Midway Gold Upgraded To Strong Speculative Buy Rating; Good Position After Combination To Become The Marquee Junior Diversified Exploration-Development-Production Gold Company In Nevada
Mike Niehuser
August 07, 2008. Midway Gold (AMEX: MDW) is an aggressive junior gold exploration company in Nevada, one of the most mining friendly political jurisdictions in the world. When we initiated coverage of Midway, our opinion was based on management's prospects to bring the Spring Valley project near Lovelock to a multi-million ounce deposit, attractive for acquisition by a major producer. In addition, Midway had the potential to advance its namesake Midway project near Tonopah with additional drilling and study. Advancing the Midway project was initially of secondary importance to its focus on Spring Valley. The gold resource at Spring Valley has increased to nearly one million ounces as of its most recent resource estimate in January of 2008, and the deposit remains of interest to Barrick Gold Corporation (NYSE: ABX) as evidenced by its financial participation. We see the combination of Midway with Golden Predator Mines Inc. (TSX: GP) including the important contribution of Fury Explorations Ltd. (TSX.V: FUR) to be a logical combination of companies. This should be attractive to investors adverse to excessive dilution while remaining independent until the potential of the Company's projects may be realized. Upon completion of the business combination it would appear that the new organization should be in good position to become the marquee junior diversified exploration-development-production gold company in Nevada.
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NexMed Reports Q2; Reiterate Strong Speculative Buy
Denise T. Resnik, M.S.
August 07, 2008. NexMed, Inc (Nasdaq:NEXM) announced on August 6, 2008 financial results for the quarter ended June 30, 2008 in line with their forecasts. The Company continues to work toward regulatory approval of its topical onychomycosis (nail fungus) product and its topical product for male erectile dysfunction, recently named Vitaros®. The Company posted a net loss for the quarter end of $1.63 million, or $0.02 per share, basic and diluted, and $1.99 million, or $0.02 per share, basic and diluted, in the second quarters of 2008 and 2007, respectively. This decrease was primarily attributable to the $750,000 in revenue recognized as a result of the $1.5 million milestone payment received from Novartis during the first quarter and the recognition of $166,667 in revenue related to the up-front payment received in November 2007 from Warner Chilcott. Research and development expenses for the second quarters of 2008 and 2007 were $1.10 million and $1.11 million, respectively. These expenses included approximately $0.26 million attributable to Vitaros® (vs $0.48 million during the same period in 2007) with the balance attributable to other NexACT ® technology-based products and indirect overhead related to research and development. NexMed spent approximately $0.10 million on the psoriasis project and expects to continue to spend modestly on other early stage products under development. Regarding indirect overhead expenses, the Company converted several temporary employees to full-time employees, which generated approximately $0.2 million in expenses related to salaries and benefits. We are heartened by the progress NexMed is making in the development of its two major products, despite its recent regulatory setback with Vitaros®. We will discuss this and other recent developments in our forthcoming Update Report. We reiterate our Strong Speculative Buy rating with as 12-month price target of $2.50 for NexMed's shares.
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Asure Software Presents iEmployee Products at Conference; Strong Speculative Buy Rating Reiterated
Richard W. West, CFA
August 06, 2008. Asure Software (NasdaqGM: ASUR), also d/b/as Forgent Networks, Inc., a provider of on-demand workforce management software solutions, will be exhibiting its iEmployee products at the Independent Payroll Providers Association's 2008 Annual Conference, a two-day conference for payroll professionals, taking place August 7 & 8, in San Antonio, Texas.
Asure Software's common stock opened today at only $0.28 per share. The market is apparently discounting results from Asure's third quarter. We maintain our rating of Strong Speculative Buy and the recently reduced 12-month price target of $1.25 per share.
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CORRECTED: Hi-Shear to Increase Legal Reserve Significantly
Gerald A. Rothstein, CFA
August 06, 2008. Hi-Shear Technology (HSR-AMEX) announced today that it will significantly increase the reserve it established at the end of the third quarter to cover a possible award of attorney's and other litigation costs related to an eight year old law suit. The company's pristine balance sheet will easily handle the payment (the company had $2 million in cash at the end of February and no debt). With the operating outlook unchanged, we are reiterating our Strong Buy rating.
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Patriot Scientific's Stock Surges on Announcement of Merger with Crossflo Systems, Inc.; Strong Speculative Buy Reiterated
Richard W. West, CFA
August 06, 2008. Patriot Scientific Corporation's (OTCBB: PTSC) announced on August 5, 2008, a merger agreement with Crossflo Systems, Inc., a private software and services company, noted for its innovative data-sharing solutions. The Crossflo Systems acquisition, with its data sharing products and services that address the public, commercial, national defense, and Homeland Security areas, is a major positive step for Patriot Scientific to enter a growing market. We reiterate our rating of Strong Speculative Buy and our price target of $0.55 per share.
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Arkados Group Speculative Buy Rating In Update; Integrated Circuits (Ics) For High-Speed Communications Over Existing Electrical Wiring, e.g. Apple iPod
David P. Soetebier, CFA
August 05, 2008. Arkados (OTCBB: AKDS) designs and sells integrated circuits (ICs) for high-speed communications over existing electrical wiring. An important market for these ICs is to enable the sharing of content among personal computers and other consumer electronics products in a building. There are also industrial markets such as "Smart-Grid" solutions for utility companies. This powerline communications is an attractive technology as it offers convenience versus other cable technologies (i.e., Ethernet, coaxial cable and telephone wiring LANs) because it uses the existing electrical wiring and outlets in a building to create the network. The need to run cables to get network capability can be quite costly. In-Stat, estimates that a typical U.S. home may have an average of 40 to 50 electrical outlets, compared to an average of 3 to 5 coaxial cable outlets and as few as 2 to 3 telephone outlets. Arkados has a number of patents relating to the technology, and some of its customers are now shipping product incorporating its chips. An interesting new product distributes the audio output from an Apple (AAPL: NASDAQ) iPod to anywhere in a house. We believe that the Company's revenues will accelerate as this and other products ship in volume. We do not believe that the market is fairly valuing the Company relative to its growth potential and the value of its technology. Our 12-month target is $0.50, a market capitalization of $13 million.
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Shengtai Pharmaceutical Strong Speculative Buy Rating In Initiating Coverage; Development, Production, and Distribution Of Pharmaceutical Grade Glucose In The PRC
Stanley Ng
August 05, 2008. We are initiating coverage on Shengtai Pharmaceutical (OTCBB: SGTI) with a Strong Speculative Buy rating and a 12-month price target of $5.11 per share. Shengtai is principally engaged in the development, production, and distribution of pharmaceutical grade glucose in the PRC. Pharmaceutical grade glucose is the raw material for pharmaceutical manufacturers to add specific formulations to produce medicated transfusion that is one of the most commonly used clinical prescriptions in hospitals and heath care institutions and a well-accepted treatment routine for many ailments. Shengtai also manufactures glucose and starch products for the food and beverage industry for the domestic market. In our view, Shengtai is an attractive play to participate in the prosperous prospects of the huge and rapidly growing PRC healthcare market, especially the fast growing pharmaceutical glucose for transfusion solution market. Shengtai enjoys several distinct advantages over its competitors, such as proximity to raw material supplies, a dominate market share of 40% in Dextrose Monohydrate and 25% in Dextrose Anhydrate in China, vertically integrated manufacturing capability and geographical proximity, and cross-cultural similarities to the end markets in Asia. Based on our production capacity expansion and utilization, product pricing and margin assumptions, we forecast Shengtai's revenue to surge from $51.7 million in FY2007 to $119.5 million in FY2009 and to $149.4 million by 2010. Diluted EPS are estimated at $0.49 for FY2008, $0.65 for FY2009 and $0.82 for FY2010.
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Asure Software Announces Milestone in 200th MRM Customer; Stock Weakness Presents Buying Opportunity; Strong Speculative Buy Rating Reiterated
Richard W. West, CFA
August 05, 2008. Asure Software (Nasdaq: ASUR), also d/b/as Forgent Networks, Inc., a provider of on-demand workforce management software solutions, announced yesterday, August 4, 2008, the signing of Sioux Valley Hospital as its 200th healthcare customer of NetSimplicity's Meeting Room Manager (MRM) scheduling software, another impressive milestone in Asure's history. This latest announcement coming right after the recent introduction of the iEmployee Time & Attendance Custom Reporting Engine is noteworthy. Asure Software's common stock registered only $0.28 per share yesterday. Stock weakness presents buying opportunity. We maintain our rating of Strong Speculative Buy and the recently reduced 12-month price target of $1.25 per share.
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Neoprobe Reports Record Revenues And Updates Clinical Progress Of Lymphoseek and RIGScan CR.
Dennis C. Fischer, CFA
August 05, 2008. Neoprobe Corporation (OTCBB: NEOP) management today discussed second quarter financial results during which total revenues increased by 49% to a record $2.3 million; and updated the clinical progress of Lymphoseek and RIGScan CR.
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Pet DRx Corporation to Report Second Quarter 2008 Financial Results. Speculative Buy Reiterated.
Sally H. Wallick, CFA
August 05, 2008. Pet DRx Corporation (NASDAQ: VETS) provides veterinary primary care and specialized services to companion animals through a network of fully-owned veterinary hospitals. The Company's goal is to become a preferred provider of veterinary services in select markets by acquiring and integrating veterinary care facilities. Pet DRx plans to report second quarter 2008 financial results after the market closes on August 14 and to hold a conference call at 5 p.m. (EST) that day to discuss the results. In conjunction with reporting first quarter results, the Company updated 2008 guidance. It projected same-store revenue growth 5% to 10%; total annual revenue of $73 to $77 million, before acquisitions; additional pro forma revenue from acquisitions of $40 million to $60 million; and aggregate same-hospital operating margin averaging 12% to 15%. We project sequential improvement in second quarter operating results relative to the first quarter. Our revenue estimate is $18.2 million (versus $17.8 million in the first quarter) and a net loss of $2.4 million (down from a net loss of $3.0 million in the first quarter). On July 18, Pet DRx announced that it had: (1) acquired the Valley Animal Medical Center in Indio, California, (2) signed a definitive agreement to acquire a veterinary hospital in San Diego, California and (3) signed letters of intent to acquire two additional veterinary hospitals in San Jose, California and San Diego. We reiterate our Speculative Buy rating on PetDRx's shares. As discussed in more detail in previous Dutton Associates reports and notes, among other factors, we believe that Pet DRx's long-term prospects are enhanced by its participation in the large and growing veterinary industry, which appears to be an excellent candidate for consolidation, and by the growth potential from realizing operating efficiencies at existing animal hospitals and from completing additional acquisitions.
