Monday, October 4, 2010

Can Encounter Technologies Quiet the Concerns Surrounding, Return Stock to Brighter Days

Undoubtedly the goals of Encounter Technologies (Pink Sheets: ENTI) are lofty, especially as they relate to their video uploading, editing, sharing and viewing site, but investors have voiced concern over the viability of these ambitions and shares in the video technology company have tumbled since hitting a six-month high of 0.0850 in May, crashing down to the 0.0004 over the past week.
Sparking much of the concern among investors has been the number of press releases the company has issued over the past few weeks; each proclaiming positive steps the company is taking yet seeing little in terms of improved share prices. Many of those releases have directly, or indirectly, focused on the advancements of MusicMatrix and its potential to generate, in their words, “major success.” That success would come from videos from the world’s largest music companies, record labels and musicians as well as from users who can “participate in music video editing competitions in order to win prizes and recognition.”
Back in May ENTI announced it had started production of television commercials to promote MusicMatrix, an aggressive marketing campaign that would “reach over 44 million households per month June through December 2010.” Networks carrying the commercials would include MTV, MTV2, ESPN, BET, Spike and about 23 others, in total broadcasting 842 :30 to :60 second advertisements. In addition, the company would also target specific Internet networks and social media outlets with the focus on attracting the 18-25 demographic.
That announcement was followed by another release the next day in which ENTI announced they had “delivered proposals to agents which represent such artists as Lady Gaga, Souljah Boy, Justin Beiber, Snoop Dog, and Black Eyed Peas” for artist spokesperson deals related to MusicMatrix. More than three months later ENTI announced they had finalized negotiations toward securing musician Ne-Yo as their premier spokesperson. While Ne-Yo is certainly a respected name in the music business and has a strong fan base his name wasn’t among those listed back in May, a list that was comprised of the most marketable musicians today.
Taken at their word, these releases indicated that MusicMatrix was indeed on the right path yet the site has, according to, failed to take off with the 18-24 demographic, an age group that is “under-represented” at the site. Time spent on the site has also dropped off significantly, falling from an average of nearly eight minutes per user in June to under a minute in September. Perhaps most troubling for investors is the membership of MusicMatrix which, according to skeptics, appears to be dominated by “dummy accounts” created by the company.
For the optimistic investor the MTV Music Awards will be airing this week and with a traditionally strong viewership an advertisement for MusicMatrix could spark some interest and generate membership to the site. ENTI has not disclosed any information regarding plans to advertise during the airing and with their penchant for press releases this could be a bad sign for shareholders.
Trying to figure out where the money to advance MusicMatrix is coming from is another issue all together. In April ENTI announced gross revenue projections for their Video Sales Platform (VSP) product line for the quarters ending Dec. 31, 2010, March 31, 2011, June 30, 2011 and September 30, 2011, stating they believed they would gross $11,664,000 in revenue and sell over 12,960 video products by that Sept. date. That same press release announcing the projections offered no specific packages or details that supported the projected figures.
Sticking with MusicMatrix, a July press release from ENTI informed investors that the company had entered discussions with various music labels to address the potential streaming of concerts on the music hub. Then CEO Rick Dibiase stated that streaming live concerts had been something that was considered since the beginning, calling it “a highly desirable, cost-effective means of achieving additional revenues while bringing concerts to worldwide audiences.” As for the feasibility of such a venture Dibiase said “We already have relationships with some of the largest music companies in the world and we’ll be talking to smaller labels as well, in line with setting up or contracting larger servers for high bandwidth capabilities. A streaming concert can easily take in some impressive numbers for the site if you look at the stats.”
While the ideas are there for MusicMatrix the practicality of such ventures may be a bit further off.
Less than three weeks after this July announcement Dibiase stepped down as CEO and was replaced by Strategic Rare Earth Metals CEO, Anthony Dibiase. According to the board executives the move was a “beneficial step to accommodate the company’s precipitated growth in Q3 which is expected to continue through 2011.” The new CEO went on to say “Our main focus in moving forward will be to work to identify any areas within the company that need improvement to compliment our evident strengths and recent success, toward exponentially enhancing these attributes. That said, we are in tune with shareholder sentiment and are performing this move, for the most part, to organize the company toward increased transparency and accessibility as well as market confidence and appeal.”
More action from ENTI followed as they announced the hiring of The Britto Agency to “ensure maximum market position for its online interactive music video sensation, MusicMatrix.” Dibiase said the move was “a significant step for MusicMatrix and one I’ve thought for quite some time would bring tremendous value and added potential,” an interesting statement from somebody who has been the CEO for a week.
Making things more difficult for ENTI to establish credibility among investors was last week’s debacle concerning the company’s released podcast in which it was said Anthony was being interviewed by the Wall Street Journal. The podcast went into detail regarding the WSJ’s August readers, circulation and its overall reputation, all information that helped spike the buy volume in the stock. The only problem was that Dibiase was not interviewed by the WSJ but by a Wall Street reporter, a significant error and one that many investors felt may have been staged.
With so many press releases being churned out by ENTI announcing planned discussions, a potential spokesperson, future ventures, etc. it’s difficult to see where the value lies in this company. While the ideas that appear to be driving MusicMatrix are solid the practicality behind their implementation remains suspect, especially due to a loss in investor confidence.
ENTI has a 200 day moving average of 0.0047 and a 50 day moving average of 0.0009 as can be seen in the chart below:
ENTI Chart 090910
ENTI Chart 090910

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Will Reorganization of Trico Marine Services Bring Investors New Opportunities or has Offshore-Energy-Services Provider Hit the Ocean Floor

