Amarillo Biosciences Inc. OTCBB: AMAR $0.85
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $1.90
By: Wayne M. Lottinville, CFA
Amarillo Biosciences Announces the Publication of Influenza Pretreatment Data; Reiterate Speculative Buy
February 13, 2007. Amarillo Biosciences, Inc. (OTCBB: AMAR), has announced that the publication of data on the use of oral interferon for influenza is now available online in Biochemical & Biophysical Research Communications. The data indicate that oral interferon is life-saving to treated mice given an otherwise fatal infection. These mice data are important because the mouse model is used by government laboratories to evaluate antivirals for testing in humans. Amarillo Biosciences is generating animal and human data in an effort to motivate government decision-makers to consider the use of oral interferon in the management of pandemic influenza.
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Amarillo Biosciences Inc. OTCBB: AMAR $0.85
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $1.90
By: Wayne M. Lottinville, CFA
Amarillo Biosciences Enrolls Patients In HIV Warts Study; Reiterate Speculative Buy
February 8, 2007. Amarillo Biosciences, Inc. (OTCBB: AMAR), reports that patients are now being enrolled in its Phase 2 study testing low-dose interferon-alpha lozenges administered orally to HIV-positive subjects with oral warts. Two previous studies demonstrated the ability of interferon-alpha lozenges to reduce oral-wart load in HIV-positive patients. Eighty patients will undergo treatment for 24 weeks at six clinical sites. The FDA has granted Orphan Drug Designation to Amarillo Biosciences for this indication.
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Ampex Corporation Nasdaq: AMPX $19.58
Research Note
Industry: Electronics & Engineering
Rating: Strong Buy (Reiterated)
Price Target: $35.00
By: Richard W. West, CFA
Ampex Corporation Announces Management Changes; Strong Buy Rating Reiterated
February 16, 2007. Ampex Corporation (NasdaqCM: AMPX) announced that it has appointed D. Gordon Strickland as its new CEO and president, replacing Edward J. Bramson. William A. Stoltzfus, Jr., has advised Ampex that he will not stand for reelection, and Ned Goldstein, Esq., has joined the Board of Directors. Ned Goldstein, Esq., a Director and President of M-CAM, Inc., has joined the Board of Directors. Ampex's Board of Directors has initiated a search for an additional director to assist in further exploiting Ampex's intellectual property. We reiterate our Strong Buy and our current price target of $35.00 per share.
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CHINA-BIOTICS, INC. OTCBB: CHBT $10.50
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $10.27
By: Stanley Ng
China Biotics, Inc. Announces Record Financial Results for 3QFY07; Reiterate Speculative Buy Rating With a View to Update our Estimates and Price Target
February 16, 2007. China Biotics, Inc. (OTCBB: CHBT.OB) announced on February 14 its financial results for the third quarter of FY2007 ended December 31, 2006. Revenue was at record level of $8.8 million, up 31.2% from $6.7 million in 3QFY06 and was $1 million above our forecast. The Company achieved a net income of $3.6 million in 3QFY07, up 23% from $2.93 million and $1 million above our estimate. We maintain our Speculative Buy rating on the stock, with a view to update our estimates and price target on the stock.
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BluePoint Energy Inc. OTCBB: CPEU $4.40
Research Report
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
BluePoint Energy Strong Speculative Buy Rating; Cusp Of National And More Importantly, Worldwide Recognition As The Go-To-Corporation To Provide Low Cost Of Capital Energy Saving Equipment
February 13, 2007. Since our last Research Report, October 24, 2006, BluePoint Energy (OTCBB: CPEU) has made major strides toward becoming a premier provider of cogeneration and distributed generation systems for commercial organizations. On December 12, 2006, BluePoint Energy announced a "master form of agreement" to provide energy conservation services for a significant number of properties owned by Starwood® Hotels & Resorts Worldwide. On December 14, 2006, BluePoint Energy announced plans to convert all its long-term debt to common stock. The conversion of $9.4 million debt, net of unamortized discount, will save interest expenses of approximately $0.011 per outstanding share, and will result in BluePoint becoming debt-free with no related interest expenses to dilute earnings. The conversion of the bonds and private warrants and options could result in an additional 66.0 million shares of common stock. Our report covers additional events, as well as our initial earnings model based on the Company's recent releases. We believe that BluePoint is on the cusp of national and more importantly, worldwide recognition as the go-to-corporation to provide low cost of capital energy saving equipment.
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Familymeds Group, Inc. OTCBB: FMRX $2.60
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $6.25
By: Jonathan H. Ziegler, CFA
Familymeds Announced Yesterday A Plan For Sale Of Its Business
February 16, 2007. Familymeds Group, Inc (OTCBB: FMRX) announced yesterday that its board approved an agreement with Walgreen Co. to sell a majority of the pharmacy assets for an estimated $60 million in cash plus assumption of real estate leases.
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Familymeds Group, Inc. OTCBB: FMRX $2.60
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $6.25
By: Jonathan H. Ziegler, CFA
Familymeds Announced Yesterday A Plan For Sale Of Its Business
February 16, 2007. Familymeds Group, Inc (OTCBB: FMRX) announced yesterday that its board approved an agreement with Walgreen Co. to sell a majority of the pharmacy assets for an estimated $60 million in cash plus assumption of real estate leases.
