HIETE to show NATO the suitcase Tuesday (COMTEX) B: More Isonics Touts, More Warrants, More Volume, More on NATO,
ew 52-Week High ( financialwire.net )
B: More Isonics Touts, More Warrants, More Volume, More on NATO, New 52-Week Hig
( financialwire.net )
Oct 18, 2004 (financialwire.net via COMTEX) -- (FinancialWire) Confusion
continues to reign over the Isonics (NASDAQ: ISON) intention to
"demonstrate" its IUT Detection Technologies subsidiary's
"NeutroTest Explosion Detection Device Prototype, new 52-week highs,
continuing mounting volume, a flurry of new and even more dubious touts, a
"White Paper" presentation to the North Atlantic Treaty Alliance, while
a competitor, HiEnergy (OTCBB: HIETE), is actually demonstrating a
suitcase-borne "stealth stoichiometric"* explosive detection device to NATO
tomorrow, and actually has contracts with the U.S. Department of Homeland
Security.
Isonics, whose shares gained another 54.59% on volume of 26,272,020, more than
100 times its average volume, to a new 52-week high of $3.37, before advancing
another 12.76% in after hours trading to $3.80, and which is headed by 1992
co-founders James E. Alexander and Boris Rubizhevsky, both formerly with General
Electric (NYSE: GE), said that its product will be unveiled this Thursday.
However, Dr. Dirk Rondeshagen, of the IUT Insttitut fur Umwelttechnologien GmbH
of Berlin (http://iut-berlin.de/), which Isonics notes is its development
partner, is listed as a presenter tomorrow concerning "A neutron based device is
a non-destructive inspection technique for finding hidden explosives," at
the NATO International Symposium on Countering Improvised Explosive Devices in
Madrid (http://www.mde.es/dgam/SYMPOSIUM/file/programme.htm).
Following his presentation, Dr. Bogdan C. Maglich, president of HiEnergy
Technolgies, will present his company's "Portable Stoichiometric Sensor:
Standoff Rapid Online Decoder of Quantitative Chemical Formulas Through Steel
for Detection, Discrmination and Identification of IED's by Non-Pulsed (DC) Fast
Neutrons" (http://www.mde.es/dgam/SYMPOSIUM/doc/preliminary_programme.pdf), and
later in the day will demonstrate the "operation of a portable explosive
detector capable of identifying explosive and non-explosives substances"
(http://www.mde.es/dgam/SYMPOSIUM/doc/triptico-demos.pdf) to the NATO conference
attendees.
HiEnergy (http://www.hienergyinc.com/) is also exhibiting at the conference,
where it says some sixteen companies, not including either Isonics or IUT, will
perform live demonstrations of their detectors for improvised home-made bombs to
approximately 300 military and civilian law and security enforcement officers
from 23 NATO members and candidate states at the Spanish Army Engineer Academy.
A month ago, HiEnergy, currently trading at $0.88, in the low-end of its 52-week
range of $0.59 to $3.60, on average volume of 185,606, announced that it had
signed a cooperative agreeement with the Transportation Security Administraion
of the U.S. Department of Homeland Security, worth $367,141, and $145,381 in two
stages to fund its "NextGen Checked Baggage Program (STOXOR)" under TSA's
"Manhattan-II Project."
HiEnergy Technologies, on its website, says it was founded in 1995 by Dr.
Maglich to commercialize the technology he invented to remotely decipher the
chemical composition of a substance using a fast neutron emitter focused on the
substance and receptors and proprietary algorithms to measure the gamma rays and
alpha particles radiated by the substance in response to the neutron stream.
"Dr. Maglich has received numerous awards and recognition for his work on
subatomic particles, including a White House citation by President John F.
Kennedy for his work on the discovery of the omega meson during World War
II," the company states.
His biography at hienergyinc.com points out
that "as a Special Representative of President Ford to President Tito of
Yugoslavia, he convinced the Yugoslav Government to accept the principles of the
Non-Proliferation Treaty. Without his role in stopping Belgrade going ahead with
the development of nuclear weapons, things would have turned out very different
from what took place in the Balkans recently had the Serbs had the bomb."
The company says further, that , HiEnergy Technologies, Inc. believes it has
invented and developed the world's first noninvasive stoichiometric detection
and imaging technology.
