
ICOP Digital Sees 4Q 2006 Revenues Above $2.5 Million
December 22, 2006. ICOP Digital Inc. (Nasdaq: ICOP) yesterday announced that Q4 revenues would exceed $2.5 million for Q4FY06, significantly above our recently reduced expectation of $1.7 million. The company has announced two significant orders in Q4FY07. The 100 unit order from Mobile, Alabama Police Department, and the 82 units to the Wyoming Highway Patrol. This is in addition to an unknown number to the Alaska State Troopers. We are maintaining our Neutral rating, but will re-evaluate following Q4 EPS when we hope we will be better able to determine the impact of the increased competitive pressures we have reported on.
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ICOP Digital Inc. Nasdaq: ICOP $5.44
Research Report
Industry: Electronics & Engineering
Rating: Neutral (Reiterated)
By: Mike Loughran
ICOP Digital Rating Lowered To Neutral; Consider Upgrading The Shares Should Additional Large Orders Be Achieved And Should Several Of The Near-Term Factors We Have Addressed Prove Inconsequential
December 20, 2006. We are downgrading shares of ICOP Digital (Nasdaq: ICOP) from Speculative Buy to Neutral based upon the following factors, discussed in detail in our report. These include i) the slowing of the sequential revenue growth from Q2 to Q3 was greater than we had anticipated, ii) as a result, we have lowered our revenue expectations and adjusted our model (additionally, we have some concern that some sales over the course of the next several quarters may be delayed as customers anticipate the arrival of the Company's new product line scheduled to debut in April), and more troubling is our competitor research, which has identified an increasingly competitive pricing environment in the marketplace (although we view ICOP's in-dash design as superior, the customer base is extremely price-sensitive and under significant budgetary constraints). Our model now calls for a loss of $(0.14) in Q406 and $(0.52) for FY06. Losses in FY07 and FY08 are $(0.49) and $(0.28), respectively. In our model, $900,000 or $(0.12) in FY07 and $(0.15) in FY08 are non-cash compensation expenses listed as an executive bonus accrual relating to shares granted certain executive officers. The $630,000 executive tax reimbursement in each of FY07 and FY08 represents a cash charge and is a supplemental bonus to the executives to compensate them for the tax implications of the share grant.
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Internet Gold-Golden Lines Ltd Nasdaq: IGLD $11.42
Research Note
Industry: Computers, Technology & Internet
Rating: Buy (Reiterated)
Price Target: $15.00
By: Rafael K. Kapelinski
Internet Gold: Meeting With Management; Reiterate Buy
December 19, 2006. We reiterate our Buy rating on Internet Gold and price target of $15.00 following a meeting with the management in Israel today. Our view on the acquisition of Golden Lines remains positive: It should produce significant synergies, creating one of the three largest Internet media and communications groups in Israel. The acquisition was the right step for Internet Gold both strategically and operationally.
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InkSure Technologies Inc OTCBB: INKS $3.25
Research Note
Industry: Electronics & Engineering
Rating: Speculative Buy (Reiterated)
Price Target: $3.50
By: Rafael K. Kapelinski
Inksure: Meeting With the Company, Estimates and Rating Under Review
December 21, 2006. InkSure Technologies Inc.'s (OTCBB: INKS.OB) share price has exceeded our price target of $3.50 as the market clearly expects a positive resolution of the Company's bid for the Turkish stamp tax contract. The final decision is expected some time next week. After meeting the Company today, we believe that our our initial 2006E and 2007E forecast was too conservative, even excluding the Turkish opportunity, and is currently under review.