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Fushi International, Inc OTCBB: FSIN $6.85
Research Note
Industry: Industrial & Manufacturing
Rating: Strong Speculative Buy (Reiterated)
Price Target: $11.64
By: Stanley Ng
Fushi International, Inc. 2006 Results Preview and Earnings Update for 2007 and 2008; Reiterate Strong Speculative Buy Rating
February 8, 2007. Fushi International, Inc. (FSIN.OB) is expected to announce its full year results for the twelve months ended December 31, 2006 in March. We expect the Company to announce full year net profit of $16.5 million or a diluted EPS of $0.78 for the fiscal year 2006. We believe the fundamentals of Fushi have improved significantly after the recent $60 million debt financing from Citadel, with more visible growth prospects driven by capacity expansion and increase in sales volume. Consequently, we are significantly revising our assumptions for our earnings estimates for both fiscal year 2007 and 2008 from $1.09 and $1.35, respectively, to $1.06 and $1.49, respectively. We reiterate our Strong Speculative Buy recommendation and our price target of $11.64, which translates into 11 times diluted 2007 EPS.
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Green Plains Renewable Energy NasdaqNM: GPRE $21.50
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $60.00
By: Paul J. Resnik, CFA
Green Plains Renewable Energy Reports Fiscal 2006 Results; Derivative Gains and Interest Income Generate Profit; Strong Speculative Buy Reiterated
February 14, 2007. Green Plains Renewable Energy (NasdaqCM: GPRE) reported November 2006 fiscal year results today. The Company posted net income of $918,120. Operating expenses of $2,150, 986 were more than offset by interest income of $1,791,989 and gains on derivative financial instruments related to corn futures of $1,600,396. Earnings per share, based on the average weighted fully diluted shares outstanding of 4,904,545 (current shares outstanding are 6,002,736), was $0.19. Our 2007 and 2008 estimates are under review and we will make adjustments to reflect the positive adjustment in our estimate for the Shenandoah plant start-up (now 3Q 2007, was 4Q 2007) and fluctuations in commodity prices in our next Update report early in March. We continue to rate Green Plains shares a Strong Speculative Buy.
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HydroGen Corp OTCBB: HYDG $4.20
Research Note
Industry: Oil, Gas & Energy
Rating: Speculative Buy (Reiterated)
Price Target: $8.25
By: Sally H. Wallick, CFA
Hydrogen Corp. (OTCBB: HYDG) Makes Progress on Demonstration Facilities; Speculative Buy Reiterated.
February 15, 2007. Hydrogen Corp. (OTCBB: HYDG) announced the mechanical completion of its 400 kilowatt phosphoric acid fuel cell module demonstration and acceptance test facility and initiation of pre-commissioning activities. The test facility will be used for demonstration and acceptance testing of 400 kilowatt fuel cell modules manufactured in HydroGen's Versailles, Pennsylvania plant. We believe that this is a major technical achievement for HydroGen and an important milestone in the Company's progress towards successful commercialization of its hydrogen fuel cell technology. During the balance of 2007, we will be looking for the completion of certain operation and financial milestones as evidence that HydroGen is successfully executing its business plan, including: 1. Completion of a 400 kilowatt commercial demonstration power plant now under construction in Ashtabula, Ohio; 2. Receipt of significant orders for the Company's hydrogen fuel cell systems; and 3. Negotiation of one or more financial partnerships that will allow HydroGen the flexibility to offer potential customers a broader array of financing options for acquiring HydroGen fuel cell systems, including operating leases. We reiterate our Speculative Buy rating on HydroGen's shares.
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LJ International Inc. NasdaqNM: JADE $9.26
Research Note
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated)
Price Target: $9.00
By: Sally H. Wallick, CFA
LJ International: Management Announces Accelerated Retail Expansion; Raises 2006 Guidance; Speculative Buy Rating Reiterated.
February 15, 2007. LJ International Inc. (NasdaqGM: JADE) announced a more aggressive 2007 store opening program for its retail jewelry chain, ENZO. The Company now plans to have 100 ENZO stores open by December 31, 2007, up from a target of 80 ENZO stores previously. At the end of 2006, there were 42 ENZO stores open in Mainland China, Hong Kong and Macau. Therefore, based on the new target, LJI plans to open 58 stores in 2007 and to increase its store count by 138%. LJI also announced sharply higher revenue and earnings guidance for fourth quarter and full year 2006. It now projects fourth quarter revenue of $40 million, up 27% from $31.6 million a year earlier, and diluted earnings per share of $0.16, up from $0.09 in the fourth quarter of 2005. For the full year, its revised estimates are revenue of $123 million, up 30% year over year, and diluted earnings of $0.34 up from $0.24 in 2005. This guidance is well ahead of our estimates, which called for fourth quarter revenue and diluted earnings per share of $37 million and $0.11 per share, at the high end of management's previous guidance. Management also noted that, given ENZO's strong performance, it expects LJI to achieve record revenue and profit in 2007.
