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Harris L. Berenholz, CFA
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I like analyzing stocks, especially small caps and micro caps. My firm, Carpe Diem Advisors, LLC provides investment ideas, research and analytical services. Before establishing my firm I was (for 18 years) a Managing Director of Invemed Associates LLC, a New York Stock Exchange member firm,... More
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  • International Fuel Technology ($IFUE) Is Now A Compelling Story
    The company two primary product lines, DiesoLiFTTM 10 and the PerfoLiFTTMBD-Series , both using breakthrough technology.

    DiesoLiFTTM 10 is IFT's proprietary surfactant-based fuel additive formulation. The product has been scientifically proven to provide a significant improvement in fuel economy and a reduction in harmful emissions. In addition, DiesoLiFTTM 10 increases fuel lubricity provides detergency benefits and co-solves normal amounts of free water, which collectively reduce maintenance costs for the end user. The product is easy to use, only splash blending is needed, and its use has been proven to have no effect on fuel composition, make-up or standard specification.

    The PerfoLiFTTM BD-Series is a series of fuel additive formulations specifically developed to provide superior oxidation stability and deposit formation control to bio-diesel and bio-diesel fuel blends. These desirable product characteristics are well-documented through extensive independent laboratory and field testing.

    A report, by Stuart A. Brown, an award-winning science and technology writer and reporter ( arrived at some important and compelling conclusions:

    · Users of DiesoLiFT in the railroad, trucking and other industries consistently report fuel savings ranging from 3% to 6% and higher, lower exhaust emissions and a reduced need for maintenance of fuel system components such as fuel injectors and fuel filters. The consistency of these results is noteworthy.

    · The body of test data supporting IFT's claim for DiesoLiFT's fuel-conserving properties is overwhelming. The project manager at the UK railway consulting firm Interfleet stated that the "fuel economy claims by IFT are irrefutable."

    · Laboratory testing for fuel economy is considered highly reliable because of the controlled conditions and the established procedures that are adhered to.

    · IFT's technology can potentially apply to every diesel engine in the world since diesel engines have injection systems that spray pressurized fuel into the combustion chambers and therefore can benefit from DiesoLiFT's ability to enable more efficient and cleaner combustion.

    · DiesoLiFT is a patented formulation comprising a complex mixture of surfactant detergent substances.

    · Because of its surfactant chemical formulation, DiesoLiFT cannot cause any harm to engine components

    · DiesoLiFT's benefits also extend to users of biodiesel fuels.

    · Improved combustion reaction reduces emissions of pollutants including carbon monoxide, unburned hydrocarbons (soot), and less of the climate-altering gases oxides of nitrogen (NOx) and carbon dioxide (CO2).

    I have been an investor in IFUE shares for a number of years (admittedly, I was early) and have added to my position recently.

    The commercializing of a destructive technology is a long, arduous process. (It took Xerox some 20 years to commercialize its breakthrough technology.) IFUE has developed unique, revolutionary additives for diesel and bio-diesel fuel that provide a number of important benefits to users. Being a small company, IFT has had to prove itself over and over again to convince end users of its claims. Prospective customers were initially skeptical, wondering "how a little unknown company could invent something, possibly THE "silver bullet", that the big companies have been unable to do?"

    Now after nine years, the company's products finally are being commercialized worldwide. Two major international chemical manufacturers have been contracted with to produce the product; key distributors have been and will continue to be signed up in major markets; and patents have been issued. Initial focus is on the rail industry but any industry using diesel fuel is a potential customer.

    The company is having great commercial success overseas because fuel prices are much higher there than in the U.S. and because marketing efforts can be more concentrated. In the U.K., for example, ATOC is railway industry trades group that initiated (and paid for) testing of the company's products and then shared the positive results with its members.

    What's different today vs. last year, or last 2-3 years, is that IFT finally has reached the tipping point of credibility in the marketplace. For five years prospective customers in the U.K. and Europe hesitated. As recently as last July, IFT had no rail customers and confronted unwillingness on the part of rail operators to even consider testing the product in the field. This, despite the voluminous data garnered from the lab and from field testing that document the cost saving, pollution reducing and engine life extension characteristics of the company's products. That all changed when East Midlands Rail, a large respected operator (and one of the successor rails to the British Railways System, that was privatized between 1994 and 1997) tested and then started buying. Since then, East Midlands has reordered product seven times. Recently, its parent company Stagecoach Group was again awarded the prestigious Carbon Trust Standard after taking tough action on carbon reduction. One of the initiatives it cited was "using an innovative fuel additive (i.e., International Fuel's) on East Midlands trains, which demonstrated a 4.4% improvement in fuel economy".

