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 start to fall in the next day or so.  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”.

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.

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

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 itsa 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.

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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.

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.

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

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.

Global Cash Access Holdings, Inc. (GCA)

A few weeks back, I came across Global Cash Access Holdings, Inc. (GCA) on one of my trips around the web, researched it, liked it….and then discarded it.  The stock was in a serious tailspin and I never like “falling-knife” stocks.  We all know those don’t usually end well.

But, it appears that the stock may have put in a bottom and the indicators are giving some credence to a rally.  It is a stock that given a longer time horizon might make for a good trade.  The stock is strong financially and after the hysteria about losing a big customer subsides, GCA could come back strong.

GCA (website) is a leading provider of cash access products and related services to over 1,100 casinos and other gaming properties in the United States, Europe, Canada, the Caribbean, Central America and Asia. GCA’s products and services provide gaming patrons access to cash through a variety of methods, including ATM cash withdrawals, point-of-sale debit card transactions, credit card cash advances, check verification and warranty services, and Western Union money transfers.

Why do I hate GCA? The few times I have been to a casino and needed extra cash, the exorbitant fees that companies like GCA charge tick me off.  I know they have to “make a buck”, but am too cheap to want to pay those fees.   However, that doesn’t stop them from making huge bucks from those fees to millions of willing customers.

The Fundamentals

GCA has strong fundamentals and that gives me confidence they have the ability to weather this downturn in their stock.  While L-T debt is high ($249MM), cash position and receivables are strong.  The company has good ratios and debt coverage is strong.  Cash flow continues to be strong.

The company is strongly profitable (although losing Harrah’s Casino at 14% of their overall business will hurt going forward).  Sales have plateaued during these tough economic times…which in some ways is a coup for the company.  They have maintained strong sales, margins and profitability during some difficult economic times.

The Chart

The Wild Card

Earnings are scheduled to be released Wednesday, August 4th.  I have read the analyst’s estimates and there appears to be no trepidation on the part of analysts.  We will see once earnings are released.  I have made the mistake of buying in anticipation of earnings and I don’t want you to make the same mistake.  We will see what happens once earnings are released.

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

Last Close:              $4.35

Buy Opinion:          $4.00-4.75

Short Term Sell:   $6.00

Long Term Sell:     $8.00 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, 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.