In light of LJI's much better-than-projected 2006 results and the Company's plans to accelerate its retail expansion, we will review our 2007 earnings per share estimate and most likely raise it. However, we have not had an opportunity to discuss this morning's announcements with LJI and will postpone finalizing a new estimate until we do. Therefore, the 2007 estimate in this note's header does not necessarily reflect our current thinking and is subject to change. We reiterate our Speculative Buy rating on LJI's shares.
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LJ International Inc. NasdaqNM: JADE $9.26
Research Note
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated)
Price Target: $9.00
By: Sally H. Wallick, CFA
LJ International: LORENZO Piece Featured in Grammy Gift Bags
February 10, 2007. LJ International Inc.'s (NasdaqGM: JADE) green amethyst neck piece, designed by the Company's chief designer, Omar Torres, for their LORENZO brand, will be included in the gift bags and backstage lounge at the 2007 Grammy awards. The LORENZO-branded piece, as well as the entire LORENZO collection, is available at more than 700 LORENZO-authorized retail jewelers throughout the U.S. We believe that this product placement is noteworthy for LJI because: 1. Jewelry is a fashion business for which unique and distinctive design is one of the key drivers of sales. We believe that the choice of a LORENZO piece for inclusion in the Grammy gift bags is a validation of the high quality of LORENZO's designs and craftsmanship. 2. It is an opportunity for LJI to significantly raise the profile of its LORENZO brand, including with music industry celebrities who often are fashion trend setters. We rate LJI shares Strong Speculative Buy.
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Joystar Inc. OTCBB: JYSR $1.01
Research Note
Industry: Leisure & Entertainment
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.50
By: Richard W. West, CFA
Joystar, Inc. Announces Travel Bookings Exceed $140.0 Million;Strong Speculative Buy Reiterated
February 1, 2007. Joystar, Inc. (OTCBB:JYSR), a host-based leisure travel agency network and seller of complex cruises, announced February 1, 2007, that their travel bookings have surpassed $140.0 million on an annualized basis. Increases in the leisure group travel segment and growth of travel agency networks are factors for this growth. We reiterate our rating of Strong Speculative Buy.
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Lime Energy Co. OTCBB: LMEC $0.97
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.00
By: Richard W. West, CFA
Lime Energy Announces Rights Offer Ruled Effective by SEC; Unique Buying Opportunity
February 16, 2007. Lime Energy Co. (OTCBB:LMEC) announced on February 16, 2007, that its rights offer for "outside" stockholders to purchase shares of common stock at the same price per share paid by Company management, certain members of the board of directors, and former Series E Preferred Shareholders in the $17.875 million PIPE that was completed last June, was ruled effective by the SEC on February 15, 2007. Investors not presently stockholders of Lime Energy, to be able to participate in this rights offering, new shares must be purchased by Tuesday, February. We reiterate our Strong Speculative Buy Rating and our 12-month price target of $2.00 per share.
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Lime Energy Co. OTCBB: LMEC $0.97
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.00
By: Richard W. West, CFA
Lime Energy Co. Announces New Board Member;Strong Speculative Buy Rating Reiterated
February 1, 2007. Lime Energy Co. (OTCBB:LMEC) announced on February 1, 2007, that former California Energy Commission (CEC) Chairman, Joseph F. Desmond, has joined their Board of Directors. Mr. Desmond served in Governor Schwarzenegger's administration from 2004 to 2006 as both CEC Chairman and Under Secretary for Energy Affairs in the California Resources Agency, advising the governor and directing the state's efforts on energy and environmental policy matters, including alternative and renewable energy. An anticipated net result of this partnership with Lime Energy could be a reduction in the strain on the electrical grid and a reduction of harmful emissions from unnecessary electricity production.
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Lantronix, Inc. Nasdaq: LTRX $1.69
Research Note
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.50
By: David P. Soetebier, CFA
Lantronix FY Q2 Revenues Exceeded our Estimate; Guidance for Year Maintained
February 12, 2007. Lantronix, Inc. (NasdaqCM: LTRX), a leader in device networking and data center management technologies, reported net revenues of $14.8 million for its fiscal second quarter ended December 31, 2006, up 15% year over year (YoY). This was the Company's highest quarterly revenue in five years and exceeded our estimate. Device Enablement sales grew 21% YoY and Device Management sales grew 30% YoY. Management maintained its fiscal 2007 (June) guidance of sales reaching $58 to $60 million and profitability from operations in the third or fourth fiscal quarter. Our rating is Strong Speculative Buy with a 12-month target of $2.50.
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Lantronix, Inc. Nasdaq: LTRX $1.69
Research Note
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.50
By: David P. Soetebier, CFA
Lantronix, Inc., A Leader In M2M Technology, Has Announced A New Category of Device Server Under $20
February 1, 2007. Lantronix, Inc. (NasdaqCM: LTRX), a leader in M2M technology, has announced a new category of device server under $20. The new "XPort Direct" embedded device gateway is a new category of device server that serves as a complete, miniaturized communications subsystem. By getting the cost down to $20 the new product expands the market to new high-volume, cost-sensitive applications. We believe investors have failed to value the company relative to its growth potential. Consequently, we consider the shares undervalued at the recent price of $1.83. Our rating is Strong Speculative Buy with a 12-month target of $2.50.