Over the past years Trico Marine Services Inc. (PinkSheets: TRMAQ) shares have been taking on water and just last week the provider of support vessels for offshore oil and natural-gas drillers became submerged, voluntarily filing petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Included in the petitions were Trico’s U.S. companies as well as its Cayman Islands holding company but its other foreign subsidiaries will remain afloat.
While the company has said its U.S. and worldwide operations are expected to continue without interruption they will be going through a restructuring process in hopes of restoring viability and regaining investor trust. That may be a difficult task for Trico as their company stock was suspended on Wednesday after failing to meet NASDAQ listing qualifications and they have said they have no plans to appeal the decision. Since the delisting Trico has been trading on the Pink Sheets under the symbol TRMAQ. Now the question arises, what does Trico have to offer?
It was last October that the stock was trading at a 52-week high of 9.47 but a dismal first quarter was followed by additional troubles into the second, eventually sinking the stock to a low of 0.18 on August 26; a day after the bankruptcy announcement. According to Richard Bachmann, chairman and chief executive, the decision to reorganize was based on “The combination of a sluggish economy, a highly leveraged balance sheet and imminent interest payments due.” These factors led Trico “to determine that a court-supervised restructuring is the best course of action for the company and its stakeholders.”
That leveraged balance sheet included a tough to swallow $353.6 million of debt compared to listed assets of $30.6 million according to their bankruptcy filing. Sealing TRMAQ’s bankruptcy fate was a June loan agreement established with Tennenbaum Capital Partners that required the company to file for Chapter 11 no later than September 8, 2010.
While that June agreement included $50 million in debtor-in-possession financing it has since been revised to $35 million for bankruptcy financing.
As Bachmann has pointed out, TRMAQ’s collapse has been the result of a number of factors and many of those were seemingly out of the company’s control. In 2009 there were plenty of signs that there could be trouble for TRMAQ as the oil industry began cutting expenses on oil and natural gas projects, an obvious indicator that things could become tight for a company that provides support services for the offshore and subsea services market.
Those services are wrapped in Trico’s three operating companies: DeepOcean, specializing in subsea installation and construction support, survey, inspection, maintenance and repair services as well as subsea decommissioning. CTC Marine, specializing in trenching, cable-lay, life of field seismic, and subsea installation, and Trico Offshore, specializing in offshore towing and supply services.
As the demand for oil began to shore up, the need for Trico’s services became less and less, eventually leading to a situation where their cash intake was insufficient to meet debt obligations.
Provided Trico can restructure and get its financial feet on firmer ground there stands a chance they could return to positive days. Much of that will depend on the global economy and demand for oil but with their operations in the North Sea, West Africa, Mexico, Brazil, the Middle East and Southeast Asia there remain opportunities.
Those opportunities may arise from the number of subsidiaries operating under Trico as their foreign subsidiaries were not included in the recent bankruptcy filing and are not subject to the requirements of the U.S. Bankruptcy Code.
With all that said, shares in TRMAQ have continued to tumble since the bankruptcy filing and subsequent delisting on the NASDAQ exchange. On Thursday the stock dropped to a low of 0.13, well below its 5-day moving average of 0.21 as well as its 50-day and 200-day moving average of 0.48 and 2.45 respectively.
Whether Trico can emerge out of the bankruptcy filing and find smoother waters to sail remains to be seen but with investors dumping shares of TRMAQ as quick as they can it appears doubtful.
TRMAQ Chart:
Trico Marine TRMAQ Chart
Trico Marine TRMAQ Chart

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Oil Demand in China Sparking Boon for Longwei Petroleum Investment Holding Limited, Can Energy Company Sustain Growth?

With the spike in demand for oil in China few energy companies have benefited more than Longwei Petroleum Investment Holding (NYSE AMEX: LPH) and this has paid off for shareholders who have seen their stock climb steadily over the past week accompanied by its above average trading volume.
A distinct advantage for LPH has been its efforts to concentrate their oil and gas operations exclusively in China. These operations, which include transporting, storing, and selling finished petroleum products, have established LPH as one of the largest oil and gas operations in China and put them on track for what could be significant growth.
That growth is being projected in large part because of China’s growing demand for oil and as CFO Michael Toups stated “As one of the largest oil and gas distributors in China, Longwei is a direct beneficiary of the long-term upward trend in oil consumption and vehicle use in China. Last year China became the largest new automobile market in the world, and a recent International Energy Agency report suggests that China may now also be the top global energy consumer as well. These immense outside developments, taken in conjunction with our strong internal growth, continue to substantiate our business model and underscore the attractiveness of our industry.”
The attractiveness of LPH appeared to be underscored by their announcement of select operating data earlier this week. In that announcement reported revenues of $39 million for the month of June, a 130% increase from the same month in 2009. For the fiscal year ending June 30, 2010 LPH reported total revenues of $339.4 million, a 72% spike from the $196.8 million in 2009 fiscal revenues and a 9.2% improvement upon the company’s earlier guidance that suggested revenues would hit $310.8 million for the year.
Accompanying their improved revenues LPH reported impressive gross profit numbers as well, generating $8.1 million for the month of June, a 138% increase from the same month last year. For their fiscal year LPH saw profits of $68.5 million, a 119% jump from their 2009 fiscal year profits.
As for the upcoming year LPH has been nothing but optimistic as they project sales to top $500 million for their fiscal year 2011, an optimism expressed by Longwei’s President and CEO Cai Yongjun who forecasted the growth saying “The outlook for our industry and economic environment is promising, as China’s rapid economic growth recently propelled it past Japan as the world’s second largest economy in terms of GDP. Coupled with China’s growing dominance in the automobile market and strong industrial growth in our operating region, Longwei is in an ideal position to capitalize on the boom in oil demand.”
Much of that optimism has been based on LPH’s new Gujiao storage facility in Shanxi Province, a storage facility that has a capacity of 70,000 metric tons. Because LPH is the sole licensed intermediary in Gujiao it enjoys a relative monopoly in the area, making it the only option for local wholesalers, fuel pump operators and the mining industry. Along with their Gujiao storage facility LPH has a storage facility in Taiyuan City, also in Shanxi Province, that is capable of storing 50,000 metric tons.
Of significant importance to LPH is the increase in industrial activity in Shanxi Province, suggesting the company is on solid ground as consumer needs continue to improve their financial standing. In addition to its dominant presence in Shanxi Province LPH also have the necessary licenses to operate and sell products throughout China, opening the door for further expansion in a growing market.
On Friday the International Energy Agency suggested that global oil demand would continue to climb this year, noting China’s demand remained strong.
While all signs point to LPH growth there are those investors who have opted to wait until the company files its 10K so that they can get a clearer picture. Getting that clear picture and forecasting predictions can be difficult for company’s operating in China as their sales prices and cost basis are largely dependent on regulations and price control measures instituted and controlled by the PRC government. LPH is also subject to uncertainty surrounding the price of crude oil, a factor that directly influences the company’s operations.
Having a clear advantage in one of China’s fastest growing provinces makes LPH an attractive company and while there are several factors that remain out of their control the company has, up to this point, followed a solid business plan that could soon make quite a few investors very happy.
LPH has a 50 day moving average of 2.11 and a 200 day moving average of 2.33 which can be seen in the chart below:
Technical Chart of LPH
Technical Chart of LPH
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Hemispherx Biopharma’s Lengthy Struggle to Bring Chronic Fatigue Syndrome Drug Ampligen to Market Leaving Investors Weary, Where is HEB Heading Next?

