ESTG....
O/S: 9.3M
Float 4M
Here is from the Research Report by XCEL ASSOCIATES:
The entire report can be viewed here:
elast.com
Here is the meat and potatoes of the report:
Elast Technologies, Inc. (OTC: BB symbol "ESTG") is a technology-development company in the medical equipment field, based in Las Vegas, NV. Its Electronic Allergo-Sensitivity Test (ELAST) Device is an allergy-sensitivity testing instrument whose technology is based on the flow of electricity in the human body. The Company holds a patent on its invention, which could have a brilliant medical/economic future, especially if it receives FDA approval, because of the huge number of allergy-sensitive humans worldwide. A fully S.E.C.-reporting company, it was incorporated in NV in 1996 as a result of a reverse acquisition (with a public company) in October 1998, at which time ESTG shares began trading publicly. Robert D. Milne, M.D., the Inventor of the ELAST Device and the Founder of the Company, is recognized in the integrative medicine/allergy field. He practices family/integrative medicine, out of which came insights which led to his creation of the ELAST Device. There are currently 9.3 million common shares outstanding, of which 4.0 million shares are in the float. The Founder and President together own 30% and there is an apparent constituency of shareholders with an unusual faith in the Company’s outlook (many are Dr. Milne’s patients). The 52-week price range of ESTG is $3.125-$0.75. Trading volume averaged about 14,000 shares per day from October 1998-February 2000, but has been 50,000 shares over the past 90days. The two-day combined total of almost 1,000,000 shares traded in mid-March was extraordinary. We attribute this volume surge to growing investor awareness of ESTG’s potential, spurred by the Company’s activities at the time to raise capital. It obtained $1 million which should cover final product development, clinical trials, and FDA filing next year.
The Proposed Company: Elast Bioelectronics Corporation -
Elast Technologies, Inc. has entered into a merger agreement with Bioelectronics Corporation ("Bioelectronics") of Germantown, MD, a private company. Bioelectronics is a technology-development firm also engaged in the bioelectric medical equipment field. It has also developed one product – the Portic Electronic Bandage ("Portic"). The Portic has successfully demonstrated, on over 2,000 patients, the capability to reduce the healing time of tissue injuries (hard and soft) by 20% - 30%, without any side effects. Bioelectronics is seeking FDA approval of the Portic.
The terms of the merger agreement call for a share-for-share exchange, after which there would be 18.6 million shares outstanding. Voting by shareholders is scheduled for early June. We are assuming that the proposed merger will be approved because of the strong desire of controlling shareholders of both companies to quickly consummate a friendly union. The surviving public company will be renamed Elast Bioelectronics Corporation ("Elast Bioelectronics"). Dr. Robert Milne, currently Chairman of Elast Technologies, and Thomas Krucker, currently President/CEO of Elast Technologies, will both assume the same titles and functions with the newly formed entity. Mr. Andrew J. Whelan, currently Chairman/President of Bioelectronics Corp., will become Chief Operating Officer of Elast Bioelectronics Corp. The Board of Directors of the combined company will consist of representation of current Elast and Bioelectronics’ directors, with a majority coming from Elast’s Board.
The Products –
The technology of the Electronic Allergo-Sensitivity Test Device is based on: (1) the physiological fact that the human body has an electric current, and (2) the clinical observation that the body’s electrical current changes when it is exposed to a substance to which the individual’s body is sensitive or allergic (a heightened response of the immune system to a substance). An individual can be reactive to allergens (commonly pollen, dust, mold, and animal dander) and/or foods, chemicals and prescription drugs. The ELAST Device detects, measures, and records these human sensitivities in microvoltage and thereby is a tool to aid doctors in their diagnoses. This unique invention charts the electrical flow, processes the signal via analog-to-digital conversion, and presents it graphically on a PC screen. This process is made possible by sophisticated software developed by the Company, resulting in documentation similar to an EKG. This presentment has never been done before (to the Company’s knowledge), which has profound significance because current allergo-sensitivity tests leave much to be desired. Moreover, every human body is different, like fingerprints. The claimed testing advantages of the ELAST Device in comparison with all current testing alternatives are: more accurate (over 90%); quantifiable; faster (virtual real time); displayable; non-invasive; painless (electrodes on wrist); lower cost; and zero risk of anaphylaxis (life threatening reaction). The Company holds patents, trademarks, and legal rights to the ELAST Device in all worldwide target markets.
The initial testing unit is considered by management to be in its final development stage. The Company’s plan is to procure capital shortly which it would use to fund final testing/development of the instrument and broad-based clinical trials, to file with the FDA for approval, to commence manufacturing and marketing, and to finance future inventory. The Company expects clinicals to take about six months and the FDA to grant approval within six months of filing. Legal counsel for the Company contends that, because the ELAST Device is a non-invasive medical device like an EKG, it is more likely to be approved and in a shorter time period. Final development work is being done at the Company's laboratory at the Center for Applied Technologies in San Diego, a government-funded entity that seeks to accelerate the path of biotech products from R & D to manufacturing status. If the Company’s "game plan" proceeds on schedule, it would introduce the ELAST Device in the U.S. in late 2001 and overseas sooner (important international marketing alliances and Board of Director/Advisor arrangements have been established). The Company believes it can manufacture the ELAST Device and its critical software at moderate cost, largely by outsourcing. (Production cost and patient use value are not necessarily commensurate: consider the use value of a thermometer relative to its price!).
Bioelectronics’ Portic Electronic Bandage operates on a Pulsed Electromagnetic Field ("PEMF") device, and this application is a sub-set of short-wave diathermy bioelectric medicine. In summary, the main physical features of the Portic Electronic Bandage are: general purpose, safe (battery powered), portable (6"), lightweight (2 ounces or less), flexible and disposable. Its medical essence, as represented by the Company, is that it can accelerate healing by 20% - 30%. Its economic essence, as projected by us, is that it should be very low-priced (about $100) vs. alternative therapies, to the extent that they exist. The protocol calls for application of the Portic Bandage as soon as possible after tissue trauma, in order to minimize swelling and pain. We believe the Portic prototype has been fully developed. A 510(k) application has been filed with the FDA and it has granted permission to conduct a minimum 50-person clinical trial, scheduled to commence in July. We anticipate success, followed by FDA approval, followed by product introduction in 2001.
Finally, XCEL seems to "put their money where their mouth is" ... The disclaimer:
Although Xcel does not believe that its activities come within the purview of Section 17(b) of the Securities Act of 1933, in an abundance of caution and in the interest of full disclosure, we call the reader’s attention to the fact that Xcel recently purchased 100,000 shares of common stock of ("ESTG") in a private transaction for a purchase price of $1.40 per share. Xcel also received 6,000 shares of ESTG common stock as reimbursement for expenses incurred by Xcel in its performance of due diligence relating to ESTG. As of this report, Xcel and its associates have purchased in the open market an additional 455,000 shares between $1.25 and $2.75 per share. In addition, Xcel has reached an understanding with ESTG that ESTG has retained Xcel to perform certain financial consulting services on behalf of ESTG in consideration of the issuance to Xcel of options to purchase 1,000,000 shares of ESTG common stock at a purchase price of $1.50 per share.
Not a rec to buy, do your own DD.
Tom |
