The Micro Cap Opportunity

06/04/2008
The MCO Daily - Before the Bell for Thursday, June 5, 2008

The Micro Cap Opportunity 'Daily'
‘Before the Bell’ for Thursday, June 5th, 2008

On the Radar: ALRY, PRPM, ACII, JYTO, ZILA, HEPH

This morning's top Micro Cap trading ideas include, Allenergy, Inc. (OTCPK: ALRY), Propalms, Inc. (OTCPK: PRPM), AmeriChip International, Inc. (OTCBB: ACII), Joytoto USA, Inc. (OTCBB: JYTO), Zila, Inc. (NASD: ZILA), Hollis Eden Pharmaceuticals, Inc. (NASD: HEPH).

ALLENERGY, INC. (OTCPK: ALRY)                                                                                       Up 21.21% Yesterday

Detailed Quote: http://finance.yahoo.com/q?s=ALRY.PK

Allenergy, Inc. (Pink Sheets: ALRY - News) is an independent energy company strategically focused on Southeastern Kansas where it currently holds approximately 4,620 acres of leased land with more than 150 oil and gas wells on its producing properties
 

Recent ALRY News:

June 4, 2008 - Allenergy, Inc. Oil Production Up 683% In First Quarter

Allenergy, Inc. (Pink Sheets: ALRY), an independent oil and gas producer focused on Southeastern Kansas, has increased its oil production 683% in the first quarter of 2008 compared to the same period in 2007, announced CEO Larry Sanford.

"Allenergy produced 5,688 barrels of oil during January, February and March of 2008," said Mr. Sanford. "This is nearly seven times the 833 barrels we produced in the first three months of 2007," Allenergy's CEO said.

"It is also very important to note that our average sales price per barrel more than doubled," he continued. "Allenergy averaged $84.31 per barrel in Q108 compared to $47.09 in Q107."

First quarter 2007 revenues were impacted by record-breaking cold weather and harsh snows, followed by the "100 year flood" that hit many parts of rural Montgomery and Chautauqua Counties in Kansas, where Allenergy holds leases on over 2,000 acres containing more than 50 producing wells.

"The Company's most recent oil sales in 2008 have been $99.70 per barrel," said Mr. Sanford. "Current prices for Eastern Kansas Crude Oil are now $116.50 per barrel, so we expect to break the $100 per barrel mark shortly," he added.

Contributing to Allenergy's production progress in 2008 have been moderate weather conditions in the Company's production sites, and operational decisions to maximize these factors. "We've proceeded with high-ground drilling in areas subject to heavy rains," Mr. Sanford said. "We had some high winds recently, but they were unrelated to last weekend's tornadoes in other parts of Kansas and Oklahoma."

"Barring any unusual weather conditions like those from 2007 during the balance of 2008, we should continue to improve on our production figures quarter by quarter," Allenergy's CEO concluded.

PROPALMS, INC. (OTCPK: PRPM)
Up 20.93% Yesterday

Detailed Quote: http://finance.yahoo.com/q?s=PRPM.PK

Propalms, Inc. is a leading global provider of application delivery solutions for Terminal Services and Virtual Desktop Infrastructures. Delivering to enterprises of all sizes, Propalms offers reliable, scalable and affordable solutions that simply work. Our belief is that application delivery solutions should be flexible, dynamic and, above all, simple to use.

Recent PRPM News:

June 4, 2008 - Propalms, Inc. Files Form 10-K Annual Report and Reports a 52 Percent Increase in Revenue for Fiscal Year 2008

Propalms, Inc. (Pink Sheets:PRPM) is pleased to announce that the Company has filed its annual Form 10-KSB for its fiscal year ending January 31, 2008 with the Securities and Exchange Commission (SEC). The Company generated $1,076,715 in revenue for its fiscal year ending January 31, 2008, a 52% increase over its prior fiscal year, where Propalms generated $708,434 in revenue. Equally as important for long term stability, deferred revenue to be recognized over the next year has remained consistent at approximately $630,000 when compared to the previous year.

The gross profit percentage has increased from 40% to 52% from the prior year which reflects the Company's ability to commercialize its prior development activities. Research and development expenditures have increased 106% from the prior year as Propalms has remained committed to enhancements and modifications to its technology base.

General and administrative expenses increased 58% from the prior year which primarily reflects the increased activity for raising capital funds. This has been offset by an approximate 10% decrease in total debt owed to third parties.

