SMALL CAP SUPERSTARS

I am paraphrasing the old Temptations hit for the title (Get ready ‘cuz here I come) of this blog.  I think it is appropriate, though.  Big changes are coming for Investor Soup.

I have been working very hard over the past few months on a new creation (and have neglected Investor Soup in the bargain, I admit).

That new creation is a website that will be focused on the small cap world. When we launch next week, I will give everyone an opportunity to sign up.  I am holding the price artificially low for the first month or two, so I can encourage my loyal readers to sign up.

I will be editor and author on the site.  We are a newsletter (NL) subscription site that focuses on the best in the small cap universe.  Initially, I will have 3 newsletters that traders can sign up for, as follows:

1. Small Cap Superstars - This is my newsletter.  I will be doing all of the research, analysis and writing for this NL.  I have seen in my long career just how far and fast small caps stocks can move.  So, I am focused on “Stocks under $5″.  I am looking for the best swing and position trades for my subscribers.  I won’t shy away from true penny and sub-penny stocks, but will only feature them if they are good swing or position trades.  I have put up $100,000 in an account and will trade my picks and let you know how I am doing.  I will leave day trading to my associates.
2. Penny Stock Supernovas – I am very excited about this newsletter.  I can’t reveal his name just yet, but I have one of the foremost experts on penny and sub-penny stocks writing this newsletter for us.  It is quite a coup to get him and I think that more active traders will FEAST on his picks.  He has an almost uncanny understanding of the microcap markets and a method that routinely produces big winners.
3. China Stock Report - I am also “tickled pink” to have this gentleman on board with us.  His specialty is China Stocks and he knows them like no one I have ever met.  His ability to ferret out the best in small cap China Stock opportunities is very impressive.  I think that traders will find that this newsletter opens them up to possibilities they never considered before.

One last thought.  The motto for our site is “Trade big or go home”.  I like what our China Stock guy says, “I am hunting elephants…I am looking for ten-baggers and more”.  No one trades small caps and micro caps looking for a “safe” return.  We are all swinging for the fences.  Hold on….it’s going to be a wild ride.

Traders rock!

Jeffrey Dean, Editor

Adamis Pharmaceuticals Corp. (ADMP.OB)

I continue to be sold on Adamis Pharmaceuticals Corp. (ADMP.OB).  It is a stock that I had called a “potential 10-Bagger” in a blog several months ago (read it here).  Unfortunately, the stock did little to make me look like a genius.  The stock has traded in a range between $0.25 (where I recommended it) and $0.30.  The stock continued to be beset by naked shorters.  In fact, Friday’s FINRA report was the first time since I began covering this stock that there was no shorting!

Finally!  The Financing News!

Last week, the company finally released the news that loyal ADMP holders have been waiting for:  A financing in the amount of $10,000,000!

Here is a summary of the financing:  Eses Holdings Limited, a company located in the United Arab Emirates has agreed to invest $10 million and acquire 40 million shares of Adamis common stock at a purchase price of $0.25 per share. $5 million of the investment was made at an initial closing. The remaining $5 million is to be invested in two tranches of $2.5 million each upon the achievement by the company of certain milestones. The company anticipates that the milestones will be achieved and the additional investments will occur within the next 60 to 120 days.

According to my contacts, the contingencies will be met in a timely manner, so ADMP will have what could be the last financing they will ever need….according to Dennis Carlo, CEO of Adamis.  The other notable thing about the financing was the their were NO warrants attached.  Dilution, yes, but no warrants which I see as a good sign.  The strike price of $0.25 was reasonable based upon recent trades although that did cause some downward pressure on the shares late in the week.

There is still time to get in!  A look at the chart!

The boards that I frequent are not shy of opinions on ADMP.  Most posters are highly skeptical of management due to the number of unfulfilled promises from management (Epi Pen Debacle, botched LaJolla Pharma merger, no financing news forever, etc…). The chart show the tug of war that is going on with the stock.  Pro-ADMP posters can’t wait for the short squeeze to start.  With all of the shorting activity, the % short could be very high.  Management still has a DNDN-type of success story in mind.  I have heard from others that the company will really begin to pick up steam in the near term. Let’s hope so.

I’ll apologize in advance…

…for  a long, boring paragraph about the tech behind their main drugs.  The blockbuster drug potential is contained in the APC compounds which are targeting the most prevalent type of cancer in men:  Prostrate Cancer.  My IR contact for ADMP created an overview of this drug family and I am going to repeat it in its entirety.

Contrasting the science of Dendreon (DNDN) to the science of Adamis (ADMP) does a good job of explaining why Adamis Pharmaceuticals (ADMP) could present a remarkably opportunity for investors.

Dendreon & Adamis Pharmaceuticals have both developed a novel method of attacking Prostate Cancer. Cancer behaves similarly to the viruses (Colds & Flu) we are all familiar with, invading a human cell and turning the cell into a manufacturing plant for more viruses or Cancer cells. Thousands of years of Evolution have produced an Immune System that readily handles most of Nature’s viruses. The body uses T-Cells for this task of dealing with viruses. T-cells can peer inside a cell and find the chemical fingerprint which identifies the cells carrying the virus. Cancer cells however, are not recognized by the immune system. Both Adamis & Dendreon have developed science to allow the immune system to create T-Cells specific against Prostate Cancer.

Dendreon has already proven this T-Cell approach works and is potentially a game changing breakthrough for the treatment of Prostate Cancer. Investors have seen shares of Dendreon rise on this promise with a high of $57 earlier this year after receiving FDA approval and currently trading around $36. Dendreon uses Dendritic cells to mount a T-Cell immune response against Prostate Cancer cells. While partially effective, Dendritic cells offer only a short antigen presentation window to create T-Cells over a period of a few hours. The numbers of T-Cells created are time limited, explaining why Dendreon enjoyed limited trial success but still enough to garner FDA approval based on the increase in patient longevity of 4.1 months. Dendron’s approach is costly to implement, running approximately $90,000 per patient. The process is complicated, must be done on a case by case basis and requires highly skilled technicians.

Adamis on the other hand is a relatively unknown company by investors, whose shares are currently trading for around 25 cents and still needs to conduct both an FDA Phase II and a Phase III trial. Adamis  also produces T-Cells, differing from Dendreon by using a Tolomerase gene vaccine. This has the advantage of longer antigen presentation cycle to create active T-Cells against Prostate Cancer. This longer presentation window (4 – 5 days) means the Adamis vaccine creates more T-Cells, which are the active ingredient that kill Cancer cells.

More importantly, the Adamis vaccine creates T-Cells which can target Prostate Cancer stem cells. These stem cells are the key to enabling Cancer to spread throughout the body. The Adamis T-Cells directly target these key cells while the Dendreon doesn’t.

Adamis will be launching a phase II trial shortly, which will run a year. Dennis Carlo (CEO of Adamis) says he’ll have actionable data in 6 months (proof it works) allowing Adamis to partner with a large Pharmaceutical company like Merck. Once the Phase II trial is concluded Adamis will still need to run a phase III trial, before they can apply for FDA approval. Given the similarity in science to Dendreon’s, it might be reasonable to assume Adamis could also be granted FDA approval.

The point to stress here is simply that Adamis is causing T-Cells to be produced that are active against Cancer cells, just like Dendreon. The difference is that Adamis’s vaccine produce more of them and targets Cancer stem cells and offers a simpler less expensive therapy. Adamis’s CEO, Dennis Carlo told me nearly a year ago, that he believed this held the promise as a potential Cancer cure. While that bold assertion remains to be proven, when the Street finally understands how big of a breakthrough this might be, investors could be well rewarded.

Why is ADMP a Ten-bagger? -or- ADMP:  From the outhouse to the penthouse

When I stumbled across ADMP, I did my usual in-depth research and actually got to talk to the CEO, head IR guy and a number of other interested parties.  I don’t think that the company has done a good enough job getting the word out about the company, but it appears that the good news is there.  With the blockbuster drug potential of the APC compounds (see previous paragraph), that alone could drive the company forward.  But, ADMP has the Epi-Pen product that has great potential and the Contraceptive Gel product (nearing approval) that could winners for the company.  I would like to see Dr. Carlo be more proactive in getting news out to the investing community and then following up on that news with updates periodically.

