Micro & Small-Cap Report 9/28/06
The Power to Surf
There might be a new kid on the block when it comes to Internet access. Not that cable and DSL providers are scrambling with fear yet, but there seems to be quite a bit of commotion surrounding what is called Broadband over Power Lines, or BPL.
BPL is a technology that allows for broadband Internet service via power lines. Radio energy is coupled onto power lines and distributed into homes. A device in the home plugs into a normal wall outlet and provides an Ethernet connection to a computer or home network.
The technology seems like it may be falling behind wireless. “Hot spot” technology is beginning to become more main stream. It has expanded and is spreading to larger metropolitan cities where these wireless companies are leasing time on cell phone towers and using rooftops of city owned buildings to provide much larger areas with the wireless service.
But BPL does have one advantage, and it may be what is allowing the technology to stay afloat. Utility companies, particularly publicly owned, are interested in the technology because of the fact that it allows access to homes through the utilities’ wires. In other words, utilities have a direct line of communication with each and every house they serve if an Internet connection is running through it.
The connection is also facilitating “meter reading” or the report of each household’s use of energy. This seems to be the main selling point for the BPL’s to the utilities. Since utilities will undoubtedly save money on the cost of human labor to read the meters, they have become increasing interested in installing the technology in their infrastructure.
This fact is evident by today’s news from Telekonet Inc (TKO) and Ambient Corporation (ABTG). Ambient announced that it had entered into an Expanded Deployment Agreement with Duke Energy (DUK), one of the largest investor owned utilities in the United States. The deployment will include building connectivity to approximately 6,000 homes in Charlotte, North Carolina, and is part of an ongoing BPL pilot program at Duke.
Ambient will provide an end-to-end solution for high-speed transmission and reception of data and voice via electric power lines for both broadband carrier and core utility applications and services. In addition to utilizing Ambient’s industry-leading, FCC-certified X2 BPL Access Node (with up to three 200Mbit BPL interfaces), Ambient designed, next generation overhead and underground couplers and BPL modems in the deployment, Ambient will also provide the engineering and technical support needed to design, support and assist in the deployment and management of the network. The deployment will also include X2 nodes with integrated 802.11a/b/g Wi-Fi support to provide wireless access. Additionally, Ambient will license its Network Management Software (NMS) to Duke for monitoring and control of the network.
Telekonet announced that they partnered with Ameren Energy Communications and River City Internet Group to provide a unique version of BPL in Ameren’s Missouri and Illinois utility service areas. The unique version consists of a packaging of the BPL with VoIP, energy monitoring in real time to improve efficiency, in building security and surveillance, secured networks, digital signage controls, and in-building system controls for centralized heating and air conditioning.
The possibility that wireless becomes the dominant technology in the future is certainly an aspect to cause investors trepidation, though with the utilities on their side, BPL already has a foot in the door to consumers. With a positive outcome to their trial runs and the continued backing from utilities, these two companies are definitely ones to watch over the coming months.
Top Stories
Aradyme Signs Comprehensive Database
Migration and Conversion Solution Agreement
Aradyme Corporation (ADYE) announced that it has signed a Master Services Agreement to provide its comprehensive Independent Software Vendor (ISV) Solution for standardizing database migration and conversion services to Spillman Technologies, Inc. (“Spillman”). This agreement marks the second customer announcement for Aradyme’s ISV Solution released in June of this year and expands on the Company’s previous work in the public safety sector. Under the terms of the agreement, Aradyme will provide comprehensive data migration and conversion services to Spillman, with the first project being the conversion of legacy data within a law enforcement agency. Aradyme expects to also provide data migration/conversion for Spillman’s existing and future application implementation projects as well. By the close of Wednesday’s session, shares of ADYE were up more than 5c, or almost Collins Industries To Be Acquired by 65%, on above average daily trading volume. Steel Partners II for $110M ($12.50 Per Share) Collins Industries, Inc. (CNSI) announced that it has entered into a definitive merger agreement with Steel Partners II, L.P., a private investment partnership based in New York. Steel Partners is purchasing Collins in affiliation with American Industrial Partners, an operationally focused private equity firm. Under the terms of the agreement, Collins shareholders will receive $12.50 in cash for each share of Collins common stock they hold. The total value of the transaction, including assumed debt and expenses, is approximately $110 million. Shares of CNSI closed Monday’s session up $2.65, or almost 28%, on heavy trading volume.
GlobalOptions Group’s Subsidiary Inks
Deal; Won’t Comment on Canceled Merger
GlobalOptions Group Inc (GLOI) announced the receipt of a contract by its subsidiary, James Lee Witt Associates, to assist the Virginia Department of Emergency Management in disaster preparedness. The subsidiary has partnered with IEM of Baton Rouge to provide the services. It was not immediately known the extent or terms of the partnership or the contract. By acting as liaison between applicants and FEMA, James Lee Witt Associates (JLWA) will provide a comprehensive plan that includes pre-declaration preparation, such as educating local governments about how to conduct preliminary damage assessments and how to perform preliminary damage assessments with FEMA. As part of its contract, JLWA will also be involved in post-event recovery operations, as well as close interaction with FEMA personnel in the areas of damage inspection and insurance oversight. The company had recently been in the news as the merger agreement with LocatePlus was terminated. The original merger was announced on September 20th. Speaking with Chris Witty, investor relations representative, “The termination was mutual and that’s all we will or want to say about that.” Interestingly though, the company is not planning on slowing their acquisition strategy. Witty noted, “If you’ll look at our August 15th press release, you’ll see the company’s goals in Dr. Schiller’s comments.” The quote that Dr. Schiller released was: “We have begun the process of integrating our business units, driving organic growth among the acquired companies through strong industry relationships and cross-selling of each company’s services. We are also creating a streamlined infrastructure, cutting costs where appropriate to improve our return to shareholders. As we implement to plan, we remain on track to achieve our pro-forma revenue run-rate goal of $100 million by the end of 2006 through a combination of organic growth along with some additional acquisitions. We are confident of the opportunities that exist for GlobalOptions Group and see excellent prospects for continued rapid growth, margin improvement, and sustainable profitability.” In any event, with a continued commitment to acquiring quality accretive companies, this name could certainly be one to watch as they pursue their goal of the $100M revenue run rate. Shares of GLOI were up 48c, or more than 31%, by the close of Wednesday’s session.