"We anticipate revenues to continue to increase over the next twelve months. Propalms is making significant strides by continuing to add new customers, new products. Our uplisting process to the OTCBB is on schedule and we are awaiting final approval from FINRA. We are committed to our business plan and we will continue to look for and execute business deals that will add increased value to our Company and shareholders," stated Robert Zysblat, President of Propalms, Inc.

AMERICHIP INTERNATIONAL, INC. (OTCBB: ACII)
Up 59.09% Yesterday

Detailed Quote: http://finance.yahoo.com/q?s=ACII.OB

Headquartered in Clinton Township, MI, AmeriChip International, Inc. holds a patented technology known as Laser Assisted Chip Control, which can be used to re-engineer the manufacturing process for industrial metal machining applications.

Recent ACII News:

June 4, 2008 - AmeriChip International Receives First LACC Production Order From Eaton Corporation

AmeriChip International, Inc. (OTCBB:ACII) received its first Laser Assisted Chip Control production order from Eaton Corporation, Truck Components. Eaton is a profitable, worldwide, diversified manufacturer with over $13 billion in annual revenue.

Kenneth W. Mann, CEO of AmeriChip, said, "AmeriChip secured the Eaton order because we are the only Tier One supplier* able to offer Laser Assisted Chip Control technology. Based on LACC technology, AmeriChip is the lowest cost supplier."

* Tier One Supplier definition: http://www.qualitydigest.com/nov00/html/qs9000.html

VALIDATION

"This new Eaton order validates AmeriChip's unique, patented, proprietary Laser Assisted Chip Control (LACC) technology. Our LACC technology has the potential of reducing costs in the turning manufacturing industry worldwide," Mann continued.

"We are currently in advanced discussions and negotiations with a number of our other blue chip clients for LACC technology implementation across a number of products."

IMPLEMENTATION

"When successfully implemented, this specific gear order will be billed at up to $1.2 million. We expect this gear production order to generate consistent, recurring top line revenue because we are essentially becoming a strategic manufacturing partner with Eaton," concluded Mann.

The pre-production approval process (PPAP) starts today on the first 10 gears, with the full PPAP to be completed by July 31, 2008 of about 3000 parts. Once the first 10 gears are run through their PPAP process, AmeriChip will be asked to produce additional batches of 300 each until the PPAP process is complete. AmeriChip will be shipping manufactured parts to three (3) Eaton truck component plants.

Thereafter, AmeriChip anticipates receiving additional, ongoing Eaton purchase orders for this particular gear. AmeriChip also expects Eaton to provide additional RFQ's to manufacture other product families using LACC technology.

About Eaton Corporation

Eaton is a profitable, worldwide, diversified manufacturer with over $13 billion in annual revenue.

http://www.eaton.com/EatonCom/OurCompany/AboutUs/index.htm

JOYTOTO USA, INC. (OTCBB: JYTO)
Up 20.75% Yesterday

Detailed Quote: http://finance.yahoo.com/q?s=JYTO.OB

Joytoto USA, Inc. (OTC Bulletin Board: JYTO.OB - News). The company's two business segments are electronic products and components, and online games. The electronic products and components business is that of a virtual, original equipment manufacturer (OEM) and original design manufacturer (ODM) of consumer electronics for retailers throughout the world. Joytoto USA's online game business segment operates online games in North America pursuant to an Exclusive North American Master License Agreement with Joyon Entertainment Co., Ltd. ("Joyon Korea"). The Master License Agreement gives Joytoto USA's wholly-owned subsidiary access to Joyon Korea's library of successful online games currently operating in the Asian markets which have generated more than $100,000,000 in the Asian markets.

Recent JYTO News:      

June 4, 2008 - Joytoto USA, Inc. Announces Its First Downloadable Online Game for US Distribution

Joytoto USA, Inc. (OTC Bulletin Board: JYTO.OB), has announced that it will release its first downloadable online game in the United States, "Pang Pang Terrible", through its US web distribution portal http://www.playolive.com, sometime during the third quarter of 2008. Joytoto USA's CEO, Michael Cho, says "We are very excited about our first downloadable online game release, as it demonstrates our commitment to the US online gaming market and the growing demand of the US consumer. The company continues to commit a substantial amount of time and resources to the US online gaming market".