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Joystar Inc. OTCBB: JYSR $1.05
Research Report
Industry: Leisure & Entertainment
Rating: Strong Speculative Buy (Change)
Price Target: $1.50
By: Richard W. West, CFA
Joystar Rating And Price Target Increased By Dutton Associates
December 18, 2006. Joystar's (OTCBB: JYSR) travel agent network is presently 4,909 professional agents, and is closing in on management's goal of 5,000 agents for year-end 2006. Joystar Cruises, the Company's "cruise only" channel for agents serving consumers, is up and running and agents are booking cruises through this center. Joystar has attracted an experienced sales staff and plans to increase the staff from 20 to 50 agents in the second quarter of 2007. Joystar has received notification from major cruise lines that their increased bookings have resulted in increased commission levels, up to 50%, being offered to Joystar's travel agents. Gross travel bookings, (the basis for earned commissions), increased 221% to $16,220,487 in the quarter ended September 30, 2006, compared with $2,153,778 for the quarter ended September 30, 2005. On a sequential quarter-to-quarter basis, gross travel bookings increased slightly from $15,019,370 in the second quarter. Joystar believes it is on track to produce gross bookings over $100 million by year-end 2006.
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Logility Inc. Nasdaq: LGTY $7.77
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $12.50
By: David P. Soetebier, CFA
Logility Reports 17% Increase in Operating Earnings
December 12, 2006. Logility, Inc. (Nasdaq: LGTY), a leading supplier of collaborative solutions to optimize the supply chain, announced favorable financial results for its second quarter of fiscal year 2007. The 17% increase in operating earnings was basically in line with our estimate driven by a 19% increase in Service revenues and 17% increase in Maintenance revenues. Software license fees of $3.3 million (down 7% year over year) were $700,000 below our estimate. However, spending on R&D and G&A expenses were below our estimate resulting in fully diluted earnings per share of $0.08 that was in line with our estimate. Our fully diluted earnings per share estimate for the April 07 year remains $0.39 and fiscal 2008 $0.50. Our 12-month target is $12.50.The shares remain rated Strong Speculative Buy.
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Maine & Maritimes Corporation AMEX: MAM $14.95
Research Note
Industry: Oil, Gas & Energy
Rating: Speculative Buy (Reiterated)
Price Target: $20.00
By: Sally H. Wallick, CFA
Maine & Maritimes Corporation: Update on Regulatory Decision.
December 20, 2006. Maine & Maritimes Corporation (AMEX: MAM): On December 15, The Maine Public Utility Commission (MPUC) accepted a bid from WPS Energy Services Inc. to provide retail standard offer service in Aroostock County in northern Maine. This is a change from MPUC's previous actions, when it rejected a standard offer bid and directed MPS to arrange to provide standard offer service to its customers beginning January 1, 2007. MPS will continue to provide electricity transmission and distribution services to its customers. We reiterate out Speculative Buy rating on Maine & Maritimes common stock.
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Midway Gold Corp. TSE-V: MDW $2.63
Research Note
Industry: Metals & Mining
Rating: Speculative Buy (Reiterated)
Price Target: $3.75
By: Mike Niehuser
Midway Gold Announces Acquisition
December 13, 2006. Midway Gold Corp. (TSX Venture: MDW) announced its intent to acquire Pan-Nevada Gold Corporation (TSX Venture: PNV). The acquisition would immediately double the company's resources and exploration potential. We anticipate that the transaction should close by the end of 1Q07.
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MediciNova, Inc. NasdaqGM: MNOV $13.22
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Initial)
Price Target: $20.00
By: Wayne M. Lottinville, CFA
MediciNova Strong Speculative Buy Rating In Initiating Coverage; Eight Unique, Differentiated Small Molecules For 10 Different Therapeutic Indications; Well Financed With $117 MM Cash
December 22, 2006. MediciNova (Nasdaq: MNOV) is developing eight unique, differentiated small molecules for 10 different therapeutic indications. Its therapeutics offer significant potential improvements over current standards of care for a variety of diseases and conditions. Its development programs include therapeutic drug candidates for treatment of asthma, multiple sclerosis, cancer and incontinence. To date the Company has capitalized on the relationships and efforts of its management to acquire most of its product candidates from Japanese pharmaceutical companies, a practice that management believes gives MediciNova an advantage over other specialty drug development companies in the U.S. market. Most of these programs are in advanced clinical testing. At $143 million market cap, it has been well-financed from its start, with $117 million in cash and marketable securities on September 30. MediciNova has numerous near-term potential drivers of its value, and many of these represent opportunities for the Company to ink licensing or partnership deals to promote the further development of a therapeutic program. Another driver of value could be MediciNova's recent listing on the Nasdaq. Shares also trade on the Osaka Securities Exchange in Japan.