Cal-Bay International Commences
Buyback and Retirement of Common Shares
Cal-Bay International, Inc. (CBAY) announced the launch of a common stock buy-back program effective immediately. The company will commence the repurchase the company’s common shares from the open market, effective immediately, and retire the shares permanently. This program will remain effective through October 31st, 2006, and will be reviewed by the Board of Directors after that date. The company will publish the results of the Buy-Back and total number of shares cancelled upon completion of the program. Shares of CBAY closed up almost 4c, or approximately 37%, in Wednesday’s session.
Puda Coal Sees Revenue Growth of
153% For FY06; Shares Climb More Than 7%
Puda Coal, Inc . (PUDC) announced today Q3, Q4 and full year ‘06 revenue guidance. Puda anticipates Q3 revenue of $38 million, as compared to revenue of $18 million in Q3 2005, a 111% increase. The Company anticipates Q4 revenue of approximately $40 million, as compared to revenue of $21 million in Q4 ‘05 -- a 90% increase. The Company anticipates revenue for the full year ‘06 to be approximately $130 million, a 153% increase. Shares of PUDC closed Wednesday’s session up 25c, or more than 7% on double its average daily trading volume.
Today's Headlines
SIGNS LOI TO MERGE: Organetix Inc. (OGTX) announced that it has executed a Letter of Intent (“LOI”) with Los Alamos, New Mexico based Volius, Inc. The next step towards the completion of the proposed merger would be the execution of a definitive merger agreement, based on terms set fourth in the Letter of Intent (which shall be disclosed in a form 8K filing). While there can be no assurances moving forward, management of Organetix is confident about the successful completion of a definitive merger agreement with Volius, at a future date. Shares of OGTX were up 33% by the close of Wednesday’s session.
PRESIDENT GIVES UP MORE THAN $1.3M IN WAGES: Moller International (MLER) announced that its President, Dr. Paul Moller, has voluntarily relinquished $1,303,861.43 in wages and $145,386.20 in interest he had earned. The move by the company’s founder is intended to relieve the company of some of the backlog of debt from his voluntary salary deferrals over the past several years. “I am comfortable giving up these wages if it can help the Company,” he said. “I have faith that we’re going to come out of this cash-crunch shortly, but for now the Company needs this money more than I do.” Shares of MLER close Monday’s session down 15c, or more
than 27%, on heavy trading volume.
RECEIVES ADDITIONAL ORDER: Electronic Sensor Technology (ESNR) announced the receipt of an initial order for 3 Model 4300 zNose(R) instruments to be delivered to the Government of Kuwait for their use in homeland security applications. It is anticipated that this initial order is a precursor to additional follow on orders. The zNose(R) is able to detect conventional explosives and a liquid bomb called TATP, which was the same ingredient used in the London airliner plot. The zNose(R) product line is not only used for homeland security. It is also used to monitor environmental concerns. Recently, ESNR announced the receipt of an order from the USDA for EST’s zNose(R) equipment to be used to test fish ponds for traces of algae. For the last six months, ESNR reported revenues of $1.15 million, an increase of 77% over the comparable year ago period and recorded a loss of $1 million. SG&A expenses increased 30% over this period to accommodate a larger marketing staff and expenses of going public in 2005.
TO RECEIVE FUNDING: Biophan Technologies, Inc. (BIPH) announced full congressional approval of an allocation of $1 million in U.S. government funding to help accelerate the commercialization of the MYO-VAD(TM) cardiac recovery system. A previously announced additional allocation of $400,000 is still pending. The MYO-VAD cardiac recovery system is being developed to provide short-term support and recovery capability to damaged or diseased hearts. The MYO-VAD is the first in a family of products based on Direct Mechanical Ventricular Actuation (DMVA) technology. It consists of a flexible polymer cup that fits around the heart, coupled to a drive unit, which pumps the heart to restore blood flow. Due to its simple design, rapid and technically simple installation, and anticipated lower total procedure cost, management expects the MYO-VAD to become a broadly available option for treating many types of heart failure.
SALE OF STAKE: U.S. Energy Corp. (USEG) and Crested Corp. (CBAG) announced the sale of their minority ownership interests in Pinnacle Gas Resources, Inc. and Enterra Energy Trust (ENT). The companies have also settled outstanding litigation with Phelps Dodge Corporation (PD) concerning the return of the Lucky Jack molybdenum project in Colorado to USE/CC. USEG and CBAG sold all of the shares of common stock they owned in Pinnacle to funds affiliated with DLJ Merchant Banking III, Inc. for an aggregate cash purchase price of $13.8 million. USEG and CBAG announced the sale of the rest of its minority interest in Enterra for approximately $8.3 million in cash. Under the terms of the settlement agreement with Phelps Dodge, USEG and CBAG will pay $7 million to settle all outstanding issues in regards to the operation of a water treatment plant and the transfer of the Mt. Emmons molybdenum properties (now referred to as the “Lucky Jack” molybdenum property) to USEG and CBAG.
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