The DNDN connection obviously draws attention to ADMP’s potential.  I am impatient to see just how ADMP executes on its plan…and, realizes its potential.  Right now, long-term investors feel a little like they are in the “outhouse”, but there is a great deal of confidence that this stock is headed for the “penthouse”

Here is what I am looking at for entry/exit points

Last Close:              $0.26
Buy Opinion:          $0.25- $0.35
Short Term Sell:   $1.45  (I plan on selling enough to cover my investment, lock in a little profit and then sit back for the ride)
Long Term Sell:     $2.50+ (I plan on selling enough to cover my investment, lock in a little profit and then sit back for the ride)

Good Luck and Great Trading,

Jeffrey Dean

Disclosure:  Long ADMP

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stock market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

San Francisco Giants

55 years of frustration ended for the San Francisco Giants (and me) last night.  The Giants finished out the most improbable World Series.  Improbable because the Giants were even there.  A middling regular season team that only clinched the Division on the last day of the season (thanks to a monumental collapse by the San Diego Padres), the Giants became playoff terrors. I watched with great pride as my Giants matured into an unstoppable force in the playoffs.  A true story of a team peaking at the right time.

It was especially sweet because the Giants were my first team. I fell in love as a true baseball fan should….when I was a young man of 8 years old.  I lived with my Dad in Belmont, CA in the San Francisco Bay Area during the 60′s.  My father was a “Big Brother” to a fatherless boy and I got to tag along to the events he took his “little brother” to.  One of those events was a reception hosted by the football 49ers and baseball Giants.  It was there that I began my love affair with both teams.

On that magical night a boy found out who his heroes were.  I met such Giants as Ron Haller, Orlando Cepeda, Jim Davenport and Willie McCovey.  I was enthralled by them and have been a fan of the Giants ever since.

One thing that stood out for me that night was Giant legend, Willie McCovey.

I remember being a little scared of him.  Willie McCovey was the biggest human being I had ever met up to that point (Bubba Smith and Shaquille O’Neal have since topped him).  But on that night, I spent a few minutes chatting with Mr. McCovey.  At 6′ 7″ and 250 pounds, Mr. McCovey dwarfed me.  When I shook his hand, half of my arm disappeared into his hand.  But, I recall him being very gentle with me and taking the time to learn my name and talk to me.  I was hooked!

My love affair with the Giants had begun!

I remember sitting in the old Candlestick Park on a summer’s day with my Dad and freezing my butt off.  I remember wearing my much-too-big mitt to the ballpark in hopes of catching a foul ball (I never did).  I remember the sights and sounds of Candlestick Park and cherish the memories that the Giants gave me over the years.  Even when their cross-bay neighbors, the Oakland A’s, were winning championships in the 70′s and 80′s, I “Never Stopped Believing” (to paraphrase their theme song) in my team, The San Francisco Giants.  To root for another team, especially the hated A’s, was unthinkable for me.  Finally, my team has earned the bragging rights in the Bay Area.

Congratulations to a group of misfits and knuckleheads….who just happen to be World Series Champions.

I thank the Giants for never giving up and believing in each other..and, for giving us fans something wonderful to celebrate.

Gannett Co., Inc. (GCI) and Lee Enterprises Inc. (LEE)

A very successful blog for me in 2009 was one that I did on these two companies. (Click here for blog)  Back in June of 2009 (when the newspaper industry was teetering), I picked both Gannett Co., Inc. (GCI) and Lee Enterprises, Inc. (LEE) as potential long opportunities.  Boy, was I right.  Both returned HUGE gains for my members.

Both are looking like they might be at a good entry level again.  Here is a quick chart analysis for my two past winners.

Gannett Co., Inc. (GCI)

GCI (The USA Today people) are in reasonably good condition and have made significant inroads in changing their business model to conform to the new information paradigm that exists in today’s marketplace.

Lee Enterprises, Inc. (LEE)

LEE has done a good job returning to profitability.  They are on a mission to reduce debt and have reiterated their desire to clean up their balance sheet.

Be Warned! These companies are still in the newspaper business and with declining ad revenues and readership, both are facing many challenges ahead.  LEE is making a concerted effort to get caught up on the electronic/Internet front and be much more of an player in that space.  Their regional empire is a strength and LEE could see another run.  GCI has already come back strongly, but could have farther to go.  They are profitable and growing (once again) and have a strong balance sheet.  Debt is high, but coverage ratios are strong.

Here is what I am looking at for entry/exit points

GCI

No recommendation….GCI is out of my specified investment range.  I focus on stock under $5.  It could be a very good trade, but I am not recommending it at this time.

LEE

Last Close:              $1.99
Buy Opinion:          $1.90 – $2.15 (Stop Loss trigger – $1.80)
Short Term Sell:   $2.50
Long Term Sell:     $4.00+

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

BSD Medical Corp. (BSDM)

I previewed BSD Medical Corp. (BSDM) for my readers back in July when the stock was at $0.90.  When the stock closed  at $4.21 on October 6th, I was feeling very good about my pick…for you and for me.

I came out very strong that BSDM was a stock that you needed to own…and, I was right.  Read my original blog here.  It took about a month for it to begin to move, but when it did it moved FAST.

For those keeping score at home, my readers could have booked a potential gain of over 340% at its height.

The question for me now is will the run continue?  Does this stock have any more legs?

BSDM the company

BSD Medical Corporation (NASDAQ:BSDM) develops, manufactures, markets and services systems to treat cancer and benign diseases using heat therapy delivered using focused radio frequency (RF) and microwave energy. BSD Medical is also making major progress in the application of its technology for other therapies. (from BSDM’s Site).

The company has pioneered using heat (in  the form of microwave energy) to kill entire clusters of cancer cells.  I won’t go deep into their technology, but you can read on their site just how impressive their technology is.

It appears the company is only beginning to penetrate the market with their devices and the potential is huge.  Certain of the Company’s products have received regulatory approvals and clearances in the United States, Europe and China.

I read something on Seeking Alpha, where a pundit quoted a blog in MedMarket Diligence saying the market for these types of devices could be worth up to $10 billion.  He went on to opine that “this gives BSD the potential to catapult its market cap by more than 11,000% from its current market cap of just over $90 million.”  I looked on that site to find the quote directly but couldn’t find it.  This gentleman was the only one I could find that was willing to go out on a limb and give specifics about market potential….so I included it.

The company is being closed-mouthed on it, but I get the feeling they are excited about what the future could hold.

Let’s check the chart

The chart is showing a strong uptrend and if you were to draw trend lines it would look like the run could continue.  With this morning’s gap and run, be careful with this stock.  It is scary to buy into such a big gap.  I would recommend watching it for the next day or two to see how the stock performs.

I think that BSDM could be one of the big stories on 2010.  It might be scary to buy into this current run, but this is one stock to keep on your radar.

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Adamis Pharmaceuticals Corp. (ADMP.OB)

I AM STILL HERE!  I have gotten several emails asking where my next post was.  I have taken about a two week break from posting.  No worries.  All is good.  I have been spending all of my time working on my new site:  www.topstockpicks.com.  It’s not live yet, but I will be making an ann0uncement soon.  I never know how much work a new site was!

But, let’s talk about ADMP.

I am still very bullish on Adamis Pharmaceuticals Corporation (ADMP).

As I laid out in my August blog (click here to read), ADMP is a potential ten-bagger and above.    I continue to be in touch with the CEO and the IR people and their confidence gives me a strong feeling that ADMP has a real future.

Shorters continue to plague the stock but yesterday’s rally could mean the buzz about ADMP’s long anticipated financing could be coming to fruition.  Somehow volume is known to precede news…could ADMP ready to give us dedicated followers some good news?

What’s new with ADMP

The only PR that the company has put out was about the closing on their prostrate cancer drug candidates.  It’s not huge news, but reading between the lines gives it greater importance than the way the market reacted.  The market reacted with a big, fat YAWN.  I, on the other hand, think it is great news.

Here is what happened:  On February 25, 2010, Adamis announced the signing of a definitive agreement to acquire exclusive licenses covering three small molecule compounds, named APC-100, APC-200 and APC-300. Adamis acquired APC-300 as part of the original transaction and has now completed the acquisition of APC-100 and APC-200.   The cool thing is the financing contingency was waived by the sellers and now ADMP now owns all three potential blockbuster compounds.

The company appears to hold out great hope for these compounds.  Dr. Carlo still appears to have Dendreon (DNDN) dreams about these compounds.

Ten-Bagger Status

I actually got a comment from a reader on my original blog saying that I shouldn’t put a sell target on this stock at a ten-bagger because it could blow through that status easily.  What I recommend is what I did with CLYW to such great effect.  With CLYW’s huge 750% move (that I called), I was able to sell some at a good profit and I am basically “playing with the house’s money”.  I like that and that is the technique I will use with ADMP.

A look at the chart

ADMP, until yesterday, was beset by naked shorters.  The boards are still mainly negative, but the stock never fell too far.  That tells me there is strength on the bid and that buyers are waiting.  If the stock continues to advance, the short squeeze could rocket the shares further. If any substantive, positive news comes out this stock could rocket.