It has been nearly a year since Hemispherx Biopharma, Inc. (NYSE AMEX: HEB) received the news that Ampligen, the Chronic Fatigue Syndrome (CFS) drug they have been working on for more than three decades, was not being approved by the FDA. While the FDA said it wanted HEB to conduct additional studies to demonstrate Ampligen’s effectiveness time may be running out for the company when it comes to investors as many have grown tired of waiting.
While HEB has long stated that Ampligen could target diseases that included Hepatitis B and Hepatitis C as well as kidney cancer and metastatic malignant melanoma what has attracted investors most has been the potential surrounding CFS. With more than four million Americans suffering from CFS it appeared HEB had the inside track on the treatment drug but the FDA has derailed those beliefs and despite CEO William Carter’s insistence that the rejection “provided us with a clear path to approval and commercialization” the stock has continued to tumble.
Last September the stock was trading at its 52-week high of $2.24 and when news from the FDA hit in November shares began to dip, eventually sinking below the $1.00 mark in December and they haven’t seen that level since. HEB actually hit its 52-week low of 0.43 in June but has since established a five day moving average of 0.52, a .0.02 improvement over its 50-day moving average but still a significant drop from its 200-day moving average of 0.64.
HEB certainly wasn’t helped by their August agreement to settle all pending securities class actions against them. Allegations leveled against the biotechnology firm asserted the company, along with certain officers, misrepresented the status of their drug application for Ampligen. Details of the settlement, which still requires court approval, have not been disclosed. While the company stated the settlement “expressly is not an admission of any culpability by Hemispherx or its officers” it hasn’t won them any favor among investors who have seen it as yet another blow to their credibility.
With the difficulties in getting Ampligen approved by the FDA the company has been touting its Alferon N Injection, an FDA approved intralesional treatment of genital warts. While there has certainly been success in gaining FDA approval for Alferon N Injection it’s the company’s declaration, published on their own site, that “Alferon N Injection may also have activity against other viral infections such as Multiple Sclerosis, Hepatitis C, HIV, West Nile Virus, and SARS.” HEB does note that Alferon N Injection has not been approved for that use but it seems like the treatment is a broad stroke for a variety of serious viruses, infections and diseases.
Skeptics of HEB have pointed to this broad stroke as one reason for their concern as it appears to be the same approach the company has taken with Ampligen as they announced in their recent quarterly report the completion of a “three-year research program funded by the National Institute of Infectious Disease of Japan indicating that a nasally delivered flu vaccine, when coupled with Ampligen®, yielded positive results in providing a more robust and longer lasting immune response in non-human primates.”
That same report also highlighted that “In connection with Max Neeman International, a leading clinical research organization in India, the Company obtained approval to begin a Phase II b study from the Indian Drugs Controller General as it works to enroll subjects for the current monsoon season to treat seriously ill hospitalized flu patients evaluating Alferon N Injection.”
So if Ampligen never receives approval as a treatment for CFS it could still find its way as a flu and influenza vaccine enhancer.
This is something that shouldn’t be overlooked as any type of treatment or treatment enhancer for an influenza outbreak or respiratory disorder could prove tremendously beneficial to a shareholder. In noting that Ampligen, as well as Alferon N Injection, have reportedly shown promise in that area and if they continue to show more promise in that arena then HEB could shift their focus to marketing them as such.
See below for a chart on Hemispherx Biopharma:
Technical Chart on HEB
Technical Chart on HEB

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Diversification of MOP Environmental Solutions Products Could be Key to Company’s Success, Bolster Investor Activity

