Amarillo Biosciences Inc. OTCBB: AMAR $0.70
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $1.90
By: Wayne M. Lottinville, CFA
Amarillo Biosciences' Partner To Conduct Hepatitis C Trial; Reiterate Speculative Buy
June 1, 2007. Amarillo Biosciences (OTCBB: AMAR) said that its partner in Taiwan and China will conduct a clinical trial to test low-dose oral interferon alpha in chronic hepatitis C patients. The patients will receive one of three different dosages of oral human interferon alpha or placebo. The trial is expected to start in the fourth quarter of 2007.
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American Mold Guard, Inc. Nasdaq: AMGI $2.22
Research Report
Industry: Industrial & Manufacturing
Rating: Strong Speculative Buy (Reiterated)
Price Target: $4.22
By: Mike Loughran
American Mold Guard Strong Speculative Buy Rating In Update Coverage; A Significant Bright Spot Is The Company's Multi-Family Division
May 29, 2007. American Mold Guard (Nasdaq: AMGI) reported Q1FY07 EPS of ($0.27) versus our estimate of ($0.18). Revenues fell 24% year-over-year, but rebounded 15% sequentially. The Company continued to show sequential SG&A improvement, with SG&A falling 3% sequentially despite the 15% improvement in revenue. A significant bright spot in the quarter was a 680 basis point improvement in the gross margin from 42.2% in Q1FY06 to 49% in Q1FY07. Increasing levels of multi-family projects in the mix will continue to drive improvement in this metric. Importantly, AMG Scientific is expected to achieve significantly higher gross margins than the company's current housing market. A significant bright spot is the company's multi-family division, which booked $1.7 million of new orders in Q1, representing a significant improvement given total multi-family revenues were $2 million in FY06. Encouraging still was that $1 million of these orders were from existing customers, and $700 thousand were from new, first-time clients. Also encouraging, was that the company achieved new orders from several different regions, indicating that awareness of the company's anti-microbial process is becoming well recognized throughout the nation, and well beyond the company's original California market. At current loss rates, the company will likely require additional capital in FY07.
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Baldwin Technology Company Inc AMEX: BLD $6.04
Research Report
Industry: Industrial & Manufacturing
Rating: Buy (Reiterated/Update)
Price Target: $6.65
By: Wayne M. Lottinville, CFA
Baldwin Technology Buy Rating In Update Coverage; Expectations Of Continued Global Economic Expansion Favor The Projected Increases In Baldwin's Sales
May 21, 2007. In recent months Baldwin (AMEX: BLD) has made two acquisitions that have strengthened its presence and product offerings in its press cleaning and consumables lines, which already account for more than half its revenues. Partly as a result of these acquisitions, Baldwin could see sales increasing more than 12% in FY07 ending June to over $200 million, then more than 9% in FY08 as a full year of sales from these acquisitions are recorded on the top line. Add in the potential for consolidation and continued margin expansion, and net earnings could reach $0.39 per diluted share in fiscal 2008 and $0.53 per share the following year. Our price target is based on FY09 results because that is expected to be the first full year of operations after the consolidation of Oxy-Dry is complete. We reduced that FY09 figure by an annualized 15% discount rate to arrive at a one-year price target of $6.65 per share. This price target is 20% above Baldwin's recent $5.50 share price and merits a Buy rating on the Company's stock.
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Chembio Diagnostics, Inc OTCBB: CEMI $0.62
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.50
By: Stephen L. Handley
Chembio's Corporate Development Steps Continuing; R & D Agreements With The Infectious Disease Research Institute
May 31, 2007. Chembio Diagnostic Systems, Inc. (OTCBB:CEMI) has entered into two R & D agreements with the Infectious Disease Research Institute (IDRI) for the development of rapid diagnostic tests for two "neglected diseases" -- Leprosy and Leishmaniasis. It is our current assumption that although these diseases afflict many people, primarily in the Indian subcontinent, Africa and Latin America, the unit price for related disgnostic tests is likely to be quite low. Nevertheless, this can be meaningful for a small company like Chembio, and successful development of these tests would further enhance the Company's reputation as a developer of innnovative diagnostics. This announcment follows release of first quarter results about a week earlier which we believe were consistent with the strong gains (from a relatively low base) we have modeled for 2007 and 2008.