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Pressure BioSciences Strong Speculative Buy Rating In Update Coverage; Unique And Superior Technology For The Preparation Of Biological Laboratory Samples
Denise T. Resnik, M.S.
August 04, 2008. Pressure BioSciences (Nasdaq: PIIO) has developed a unique and superior technology for the preparation of biological laboratory samples and is in the early stages of commercialization of its product platform. While the rollout of this technology and the Company's products has been somewhat disappointing (as reflected by the past three quarters' revenues), we believe that with the sales force in place, sales should ramp up in coming quarters. The Company continues to drive its installed base of Pressure Cycling Technology (PCT) Sample Preparation Systems to enable it to realize increases in its recurring revenue streams from PULSE Tubes, ProteoSolve kits, and extended service contracts. Toward this end, the Company has increased the number of leads in the U.S. by over 2,000 and building its international distribution network with distribution agreements with three partners covering France, Switzerland, Belgium, Japan, and Korea. We expect that the shares will begin to reflect the substantial profits that we believe the Company can generate beginning in 2012. We are reiterating our rating of the Company as a Strong Speculative Buy with a 12-month price target of $8.00 per share.
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IntegraMed America, Inc.'s Q2 FY 2008 on Target with Estimates; Strong Buy Rating Reiterated
Richard W. West, CFA
August 04, 2008. IntegraMed America, Inc.'s (NasdaqGM-INMD) Q2 FY 2008 results were positive, even though the results reflect an increase in effective tax rate, and fully diluted share count increased over last year. However, even with these positive results, IntegraMed's common stock nudged only slightly higher to close the week at $6.54 per share. We believe an investment in IntegraMed at these levels will afford investors a relatively high rate of appreciation with minimal downside risk. We reiterate our Strong Buy recommendation and $14.00 per share price target. An updated Research Report will be published shortly.
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Patriot Scientific Announces Increased Ownership in Talis Data Systems, LLC; Strong Speculative Buy Reiterated
Richard W. West, CFA
August 04, 2008. Patriot Scientific Corporation's (OTCBB: PTSC) announced today, August 4, 2008, its increased ownership, from 15 to more than 41 percent, in Talis Data Systems, LLC. This transaction another step in Patriot Scientific's strategic plan to pursue minority investments in early-stage revenue and technology ventures. Patriot Scientific's common stock has recovered from the 52-week low of $0.15 registered on July 8, 2008. We believe this uptrend could continue and we reiterate our rating of Strong Speculative Buy and our price target of $0.55 per share.
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Hong Kong Highpower Technology Provides Growth Expectations and Expansion Plans
Stanley Ng
August 01, 2008. Hong Kong Highpower Technology, Inc. (Amex: HPJ) announced on July 31, 2008 its growth expectations for 2008 and business expansion plans
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Maine & Maritimes Corporation Second Quarter Previewed.
Sally H. Wallick, CFA
August 01, 2008. Maine & Maritimes (AMEX: MAM): We expect Maine & Maritimes to report second quarter financial results by mid August. We project flat second quarter regulated revenue year over year as a result of the effect of the economic slowdown on demand, but a 13% increase in overall revenue as a result of a revenue contribution from MAM Utilities Services Group (USG). Our diluted earnings estimate (from continuing operations) is $0.15 per share, versus $0.11 per share in the second quarter of 2007. Our confidence in specific quarterly financial projections for Maine & Maritimes is low for several reasons. First, management does not provide quarterly guidance. Second, given the Company's modest share count (about 1.7 million shares) relatively small changes in income can have a meaningful effect on earnings per share. Third, USG's revenue contribution is particularly hard to predict since it is a relatively new business with a focus on project-oriented business and, as a result, we believe that its revenue could vary widely quarter-to-quarter. In the first quarter of 2008, USG contributed revenue of $1.3 million (which accounted for all of the period's year-over-year growth) and net income of $95,000 (about $0.06 to earnings per share). During the quarter USG worked on two significant wind farm projects outside of MPS's service territory, as well as other smaller projects. USG's first quarter performance was a very pleasant surprise, and it was especially impressive for a business that was incorporated in September 2007, less than a year ago. In July, Maine & Maritimes' subsidiary, Maine Public Service Company (MPS), and Central Maine Power Company (CMP) announced plans to construct a 200-mile transmission line connecting Northern Maine to the CMP and New England electric grids. As discussed in previous Dutton Associates notes, we believe that this project could result in significant benefits to MPS, its transmission customers, and its service territory. We reiterate our Buy rating on the Company's shares.
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TZ Limited Reports Progress in 2Q 2008; Reiterate Strong Speculative Buy Rating; Dutton Associates Update Correction of Report
Paul J. Resnik, CFA
August 01, 2008. TZ Ltd. (AX: TZL), in an Update issued on July 31, 2008, reported significant areas of progress in the second quarter of calendar 2008. These developments are in addition to the substantial progress outlined in the Dutton Associates Update published on July 30, 2008. With regard to that report, we note that a tabulating error was made with regard to PDT revenue projections whereby those figures portrayed revenues trending lower in coming years rather than higher, which is our actual expectation. That error has been corrected on the report at the Dutton Associates website, www.duttonassociates.com, and also in institutional services including Bloomberg Professional, First Call, Capital IQ, FactSet, and others As a result of the correction, our earnings per share estimate for 2010 has been revised from $0.46 in our original July 2008 report to $0.47 and, correspondingly, our price target (based on a 20 P/E multiple) has been adjusted from $9.20 to $9.40. With regard to earnings estimates and price targets, we would note that as TZ moves to commercialize its Intevia technology the timing and extent of profitability is highly conjectural. We believe investors would be better served monitoring the general progress in developing and commercializing the technology (such as the events described in this Note) then focusing on earnings estimates that can be affected by fluctuations in exchange rates and the precise timing of initial contracts. We believe the important "take-away" in the TZ story is not whether the Company earns $0.46 or $0.47 (or for that matter $0.40 or $0.60) in 2010 but whether it continues to be successful in entering new markets. We believe such success could result in a valuation of the stock at a multiple of its current level and that is the basis of our Strong Speculative Buy rating.
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Baldwin Wins $2.6 Million Newspaper Order in Japan
Wayne M. Lottinville, CFA
July 31, 2008. Baldwin Technology (Amex: BLD) has secured a $2.6 million order from the Nikkan Sports Newspaper Printing Company, part of the Asahi Newspaper Group, for their four new Mitsubishi newspaper presses. The Nikkan order includes Baldwin's automatic guide roller cleaning equipment, automatic press washers, super washers, and spray dampening systems. The Mitsubishi presses are scheduled to be installed in September 2009 and March 2010 at the Nikkan plant in Tsukiji, Tokyo. We reiterate our Strong Buy recommendation on Baldwin's stock with a price target of $5.00 a share.
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DXP Enterprises Reports 2Q EPS Above Estimate; Price Target Raised and Strong Buy Rating Reiterated
Paul J. Resnik, CFA
July 31, 2008. DXP Enterprises (NASDAQ: DXPE) yesterday announced net income of $6,373,000 for the second quarter ended June 30, 2008, with diluted earnings per share of $.93 (our estimate was $0.86) compared to net income of $3,417,000 and diluted earnings per share of $.56 for the second quarter of 2007. Sales increased 120.1% to $187.8 million (our estimate was $172.6 million) from $85.3 million for the second quarter of last year. In the midst of a sluggish economic environment, DXP has seen solid growth not only in its traditional energy business, but in the food and beverage, agriculture, and mining sectors as well. We are raising our 2008 revenue and earnings per share estimates from $716.9 million to $742.3 million and from $3.55 to $3.70, respectively. With regard to our 12-month price target, we now believe it is appropriate to base it on a 2009 estimate. Assuming 12% growth in revenues to $831.4 million and gross margin of 27.6%, SG&A at 21.0% of revenues, interest expense of $5 million, and a 38.5% tax rate, we estimate earnings per share of $4.45. (Of course, there are likely to one or more acquisitions that could change these numbers.) We will utilize a price/earnings multiple of 16 (which is approximately the current P/E based on trailing 12 month earnings) in calculating our price target. On this basis ($4.45 times 16) we now have a price target of $71 for DXP shares (our previous target had been $60.00). Accordingly, we reiterate our Strong Buy recommendation.
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Pluristem Therapeutics Speculative Buy Rating Maintained; Cell Therapy Products For The Treatment Of A Variety Of Severe Degenerative, Ischemic, And Autoimmune Disorders
Denise T. Resnik, M.S.
July 30, 2008. Pluristem Therapeutics (Nasdaq: PSTI) is a bio-therapeutics company dedicated to the development and commercialization of cell therapy products for the treatment of a variety of severe degenerative, ischemic, and autoimmune disorders. The cell therapy products result from the Company's proprietary system to expand mesenchymal stem cells (MSCs) from post-birth human placenta. The Company's primary therapeutic area under investigation using these cells is critical limb ischemia (CLI) secondary to peripheral vascular disease (PAD). It is also investigating the use of these cells in stroke, multiple sclerosis, and inflammatory bowel disease, and, in conjunction with hematopoietic stem cells (HSCs) from human umbilical cord blood, for bone marrow transplantation (BMT). Pluristem believes its PLX (PLacenta eXpanded) cells are also potentially useful for other indications such as organ transplantation, orthopedic injuries, and the prevention of radiation sickness. Validation of Pluristem's technology is still in the preclinical stage, and we continue to believe that Pluristem has significant challenges to overcome before it can be successful. Its major challenge is to fully validate its hypothesis that the three-dimensional expansion of placental-derived mesenchymal stem cells in its PluriX™ 3D Bioreactor System produces therapeutic products with clear clinical benefits over existing therapies. In addition, the Company seeks to achieve 12-month milestones it has set for itself, including the initiation of its first Phase I clinical trial before the end of 2008 and the completion of the trial showing positive results.
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TZ Ltd. Strong Speculative Buy Rating In Update; Market Leader In Intelligent Fastening And Smart Materials Actuation Control
Paul J. Resnik, CFA
July 30, 2008. TZ (ASX: TZL) is the market leader in intelligent fastening and smart materials actuation control: the integration of intelligence and software control into everyday objects to enable new levels of functionality. The Company has created this novel market by adding intelligence, networking, programmability, and electronic security functions to fasteners in ways not previously considered. While significant time is required to engineer TZ's products into the products of potential customers and then test the products and coordinate manufacturing, TZ has begun to receive initial purchase orders for its products and we anticipate a continuing stream of announcements of contracts signed and markets entered. Moreover, TZ has indicated that going forward it will be increasingly focused on securing shorter-cycle opportunities for Intevia. Since TZ has introduced a unique and potentially disruptive solution, it has virtually no direct competition in intelligent fasteners. The Company maintains that its patents and trade secrets provide a three to four year lead over any competitor just starting to develop a similar product. In 2007, TZ's fastening technology was a development-stage opportunity with great potential but no business. As of today, TZ's Intevia® intelligent fastening solutions business is entering production with the receipt of a high volume order in one of its key market segments. We believe, as pilot contracts turn into high volume business in coming months, TZ shares will respond favorably and we reiterate our Strong Speculative Buy rating on the shares.