"Pang Pang Terrible" is an FPS (first-person shooter) game, where players view the game from the shooter's perspective. The game is considered a "next generation" FPS game, in that users can create their own unique characters by selecting different attributes from a diverse showroom of choices. To see a movie of "Pang Pang Terrible", users can go to Joytoto USA's website and view a demo, at http://www.joytotousa.com/games/vod.jump?vod_no=001 .

ZILA, INC. (NASD       ZILA)                                                                                                                             Up 42.86% Yesterday

Detailed Quote: http://finance.yahoo.com/q?s=ZILA

Zila, Inc., is a fully integrated oral diagnostic company dedicated to the prevention, detection and treatment of oral cancer and periodontal disease. ViziLite(R) Plus, the company's flagship product for the early detection of oral abnormalities that could lead to cancer, is the first and only adjunctive medical device cleared by the FDA for use in a population at increased risk for oral cancer. In addition, Zila designs, manufactures and markets a suite of proprietary products sold exclusively and directly to dental professionals for periodontal disease, including the Rota-dent(R) Professional Powered Brush, the Pro-Select Platinum(R) ultrasonic scaler and a portfolio of oral pharmaceutical products for both in-office and home-care use.

Recent ZILA News:

June 4, 2008 - Zila Takes Steps to Clear Path for Growth and Financial Stability

Zila, Inc. (NASDAQ:ZILA) today said it has revised its agreement with the holders of its senior secured convertible notes to modify the EBITDA and minimum cash balance covenants.

Under the new terms, the minimum cash balance has been lowered by $1 million and the EBITDA requirement has been moved to July 31, 2009. The modifications did not alter the 7% interest rate of the notes nor require a cash payment.

"We believe that this action enables us to move forward with our goal of building value for our shareholders without the need to raise capital solely to meet a loan covenant," said David Bethune, chairman and chief executive officer. "As part of our strategy to achieve this goal, we recently implemented a number of cost reduction measures throughout the organization, including further reductions in headcount, non-critical marketing and general and administrative costs.

"In addition to lowering operating costs, we have developed a comprehensive plan to market ViziLite(R) Plus to U.S. and overseas medical facilities at our U.S. Military installations and U.S. Veteran's clinics and hospitals, through a five year U.S. Federal Supply Schedule Contract - # V79P-3158M," said Bethune. "Last month, we launched ViziLite Plus in the United Kingdom and are in the process of identifying distributors for the product in other European countries. Finally, our direct field and telemarketing teams are now fully trained on our entire product portfolio and continue to drive North American sales growth and build our customer base."

"While these are highly energetic objectives, I believe the Zila team is ready for these challenges. I look forward to working with all of our employees to build a value driven company," said Bethune.

HOLLIS EDEN PHARMACEUTICALS, INC. (NASD: HEPH)
Up 18.52% Yesterday

Detailed Quote: http://finance.yahoo.com/q?s=HEPH

Hollis-Eden Pharmaceuticals, Inc. is a world leader in the development of a proprietary class of adrenal steroid hormones as novel pharmaceuticals for human health. Through its Hormonal Signaling Technology Platform, Hollis-Eden is developing a new series of small molecule compounds that are metabolites or synthetic analogs of endogenous hormones derived by the adrenal glands from the body's most abundant circulating adrenal steroid. These steroid hormones, designed to restore the biological activity of cellular signaling pathways disrupted by disease and aging, have been demonstrated in humans to possess several properties with potential therapeutic benefit -- they regulate innate and adaptive immunity, reduce nonproductive inflammation and stimulate cell proliferation. The Company's clinical drug development candidates include TRIOLEX(TM) (HE3286), a next-generation compound currently in clinical trials for the treatment of type 2 diabetes, ulcerative colitis and being prepared for clinical trials in rheumatoid arthritis, and APOPTONE(TM) (HE3235), a next-generation compound being prepared for clinical trials in cancer. In addition to these clinical development candidates, Hollis-Eden has an active research program that is generating additional new clinical leads that are being further evaluated in preclinical models of a number of different diseases. For more information on Hollis-Eden, visit the Company's website at www.holliseden.com.