Having grabbed investors attention following the Deepwater Horizon oil spill disaster in the Gulf of Mexico earlier this year MOP Environmental Solutions, Inc. (Pink Sheets: MOPN) quickly saw its fortunes turn when they received a purchase order from BP, pushing their share price from 0.08 to a 52-week high of 0.35 on June 7, the first day of trading following that announcement. Since that time shares have continued to dip and MOPN is now back down to the 0.09 range, slightly lower than its 50-day moving average of 0.1053 but better than its 200-day moving average of 0.0675.
While a favorable opinion of MOPN was recently expressed by Larry Oakley, often referred to as the “Elder Statesman of Emerging Growth Investment Writers,” his insistence that potential investors view Mop Environmental “from the posture of someone who has two intents: (A) To realize the type of appreciation potential that you would have enjoyed if you had invested in Microsoft, for example, when it was just starting as a public company; & (B) To be a part of & a backer of a technology that has the probability to save countless birds & animals from the ravages of oil spills; clean up not only Earth’s atmosphere, but a great many aspects of our industrial facilities” might be a bit much.
That being said, there are certainly a number of attractive qualities presented by MOPN that could turn the stock into a financial reward for investors. The most attractive of these qualities is in the fact that their oil recovery products work and they that claim has been backed by a number of testimonials from BP, USA Fuel Service LLC and others. Not to be overlooked, the company also points out that “MOP sorbents are the only oil spill remediation products on the planet that are green from “cradle-to-cradle” being manufactured with green hydro-electric power, and all natural materials that are 100% Biodegradable and 100% Recycled.” When it comes to cleaning up an environmental disaster the “greener” the process the more likely it will be received well.
The increased demand for MOP Environmental Solutions products following the Gulf oil spill actually put the company in a position where they needed to secure financial services so that they may continue to fill orders. MOPN opted to secure Bibby Financial Services for that need and according to Diamond the move would allow them to offer “better terms to capture large orders from large customer accounts.”
One of those larger accounts appeared to have been landed as the company stated last month that “one of the world’s largest oil companies, whose name we are unable to disclose without violation of their press release disclosure terms, has accepted MOP Environmental Solutions, as a vendor, with issuance of vendor number, internal contact hot line, and the confirmation of its vendor status.” While details surrounding that oil company remain vague it certainly has Diamond excited as he has expressed supreme optimism for what lies ahead. The CEO said the company now anticipates orders for spill kits designed for oil cargo vessels and with U.S. Federal Regulations mandating all oil carrying vessels in U.S. Waters to carry oil spill cleanup equipment the financial benefit for MOPN could be significant.
This growth has led MOPN to form strategic alliances with a pair of companies that would make meeting the demands possible. The company has turned to Leigh Fibers to help produce the sorbent materials while Global Sales Co. has the production capacity for booms five times greater than MOP.
Adding to the value of MOPN is the fact their breakthrough absorbent material MOP (Maximum Oil Pickup) is patented and according to the company clean oil can be recovered from the oil-saturated sorbent, making it possible to extract, salvage, and re-use up to 95% of the absorbed oil. That oil is free from contamination and the remaining 5% MOP material can be burned to recover 100% of the available energy.
Topping off all the positives for MOPN is their posted financial statements back in late July in which they revealed they had over $90,000 in cash on hand and total assets nearing $250,000 for the period ending June 30, 2010. In the month that followed that June 30, 2010 statement MOPN said they had about $200,000 in available cash and accounts receivable of over $165,000.
Despite all of the positive aspects of MOP Environmental Solutions the company’s stock remains in the 0.08-0.10 range and that should raise some red flags.
What MOPN appears to be lacking is any kind of presence in the consumer market. The company has insisted MOP is ideal for absorbing everything from gasoline, diesel fuel, motor oil and viscosity enhancers to jet fuel, ethyl alcohol and methyl ethyl and can be used in oil and gas production, petroleum transportation, gas transmission, health care facilities, rail transportation, service stations, airports and “many other industrial and service applications” yet it hasn’t found itself on the shelves of a major store.
Failing to reach the direct to consumer and the commercial industrial markets could have devastating effects on the company and it is difficult to see how the company is addressing the issue.
Much was being made about the opinion of Oakley and while he stated “the long-term benefits I see are amazing” and the product could “practically save this planet for our children’s children” there remains plenty of doubt in the minds of many investors. Oakley does mention that his opinion piece on MOP was without cost to the company but that he was “sufficiently impressed to invite Charles Diamond to have his company come aboard as a client” on his site. Naturally Diamond agreed and Oakley will now be preparing a Research Report in the next two weeks, a service that dos come with a charge.
While landing orders for emergency response projects and government deals will get MOPN some attention the company will need to rely on the consumer and commercial industrial markets to generate their financial rewards. If they are honest in their efforts to grow their products this could be a great time to investigate the stock but failing to take off following the BP oil disaster could be an ominous sign as they may not ever see a better opportunity to prove their products worth.
MOPN Chart:
Technical Chart on MOPN
Technical Chart on MOPN
MOPN is a penny stock traded on the Pink Sheets. Penny stocks are shares of public companies that trade below $5 per share.

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Friday, October 1, 2010

Popular Penny Stocks Making Headlines Tuesday, Sept. 14, 2010

Sunvalley Solar,Inc. (OTCBB: SSOL), announced on Tuesday the signing of several new contracts with customers in Southern California as part of their Green Community Program designed to provide solar power solutions which will reduce utility bills in addition to reducing the eco-damage caused by traditional power. The new contracted services are for over 52,000 Watts of solar power in the Los Angeles area.
SSOL opened trading at $0.0553 on Tuesday.
Camelot Entertainment Group, Inc. (OTCBB: CMGR), announced on Tuesday that Vendetta Films had obtained all-media rights for Australia and New Zealand for DarKnight Pictures “National Lampoon’s Dirty Movie.” Camelot Distribution and DarKnight Pictures is one of four divisions that comprises CMGR, the others being Camelot Film Group, Camelot Studio Group and Camelot Production Services Group.
CMGR opened trading at $0.0200 on Tuesday.
American Power Corp. (OTCBB: TGMP), announced on Tuesday the closing of a $10 million financing agreement through a 2.5 year stock issuance agreement with Black Sands Holdings, Inc. The dynamic energy company focuses on  acquiring near-term, large-scale coal projects in close proximity to national transportation links. American Power envisions developing its large coal resources to support electricity generation.
TGMP opened trading at $1.01 on Tuesday.
Highline Technical Innovations (Pinksheets: HLNT), announced on Tuesday the company had received Purchase Orders from SFC Buy Direct and Anything RV. The purchase orders total $749,000 in initial revenues for Highline Technical Innovations, Inc. HTI is comprised of three subsidiaries, Highline Hydrogen Hybrids, Bo-tie Manufacturing and Hoss Motorsports.
HLNT opened trading at $0.01 on Tuesday.
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SMTC Corporation Showing Consistent Improvement, Strong 2Q Numbers and Order Backlog Suggest Positive Outlook for EMS Provider