Here is what I am looking at for entry/exit points

Last Close:              $0.28
Buy Opinion:          $.25 – .35
Short Term Sell:   $0.75 (might be a good place to take profits and then let the remaining shares ride)
Long Term Sell:    $2.50 and above (watch the stock, news, boards…this stock could get hot and blow through the $2.50 level with strength)

Good Luck and Great Trading,

Jeffrey Dean

Disclosure: Long ADMP

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Adeona Pharmaceutical (AEN), Western Lithium (WLCDF),  Sustainable Maritime (HQS), Celldex Therapeutics (CLDX), American Power (TGMP), Calypso Resources (CLYW), Adamis Pharmaceuticals (ADMP), Jade Art Group (JADA), AI Systems (ASYI)

The title of today’s blog is one of my favorite quotes of all time.  First attributed to Dizzy Dean (the ace pitcher for the St. Louis Cardinals in the 40′s), this quote sums up how I feel about my stock picking track record.  I don’t claim perfection, but I am pretty darn good.

A little review:  I was once a stock promoter (I admit it)…the kind that Tim Sykes loves to slam.  No longer, though.  My site is now 100% independent and unbiased.  I look for Stocks under $5 (small caps, microcaps, penny and sub-penny) that I believe might offer a “above-average” return.  The fact of the matter is that I love hitting home runs.  Singles are nice, but home runs are great for my ego and for my members’ bank accounts.

I am a swing and position trader.  I may have a short-term idea occasionally (usually a short), but most of my ideas are longer-term.  I will never be a buy-and-hold investor.  I have seen too many portfolios implode because of that misguided theory.

On investimonials.com, I recently got taken to task by SPUR20 and he said that he  ” just cant trust (me) because you have no track record and only talk about the OTsCams of the world”.  Is that so?  Let’s just look at how I have done over the past few months.

The following is a summary list of my picks since August 11th.  I will show the co. name, ticker (hotlinked to my original blog) and some general comments.

Adeona Pharmaceuticals (AEN) – This stock is still in play for me.  I had a long phone conversation with the CEO yesterday and I believe that much better days are ahead for this undiscovered pharma play.  It has several drugs with blockbuster potential and at least one drug that could see approval in the next 6 to 9 months.  It is trading for only 75 cents and could be an explosive gainer over the next 6 months to a year.

Western Lithium (WLCDF) – I am still very high on this stock.  It is a pure Lithium play and NOT a scam….as so many are.   I blogged it at $1.00, said it would fall near term (and it did) and then said that it was a GREAT long-term hold.  It is currently trading at $1.25 and could go much higher.  The company could be a $10 stock in a year or two imo.

Sustainable Maritime Industries, Inc. (HQS) – I blogged it at around $2.80 and it recently topped out around $3.10 (only a 10% gain so far).  The chart is showing the stock is overbought, but with the bullish MACD (that is crossing over the “0″ line) this stock could run farther.

Celldex Therapeutics (CLDX) – A great pick!  CLDX ran to almost $5.00 intraday from my September 9th pick (40+% gain) in one month.  I hope you took profits on the way up, because now that the stock has closed the bullish gap it may trade sideways or down for a few trading sessions.   The stock surged on promising news on one of their brain cancer drugs.  Who knows what the future might hold for CLDX.

American Power Corporation (TGMP) – I knew this was going to be a good stock to short.  I just didn’t know when.  I blogged it at $1.04 and it pumped itself all the way up to $1.25 before dropping to $0.80 intraday just 9 days after my alert.  It is a stock that I would avoid like the plague.

Calypso Wireless (CLYW) - My shining star, my rocket ship.  CLYW has made me look like a genius…and the ride may not be over.  I first blogged this one at $0.02 (and bought some myself).  The stock took off zooming to $0.17 intraday (an 750% gain).  Profit-takers took much of the profit off the table almost halving the stock price, but it has since made a strong recovery.  I did what I tell all my traders to do.  I took my investment and some profit off the table and am still holding a substantial stake.  I am playing with the house’s money and loving it!

Adamis Pharmaceuticals (ADMP) – This is one of those stocks that when it takes off, it will take off big.  Shorters still torment the stock, but I believe in it firmly.  I have positions in several accounts and am still holding out great hope for it.  The lack of financing continues to dog the company, but I am hoping that something will be announced soon.  The stock has traded up and down from the $0.25 that I blogged it at, but I am hoping the company can start squeezing the shorts with some good news.

Jade Art Group (JADA) – JADA is a great company that unfortunately is a Chinese company…a sector that is depressed right now.  However, JADA is now making another move.   From my alert price of $0.34, the stock recently hit $0.42.  When the China sector comes back, this stock could really fly.

AI Systems, Inc. (ASYI) – I love the technology and the market potential, but the glacial pace of the stock has me impatient.  I did not put any of my cash in this one, because of the uncertainty of when they were going to “take off”.  ASYI is one that I have on my radar, but not in my account.

Disclosure:  Long CLYW, VPER, ADMP

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Adeona Pharmaceuticals, Inc. (AEN)

I am still waiting for my Adamis Pharmaceutical (ADMP) pick to take off.  I have great hopes for that stock and look for some great things ahead for it.  And, you know that I like pharma companies.

Adeona Pharmaceuticals (AEN) reminds me of ADMP in some ways.  Granted, they are totally different (drug types, financial position, drug pipeline, etc…), but they are alike in their tremendous potential and the depressed price of their stock.

The Company

Adeona Pharmaceuticals (AEN) has a very robust drug pipeline specializing in drugs for the Central Nervous System diseases (CNS).  Their primary strategy is to license clinical-stage drug candidates that have already demonstrated a certain level of clinical efficacy and develop them to a valuation inflection point resulting in a significant development and marketing collaboration (essentially they develop them until they can attract the big pocket pharma guys and then do a co-development deal). They have five product candidates, four are drug candidates and one is a medical food product candidate in clinical development.

Here is their drug pipeline chart (I left the hotlinks in, so you can get more info on anyone of of the drug candidates by clicking on the link)

Trimesta – Treatment of relapsing remitting MS in women

Effirma Treatment of Fibromyalgia (partnered with Meda)

Zinthionein ZC – Dietary mgt. of Alzheimer’s disease and mild cognitive impairment

dnaJP1 – Treatment of rheumatoid arthritis

ZincMonoCysteine – Treatment of dry age-related macular degeneration

In addition to drug development, AEN purchased a CLIA-certified diagnostic laboratory in July of 2009…now called Adeona Clinical Laboratory.

Fundamentals

As of June 30, 2010, AEN emerged, for accounting purposes, from being a development stage enterprise with $979,782 in second quarter profit. Total net revenues for the three and six months ended June 30, 2010, consisting of license revenue and laboratory revenues, were $2,194,888 and $2,254,927, respectively. There were no revenues for the same periods in 2009. The revenues in 2010 are the result of the Meda AB sublicense agreement of flupirtine for fibromyalgia less the $375,000 payment to McLean Hospital and revenues for services provided by Adeona Clinical Laboratory.

As of the last quarterly (6-30-2010), AEN had $3.3MM in cash with no debt.  The balance sheet, while clean, is not especially strong.  However, AEN has a number of grants that it is funding operations from, as follows:

1.  Trimesta trial is being funded by a $5MM grant from the NIH, among others

2. Effirma is being funded under a partnership announced in May of 2010 with Meda (A Swedish specialty pharma company).  Meda has assumed all future development costs and will pay AEN up to $17.5MM in upfront and milestone payments along with royalties once the drug is on the market.

3. dnaJP1 is being funded by a $5MM grant from the NIH

The Chart

Here is where things get really interesting.  AEN is trading near its lows for reasons that I cannot readily detect.  The news has been all good, yet the stock has continued to drop.  The chart is indicating a bullish divergence has developed with the MACD strengthening while the stock price is falling.

The Bottom Line

I don’t believe that an investment in AEN is a high-risk venture.  If you listened to Dr. Kou’s webcast, you would have heard him expand on his low-risk strategy that I believe could be very effective for the company.  He stated that AEN’s strategy is to “partner with pharma companies and let them take the drugs all the way through development.  ”  He also made the point that several of the drugs in the pipeline have blockbuster potential (Effirma being one).  By partnering, AEN won’t be in line for the huge payday that being the sole owner of a blockbuster drug could bring, but with such a low float (14MM shares), any deals signed and revenue booked could make this stock fly.

The acquisition of Hart Labs in 2009, now called Adeona Clinical Laboratories, gives the company a strong “cash cow” with strong revenues and excellent profitability.  The company is also using the lab to produce their own compounds for the ongoing clinical tests.

I laugh when I read message boards usually, but those who are following AEN seem to be very bullish on the company’s prospects and the stock itself.