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MortgageBrokers.com Holdings OTCBB: MBKR $0.91
Research Note
Industry: Banks, Financial Services & Insurance
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.50
By: Richard W. West, CFA
MortgageBrokers.com Nominated For Two CMP Canadian Mortgage Awards; Strong Speculative Buy Rating Reiterated
February 14, 2007. MortgageBrokers.com (OTCBB: MBKR ) announced it has been nominated in two categories for the upcoming 2007 CMP Canadian Mortgage Awards; The MGIC Company Award for Best Internet Presence and The AIG United Guaranty Award for Best Newcomer (Mortgage Brokerage Company). We reiterate our Strong Speculative Buy Rating and price target of $1.50.
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MortgageBrokers.com Holdings OTCBB: MBKR $0.91
Research Note
Industry: Banks, Financial Services & Insurance
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.50
By: Richard W. West, CFA
MortgageBrokers.com Highlights Unique Retirement Plan To Be Administrated by Manulife Financial;
Strong Speculative Buy Rating Reiterated
February 13, 2007. MortgageBrokers.com Holdings (OTCBB: MBKR ) announced the selection of Manulife Financial as the new administrator of the Retirement Savings Program for RE/MAX Real Estate Agents. MortgageBrokers.com's unique retirement plan is meant to attract and retain referring real estate agents. The retirement plan is another incentive to join MortgageBrokers.com's network. We reiterate our Strong Speculative Buy Rating and price target of $1.50.
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Medivation, Inc. AMEX: MDV $17.29
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $22.00
By: Wayne M. Lottinville, CFA
Medivation To Present Preclinical Prostate Cancer Efficacy Data; Reiterate Strong Speculative Buy
February 16, 2007. Medivation, Inc. (Amex: MDV) will present preclinical efficacy data on MDV3100 this month at the Prostate Cancer Symposium. MDV3100 was rationally designed to treat hormone-refractory prostate cancer by inhibiting the androgen receptor differently from currently approved androgen-receptor antagonist drugs, which are ineffective in treating prostate cancers that have become hormone-refractory. Based in part on encouraging preclinical efficacy data, Medivation plans to begin a Phase 1-2a trial of MDV3100 in patients with hormone-refractory prostate cancer in the first half of this year.
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Medivation, Inc. AMEX: MDV $17.29
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $22.00
By: Wayne M. Lottinville, CFA
Medivation to Present Clinical Results At Investor Conference; Reiterate Strong Speculative Buy
February 5, 2007. Medivation, Inc. (Amex: MDV), announced that its CEO will present an overview of the Company and its clinical development programs for Dimebon™ for Alzheimer's and Huntington's diseases and MDV3100 for prostate cancer at an investor conference February 12 in New York City. Medivation reported top-line results from its Phase 2 efficacy study of Dimebon in Alzheimer's disease in September 2006, demonstrating that Dimebon met all five efficacy endpoints with strong statistical significance compared with placebo. Dimebon-treated patients also showed statistically significant improvement over baseline on all five efficacy endpoints. That is, patients at the end of the study were actually better off than when they started.
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MediciNova, Inc. NasdaqGM: MNOV $12.00
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $20.00
By: Wayne M. Lottinville, CFA
MediciNova Reports 2006 Financial Results; Reiterate Strong Speculative Buy
February 15, 2007. MediciNova, Inc. (Nasdaq: MNOV), recently announced a loss of $3.52 per share for 2006 compared with a loss of $2.88 per share in the prior year. The increased loss was attributed, in part, to increased R&D expenses of $32.2 million in 2006, up from $22.7 million in 2005, reflecting the advance of multiple clinical trials. G&A expenses also increased from $7.5 million in 2005 to $9.6 million in 2006 due to stock-based compensation and an increase in legal and accounting fees. Cash and cash equivalents at the end of the year were $104 million. However, MediciNova recently completed an offering of 1 million shares, netting the company $10.5 million.
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MediciNova, Inc. NasdaqGM: MNOV $12.00
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $20.00
By: Wayne M. Lottinville, CFA
MediciNova To Report Financial Results And Clinical Progress; Reiterate Strong Speculative Buy
February 9, 2007. MediciNova, Inc. (Nasdaq: MNOV), will report fourth quarter and year-end 2006 financial results on Thursday, February 15, after the close of U.S. financial markets. In December we projected that the Company, with its aggressive research program to develop eight drug candidates for ten therapeutic indications, would lose $37 million in 2006, or $2.08 per share. At the end of MediciNova's September quarter, the Company had $117 million in cash, equivalents, and readily marketable securities, and planned to raise another $100 million.
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Memry Corporation AMEX: MRY $1.96
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Memry Corporation: 10-Q Highlights Include Strong Cash Flow and litigation Update; Neutral Rating Reiterated.