    Thanks to the success with East Midlands, IFT has commitments from over 20 other rail operators in the U.K. and Europe to commence field validation processes. There is no doubt that there is now a major industry-wide positive paradigm shift in sentiment toward the company and its products.

    As far as competing technologies….there aren't any. Extensive work with the rail operators and with Interfleet (a world renowned rail consultant) has confirmed that "there is no one out there with a fuel additive for fuel economy other than IFUE……period!"

    Bio-diesel (especially in Brazil) is another potentially huge market opportunity.Last June, International Fuel received a purchase order to supply PerfoLiFT BD-4 to Petrobras, a $139 billion (in revenues) company (the third largest energy company in the world). Affiliation with Petrobras could mean substantial revenues for International Fuel. It also provides the company with the credibility necessary to call on other potential customers. PerfoLiFT BD-4 is part of the PerfoLiFT BD-Series of proprietary IFT fuel additive formulations that provide superior oxidation stability and deposit formation control in bio-diesel fuel blends. A few weeks ago the company received its largest order ever for the product from a European-based biodiesel production division of Cargill.

    Bio Capital, one of the largest bio-diesel producers in Brazil, is in final testing of PerfoLiFT BD-7. Here, too, an expected successful outcome should result in orders. International Fuel is currently negotiating with the country's largest rail operator to start field tests. Oxiteno a major Latin American chemical company (part of Ultrapar, with $28 billion in revenues) is interested in an exclusive manufacturing and distribution rights deal to sell IFT's products to industrial users of diesel fuel in Brazil and other South American markets under a royalty arrangement. Once consummated, this deal could also generate additional commercial opportunities for International Fuel throughout Latin America.

    The company's products are gaining recognition as one of the top performing technologies for bio-diesel stabilization. They have received the coveted "No Harm" certification from the German-based Association for the Quality Management of Bio-diesel (AGQM) under its "No-Harm and Efficiency" program. This certification is the international standard in the bio-diesel industry due to the demanding requirements necessary to obtain such certification and, in many countries, this is necessary before entering the market.

    The company is at a key inflection point for explosive growth, but there is no way of predicting the timing of both initial and reorders. Current indications are that sales next year could climb to $24 million (or higher) from a possible $5 million this year (up from an estimated $500,000 last).

    Breakeven is about $8 million. On $24 million in sales, I think the company could earn $5 million (pretax), or around $.04 a share. A $44 million tax loss carry forward will shelter earnings.

    It seems to me that International Fuel's stock risk-reward ratio is especially attractive for investors, given the sales momentum and the

    • enormous commercial business opportunities
    • extensive patent portfolio
    • experienced management , including a Nobel Laureate, Sergio Trindade, who heads research and maintains important business contacts in Brazil
    • prospect of positive announcements over the next few months



    Harris L. Berenholz,CFA

    Disclosure: I own IFUE shares and have been retained by the company as an independent consultant

    Disclosure: I am long OTCQB:IFUE.

    Mar 21 10:34 PM | Link | Comment!
  • I Think Altigen ($ATGN) Is A Mispriced Stock.

    The equity now sells somewhat higher than cash per share and at a market valuation that is less than half of sales. I own the stock because of the large potential for each of the two new products/services and the operating profit leverage as the new replaces the old. When the company begins to report profitable quarters (I'm assuming next quarter) I can see the stock heading back up dramatically as the estimated $0.10-.15 /sh earnings -and recognition of accelerating growth-bring the stock a higher valuation. If revenues turn out to be much higher so will earnings and price target:

    Software for the Microsoft Unified Communications

    As communications industry started shifting from proprietary, hardware-centric IP PBX systems to open, software-based solutions, AltiGen 's management (who saw this trend coming) gradually converted from its traditional equipment legacy to become a software provider . AltiGen is partnered with Microsoft for whom it created a complete, software-based solution that seamlessly integrates with Microsoft software. Software and direct sales to large customers (5,000 users) are replacing product sales to VARs and small customers (400 users). AltiGen, working closely with Microsoft, now is in a much better business and competitive position.

    iFusion SmartStation for iPhone

    At the Macworld 2011 conference last year, the company introduced (to rave reviews) the iFusion SmartStation, a revolutionary new docking station for the iPhone. This docking station will facilitate (and accelerate) smart phones' replacement of desktop phones in that the smart phone can now function as the single converged communications device, will save companies money, and will provide users greater flexibility in where and how they work. Given that there are some 350 million iPhones in the world, the potential market for the product appears to be enormous.