Here is what I am looking at for entry/exit points

Last Close:              $0.79

Buy Opinion:          $0.75 – $0.85

Short Term Sell:   $1.25 (50%+ gain)

Long Term Sell:     $2.00+

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Calypso Wireless Inc. (CLYW)

The story of Calypso Wireless, Inc. (CLYW) is being written in BIG LETTERS right now.  CLYW has been an absolute rocket over the past few days.  I was correct in my call on CLYW but I had no inkling the stock would run so far, so fast.

My blog summary stated “High risk could mean high reward with this highly speculative stock.  The other wild card is timing.  The $64,000 questions are “When is CLYW going to take off” and “Is CLYW going to take off.”.  You can read my August 25th blog by clicking on the link in this sentence.

To Review

Calypso Wireless, the company - According to CLYW’s website, they are the company behind the ASNAP™ technology for which it was granted U.S. Patent #6,680,923 titled “Communication system and method” www.uspto.gov (search U.S. patent number 6,680,923), which covers the seamless roaming of voice, video and data between Wide Area Network access points, such as cellular towers (GSM/GPRS/EDGE, CDMA, WCMDA etc.) and short-range Internet access points (such as Wi-Fi, Bluetooth, etc.).

According to what I have read, the entire mobile backbone around the globe is built on this technology.  The ability to switch access points is crucial to our current ability to “roam” and receive date and voice seamlessly.  Again, the story is that CLYW was in such bad financial shape that many cell carriers just used the technology because it appeared that the company would be going out of business.  It might be time for them to pay up!

“Fun, (almost) Free and Full of Potential – CLYW”

That was the title of my blog and CLYW has not disappointed.  My call was when it was around 2 cents and yesterday it closed at 7.4 cents.…a 270% gain

The amazing chart on CLYW

Is the run over?

With such a strong move, you would expect traders to be taking their profits off the table.  I might even take some of mine off.  However, reading the boards and any information on this deal I can gives me a feeling that traders are targeting much bigger numbers on this deal.  The boards are full of traders dissecting legal documents to determine just how real CLYW’s patent claims are against T-Mobile.

I would suggest that you watch closely what this stock does over the next few days.  Will the bullish run continue?  I sure hope so, but I could see this pulling back (which might be a good time to get in).  Read the boards remembering that much of what you read is crap and watch the chart.  CLYW could have farther to run.

My biggest regret

I only bought this in one of my accounts.  All I can say is that my oldest son will be going to a better college since I bought shares with his college money.

Good Luck and Great Trading,

Jeffrey Dean

Disclosure:  Long CLYW

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

WESTERN LITHIUM USA (WLCDF.PK)

I wrote a blog a few weeks ago (link here) about how the Lithium mining industry has been the favorite industry of “pump and dumpers”.  Today’s focus stock appears to have the marking of the next in a long line of Lithium pumps.

Wikipedia defines “pump and dump” as a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme “dump” their overvalued shares, the price falls and investors lose their money.

Say hello to WESTERN LITHIUM USA (WLCDF.PK).

Western Lithium has appeared on trader’s radars over the past few days with strong volume and several days of steady gains.  They are putting out a number of really positive PR’s which is the hallmark of lithium pumps.  I almost didn’t go searching past the frothy PR’s because I was so convinced that it was a scam….but, WLCDF might be a real play after all.

When I went to Yahoo Finance and pinksheets.com to look for info….there wasn’t any (other than PR’s).  That is usually a bad sign.  I did however go to Western Lithium’s website and found a wealth of information there.  They have the obligatory, slick website extolling the virtues of Lithium, how it is the metal of the future and how they are going to corner the market.  They drop all the right names and have lots of “facts” to convince traders that they are the right lithium vehicle.

But, I actually read their financials.  What I found surprised me.  WLCDF has over $17MM USD in cash with no debt.  The company has a quarterly burn rate that is very manageable and have plenty of cash on hand for operating purposes for several years (at this burn rate).  As of March 31st, the company had fully diluted shares of 110MM.  Not too bad for a penny stock.

The chart

The chart has all of the earmarks of a pump and dump.  It has had strong buying come into the stock lately, a bullish gap and a strong run to close at $1.00 yesterday.  See for yourself.  The stocks looks primed to fall, but it probably won’t be a collapse like so many of its lithium mining buddies (LIEG, AMEL, LTUM, BHWX and AMLM)

Where is the pump?

I looked for the newsletters plugging WLCDF as the latest pump and dump…and, couldn’t find any.  These guys may be legit!  I have several sources that tell me how many newsletters a particular stock is being flogged by and I couldn’t find any.  I was almost disappointed.

Bottom line

I still think that shorting WLCDF is the best course in the near term.  I look at this run (and the indicators) and think there will be a short-term correction.  It won’t correct for months like its brethren AMEL, LTUM and others did.  Once it drops, THEN that might be a good time to pick up some shares.  WLCDF appears to be the “real deal”.

I now have this one on my trading radar.  It will be fun to watch to see if it can be one of the winners in the lithium space.

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

SUSTAINABLE MARITIME INDUSTRIES, INC. (HQS)

Here is a stock that has tons of cash (actually selling for less than cash), has increasing revenues and solid prospects going forward.  However, if you read the boards (and I do for fun…sometimes), HQS are the biggest scam artists on the planet.  Management is inept and they have presided over the emasculation of the company and the steep decline in the stock price.  I think the boards are most angry about the decline in the stock price, though.

I figure the truth lies somewhere in between.

Sustainable Maritime Industries, Inc. (HQS) is a fish farmer and exporter.  Actually…the describe themselves as a “integrated aquaculture and aquatic product processing company”.  The company has its main operations on the “environmentally pristine”  (whatever that means) island province of Hainan, in China’s South Sea.  They specialize in the export of tilapia in different forms to the US, Japan, Korea, Mexico. The tilapia products sold by the company are mainly in the following forms: Whole Round Frozen, Gutted and Scaled (G&S), boneless-skinless tilapia fillet (CO treated) or (non-CO treated).

The company touts its operations as “functional, sustainable, biomass products focused on Tilapia aquaculture through vertically integrated operations”.   The company  claims to practice cooperative farming of sustainable aquaculture using all-natural enriched feeds. The Company produces and sells wholesale feed products as well as retail focused nutraceutical and health products, including its “Omojo” branded health products through direct and franchise sales in China. Additionally, the Company produces and sells Lillian’s Healthy Gourmet Meals and other fish products in the United States. The Company conducts fish processing, production and sales from its main office in China.

Balance Sheet

Cash – $43.8 MM

A/R – $51.7MM

A/P – $6.5MM

Quick (acid test) Ratio – 14:1  Very strong

Clearly, the company has a strong balance sheet and it will get stronger with the news of a successful capital raise in the third Q of 2010.  The net to the company was in excess of $11MM and will make a strong balance sheet even stronger.  I am concerned about the size of the A/R balances (just as a percentage of total assets), but with audited financials hopefully those numbers represent future cash as they are collected.

Income Statement

This is where I have some concern.  The company is on a run rate for 2010 that is lower than 2009.  However. the 6-month results through June 30th are ahead of the previous years.  There has been some decline in margins, but nothing lethal.  I wonder if there isn’t some seasonality with their business that could account for the decreased run rate year over year.

Thru 2nd Q 2010        Thru 2ndQ 2009             FY 2009

Total Revenues                         $35.0MM                     $26.9MM                    $72.0MM

Gross Profit                               $10.9MM                       $11.1MM                    $30.2MM

Operating Income                     $4.0MM                       $3.8MM                      $11.1MM

Net Income                                 $2.8MM                       $2.2MM                      $8.1MM

The Chart

The bearish gap is a direct response to the recent equity raise which was priced at $3.61 per unit with a half warrant attached at a $4.52 exercise price.   If you were to take the $3.61 exercise price and divide by the units (1.5), you would actually arrive at a net share value of $2.40.  I can do this because even though the half warrant is priced at $4.52, there is no guarantee that will be the actual exercise price.  In fact, I have found that warrants are easy to re-price if the shares don’t reach the trigger points quick enough.

The chart itself is showing some bullish pressure with a strengthening MACD and an improving stochastics.  Other indicators are telling me the selloff could be ending.

Bottom Line: This could be a great time to get in to HQS.  I am a firm believer that firms with strong balance sheets give themselves the “breathing room” to overcome dips like the one HQS is currently in.  I like the stock…..I think that it could make a strong recovery over the next few months.  They are increasing capacity and expanding distribution…two very good signs.