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China Direct, Inc. OTCBB: CHND $3.28
Research Note
Industry: Diversified Industries
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.52
By: Stanley Ng
China Direct, Inc. to increase Magnesium Manufacturing Capacity by 20,000 tons per year Through New Joint Venture; Reiterates Strong Speculative Buy Rating
May 31, 2007. China Direct (OTCBB: CHND) Announced Increased Magnesium Manufacturing Capacity by 20,000 Tons Per Year Through a 52% Owned New Joint Venture
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China Direct, Inc. OTCBB: CHND $3.28
Research Note
Industry: Diversified Industries
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.52
By: Stanley Ng
China Direct, Inc. to Assist MediaREADY, Inc. With Its Plan To Enhance Its Business Through Acquisition; Reiterate Strong Speculative Buy Rating
May 25, 2007. China Direct, Inc. (OTCBB: CHND) has been engaged by MediaREADY, Inc. (OTC BB: MRED) to assist the latter's expansion in China through acquisition. MediaREADY intends to pursue an acquisition strategy in China that will focus on acquiring a Chinese entity that is currently generating substantial revenues and has achieved operational profitability. Overall, we believe the announcement has limited positive impact on the revenue and earnings projections of China Direct. We maintain our Strong Speculative Buy rating and 12-month target price of $5.52 on the stock
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Clearant, Inc. OTCBB: CLRI $0.04
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Not Rated (Reiterated)
Price Target: N/A
By: Sally H. Wallick, CFA
Clearant, Inc. 2006 Reviewed; Record 4Q Revenue; Risks Still High; Rating Remains Suspended.
May 20, 2007. Clearant, Inc. (OTCBB: CLRI) reported a 2006 diluted loss of $0.25 per share, down from a $0.47 per share loss in the prior year. Revenue increased 42% year over year to $770,000. In the fourth quarter, estimated revenue more than tripled year over year to a record $282,000, and the net loss was $0.06 per share, down from last year's $0.09 per share loss. Sequentially, fourth quarter revenue increased 48% relative to the third quarter as a result of a 93% increase in direct distribution revenue. Highlights of Clearant's year-end balance sheet include cash of $0.6 million, negative working capital of $1.1 million, shareholders' equity of $0.6 million, and debt of $106,000. Significant developments thus far in 2007 include the resignation of the Company's Chief Executive Officer (CEO) and the naming of Jon Garfield, the Company's Chief Financial Officer (CFO), as his successor, and the completion of a $2.3 million private placement in April. While Clearant's fourth quarter revenue growth is encouraging, there are still a number of significant risks that make the Company's prospects going forward uncertain, including (but not limited to) the following. First, at the end of 2006, Clearant had a working capital deficit of $1.1 million and approximately $2.3 million of accounts payable and accrued liabilities, a significant portion of which was past due. The Company is trying to resolve the overdue amounts. Second, Clearant's management anticipates that the Company will need to raise additional capital before year end. And, third, in late April, Clearant received notice of a claim on behalf of most of the investors who participated in the private placement asserting that the financial projections provided to them before the financing were inaccurate and seeking to rescind the stock agreement. We believe that if Clearant cannot resolve these issues in a way favorable to the Company, it may not be able to continue as a going concern. In light of these significant risks, our rating on the shares remains Suspended.
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BluePoint Energy Inc. OTCBB: CPEU $4.10
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
BluePoint Energy Announces Discussions For Possible Joint Venture With NYSE Firm; Strong Speculative Buy Reiterated
May 22, 2007. BluePoint Energy (OTCBB: CPEU) announced that it was involved in discussions with an asset management company listed on the New York Stock Exchange in connection with the formation of a joint venture to provide equity capital for up to $300.0 million in support of BluePoint's discount energy purchase agreement financial model. We Reiterate the Strong Speculative Buy and the twelve-month price target of $5.00.
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BluePoint Energy Inc. OTCBB: CPEU $4.10
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
Chapeau, Inc. d/b/a/ Blue Point Energy, Inc. Announces Results for March 2007 Third Quarter and Nine Months; Strong Speculative Buy Reiterated
May 20, 2007. Blue Point Energy's (OTCBB:CPEU) top line revenue of $367,896 for its 3rd quarter was slightly lower than our estimate of $580,000. BluePoint Energy has made great progress in cleaning up its balance sheet by eliminating over $10.0 million in convertible debt. Consequently, the common stock outstanding increased to over 54.0 million shares, and we expect increase to approximately 92.0 million by the exercise of options. Blue Point's common stock has been trading in the $3.20 to $4.50 per share range on moderate volume since the beginning of April 2007. We are maintaining our Strong Speculative Buy Rating and the $5.00 price target.
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CardioVascular BioTherapeutics Inc OTCBB: CVBT $0.81
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Change)
Price Target: $1.05
By: Richard W. West, CFA
CardioVascular BioTherapeutics Announces $15.0 Million PIPE; Defers Listing and Offering on the London AIM; Raising Rating to Speculative Buy
May 24, 2007. CardioVascular BioTherapeutics (OTCBB: CVBT) announced on May 24, 2007, a $15.0 million private equity placement. With this financing, Cardio has decided to defer its listing and offering on the London Stock Exchange's Alternative Investment Market (AIM). This financing, coupled with the current price of the stock, prompts us to raise our rating to a Speculative Buy and establishing an initial 12-month price target of $1.05.