Recent HEPH News:

June 4, 2008 - Hollis-Eden Pharmaceuticals Provides Update on Clinical Development Programs; Announces First Quarter 2008 Financial Results

Hollis-Eden Pharmaceuticals, Inc. (NASDAQ:HEPH), the world leader in the development of a new class of small molecule compounds based on endogenous adrenal steroid hormones, today reported on the Company's progress with its drug development programs in the areas of metabolic disorders, inflammatory diseases and cancer, and announced financial results for the first quarter ended March 31, 2008.

Recent Progress in Drug Development Programs

During the first quarter of 2008, Hollis-Eden continued to advance development of its two lead drug development candidates - TRIOLEX(TM) (HE3286), now in clinical trials for metabolic and inflammatory disorders, and APOPTONE(TM) (HE3235), scheduled to enter a clinical trial for prostate cancer in the second quarter of 2008.

Metabolic Disorders: Type 2 Diabetes

In March 2008, Hollis-Eden announced preliminary data from its ongoing 28-day Phase I/II clinical trial with TRIOLEX in obese insulin resistant subjects. The trial, which was commenced in the fourth quarter of 2007, is designed to study the compound's safety, tolerability, pharmacokinetics and potential activity at three dosing levels -- 5mg once daily, 5mg twice daily and 10mg twice daily. Preliminary data from this clinical trial, reported in an oral presentation at IBC's 6th Annual Conference, Targeting Metabolic Disorders, indicate that TRIOLEX is safe and well tolerated at all doses studied, and suggest that the compound is reducing fasting blood glucose levels and improving insulin sensitivity.

Data were presented at IBC on the initial 19 subjects who had completed the study, seven of whom were evaluated for insulin sensitivity by "clamp studies," a method widely used in the pharmaceutical industry and academia to assess whole body glucose metabolism and to test compounds as potential insulin sensitizers for the treatment of type 2 diabetes. When comparing the mean value of changes in fasting glucose levels and insulin sensitivity under clamp conditions, TRIOLEX-treated subjects exhibited both a reduction in fasting hyperglycemia and improved insulin sensitivity, compared with placebo-treated subjects.

In addition, 15 subjects were evaluated for changes in inflammatory mediators. Consistent with the apparent anti-inflammatory mechanism of action of TRIOLEX, subjects treated with the compound showed a drop in TNFalpha, IL-6, IL-1beta and MCP-1 production measured in LPS-stimulated peripheral blood mononuclear cells, as compared to placebo-treated subjects.

Based on these positive preliminary results, Hollis-Eden plans to present additional data from this on-going Phase I/II clinical trial in a corporate symposium at the 68th American Diabetes Association annual meeting on June 8, 2008 in San Francisco, California. Hollis-Eden also plans to commence a Phase II, 90-day clinical trial in patients with type 2 diabetes in the second quarter of 2008. The clinical endpoint for this Phase II study will be changes in hemoglobin-A1c as well as key biomarkers of insulin sensitivity and glucose disposal in these patients.

Inflammatory Diseases: Ulcerative Colitis

During the first quarter of 2008, Hollis-Eden commenced enrollment in a Phase I/II clinical trial with TRIOLEX in ulcerative colitis (UC). This Phase I/II dose ranging study will evaluate the safety, tolerance, pharmacokinetics and activity of TRIOLEX when administered orally for 28 days to patients with active, mild-to-moderate UC.

In previously reported data presented at the 3rd International Conference on Autoimmunity, TRIOLEX showed significant (p less than 0.05) benefit in the Wistar rat model of dinitrobenzene sulfonic acid (DNBS) induced colitis, a preclinical model widely used by the pharmaceutical industry and academia to test agents as potential treatments for UC. DNBS challenged rats with induced colitis were treated orally for seven days with either TRIOLEX or placebo (n=10 per group). At the end of the treatment period, TRIOLEX-treated animals had significantly reduced disease, as judged by reduced colon weight and reduced area of necrosis, compared to the placebo-treated animals. TRIOLEX performed as well as or better than Sulfasalazine, the standard of care used as a positive control in this model.

Inflammatory Diseases: Rheumatoid Arthritis

Hollis-Eden has also been cleared under a separate IND with the FDA to begin clinical trials with TRIOLEX for the treatment of rheumatoid arthritis (RA). A safety and pharmacokinetic Phase I/II clinical trial in stable RA patients on methotrexate, a commonly used chemotherapy treatment, is currently planned to begin in the second quarter of 2008. The Company believes that certain aspects of the pathology driving UC are similar to those driving RA. Therefore, data obtained in this UC study could potentially help support the design of the Company's planned Phase II RA clinical study and could help to accelerate the development of TRIOLEX for potential use in patients with RA.