"HiEnergy's SuperSenzor can retrieve from 3 ft away, in a matter of seconds,
the chemical formula and 3D image of explosives through steel or soil; of
cocaine through rice; or of anthrax through paper. The empirical chemical
formulas of substances and their locations are obtained non-invasively,
trans-barrier and online."
Moreover, it says, "HiEnergy is unaware of any other stoichiometric detector
on the market or in the laboratory stages."
It says its SuperSenzor is based on the proprietary invention named atometry,
which was developed between 1997-2002 at a cost of over $4 million, by the
California Atometry Collaboration, a joint private sector-government-university
research consortium led by HiEnergy. The company noted that private investors,
tech industry and six governmental contracts (4 Department of Defense, 1
Department of Energy, 1 US Customs) have all contributed to the development of
this project.
Stoichiometry is the branch of chemistry and chemical engineering that deals
with the quantities of substances that enter into, and are produced by, chemical
reactions. HiEnergy's Scientific Advisory Board includes Dr. Melvin Schwartz,
Professor of Physics Emeritus at Columbia University; Dr. Giovanni G. Fazio,
Senior Physicist at the Harvard Smithsonian Center for Astrophysics; Dr. Robert
J. Macek, Project Leader, Proton Storage Ring Development & Upgrades, Los Alamos
Neutron Science Center; and Dr. Andrew J. Lankford, Professor of Physics & Chair
of the Department of Physics and Astronomy, University of California, Irvine.
The Isonics (http://www.isonics.com) website, by contrast, provides little if
any information about its "homeland security" division or products.
Asked for a comment about Isonics and its products, HiEnergy spokespersons
reportedly demurred.
After announcing the "timely" and some say, coincidental conversion of
warrants for the company during some of the wild trading days for its stock this
week, Friday's volume, based on the announcement of the company's prototype
webshow this coming Thursday and an array of new promotional touts, was also
accompanied by a little-noticed Form 8-K filing with the U.S. Securities and
Exchange Commission, revealing that three holders of 3,000 shares of its
"preferred stock" have converted their shares into 272,727 shares common
stock, and if not already sold, currently worth about $600,000..
The company also said it is filing SEC forms that would allow its Class B and
Class C warrants to become exercisable in the next ten days. The Class B
warrants will be exerciseable for $1.50 and results in one common share,
currently valued at $3.80 in the last trading, and one Class C warrant, which is
exerciseable for $2.50 into one common share.
Friday's touts included Early Stock Market Alerts at 9:$5 a.m., TheSubway.com at
10:18 a.m., Bellwetherreport.com at 11:07 a.m., Emerging Stock Report at 11:44
a.m., and OTCStockExchange.com at 12:54 p.m.
The SEC has charged that publisher Chuck Tamburello and the Subway.com "scalp"
investors by selling their shares into the hype they create with their press
releases and emails. The SEC allegations are at:
sec.gov .
On Friday, FinancialWire noted that the Isonics saga has been remarkably
reminiscent of a story FinancialWire covered about Wave Systems (NASDAQ: WAVX)
in August, 2003, when it announced that Intel Corp. (NASDAQ: INTC) would use its
software to secure digital content, and a deal with IBM Corp. (NYSE: IBM),
giving rise to a gain of 167.86% on extraordinary volume of 18,999,864, compared
to its average volume of 199,136.
"Due to the positive response we have received as a result of the announcement
of our newly formed Isonics Homeland Security and Defense Corp., a number of
warrant holders have exercised warrants providing additional capital which will
be deployed to further implement the Company's previously announced strategic
plan," stated Alexander on Thursday.
Deja vu worked overtime when it was recalled that Wave Systems' similarly
excellent timing resulted in a cash influx of $3.6 million in cash, most coming
from shareholders who exercised options to buy 1.189 million shares at strike
prices between $1.09 to $4.08 per share as the company's announcements spurred
trading up to $5.24, and of course, before the U.S. Securities and Exchange
Commission came knocking.
The whole episode spurred the creation of followers, many of them money-losers
as Wave's big announcements failed to "amount to a hill of beans," as
one said, who are known as "Wavoids." A play, "It's All About the
Wave," was even birthed, and reviewed by the New York Times (NYSE: NYT),
according to an August 23, 2004 FinancialWire article.