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Elron Electronic Industries LTD. Nasdaq: ELRN $15.70
Research Note
Industry: Electronics & Engineering
Rating: Buy (Reiterated)
Price Target: $18.50
By: Barry Raeburn
Elron Invests In RADLIVE, Addressing Telephony Voice Quality
May 31, 2007. Elron (Nasadaq: ELRN) Invests $3.7 Million in RADLIVE, Addressing Telephony Voice Quality
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Elron Electronic Industries LTD. Nasdaq: ELRN $15.70
Research Note
Industry: Electronics & Engineering
Rating: Buy (Reiterated)
Price Target: $18.50
By: Barry Raeburn
Elron Updates Group Companies; IPO Process
May 30, 2007. Elron Updates Group Companies' IPO Process
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Elron Electronic Industries LTD. Nasdaq: ELRN $15.70
Research Note
Industry: Electronics & Engineering
Rating: Buy (Reiterated)
Price Target: $18.50
By: Barry Raeburn
Elron to Present at JM Dutton Conference in San Francisco on May 30
May 24, 2007. Elron Electronic Industries Ltd. will present at the Dutton Associates "Recognizing Opportunity" SmallCap Conference in San Francisco on May 30, 2007. The Elron story is largely event driven. The key value creating events are sales of group companies and revaluations due to follow on investments. We maintain our BUY recommendation and 12 month price target of $18.50. With these significant tangible value generating catalysts present, we believe that a premium to NAV is warranted.
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Forgent Networks, Inc. Nasdaq: FORG $1.07
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.40
By: Richard W. West, CFA
Late News; Forgent Loses 746 Litigation; Forgent Networks Announced 2007 Fiscal 3rd Quarter Earnings Release & Conference Call; Strong Speculative Buy Rating Reiterated
May 22, 2007. Correction: Forgent Networks, Inc. (NasdaqGM: FORG) announced that it will release results of its 2007 fiscal third quarter for the period ending April 30, 2007, on Wednesday, May 30, at 8 a.m. CT (9 a.m. ET), and that they have scheduled a conference call for the investment community on Wednesday, May 30th, at 10:00 a.m. CT (11:00 a.m. ET) to discuss the quarter and future outlook. We reiterate our Strong Speculative Buy Rating and our 12-month price target of $2.40 per share.
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Forgent Networks, Inc. Nasdaq: FORG $1.07
Research Note
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.40
By: Richard W. West, CFA
Forgent Networks, Inc. Files SEC Form 8-K, Detailing Settlement with DIRECTV for $8.0 Million; Strong Speculative Buy Rating Reiterated
May 20, 2007. Forgent Networks, Inc. (NasdaqGM:FORG) details settlement with DIRECTV in SEC Form 8-K; to grant license for $8.0 million. We reiterate our Strong Speculative Buy Rating and our 12-month price target of $2.40 per share.
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Genesis Technology Group, Inc. OTCBB: GTEC $0.15
Research Note
Industry: Business & Support Services
Rating: Speculative Buy (Reiterated)
Price Target: $0.22
By: Stanley Ng
Genesis Pharmaceutical Partner Announces First Quarter Financial Results; Reiterate Speculative Buy Rating
May 24, 2007. Genesis Technology Group, Inc. (OTCBB.GTEC) announced on May 23 that its pharmaceutical partner has announced its financial results for the first quarter of fiscal 2007. Income from operations amounted to $1.13 million for the three months ended March 31, 2007, a decrease of 2.3% from the corresponding period in 2006. The slight decline in operating income was mainly attributable to the significant increase in expense in operating as a U.S. public company. We maintain our view that Genesis will be able to complete two projects in fiscal 2007 and three projects in 2008. Due to lack of financial information on the amount of equity stake to be received from the partner companies and the market value of these shares, we continue to maintain our initial estimation that each graduate of the GEP private-to public company will bring in excess of $2 million to Genesis. We reiterate our target price of $0.22 per share based on a 20% discount to our estimated net asset value of $0.27 per share and maintain our Speculative Buy rating on the stock
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Genesis Technology Group, Inc. OTCBB: GTEC $0.15
Research Note
Industry: Business & Support Services
Rating: Speculative Buy (Reiterated)
Price Target: $0.22
By: Stanley Ng
Genesis Technology Group, Inc. Announces Six Months Financial Results And Progress on Jin Ma Group; Reiterates Speculative Buy Rating
May 22, 2007. Genesis Technology Group, Inc. (OTCBB GTEC) Announces Six Months Financial Results And Progress on Jin Ma Group
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Harbin Electric, Inc. Nasdaq: HRBN $13.50
Research Report
Industry: Industrial & Manufacturing
Rating: Speculative Buy (Reiterated)
Price Target: $16.02
By: Stanley Ng
Harbin Electric Speculative Buy In Update Coverage; Progress Made On New Product Rollout, Technology Partnership, and Supplier Contract To A Fortune 500 Company
May 29, 2007. Harbin Electric (Nasdaq: HRBN) is a leading player in China's fast growing linear motor and specialty motor for automobile market. The Company has recently completed a technology partnership with the U.S.-based Shelton Technology to jointly design, develop, and make custom industrial automation controllers and was selected as an approved supplier to a large diversified automotive OEM supplier based in North America. In the domestic China market, the success of developing a high efficiency, energy saving "Tower Type Oil Pump" driven by permanent magnetic linear motors for the oil and gas industry, and the placing of a purchase order from Daqing Petroleum confirmed the quality and design of Harbin Electric's Tower Type Oil Pump. In our view, the Company's recently announced 1Q07 financial results are respectable, with record quarterly revenue and solid margins. Even though we have downgraded our reported net income and diluted EPS for 2007 and 2008, it is mainly due to distortion by $4.53 million of non-cash expense related to the $50 million note issue in August 2006. Excluding such non-cash charge, net income for 2007 and 2008 have actually been upgraded by 3.3% and 3.7% respectively. Given the modest increase in net income on cash basis, we maintain our target price of $16.02 per share and reiterate our Speculative Buy rating on Harbin Electric.