SMTC Corporation Showing Consistent Improvement, Strong 2Q Numbers and Order Backlog Suggest Positive Outlook for EMS Provider

It’s been more than ten years since SMTC Corporation (NASDAQ: SMTX, TSE: SMX) completed its IPO and closed the day at $25.38 on volume exceeding two million. Within a month and a half shares would climb above the $30.00 mark but by February 2001 those shares were consistently below the $10 mark, eventually settling around the $1-$4 range where it’s been ever since. That rapid descent has made their recent climb all the sweeter for the recent investors who managed to get in low on the stock and have seen share prices rise. That ascension, backed by strong second quarter numbers, could be a positive sign of what’s to come for the global electronics manufacturer as they boast of a solid order backlog and continued demand from their current customers as they enter the third quarter.
The core business of SMTX is as a provider of end-to-end electronics manufacturing services (EMS) which includes PCBA production, systems integration and comprehensive testing services, enclosure fabrication, as well as product design, sustaining engineering and supply chain management services.
SMTX’s five-day moving average of $3.42 is above its 50-day average of $2.92 and its 200-day moving average of $2.43.
Much of that can be attributed to the company’s impressive second quarter figures in which they showed an 82% increase in revenue to $71.2 million in quarter over quarter and compared to their first quarter of 2010 revenue jumped by $9.8 million- a strong indicator of growth. Not only did SMTX’s revenue growth exceed that the 5.90% growth (yoy) of its industry but also well above its competitors as Jabil Circuit Inc (JBL) reported 32.10% growth, Flextronics International Ltd. (FLEX) reported 13.50% and Celestica Inc. (CLS) reported 13.10% growth.
The revenue growth was due in large part increased orders from its top customers compared to first quarter orders as well as the addition of five new customers in the early stage of ramping production. John Caldwell, President and CEO of SMTC Corporation attributed the company’s solid earnings performance to “the combination of higher revenue and the continuing effect of last year’s cost and capacity reduction initiatives to measurably increase margins and overall profitability.”
While SMTX shied away from specific guidance concerning the rest of the year Jane Todd, SVP Finance and Chief Financial Officer, did say “Through the later part of 2010 we expect to increase cash generation and lower debt levels through continued profitability and reduced working capital as supply chain issues abate and timing issues reverse.”
SMTC Corporation’s recent strategic relationship with FEI Company (NASDAQ: FEIC), has also provided some traction for the stock as the company will now “manufacture integrated control cabinets for FEI’s Titan(TM) Transmission Electron Microscopes leveraging the internal precision sheet metal fabrication, printed circuit board assembly and cable harness assembly capabilities of its Chihuahua, Mexico campus.”
The relationship with FEI, as well as a number of SMTC’s existing clients, could be of long standing benefit as the order backlog and demand has the ability to drive share prices for some time.
Of course there are some variables that leave SMTX vulnerable as the economic uncertainty that continues to hang has left many investors cautious, especially as it concerns a company who has collapsed once before. In addition, SMTX does not have any insight into their customers end markets or their inventory, leaving future orders up in the air to some degree. To a large degree SMTX’s future is based on the future success of their customers and in this economy that continues to be a difficult environment to predict.
Putting things into perspective, SMTC Corporation has now seen four consecutive quarters of strong revenue growth and has maintained solid relationships with their existing customers while continuing to attract new customers, making them an attractive company among penny stock investors. If things progress as forecasted share prices could continue to climb and SMTC could once again find themselves on solid ground.
SMTX Chart:
Technical Chart on SMTX
Technical Chart on SMTX
SMTX is a penny stock traded on the NASDAQ. Penny stocks are share in public companies that trade below $5 per share.

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Safety Issues Surrounding Obesity Drug Could Signal End of Road for Arena Pharmaceuticals as Company Awaits FDA Decision

Safety Issues Surrounding Obesity Drug Could Signal End of Road for Arena Pharmaceuticals as Company Awaits FDA Decision