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Patriot Scientific Announces Portfolio License Agreement with Audiovox; Strong Speculative Buy Reiterated
Richard W. West, CFA
July 30, 2008. Patriot Scientific Corporation's (OTCBB: PTSC) announced today, July 30, 2008, that Audiovox Corporation has purchased a Moore Microprocessor Patent™ (MMP) Portfolio license from Patriot Scientific's licensing agent, The TPL Group. It is noteworthy that TPL continues to close MMP Portfolio license transactions on a global basis with Audiovox being the third MMP Portfolio licensee announced in the past 30 days. This is most impressive and should add to investors' confidence. We believe Patriot's current share price is an attractive buying opportunity and reiterate our rating of Strong Speculative Buy and our price target of $0.55 per share.
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LJ International Rating Maintained At Neutral; Shares Currently Trade At A Discount To Book Value Per Share, Which We Believe Could Help To Limit The Stocks Downside Risk
Sally H. Wallick, CFA
July 29, 2008. We rate LJ International's (Nasdaq: JADE) shares Neutral. Our rating reflects i) the uncertain outlook for consumer spending (especially on discretionary items such as jewelry) in light of today's challenging economic environment, and ii) financial risks related to lawsuits filed against LJI and its officers and Board members could overhang the stock until these actions are resolved. It is worth noting that LJI's shares currently trade at a discount to book value per share, which we believe could help to limit the stock's downside risk. Full-year 2007 revenue of $152.0 million was up 23% and NI of $1.5 million or diluted EPS of $0.07. The decline in NI primarily resulted from start-up and ongoing operating costs associated with new store openings. LJI's 1Q08 revenue fell 11% year-over-year to $30.4 million. Retail revenue totaled $8.5 million, down 3% as a result of lower sales of high-end jewelry, and wholesale revenue dipped 13% to $21.9 million partly due to the effect of economic pressures on demand in the U.S., this division's largest market. 1Q08 NI, including one-time items, was $1.1 million, or diluted EPS of $0.05. We project 2008 revenue of $131.4 million, down 14%, as a result of the elimination of the high-end "Signature" jewelry line, which generated $13 million of sales last year, and lower wholesale revenue. Our 2008 diluted EPS estimate is $0.08.
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Qiao Xing Universal Telephone Rated Speculative Buy In Update Coverage; Is Undervalued, Though Share Price Performance Will Continue To Be Hindered
Stanley Ng
July 29, 2008. Qiao Xing Universal Telephone (Nasdaq: XING) recently announced its long-overdue financial results for the 12 months ended December 31, 2007. For 2007, total revenue increased 28.7% over 2006 to a record $531.1 million, while gross profit jumped 83.1% to $133.7 million as a result of visible gross margin improvement to 25.2% from 17.7% in the two corresponding periods. Isolating the impact of a number of rather complicated, non-recurrent, non-cash exceptional items, diluted EPS increased 143.5% to $1.26 for 2007 from just $0.52 in 2006. Net cash and net asset value per share amounted to $6.23 and $13.70, respectively. These numbers confirmed our previous optimism on Xing, based on fundamentals and valuation. Because of the limited information flow from the recent results announcement, as well as the sharp drop in average selling price of CECT handsets and lower-than-expected sales of indoor phones, we see the need to revise downward our revenue and net income estimates for 2008 and maintain our below-average level of confidence in our forecasts. Given that the share price performance showed very weak correlation to its fundamentals and valuation, we believe that it is appropriate to apply a conservative valuation and rating on the stock. At our new 12-month target price of $7.02 per share, the stock is trading at 5.6 times 2007 PE and 4.5 times 2008E PE.
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IntegraMed America, Inc. to Report 2Q Results on July 31, 2008; We Present Our Estimates of 2Q; Strong Buy Rating Reiterated
Richard W. West, CFA
July 29, 2008. IntegraMed America, Inc. (NasdaqGM: INMD) will host an investment community conference call and webcast to review its financial results for the second-quarter 2008 at 10:00 a.m. EDT on Thursday, July 31, 2008. We Present Our Estimates of 2Q. The current stock valuation is a major buying opportunity with minimal downside risk. We reiterate our Strong Buy Rating and $14.00 price share target.
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21st Century Holding Co. Announces Earnings Release and Conference Call Date; Strong Buy Rating Reiterated
Richard W. West, CFA
July 28, 2008. 21st Century Holding Company (NasdaqGM: TCHC) announced on July 24, 2008, that it will release its 2008 second-quarter financial results at 2:00 p.m. on Wednesday, August 6, 2008, which will be followed that same day by an investor conference call at 4:30 p.m. ET. 21st Century's common stock has been suffering from the general market weakness. We reiterate our Strong Buy Rating and our 12-month price target of $22.00 per share
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Corrected; 21st Century Holding Co. Company Announces Earnings Release and Conference Call Date; Strong Buy Rating Reiterated
Richard W. West, CFA
July 28, 2008. Corrected; 21st Century Holding Company (NasdaqGM: TCHC) announced on, July 24, 2008, that it will release its 2008 second-quarter financial results at 2:00 p.m. on Wednesday, August 6, 2008, which will be followed that same day by an investor conference call at 4:30 p.m. ET. 21st Century's common stock has been suffering from the general market weakness. We reiterate our Strong Buy Rating and our 12-month price target of $16.00 per share.
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DXP Enterprises to Report 2Q Results on July 30; Reiterate Strong Buy Rating
Paul J. Resnik, CFA
July 28, 2008. DXP Enterprises, Inc. (Nasdaq: DXPE) today announced that it will report second (June) quarter results after the close of trading on July 30, 2008. Our estimates for the quarter are revenues of $172.64 million versus $85.32 million in the year earlier period and earnings per share of $0.86 versus $0.56. As we have previously noted, the Precision acquisition appears to be working well, with revenues trending upward and the acquired business accretive to earnings per share. At the same time, we believe DXP's energy business remains healthy and that there has been no let down in the Company's efforts to gain market share. Our current full year estimates are for $717 million (versus $455 million in 2007) in revenues and earnings per share of $3.55 (versus $2.71). We maintain our rating of Strong Buy and 12-month price target of $60.
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General Steel Holdings, Inc. to Move its Listing to the prestigious NYSE
Stanley Ng
July 28, 2008. General Steel Holdings, Inc. (NYSE Arca: GSI) announced on July 28, 2008 that it has received authorization to list its common stock on the NYSE
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Vyteris, Inc. Announces Completion of Phase I Dose Ranging Study; Rating Returned to Speculative Buy
Richard W. West, CFA
July 28, 2008. Vyteris, Inc. (OTCBB: VYTR), in partnership with Ferring Pharmaceuticals (Ferring), announced the completion of a Phase I dose ranging study using Vyteris' patented Smart Patch transdermal system for delivery of a peptide hormone. We believe this is a most important event for Vyteris, since Ferring advanced a $2.5 million payment, which is due to Vyteris should Ferring elect to proceed with Phase II clinical trials. Based on this progress and the recent financing, we are returning our rating to Speculative Buy and setting a new price target of $1.00 per share.
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21st Century Rating of Strong Buy Maintained; Positive Earnings Results And Relatively Low Valuation Compared To The Peer Group
Richard W. West, CFA
July 25, 2008. Several events have occurred at 21st Century (Nasdaq: TCHC) including positive earnings results, maintenance of the dividend, and the retirement of the founder and CEO, Mr. Lawson. The following summary provides our rationale for reiterating our rating of Strong Buy and $16.00 price target. 21st Century's management made a decision to be selective in the underwriting of home insurance policies, with an eye toward profitability. This decision came about as a reaction to competition from the State of Florida and their lower premium rates. Even with the lower revenue from new underwritings, management's strategy to control expenses resulted in record earnings for both the fourth quarter and year-end 2007. TCHC's 1Q results, while still strong, continued to be impacted by the selective underwriting decision and continued control of expenses. For 1Q 2008, total revenue decreased $5.5 million, or 21.7%, to $20.0 million while total expenses decreased $9.3 million, or 38.2%, to $15.0 million. NI increased 412% to $4.3 million for 1Q 2008 while fully diluted net income per share increased 440% to $0.54 for 1Q. The recent move by 21st Century to diversify its business lines away from mobile homes and auto business continues to produce positive results. Further geographical diversification is adding to the long-term attractiveness of TCHC. Considering the actual low market capitalization of 21st Century and the relative low valuation compared to the peer group, we believe shares continue to deserve a rating of Strong Buy.
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ImaRx Therapeutics Shares Weaken; Speculative Buy Rating Reiterated
Denise T. Resnik, M.S.
July 25, 2008. ImaRx Therapeutics, Inc (Nasdaq: IMRX) shares continue to weaken in the absence of news related to monetization of its urokinase inventory or progress in finding financial support for its microbubble clinical development program. As of this writing, the market capitalization has fallen to under $800,000. Recognizing the disappointment the Company experienced in both the urokinase and microbubble segments of its business, and its need to attain funding in coming months to remain an ongoing concern, we nonetheless believe that the current extremely depressed price for the shares undervalues the Company's assets. ImaRx ended the March 2008 quarter with shareholders' equity of $7.88 million. Subsequently, the Company eliminated a $10.75 million debt to Abbott Laboratories (NYSE: ABT) with a payment of $5.18 million. Assuming a June quarter loss matching the previous quarter's loss of $2.53 (with expenses related to the restructuring of the Company's personnel offsetting expected cost reductions), shareholders' equity could stand at almost $11 million at the end of the June quarter. Moreover, there could be additional inventory value assuming the Company attains Food and Drug Administration approval for release of another $20 million in urokinase inventory that was initially rejected based on initial stability testing data. The Company intends to complete additional testing and submit the data within two months, which would allow the Company to begin sales of this inventory in the fourth quarter of this year. Based on the uncertainties surrounding this Company, we believe these shares are only suitable for investors able to accept a high degree of risk. Nonetheless, we are maintaining our Speculative Buy rating.
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Pet DRx Corporation: VCA Comments on Veterinary Hospital Operating Environment.
