The Undervalue dog just put this one out
******Undervalued Dog******, Volume 3, No. 20, May 28, 1998
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Disclaimer: The information that the Undervalued Dog provides is not a solicitation to buy or sell securities. We are not stock promoters. We do not accept payment of any kind from the companies we introduce or their public relationship firms. Investing in securities is speculative and may carry a high degree of risk. As a reader of the Undervalued Dog you will be responsible for your own trading and investment decisions. You have to set your own goals whether you want to invest for short or long term. The Undervalued Dog is not responsible for your investment decision. We give you ideas, stock picks, and buy alert to work with. We advise you do a little research yourself to make a proper investment decision depending on your own risk objectives. The information set forth herein is obtained from sources believed reliable, but the Undervalued Dog does not guarantee its accuracy or completeness. Investors are urged to obtain information directly from the company to furthe!
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Part I: New Pick IGNE
IGENE Biotechnology (OTC BB: IGNE)
Recent Price: $0.15/share
Daily Average Volume: 92 K
97 EPS: -$0.10/share (loss)
Estimated 1998 EPS:$0.25/share
Estimated 1998 PE: 0.60
Div/Shr: None
Yield: None
52-week Range: $0.06-0.27/share
Outstanding Shares: 19.2 M
Floating Shares: 1.90 M
Market Cap: 1.92 M
1997 revenues: $0.14 M
Estimated 1998 revenues: $10 M
Profit margin: 50%
SEC failings: Yes
Insider Buying: Yes
BUSINESS SUMMARY AND CORPORATION BACKGROUND: IGENE Biotechnology, Inc. ("The Company") is engaged in the business of industrial microbiology and related biotechnologies. The Company was formed on October 27, 1981 to develop, produce and market value-added specialty biochemical products derived from abundant, inexpensive and renewable
agricultural residues and wastes through the use of state-of-the-art fermentation technology, physical and chemical separation technology, and related chemical and biochemical engineering technologies.
The Company has two patented commercial products. AstaXin(r) is the Company's tradename for its dried yeast product made from a proprietary microorganism developed by the Company. AstaXin(r) is a natural source of astaxanthin, a pigment which imparts the characteristic red color to the flesh of salmon, trout, and prawns. In the ocean, salmon and trout obtain astaxanthin from krill and other planktonic crustaceans in their diet. A crustacean diet would be prohibitively expensive for farm raised salmonids; without the addition of astaxanthin, the flesh of such fish is a pale, off-white color which is less appealing to consumers expecting "salmon-colored" fish. Efficacy of AstaXin(r) has been demonstrated by fish feeding trials in Europe, Asia, and North and South America. An estimated 700,000 metric tons of farm raised salmon are produced annually worldwide. Based on estimates of worldwide production of farm-bred salmon, the Company believes the market for AstaXin(r) exc!
eeds $150,000,000 worldwide, which would be approximately 75 metric tons.
ClandoSan(r) is the Company's registered trademark for its natural nematicide made from crab and crawfish exoskeletons and processed into pellets or granules by patented and patent pending technology developed by the Company. The product acts in soils as a biological control agent by stimulating the growth of normal soil microorganisms, which produce chitinase, and other enzymes that degrade chitin present in the cuticles and eggs of plant-pathogenic nematodes. It has secondary effects as a slow release organic fertilizer. ClandoSan(r) does not have a direct adverse effect on plant-pathogenic nematodes either in vitro or in sterilized or irradiated soils and only acts indirectly to suppress nematode populations in soils. The product generally is not water-soluble and, consequently, does not contribute to ground water contamination.
On March 17, 1988, ClandoSan(r) was registered by the EPA for use with all agricultural and horticultural crops in accordance with the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA") section 3(c)(5). ClandoSan(r) is now registered in 49 states and is produced at one contract manufacturing facility in the United States.
RECENT DEVELOPMENTS AND ANALYSIS: In 1995 the Company signed a nonexclusive licensing agreement with Archer Daniels Midland Company (ADM) for the manufacturing and sale of AstaXin(r) worldwide. On February 29, 1996, ADM informed IGENE that it would no longer use IGENE's astaxanthin technology and terminated the licensing agreement. On August 4, 1997, the Company filed a $300,450,000 contract and trade secrets lawsuit in U.S. District court in Baltimore, Maryland against ADM, contending that ADM stole the Company's formula for making its natural astaxanthin pigment, AstaXin(r). The Company was also claiming breach of contract, in regards to the licensing agreement entered into by the Company and ADM in 1995. The Company was contending that it complied with all material terms of this agreement, including concentration levels of its pigment. On September 10, 1997 the District Court denied ADM's request for a preliminary injunction on the basis that ADM could not demonstra!
te a likelihood of success on the merits of its case.