It appears as if the writing is on the wall for the clinical-stage biopharmaceutical company Arena Pharmaceuticals Inc. (NASDAQ: ARNA) as new safety issues surrounding their experimental obesity drug lorcaserin has most analysts doubting FDA approval, a potentially devastating scenario that has already led to a dramatic hit to the share price.
That doubt seems to center around a report that suggests lorcaserin increases the potential risk for a number of cancers. In that report the FDA noted that different cancers developed in rats who took the drug for up to two years and while it has been pointed out that the administered dosage to get those effects were much higher than would be used in humans that has done little to ease the concerns.
Just two months ago the sky was the limit for ARNA as they were the beneficiary of an FDA rejection when the agency nixed Vivus Inc.’s application for the weight loss drug Qnexa. That news sent share prices for ARNA from the $3.88-$4.27 range to as high as $7.46 as recently as Sept. 9 but following Tuesday’s news the price plummeted on massive volume, closing at $4.13.
While the FDA has not formally rejected the application for lorcaserin, with news due later this month, the concerns over the rejected drug Qnexa were not as serious, indicating ARNA’s rejection is coming. Lorcaserin was already facing a tough road ahead due to questions of its effectiveness, its potential to cause heart valve problems, and cognitive and psychiatric side effects; now that road appears even tougher.
Arena Pharmaceuticals has done its best to downplay the cancer concerns but they will have to convince the FDA of lorcaserin’s safety, something that will almost certainly require longer and larger clinical trials. The prospect of new trials could crush ARNA as the small San Diego-based company has sunk most of its resources into lorcaserin and with no approved drugs on the market the company could lose the backing of investors.
With the deck stacked against ARNA many of those investors have already jumped ship, this despite an FDA review finding that one of the lorcaserin doses tested by Arena met the agency’s criteria for effectiveness “by a slim margin.” Unfortunately for ARNA even the FDA panel’s acknowledgement of effectiveness carried a negative tone as they urged the clinical review division to “evaluate whether or not the weight loss associated with lorcaserin is clinically significant.”
Whether that “slim margin” is great enough to offset the concerns over the potential risks is yet to be seen but the FDA is holding the answer. In their summary delivered to the FDA panel Arena said lorcaserin’s benefits “substantially outweigh the potential risks.”
It has been more than a decade since a new diet drug hit the market in the U.S. and Arena Pharmaceuticals is in the middle of a three-way race with Orexigen Therapeutics and Vivus to get a product on the shelves and in front of the overweight population. Analysts have already predicted lorcaserin approval could generate annual sales of $822 million, a figure that has kept some investors holding on to their shares in ARNA.
As the stock continues to fall ahead of the FDA’s decision the risk-takers are finding an opportunity to bet long on the stock or perhaps inherit a pot of gold if approval is granted. While investors are banking on lorcaserin Arena has been developing three other drugs for the treatment of blood clots, sleep disorders and pulmonary arterial hypertension, all of which are still in the early development stage.  If the FDA rejects Arena’s application for lorcaserin these may be the drugs that shareholders hope gain approval some time down the road.
ARNA has a 50 day moving average of 6.20and a 200 day moving average of 3.99 as can be seen in the chart below:
Technical Chart for ARNA
Technical Chart for ARNA

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OTCBB Afternoon Active Volume Leaders for Wednesday, Sept. 15 (SSOL, ARTS, ELCR, GELV)

Sunvalley Solar Inc. (OTCBB: SSOL) is the top volume leader among OTCBB stocks in afternoon trading on Wednesday with 125.65 million shares trading hands. Volume spiked for the solar power technology and solar system integration provider following their announcement of another commercial solar installation contract in Thermal City, California with Felix Chao Chuo Farm. Inc. The contract value is in excess of $3 million and entails a 653 Kilowatt installation that includes three solar systems comprised of 6,876 solar panels.
SSOL opened the day trading at 0.0839 and by midday is trading at 0.0901
Artfest International Inc. (OTCBB: ARTS) volume stands at 58.74 million in afternoon trading. The direct sales marketing company that brings together artists, investors, decorators, designers, private collectors and art galleries recently announced they had signed with a new IR/PR company, TEN Associates LLC. As part of that announcement they revealed they would be launching a new marketing campaign for the fall Television and Football season.
ARTS opened the day trading at 0.0002 and by midday is trading at 0.0001
Electric Car Company Inc. (OTCBB: ELCR) has experienced heavy trading on Wednesday with volume standing at 34.86 million by midday. The Springfield, Massachusetts-based company operates as a business development, marketing, and manufacturing conglomerate with a focus to provide 100% electric vehicle and powertrain technologies.
ELCR opened the day trading at 0.0003 and by midday is trading at 0.0002
Green Energy Live Inc. (OTCBB: GELV) volume stood at 28.54 million by mid-afternoon trading. The clean energy company recently announced plans to focus on sustainable ‘clean side of green’ solutions for the U.S. livestock industry.
GELV opened the day trading at 0.0005 and by midday is trading at 0.0006.

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OTCBB Volume Leaders for Wednesday September 29

OTCBB Volume Leaders for Wednesday September 29 Include Wellstar International Inc. (WLSI), Kraig Biocraft Laboratories, Inc. (KBLB), EGPI Firecreek Inc. (EFIR) and Trey Resources, Inc. (TYRIA)

Backed by news that the publication of “Advances of Skin and Wound Care” medical journal has approved the manuscript submitted and will be publishing the results of the Duke Study, Wellstar International, Inc. (OTCBB: WLSI) enjoyed a heavy day of trading on Wednesday with more than 116 million shares moving, surpassing its volume average of just over 71 million shares. The share price settled at 0.0002 for the day, even with its 50-day moving average.
Kraig Biocraft Laboratories, Inc. (OTCBB: KBLB) also experienced a heavy trading day with nearly 52 million shares trading hands, a significant spike from its average volume of 13.9 million. The jump came following Wednesday’s joint press release that announced the research and development effort by the University of Notre Dame, the University of Wyoming, and Kraig Biocraft Laboratories, Inc. has succeeded in producing transgenic silkworms capable of spinning artificial spider silks. Shares closed at 0.1474 on the day, above its 50-day moving average of 0.0508 and 200-day moving average of 0.0217.
Following their announcement that they had completed all final documentation for the acquisition of Terra Telecom, LLC (“Terra”) EGPI Firecreek, Inc. (OTCBB: EFIR) saw their volume move from its average of just over 37.6 million to more than 38 million. Shares closed at 0.0007 on the day, below its 50-day moving average of 0.0019 and its 200-day moving average of 0.0180.
Trey Resources, Inc. (OTCBB: TYRIA) saw volume jump more than seven times its average as more than 28 million shares moved hands. The business consultant, and value-added reseller and developer of financial accounting software recently released their 10-K which revealed a decrease in revenue and gross profit for the quarter compared to the same period last year.
Also seeing heavy volume on the day were Electric Car Company, Inc. (ELCR) with more than 123 million shares trading, Zevotek, Inc. (ZVTK) passing the 120 million mark, Artfest International, Inc. (ARTS) passing the 58 million mark and International Building Technologies Group, Inc. (INBG) trading more than 54 million shares.

