Arkados Group OTCBB: AKDS $0.38
Research Note
Industry: Electronics & Engineering
Rating: Speculative Buy (Reiterated)
Price Target: $2.00
By: Robert S. Stoklosa
Arkados Acquires ASTER Wireless
February 22, 2007. Arkados Group Inc (OTCBB: AKDS) acquired private ASTER Wireless Inc. in an all stock transaction. We think that Aster's intellectual Property is intended to enrichen Arkados' AV chip environment. We maintain our Speculative Buy rating.
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Amarillo Biosciences Inc. OTCBB: AMAR $0.97
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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Ampex Corporation Nasdaq: AMPX $17.92
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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African Platinum plc LSE: APP $1.06
Research Note
Industry: Metals & Mining
Rating: Speculative Buy (Reiterated)
Price Target: $1.20
By: Les W. Childress
African Platinum Shares Jump 40% on Buyout Offer: Rating Reduced to Neutral
February 22, 2007. African Platinum plc (LSE: APP) shares jumped 40% on a buyout offer by Impala Platinum. The estimated value of the transaction is US $584 million and represents a 71.1% increase from our initial Speculative Buy recommendation on January 11, 2005. Our rating change to Neutral is premised on our sense that no competing offer will likely be forthcoming.
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Biophan Technologies, Inc. OTCBB: BIPH $0.47
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Change)
Price Target: $1.00
By: Richard W. West, CFA
Biophan Announces New Board of Directors Member; Need for Capital Prompts Us to Lower Rating to Speculative Buy
February 21, 2007. Biophan Technologies, Inc. (OTCBB:BIPH), a developer of medical technology, announced the appointment of Peer M. Portner, PhD, FACC, FAHA, to the MYOTECH, LLC Board of Directors. Biophan and MYOTECH are co-developing MYOTECH's cardiac support system designed to treat many types of acute heart failure. Dr. Portner's experience as a developer of the first permanently implanted mechanical cardiac assist system will be an asset to Biophan.
Need for capital prompts us to lower our rating to Speculative Buy and our price target to $1.00 per share. We will review our rating in an upcoming Research Report.
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CHINA-BIOTICS, INC. OTCBB: CHBT $12.00
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 $4.20
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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Elron Electronic Industries LTD. Nasdaq: ELRN $12.81
Research Note
Industry: Electronics & Engineering
Rating: Strong Buy (Reiterated)
Price Target: $15.00
By: Barry Raeburn
Elron: ChipX Expands Presence in ASIC Semiconductor Market; Private Company Values Continue to Increase
February 21, 2007. Elron Electronic Industries, Ltd.'s (NasdaqGS: ELRN) group companies have quietly positioned themselves as emerging leaders in their respective industries. Today's announcement regarding ChipX will likely increase the value of Elron's holding significantly. Elron owns 29% of ChipX.
In our view Elron's shares should not trade at a discount to net asset value. We maintain our Strong Buy rating and 12-month price target of $15.
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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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Forgent Networks, Inc. Nasdaq: FORG $1.48
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.40
By: Richard W. West, CFA
Forgent to Release Second-Quarter Earnings and Conduct Conference Call; NetSimplicity Earnings Estimate Reduced Slightly; Strong Speculative Buy Rating Reiterated
February 21, 2007. Forgent Networks, Inc. (NasdaqGM: FORG) announced that it would release results from its 2007 fiscal second quarter for the period ending January 31, 2007, on Thursday, March 1, 2007, at 8 a.m. CT (9 a.m. ET). Forgent has scheduled a conference call that same day to discuss the quarter and the future outlook. With the positive to neutral Markman Hearing ruling, and the current relative low valuation, we reiterate our recent increased rating to Strong Speculative Buy and our raised $2.40 price target.