February 14, 2007. Memry Corporation (AMEX: MRY): Highlights of Memry's second quarter fiscal 2006 10-Q include details on the Company's strong first-half cash flow and an update on the lawsuit filed by Kentucky Oil against Memry and Schlumberger. During the first half of fiscal 2007, Memry's operations generated cash, net of capital expenditures, of $2.1 million, up from approximately $900,000 in the same period of the prior year. With regard to the lawsuit, Memry believes that Kentucky Oil's claims are without merit. However, one near-term effect of this litigation has been sharply higher legal fees. In the first half of fiscal 2007, the Company booked incremental professional fees, including excess litigation fees and professional fees related to the implementation of Sarbanes-Oxley requirements, of nearly $600,000. We rate Memry's shares Neutral.
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Memry Corporation AMEX: MRY $1.96
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Memry Corporation Reports 2Q Loss; Estimate Cut; Neutral Rating Reiterated.
February 10, 2007. Memry Corporation (AMEX: MRY) reported a 1.1% decline in second quarter fiscal 2007 revenue to $12.5 million and a net loss of $280,000, or $0.01 per share, compared with a net loss of $236,000, or $0.01 per share, in the second quarter of fiscal 2006. In discussing the outlook for the balance of fiscal 2007, Memry's management cautioned that it expects the weakness in the Company's nitinol revenue and margins to continue for the rest of the fiscal year. Also, while the polymer products segment's revenue growth has been strong, investment in this segment's manufacturing growth will continue to affect near-term profitability. On a positive note, management expects new product initiatives to begin to benefit the Company late in calendar 2007 and during 2008 and looks for the polymer segment's manufacturing investments to position it for continued revenue growth beyond fiscal 2007. Taking into account Memry's second quarter results and management's guidance, we are reducing our full-year fiscal 2007 diluted earnings estimate for Memry from $0.08 per share to $0.01 per share. This compares with $0.11 per share in fiscal 2006 excluding a one-time separation charge that reduced earnings $0.02 per share. We believe that Memry's long-term prospects are bright for the reasons detailed in a Dutton Associates report dated October 26, 2006. Nevertheless, in light of the uninspiring near-term earnings outlook, we are maintaining our Neutral rating on the Company's shares.
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Memry Corporation AMEX: MRY $1.96
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Memry Corporation Plans to Report 2Q Earnings on February 8; Neutral Rating Reiterated.
February 6, 2007. Memry Corporation (AMEX: MRY) plans to report second quarter fiscal 2007 results after the stock market closes on Thursday, February 8. In conjunction with reporting first quarter results in November (including a 9% year-over-year revenue increase), Memry's management cautioned that it anticipated slower revenue growth and some margin and expense pressures during the balance of fiscal 2007. Based on this guidance, we project second quarter revenue of $12.6 million, relatively flat year over year, and breakeven diluted earnings, compared with a $0.01 per share loss last year. However, our confidence in quarterly projections for Memry is below average since management typically provides no intraquarter guidance on revenue, margin and cost trends and Memry's quarterly results can be volatile. We believe that Memry's long-term prospects are bright for the reasons detailed in a Dutton Associates report dated October 26, 2006. Nevertheless, in light of the uninspiring near-term earnings outlook, we are maintaining our Neutral rating on the Company's shares.
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National Coal Corporation Nasdaq: NCOC $4.95
Research Report
Industry: Oil, Gas & Energy
Rating: Speculative Buy (Reiterated)
Price Target: $6.35
By: Richard R. Wolfe, CFA
National Coal At Speculative Buy Rating; Our Coal Price Outlook Is Favorable Over The Medium-To-Long Term
February 7, 2007. National Coal (Nasdaq: NCOC), a Central Appalachian coal producer established in 2003, that grew rapidly during 2004 and 2005, encountered some challenges in 2006 which are likely to extend into 2007; but from a fundamental standpoint remains very well positioned for substantial growth over the medium term as an expected rebound in coal markets opens up growth opportunities for the Company. The basis for the Company's growth is a formula for rolling-up available Central Appalachian properties through a combination of effective financing strategies, farsighted management with long industry experience, and leveraging acquisition-friendly conditions in the coal industry. Geography is also an advantage. As of September 30, 2006, the Company controlled 37.4 million estimated recoverable tons of coal. In the nine months ended September 30, 2006, the Company's mines produced approximately 1,046,000 tons of coal, or about 100,000 tons per month, compared to 813,000 tons during the first nine months of 2005, an increase of nearly 30%. Our coal price outlook is favorable over the medium-to-long term. We believe that the recent inventory run-ups will not persist beyond 2007. Therefore, in our earnings and cash-flow model, we are using a coal price of $50 per ton. We provide a totally new earnings and cash flow model based on operating changes and the scale-back in 2006 second half.