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MorphoSys AG XETRA: MOR.DE $69.29
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Change)
Price Target: $71.00
By: Stephen L. Handley
MorphoSys AG Speculative Buy Rating After Share Price Rise; A Leader In The Development Of Human Antibodies
December 15, 2006. MorphoSys AG (XETRA: MOR), headquartered in Munich Germany, is a leader in the development of human antibodies, and during Q3 2007, generated 37% of its revenues from North America. Its technology -- known as HuCAL® (Human Combinatorial Antibody Library) -- facilitates the rapid and automated production of specific human antibodies, and is gaining increased recognition by the pharmaceutical industry as an attractive and often preferred method for generating antibodies used in therapeutics. Company management is continuing, and even accelerating, strategic steps to establish the framework for multiple sources of future earnings. Most important will be royalties flowing from commercialization of compounds now progressing through development. Although the pattern of quarterly EPS is likely to remain uneven and difficult to predict near term, we believe investors should focus primarily on the Company's fundamental, underlying momentum, which is positioning it to become, in time, a highly profitable, fast growing company. In short, we judge that MorphoSys' long-term growth prospects are excellent. We are nonetheless adjusting our rating on the stock from Strong Speculative Buy to Speculative Buy reflecting the better-than-20% price advance for the shares subsequent to our initial recommendation.
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Memry Corporation AMEX: MRY $2.60
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Memry Corporation: S.E.C. Proposal Could Reduce Sarbanes-Oxley Costs Long term; No Anticipated Effect On Fiscal 2007 Spending.
December 15, 2006. Memry Corporation (OTCBB: MRY): The Securities and Exchange Commission (S.E.C.) recently issued a number of orders and proposals aimed at lowering costs for public companies, including proposed guidelines for small companies related to Sarbanes-Oxley auditing requirements. While the details of this proposal have to be finalized, it appears to have the potential to reduce small companies' Sarbanes-Oxley costs. Memry is in the process of complying with Sarbanes-Oxley. We do not expect the S.E.C. proposal to have any effect on the Company's fiscal 2007 Sarbanes-Oxley spending. However, depending on the resolution of the S.E.C. proposal, we believe that it could result in lower regulatory and auditing costs long term. We rate Memry's shares Neutral.
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Oragenics Inc AMEX: ONI $1.10
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $3.75
By: Wayne M. Lottinville, CFA
Oragenics Calls In Warrants To Provide Needed Funding; Reiterate Speculative Buy
December 12, 2006. Oragenics, Inc. (Amex: ONI) said that it will exercise its right to accelerate the redemption of warrants associated with its December 2005 private financing round. Management estimates that the exercise of these warrants should provide, at a current monthly burn rate of $150,000, the additional funds it needs to meet its development timeline through 3Q07. Warrant holders are entitled exercise their warrants at $0.60 per share, but they must act by January 8, 2007. A total of 1.4 million shares of Oragenics' common stock is involved in this accelerated redemption call. The exercise of all would generate $840,000.
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On Track Innovations Ltd. Nasdaq: OTIV $6.43
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Buy (Reiterated)
Price Target: $12.00
By: Rafael K. Kapelinski
On-Track Innovations: Company Update; Reiterate Strong Buy
December 21, 2006. On-Track Innovations Ltd. (NasdaqGM: OTIV): We reiterate our Strong Buy rating and price target of $12.00 on OTI following our meeting with the Company today. We will publish a comprehensive update over the next few days.