    Over the last year Altigen announced distributor and Partner agreements that, in my view set the stage for significant sales growth. Recently, Hammacher Schlemmer, America's longest running catalog has become an authorized Retailer. Of even greater consequence, in my opinion, is that both Apple and VoIP Supply are now selling the iFushion SmartStation on their online webstores. VoIP Supply has 100,000 customers worldwide.

    The company's breakeven December quarter (after many years of losses) demonstrates the twin effects of rising revenues and a shift in revenue mix. Last fiscal year (ended 9/30) the company's software and service support plans (that have nearly 100% gross margins) again increased their relative importance to 38% of the total from 36% the year earlier. I think that they may account for 40% of the $19 million in revenues I estimate for this year and 43% of next year's estimated $22 million in sales. Under these assumptions, earnings (untaxed) will be a few cents a share this year and reach the low teens next.

    Harris L. Berenholz, CFA

    Disclosure: I am long OTCQX:ATGN.

    Mar 02 11:53 AM | Link | Comment!
  • International Fuel Technology($IFUE) Continues To Predict A 25-Fold Increase In Revenues Next Year

    The company, which began serious commercialization efforts for its breakthrough DiesoLiFT10 diesel engine fuel additive early last year, reports that over 20 rail operators around the world are either buying, testing or planning field testing of the product.

    Its success in the railway industry is a testament to management's strategy to build a top-quality international distribution network that includes such highly-regarded partners as Unipart ( (U.K. and Australia), Nordmann Rassmann ( (Central and Eastern Europe) and Logerail ( (Africa and the Middle East). These relationships have allowed IFT to leverage its resources and capitalize on the credibility of its partners and their ability to call on a large number of prospective customers in each of their respective markets.

    The growth that IFT is now experiencing in the rail industry is built on many years of worldwide independent laboratory and field testing that have consistently demonstrated fuel efficiency improvements of 3% to 6% (on average) and associated cost and environmental benefits resulting from use of the product. No diesel fuel additive now on the rail market can make and support these claims.

    IFT recently completed four rounds of testing at mi Technology (, a prominent independent test facility in the U.K. In one test against four competing additives in a B-20 bio-diesel fuel blend, DiesoLiFTTM 10 was the only additive that demonstrated fuel economy improvement as well as recovery of the lost fuel economy that results from the use of bio-diesel fuel.

    "We have passed the tipping point of credibility with DiesoLiFTTM 10," said Gary Kirk, IFT's Director of Sales and Marketing. "The marketplace now recognizes that we have a unique technology that truly performs as advertised to improve fuel efficiency in diesel engine powered trains. We expect our worldwide sales to the rail industry from this product to be at a $5 million annual run rate by year-end."

    The company is working with most of the passenger rail operators in the U.K. One existing customer who at one of its divisions plans to begin field testing in its two other divisions. More than 10 other freight and passenger operators will begin field testing over the next 6 months. There is a high level of field validation activity either in progress or planned in Belgium, Romania, Poland, Czech Republic, Netherlands, France, Spain and Germany.

    IFT recently added a new distributor in Africa;one major rail operator will begin testing by year-end.

    In the U.S., a new distributor has been added and discussions are underway with two major rail operators to start field testing.

    Discussions with operators are well underway in Brazil, the South Pacific and India.

    How successful an investment IFUE turns out to be depends on how fast sales build and to what level they grow.The current environment of rising fuel prices should be a positive for the company's cost-saving products.

    In our view, incremental profits and profitability could be substantial. For example, I estimate that $10 million a year in revenues should mean some $1.5 million (or more) in pretax income.Higher revenues should yield a widening in gross profit margins on a smaller percentage growth in SG&A.

    This operating profit outlook compares to the current $18 million market cap. International Fuel also has a $42 million tax loss carry forward. The weak link is the balance sheet but, in my opinion, a relatively modest capital raise will carry the company until the sales come in.

    Harris L. Berenholz, CFA

    Disclosure: I own IFUE shares and have been retained by the company as an independent consultant

    Disclosure: I am long OTCQB:IFUE.

    Feb 28 9:17 PM | Link | Comment!
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