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HydroGen Corporation NasdaqCM: HYDG $4.20
Research Note
Industry: Oil, Gas & Energy
Rating: Speculative Buy (Reiterated)
Price Target: $8.25
By: Sally H. Wallick, CFA
Hydrogen Corporation: Visit to Versailles Manufacturing Plant Highlights Significant Progress on Business Plan: Speculative Buy Reiterated.
May 28, 2007. HydroGen Corporation (NASDAQCM: HYDG): Recently, we toured HydroGen's manufacturing plant in Versailles, Pennsylvania. Previously, we had visited this facility in March of 2006. The changes in the intervening period have been dramatic. At the time of our first visit, the plant was minimally staffed and activity was limited to a few areas of the facility. Today it is fully staffed and equipped, with activity occurring at all steps of the production process. Also, the module test facility at Versailles appears to be ready to begin its first demonstration of a full-scale 400 kilowatt (kW) module within the next month. This is significant, because we believe that successful demonstration of the Company's modules could be a critical forerunner of the Company obtaining and booking its first orders. HydroGen has set forth a business plan consisting of three stages: market entry, cost reduction, and growth. Based on what we saw at the Company's Versailles facility, we believe that it has made significant progress on the market entry stage, which includes ramping up fuel cell manufacturing to a rate of 2 megawatts (MW) per year, initiating production of 400 kW modules, initiating product and technology testing and validation, finishing 2 MW power plant design and initiating development of accelerated manufacturing, and pursuing sales and marketing efforts. We rate the Company's shares Speculative Buy.
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IntegraMed America Inc NasdaqNM: INMD $11.58
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Buy (Reiterated/Update)
Price Target: $12.00
By: Richard W. West, CFA
IntegraMed America, Inc. to Present at JM Dutton Associates' SmallCap Conference; Strong Buy Rating Reiterated
May 24, 2007. IntegraMed America, Inc. (NasdaqNM: INMD) will be presenting at JM Dutton Associates' "Recognizing Opportunity" SmallCap Conference being held at The OMNI Hotel in San Francisco on Wednesday, May 30 from 7:30 a.m. to 7 p.m. The presentations will be Web broadcast and can be reached by a link found at http://www.jmdutton.com. We are maintaining our Strong Buy Rating.
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Joystar Inc. OTCBB: JYSR $0.82
Research Note
Industry: Leisure & Entertainment
Rating: Strong Speculative Buy (Reiterated)
Price Target: $1.50
By: Richard W. West, CFA
Joystar Inc. Announces Joining Vacation.com; Reiterate Strong Speculative Buy and $1.50 Price Target
May 23, 2007. Joystar Inc. (OTCBB: JYSR) announced it joined Vacation.com, North America's leading travel services marketing organization. This move by Joystar should increase revenue opportunities by utilizing Vacation.com's comprehensive direct marketing programs, and is another marketing arrow in the quiver that Joystar offers its network of travel agents. We reiterate our Strong Speculative Buy Rating and our 12-month price target of $1.50 per share.
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Lime Energy Co. OTCBB: LMEC $1.12
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.00
By: Richard W. West, CFA
Lime Energy Co. Announces Completion of $3.0 Million PIPE;Strong Speculative Buy Reiterated
May 30, 2007. Lime Energy Co. (OTC: LMEC) announced on May 29, 2007, the completion of a $3.0 million PIPE. The single investor in the PIPE is Mr. Richard Kiphart, Lime Energy's Chairman of the Board and largest individual shareholder. This PIPE will initially be utilized to fund a new finance subsidiary that will provide financing to customers for energy saving projects. We believe Lime Energy is on the cusp of proving itself to investors. We reiterate our Strong Speculative Buy Rating and 12-month price target of $2.00 per share.
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Lime Energy Co. OTCBB: LMEC $1.12
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.00
By: Richard W. West, CFA
Lime Energy Co. To Present at JM Dutton Associates' "Recognizing Opportunity" SmallCap Conference;
Strong Speculative Buy Reiterated
May 23, 2007. Lime Energy Co. (OTCBB: LMEC) will be presenting at JM Dutton Associates' "Recognizing Opportunity" SmallCap Conference being held at the OMNI Hotel in San Francisco on Wednesday, May 30, from 7:30 a.m. to 7 p.m. The presentations will be Web broadcast and can be reached by a link found at http://www.jmdutton.com. We reiterate our Strong Speculative Buy and $2.00 per share price target.