Sally H. Wallick, CFA
July 25, 2008. Pet DRx Corporation (Nasdaq:VETS): VCA Antech, a leading owner and operator of veterinary hospitals and veterinary-exclusive clinical laboratories, reported year-over-year second quarter revenue and diluted earnings per share growth of approximately 11% and 12%, respectively. Acquisitions boosted animal hospital revenue nearly 15%. Same-store revenue declined 0.2%. VCA's management characterized the second quarter as a challenging period, given comparisons to strong results last year and a difficult economy. It said that pet owners remain willing to spend to treat their pets as necessary, but are limiting spending somewhat on some elective procedures, such as wellness programs. On a positive note, VCA indicated that it is encouraged by a strong acquisition environment and by a rebound in demand at the company's animal hospitals so far in the third quarter. Regarding the latter, it is not clear why business has firmed, it is still early in the third quarter, and the company emphasized that it does not view this pick up as a predictor for the future. VCA's second quarter results may or may not be indicative of Pet DRx's performance during the period. However, we believe that VCA's comments provide useful insights into the current operating environment for the veterinary industry overall. We expect Pet DRx to report second quarter financial results in August. We reiterate our Speculative Buy rating on PetDRx's shares. As discussed in more detail in previous Dutton Associates reports and notes, among other factors, we believe that Pet DRx's long-term prospects are enhanced by its participation in the large and growing veterinary industry, which appears to be an excellent candidate for consolidation, and by the growth potential from realizing operating efficiencies at existing animal hospitals and from completing additional acquisitions.
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Asure Software Announces MRM with Enhanced Microsoft Outlook Plug-In For Meeting room Manager; Strong Speculative Buy Rating Reiterated
Richard W. West, CFA
July 24, 2008. Asure Software (NasdaqGM: ASUR), also d/b/as Forgent Networks, Inc., a provider of on-demand workforce management solutions, announces yesterday, July23, 2008, the latest version and general availability of Meeting Room Manager (MRM), featuring enhanced functionality with Microsoft Outlook Plug-in. This latest version of the MRM is another example of Asure Software's continuing effort to enhance its on-demand workforce management software, and its availability coming right after the recent introduction of the iEmployee Time & Attendance Custom Reporting Engine is noteworthy.
Asure Software's common stock registered only $0.30 per share yesterday. The market is apparently discounting results from Asure's third quarter. We maintain our rating of Strong Speculative Buy and the recently reduced 12-month price target of $1.25 per share.
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Day Software Announces Appointment of New Chief Financial Officer
David P. Soetebier, CFA
July 24, 2008. Day Software (OTCQX: DYIHY; SWIS: DAYN), a leading provider of global content management software and content infrastructure software, announced on July 22, 2008 the appointment of Richard Francis as Day's Chief Financial Officer effective September 15, 2008. Most recently, he served as Chief Financial Officer of Celona Technologies, a provider of application data migration platforms. Earlier this year Day announced the appointment of Erik Hansen as new CEO. Michael Moppert, founder and CEO of Day Software for over 15 years, will continue to serve the company as Chairman of the Board of Directors.Opinion. We view these changes as positive in the evolution in the growth of Day. The shares are rated Speculative Buy with a 12-month price target of $9.25.
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Day Software: 2Q Outlook
David P. Soetebier, CFA
July 24, 2008. Day Software a Swiss company (OTCQX - $5.80 - DYIHY; SWIS: DYAN) is a provider of integrated content, portal and digital asset management software (i.e., web content). We are expecting favorable revenue growth for June 2008 quarter but negative earnings per ADR comparisons (-$0.02 versus $0.46) primarily because of a CHF 3.62 million tax credit taken in last years second quarter and a significant jump in spending on product development. R&D spending is expected to remain at the first quarter level when it increased 96.3 % year over year. This R&D spending should accelerate product development so contributes to our favorable longer-term outlook. The shares are rated Speculative Buy rating and 12-month target of $9.25.
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Znomics Corrects Minor Accounting Error with Restatement of Financial Results
Wayne M. Lottinville, CFA
July 24, 2008. Znomics, Inc. (OTCBB: ZNOM), filed two amendments with the SEC late yesterday to correct a relatively minor, yet material, accounting error related to revenue recognition. This resulted in a decrease in reported sales of $54,000 and a $54,000 increase in the 2006 net loss to $129,000, or $0.09 per share.
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Amarin Advancing Cardiovascular Development; Speculative Buy Reiterated
Stephen L. Handley
July 23, 2008. Amarin Corporation plc (Nasdaq: AMRN) announced that it has met with the FDA to discuss plans to develop AMR101 for the treatment of the cardiovascular condition hypertriglyceridemia. Following these discussions, the Company is proceeding to Phase 3 with this compound. We are encouraged by this development, which is capitalizing on Amarin's extensive know-how and experience in lipid science.
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LJ International Files Registration Statement.
Sally H. Wallick, CFA
July 23, 2008. LJ International (Nasdaq: JADE) announced that it had filed a Universal Shelf Registration Statement with SEC. Once effective, the registration statement will allow the Company to raise up to $100 million in one or more public offerings, with terms of any offering set at the time of sale. Proceeds of such offerings, if any, could be used to expand the ENZO retail chain; for mergers, acquisitions or other business partnerships; for general working capital purposes; and/or to reduce short-term liabilities. Our rating on LJI's shares is Neutral and reflects the uncertain outlook for consumer spending, especially on discretionary items such as jewelry, in light of today's challenging economic environment. Also, financial risks related to lawsuits filed against LJI and its officers and Board members could overhang the stock until these actions are resolved.
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LogicVision Reduces Net Loss on Flat Sales, But Increases Backlog
Wayne M. Lottinville, CFA
July 23, 2008. LogicVision, Inc. (Nasdaq: LGVN), reported revenues of $3.0 million in its second quarter of 2008, nearly identical with both the first quarter of 2008 and the second quarter a year earlier. Net loss in the 2Q08 was $1.0 million, or $0.10 per share, compared with a loss of $1.3 million, or $0.13 per share, in 1Q08 and a loss of $1.1 million, or $0.12 per share a year earlier.
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NexMed Receives FDA Response on ED Product Filing; Reiterate Strong Speculative Buy Rating
Denise T. Resnik, M.S.
July 23, 2008. NexMed, Inc (Nasdaq: NeXM) received a non-approvable letter from the Food and Drug Administration (FDA) in response to the Company's filing of its New Drug Application (NDA) for approval of its topical treatment for erectile dysfunction (ED). Response by the FDA was received, as expected, on July 21, 2008. The major regulatory issues raised by the FDA were related to the results of a required transgenic mouse carcinogenicity study. In a follow-up conference call the Company held this morning, NexMed stated that the carcinogenesis that occurred in the transgenic mouse model occurred at the highest doses, and that FDA stated that it believed these findings were product-specific. NexMed plans to request a meeting with FDA to discuss a plan to resolve the deficiencies cited in the non-approvable letter. The FDA has 75 days to schedule a meeting. Upon reaching a consensus with the FDA on necessary actions, NexMed plans to work with its ED product partner, Warner Chilcott, Ltd (Nasdaq:WCRX), to the extent agreed to in its collaboration agreement, to amend and re-submit the NDA. While we - along with the Company - are disappointed in the receipt of the non-approvable letter, we are impressed by Management's rapid response. Accordingly, we reiterate our Strong Speculative Buy rating with a 12-month price target of $2.50 for its shares.
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Pressure BioSciences Expands Its PCT Consumables Product Line and PCT-Dependent Research Applications; Reiterate Strong Speculative Buy Rating
Denise T. Resnik, M.S.
July 23, 2008. Pressure BioSciences (Nasdaq: PBIO) announced on July 22, 2008 the expansion of its pressure cycling technology (PCT) product line with the unveiling of a new consumable PULSE Tube and of three new related extraction applications. The new PULSE Tube, the FT500-ND, is a novel, single-use processing container designed specifically for the Company's Barocycler sample preparation instruments. The FT500-ND is based on the original FT500 PULSE Tube currently in use. The FT500-ND is similar to the original in look and feel; however the new tube does not contain a lysis disk. In conjunction with the release of the new PULSE Tube, the Company unveiled its first three applications dependent on the new FT500-ND. Two applications address the extraction of biomolecules from bacteria and fungi in the complex matrices of soil or skin cells collected on adhesive tape. The third application addresses the extraction and isolation of mitochondria from cell suspensions. While installation of Barocycler equipment has lagged behind our projections, we are heartened by the release of this new PULSE Tube and related applications. We reiterate our Strong Speculative Buy rating with a 12-month price target of $8.00.
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IntegraMed America, Inc. Announces Investment Community Conference Call; Strong Buy Rating Reiterated
Richard W. West, CFA
July 22, 2008. IntegraMed America, Inc. (NasdaqGM: INMD) announced that it will host an investment community conference call and webcast to review its financial results for the second quarter of 2008 at 10:00 a.m. EDT on Thursday, July 31, 2008. IntegraMed's common stock continues to be depressed by the general stock market weakness. We believe the current stock valuation is a major buying opportunity for investors with minimal downside risk. We reiterate our Strong Buy Rating and $14.00 price target.
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Review of Patriot Scientific's Letter to Shareholders; Stock Price Presents Investors with Buying Opportunity; Strong Speculative Buy Reiterated
Richard W. West, CFA
July 22, 2008. Patriot Scientific Corporation's (OTCBB: PTSC) President/CEO Rick Goerner presented a letter to shareholders yesterday, July 21, 2008, as a status of key business initiatives. Mr. Goerner is proactively taking steps to increase stockholder value, evidenced by this letter and his stated intention to continue providing periodic updates on progress. The recent depressed price of Patriot's shares can be attributed to the overall troubled market. Patriot's balance sheet is solid, with cash, no debt, and an M&A strategy that could aid future corporate viability. We believe Patriot's current share price is an attractive buying opportunity. We reiterate our rating of Strong Speculative Buy and our price target of $0.55 per share.
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American Software Strong Buy Rating In Update; A Leading Supplier Of Enterprise Management Software and Services
David P. Soetebier, CFA
July 21, 2008. American Software (Nasdaq: AMSWA) is a leading supplier of enterprise management software and services. Through 88%-owned Logility Inc., the Company has a strong market share position in the growing market for Supply Chain Management (SCM) software. We expect the demand for SCM software to become even stronger as major companies increasingly outsource production, driving the need to optimally manage their supply chains, since the long supply line amplifies mistakes. We believe that the poor relative price action in American Software reflects the sell-off in Logility shares, which are an important part of the total valuation of the Company. Logility targets small to mid-sized companies that may be more influenced by recent economic conditions than Fortune 500 type firms. We believe that the market has overreacted to the reported earnings shortfall at American Software. The outlook for all three of the Company's businesses (supply chain management, enterprise resource planning and information technology services) remains positive. In addition to its internal strengths, the Company's strong balance sheet allows it to take advantage of growth opportunities either internally or through acquisitions. Although the fourth quarter was below our estimate we have maintained our Strong Buy rating because of the favorable longer-term outlook. We expect earnings to rebound with an improvement in the U.S. economy. However, our 12-month price target was reduced from $8.40 to $8.00. The Company currently pays a cash dividend of $0.09 per share per quarter, which we consider safe.