Here is what I am looking at for entry/exit points

Last Close:              $2.80

Buy Opinion:          $2.75 – $2.90

Short Term Sell:   $3.75

Long Term Sell:    $5.00

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Celldex Therapeutics, Inc. (CLDX)

Celldex Therapeutics, Inc. (CLDX) has experienced a severe drop in its share price since its high of $9.49 on May 18th, 2010.  Perhaps the news that Pfizer Vaccines had cancelled its licensing agreement of CLDX’s therapeutic cancer vaccine candidate, now called rindopepimut, was the final “nail in the coffin”.   I am not trying to mitigate the damage to the company future prospects that this cancellation caused, but I think that CLDX is not “terminal”…and should be on your radar list.  The stock is in a downtrend currently and I would not suggest being careful with your entry point.  It might be best to see if the stock has put in a base at these levels.

About CLDX

Celldex Therapeutics is the first antibody-based combination immunotherapy company. Celldex has a pipeline of drug candidates in development for the treatment of cancer and other difficult-to-treat diseases based on its antibody focused Precision Targeted Immunotherapy Platform. The PTI Platform is a complementary portfolio of monoclonal antibodies, antibody-targeted vaccines and immunomodulators used in optimal combinations to create novel disease-specific drug candidates.                                                                                                                                                                  source: company website

CLDX also offers a “fact sheet” on their company and its drug candidates which is good reading to help you gain a better understanding of the company.  Click here to access.  It is dated April 8, 2010 and still contains mention of Pfizer, but the information is still relevant.

The chart is not CLDX’s friend…for now

Is this a  good time to get back in?

All that I have read (company info, third-party journalists and even message boards) lead me to believe that CLDX has a great recovery potential.

The company believes firmly that their main drug candidate, rindopepimut, still has great potential.   In a recent press release commenting on the Pfizer withdrawal, the company makes the point that “across three clinical studies, rindopepimut has met or exceeded all pre-determined safety and efficacy objectives.”

The PR goes on to say (and I thought this was important so that is why I am including it), ”There is a significant need for new therapies for GBM and we are fully committed to developing rindopepimut for the patients who suffer from this fatal disease,” said Anthony Marucci, President and Chief Executive Officer of Celldex Therapeutics. “Importantly, the program has advanced significantly, including the completion of a multi-center Phase 2 study, the development of a diagnostic companion product, the manufacture of drug supply for clinical studies, and the execution of discussions with regulatory agencies on the design of a global controlled study. We believe the program is very well-positioned to advance into pivotal clinical studies and that the GBM market remains extremely attractive.”  Read the full release by clicking here.

One of the hallmarks that I look for (as a recovering CPA) is a company’s financials.  CLDX has a strong balance sheet that will give it time to work out its problems.  As of the June 30th Q, the company had over $65 million in cash with manageable debt and good coverage ratios…over $2.00/share in cash.  Pfizer has funded much of the development over the past year and I will be curious to see what the burn rate of the company will look like in future quarters.  It’s ability to raise funds in the future is heavily dependent upon how they can recover from the Pfizer debacle and re-establish in the minds of investors (and the financial community) that they have a viable drug pipeline.

Here is what I am looking at for entry/exit points

Last Close:              $3.55

Buy Opinion:          $3.40 – $3.70

Short Term Sell:   $4.50

Long Term Sell:     $6.00+

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, stocks under $5, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

American Power Corporation (TGMP)

I came across this heavily promoted stock late this afternoon and the hype and chart are telling me that American Power Corporation (TGMP) is ready for a fall.  It may not be today, but soon it will be heading south.

I won’t spend a great deal of time talking about TGMP, because there isn’t a lot to talk about.  This is a natural resource play (coal) that is being plastered all over the boards and is appearing in over 10 newsletters.  It has only been actively trading for a few days and has seen some strong volume and some decent price appreciation.  It has no revenues, no assets and only one recent PR of note.  That PR talks about the purchase of land in Montana for a coal plant.  I have, however, seen no news on how they are going to finance such a large project.  The company is so new they don’t even have a website.

Highly suspect!

Here is the chart…so you can see for yourself.

Volume is tailing off and a stock can only be pumped so much.  I expect to see TGMP fall…the question is when.  Be on the lookout.  The overall trend is still positive (Bullish MACD and stochastics near overbought levels) and who knows what additional promotion is “coming down the pike” that could drive the price even higher.

But….TGMP could fall and fall far.  If you are able to pick up 20 cents in its pending collapse, then you have made a great trade.

Here is what I am looking at for entry/exit points

Last Close:              $1.03

Short Opinion:      $1.00 – $1.10

Short Term Sell:    $0.90

Long Term Sell:     Between $0.70 and $0.80 (don’t be greedy…I don’t know how low it will go, but take your profit and run)

Good Luck and Great Trading,

Jeffrey Dean

Editor’s Note: I was checking emails the day after I wrote this blog and I received another email on TGMP that says “Warren Buffett to take over TGMP in two months”.  Despite the laughable headline that has no basis in fact, be sure and watch out that you don’t get short squeezed on this one.  THE PUMP LIVES!

Editors’s Note II:  It has been several days since my original post and TGMP continues its run.  It looks like the stock is finally cracking (9/2/10), so be ready to play.

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stock market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Calypso Wireless Inc. (CLYW.PK)

WARNING:  This is a highly speculative stock play

One of my members, Bill P., sent me an email last week about Calypso Wireless Inc. (CLYW.PK).  He said that it could be a huge payday for the right investor.  Having heard such pronouncements from many emailers over the years, I was highly skeptical.  I did my research and I am less skeptical.  However, this is a highly speculative play and should be viewed as such.

Here is what Bill wrote:

Calypso Wireless has significant patents for switching from towers to wifi on the fly.  They presently have a lawsuit against a major shareholder which will probably be settled by a mediator.  It would be more beneficial to go to trial, but they need to organize and go after T Mobile which has infringed on its patents.  Apple, htc, sprint, and motorola have all infringed on the patents.

T Mobile will be the first and are scheduled for court today.  They must submit their side of the argument today.  This will then go to December for court or for T Mobile to come up with a settlement which should be hundreds of millions of dollars.  Next would be the other companies that would follow suit.

Huge paydays are ahead for Calypso Wireless.  This was a $6.00 stock 6 years ago.  It could very easily be there before the end of next year, maybe sooner.  It should be moving forward from the .02 to .03 trading range. Most in the know investors look for this to be at least .50 cents by December.  Not a bad return. This will happen.  Calypso will clean up their internal problems in the next 90 days and as a united board of directors, they will take down the big guys and receive huge royalties. Could be a HUGE pop. (emphasis added by me)

Bill is an individual investor who runs a business.  My conversations with him lead me to believe that he is a serious investor….so I looked deeper into this stock and found that he may be on to something.

Calypso Wireless, the company - According to CLYW’s website, they are the company behind the ASNAP™ technology for which it was granted U.S. Patent #6,680,923 titled “Communication system and method” www.uspto.gov (search U.S. patent number 6,680,923), which covers the seamless roaming of voice, video and data between Wide Area Network access points, such as cellular towers (GSM/GPRS/EDGE, CDMA, WCMDA etc.) and short-range Internet access points (such as Wi-Fi, Bluetooth, etc.).

According to what I have read, the entire mobile backbone around the globe is built on this technology.  The ability to switch access points is crucial to our current ability to “roam” and receive date and voice seamlessly.  Again, the story is that CLYW was in such bad financial shape that many cell carriers just used the technology because it appeared that the company would be going out of business.  It might be time for them to pay up!

The court cases – CLYW has a case against a former officer and shareholder, Drago Daic and his ex-wife Cathy.  According to what I have read, Drago was brought into the company to help “perfect” the patents.  Instead, he made a power grab and has laid claim to the patents themselves.  The case has been submitted to arbitration and the hope (from Bill and message board types) is that arbitration will pass on issuing a judgement and then the company can proceed with a court case to defeat Drago and his claims to the patents.

The second case (and most important) is the case that has been filed against T-Mobile.  This is the first of a number of suits expected to be filed against other cellular carriers.  This suit is expected to set precedent that T-Mobile infringed on Calypso’s patents and, by default, the rest of the cellular industry.  The financial ramifications could be in the hundreds of millions for CLYW.

The decline and fall of CLYW

The chart illustrates the collapse of CLYW and the fact that it has treaded water for the last several years.

Li3 Energy Corporation (LIEG) – Amerilithium (AMEL) – Lithium Corporation (LTUM) – American Lithium Minerals (AMLM) – BlackHawk Exploration (BHWX)

In my previous life as a paid promotion site, I got to see any number of companies and sectors pushed and promoted that didn’t deserve to be!