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Maine & Maritimes Corporation AMEX: MAM $27.18
Research Report
Industry: Oil, Gas & Energy
Rating: Buy (Reiterated)
Price Target: $35.00
By: Sally H. Wallick, CFA
Maine & Maritimes Buy Rating And $35 Price Target Maintained In Update; Q1 Exceeds Our Estimate; Undervalued On Industry Comps
May 22, 2007. Maine & Maritimes (AMEX: MAM) reported a doubling of first quarter diluted earnings from continuing operations as a result of rate- and volume-driven revenue growth and margin expansion. Regulated operating revenues totaled $10.9 million in the first quarter, up 8.6% year over year, and net income from continuing operations was $1.6 million, or $0.94 per diluted share, compared with $784,000 or $0.47 per diluted share a year earlier. Earnings came in well ahead of our $0.63 per share estimate. Including a loss from discontinued operations, diluted earnings were $0.81 per share versus $0.32 per share in the prior year. In light of the better-than-projected first quarter results, we raised our 2007 and 2008 diluted earnings estimates (from continuing operations) for Maine & Maritimes from $0.70 and $1.15 per diluted share to $0.95 and $1.30 per diluted share, respectively. In addition, we raised 12-month target price from $28 per share to $35 per share. We reiterate our Buy rating on Maine & Maritimes common stock, which is trading at only 2.7x earnings before interest, taxes, depreciation and amortization (EBITDA) versus an average of about 5.6x for 15 other small or medium capitalization utility companies.
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MortgageBrokers.com Holdings OTCBB: MBKR $0.50
Research Note
Industry: Banks, Financial Services & Insurance
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Richard W. West, CFA
MortgageBrokers.com to Present at JM Dutton Associates' SmallCap Conference; Speculative Buy Rating Reiterated
May 25, 2007. MortgageBrokers.com (OTCBB: MBKR)will be presenting at JM Dutton Associates' "Recognizing Opportunity" SmallCap Conference being held at The OMNI Hotel in San Francisco on Wednesday, May 30 from 7:30 a.m. to 7 p.m. For more conference information and registration, visit http://www.jmdutton.com. The presentations will be Web broadcast and can be reached by a link found at http://www.jmdutton.com. We reiterate our Speculative Buy rating and 12-month price target of $1.00 per share.
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MortgageBrokers.com Holdings OTCBB: MBKR $0.50
Research Note
Industry: Banks, Financial Services & Insurance
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Richard W. West, CFA
MortgageBrokers.com Announces Record Revenue in FY2007 Q1; Cancels Announced 3-1 Forward Split; Speculative Buy Rating Reiterated
May 23, 2007. MortgageBrokers.com Holdings, Inc. (OTCBB: MBKR) announced its first-quarter results on May 22, 2007. With the reported revenue of $1.2 million in the first quarter, we are maintaining both our FY2007 revenue estimate of $24.0 million and estimate of $0.20 EPS. It canceled the announced 3-1 forward split. We reiterate our Speculative Buy rating and 12-month price target of $1.00 per share.
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Memry Corporation AMEX: MRY $1.77
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Memry Neutral Rating Maintained In Update Coverage; Believe That Memry's Long-Term Prospects Are Bright
May 25, 2007. Memry Corporation (AMEX: MRY) markets products using the Company's proprietary shape memory alloy (SMA) and polymer-extrusion technologies. Memry's principal SMA is a nickel-titanium alloy called nitinol. Approximately 95% of the Company's sales are to the medical device industry. Memry reported a 12.7% decline in third quarter fiscal 2007 revenue to $12.2 million and a net loss of $460,000, or $0.02 per share, compared with net income of $1.52 million, or $0.05 per share, in the third quarter of fiscal 2006. Third quarter results fell short of our estimate mainly because of lower-than-projected revenue and higher-than-projected operating expenses. In discussing the outlook for the balance of fiscal 2007, Memry's management cautioned that it expects weakness in the Company's nitinol and polymer revenue to continue in the fourth quarter, although it looks for a more moderate drop in polymer products segment revenue year over year than in the third quarter. On a positive note, management expects new product initiatives to begin to benefit the Company late in calendar 2007 and during 2008, contributing to a resumption of revenue growth and margin expansion in fiscal 2008, especially in the second half. We project breakeven results for Memry in fiscal 2007 and a $0.03 per share profit in fiscal 2008, excluding acquisitions. We believe that Memry's long-term prospects are bright for the reasons detailed in a Dutton Associates report dated October 26, 2006.
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Memry Corporation AMEX: MRY $1.77
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Sally H. Wallick, CFA
Memry Corporation FY08 Estimate Fine-tuned; Neutral Rating Reiterated.