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Debut Broadcasting Strong Speculative Buy Rating In Update Coverage; See Potential 10x Return Over Next 12 Months
Randy Wilson
July 21, 2008. Debut Broadcasting (OTCBB: DBTB) is a Nashville-based radio broadcasting company that produces and distributes syndicated radio programs and services to radio stations across the United States and Canada. The Company currently owns and operates seven radio stations. The Company's business plan emphasizes the creation of unique synergies between syndicated programming and station ownership. These unique synergies are created by focusing on acquisition of undervalued and under-utilized media properties in small to mid-sized radio markets in the United States and by rapid expansion of programming and content offerings. Debut has ongoing plans to acquire additional radio stations in attractive target markets as acquisition opportunities arise. The Company is currently focusing on targeted turnaround opportunities in the southeastern United States. Debut Broadcasting's entertainment division, Impact Radio Networks, produces and distributes approximately 20 radio programs, which are broadcast by approximately 1,400 radio station affiliates in the United States and Canada, reaching an audience of over 45 million listeners each week, making it one of the leading syndicators in the industry. Revenues for 2008 are estimated at $10.1 million with EPS of $.03, and growing to $29 million and $.15 respectively for 2009. Shares sell currently at 1.5x 2009 estimated EPS.
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Day Software Reported Favorable Revenue Growth For Its March 2008 Quarter. Adjusting Estimates.
David P. Soetebier, CFA
July 21, 2008. Day Software, a Swiss company (OTCQX: DYIHY; Swiss: DAYN.SW) is a provider of integrated content, portal and digital asset management software (i.e., web content). Total revenues increased 15.1% to CHF 7.39 million from CHF 6.42 million. However, expenses were higher than would have been expected based on sequential changes resulting in a reduction in our earnings estimate. A 96.3% increase year over year (YoY) in spending on research and development was the most notable increase. Based primarily on an expectation that R&D spending will continue at the higher level for the remainder of the year we reduced of 2008 fully diluted estimate per ADR to CHF 0.17. We have maintained our Speculative Buy rating and a 12-month ADR target of $9.25.
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Asure Software Announces iEmployee Time & Attendance Custom Reporting Engine; Strong Speculative Buy Rating Reiterated
Richard W. West, CFA
July 18, 2008. Asure Software (Nasdaq: ASUR), also d/b/as Forgent Networks, Inc., a provider of on-demand workforce management solutions, announces yesterday, July 17, 2008, the release of the new custom reporting engine for its web-based iEmployee Time & Attendance solution. This new iEmployee Time & Attendance custom reporting engine reduces time and effort needed to deliver custom reports, yet another example of Asure Software's continuing effort to enhance its on-demand workforce management software. Asure Software's common stock registered only $0.33 per share yesterday. At this level the stock affords investors an entry point for long-term capital gains with minimal risk. We maintain our rating of Strong Speculative Buy and the recently reduced 12-month price target of $1.25 per share.
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CardioVascular BioTherapeutics, Inc. Releases Form 8-K Regarding Clinical Development Agreements; Neutral Rating Reiterated
Richard W. West, CFA
July 18, 2008. CardioVascular BioTherapeutics, Inc. OTCBB: CVBT released a Form 8-K regarding its entering into clinical development agreements with ProDerm, LP (ProDerm), a limited partnership, on July 8, 2008, and Cardio Derma Clinical Partners, LP, (Cardio Derma), a limited partnership on July 10, 2008. These Cardio Derma Clinical Partners and ProDerm Limited Partnership are the first partnerships to fund Cardio's wound healing drug clinical trials. Conducting FDA clinical trials is expensive and the condition of the financial market over the last eight months has made access to capital more difficult for Cardio. We find it encouraging news that Cardio has entering into two clinical development agreements. Cardio's common stock continues to sell below the $1.00 per share range. We reiterate our Neutral Rating.
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ImmuneRegen BioSciences, Inc. Progressing Nicely Toward IND Filing; Speculative Buy Rating Reiterated
Richard W. West, CFA
July 18, 2008. ImmuneRegen BioSciences, Inc. (OTCBB: IRBO) yesterday, July 17, 2008, announced findings from genotoxicity studies confirming that Homspera®, their lead drug candidate in development, does not cause DNA damage. These findings regarding Homspera® are another positive for IR BioSciences and validates their strategy of outsource testing and development of Homspera® and its derivative compounds. We believe purchases initiated at these levels will provide above average capital gains with minimal downside risk. We reiterate the Speculative Buy Rating and initial price target of $0.20 per share.
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BluePoint Energy Raised to Strong Speculative Buy and $2.50 Target Price; Several Events Discussed In Report Underlying Upgrade
Richard W. West, CFA
July 16, 2008. Since our last Research Report, there have been several events that affected our rating of BluePoint Energy (OTCBB: CPEU) that included a major addition to the business plan, signing of financing for projects and working capital, creation and expansion of the infrastructure, signing of an alliance with Caterpillar (NYSE:CAT-$70.00), signing of Demand Response Asset Aggregation Program (D-RAAP™) installation projects for Macy's (NYSE:M-$15.91) and Starwood Hotels and Resorts Worldwide (NYSE:HOT-$32.31), and signing of D-RAAP installation projects with utilities in California, New York and Hawaii. The D-RAAP program now holds great promise for near-term and long-term revenue prospects for BluePoint Energy. For these reasons we are increasing our rating to a Strong Speculative Buy with a new price target of $2.50 per share; however, investors should review our risk concerns detailed at the end of this report.
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Lime Energy Two Positive Events: Duke Energy Adds to Stock Position and Lime Energy's Stock Joins Russell Microcap Index;Strong Buy Rating Reiterated
Richard W. West, CFA
July 16, 2008. Lime Energy Co.'s (Nasdaq: LIME) SEC 8-K details the additional purchase of common stock by a wholly owned subsidiary of Duke Energy Corporation. Lime Energy announced it was added to the Russell Microcap Index after the Russell Investment Group reconstituted its comprehensive set of United States and global equity indices on June 27, 2008. Both of these events are most positive for Lime Energy. We reiterate our Strong Buy Rating and $17.50 per share price target.
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SOYO Group Announces Headquarters Relocation to Larger Facility; Reiterate Strong Speculative Buy Rating
Paul J. Resnik, CFA
July 16, 2008. SOYO Group Inc. (OTCBB: SOYO) announced yesterday that it has signed a five-year agreement to lease a 74,731 square foot multi-purpose facility, which will nearly double its headquarters, operations and warehouse space. We believe this move underscores the highly visible prospects for revenue growth. Also yesterday, SOYO announced that it has retained Segue Ventures, LLC to provide investor and public relations services. We believe that as the Company grows and seeks to tell its story to a wider investor audience the utilization of a professional investor relations organization is appropriate. SOYO shares have been under pressure in an environment of a weak stock market in which there are particular investor concerns regarding consumer spending. We believe that as SOYO's Honeywell line continues to roll out, the shares will begin to reflect this growth opportunity. We reiterate our Strong Speculative Buy rating.
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Neoprobe Announces Letter Of Intent For Marketing And Distribution Of Lymphoseek In the European Union, Switzerland, Scandinavia, India, Turkey and Canada with DRAXIMAGE, A Unit Of India-Based Jubilant Organosys Ltd.
Dennis C. Fischer, CFA
July 15, 2008. Neoprobe Corporation (OTCBB: NEOP) today announced that it has signed a non-binding letter of intent with DRAXIMAGE, a unit of Indian pharmaceutical manufacturer Jubilant Organosys, to market and distribute Lymphoseek in the European Union, Scandinavia, Switzerland, India, Turkey and Canada.
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Vyteris, Inc. SEC 8-K Details Advanced Payment From Ferring and Payoff Loan to Spencer Trask; Rating Still Suspended
Richard W. West, CFA
July 15, 2008. Vyteris, Inc.'s (OTCBB: VYTR) filed an SEC 8-K detailing that effective July 9, 2008, Ferring Pharmaceuticals, Inc. (Ferring) advanced a $2.5 million payment, due to Vyteris if Ferring elects to proceed with Phase II Clinical Trials. In a related transaction, Ferring loaned Registrant an additional $50,000, enabling payoff of the existing $475,000 principal amount note with Allen Capital Partners, which was paid off in full on July 8, 2008. The advancement of capital to Vyteris by Ferring, the payoff of the Spencer Trask note, and the termination of the senior lien on Vyteris' assets are all positives for Vyteris. We continue the Suspended Rating at this time; however, we are preparing an Update Research Report and will review our current investment stance on Vyteris.
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Znomics Appoints Pharma Expert to Board of Directors
Wayne M. Lottinville, CFA
July 15, 2008. Znomics, Inc. (OTCBB: ZNOM), has appointed Charles N. Blitzer to its board of directors, increasing the membership to five. Mr. Blitzer, 67, joins Znomics with more than 30 years in executive leadership positions in the pharmaceutical industry, having led many public and private companies from start-up to profitability, including Barbeau Pharma, a privately held specialty pharmaceutical company; Fulcrum Pharma, a privately held drug design and development company; and MGI Pharma, a publicly-traded oncology-focused pharmaceutical company.
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Harbin Electric Signs Definite Agreement to Acquire Hengda Electric Motor for $54 million in cash; Reiterate Strong Buy
Stanley Ng
July 14, 2008. Harbin Electric, Inc. (Nasdaq: HRBN) announced on July 11, 2008 that it has entered into a definite agreement to acquire Weihai Hengda Electric Motor Co. Ltd. (Hengda Electric Motor) for RMB375 million (US$54 million) in cash.
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Logility Strong Speculative Buy Rating In Update; Strong Market Share Position In The Growing Supply Chain Management (SCM) Software Area
David P. Soetebier, CFA
July 11, 2008. Logility (Naasdaq: LGTY) has a strong market share position in the growing supply chain management (SCM) software area. The increasing trend of global sourcing puts more emphasis on supply chain planning, which in turn drives demand for Logility's products and provides the Company with above-average growth potential. In addition, the Company's strong balance sheet allows it to take advantage of growth opportunities either internally or through acquisitions. In our judgment, the stock market is not fairly valuing the Company relative to the growth potential for SCM software. We strongly believe that Logility will return to its historical growth rates when the U.S. economy improves. In addition, Logility has recently expanded both its domestic and international sales capabilities to aid sales growth. Consequently, we believe that the current price of the shares provides investors with the potential for above-average price appreciation. The shares are rated a Strong Speculative Buy with a 12-month target price of $12.60 that is less than 20 times our fiscal 2009 EPS estimate of $0.64.