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Forgent Networks, Inc. Nasdaq: FORG $1.48
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.40
By: Richard W. West, CFA
Forgent Breaking News: 746 Markman Hearing Ruling Released; Rating Raised to Strong Speculative Buy
February 19, 2007. Forgent Networks, Inc. (NasdaqGM):Markman Hearing ruling filed. Initial review appears positive to neutral for Forgent. We assume litigation to proceed to trial.
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Green Plains Renewable Energy NasdaqNM: GPRE $22.04
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 $4.25
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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Internet Gold-Golden Lines Ltd Nasdaq: IGLD $13.90
Research Report
Industry: Computers, Technology & Internet
Rating: Strong Buy (Change)
Price Target: $20.00
By: Rafael K. Kapelinski
Internet Gold Upgraded To Strong Buy Rating; Price Target Raised to $20
February 23, 2007. We re-initiate coverage on Internet Gold (Nasdaq: IGLD) increasing our Buy rating to Strong Buy, and increasing our price target from USD 15.00 to USD 20.00 based on our sum-of-the-parts analysis. In our view, the valuation remains attractive given the scope for synergies following the merger with Golden Lines: Internet Gold contributes a strong management team with an excellent track record in containing expenses and a coherent vision to position the merged company as a leading telecommunications and Internet media player in Israel. Golden Lines on the other hand brings in around 220,000 active broadband subscribers, a license to enter the local telephony market along with the requisite infrastructure and tremendous cross-selling potential (the company's value-added offering such as anti-spam and anti-virus software, etc.was limited). In our report, we have taken a stab at valuing Internet Gold as a sum-of-the-parts entity. We would like to argue that this fundamental approach to valuing the Company is increasingly valid given the ongoing operating separation between smile.communications and smile.media. It is important to stress that our 2006 numbers are not retroactively adjusted. Following the acquisition, we estimate Internet Gold's shares of the Israeli ISP market and international telephony markets at approximately 34% and 37%, respectively.
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Internet Gold-Golden Lines Ltd Nasdaq: IGLD $13.90
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Buy (Change)
Price Target: $20.00
By: Rafael K. Kapelinski
Internet Gold (IGLD) Has Received Approval For Merger of 012 Golden Lines.
February 21, 2007. Internet Gold-Golden Lines Ltd. (NasdaqGM: IGLD) has received approval for the merger of 012 Golden Lines Ltd. into its wholly owned subsidiary Smile.Communications Ltd. At the same time, the company said it was also granted approval to transfer its Internet portals, e-advertising and e-commerce businesses to Internet Gold's segment Smile.Media Ltd., and its Internet access and international telephony businesses to Smile.Communications Ltd.
In our view, the last legal obstacle for the Company to separate Smile.Communications from Smile.Media has thus been overcome. Both units have been managed independently from each other for over two quarters now, and we believe that the Company will seek to spin one of the units off in the near future. We will be releasing a comprehensive break-up analysis shortly. In the meantime we reiterate our Buy rating and price target of USD $15.00.
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LJ International Inc. NasdaqNM: JADE $12.00
Research Note
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated/Update)
Price Target: $16.00
By: Sally H. Wallick, CFA
LJ International Estimate and Price Target Raised; Speculative Buy Rating Reiterated
February 22, 2007. LJ International (NasdaqGM: JADE) We are raising our 2007 earnings estimate for LJ International from $0.35 per share to $0.57 per share (within a range of $0.55-$0.60 per share). The earnings increase is attributable to a sharply higher revenue projection for ENZO, LJI's jewelry retail business in China, given its far better-than-expected fourth quarter 2006 performance and LJI's plan to accelerate ENZO's expansion during 2007. LJI's share price has risen sharply in the wake of recent earnings and growth announcements. Nevertheless, in light of LJI's well above-average growth potential in the next two to three years, mainly as a result of ENZO's growing contribution to revenue and earnings, we are maintaining our Speculative Buy rating on the Company's shares. In our opinion, ENZO is especially well positioned to benefit from China's rapidly expanding middle class and rising consumer spending, given its first mover advantage in that dynamic market, growing brand recognition, differentiated Western-style merchandise, and positioning as a purveyor of affordable luxury items. Given the significant increase in our 2007 earnings estimate, we are raising our 12-month target for the shares from $9 per share to $16 per share.