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Pluristem Life Systems Inc OTCBB: PLRS $0.02
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $0.06
By: William R. Prather, RPh, MD
Pluristem Life Sciences Speculative Buy Rating In Update Coverage; Invited To Present Data At The American Society of Hematology (ASH) on December 10, 2006
December 11, 2006. Pluristem's (OTCBB: PLRS) PluriX™ technology has the potential to enable umbilical cord blood to become an alternative to bone marrow transplant (BMT), eliminating the current BMT search and match process. Since we initiated coverage on the Company in September 2006, we believe Pluristem has made significant strides with its technology, documented, in part, by the fact that they were invited to present data at the American Society of Hematology (ASH) on December 10, 2006, in Orlando, Florida. We also believe the Company is negotiating collaborations with other companies and scientific entities for using PLX cells in addressing a variety of ailments such as stroke and limb ischemia (lack of blood supply). This is because the stem cells expanded in Pluristem's PluriX reactor are multipotent and potentially able to differentiate into a variety of other cells, tissues and organs. Additionally, we believe these cells are also immune-privileged. We believe that at Pluristem's current market value of approximately $3.8 million, speculative, risk-tolerant, patient investors could potentially see a significant upside relative to a downside of losing their entire investment. We believe this is true despite the fact that Pluristem will need to raise additional capital in the spring of 2007. One only need examine comparable companies such as Osiris Therapeutics, Inc. (NASDAQ:OSRI) and ViaCell (NASDAQ:VIAC), which have an average value of approximately $375 million, to see the potential upside for Pluristem.
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Pipeline Data Inc. OTCBB: PPDA $1.30
Research Report
Industry: Computers, Technology & Internet
Rating: Strong Buy (Reiterated)
Price Target: $2.00
By: David Riedel
Pipeline Data Rating Maintained At Strong Buy; Spent Three Years Building Itself Into A Significant Player In Credit Card Transaction Processing.
December 13, 2006. Pipeline Data (OTCBB: PPDA) is a financial services company specializing in providing systems and services for the credit card transaction processing industry in both traditional card-present transactions and in card-not-present transactions. Pipeline Data has spent the past three years building to make itself into a significant player in credit card transaction processing. Counting recently announced and intended acquisitions; the Company's portfolio includes 40,000 merchant accounts. In the quarter ended September 30, 2006, the gross profit margin increased by 171% and EBITDA for the same period grew by 106%. Net profit of $(304,708) was impacted by non-cash and one-time expenses. Based on the valuation for similar payment processing companies, we estimate fair value for the shares at $2.00 (19x 2007 estimated EPS). This would be a 40% increase from the current share price, which supports our Strong Buy rating.
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Patriot Scientific Corp. OTCBB: PTSC $0.60
Research Note
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.12
By: Richard W. West, CFA
Patriot Scientific Announces First European Licensee;Reiterate Strong Speculative Buy
December 19, 2006. Patriot Scientific Corporation (OTCBB:PTSC) announced that Schneider Electric purchased a license that gives it the right to use technologies protected by the Moore Microprocessor Patent™ (MMP) Portfolio. The license is the third new license in the past month and the twelfth licensee to purchase MMP Portfolio licenses during 2006. We maintain a Strong Speculative Buy Rating.
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Patriot Scientific Corp. OTCBB: PTSC $0.60
Research Note
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.12
By: Richard W. West, CFA
Patriot Scientific Announces Additional Licensee;Stock Under Year-End Tax-Selling Pressure
December 12, 2006. Patriot Scientific Corporation (OTCBB:PTSC) announced today that Lexmark Inc. (NYSE: LXK-$74.16) purchased a license that gives it the right to use technologies protected by the Moore Microprocessor Patent. The Lexmark license is the second license announced in the past 15 days. Stock appears to be stalled by year-end tax selling. We are increasing our rating to a Strong Speculative Buy, while maintaining our 12-month price target of $1.12
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Provectus Pharmaceuticals Inc OTCBB: PVCT $1.19
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $3.90
By: Wayne M. Lottinville, CFA
Provectus Expands Patent Protection to Europe and Taiwan; Reiterate Strong Speculative Buy
December 14, 2006. Provectus Pharmaceuticals, Inc. (OTCBB: PVCT), has obtained patents from the European Patent Office and the Intellectual Property Office of Taiwan on its flagship products, Provecta™ and Xantryl™, which are formulations of its lead drug compound, Rose Bengal. The pending patents cover certain formulations and medical uses of the drug that the Company is developing to treat cancer, acute psoriasis, and other chronic skin diseases.