May 23, 2007. Memry Corporation (AMEX: MRY): We are fine-tuning our fiscal 2008 earnings estimate for Memry down slightly from $0.04 per share to $0.03 per share as a result of a modest adjustment to our gross margin assumption. Our fiscal 2007 estimate is breakeven. Key assumptions in our fiscal 2008 projection include revenue contributions from new products, gross margin expansion, and lower professional fees and interest expense. We expect the revenue, earnings and margin recovery to be weighted to second half of the year. Our fiscal 2008 estimate does not take into account an acquisition, given the inherent uncertainty of the acquisition process, although management's goal is to complete one next year. Our rating on Memry's shares remains Neutral.
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Online Vacation Center Inc. OTCBB: ONVC $2.20
Research Note
Industry: Leisure & Entertainment
Rating: Speculative Buy (Reiterated)
Price Target: $3.25
By: Richard W. West, CFA
Online Vacation Center Holdings Corp. Acquires Women's Fitness Franchise; Speculative Buy Reiterated
May 21, 2007. Online Vacation Center Holdings Corp. (OTCBB: ONVC) announced on May 21, 2007, it has acquired Tone & Travel, d/b/a/ Curves, which is a well-known franchise fitness company for women, with over 4.0 million members. This acquisition is another step in Online Vacation Center's business plan of building a network of diversified vacation sellers with a range of products that can be cross sold to its growing customer base. We reiterate our Speculative Buy Rating and our 12-month price target of $3.25 per share.
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O2Diesel Corp AMEX: OTD $0.56
Research Note
Industry: Oil, Gas & Energy
Rating: Speculative Buy (Reiterated)
Price Target: $2.25
By: Sally H. Wallick, CFA
O2Diesel Corporation Management to Participate in Dutton Associates Conference; Speculative Buy Rating Maintained.
May 28, 2007. O2Diesel Corporation's (AMEX: OTD) management will participate in the Dutton Associates "Recognizing Opportunity" Small Cap Conference on Wednesday, May 30. O2Diesel Corporation has developed a proprietary ethanol/diesel blended fuel, O2Diesel(TM). We expect the Company's conference presentation to focus on growth opportunities as a result of increasing demand for clean-burning fuels with a renewable component. In addition, we expect management to discuss the implications of recent developments such as: (1) The signing of a definitive agreement to acquire 80% of ProEco Energy Company, Inc., which is developing an ethanol plant in South Dakota; (2) The negotiation of a $10 million stock purchase agreement with Fusion Capital; (3) The announcement of a supply agreement with Fair Energy S.A. to jointly develop markets in certain Central and South American countries for O2Diesel; (4) The receipt of an additional $1 million of Department of Defense (DoD) funding and the initiation of field tests of a new renewable fuel, O2Biodiesel, that is being developed for the DoD; (5) The addition of a third school bus fleet to O2Diesel's CityHome(TM) School Bus Program; and (6) The receipt of orders for more than 70,000 liters of the Company's proprietary additive technology from Energenics, its Asian distribution partner. We reiterate our Speculative Buy rating on the Company's shares.
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PacificHealth Laboratories Inc. OTCBB: PHLI $2.12
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $2.75
By: Jonathan H. Ziegler, CFA
PacificHealth Laboratories: Previously Sold Rights to its ACCELERADE Enhanced Energy Drink to Cadbury Schweppes (CSAB); Last Friday, Coca-Cola Announced $4.1 Billion Purchase of Energy Brands, A Maker Of Vitamin-enhanced Water "Glaceau".
June 1, 2007. PacificHealth Laboratories (PHLI.OB), as previously-discussed, has sold the rights to its ACCEERADE energy drink to CSAB. The Friday announcement of Coca-Cola's $4.1 billion purchase of vitamin-enhance beverage maker Glaceau may provide some indication of the valuations placed on upscale brands in the enhanced beverage industry. NB. this is an unrelated transaction and could mean nothing.
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PacificHealth Laboratories Inc. OTCBB: PHLI $2.12
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $2.75
By: Jonathan H. Ziegler, CFA
Line Of Private Equity Firms Interested In Cadbury Schweppes PLC's U.S. Beverage Operations, Including 7-Up and Snapple. Also includes Rights To Distribute PacificHealth Lab's High-tech Protein-and-carbohydrate Enhanced Sports Drinks.
May 21, 2007. It was announced today that there appears to be 12 private equity firms interested in purchasing Cadubury Schweppes LLC's U.S. beverage business. This business is not only the distributor of 7-Up and Snapple in the U.S. but has an important, albeit small, new growth product, PacificHealth Lab's (OTCBB: PHLI) Accelerade sports drink
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Pluristem Life Systems Inc OTCBB: PLRS $0.10
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Not Rated (Change)
Price Target: N/A
By: Denise T. Resnik, M.S.
Pluristem Life Systems Announces Equity Investment and Patent Purchase
May 25, 2007. CORRECTED: Pluristem Life Systems, Inc. (OTCBB: PLRS) announced on May 22, 2007 that it has closed on a private equity investment in the Company totaling approximately $13.5 million. In related news, also on May 22, Pluristem announced it has purchased patents for its innovative stem cell production technology from the Technion-Israel Institute of Technology and the Weizmann Institute of Science for approximately $2 million. The purchased patents replace a previous license agreement with Technion and Weizmann where Pluristem had exclusive rights to the technology in exchange for royalties.