Before 1998, IGNE was a development stage company. In March, 1998, IGNE began production of commercial quantities of its natural astaxanthin product, AstaXin(r), at its contract manufacturing facility in Mexico. The Company stated that shipments to satisfy existing orders will commence by the end of March. Since then, the Company has received many orders that are worth about $5 million. It is estimated that the revenues will top $10 million in 1998 from its production of AstaXin (r). In order to finance massive manufacturing of AstaXin (r), the Company also raised $5 million from its directors, that will allow IGNE to finish its transition from a development stage company to a manufacturer.
According to a report from "Small-Cap Investment Center" published yerterday, ADM will settle the lawsuit in favor of IGNE. Major terms include, but not limited to, that ADM will stop the production of astaxanthin pigment and IGNE will receive $100 million from ADM for next five years, $20 million a year. This money should allow IGNE to build up a manufacturing facility for massive production of AstaXin(r). Also, the company will be able to pay its shareholders some dividend at $0.50/share per year s . Since ADM will no longer be allowed to produce astaxanthin pigment, IGNE will be a major player in this market worldwide. it is estimated that revenues will top $100 million in 1999 for the Company.
IGNE shares have been traded very actively since last March. Insiders are buying the shares actively. There is important technical support in the area of $0.10/share. With these recent developments, IGNE shares are ready to move up with huge upside potential. The target price for IGNE shares is in a range of $1-2/share in a short term (1-6 months) and in a range of $3- 4/share in a long term (6-24 months).
Contact:
Stephen Hiu, President
9110 Red Branch Road
Columbia, MD 21045
Tel: (410)997-2599
Fax: (410) 730-0540
E-mail: igene@igene.com
Company Website: igene.com
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Part II: A Follow-Up for American Diversified Group, Inc. (OTC.BB: ADGI)
On Febreuary 19, 1998, we recommended ADGI. The following is a follow-up ADGI due to its latest development.
On May 26, 1998, ADGI announced that its affiliate, Telephonetics Overseas Corp. of Miami (TOC), which has changed its name to Global Transmedia Communications Corp., has commenced marketing of new ''State of the Art'' Internet telephony services.
These new services, called ''Cheap Talk'' (http://www.cheaptalk.net), are available for both single line telephone (InfoTalk) subscribers and multi-line telephone (InfoGate) subscribers. Cheap Talk's basic service (InfoTalk) does not require a subscriber to use a computer and with InfoGate, there is not need for any additional equipment. Both services enable subscribers, as part of TOC's Internet telephony service package and an Internet access account, to make long distance telephone calls at very significant savings on a phone to phone basis, over the Internet.
In addition, InfoGate enables subscribers through a company provided gateway, to use four telephone lines simultaneously for voice, data, paging and commencing on Sept. 1, faxing. The company projects that InfoGate will have a significant impact on future revenues because faxing presently represents approximately 30% of long distance usage domestically and 50% of all long distance charges internationally.
In an issue of Money World magazine published in September 1997, an article entitled "On Top Growth Market of 1998" stated "a quite revolution started in 1995 with the introduction of Internet Telephony (voice-over-the-Internet technology). In three years, the global Internet Telephony market has grown from ground zero to nearly $800 million. And in the next five years, it is projected to soar beyond $60 billion. There is good reason for the spectacular growth. Advanced communications aspects of Internet Telephony makes conventional phone services outdated. Not just because of features like paperless faxing, voice mail, video phone, 100-call conferencing, and live chat groups. It is also a matter of price. With Internet Telephony, consumers can make long-distance phone calls for just the monthly cost of Internet access. Think of it: all the long distance phone calls you can make, yet your monthly long-distance phone bill will not exceed your Internet access fee (usual!
ly around $20/month). The saving is phenomenal".
There are very few players in the emerging Internet Telephony industry. Not even Lucent Technologies has a product on the market, But then, big companies are often slow to react. The timing is right-on-money for an adroit young company to enter the arena and capture key untapped markets. This is what ADGI can accomplish.
On the basis of projected revenues of $10 million from current businesses (telecommunication services: $3.2 million, pharmaceutical products: $2.4 million, and medical products: $4.6 million in West Africa and South America) in 1998, the new Internet Telephony business will add $5 million net incomes for ADGI in 1998. EPS is projected about $0.05/share for 1998. With this recent development, ADGI shares are ready to move up with huge upside potential. The target price for ADGI shares is in a range of $0.20-0.30/share in a short term (1-6 months) and in a range of $0.50-0.60/share in a long term (6-24 months).
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STATEMENT OF DISCLAIMER: The information presented in the Undervalued Dog is not an offer to buy or sell securities referred to herein. By no means is the above company information complete. One should obtain financial statements and a full due diligence package, including chronological news releases, from this company prior to reaching any investment decision. One should also use the full battery of available technical analysis, including stock charts, moving averages, etc. and consult a licensed financial advisor for an independent opinion. The Undervalued Dog is not in the financial advisory business. The Undervalued Dog is not responsible for the outcome of anyone's investment decision. The receipt of this information constitutes your acceptance of these terms and conditions.
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