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LJ International Inc. NasdaqNM: JADE $12.00
Research Note
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated/Update)
Price Target: $16.00
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 $12.00
Research Note
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated/Update)
Price Target: $16.00
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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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 Completes Lighting Retrofit That Saves 24% Power Consumption for Customer; Rights Offer Proceeding
February 22, 2007. Lime Energy Co. (OTCBB:LMEC) announced the completion of a comprehensive energy efficient lighting retrofit project for McDonald Packaging, Inc. (McDonald). The retrofit resulted in a 24% reduction in power consumption for McDonald.
Lime Energy's registration for it rights offering became effective 1/15/07, and February 23, 2007 was set as the record date for investors to take advantage of this rights offering. 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 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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LESCO, Inc. NasdaqNM: LSCO $14.40
Research Note
Industry: Consumer & Retail Products
Rating: Neutral (Reiterated)
By: Paul J. Resnik, CFA
LESCO Agrees to Be Acquired by Deere for $14.50 Per Share
February 20, 2007. LESCO, Inc. (Nasdaq: LSCO) tday announced its agreement to be acquired by Deere & Company (NYSE: DE) for $14.50 per share. LESCO shares responded to the announcement by, as of this writing, rising $3.80 to $14.23. Although we believe LESCO's unique network offers the potential for sustained growth over the long term as near term difficulties are resolved, the proposed price, in our judgment, represents a reasonable offer in light of near term profitability issues. Accordingly, we are maintaing our Neutral rating on LESCO shares, recognizing the unlkely, but still possible, potential for a higher, competing bid.
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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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MortgageBrokers.com Holdings OTCBB: MBKR $0.83
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 $0.83
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 $17.90
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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MediciNova, Inc. NasdaqGM: MNOV $13.08
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $20.00
By: Wayne M. Lottinville, CFA
MediciNova To Present Phase 2 Asthma Clinical Trial Results: Reiterate Strong Speculative Buy
February 22, 2007. MediciNova, Inc. (Nasdaq: MNOV), will present data from a Phase 2 clinical study of MN-001, MediciNova's investigational oral treatment for bronchial asthma, at an annual conference on the disease. As previously announced, MN-001 was well tolerated and significantly improved measures of respiratory function in asthma patients compared to placebo in this trial. MediciNova recently initiated an 18-month Phase 3 clinical program.
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MediciNova, Inc. NasdaqGM: MNOV $13.08
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 $13.08
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 $1.94
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Memry Corporation: Fiscal 2008 Estimate $0.05 Per Share; Neutral Rating Maintained
February 22, 2007. Memry Corporation (ASE: MRY): We are introducing a $0.05 per share earnings estimate for Memry's fiscal year that ends June 30, 2008. This estimate is based on the assumption that recent revenue and margin pressures at the Company's nitinol division will continue during the balance of fiscal 2007 and into fiscal 2008, but will begin to ease toward the end of calendar 2007 and in calendar 2008. Our fiscal 2007 earnings estimate remains $0.01 per share. We reiterate our Neutral rating on Memry's shares.
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Memry Corporation AMEX: MRY $1.94
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 $1.94
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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Oragenics Inc AMEX: ONI $1.03
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $3.75
By: Wayne M. Lottinville, CFA
Oragenics Updates Clinical Development Plans; Reiterate Speculative Buy
February 23, 2007. Oragenics Inc. (Amex: ONI), in a recent letter to shareholders, predicted that its efforts last year to add value to the Company's lead technologies could result in one or more licensing deals in 2007. At this point, partnering represents the preferred strategy for funding its programs, management said, but the Company continues to explore additional funding alternatives to sustain its development plans, which include the cost of conducting clinical trials this year for at least two of its lead products.