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IntegraMed America, Inc. Announces Contract with Arizona Reproductive Medicine Specialists; Depressed Stock Price Creates a Major Buying Opportunity; Strong Buy Rating Reiterated
Richard W. West, CFA
July 11, 2008. IntegraMed America, Inc. (NasdaqNM: INMD) announced the signing of a 25-year contract to provide business, marketing, and facility services to Arizona Reproductive Medicine Specialists (ARMS) in Phoenix, Arizona. ARMS represents the first fertility center in the southwest and the 13th major market where IntegraMed has committed to providing its full range of services. IntegraMed's common stock continues to be depressed by the general stock market weakness. The recent first-quarter and year-end 2007 results evidence continued strong revenue growth, positive net income, and margins progression. We believe the current stock valuation is a major buying opportunity for investors with minimal downside risk. We reiterate our Strong Buy Rating and $14.00 price target.
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Ampex Corporation Delisted from NASDAQ; Now Trading on Pink Sheets with Symbol AMPXQ; Neutral Rating Reiterated
Richard W. West, CFA
July 10, 2008. Ampex: AMPXQ-Pink Sheets:As expected, the NASDAQ Stock Market filed Form 25 with the SEC today detailing the final action in delisting the Class A common stock of Ampex Corporation (NasdaqGM). Ampex believes that it will emerge from Chapter 11 no later than the fall of 2008 and that it will continue to operate its business without interruption as a debtor-in-possession. The recent follow-on order from Boeing is evidence thatAmpex Data Systems is still doing good business. We are maintaining our Neutral Rating on Ampex.
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Patriot Scientific Announces Bosch Purchases Moore Microprocessor Patent Portfolio License; Strong Speculative Buy Reiterated
Richard W. West, CFA
July 10, 2008. Patriot Scientific Corporation (OTCBB: PTSC) announced today, July 10, 2008, that Robert Bosch GmbH has purchased a Moore Microprocessor Patent™ (MMP) Portfolio license from Alliacense, a TPL Group entity. Bosch's purchase of an MMP license is validation of the strength and broad scope of the MMP Portfolio. This sale of the patent license shows that Patriot Scientific is continuing to bring in high quality companies to the list of licensees. Patriot Scientific common stock is today trading below the $0.20 per share range and the Bosch license sale should be a welcome announcement to shareholders. However, with the current general weak stock market this license may have little effect on the stock price. We reiterate our Strong Speculative Buy Rating and our price target of $0.55 per share.
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IntegraMed Strong Buy Rating Maintained In Update Coverage; Performance For Both 4Q07 And 1Q08 Was Most Auspicious
Richard W. West, CFA
July 09, 2008. IntegraMed has continued its aggressive acquisition program. IntegraMed has since January added two new vein clinics, one in Boca Raton, Florida, and one in Alexandria, Virginia. In the fertility segment, IntegraMed added affiliates in Brooklyn, NY, and in Oklahoma City, OK, and elevated a fertility affiliate to a partner in Mt. Pleasant, SC. INMD is undergoing a transition from two to three revenue- and earnings-producing divisions. The positive results after the August 2007 acquisition of Vein Clinics of America (VCA), with its attendant expenses, stem from the overall planning and execution by management in its continuing acquisition strategy. Considering the August 8, 2007, acquisition of Vein Clinics of America, and the attendant expenses to integrate the acquisition, IntegraMed's first quarter ended 03/31/2008 results are most positive indeed. Comparable results show continued strong revenue growth and positive net income and margins progression. These gains were made even though IntegraMed is aggressively making additional investments to "position it for accelerated long-term growth," and these expenses are expected to continue through the end of the second quarter. In view of the expansion in both the fertility center division and the vein clinic area, the performance for both the fourth quarter FY 2007 and the first quarter FY 2008 is most auspicious. Unfortunately, the price of the common stock has not reflected these positive results. A contributing factor was an institutional seller of its position of over 800,000 shares.
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Neurobiological Technologies Strong Speculative Buy Rating Maintained; Major Research Effort Is Being Concentrated On Phase III Clinical Trials Of Viprinex™ For The Treatment Of Acute Ischemic Stroke
Denise T. Resnik, M.S.
July 09, 2008. Neurobiological Technologies' (Nasdaq: NTII) major research effort is being concentrated on Phase III clinical trials of Viprinex™ for the treatment of acute ischemic stroke, which is believed to have a worldwide market approaching $2 billion. Stroke patients currently have few treatment options, and Viprinex is designed to expand the treatment window from three hours to six hours. A futility analysis on the first 525 patients entered into the two worldwide Viprinex trials is now expected during the first half of 2009. This represents a slippage from the original Company guidance of 3Q2008 and subsequent guidance of 4Q2008 and reflects the slow patient entry into these trials and the slow enrollment of additional trial sites. We believe that if the Viprinex clinical trials are successful and the product gains regulatory approval, the impact on the Company will be overwhelming. We continue, however, to be concerned that the study subject and site issues discussed above add to the cost of the program. Based on delay in the futility analysis, while we retain our investment rating on the shares of Strong Speculative Buy, we are adjusting our 12-month price target from $5.00 to $4.00.
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Kandi Technologies Sets to Launch New Two-Seater and Three-Wheeled Motorcycle for On or Off Highway Driving; Reiterates Strong Speculative Buy Rating
Stanley Ng
July 09, 2008. Kandi Technologies, Corp. (Nasdaq: KNDI) announced on July 8, 2008 that it shortly expects to begin exporting to the US its new two-passenger 150cc, three-wheeled motorcycle, which it has named the Kandi "TT"
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Maine & Maritimes Corporation: Share Price Moves Higher; Target Raised; Buy Reiterated.
Sally H. Wallick, CFA
July 09, 2008. Maine & Maritimes Corporation's (AMEX: MAM) shares have moved sharply higher this week. We know of no news from the Company in this period to explain the share-price increase. However, on July 1, 2008, Maine and Maritimes' regulated utility, Maine Public Service Company (MPS), and Central Maine Power Company (CMP) announced plans to construct a 200-mile transmission line that will connect Northern Maine to the CMP and New England electric grids. We believe that this project could result in significant benefits to MPS and its customers. Also, a more recent event may have attracted attention to the substantial potential for wind energy as part of a national energy policy, which could be viewed as positive for Maine & Maritimes in light of numerous wind farms planned in the state of Maine (see Dutton Associates report dated May 28, 2008 for more details). In the past couple of days, T. Boone Pickens has described a plan to reduce the U.S.'s reliance on imported oil. Among other things, he proposes substantial investment in alternative energy, especially wind and solar. His plan has received widespread media attention. If the new transmission line is completed, we believe that Maine & Maritimes will be well positioned to benefit from growing demand for energy in the Northeast and from the potential for alternatives such as wind to play a more significant role in satisfying that demand. We are raising our 12-month target for the shares from $48 to $54 per share. We reiterate our Buy rating on Maine & Maritimes common stock.
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Pet DRx Corporation Prepays Loan.
Sally H. Wallick, CFA
July 09, 2008. Pet DRx Corporation (NASDAQ: VETS) prepaid a $12 million loan with Fifth Street Mezzanine Partners, II, L.P. The $12.5 million payment included principal, interest and fees (including a $242,429 prepayment fee). The annual rate on the loan, which was required to be paid in full on March 8, 2010, was 15%. Pet DRx prepaid the loan because it believes that, when needed, additional capital may be available to it on more favorable terms. We reiterate our Speculative Buy rating on Pet DRx's shares.
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SES Solar Inc. to Sell Power Station at Manufacturing Plant.
Sally H. Wallick, CFA
July 09, 2008. SES Solar Inc. (OTCBB: SESI) agreed to sell the photovoltaic power station on the roof of its manufacturing plant near Geneva, Switzerland to Services Industriels de Geneve for approximately $5.6 million. SES, which expects to receive the sale proceeds during the first half of August, anticipates using a portion of the cash to repay an outstanding loan in the amount of approximately $4.4 million. Following completion of the sale, SES will no longer generate revenue from the sale of electricity produced by the power station. In the first quarter of 2008, such sales generated revenue of $83,138 versus none a year earlier. Our rating on SES's shares remains Speculative Buy.
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Znomics Launches Drug Discovery Program for Treatment of Inflammatory Diseases
Wayne M. Lottinville, CFA
July 09, 2008. Znomics, Inc. (OTCBB: ZNOM), announced today a collaborative research program to design and develop preclinical compounds to treat diseases such as rheumatoid arthritis, asthma, and inflammatory bowel syndrome. The collaboration is with Oregon Health & Science University (OHSU) and Thomas Scanlan, Ph.D., who is the director of OHSU's chemical biology program. Under the research agreement, Znomics will fund the program and will have the option to exclusively license the rights to the discoveries. With this collaboration, Znomics has met its objective this year of establishing three de novo drug discovery programs with the goal of having three preclinical lead compounds in different disease areas in 2010.
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Hong Kong Highpower Technology Buy Rating In Initiating Coverage; World Market Share In Nickel Hydride Metal (Ni-MH) rechargeable batteries Growing From 10% To 30% Goal By 2012
Stanley Ng
July 08, 2008. We are initiating coverage on Hong Kong Highpower Technology (AMEX: HPJ) who through its wholly owned subsidiary, Shenzhen Highpower, is engaged in the manufacturing of Nickel Hydride Metal (Ni-MH) rechargeable batteries for both consumer and industrial applications. The Company has significantly increased its production capacity of Ni-MH batteries and distribution network in the past few years and has become a major global player with a 10% global market share in 2007. The Company has also successfully developed a line of Lithium-ion (Li-ion) batteries to complement its existing strength in Ni-MH batteries. In our view, Hong Kong Highpower is an attractive vehicle to participate in the long-term growth prospects of rechargeable batteries due to the growing trend of replacing single use batteries for both energy renewable and environment protection reasons. Meanwhile, the Company has commenced the construction of a much larger manufacturing facility in Huizhou to increase its production capacity with a target of increasing its global market share of 10% in 2007 to 15% in 2008 and to 30% by 2012. Based on our HPJ revenue and net income forecasts, revenue will increase to $91.9 million in 2008 from $73.3 million in 2007 and rise 17% to $107.4 million in 2009; net income will jump 139% to $3.98 million in 2008 from $1.66 million and rise 13% to $4.50 million in 2009. We estimate that basic and diluted EPS will increase to $0.27 in 2008 from $0.17 in 2007 and rise to $0.30 in 2009.
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Elron Price Weakness Creates Historic NAV Discount Of Over 50%
Barry L. Raeburn
July 08, 2008. Elron (Nasdaq: ELRN) has experienced significant price weakness this year which has accelerated in the last week. The company is trading a price not seen since early 2003 and at a valuation that is only $13 million above the value of its public company holdings value. Elron's net asset value (NAV) is in excess of $400 million and reported shareholders' equity is in excess of $250 million. We know of no fundamental reasons for this recent accelerated decline in price. We review the progress and expansion of the group companies.