It seemed that every week I was doing an Oil and Gas Play.  Alternative energy plays were very popular…biofuels and solar, too.  BUT, the clear winner over the past year has been the Lithium mining sector.  I saw a succession of mining plays like LIEG, AMEL, LTUM, BHWX and AMLM parade across the paid promotion universe.   They did just want “pump and dumps” should do…they skyrocketed and then fell.  They all has slick, professional websites that touted that Lithium was the “energy source of the future”.  It may well be, but these companies are very far away from being viable companies.

The truth is I did alerts on all of these companies at one time or another over the past year.  I just ran across LIEG the other day and have added it to my list since it is in the lithium mining business and it is a paid promotion stock, too.

Is Lithium the energy source of the future?

It certainly is when it comes to batteries for electric cars.  Greentech Media published an article by Mark Boslet called “Lithium Battery Oversupply Debate Rages” (click here to read).  It was an entertaining article that makes a case that the future demand for Lithium batteries will be extremely strong.  Certainly Obama’s multi-billion dollar investment in Lithium battery technology should bear some fruit for the domestic battery and electric car industry.

Here are just a few facts that I have gleaned about Lithium:

• The Obama administration’s Energy and Environmental plan requires increased lithium production because the plan calls for ONE MILLION hybrid/electric vehicles on American roads by 2015 and is investing BILLIONS to jumpstart a domestic electric battery industry.

• It may play a vital role to the future of the automotive industry. In fact, According to a new report from Pike Research, this market growth will create a Li-ion transportation battery industry with nearly $8 billion in sales worldwide by 2015, up from $878 million in 2010.”

That is bound to have a HUGE impact on lithium mining companies.  I read somewhere that it take 60 to 70 pounds of lithium carbonate to make the batteries that will go in the typical Electric vehicle.  Clearly, lithium is going to be a hot commodity going forward.  I am not sure that these companies are going to allow you to take advantage of the demand for Lithium.

Are all Lithium Mining Stocks scams?

I sure hope not.  But, they have been a very popular “pump and dump” stock lately.  If you  are still interested in Lithium and want to get out of the pump and dump world their is always the new Lithium ETF – LIT (Global X Lithium ETF)

There are larger mining concerns that are producing and viable (Chementall and SQM from Chile, FMC Lithium and Tallison Minerals from Argentina), but LTUM, AMEL, AMLM, BHWX and LIEG aren’t there yet.   Most current production is in what is known as the “lithium triangle” or lithium “ABC“: ” Argentina, Bolivia and Chile”.  U.S. mining is concentrated in Nevada’s Clayton Valley where several of these companies have exploration properties. (and Chementall Foote has the only producing U.S. Lithium mine).  By my own unscientific estimations, these other companies are many, many years away from viability.

I did notice that LTUM and AMEL seem to be run by the same group since their websites are eerily similar.  So….some Lithium plays are so lazy they just recycle information off of another website.  And, still people bought both stocks “hand over fist” when the pump was going on.

Let’s take a look at these U.S. Lithium Mining Companies

As you can see their charts are remarkably similar….they hit the ground running with lots of paid promotions and a great deal of buzz.  After initial success, most of the price action has been down.  In fact, all are trading significantly below their recent highs.

LI3 Energy, Inc. (LIEG)

Lithium Corporation (LTUM)

American Lithium Minerals, Inc. (AMLM)

Amerilithium Corporation (AMEL)

Black Hawk Exploration, Inc. (BHWX)

Bottom Line:

Lithium is going to be a hot sector for many years to come.  I am not sure that any of these companies are going to “hit the jackpot” in the long run, but if you are a gunslinger trader you can certainly play the next pump on any one of these stocks.  Just be careful with these and any other of the “hottest stocks” that gets touted.

When I introduce my paid newsletter site in another month, I will give traders the opportunity to take advantage of my research, experience and knowledge to pick the right stocks…free of hype and manipulation.  I don’t have anything against any of these stocks.  I expect that very few of them will be around in a year or two, but I could be surprised.   Paid promotions (also called “pump and dumps”) are a great way to LOSE money for most traders.  Just be careful when you get the email or piece of mail touting the next hottest thing.  It might be hot, but only long enough for the promoters to make money!  Not you, though!

Here is what I am looking at for entry/exit points

HA HA HA HA HA HA HA HA! (yeah, right!)

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average trader is aware of them.

———————————————————————————————————————————————————

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received any current compensation of any kind for any of the companies listed in this communication. AMEL, BHWX, LTUM and AMLM were subject to paid promotional agreements which has since lapsed.  The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Adamis Pharmaceuticals Corp. (ADMP.OB)

There is an old saying that I love: “It ain’t bragging if you can back it up”.  While the ADMP people aren’t saying they are going to be a ten-bagger, I am.   And, I think they will back it up for me.

I haven’t been this excited about a pharma company for quite some time.  Adamis Pharmaceuticals Corp. (ADMP.OB) currently is a beaten-down pharma stock that isn’t generating much positive buzz.  Their reverse merger with Cellegy in 2009 (to go public) generated a lot of bad blood and their recent unsuccessful attempt to merge with La Jolla Pharmaceuticals left many traders wondering if the company was going to be able to survive.  The boards are, by and large, down on ADMP.  The negative comments I am hearing center around their lack of financing, poor results for their highly touted Epinephrene syringe initiative and disbelief in the company’s current strategic direction.  In fact, there is still a great deal of short activity surrounding ADMP.  Yesterday’s FINRA report shows that out of 150,500 shares traded….33,000 were shorts.

To my mind NOW is a great time to have ADMP on your trading radar.

I have known about ADMP for quite some time.  I actually did a blog the company in August of 2009 when the stock was at $0.24.  I titled my blog “When it goes, it will go big“.  Well, it did go big…for awhile.  Shortly after I blogged it, ADMP went on a run to $0.45 (a gain of over 87% in less than two weeks). I got many emails from traders thanking me for that call.  Since then, the stock has been very volatile trading in a range between $0.55 and $0.15 and is currently is trading right around the $0.25 mark.

It is time to take a close look at ADMP again.

ADMP calls itself a commercial-stage specialty pharmaceutical company.  click here for website.  The site needs updating, but it will give you more information about the company.

Before I wrote this blog, I did extensive research on the company, reading financials and talking with both the IR firm and several officers of the company.  All have extraordinary confidence in the company.   On its face it might be hard to share their optimism, but I drilled into the company and found out some things that make me very high on the stock.

Financing will come

All of my conversations with the company and its IR firm started and ended with the question…..”What about financing”.   While the company would not give me any details on current financing efforts, I got the impression that something was imminent.  The company is highly motivated to raise the capital since one of the conditions of their recent acquisition of their prostate cancer drug candidates was a minimum equity raise of $2MM.  I am inferring here, but I couldn’t see a company licensing its technology to ADMP (especially since they have blockbuster drug potential) without real confidence that the financing could be accomplished.

Once this initial financing is accomplished, the company believes this will be the last financing it will ever have to do because of the following.

The “Steak and Sizzle” Growth Strategy

I had a very extensive conversation with Dr. Dennis Carlo, CEO and President.  I came away very impressed with Dr. Carlo (more on him later).

Dr. Carlo used an analogy for ADMP’s growth strategy calling it the “Steak and Sizzle” plan.   What he means by that is that the “meat” of the company is their Epinephrene syringe product that can conceivably generate many millions of dollars for the company NOW.  The product has been approved by all of the major medical supply distributors (Amerisource Bergen, Cardinal Health, McKesson, etc…), major drug chains and a number of insurance companies.   It is priced significantly below the current competition’s products and the company is aiming at capturing 10% to 20% of a $200MM market…which could mean millions to the company annually.  However, the success of this strategy is heavily dependent on achieving financing which hopefully they will accomplish soon.

The company has lined up manufacturers….all it needs is the capital to produce production quantities for distributors to stock and reps to sell.  Dr. Carlo’s actually is convinced that the Epinephrene sales could make the company profitable in its first year AND fund the trials for its other drug candidates.

Part of his “steak” strategy are two other products:

1. Nasal Steroid for the treatment of Allergic Rhinitis – The company is very high on this product (Beclomethasone HFA aerosolized nasal steroid….to be exact) that would gain the company entrance into a $3 Billion market.  The product is not expected to be ready for launch until 2012, but the company has high hopes for it.  They also have two other extensions of Beclomethasone for Asthma and COPD expected to be released in 2013.
2. A topical contraceptive for women  (C31G) – Hidden away in their SEC documents is a product that has passed Phase III testing with the FDA and might represent income (either from sale or licensing) for the company.  This product is a wildcard because the company has made no announcements of what they plan to do with it or the financial impact of the product.  This was a technology that came with the Cellegy reverse merger.  I will be looking for some news on this one in the near future.

