New bullish MFIC report dated December 10, 2004 from WallStreetCorner.com:
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Date Posted: 12/10/04
MFIC Corporation (OTC BB: MFIC)
Background
I covered MFIC beginning in 1994. I appreciated its patented Microfluidizer® high pressure fluids processor. Widely used back then in the pharmaceutical, biotechnology, digital ink, microelectronics, food, chemical, & personal care industries, it reduced the size of fluid particles to nano-size for dispersions, emulsions, liposomes, and deagglomerations. Incidentally, a nano-sized particle is extremely small -- about 39 billionths of an inch in diameter.
Customers
More than 3,000 MFIC systems are in use by such largely Fortune 500 & 1000 corporations as: Abbott Labs, Air Products & Chemicals, Allergan, American Cyanamid, Amgen, Amoco, BASF, Baxter, Beckman Instruments, Becton Dickinson, Bristol-Myers Squibb, Campbell Soup, Carter-Wallace, Chevron, Clorox Co., ConAgra, Corning Glass, Dow Chemical, Dow Corning, DuPont, Eastman Kodak, Eli Lilly, Exxon, GAF Chemical Corp., Georgia-Pacific Resins, Gillette, Goodyear Tire & Rubber, Helene Curtis, Hercules, Hershey Food, Hoechst Celanese, I.F.F., Johnson & Johnson, McCormick & Co., Merck, Monsanto, Nalco Chemical, Pfizer, Polaroid, PPG, Proctor & Gamble, Rhone-Poulenc Rorer, Rohm & Haas, Schering-Plough, Scott Paper Co., Sherwin-Williams, Upjohn, W.R. Grace, Warner-Lambert, & Xerox.
MFIC is a Turnaround
I interviewed CEO Irwin Gruverman this week after a long period of not being in touch. I’m impressed with MFIC’s substantial progress. Irv had good news & bad news. The bad news was that MFIC made two acquisitions that caused serious losses in 2001, 2002, & 2003. The good news included two milestones that turned the business around:
First, it sold both of those operations, the last being its Morehouse-COWLES division, sold to NuSil Corp. 2/9/2004 for $918,238.
Second, since being able to totally concentrate on its core business, it further developed its technology & expanded its marketing & sales activities.
The results are outstanding. For example, in the last six weeks, it received a series of significant orders totaling about $2,900,000. The backlog for Microfluidics products increased from about $2,288,000 at 9/30/2004 to $4,660,210 at 11/16/2004, a new record.
Irv says: ”This acceleration in booked activity indicates increased capital spending by biotech, pharmaceutical, & other businesses. Interest & bookings for laboratory Microfluidizer processors are also robust, especially for our more advanced instrumented electric hydraulic units. The result of this demand is a marked increase in Microfluidics products backlog to a historic high level, with delivery of most of these new orders scheduled in 2005. We look forward to the completion in 2004 of a strong sales year & improving profitability. With the current orders & backlog in hand & existing level of sales quotations, inquiries & orders, we can anticipate a significant portion of the 2005 year's sales.”
For the Q ended 9/30/2004, revenues were $3,163,785 & net income was $282,050, compared to revenues of $1,912,738 & net loss ($157,266) for the Q ended 9/30/2003. At 9/30/2004, current assets were $6.06 million (up from $5.19 million at 12/31/2003), & current liabilities $1.5 million (down from $4.62 million at 12/31/2003).
Irv says MFIC is free of debt on a net basis now, is close to qualifying for AMEX, & management expects to qualify for the Nasdaq National Market as well. When the share price moves up just a bit further, he intends to apply for a listing.
MFIC has also become competitive with lower-cost systems – the result is its ability to provide equipment that is far superior to that of its competitors, but at a price usually no higher than that of those competitors’ less effective products.
MFIC’s Microfluidizer® Materials Processing Equipment
Here’s just one of a great many recent applications of MFIC’s technology. On 11/15/2004, Microfluidics (the operating subsidiary of MFIC) announced that University of Massachusetts Lowell scientists are using Microfluidizer® materials processing equipment to develop water soluble plant sterols for use as cholesterol-blocking food additives. If the research proves successful, food & pharmaceutical companies may be able to use Microfluidizer processors to develop foods, beverages, & dietary supplements that inhibit the absorption of cholesterol in the intestines, significantly reducing blood cholesterol levels & the risk of heart disease, the nation's leading cause of death.
The research is being conducted at UMass Lowell's Center for Health & Disease Research by Professor Robert Nicolosi, director of the center. Nicolosi is using the Microfluidizer processor to develop a variety of other products, including foods & beverages fortified with cancer-fighting antioxidants & orange juice fortified with vitamins that will not precipitate from the juice.
Nicolosi said: ”Many nutrients are lipid or 'fat' soluble. We are using the high-pressure Microfluidizer processor to take lipid soluble nutrients & make them water soluble in a nano-emulsion."
In order to create the nano-emulsion, Nicolosi premixes a solution of water, plant sterols and an emulsifier like lecithin, which he then pours into the Microfluidizer processor. The processor compresses the solution to 30,000 or more pounds per square inch, drives it through ever-smaller microchannels, then in a reaction chamber splits the solution into two streams, which collide with each other at extremely high velocities. The powerful collision results in a nano-emulsion with a very long shelf life.
MFIC’s Microfluidizer® MicroReactor Program
MFIC recently introduced a new, patented High-Pressure Microfluidizer®
MicroReactor (MMR). It produces, on a continuous basis, uniform nanoparticles with phase purity previously unachievable with conventional batch reaction technology.
Applications for the new technology include improving the performance of catalysts, planarization polishing media, superconductors, recording media, photographic media, & pigments. The MMR is also utilized in the development & production of unique pharmaceutical products. These applications include nanoparticles for injectable formulations, topical, inhalation, & oral delivery systems, often for potent active pharmaceutical ingredients which are difficult to formulate.
Robert J. Fisher, Ph.D., of the Massachusetts Institute of Technology Chemical Engineering Dept., was recently named MFIC’s chemical engineering consultant. He will help MFIC develop new markets & expand the technical applications for its MMR.
Fisher says: "I was intrigued by the opportunity to work closely with Microfluidics to develop improved drug fabrication techniques that enhance delivery & efficacy, which pharmaceutical firms will find extremely compelling. For example, the MMR can be used by drug developers to produce suspensions with the smallest possible particle size that have functionalized for specific targeting. That is, these reformulated compounds can be used to deliver therapeutic agents to the disease site."
MFIC President Bob Bruno said: "Bob Fisher's extensive background in chemical & reaction engineering makes him the perfect candidate for further expansion of applications of our MMR & the MMR technology, specifically in the area of drug delivery. We believe the MMR will enable new drug formulation & delivery capabilities that will allow drug companies to sell products that they have not previously been able to bring to market."
Irv says the equipment is reliable, has attractive gross margins, is available in large production systems that range in price from about $250,000 to $1,000,000, & based on what I know about the industries MFIC addresses, the market for its systems is huge.
My Opinion
I feel MFIC has substantial mid-term & long-term appreciation potential. I’m pleased that I had the opportunity to interview Irv. My opinion is that his company is on the verge of an explosive period of growth. MFIC closed last evening (12/9/2004) at $2.80. Its 52-week range is $1.05 - $4.65.
MFIC is located at 30 Ossipee Road, Newton, MA 02464-910. Call VP Jack M. Swig or CEO Irv Gruverman at 617-969-5452 -- info@mfics.com
www.mficcorp.com |