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MortgageBrokers.com First-Quarter Results Reviewed; Reiterate Speculative Buy Rating; Price Target Lowered
Richard W. West, CFA
July 08, 2008. MortgageBrokers.com (OTCBB: MBKR ) reviewed in a press release, results for its first-quarter ended March 31, 2008; revenue increased for the 12th consecutive quarter and net income came in at a profit. MortgageBrokers.com's business plan is very attractive, especially in today's real estate market environments. We reiterate our Speculative Buy Rating, however in view of the general stock market and investors' perception toward mortgage companies; we are reducing our price target to $0.40 per share.
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General Steel Holdings Strong Speculative Buy In Update Coverage; Will Continue To Trade At A Significant Premium To The Average P/E Valuation Of Its Chinese Peers.
Stanley Ng
July 07, 2008. We believe investors should consider the disappointing financial results for 1Q08 for General Steel (NYSE: GSI) as an atypical non-recurring event because the higher-than-expected revenue and sustained increase in product prices suggest General Steel's products are in strong demand. The positive demand drivers, such as massive infrastructure and construction projects in the Shaanxi Province, growth in the energy sector along with the need to transport oil and natural gas through steel pipes, and higher demand for hot rolled carbon and silicon steel sheets for producing agricultural vehicles, discussed in our previous update report, will remain intact. Meanwhile, the sourcing of cheaper iron ore from its joint venture partner and the shift in product mix to higher margin silicon sheet at Daqiuzhuang Metal should contribute to visible improvement in gross margin ahead. Based on our revised revenue and net income forecast, the stock is trading at estimated 2008 PE of 12.5 times, which is at a substantial premium over its Chinese peers. Given its much higher ROE, more prestigious NYSE Arca listing status, inclusion in the Russell 3000 Index and forecast impressive 84.3% net income growth in 2009 driven by its latest acquisition of Hengda Steel, we believe General Steel will continue to trade at a significant premium to the average PE valuation of its Chinese peers. At our new target price of $14.60 per share, the stock is trading at prospective fully diluted 2008 PE of 17.8 times and 10.0 times for 2009.
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Viral Genetics Rating Neutral In Update; Lead Drug Candidate May Have Potential In The Fight Against HIV And Other Diseases; High Degree Of Uncertainty Regarding Further Development Of Its Therapy Due To Its Lack Of Funds
Wayne M. Lottinville, CFA
July 07, 2008. Viral Genetics (OTCBB: VRAL) is a preclinical-stage biotechnology company currently focused on developing a potential anti-HIV/AIDS therapy. Preliminary results from a study with 137 patients suggest that the Company's lead drug candidate, VGV-1, acts differently from current therapies and could offer an advantage in combating the virus. A recent announcement of progress in identifying the compound's underlying mechanisms of action may lend support to the drug's potential efficacy. Management just announced that due to positive progress the Company is making to understand its lead compound for treatment of HIV/AIDS, it was able to negotiate additional licensing rights for the treatment and detection of several forms of cancer and other diseases. The Company has started preparing an IND to be filed with the FDA in order to begin testing VGV-1 in an HIV clinical trial. In its last financial statement filings with the SEC, which were for the third quarter of 2007, Viral Genetics reported no cash or other current assets on its balance sheet. Since that time management says the Company has raised additional operating funds through private placement subscriptions at share prices above the Company's stock market price, although specific details of these transactions have not been filed with the SEC. Although we find that Viral Genetics' lead drug candidate may have potential in the fight against HIV and other diseases, the Company bears an extraordinarily high degree of uncertainty regarding further development of its therapy due to its lack of funds. Due to this constraint, we reiterate Viral Genetics' Neutral rating.
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LogicVision Schedules Quarterly Earnings Call for July 22
Wayne M. Lottinville, CFA
July 07, 2008. LogicVision, Inc. (Nasdaq: LGVN), has scheduled a conference call for July 22 to discuss the Company's financial results for its second quarter that ended June 30. Revenues are expected to be in the range of $3.0 million to $3.2 million, and net loss is expected to be in the range of $800,000 to $1.0 million, or $0.08 to $0.10 per share.
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MediciNova Announces Second NYC Investor Presentation
Wayne M. Lottinville, CFA
July 07, 2008. MediciNova, Inc. (Nasdaq: MNOV; Osaka: 4875), announced today that Dr. Richard Gammans, Chief Development Officer of MediciNova, will present a Company overview at an investor conference this Thursday, July 10, at 9:00 a.m. Eastern time. This is the second announced presentation for MediciNova in New York City for that morning. MediciNova's management is expected to provide corporate updates and overviews of the Company's two lead product development programs: MN-166, an orally administered compound for multiple sclerosis, and MN-221, an intravenously administered compound for status asthmaticus.
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21st Century Holding Co. Files SEC 8-K Detailing Reinsurance for 2008 - 2009 Hurricane Season Strong Buy Rating Reiterated
Richard W. West, CFA
July 03, 2008. 21st Century Holding Company (NASDAQ: TCHC) filed a SEC 8-K on July 2, 2008, detailing its excess of loss catastrophe reinsurance treaties for the 2008 - 2009 hurricane season. These reinsurance treaties will afford approximately $298.0 million of aggregate coverage, which should be sufficient if the 2008 - 2009 hurricane season is as bad as 2005. We reiterate our Strong Buy Rating. Due to the current market environment, we are lowering our price target to $16.00 per share.
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NexMed Receives Cash Infusion of $5.75 Million, Reiterate Strong Speculative Buy
Denise T. Resnik, M.S.
July 03, 2008. NexMed, Inc. (Nasdaq: NEXM), announced on July 1, 2008 that it entered into a purchase agreement with Tail Wind Fund Ltd (a long term investor in the Company) and Solomon Strategic Holdings, Inc in which the Company received $5.75 million in gross proceeds from the issuance of new convertible notes due December 31, 2011. These notes are secured by a mortgage on NexMed's manufacturing facility in East Windsor, New Jersey. The Company used the proceeds to pay off in full the $3.06 million in debt outstanding under a purchase agreement between the Company and Twin Rivers Associates LLC, dated October 26, 2007, which was secured by a similar mortgage. NexMed has earmarked the balance of the proceeds for working capital and general corporate purposes. We believe this strategy allows NexMed to raise funds, that together with milestone payments it receives from its collaboration partners, to support the development of its products while minimizing dilution of shareholder value. As such, we reiterate our Strong Speculative Buy rating with a 12-month price target of $2.50.
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American Software (AMSWA (NASDAQ) earnings estimate and target revised
David P. Soetebier, CFA
July 02, 2008. With additional analysis of American Software's fiscal fourth quarter (April) results and continued concern over the U.S. economy we have reduced our fiscal 2009 FD earnings per share estimate to $0.26 from $0.42. In addition, we have revised our 12-month price target to $8.00 from $8.40. The changes primarily reflect concern over the U.S. economy and not any changes in our longer-term outlook for the company. We have maintained our Strong-Buy rating
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LJ International: 2008 Estimate Introduced; Neutral Rating Established.
Sally H. Wallick, CFA
July 02, 2008. LJ International (NASDAQ: JADE): We are introducing a 2008 revenue projection for LJ International (LJI) of $131.4 million and a diluted earnings estimate of $0.08 per share. The Company reported 2007 revenue and diluted earnings per share of $152 million and $0.07, respectively. Management expects a global economic slowdown to hinder LJI's performance during the balance of 2008, although it remains confident that the Company will be profitable for the full year. We are introducing a Neutral rating on LJI's shares. Since August 2007, our rating had been Suspended in light of a limited amount financial and operational information available on LJI and uncertainties about the Company's recent and current business trends. Our Neutral rating reflects the uncertain outlook for consumer spending, especially on discretionary items such as jewelry, in light of today's challenging economic environment. Also, we believe that financial risks related to lawsuits filed against LJI and its officers and Board members could overhang the stock until these actions are resolved. We believe that it is worth noting that LJI's shares currently trade at a discount to book value per share.
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MediciNova to Review Product Development Programs at Investor Presentation
Wayne M. Lottinville, CFA
July 02, 2008. MediciNova, Inc. (Nasdaq: MNOV; Osaka: 4875), will host a presentation for analysts and investors in New York City on Wednesday, July 9, that will be simultaneously broadcast over the internet. MediciNova's management will provide a corporate update and overview of the Company's two lead product development programs: MN-166, an orally administered compound for multiple sclerosis, and MN-221, an intravenously administered compound for status asthmaticus.
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CardioVascular BioTherapeutics Maintained At Neutral Rating;Several Events Impacting The Current and Future Investment Status, Centering On The Progress Of Its Drug Candidates Through The FDA
Richard W. West, CFA
July 01, 2008. Since our research report on CardioVascular BioTherapeutics (OTCBB: CVBT) on April 5, 2007, there have been several events impacting the current and future investment status, centering on the progress of its drug candidates through the U.S. Food and Drug Administration (FDA) clinical trial process. These events address the financing for FDA clinical trials and the possible raising of additional capital. CardioVascular is making positive progress with its ongoing FDA clinical trials for: severe coronary heart disease -- (surgical delivery and catheter), wound healing, peripheral artery disease, lumbar ischemia, and disc ischemia. Furthermore, the research in the pre-clinical trial developmental stage for bone, diabetes, and stroke adds to the possibilities for CardioVascular's protein-based drug candidates. Considering the status of the FDA trials and the partnership financing, we believe that CardioVascular could be attractive on a long-term speculative basis. However, in view of the low level of cash, the negative working capital, the obvious need for capital, and the uncertainties surrounding the balance of the $15.0 million PIPE, we are maintaining our rating of Neutral. We will review the rating when the uncertainty surrounding CardioVascular's capital situation is resolved.
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ImaRx Therapeutics Speculative Buy Rating In Update; Microbubble Technology May Offer Medically Important Alternative
Denise T. Resnik, M.S.
July 01, 2008. We continue to believe that ImaRx's (Nasdaq: IMRX) microbubble technology may offer a medically important alternative to other stroke therapies currently marketed and in development. Lipid-coated microbubbles represent a new class of agents with both diagnostic and therapeutic applications. Microbubbles have low density, and stabilizing them with lipid coatings imparts unusual properties for diagnostic imaging and drug delivery. Perfluorocarbon (PFC) gases trapped within lipid coatings make microbubbles sufficiently stable for circulation in the vasculature. Research has shown that microbubbles can be cavitated (expanded and contracted) with ultrasound energy to deliver site-specific bioactive materials when the microbubbles are associated with therapeutic agents and can be used in the treatment of vascular thrombosis when the microbubbles do not carry drug. We also believe that the monetization of urokinase represents a non-dilutive mechanism for ImaRx to raise funds for the continuation of its microbubble clinical program. However, the Company has two large hurdles at this time. It must be able to successfully conduct the additional stability testing now required by the FDA, and it must find a mechanism to monetize urokinase or otherwise develop another source of income to use to further its clinical program. While the results from the previously-terminated TUCSON SonoLysis clinical trial have not been made public, we expect the success of the Company will ride on those results as well.