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SES Solar Inc. OTCBB: SESI $0.88
Research Report
Industry: Industrial & Manufacturing
Rating: Speculative Buy (Reiterated)
Price Target: $2.10
By: Sally H. Wallick, CFA
SES Solar Speculative Buy Rating In Update Coverage; Well Positioned To Benefit From Soaring Demand For Solar Energy In Europe And Worldwide
December 13, 2006. SES Solar (OTCBB: SESI) was formed as a result of a September 2006 merger between SES and Societe d'Energie Solaire, a Swiss-based company that researches, develops, produces and installs solar energy (photovoltaic or PV) products, including PV modules and roof tiles, with a special emphasis on high-quality products that can be architecturally integrated into new or existing structures. We believe that SES is well positioned to benefit from soaring demand for solar energy in Europe and worldwide and that its prospects will be enhanced further when it consolidates production in a new plant in Geneva Canton, Switzerland in late 2007. This facility will be fully automated and incorporate innovative manufacturing techniques, resulting in lower labor costs, higher quality electrical contacts, greater operating efficiencies and higher production volumes. In the next 9-12 months, we project that SES's revenue will be modest. Given this scenario, in the near-term, we believe that SES's share price may be driven in part by the completion of Company-specific milestones, including the successful raising of additional capital (it recently took a step in that direction with the announcement of a $3.7-million private placement), progress on construction of the new plant, the production of new-product prototypes, the signing of PV module sales agreements with one or more leading PV cell manufacturers, and sales volumes of SES solar tiles.
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Shumate Industries, Inc. OTCBB: SHMT $1.41
Research Report
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $3.00
By: Richard R. Wolfe, CFA
Shumate Industries Strong Speculative Buy Rating In Update Coverage; Estimates Indicate A 10-Fold Cash-Flow Increase Over The Next Three Years
December 21, 2006. Shumate Industries (OTCBB: SHMT) is an oilfield equipment and services company with a stable business base in machining operations and a high-potential, proprietary new technology for valve manufacturing now being commercialized. Our estimates indicate a 10-fold cash-flow increase over the next three years if the new valve technology achieves expected levels of market penetration in targeted flow-control/replaceable-cartridge installations and still faster growth if recently announced initiatives succeed in opening up subsea, downhole and other high-end applications. Since our previous update report (September 18, 2006), the Company's machining operations have continued to benefit from very high levels of drilling activity in the oil and gas industry, making it possible to raise prices and pushing cash flow ahead of our estimates. We maintain our Strong Speculative Buy rating. As is always the case with a new-product startup, there is a speculative element to the valve technology, including a risk of non-acceptance.
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Sunwin International Neutraceuticals, Inc. OTCBB: SUWN $0.67
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $1.10
By: Stanley Ng
Sunwin Stevia International Applauds World Health Organization Findings on Stevia with Evidence Showing Stevia Affects Patients With Hypertension and Type 2 Diabetes; Rating Reduced to Speculative Buy
December 21, 2006. Sunwin International Neutraceutical, Inc. (SUWN.OB) is pleased with the World Health Organization's findings on Stevia which shows Stevia affects patients with hypertension and type 2 diabetes. The news should have a long-term positive impact on the Sunwin's natural sweetener business, especially since the Company is currently promoting its Only Sweet TM line of products as a food supplement in the huge North American market. However, after reviewing the disappointing results for the six months ended October 31, 2006, we have significantly cut our revenue and net income forecasts for FY2007 and FY2008. Our revised 12-month target price is $1.10 and our rating on the stock has been changed to Speculative Buy.