The “sizzle” are a suite of products that were recently licensed from Colby Pharmaceuticals Corporation (read the full release here) that cover three small molecule compounds for the possible treatment of prostate cancer (PCa) called CPC 100, CPC 200 and CPC 300.  These three drugs are initially targeted at prostate cancer, but have application to many other types of cancer.

All are reasonably early stage (phase 1 and 2), but have already shown great promise.  According to the company, over $18 million has been spent developing the drugs to this point.

In 2006 and 2007, CPC-100 and CPC-200, respectively, received the National Cancer Institute’s multi-year, multi-million dollar RAPID (Rapid Access to Preventative Intervention Development) Award. Each year, this award is given by the NCI Division of Cancer Prevention, under the RAPID Program, to the most promising new preventative/ therapeutic anti-cancer drugs.

These drugs are very promising, but are years (and many FDA trials) away from being ready for market.  However, the payoff could be enormous for the company.  The National Institute of Health states prostate cancer is the most common cancer in America, affecting 1 in 6 men.  Prostate cancer accounted for nearly one quarter of all new cancer diagnoses of all new male cancer diagnoses. Worldwide, about 395,000 men are diagnosed with prostate cancer each year and the incidence is on the increase.  The NIH estimates that prostate cancer therapeutics in the U.S., Europe and Japan will cost $ 7.3 billion in 2011.

The point man for ADMP

Dr. Dennis Carlo is a very impressive man, as I mentioned earlier.  Here is his bio from the website (edited by me for brevity):

Dr. Carlo is a co-founder of Adamis Pharmaceuticals Corporation and……and has extensive biotech research and development experience ……  He served as Vice President of Research and Development and Therapeutic Manufacturing at Hybritech Inc., which was acquired by Eli Lilly & Co in 1985. After the sale to Lilly, Dr. Carlo, along with Dr. Jonas Salk, James Glavin and Kevin Kimberland, founded The Immune Response Corporation, a public company, where he served in various capacities from Chief Scientific Officer, COO and President and Chief Executive Officer. He served as president of Telos Pharmaceuticals, a private biotechnology company, prior to founding ADMP.  Dr. Carlo has extensive experience in the development of vaccines and biologics. He has a Ph.D. in Immunology and Medical Microbiology from Ohio State University. He is named on 23 patents and has authored over 225 articles and abstracts in the field of Immunology.

Being the skeptic that I am, I also took a trip through Google trying to find any “dirt” on the good Dr.  I found none! He appears to be just as advertised: A seasoned, accomplished pharma/immunology expert that is passionate about his company.

Their Dendreon (DNDN) fascination

When I talk to people at ADMP, they always bring up Dendreon, Inc. (DNDN) as a model for the kind of company they could become.  (emphasis on “could”)  They believe their prostate cancer drug candidates have the potential to be more effective against a wider range of cancers than even DNDN.  The amazing story of DNDN was that the stock skyrocketed even before the technology was proven.  According to my conversations with the company….DNDN only delays the inevitable (i.e.  The patient will live longer, but still die).  ADMP’s drug candidates could represent a cure for certain cancers.  Everything is couched in “maybe” or “possibly”, but I get the very real feeling that Dr. Carlo believes that he has a cure for certain cancers.

The Chart

While ADMP is not a short-term play to me, I am including a chart just so you can see the volatility inherent in the stock.  The stock has made some strong moves over the past year…and could again.  And, with the high short positions being taken, any short squeezes could really rocket the stock.

The Bottom Line

ADMP is, to me, a short-term and a long-term play.  I am buying some and plan on holding it for a minimum of several months.  I am not against however selling into any spikes, recovering my original investment and “playing with the house’s money” to quote the old gambling adage.  I think that ADMP has great long-term potential. Dr. Carlo pointed out to me that while CEO at Immune Response Corporation, he took the stock from $0.50 to $60.00.  It is unknown if ADMP can make the same kind of jump, but I like the fact that Dr. Carlo has “been there, done that” with another public company.

The company still has a long way to go.  If and when the company is able to secure financing, they will still have to execute on their “Steak and Sizzle” business plan.  The chart will continue to be weighted down with shorters who will do everything in their power to drive the shares down further.

Despite the potential of a DNDN-type stock price move, the other option for the company is to be acquired.  Johnson and Johnson (J & J) set the bar for the acquisition of companies with prostate cancer drug candidates with its US$1.0bn acquisition of Cougar Biotechnology in 2007. The acquisition, which was valued at US$43 per share, saw J&J acquire candidate drugs focused on prostate and breast cancers. This hefty valuation was in the face of the fact that Cougar was still in phase 1 trials for most of their drugs.  The market is not as frothy as it was in 2007, but the point is that larger companies are always willing to pay well for technologies they don’t have…and want!

Here is what I am looking at for entry/exit points

Last Close:              $0.26

Buy Opinion:          $0.22 to $0.30  (with a stop loss at $0.17)

Short Term Sell:    $0.50 to $0.75

Long Term Sell:     $1.50+

Good Luck and Great Trading,

Jeffrey Dean

Disclosure:  Long ADMP

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market (Stocks under $5), or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average trader is aware of them.

—————————————————————————————————————————————

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

JADE ART GROUP INC (JADA.OB)

This is a quick update on a stock that I have covered frequently over the past few months:  Jade Art Group, Inc. (JADA)

It looks like JADA could be in play today!

Yesterday, the stock saw a massive selloff based upon uninformed traders who saw that JADA’s revenues dropped by 50% over the previous quarter.  The selloff was completely reasonable given the news of the drop.  However, the press release issued by the company was interesting in the way it was presented.  The press release only talked about how the current 2nd Q was such an improvement over the previous year’s Q:

• Revenues were up 42% over the previous Q
• Gross profit was $1.9 million, compared to $1.1 million in the second quarter of 2009.
• Net income in the second quarter of 2010 was $1.1 million, an increase of nearly 200% compared to net income of $0.4 million in the second quarter of 2009.
• Basic and fully diluted earnings per share in the second quarter of 2010 were up $0.01 from $0.00 in the second quarter of 2009.

BUT (and that is a big but)….Revenues dropped over 50% from the previous fiscal quarter.  It appears, from looking at historical financials, that their business is cyclical.  Most traders seem not to be aware of that.

Here is the chart:

Yesterday’s big selloff is a great buying opportunity imo!  This is a great company that is steadily increasing EPS…margins are good, cash in increasing.  Cyclical companies get punished for putting out numbers like these for the second Q, but savvy investors take advantage.

The knife might fall further for today, but I believe that you will see JADA make a strong recovery soon.  Watch it closely for any turn.

Here is what I am looking at for entry/exit points

Last Close:              $0.34

Buy Opinion:          $0.30 – $0.37

Short Term Sell:   $0.45

Long Term Sell:     $0.70

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market (Stocks under $5), or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

—————————————————————————————————————————————

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Santeon Group, Inc. (UBCI.OB)

I don’t cover sub-penny stocks very often, but one came across my radar that I want to share with you.: Santeon Group, Inc. (UBCI.OB)

Most sub-penny’s started out as penny’s or better, but sink down into the depths of the sub-penny market…most never to re-appear.  UBCI is reversing the process.

This is one of those plays where a new company has been put into an old shell.  This one is called Santeon Group.  The old shell, UBroadcast, Inc., was reversed into only in June of this year.

The company still has the old UBroadcast ticker (and derives some incremental income from that business), but the star of the show is Santeon Group.   Santeon has been in business for over 10 years providing business process management software for the healthcare industry. (click here for website)

In it’s last fiscal year, Santeon only booked $3.6 MM in sales…not that impressive for a 10-yr. old company.  However, Santeon is betting the farm of growth.  Their PR’s make all sorts of references to strong revenue gains in 2011 and 2012.   Santeon is supposedly debt-free and cash flow positive.  I will look with interest upon the next 10-Q to see just how strong Santeon is.

Since then there has been a steady flood of press releases about the progress that Santeon Group is making in building sales posting sales with some very recognizable names in industry: BP, O2, IBM, Microsoft, etc…

The company is also growing by addition with the purchase of two other software companies, Vu Media and X2A Consulting, LLC.  None of these additions are headline stuff, but the company has laid out a strong plan for acquisitions that could help the company grow quickly.

Let’s take a look at the chart

I get the impression from looking at the chart that UBCI is just “idling” at current levels and that it won’t be a sub-penny for very long.  The chart gives me the impression that it is near the bottom of the range for UBCI and that the next move will be up.  You can play UBCI for the short-term move or if the news it puts out is strong enough, then hold for the long term.

Bottom Line: UBCI is a sub-penny play that might be worth looking in to.  Buying 20,000 shares would cost you the equivalent of a decent dinner for two, but the upside is a great deal better than a night out.