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MediciNova Strong Speculative Buy Rating In Update; Status Asthmaticus and Treatment Of Multiple Sclerosis Programs Expected To Drive Value Of The Company's Stock
Wayne M. Lottinville, CFA
July 01, 2008. We continue to believe that MediciNova (Nasdaq: MNOV) is significantly undervalued. The Company's near-term drivers of its value are shown in Table 1 in our report. The Company's cash and marketable securities on its balance sheet are more valuable than its market capitalization, which, in our opinion, represents significant misvaluation given the Company's product pipeline and results announced to date. This cash balance should provide the Company with full cost coverage until year-end. By then, MediciNova may have secured a partner and additional financing to move its multiple sclerosis drug into Phase 3 testing. MediciNova is developing eight unique, differentiated small molecules for nine therapeutic indications. These drug candidates offer significant potential improvements over current standards of care. MediciNova's development programs include potential treatments for asthma, multiple sclerosis, and cancer. In a strategic move last year, the Company decided to prioritize two of its most promising programs: MN-221 for the treatment of status asthmaticus and MN-166 for the treatment of multiple sclerosis. Both programs are expected to drive the value of the Company's stock in the short term.
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BluePoint Energy, Inc. Updates its D-RAAP Program in California and Hawaii; Speculative Buy Rating Reiterated
Richard W. West, CFA
July 01, 2008. Chapeau, Inc. d/b/a BluePoint Energy, Inc. (OTCBB: CPEU) announced on June 30, 2008, that it has successfully executed Demand Response Asset Aggregation Program (D-RAAP™) agreements with 24 commercial, institutional, and industrial demand response customers in California and Hawaii. With the announced success of its D-RAAP™, BluePoint is turning the corner, will shortly be reporting revenue, and could be progressing toward positive cash flow and earnings in late FY 6/30/2009. We are in the final stage of preparing an Update Research Report and, in consideration of the revenue projections, will be reviewing our current rating of Speculative Buy and the $2.20 per share price target.
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CEL-SCI Insiders Snap Up More Company Stock
Wayne M. Lottinville, CFA
July 01, 2008. CEL-SCI Corporation (Amex: CVM) insiders picked up where they left off in March and purchased more of the Company's shares on the open market on Monday, June 30. In the latest round, insiders purchased 21,130 shares of Company stock at $0.65 per share, for a total of $13,735. At the end of March, the CEO and the four VPs together purchased 20,808 shares of Company stock on the market at $0.66 per share, according to SEC filings, for a total of $13,730.
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Maine & Maritimes Corporation: Transmission Line Project Announced; Buy Reiterated.
Sally H. Wallick, CFA
July 01, 2008. Maine & Maritimes Corporation's (AMEX: MAM) regulated utility, Maine Public Service Company (MPS), and Central Maine Power Company (CMP) announced plans to construct a 200-mile transmission line that will connect Northern Maine to the CMP and New England electric grids. We believe that this project could result in significant benefits to MPS and its customers, including: 1. Access to competitive electric power markets and, therefore, to competitive regional electricity costs. 2. Greater market access for renewable energy generated in MPS's operating territory. 3. Greater system reliability. 4. Lower greenhouse gas emissions and less dependency on fossil fuels and imported oil. 5. Incremental annual local property tax revenue. 6. Job creation and new research and development initiatives in MPS's operating territory. We consider the announcement of this project good news for MPS. In addition to providing it with access to new markets and increased system utilization when complete, we believe that it could create revenue-generating opportunities for Maine and Maritimes' MAM Utilities Services Group (USG) during the planning and construction phases. USG is an unregulated corporation that provides electrical services including transmission line and substation design and construction. We reiterate our Buy rating on Maine & Maritimes common stock.
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Neoprobe Introduces Enhanced Gamma Detection System And Confirms Phase III Clinical Trial Progress Of Lymphoseek.
Dennis C. Fischer, CFA
July 01, 2008. Neoprobe Corporation (OTCBB: NEOP) has introduced an enhanced gamma detection system and confirms Phase III clinical trial progress of Lymphoseek.
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CORRECTED: General Steel Sets to Join Russell 3000 Index; Forecasts and Rating Under Review; Rating And Target Price Reiterated
Stanley Ng
June 30, 2008. General Steel Holdings, Inc. (NYSE Arca: GSI) announced on June 26, 2008 that it is set to join the broad-market Russell 3000 Index when Russell Investments reconstitutes its comprehensive set of U.S. and global equity indexes at the close of the market on June 27
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Harbin Electric Announces Common Stock Private Placement; Reiterate Strong Buy
Stanley Ng
June 30, 2008. Harbin Electric, Inc. (Nasdaq: HRBN) announced on June 26, 2008 that it has successfully placed 3.5 million of its common stock at a price of $14.13 per share
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IntegraMed America, Inc's President/CEO Receives Entrepreneur of the Year Award; Strong Buy Rating Reiterated
Richard W. West, CFA
June 30, 2008. IntegraMed America, Inc. (NasdaqGM: INMD), a leading operator of fertility centers and vein care clinics in the United States, announced today, June 30, 2008, that its President and CEO, Jay Higham, received the Ernst & Young Metro New York Entrepreneur of the Year® 2008 Award in the Healthcare category. As this recent award signifies, the future appears to hold much promise for IntegraMed; their fertility business continues to perform well and their acquisition of Vein Clinics of America positions them for increased growth as a provider of management services to emerging medical sectors. We reiterate our Strong Buy Rating Rating.
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LJ International reports FY 2007 and 1Q08 Results.
Sally H. Wallick, CFA
June 30, 2008. LJ International (NASDAQ: JADE) reported full-year 2007 revenue of $152.0 million, up 23% from $123.8 million in 2006, and net income of $1.5 million or $0.07 per diluted share, down from $5.3 million or $0.29 per diluted share in 2006. The decline in net income primarily resulted from start-up and ongoing operating costs associated with new store openings. First quarter 2008 revenue declined 11% year over year to $30.4 million. Retail revenue totaled $8.5 million, down from $8.8 million a year earlier as a result of lower sales of high-end jewelry, and wholesale revenue dipped to $21.8 million from $25.2 million in the prior year. We believe wholesale demand was hurt by, among other things, the economic slowdown in the U.S., which is LJI's largest market. First quarter net income was $1.1 million or $0.05 per diluted share, versus $0.6 million or $0.03 per diluted share in the first quarter of 2007. First quarter 2008 net income included a gain on the sale of investment property, partially offset by one-time charges for litigation expenses and the write-off of bad debt from a wholesale customer that filed for bankruptcy protection. Excluding these items, net income was $0.4 million or $0.02 per diluted share. Management projects second quarter revenue of approximately $31 million, down from $33 million last year, and net income (excluding one-time litigation expense) of $0.5 to $0.6 million ($0.02 to $0.03 per diluted share). It expects a global economic slowdown to hinder LJI's performance during the balance of 2008, although it is confident that the Company will be profitable for the full year. We have not yet had an opportunity to discuss today's announcements with LJI. Once we do, we expect to introduce a 2008 estimate and to reinstate a rating on the shares. In the meantime, our rating remains Suspended.
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Patriot Scientific Announces Sale of Patent License to Japan-Based Hoya Corporation; Strong Speculative Buy Reiterated
Richard W. West, CFA
June 30, 2008. Patriot Scientific Corporation (OTCBB: PTSC) announced today, June 30, 2008, that Hoya Corporation (Hoya) has purchased a Moore Microprocessor Patent™ (MMP) Portfolio license from the TPL Group. Hoya is a diversified manufacturer of information technology, healthcare, and lifestyle refinement products. The sale of the patent license to Hoya Corporation shows the TPL Group continuing to bring in high quality companies to the list of licensees. However, with the current general weak stock market this license could have little effect on the stock price. We reiterate our Strong Speculative Buy Rating and our price target of $0.55 per share.
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Pluristem Demonstrates Potential to Treat Inflammatory Bowel Disease; Manufacturing Site Certified; Reiterate Speculative Buy Rating
Denise T. Resnik, M.S.
June 30, 2008. Pluristem Therapeutics Inc. (Nasdaq:PSTI) announced on June 25, 2008 that it received Good Manufacturing Practices certification for its manufacturing facility in Haifa, Israel. This site will manufacture PLacetal eXpanded (PLX) cells for use in the Company's upcoming EU clinical trials. Certification was awarded by Biotec Distribution Wales, Ltd., the designee of the Paul Ehrlich Institute, the EU equivalent to the FDA, which is responsible to monitor the import, certification, labeling, storage and distribution of PLX cells into the EU for clinical trials. PLX cells are Pluristem's placental-derived mesenchymal stromal cells that have been expanded in the Company's proprietary PluriX™ 3-D bioreactor. Pluristem expects to begin Phase I/II clinical trials for its first product, PLX-PAD for the treatment of peripheral artery disease during Q4 of this year. In addition to developing its PLX cells for the treatment of peripheral artery disease, Pluristem has conducted preclinical research in other therapeutic areas to ascertain the effectiveness of PLX. Most recently, on May 28, 2008, Pluristem announced that PLX cells have demonstrated in vivo efficacy in the treatment of Crohn's Disease and Ulcerative Colitis, collectively termed Inflammatory Bowel Disease (IBD) in laboratory animals. We are heartened by these preclinical results, both for the Company and for the large numbers of patients with unmet medical needs. While there is no certainty in the development of medicines that preclinical work translates into clinical success, we believe that success in any of Pluristem's areas of therapeutic focus can impact greatly on the Company's shares. In light of this, we reiterate Speculative Buy rating with a 12-month price target of $6.50.
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Qiao Xing Universal Provides "Qualitative" Estimate for 2007 and Timing of 2007 Form 20F
Stanley Ng
June 30, 2008. Qiao Xing Universal Telephone, Inc. (Nasdaq: XING) announced on June 24, 2008 that the Company would file its 2007 Annual Report on Form 20-F as soon as possible and, in any event, not later than July 15, 2008. Additional, the Company reiterated that its net sales, gross profit, gross margin, income from operations, net income and basic EPS would reach a record high for the fiscal year 2007, same as it reported in a press release dated December 27, 2007. In our view, the much delayed release of its financial results for