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Petro Resources Corporation AMEX: PRC $3.66
Research Report
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Initial)
Price Target: $5.75
By: Richard R. Wolfe, CFA
Petro Resources Strong Speculative Buy Rating In Initiating Coverage With $5.75 Target; Assembled A Diverse Portfolio Of U.S. Oil And Gas Properties With Potential To Propel The Company
February 2, 2007. Petro Resources (AMEX: PRC) has rapidly assembled a diverse portfolio of u.s. oil and gas properties that, based on our estimates, has the potential to propel the company on a growth trajectory for years to come. Management reached agreement in principle to acquire 50% of a North Dakota (Williston Basin) operator's position in 15 oil-producing fields that are strong candidates for a secondary recovery program. We estimate that the proposed $65 million acquisition would immediately boost production by 70% and proved reserves by 170%. Factoring in estimates of secondary recoveries, the transaction represents a potential resource of over 10 million barrels. Other assets represent solid opportunities in a mix of programs ranging from the unconventional New Albany Shale play in Kentucky to shallow-water Gulf of Mexico drilling that exemplifies traditional high-potential rapid payback. Management talent is deep and long on experience running independent producers and marketing organizations in the energy sector, and the Company has made an astute decision to participate in oil and gas projects as a non-operator to minimize overhead and obtain maximum leverage from capital contributions. We expect to see cash flow turn positive during 2007. With the assets to be acquired, Petro Resources' net asset value should soar, and our valuation model indicates share values well above present trading levels for the Company's shares.
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Patriot Scientific Corp. OTCBB: PTSC $0.58
Research Note
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.12
By: Richard W. West, CFA
Patriot Scientific Announces License For Major Worldwide Networking Company; Reiterate Strong Speculative Buy Rating
February 8, 2007. Patriot Scientific Corporation (OTCBB:PTSC) announced that NEC Corporation (NasdaqGS:NIPNY - $4.95) purchased a license that gives it the right to use technologies protected by the Moore Microprocessor Patent™ Portfolio (MMP Portfolio). NEC Corporation is a world leader in the information technology and networking solutions markets; its market capitalization is approximately $9.5 billion and revenue for the trailing 12-month period was approximately $40.0 billion. Patriot Scientific diversification policy is pointed toward increasing the financial position and strength of the company and providing value to their shareholders. We reiterate our Strong Speculative Buy rating and maintain our 12-month price target of $1.12.
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Provectus Pharmaceuticals Inc OTCBB: PVCT $1.12
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $3.90
By: Wayne M. Lottinville, CFA
Provectus Nets $2.1 Million In Private Placement; Reiterate Strong Speculative Buy
February 1, 2007. Provectus Pharmaceuticals, Inc. (OTCBB: PVCT), has raised $2.4 million through the sale of 2.3 million shares of stock in a private placement. The Company paid $273,090 and issued 231,905 shares to placement agents for this transaction. Provectus had reported $6.0 million in cash and treasury notes as of the end of its September 2006 quarter. The Company has recorded $1.1 million used in operating activities in each of its last three reported quarters.
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Smart & Final NYSE: SMF $19.06
Research Note
Industry: Consumer & Retail Products
Rating: Buy (Reiterated)
Price Target: $21.00
By: Jonathan H. Ziegler, CFA
Smart & Final Announces Another New Store
February 2, 2007. Smart & Final, Inc (NYSE: SMF) announced the opening of a new store in Lodi, CA. The new store and the closure bring the total number of stores operated by the company to 254. We expect management to provide an update on its year-end conference call regarding its "strategic alternatives" initiatives.
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Seawright Holdings, Inc. OTCBB: SWRI $0.45
Research Note
Industry: Food Manufacturing & Products
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Jonathan H. Ziegler, CFA
Seawright Springs Announces Participation in the Berkeley Springs International Water Tasting Competition
February 2, 2007. Seawright Holdings, Inc. (OTCBB: SWRI) announced its participation in the Berkeley Springs International Water Tasting competition to be held on February 24th. This tasting is the largest water tasting competition in the world and is held in Berkeley Springs, West Virginia.
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Touchstone Applied Science Associates, Inc. OTCBB: TASA $6.95
Research Note
Industry: Publishing & Media
Rating: Buy (Reiterated/Update)
Price Target: $8.00
By: Sally H. Wallick, CFA
Touchstone Applied Science Associates Announces Further Delay In 10-K filing.
February 10, 2007. Touchstone Applied Science Associates (OTCBB: TASA) said that it will require additional time to file its 10-K for fiscal 2006 beyond the previously announced extension period of up to 15 days past the statutory filing deadline. Reasons cited for the delays include: (1) a more complex filing process than in the past given the June 2006 completion of the largest acquisition in the Company's history; (2) the hiring of a Chief Financial Officer and a new Controller during the year; (3) a change in accounting for accrued but unused employee vacation time, which will result in a restating of prior-year results; and (4) accounting issues related to the valuation of identifiable intangible assets acquired during fiscal 2006. As discussed in previous comments, we believe that Touchstone's long-term growth potential was enhanced by actions taken in fiscal 2006, especially the acquisition of Questar Educational Systems, Inc., and remain optimistic about the Company's long-term prospects. We rate the Company's shares Buy.
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Touchstone Applied Science Associates, Inc. OTCBB: TASA $6.95
Research Note
Industry: Publishing & Media
Rating: Buy (Reiterated/Update)
Price Target: $8.00
By: Sally H. Wallick, CFA
Touchstone Applied Science Associates, Inc. Plans Name Change To Questar Assessment, Inc.; Buy Rating Reiterated.