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Seawright Holdings, Inc. OTCBB: SWRI $0.48
Research Report
Industry: Food Manufacturing & Products
Rating: Speculative Buy (Initial)
Price Target: $1.00
By: Jonathan H. Ziegler, CFA
Seawright Holdings Rating Speculative Buy In Initiating Coverage; Water Has Become One Of The Biggest Businesses At A Global Level
December 13, 2006. Seawright Holdings (OTCBB: SWRI) was formed in October 1999, and in October 2003 purchased a 145-acre property containing a spring located in Mt. Sidney, Virginia, for $1 million. The property -southwest of Washington Dulles Airport in the Shenandoah Valley - has a natural flow of spring water in excess of 1,000,000 gallons of water daily up from a depth of 1,000 feet. The Company's strategy is to sell natural spring water under the "Seawright Springs" label while aggressively pursuing the bulk sale of natural spring water produced on the Mt. Sidney property. Management's plans are to build a spring water distribution business through the three vehicles discussed in the report. Seawright has finished installing an updated bulk water loading facility at the Mt. Sidney spring site as of November 2006. Now this is completed, private labeled bottlers will be able to load water at Seawright's spring site and transport it to their bottling and packaging facilities. We believe the shares, currently trading at $0.51 per share, are inexpensive, but are very speculative and high risk. Investors should note that the Company is in a start-up mode, and consequently, our projections should be used as a guide because there has been no operating history. On that premise, we initiate coverage with a Speculative Buy rating with a price objective of $1.00 per share over the next 18 months.
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21st Century Holding Co Nasdaq: TCHC $23.42
Research Report
Industry: Banks, Financial Services & Insurance
Rating: Strong Buy (Reiterated)
Price Target: $35.00
By: Richard W. West, CFA
21st Century Strong Buy Rating Maintained; Price Target $35 and Quarterly Dividend Increased 50% to $.18
December 11, 2006. 21st Century Holding Company (Nasdaq: TCHC) reported a strong third quarter in FY2006. Total revenue, net income, and earnings per share all increased. These increases translate into the highest shareholders' equity in the history of the Company. All these increases came about even with a large increase in gross premiums ceded (reinsurance premiums) to $57.3 million from $7.2 million in the third quarter of FY2005. Until the hurricane-racked year of 2004, 21st Century had a history of solid growth in revenue, net premiums earned and net income for the previous five years. Even though Florida was struck by three hurricanes in 2005, Dennis, Katrina, and Wilma, 21st Century reported moderately strong results for FY2005. For FY 2006, we are forecasting revenue of $110.5 million up from $94.7 million, and increasing to $134.3 million in FY 2007. Diluted EPS in FY 2006 are expected to be $3.05, up from $1,83 in FY 2005, and increasing to $4,26 in FY 2007. Quarterly per share dividends were raised 50% to $.18 on December 5, 2006 providing a 2.8% yield.
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Top Image Systems Ltd Nasdaq: TISA $3.84
Research Note
Industry: Software
Rating: Buy (Reiterated)
Price Target: $5.00
By: Rafael K. Kapelinski
Top Image Systems: Company Update; Reiterate Buy Rating and Price Target of $5.00.
December 21, 2006. Top Image Systems (NasdaqCM: TISA): We reiterate our Buy Rating and price target of $5.00 on Top Image Systems after a meeting with the Company in Israel today.
In our view, TISA is increasingly well positioned as a leading vendor of software capture solutions, especially after the recent release of the new generation of the Company's eFlow flagship platform. The Company continues to see good traction in both Europe and Japan, in particular since the acquisition of Captiva Software by EMC, which has created a market vacuum. As a result, in spite of the fact that 4Q in Japan is seasonally the weakest quarter, we believe that the Company is on track to meet our 4Q 2006E estimates.
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Top Image Systems Ltd Nasdaq: TISA $3.84
Research Report
Industry: Software
Rating: Buy (Reiterated)
Price Target: $5.00
By: Rafael K. Kapelinski
Top Image Systems Buy Rating And Increased Target Price; Consolidating Position As A Leading Content Capture Player; Particular Strength in High-potential Unstructured Content Capture market.