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Discovery Laboratories, Inc. in Precarious Position

Lingering Concerns Regarding FDA Approval for Surfaxin, Executive Management Shakeup has Discovery Laboratories, Inc. in Precarious Position
The third time is not always the charm and Discovery Laboratories, Inc. (NASDAQ: DSCO), the biotechnology company that has been concentrating on developing surfactant therapies for respiratory diseases, has found this out the hard way. Three times they have taken their investigational drug Surfaxin to the FDA and three times they have received acceptable letters from the agency requesting further action before drug approval. Now the company sits on its fourth effort in more than six years to bring Surfaxin to market and while there would be the potential for tremendous financial gains if the FDA gives the go-ahead many investors have seen this show before and aren’t quick to throw their support behind the company.
Shareholders have now been told that it could be the first quarter of next year before DSCO submits its complete response to the latest FDA request on Surfaxin, which is being developed to prevent respiratory distress syndrome in infants born prematurely. Couple that fact with the company’s recent management realignment and it wouldn’t surprise anybody if there were further delays.
That realignment involved the appointment of Dr. Thomas F. Miller as COO, Mr. Charles F. Katzer as CTO, and Mr. John G. Cooper as President and CFO, all of whom will report directly to Mr. W. Thomas Amick, Chairman of the Board and Interim CEO.
According to Amick, “We are realigning the leadership and technical talents of our executive team to strengthen our Company and better position us to execute our business plans successfully. Additionally, we intend to recruit for the Chief Executive Officer role with the goal of filling this key leadership position in 2011.”
It seems that the realignment at Discovery Labs is long overdue. While getting FDA approval for a new drug is certainly a daunting task the mistakes made in their first three efforts could very well have been avoided. Twice they received approvable letters that raised manufacturing questions while the third requested an additional biological activity test for quality control as well as final specifications showing certain ingredients were in compliance with International Conference on Harmonization guidelines on impurities in drug substances.
Each approvable letter was a setback for the company and its shareholders, many of whom followed the positive spin offered by DSCO.
What makes believing in DSCO so easy isn’t their track record but the potential that exists if Surfaxin does hit market. It would be the first synthetic, peptide-containing surfactant available for commercial use in neonatal medicine and would likely have an advantage over what would be its two main competitors, both of which market animal-derived surfactant products: Survanta, an Abbott Labs product derived from cow lungs, and Curosurf, a Chiesi Farmaceutici product made from pig surfactants. The market opportunity for the prevention of respiratory distress syndrome in premature infants alone has been put at $200 million and with DSCO’s intention of expanding Surfaxin’s into the broader market of Acute Respiratory Distress Syndrome which could include include cystic fibrosis, chronic obstructive pulmonary disease asthma and acute-lung injury, a $1.8 billion market in the U.S. alone.
Not only does DSCO appear to have a unique treatment, they have also been working on offering a variety of options as it pertains to the administration of Surfaxin, options that include liquid, aerosol or lyophilized formulations. It is the proprietary capillary aerosolization technology that produces a dense aerosol, with a defined particle size that likely offers the most promising rewards as it would deliver KL4 surfactant to the deep lung without the complications currently associated with liquid surfactant administration.
Earlier this month DSCO announced that new data from a pre-clinical study regarding Surfaxin had been published in Pediatric Research, the official publication of the official publication of the American Pediatric Society, the European Society for Paediatric Research, and the Society for Pediatric Research. That study showed positive results for Surfaxin when compared with Curosurf as it related to lung function following the administration of the drugs to surfactant-deficient preterm lambs. Pulmonary distribution of surfactant actually improved significantly with Surfaxin compared to Curosurf. The findings appear to support the promise of Surfaxin in the treatment of RDS, yet another straw to grasp for investors.
That being said, DSCO is certainly in need of financing as the long road to FDA approval for Surfaxin has taken its toll. Back in April former CEO Robert J. Capetola, who resigned earlier this year, said he expected the company to “forge an alliance with a larger pharmaceutical company in the not-too-distant future” and that alliance would come regardless of the outcome of the FDA’s decision.
Whether that remains a focus of DSCO remains to be seen but negative cash flow and recurring operating losses have left the company in a position where they may not have any alternative.
Of course there have been rumors about potential partnerships and buyouts from heavyweights like Johnson & Johnson (NYSE: JNJ), Merck & Co. (NYSE: MRK) and Pfizer (NYSE: PFE), all of which could generate financial gains for shareholders; DSCO has remained silent on the matter other than mentioning in their August update on key pipeline and business initiatives “We believe that success in entering into meaningful strategic alliances will likely parallel success in advancing Surfaxin towards a complete response and positioning Surfaxin LS and Aerosurf for initiation of clinical trials.” Immediately following that statement, “Although a key priority for Discovery Labs is to secure strategic partners to support ongoing research and development activities and future progress, there can be no assurances that any strategic alliance will be successfully identified or concluded.”
It’s hard to tell if the new executive management team is just trying to appease investors or if they are holding their breath while they wait for the FDA decision.
Perhaps that new management should heed the words of their former CEO who said “You never know what the FDA is going to say.” If the company is hit with a fourth approvable letter without having secured a partnership it could be a deathblow. For the optimist, interim CEO Thomas Amick retired from Johnson & Johnson in 2004 after 30-years, ending that period as Vice President of Business Development. A long relationship with such a powerful company could be a sign that he was bumped up to his position for a reason.
As devastating as the past several years has been for DSCO in relation to the FDA process the company has succeed in surviving and does have the one thing every investor loves, potential. With shares trading in the 0.21 – 0.23 range, below its 50-day moving average of 0.24 and 200-day moving average of 0.44 now could be the time to take a shot; with a potential partnership/buyout or FDA approval it may be worth the risk.
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Wednesday, September 1, 2010