February 7, 2007. Touchstone Applied Science Associates, Inc. (OTCBB: TASA) plans to change its name to Questar Assessment, Inc. The change was approved by the Company's Board of Directors on January 24 and by holders of a majority of issued and outstanding voting securities on February 5.
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21st Century Holding Co Nasdaq: TCHC $19.04
Research Note
Industry: Banks, Financial Services & Insurance
Rating: Strong Buy (Reiterated)
Price Target: $35.00
By: Richard W. West, CFA
21st Century Holding Company Comments On Lack of Claims from Todays Tornados; Reaffirms Guidance of $4.50 for FY2007
February 2, 2007. 21st Century Holding Company (NasdaqNM:TCHC) announced that they have no claims reported from the tornados that hit the central part of Florida today and that they expect few, if any, to be reported in the coming days. Management indicated that this situation would not alter their guidance of $4.50 per share for the calendar year 2007. We reiterate our Strong Buy Rating.
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American Telecom Services, Inc. AMEX: TES $4.61
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $9.00
By: Joe Noel
American Telecom Services December Quarter Revenues Ahead of Forecast
February 15, 2007. American Telecom Services Inc. (AMEX: TES) reported $9.9 million in revenue for the December quarter. This represented a significant upside to our forecasted level for the quarter of $9.3 million and was approximately 120% higher than the $4.5 million reported during the September quarter.
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American Telecom Services, Inc. AMEX: TES $4.61
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $9.00
By: Joe Noel
American Telecom Services Expected to Announce Strong 2nd Fiscal Quarter on February 15; Reiterate Strong Speculative Buy Rating
February 9, 2007. American Telecom Services Inc. (AMEX: TES) announced it will report December quarter results on February 15. We are expecting the company to report a very strong December quarter, which could be viewed as an upside surprise.
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Top Image Systems Ltd Nasdaq: TISA $3.89
Research Note
Industry: Software
Rating: Buy (Reiterated)
Price Target: $5.00
By: Rafael K. Kapelinski
Top Image Systems Reports Strong 4Q 2006; Reiterate Buy Rating
February 14, 2007. Top Image Systems Ltd. (NasdaqCM: TISA)has reported a solid set of in-line 4Q 2006 results. The Company expects 2007 revenue growth of 15%, which is in line with our forecast. At this stage, we do not foresee any major changes to our 2007 estimates.
The Company will be hosting a conference call later on today. We expect the company to provide an update on the M&A initiatives. We reiterate our Buy rating and price target of USD $5.00.
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Top Image Systems Ltd Nasdaq: TISA $3.89
Research Note
Industry: Software
Rating: Buy (Reiterated)
Price Target: $5.00
By: Rafael K. Kapelinski
Top Image Systems to Report 4Q on Feb 14; Results Preview
February 12, 2007. Top Image Systems Ltd. (NasdaqCM) will report 4Q 2007 results before the market opens on Feb 14th. We expect revenues of USD $5.52 million (+5.3% over the previous quarter) and EPS of USD $0.02. We believe that the Company has been conducting due diligence on a few players in Europe and Asia, and we believe that an acquisition may be imminent. We reiterate our Buy rating and price target of USD $5.00.
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Telkonet Inc AMEX: TKO $3.04
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
Correction as to Rating: Telkonet, Inc. to Provide Its iWire System to WorldMark by Wyndham; Strong Speculative Buy Rating Reiterated
February 7, 2007. Telkonet, Inc. (AMEX:TKO), a provider of in-building broadband access over existing electrical wiring, announced February 5, 2007, that they signed a contract to provide high-speed Internet access to all self-managed WorldMark by Wyndham timeshare properties, covering over 4,000 rooms. Including this one, Telkonet has recently made three positive announcements. We reiterate our rating of Strong Speculative Buy and the recently set 12-month price target of $5.00 per share.
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Telkonet Inc AMEX: TKO $3.04
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
Telkonet and GE Energy To Co-Develop Utility Substation Automation System;Strong Speculative Buy Rating Reiterated
February 6, 2007. Telkonet, Inc. (AMEX: TKO), the leader in providing in-building broadband access over existing electrical wiring, today announced that it has signed an exclusive supply agreement with GE Energy to co-develop a product that will enable remote monitoring and management of utility substation equipment. This agreement is a key element in Telkonet's strategy of delivering solutions to both the supply and demand sectors. We reiterate the rating of Strong Speculative Buy.
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Telkonet Inc AMEX: TKO $3.04
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
Telkonet, Inc. to Provide Its iWire System to WorldMark by Wyndham; Speculative Buy Rating Reiterated
February 5, 2007. Telkonet, Inc. (AMEX:TKO), a provider of in-building broadband access over existing electrical wiring, announced February 5, 2007, that they signed a contract to provide high-speed Internet access to all self-managed WorldMark by Wyndham timeshare properties, covering over 4,000 rooms. Including this one, Telkonet has recently made three positive announcements. We reiterate our rating of Strong Speculative Buy and the recently set 12-month price target of $5.00 per share.