Isonics went from trading about 200,000 shares a day to as much as 30 million
shares, or 116 times its average volume, last week, gaining in rapid succession
12%, 43.53%, and 8.61%, going from $1.50 last week to $3.15 Tuesday before
giving back some of its gains Wednesday and Thursday. The company's stock closed
Thursday at $2.18, after trading between $2.05 and $2.38 on volume of 5,102,798,
which prior to the madness of this week would have easily surpassed its highest
trading day ever but now seems puny.
The company said that the dot-com-like trading this week had stimulated the
exercise of warrants related to "previous equity financings" to bring
the company an additional $600,000 in proceeds. It said that as of July 14,
2004, the company had outstanding options and common stock warrants for the
purchse of up to 9,950,958 shares of common stock at an average exercise price
of $1.37 per share.
It is not possible to know what happened after the exercise, but if warrants
representing an additional 500,000 shares were purchased and quickly resold into
the volumes of 14 million and 25 million, the warrant-holders could have easily
realized windfall profits of $600,000 at upwards of $1.2 million in the price of
the stocks when sold into the massive public buying spree of this week.
"One could not suppose that there was an intent behind the line-up of touts
and announcements," said one observer, "but for the company and a select
few financiers, it surely did work out nicely."
In April, 2003, FinancialWire reported on another round of phenomenal trading
days for Boots and Coots (AMEX: WEL), whose 127,000,000 volume related to
announcements of potential activities in Iraqi oil fields was questioned by
Carol Remond of the Dow Jones (NYSE: DJ) News Services, especially with the
close proximity to the company's similar spurt of good fortune in resolving some
of its then-financial problems in the process.
Isonics' announcement said that as of the close of the market on October 13,
"warrants issued in relation to previous equity financings were exercised,
providing over $600,000 in proceeds to the Company. Based on inquiries and
expressed intentions from a number of warrant holders, the Company expects, but
cannot guarantee, that it will receive substantial additional warrant exercise
proceeds over the next several days. As noted in the Company's 10-KSB filing for
the fiscal period ended April 30, 2004, as of July 14, 2004, the Company had
outstanding options and common stock warrants for the purchase of up to
9,950,958 shares of common stock at an average exercise price of $1.37 per
share. A detailed description of the warrants is set forth in that filing. The
proceeds generated from the exercise of these warrants are in addition to the
$3.3 million in proceeds the Company announced on October 6, 2004.
Isonics reminded investors that its "Isonics Homeland Security and Defense
Corporation will include the Company's IUT Detection Technologies (IUTDT)
subsidiary, plus all other homeland security related technologies and products
Isonics has now, or may acquire in the future," noting that "Isonics has
previously announced its development of a family neutron-based products through
IUTDT for detecting explosives, chemical and biological weapons. Isonics
recently announced positive results in initial technical reviews and testing of
the first of these neutron-based products: the NeutroTest(TM) explosive
detection device. The Company expects to publicly demonstrate a prototype of the
product in the coming weeks."
The company had been heavily touted by a wide range of promotional services,
propelling the company 12% on Friday a week ago and 43.53% last Monday, which
some in the industry said was reminiscent of the dot-com era.
The list of touters on October 8 and 11 was enormous. There was little let-up
October 12, as the company traded as high as $3.15, a new 52-week high. After
hours, big-money profit-takers with the advantage over small investors had
dropped the price to $2.60.
Touters on October 12 included BullTrade.com, which suggests it is
subscription-based; Wall Street News Alert, which featured Isonics in its
"U.S. Hot Stock Highlights, Part 6;" OTC Reports, which appears to have
been "piling on" Isonics momentum and ticker spam readership in touting
CDC Systems Inc. (OTC: CPYJ); and TalkingStocks, LLC, another Pentony
Enterprises tout service, which disclosed it had been "compensated a total
of $8,000 for coverage," but not by whom.
The other question about that disclosure has to do with the fact that Pentony
Enterprises also publishes StockGuru.com, which previously disclosed it had
received only $3,000.
And AXcess News was back with a "news article" reiterating the previous
day's "article" on Isonics in conjunction with "the homeland
security sector following Friday`s news that the U.S. House of Representatives
passed the Intelligence Reform Bill, paving the way for funding once approved by
the Senate."