December 11, 2006. We reiterate our Buy rating and upgrade our price target from US$4.00 to US$5.00 following strong 3Q 2006 results for Top Image Systems (Nasdaq: TISA). In the near future, we believe that the upcoming release of eFLOW 4 should consolidate the Company's position as one of the leading content capture players with a particular strength in the high-potential unstructured content capture market. The Company's management has delivered on all the promises: Top Image's profitability continues to improve with an operating margin reaching 3.3% in the seasonally weaker 3Q 2006 and the balance sheet is sufficiently strong to support the planned acquisitions. In our view, the current valuation remains very attractive (29.7x 2007E EPS and 2.2x 2007E revenues). Our price target of $5.00 implies 2.2x 2007E sales. TISA revenues and EPS for 2007 are forecast at US$23.3 million and US$.15 respectively.
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Telkonet Inc AMEX: TKO $2.78
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $5.00
By: Richard W. West, CFA
Telkonet, Inc. Announces Pending Deployment of its iWire System At Major Airports Beginning in January 2007:Strong Speculative Buy Rating Reiterated and raising price target to $5.00 per share.
December 26, 2006. Telkonet, Inc. (AMEX:TKO) announced on December 26, 2006, an agreement with Department of Homeland Security's Transportation Security Administration (TSA), in collaboration with the U.S. Army Information Systems Engineering Command Technology Integration Centerthe pending the deployment of its iWire System in major airports.
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Telkonet Inc AMEX: TKO $2.78
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $5.00
By: Richard W. West, CFA
Telkonet, Inc. Installs iWire Systems at Four Utilities;Negotiating with Ten Other Utilities;Strong Speculative Buy Rating Reiterated
December 20, 2006. Telkonet, Inc. (AMEX:TKO) announced on December 18, 2006, that it had installed its Telkonet iWire System at substations owned by four major U.S. public utilities, and is in active negotiations with 10 additional utilities. We reiterate our Strong Speculative Buy Rating and our price target of $4.00 per share.
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Telkonet Inc AMEX: TKO $2.78
Research Report
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $5.00
By: Richard W. West, CFA
Correction:Telkonet Maintained At Strong Speculative Buy Rating; Quarterly Results Give Hint of Progress
December 14, 2006. Since our Update Research Report, dated June 9, 2006, there have been several defining events that will impact Telkonet Inc.'s (AMEX: TKO) revenue and earnings in the coming quarters and years. These events discussed in the report include that Telkonet i) announced, that NuVisions began Internet Protocol Television (IPTV) trials in New York City, the first offering of IPTV in New York City, ii) announced that its reseller, Hotel Internet Services, installed a Telkonet iWire System™ on the Queen Mary, iii) announced the sale of its iWire System™ to a major U.S. utility, by its new division, Telkonet Energy Services, and iii) announced that its subsidiary MST's NuVisions (MST/NuVisions) brand of services has added several Trump properties to its growing list of residential customers in New York City. The potential for a significant increase in revenue and earnings for Telkonet in the coming quarters and years from any one of these areas appears to be great. We believe investors should not be deterred by the reported results for the third quarter and nine months, wherein the revenue and margins give only a hint of progress toward the necessary revenue mass for possible positive cash flow. We maintain our Strong Speculative Buy Rating and reaffirm our $4.00 per-share price target.
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Telanetix, Inc. OTCBB: TNXI $1.47
Research Note
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Joe Noel
Telanetix On Track for December Quarter
December 12, 2006. Telatetix, Inc (OTC:TNXI.OB) Our confidence level in our estimate for the December quarter of $753,000 in revenue remains high as it appears Telanetix, Inc. continues to penetrate the high end video conferencing market. We are expecting the quarterly loss to narrow considerably. We reiterate our Strong Speculative Buy rating on these shares.