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Telkonet Inc AMEX: TKO $3.04
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
Telkonet, Inc. Announces Completion of 4.0 Million Share PIPE Offering; Strong Speculative Buy Rating Reiterated
February 4, 2007. Telkonet, Inc. (AMEX:TKO) announced the completion of a 4.0 million share private equity offering (PIPE) with two institutional investors for gross proceeds of $10 million. Several diverse business ventures will soon be producing major revenue and earnings, but in the meantime, Telkonet's need for capital prompted this latest $10.0 million PIPE. We reiterate our Strong Speculative Buy and the $5.00 price target.
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Telkonet Inc AMEX: TKO $3.04
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
Telkonet, Inc. Nearing Two Strategic Acquisitions; Strong Speculative Buy Rating Reiterated
February 3, 2007. Telkonet, Inc. (AMEX:TKO), a provider of in-building broadband access over existing electrical wiring, announced February 2, 2007, that they have entered into a Letter of Intent (LOI) to acquire a leading technology developer of energy management systems and into a LOI to acquire a leading US wireless hospitality company. These appear to be significant acquisitions, and we reiterate our rating of Strong Speculative Buy and the recently set 12-month price target of $5.00 per share.
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Viaspace, Incorporated OTCBB: VSPC $0.59
Research Note
Industry: Aerospace & Defense
Rating: Speculative Buy (Reiterated)
Price Target: $0.85
By: Rafael K. Kapelinski
VIASPACE Share Price Weakness Unjustified; Reiterate Speculative Buy
February 14, 2007. VIASPACE, Inc.'s (OTCBB: VSPC.OB) share price has been under pressure today on relatively large volume. We see no reasons for the weakness. Today's interview with Dr Carl Kukkonen on www.smallcapvoice.com did not bring any news that could be driving the weakness. In contrast, the Company reiterated the previous guidance, which approximates our current forecast. Our price target remains USD $0.85.
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Wave Systems Corp. Nasdaq: WAVX $2.63
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated)
Price Target: $4.50
By: David P. Soetebier, CFA
Wave Systems Introduces First Remote Administration Server For Trusted Computers
February 5, 2007. Wave Systems Corp. (NasdaqGM: WAVX) has introduced the first Remote Administration Server for Trusted Computers. The Company's EMBASSY® Remote Administration Server (ERAS) management software provides IT administrators with a way to remotely manage TPMs and trusted computing in enterprise deployments. Previously, users could not control Trusted Computers from a central server but generally had to have technicians visit each PC. We believe software sales could accelerate with this introduction. IT management will now have the capability to turn on, deploy and provide IT control for TPM-based client security from a central location significantly reducing the cost of deployment. Our price target is $4.50.
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Wits Basin Precious Minerals Inc. OTCBB: WITM $0.43
Research Note
Industry: Metals & Mining
Rating: Speculative Buy (Reiterated)
Price Target: $1.50
By: Mike Niehuser
Wits Basin Advances Merger Talks with Chinese Company
February 5, 2007. Wits Basin Precious Minerals Inc. (OTCBB: WITM) continues to advance negotiations to merge with Hong Kong based EasyKnit Enterprises Holdings Limited. As configured, shares of Wits Basin will be exchanged for three billion shares of EasyKnit which is approximately 43% of that company's issued capital. It is expected that shares of Wits Basin should respond positively to completion of the merger.
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XAAR Plc LSE: XAR $4.62
Research Note
Industry: Computers, Technology & Internet
Rating: Buy (Reiterated)
Price Target: $6.15
By: Rafael K. Kapelinski
Xaar Plc Rejects Danaher's Offer; Reiterate Buy
February 14, 2007. Xaar Plc (LSE: XAR)has annouced today that the Company has ended takeover discussions with Danaher. The Company's board viewed Danaher's offer (200 - 220 pence per share) as being too low. In our view, the offer was not attractive at all, especially as Xaar should increasingly emerge as one of the beneficiaries of the ongoing push towards digital inkjet by large imaging OEMs such as Kodak, Fuji and Agfa. We maintain our stance that the Company represents a very attractive takeover target: it holds an impressive patent portfolio and industry recognition. In our recent update, we looked at some of the more recent OEM developments and analyzed their potential implications for Xaar. Since then our stance has not changed: we reiterate our Buy rating.
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Qiao Xing Universal Telephone, Inc. NasdaqNM: XING $19.26
Research Note
Industry: Telecommunications
Rating: Strong Buy (Reiterated)
Price Target: $20.24
By: Stanley Ng
Qiao Xing Universal Reaches Agreement With Strong TV Shopping Company to Sell Popular C1000 Mobile Handsets; Reiterate Strong Buy Rating
February 14, 2007. Qiao Xing Universal Telephone, Inc. (NasdaqNM: XING) announced on February 12 that its high-end handset manufacturing arm, CEC Telecom Co., has reached an agreement to sell handsets through China Seven Star Shopping Limited, a well-known TV shopping company. We reiterate our Strong Buy rating.
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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.
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© Copyright 2006 by Dutton Associates
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