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Proginet Corp. OTCBB: PRGF $1.60
Research Report
Industry: Software
Rating: Strong Buy (Initial)
Price Target: $2.00
By: Stuart Brown
Proginet Strong Buy Rating In Initiating Coverage; Highly Respected Provider Of Security Software For Business Enterprises
May 23, 2007. Proginet Corp., (OTCBB: PRGF) a highly respected provider of security software for business enterprises, has entered a period of accelerated growth in revenue and profitability. We believe several factors enhance the outlook for the continuation of this trend in the coming years. The surge over the last two years in Business to Business (B2B) activity over the internet has created an unmet need in security. Proginet, with capabilities across all major platforms, is in a strong position to capitalize on this opportunity. An important new product is expected to be launched in the fall, which uniquely addresses several critical business problems related to E-mail and E-mail attachments. Blockade, acquired in January 2005, has been fully integrated and is having an important positive impact on cash flow. This and the Company's strong balance sheet enable future acquisitions. A pro-active search is currently underway to find suitable candidates. Proginet shares are currently selling below standard industry valuation metrics: 13x EBITDA vs.16x, 2x Revenue vs. 4.5x, and 17x PE vs. 31x. In view of the strong prospects for growth and comparable industry metrics, we consider the shares undervalued.
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Pro Travel Network, Inc. OTCBB: PTVL $0.90
Research Note
Industry: Leisure & Entertainment
Rating: Speculative Buy (Reiterated)
Price Target: $2.00
By: Richard W. West, CFA
Pro Travel Networks, Inc. Files 10Q For Third Quarter and Nine Months Ended 3/31/2007; Speculative Buy Reiterated
May 23, 2007. Pro Travel Networks, Inc. (OTCBB:PTVL) files SEC Form 10Q for Third Quarter and Nine Months Ended 3/31/2007. The results for the third quarter and nine months ended 3/31/2007 came in as expected in regard to the revenue. We believe the growth prospect of Pro Travel Networks deserves investors' attention and we maintain our Speculative Buy Rating and 12-month price target of $2.00 per share. A detailed analysis and review of our rating and price target will be presented in our soon to be published Update Research Report.
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Questar Assessment, Inc. OTCBB: QUSA $4.70
Research Note
Industry: Publishing & Media
Rating: Buy (Reiterated)
Price Target: $8.00
By: Sally H. Wallick, CFA
Questar Assessment, Inc. Management to Participate in Dutton Associates Conference; Buy Rating Maintained.
May 28, 2007. Questar Assessment, Inc.'s (OTCBB: QUSA) management will participate in the Dutton Associates "Recognizing Opportunity" Small Cap Conference in San Francisco on Wednesday, May 30. Questar provides educational testing and assessment tools and services, mainly for primary-school and secondary-school systems. During the past decade, the Company has grown partly by means of a series of acquisitions that culminated, in June 2006, with the purchase of Questar Educational Systems, the largest in the Company's history. We expect Questar's presentation at the Dutton Associates conference to focus on the Company's strategies for growth in the $2 billion educational assessment industry, including the significant revenue, operating and financial opportunities created by last year's acquisition. We reiterate our Buy rating on the Company's shares.
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Questar Assessment, Inc. OTCBB: QUSA $4.70
Research Note
Industry: Publishing & Media
Rating: Buy (Reiterated)
Price Target: $8.00
By: Sally H. Wallick, CFA
Questar Assessment, Inc.: Update Following Visit with Management; Buy rating maintained.
May 21, 2007. Questar Assessment, Inc. (OTCBB: TASA) We met with Questar Assessment's management at the Company's Minnesota location recently. Among other things, we discussed the Company's positioning since it completed the acquisition of Questar Educational Systems in May 2006. In order to take full advantage of the competitive, financial and operational benefits of the acquisition, Questar Assessment has made a number of important changes, including completing
a corporate reorganization along functional lines, changing the corporate name and initiating a rebranding campaign in order to communicate this new identity to customers and other industry participants, and expanding and strengthening the Company's business development function. In our opinion, these changes have positioned Questar Assessment to better respond to customer requirements and to be more competitive in developing and keeping business. The Company has a solid backlog of orders that should be booked in fiscal 2007 and fiscal 2008, but we believe that it is important for it to win additional business during the balance of fiscal 2007 in order to offset the anticipated expiration of a contract in July. Financially, we project that Questar will generate cash flow in excess of capital requirements in fiscal 2007 and the Company has begun to amortize the debt taken on to complete the Questar acquisition. We reiterate our Buy rating on Questar's shares.
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SES Solar Inc. OTCBB: SESI $0.60
Research Note
Industry: Industrial & Manufacturing
Rating: Speculative Buy (Reiterated)
Price Target: $2.10
By: Sally H. Wallick, CFA
SES Solar Inc.: First Quarter 2007 Review.