Will EMEA’s Validation of Cell Therapeutics' PIP Pave the Wa

Will EMEA’s Validation of Cell Therapeutics' PIP Pave the Wa

Will Growing Energy Needs in Asia, Increased Environmental Concerns Provide Financial Boon for Clean Coal Technologies

With the growing energy needs in Asia well documented and an emphasis on environmentally-friendly avenues in which to meet those demands now a standard a window of opportunity for companies specializing in clean energy technology has emerged. One such company, Clean Coal Technologies, Inc. (PINK: CCTC), has recently taken steps to satisfy these two developments by signing a strategic consulting agreement with MMB Global Advisors.

News of the agreement emerged earlier this month and Clean Coal Technologies is now hoping it will put them on target to introduce their patented technology that provides clean coal energy at low costs throughout Asia.

That technology, according to the company’s 10-Q/A filed on Aug. 10, 2010, has the ability “to utilize controlled heat to extract and capture pollutants and moisture from low-rank coal, transforming it into a clean-burning, more energy-efficient fuel, prior to combustion. Our proprietary coal cleaning process is designed to ensure that the carbon in coal maintains its structural integrity during the heating process while the volatile matter (polluting material) within the coal turns into a gaseous state and is removed from the coal.”

While the technology appears to be there, the organizational structure of Clean Coal Technologies remains a question as they will now rely on MMB Global Advisors to redefine their “global corporate structure” as well as re-align the company so as to attract key personnel while facilitating the development of strategic partnerships and alliances, according to their Aug. 17 press release. That release also noted MMB Global Advisors would assist in developing “new global client relationships predicated on the commercialization of CCTC’s products and technologies.”

Investors may be impressed with MMB as they have considerable influence in the emerging energy markets of Asia but the scope of the CCTC project may be cause for worry. The strategic consulting agreement is certainly a step in the right direction for CCTC as CEO and member of the Board of Directors Robin Eves pointed out “will help CCTC’s efforts in commercializing our technology within India, China, and other targeted countries,” but there is a lot of work to be done.

Despite owning a patented technology that, as their 10-Q/A filing points out, utilizes controlled heat to extract and capture pollutants and moisture from low-rank coal, transforming it into a clean-burning, more energy-efficient fuel, prior to combustion the company is yet to establish revenue since its inception and again, according to their quarterly report, have not installed their technology in an operating commercial facility.

To say the least that’s a bit discouraging, making it worse is the fact they don’t foresee the first operational plant to be constructed with the Sino-Mongolia International Railroad Systems, Co. Ltd. for a minimum of 12 to 18 months as they have yet to receive the Chinese government’s final approval. That leaves the company in a problematic state as they have estimated they would need approximately $5,000,000 to fund their operations for the next 12 months, and a similar additional amount to continue operations for the following twelve months, or until the initial plant is up and running. Based on their quarterly report ending June 30 those figures appear rather conservative as their operational costs during the three-month period was $2,574,866, and during the six-month period they reached $7,708,336.

CCTC has already acknowledged they anticipate increased losses during the next twelve months, citing “increased payroll expenses as we add necessary staff and increases in legal and accounting expenses associated with becoming a reporting company. We expect that we will continue to have net losses from operations for several years until revenues from operating facilities become sufficient to offset operating expenses, unless we are successful in the sale of licenses for our technology,” not exactly comforting to investors.

Making things even more difficult for Clean Coal Technologies is the fact it will need to come up with approximately $1,670,000 within 90 days of the Chinese government issuing their final approval for the project, this represents the first 20% of their partnership contribution with SMIRSC for the plant. The remaining portion of CCTC’s funding will be due within 24 months of final approval, leading the company to estimate a need of $10,500,000 for the balance of 2010, and $13,700,000 for 2011 just to meet funding commitments and operational costs.

Having generated no revenue since inception is bad enough but the company has been unable to generate any funding through any form of private or public offering, receiving cash for research and development activities and operating expenses solely through advances and/or loans from affiliates and stockholders. The company has said it intends to seek “sufficient debt or equity funding to meet both our capital contribution deadlines and funding sufficient for our operations” but based on their track record this could be difficult. CCTC has also said they have been “exploring joint venture arrangements and other strategic partnerships with various parties” so as to facilitate the deployment of their technology in the U.S. and abroad but no definitive agreements are in place.

If these weren’t enough red flags for an investor the stability of SMIRSC should be the most concerning as any problem with their finances would likely devastate the joint venture project with Clean Coal technologies. This is certainly something to be concerned about as the economic situation in China remains fragile and SMIRSC’s line of credit with the state-owned China Development Bank could disappear if the situation worsens.

Needless to say an opportunity exists for investors as most believe the stock has bottomed out after hitting its 52-week low of 0.044 earlier this month. While recent trading has it in the 0.053 range it’s still a far cry from last September when it hit its 52-week high of 2.50 and it could be some time before Clean Coal Technologies sees those days again.

CCTC’s 200 day moving average is 0.3467and its 50 day moving average is 0.0576, which can be seen in the chart at

Technical Chart for CCTC
CCTC is a penny stock traded on the Pink Sheets. Penny stocks are shares in public corporations that trade below $5 per share.