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O2Diesel Corp AMEX: OTD $0.75
Research Note
Industry: Oil, Gas & Energy
Rating: Speculative Buy (Reiterated)
Price Target: $2.25
By: Sally H. Wallick, CFA
O2Diesel Corporation Announces $10 Million Stock Purchase Agreement.
February 20, 2007. O2Diesel Corporation (AMEX: OTD) has entered into a $10 million common stock purchase agreement with Fusion Capital. We believe that this is an important step toward raising the capital needed to complete the Company's 2007 business plan, which includes the planned acquisition of ProEco Energy. Also, the financing's structure will give O2Diesel the flexibility to raise capital when it considers the share price most advantageous to the Company and its shareholders. Proceeds will be used to support the Company's efforts to develop markets for its proprietary ethanol/diesel blended fuel, O2Diesel(TM), to assist in development of a new 28% renewable fuel (currently O2Diesel's fuel contains about 8% renewable products), for the ProEco acquisition, and for working capital purposes. We reiterate our Speculative Buy rating on the Company's shares.
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PacificHealth Laboratories Inc. OTCBB: PHLI $2.15
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $2.00
By: Jonathan H. Ziegler, CFA
PacificHealth Labs Yesterday Announced That CadburySchweppes Will Commence Distribution of ACCELERADE RTD in the Second Quarter
February 22, 2007. PacificHealth Laboratories, Inc. (OTCBB: PHLI) announced yesterday that Cadbury Schweppes is ready to launch its multi-channel roll-out of ACCELERADE RTD (ready-to-drink) with shipments during the second quarter. We believe the PHLI shares have been strong recently in anticipation of the introduction of this very important product.
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Patriot Scientific Corp. OTCBB: PTSC $0.77
Research Note
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.12
By: Richard W. West, CFA
Patriot Scientific Announces License For Large Japanese Electronic Product Manufacturer:Reiterate Strong Speculative Buy Rating
February 20, 2007. Patriot Scientific Corporation (OTCBB: PTSC) announced that Funai Electric Co. Ltd. (OTCPK: FUAIY-$17.50) purchased a license that gives it the right to use technologies protected by the Moore Microprocessor Patent™ Portfolio (MMP Portfolio). This license if the fifth since November of 2006, and not only are these licenses a plus for current revenue and earnings, but the licenses give validity to the patents that are the subject of an infringement litigation pending in Texas against defendants Matsushita (NYSE:MC-$19.20) and Toshiba Corp. (OTCPK: TOSBF-$5.95). We reiterate our Strong Speculative Buy Rating and maintain our 12-month price target of $1.12 per share.
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Provectus Pharmaceuticals Inc OTCBB: PVCT $1.14
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $3.90
By: Wayne M. Lottinville, CFA
Provectus Patents Novel Acne Product; Reiterate Strong Speculative Buy
February 21, 2007. Provectus Pharmaceuticals, Inc. (OTCBB: PVCT), has received a Notice of Allowance from the U.S. Patent and Trademark Office for its patent application covering novel acne medications, including the Company's invisible solid acne treatment, Pure-Stick™, an over-the-counter (OTC) product. The Company is seeking to spin-out, license, or sell its OTC assets and use the proceeds to fund development of its key cancer and psoriasis therapies.
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Seabridge Gold Inc AMEX: SA $16.20
Research Note
Industry: Metals & Mining
Rating: Strong Buy (Reiterated)
Price Target: $20.00
By: Les W. Childress
CORRECTED: Seabridge Gold's Mitchell Deposit Is A Major Discovery
February 21, 2007. Seabridge Gold's (AMEX: SA) Mitchell Deposit is a Major Discovery: 13.1 Million Ounces of Gold, 2.24 Billion Pounds of Copper--Shares Vault 17% in Two Trading Sessions on Four Times Normal Value.