It bragged that "Isonics Corp. (Nasdaq: ISON) led the pack Monday, bolting
34% to reach $2.28 by 12:00ET, a rise of 58 cents from Friday's close. The
Golden Colorado-based technology company announced the launch of its newest
division, Isonics Homeland Security and Defense Corporation, Friday."
FinancialWire had reported last Monday that the phenomenal trading in the
company appeared to have been stimulated by a vast array of
"promotional" activities supporting the company, including AXcess News,
which Monday took "credit" for stories in Reuters (NASDAQ: RTRSY) and
CBS MarketWatch, the venture of Viacom's (NYSE: VIAb) CBS and MarketWatch
(NASDAQ: MKTW), saying that the two services "picked up on the news with
their own stories following AXcess News' article Thursday that covered Isonics
news that its handheld bomb detecting device, the NeutroTest, was being readied
for market."
AXcess News has regularly "covered" Isonics and others with news
features, but has refused to respond to FinancialWire inquiries as to whether it
has been compensated for its "news articles," or whether it is providing
full transparency in the event that it is.
U.S. Securities and Exchange Commission Regulation 17(b) states:
"It shall be unlawful for any person, by the use of any means or instruments
of transportation or communication in interstate commerce or by the use of the
mails, to publish, give publicity to, or circulate any notice, circular,
advertisement, newspaper, article, letter, investment service, or communication
which, though not purporting to offer a security for sale, describes such
security for a consideration received or to be received, directly or indirectly,
from an issuer, underwriter, or dealer, without fully disclosing the receipt,
whether past or prospective, of such consideration and the amount thereof."
The Thursday AXcess News article stated that "Isonics President James
Alexander said his company was presenting a white paper this month at a NATO
conference in Madrid and hoped to unveil the bomb-detecting prototype at that
time.
"But Alexander let the cat out of the bag early in providing Dublin
Ireland-based institutional investor, Asset Managers International Ltd., a sneak
preview. Apparently it worked. AMI invested $3.3 million directly into the
company with most of those funds earmarked for Isonics' NeutroTest homesecurity
product."
A powerful array of promotion seemed to be coincidentally set in motion October
11, including coetaneous alerts from AllPennyStocks.com at 3:57 a.m.,
StockGuru.com at 6:01 a.m., StreetInsider at 8:15 a.m., EventX/Knobias at 9:48
a.m., Stockwire.com at 10:22 a.m. and AXcess News at 3:51 p.m., headlined
"Homeland Security Industry Aided by Intelligence Reform Bill." The
AXcess News was distributed by MarketWire, which is a paid disseminator, odd
usage by a news service if it has no revenues to support paid distributions.
OTCStockExchange was a bit more forthcoming, admitting that it "has been
compensated by third party shareholders or with cash from the company on behalf
of one or more of the companies mentioned in this opinion. OTCS's affiliates,
officers, directors and employees may also have bought or may buy the shares
discussed in this opinion and may profit in the event of a rise in value."
The disclosure falls far short of the data the SEC has told FinancialWire it
requires under Regulation 17(b).
"John Pentony, Publisher of StockGuru.com, has issued a favorable report on
Isonics Corporation. In the report released earlier today, StockGuru.com has
issued its rating of 'Attractive' on Isonics Corporation. Pentony Enterprises,
LLC has been compensated $3,000 for coverage." It did not say by whom, or if
a third party, the relationship of the third party to the issuer, as required by
Regulation 17(b), and that disclosure contrasted with Tuesday's disclosure that
Pentony et. al. had actually received $8,000.
AllPennyStocks.com said it had not received any compensation for listing Isonics
and Mile Market International (OTCBB: MMRK) as "American Stocks to
Watch."
Isonics was enrolled in Investrend Research's unique and pioneering professional
analyst program, which facilitates independent analysts to provide financial
coverage for shareholders and investors in companies that otherwise would have
little or no analyst following. In April, 2002, Investrend Research analyst
Thomas C. Byrne, MBA, had rated the company a "Speculative Buy" with a
24 month target valuation of $5.40, but the research is currently stale.
Enrollment fees for Institutional coverage were $23,400, and the fees were paid
by the The Investor Relations Company, which had a marketing relationship with
the company, for six months. There are never any fees associated with
FinancialWire, which independently covers a wide range of corporate news,
including but not limited to those that are or have been enrolled in
Investrend's platforms.
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