Oncology: Prostate Cancer

In its oncology program, Hollis-Eden presented preclinical data in the first quarter of 2008 at the 19th International Congress on Anti-Cancer Agents, further suggesting that APOPTONE may be directly inducing apoptosis, or cell death, in tumor cells. These new findings further validate the activity of APOPTONE as a cytotoxic agent for tumor cells and suggest that APOPTONE's mechanism of action appears to be the induction of genes associated with cell death pathways in tumor cells, as opposed to traditional hormone therapies directed at simply interrupting either the synthesis or the signaling of the tumor cell through the androgen or estrogen receptor.

Hollis-Eden plans to initiate a Phase I/II dose ranging clinical trial of APOPTONE in prostate cancer patients during the second quarter of 2008 under an IND recently cleared by the FDA for hormone receptor-sensitive cancers. The patient population for this initial clinical trial will be considered "late stage," which is defined as patients failing at least one round of chemotherapy.

"During the first quarter of 2008, we continued to advance our development programs for metabolic disorders, diseases of inflammation and cancer," stated Richard B. Hollis, Chairman and CEO of Hollis-Eden. "The preliminary data we reported during the first quarter from our ongoing clinical trial in obese, insulin sensitive subjects are especially exciting, demonstrating a reduction in fasting hyperglycemia and improved insulin sensitivity as well as changes in key inflammatory mediators. We look forward to presenting additional data from this trial at the ADA meeting in June, and to commencing our Phase II clinical trial in type 2 diabetes patients during the second quarter of this year.

"We also look forward to commencing our clinical trials in prostate cancer patients with APOPTONE and in rheumatoid arthritis patients with TRIOLEX," added Hollis. "By year-end 2008, we expect to have at least four clinical trials underway. As a result of their attractive safety and activity profile to date, we believe that our compounds hold the potential to be breakthrough products that could play a significant role in major disease markets in the United States and globally."

Financial Results

For the quarter ended March 31, 2008, Hollis-Eden reported a net loss of $5.7 million (or $0.20 per share), compared to a net loss of $6.5 million (or $0.22 per share) in the first quarter of 2007. Included in the net loss for the first quarter of 2008 was $0.6 million of stock-based compensation expense associated with SFAS No. 123R, compared to $1.0 million in the first quarter of 2007.

Research and development expenses for the first quarter of 2008 totaled $4.3 million, compared to $4.6 million in the first quarter of 2007. The decrease in research and development expenses was due primarily to the discontinuation of the Company's NEUMUNE(TM) (HE2100) research and development program.

First quarter 2008 general and administrative expenses were $1.8 million compared to $2.6 million in the first quarter of 2007. The decrease in general and administrative expenses was primarily due to reduced costs related to salaries, consulting, audit fees and stock option compensation expense.

Total other income and expenses were $0.4 million in the first quarter of 2008, compared to $0.7 million in the first quarter of 2007. The decrease in interest income was due to lower cash balances and lower interest rates in the three-month period ended March 31, 2008 compared with the same period in 2007.

Cash used in operations for first quarter 2008 totaled $4.2 million versus $8.5 million for first quarter 2007. Cash and equivalents at March 31, 2008 totaled $39.0 million, compared to $43.2 million at December 31, 2007.

More detailed information is available in the Company's Form 10-Q, which was filed May 7, 2008 with the Securities and Exchange Commission (http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000899 394). (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

Conference Call: Hollis-Eden will conduct a conference call and live webcast on May 13, 2008 at 2:00 p.m. Eastern (11:00 a.m. Pacific) to discuss first quarter financial results and to review its drug development programs in the areas of metabolic disorders, inflammatory conditions and cancer. The conference call can be accessed by dialing 800-510-0178 (domestic) or 617-614-3450 (international) and requesting the Hollis-Eden conference call. A live webcast of the conference call will be available under "Event Calendar" on the Investors section of Hollis-Eden's website at www.holliseden.com. The webcast will be archived at the Company's website for 30 days, and a replay of the call will be available by phone for 24 hours beginning approximately one hour after the call is completed, and can be accessed at 888-286-8010 (domestic) or 617-801-6888 (international), passcode 35108191.

Return to the Alert Archives