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Smart & Final NYSE: SMF $21.60
Research Note
Industry: Consumer & Retail Products
Rating: Neutral (Change)
By: Jonathan H. Ziegler, CFA
Smart & Final Shares Up 11.8% Yesterday On Buyout Proposal; Limited Upside Prompts Rating Downgrade to Neutral
February 21, 2007. Smart & Final, Inc. (NYSE: SMF) shares closed at the highest price yesterday since we recommended them almost two years ago. We were tempted to hold out with our Buy rating, but believe it now makes sense to reduce our rating to Netural based on the out-performance of the shares. The potential transaction announced yesterday morning at a price of $22.00 per share allows only a 1.9% upside from today's close.
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Smart & Final NYSE: SMF $21.60
Research Note
Industry: Consumer & Retail Products
Rating: Neutral (Change)
By: Jonathan H. Ziegler, CFA
Smart&Final Announced This Morning That It Has Entered Into An Agreement To Be Acquired For $22 Per Share Cash
February 20, 2007. Smart & Final, Inc. (NYSE: SMF) announced this morning that it has entered into an agreement to be acquired by an affiliate of Apollo Management, LP, a leading private-equity firm, for $22 per share. The Company also announced its fouth quarter 2006 results, which were better-than-expected.
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Sunwin International Neutraceuticals, Inc. OTCBB: SUWN $0.58
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $1.10
By: Stanley Ng
Sunwin International Neutraceuticals Claims Successful Launch of Only Sweet TM Online Sales Program; Reiterate Speculative Buy Rating
February 22, 2007. Sunwin International Neutraceuticals Inc. (SUWN.OB) announced on February 20, 2007 that it has successfully launched the Only Sweet TM online sales program. We expect the Company to announce more detailed sales figures on its Only Sweet TM products in the upcoming quarterly results in mid March and we will be able to offer a better assessment of the impact on revenue and earnings. For the time being, we reiterate our price target of $1.10 and Speculative Buy rating on the stock.
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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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21st Century Holding Co Nasdaq: TCHC $19.65
Research Note
Industry: Banks, Financial Services & Insurance
Rating: Strong Buy (Reiterated)
Price Target: $35.00
By: Richard W. West, CFA
21st Century Holding Revokes FY2006 Guidance And Confirms FY2007 Guidance; Strong Buy Rating Reiterated
February 19, 2007. 21st Century Holding Company (Nasdaq:TCHC) announced they have revoked their guidance for FY2006 due to accounting reasons. We are suspending our earnings estimates for FY2006, but still maintain our estimate of basic EPS of $3.26 for FY2007, and reiterate our Strong Buy rating and $35.00 price target.
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American Telecom Services, Inc. AMEX: TES $4.10
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 $4.10
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 $3.97
Research Note
Industry: Software
Rating: Buy (Reiterated)
Price Target: $5.00
By: Rafael K. Kapelinski
Top Image Systems Signs Diageo as Customer; Additional Colour
February 21, 2007. Top Image Systems has announced today that the Company has signed Diageo, a global drinks manufacturer, as a customer. This is yet another major account signed in the last few months, following Office Depot most recently.
We leave our estimates unchanged. The project is already in full production and almost fully paid for. We estimate that initially the total 2007E revenue contribution will be around USD $100,000, which makes the project smaller than the recent Office Depot deal. However, as always, there are good prospects for generating follow-on revenues from additional applications. Sixty-five percent of the revenues are generated by software and 35% by services. The integration is done mainly by Accenture.
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Top Image Systems Ltd Nasdaq: TISA $3.97
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 $3.97
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 $2.92
Research Note
Industry: Telecommunications
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
Telkonet, Inc. Issues Chairman's Letter to Stockholders; Common Stock Price Not Reflecting Telkonet's Potential; Strong Speculative Buy Rating Reiterated
February 22, 2007. Telkonet, Inc. (AMEX:TKO) reviewed the current status of its business in its annual letter to stockholders. Management's estimate of annual revenue of $25.0 million and positive cash flow for 2007 is the first time they have presented such guidance. 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 Inc. OTCBB: VSPC $0.56
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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XAAR Plc LSE: XAR $4.71
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 $19.55
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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