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Wave Systems Corp. Nasdaq: WAVX $2.53
Research Report
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated)
Price Target: $4.50
By: David P. Soetebier, CFA
Wave Systems Strong Speculative Buy Rating Reiterated In Update Coverage; Believe All PCs Will Ne Trusted Computers
December 14, 2006. Wave Systems (Nasdaq: WAVX) is a leading provider of "trusted computing" solutions. "Trusted" computers use a combination of hardware (Trusted Platform Modules or TPMs) and software to reduce or eliminate the possibility of the software installed on a personal computer being corrupted, and to verify that the user on a PC is the designated user of the machine. Because the rate of adoption of this technology is unknown, we believe it is difficult to develop an accurate earnings forecast. However, in 2005 and continuing through 2006, Wave has made significant progress in releasing new products and in solidifying relations with key OEMs such as Dell, Intel and Seagate that should drive sales. We believe the Company addresses a large market opportunity, and at some point all PCs will be Trusted computers. Consequently, for those investors willing to consider an investment that offers the potential for significant appreciation, keeping in mind the risk that the Company is effectively out of business if its products are not widely adopted (i.e., it is not cash flow positive), we believe Wave offers strong speculative appeal. Consequently, the shares are rated a Strong Speculative Buy with a 12-month target price of $4.50.
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Wits Basin Precious Minerals Inc. OTCBB: WITM $0.34
Research Report
Industry: Metals & Mining
Rating: Speculative Buy (Reiterated)
Price Target: $1.50
By: Mike Niehuser
Wits Basin Precious Minerals Speculative Buy Rating Maintained; Three Projects In Development And Currently In The Process Of Exploring A Merger
December 22, 2006. Wits Basin Precious Minerals (OTCBB: WITM) has three projects located in historically productive regions: Colorado, Mexico, and South Africa. The Company has consolidated land positions and has established unique intellectual talent and experience with all three projects. We believe each one of the projects has the potential to become a multi-million-ounce deposit attractive to major operators. All three projects have a precious metal focus, one with potential base metal credits available to offset production costs. The Bates-Hunter Mine and Vianey Mine projects are permitted and located in political environments amenable to mining, with the potential of moving into production within the next 12 months. The FSC Project, located in South Africa, has the potential to become a major goldfield. Wits Basin is currently in the process of exploring a merger with Easyknit Enterprises Holdings Limited, incorporated in Bermuda with shares listed on the Stock Exchange of Hong Kong Limited. The merger is anticipated to provide Wits Basin cash, additional liquidity for its stock, and access to additional capital markets and projects in China.
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Qiao Xing Universal Telephone, Inc. NasdaqNM: XING $13.45
Research Note
Industry: Telecommunications
Rating: Buy (Reiterated)
Price Target: $17.44
By: Stanley Ng
Qiao Xing Universal Telephone, Inc. Releases its Income Statement for 3Q and 2Q Balance Sheet data as at June 30, 2006 and Provides an Update on Acquisition; Buy Recommendation Maintains
December 23, 2006. Qiao Xing Universal Telephone, Inc. (XING) Announces Detail Income Statement and Balance Sheet Data; Provides Update on CECT Acquisition
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Information, opinions or recommendations contained in this research report or research note are submitted solely for advisory and information purposes. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Such information and the opinions expressed are subject to change without notice. This research report or note is not intended as an offering or a solicitation of an offer to buy or sell the securities mentioned or discussed. Neither the Firm, its principals, nor the assigned analysts own or trade shares of any company covered. The Firm does not accept any equity compensation. Anyone may enroll a company for research coverage, which currently costs US $39,500 prepaid for one-year. Reports are performed on behalf of the public, and are not a service to any company. The analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests and insure independence. Please read full disclosure and other reports and notes on the Company at www.DuttonAssociates.com.
The views expressed in this research report or note accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by Dutton Associates is in any way related to the specific recommendations or views contained in this research report or note.
Dutton Associates. John M. Dutton, President, 4989 Golden Foothill Parkway, Suite 4, El Dorado Hills, CA 95762 Phone (916) 941-8119, Fax (916) 941-8093
© Copyright 2006 by Dutton Associates
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