May 23, 2007. SES Solar Inc. (OTCBB: SESI) researches, develops, produces and installs solar energy (photovoltaic or PV) products, including PV modules and roof tiles. SES reported a first quarter comprehensive net loss of $395,333 or $0.008 per share, versus a first quarter 2006 loss of $159,179 or $0.006 per share. No revenue was booked in either period. Highlights of SES's March 31, 2007 balance sheet include cash and equivalents of $5.3 million, working capital of $4.3 million, total debt of $1.2 million or approximately 23% of equity, and shareholders' equity of $5.3 million. SES's business plan includes consolidating production in a new specially designed manufacturing facility being constructed near Geneva, Switzerland. Management expects to complete this highly automated facility by the end of 2007. During the rest of 2007, we expect management's focus to be on completing this facility and preparing to bring it on stream. During this transition period, we do not expect quarterly results to be indicative of the Company's long-term potential. Given this scenario, in the near-term, we believe that SES's share price may be driven by the completion of Company-specific milestones, as well as external events that affect investor perceptions of the solar industry. We rate the Company's shares Speculative Buy.
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Seawright Holdings, Inc. OTCBB: SWRI $1.92
Research Note
Industry: Food Manufacturing & Products
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Jonathan H. Ziegler, CFA
Seawright Holdings: Has Asset Value; Tangential Development viz. Coca-Cola Paying $4.1 billion In Cash For Energy Brands, A Maker of Vitamin-enhanced Water Under Trade-name Glaceau.
June 1, 2007. Seawright Holdings (OTC BB SWRI) should, we believe, currently be viewed as an asset value play rather than a sales-earnings-EBITDA story, primarily because there are none of the latter extant. However, Coca-Cola's announcement last Friday of its $4.1 billion purchase of Energy Brands, which produces Glaceau, an enhanced beverage, may provide some clues as to asset values.
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Seawright Holdings, Inc. OTCBB: SWRI $1.92
Research Note
Industry: Food Manufacturing & Products
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Jonathan H. Ziegler, CFA
Seawright Holdings Announces First Quarter 2007 Results
May 22, 2007. Seawright Holdings Inc. (OTCBB: SWRI) reported its first quarter 2007 results today. The loss per share was ($0.07) on minimal revenues. We had been estimating a loss per share of ($0.01). EBITDA came in at ($412,000) versus our apparently too-optimistic $16,000.
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21st Century Holding Co Nasdaq: TCHC $11.43
Research Note
Industry: Banks, Financial Services & Insurance
Rating: Speculative Buy (Reiterated)
Price Target: $14.00
By: Richard W. West, CFA
21st Century Holding Company: Directors Declare Regular Third Quarter Dividend of $0.18 Per Common Share
May 23, 2007. The 21st Century Holding Company (NasdaqGM:TCHC) Board of Directors declared a regular quarterly dividend of $0.18 per common share for the second quarter of 2007.
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Vita Food Products, Inc. AMEX: VSF $1.58
Research Note
Industry: Food Manufacturing & Products
Rating: Neutral (Reiterated/Update)
By: Gerald F. LaKarnafeaux, CFA
Vita Food Products Reported Sharply Higher Earning in the First Quarter
May 22, 2007. Vita Food Products (AMEX: VSF) annouced an increase in net income in the first 2007 quarter. Per share income was $0.04 versus $0.01 in the comparable 2006 period. Sales of $12.8 million were unchanged from the 2006 first quarter.
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Wave Systems Corp. Nasdaq: WAVX $2.15
Research Report
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $4.00
By: Robert Goldman
Wave Systems Strong Speculative Buy Rating Reiterated In Updated Initial Coverage; Meaningful Penetration Of TC Solutions Likely To Occur Over Next 18 Months
June 1, 2007. Wave Systems (Nasdaq: WAVX) is a leading provider of trusted computing (TC) solutions. Trusted computing solutions combine industry-standard hardware and software to ensure authentication, access control, data protection, and limit identity theft. Trusted computers incorporate the use of a security chip known as a Trusted Platform Module (TPM), combined with related software tools, as a platform for computer and network security. With strong OEM relationships with other TC leaders such as Dell, Microsoft, Intel, Seagate, and Gateway, we believe that Wave is well positioned to take advantage of the expected broad acceptance and utilization of TC solutions over the next few years. Since it is early in the TC technology adoption cycle, the timing and magnitude of market penetration is difficult to predict. However, with 50 million TPMs shipped to date, recent trends suggest broad OEM, enterprise, and government interest in TC solutions. This activity leads us to believe that not only will meaningful penetration of TC solutions likely occur over the next 18 months, but that ultimately all personal computers will be incorporated as trusted computers, thus creating a multi-billion dollar market opportunity for Wave Systems. We believe that sales will initially be driven by the Company's relationships with Dell, Gateway, and Seagate, with traction in the enterprise space to occur next year. We rate these shares Strong Speculative Buy with a 12-month price target of $4.00.
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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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