From my research on the company, I get a strong feeling they will deliver on what they are promising.  I expect they will be issuing a steady stream of PR’s about clients landed, revenue growth, new acquisitions, etc.   I just hope they have some substantive news that traders are actually interested in.

The “fly in the ointment” is that somewhere down the road, UBCI will have to do a reverse split.  As with most penny and sub-penny stocks, stock is better than cash.  Every vendor gets paid in stock, officers are paid in stock, acquisitions are done in stock….all that stock has left UBCI with a bloated capital structure that will demand a reverse split before a year has passed.

Here is what I am looking at for entry/exit points

Last Close:              $$0.008

Buy Opinion:          $0.005 – $0.008

Short Term Sell:   $0.015 – $0.025

Long Term Sell:     $0.1 and above

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market (Stocks under $5), or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

—————————————————————————————————————————————

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

AISYSTEMS, INC. (ASYI)

I get calls from Investor Relations people all the time.  They all want me to know about their client, company X, that will be the next best….whatever.  They are all earnest and mean well, but I don’t always trust them.

One IR guy that I do trust brought me AI Systems, Inc. (ASYI).

He arranged for me to talk with the President of the company, Stephen Johnston, several times.  Despite Mr. Johnston’s understandable reticence to give me anything meaty, his passion for and confidence in his company came through clearly.   I shouldn’t get too excited because I have been lied to by many IR guys and company personnel.  But, I don’t think Mr. Johnston is lying.

I also think that ASYI is a company that traders should put on their radar.  It is a longer-term prospect given its chart and current situation (no rev’s, no customers and little cash).

Sounds like a deal you can’t pass up?  Right?

ASYI is a specialty software company that is targeted to the Airline Industry.  They are offering a suite of software services that “Can change the airline industry as we know it“.  Those words came out of Mr. Johnston’s mouth and I am quoting them.  Let’s look at what is behind his bravado.

Currently, airlines plan their overall schedules (route, crew, fleet and maintenance) in a process that closely resembles a Rube Goldberg machine.  For the largest airlines, it takes literally hundreds of personnel many weeks to create an overall schedule for the airline.  And, it takes weeks and weeks to create…all at enormous cost to the airline.

According to ASYI’s latest press release, “The end-to-end process (of creating the master schedule) is extremely time consuming, inflexible and often hinders an airline’s ability to achieve and sustain profitability. Utilizing current technologies to create an airline business plan and schedule has become a highly complex, expensive and often error prone process typically taking weeks to months to complete.”

If there are any deviations in the schedule (Weather, Flight Delays, Broken Planes, Icelandic Volcanoes), then the process must start again.   The Icelandic Volcano of 2010 is a perfect example of what I mean…ASYI believes their software could have saved the airlines MILLION$ during this crisis alone.  ABC News reported (read it here) that airlines lost billions ($200MM per day) while the volcano had air travel shut down.  According to Mr. Johnston, what airlines lacked was a way to quickly, efficiently and effectively change their schedules.  There was NO WAY given the current way that schedules are  constructed for airlines to change quickly.

That is what ASYI is counting on.  They have created several pieces of software (jetEngine Business Planning Software (BPS) and jetEngine O/S) that could change forever the way that airlines manage their business.

The BPS software has been released and is currently on the market.  However, no sales have been reported yet as the company is “working with several major airlines” who have expressed interest in both the BPS and O/S software.  According to the company, the biggest impediment to full adoption is the airlines’ decentralized decision making structure and the cost of the software.  The BPS software will cost airlines $1MM annually (which is a big number to swallow) and the O/S software is double that.  The O/S (due out in 2011) will also include a $0.40 per passenger fee.

However, ASYI is counting on a cost/benefit analysis that clearly shows how much money airlines will MAKE using their software.  Mr. Johnston told me of a collaborative study that was done with a major domestic airline.  The airline gave ASYI all of their schedule data for a previous year and the company then ran those numbers through their program.  According to Mr. Johnston, the use of ASYI’s software would have resulted in an increase in EBITDA of $300 MILLION dollars.

The benefits to ASYI are clear: The passenger fee alone could mean millions upon millions to ASYI since the major airlines routinely fly 100 MILLION passengers annually.  In addition, it is important to note that there are well over 1,000 passenger airlines who are potential customers for ASYI’s software and at a million dollars per installation that could mean big dollars for the company.

Sounds great, but what’s the catch?

The catch is getting someone to buy the software.  ASYI has been around for several years and seemingly had it made a few years back with the signing of a $35 Million dollar contract with AeroMexico.  They were going to be the test bed for the new software.  It looked like everything was going to turn out well for ASYI.  Then the global recession hit the airline industry hard (AeroMexico too) and ASYI lost a great deal of momentum as well as the perfect test bed for their product.

The company has adopted a bunker mentality…dumping payroll (firing their CFO and COO recently) and keeping operations “lean and mean”.

The chart isn’t much help

With a bloated capital structure (over 90 Million shares in the float), I am curious how the company will generate trader interest.  They have done some promotion in the past, but that didn’t seem to lift the stock for very long.  I have a feeling that it will be news that drives this stock.  If they are able to start closing some customers in the near term, they might be able to reach their goal of being cash flow positive by 3Q 2011.

Bottom Line:

If I had a “Top Stocks for the New Millennium” list, I would put ASYI on it.  It is not a great stock to trade now (and that is management’s fault for large part), but the stock is all about the future.  I would like to see management and their investment bankers work the price down and tighten up the bid/ask spread.  Very few traders want to buy a software company with a market cap of $66MM that has no clients, no revenues and little cash in the bank.

HOWEVER, I am going to watch ASYI because I think it has real “home-run potential” .  I will watch with interest to see if the company can truly “revolutionize the airline industry”.

I will keep you posted.

Here is what I am looking at for entry/exit points (There is a little bit of fantasy about these numbers since ASYI doesn’t trade predictably yet)

Last Close:              $0.49

Buy Opinion:          $0.20 – $0.30

Short Term Sell:    $0.75

Long Term Sell:     $1.50

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market (Stocks under $5), or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; Investor Soup covered this company under an expired promotion contract in June 2010. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

China Nepstar Chain Drugstore Ltd. (NPD), China Jo Jo Drugstores, Inc. (CJJD) and China Yongxin Pharmaceuticals, Inc. (CYXN)

Of course, I meant “LEGAL” drugs……The china pharmaceutical industry is an exciting sector with a great deal of competition and no true national chains.  The market is, in fact, highly fragmented and while NPD has over 2,500 stores, it owns only around 1% of the overall market.

These stocks are three of the most popular ones and they have been penny stock darlings for quite some time.  They are all volatile stocks that could be in play at any time based upon news or general China sentiment

China Nepstar Chain Drugstore Ltd. (NPD)

An earnings release this week could make things interesting for NPD.  It is scheduled for August 11th…this Wednesday.  The stock has been on a flatline for the past several months forming a durable base at around $3.  The bollinger bands have formed a tight convergence around the stock which could portend some move off this base.  Here is the chart, so you can see what I mean.

NPD is phenomenally profitable and has a very strong balance sheet.  Debt is classified as short-term debt and is significant ($68 Million), but cash ($200MM) and other debt-coverage ratios make the high debt a non-factor.

China Jo Jo Drugstores, Inc. (CJJD)

The story for CJJD is all about growth.  They are the smallest of the three companies profiled today and on the largest growth curve, but growth is easier when you are going from 29 stores (a/s March 2010) to 60 (projected by March 2011).  Having said that, CJJD is also showing (unaudited) income statement numbers that are impressive….55 MIllion revenues for ye 3/31/10 with 12.7 EBITDA.  Balance sheet is not as strong, but there are no big concerns.

China Yongxin Pharmaceuticals, Inc. (CYXN)

CYXN is a bit different from the other two because of its range of services and products…in addition to running its 79  retail stores (a/o 12/31/09), they are also heavily involved in pharmaceutical distribution as well as selling their own line of herbal remedies and medicines.  Their unaudited numbers are good, too.  Not as good as the other two, but still respectable.  For the y/e 12-31-09, the company booked $47 million top line and showed EBITDA of $7.7 million.

I would recommend staying away from CYXN until the volume issue is resolved (I have calls out to the IR firm) to try and get some details on their recent trading patterns.  CJJD is a potential short to me, but on such low volume, any position is a HUGE risk.  NPD has earnings coming out this week.  There has been no runup to earnings, so I can’t even begin to call how this will trade on Wednesday.  I like NPD, personally, but will not be trading it until I know more.

Good Luck and Great Trading,

Jeffrey Dean

About InvestorSoup

InvestorSoup.com is committed to provide intelligent commentary and solid analysis of small cap stocks, micro-cap stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

—————————————————————————————————————————————

Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.