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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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  • I think Altigen ($ATGN) shares are underpriced

    The price of this thinly traded stock has been cut in half in less than a month. I suspect that the reasons relate to the complete liquidation of its entire position by one major institutional owner; tax loss selling; and the absence of announcements.

     

    At its current price, this equity sells at about cash per share and at 40% of sales. This, despite the fact that the company is poised to experience pronounced growth from at least two sources:

     

    iFusion SmartStation  for IPhone

    At the  Macworld 2011 in January, the company introduced (to rave reviews) the first integrated communications docking station for the iPhone . Instead of having separate desktop and mobile phones for employees, iFusion SmartStation enables the iPhone to be deployed as the single converged business communications device. The iPhone is "docked" for power and battery charging and for data synchronization with a connected Mac or PC. Use of this device will save companies money and will provide users with greater flexibility in where and how they work. With some 350 million iPhones in the world, the potential market for the product appears to be enormous.

     

    Software for the Microsoft Unified Communications

    MaxACD technology is a complete, software-based solution that seamlessly integrates with Microsoft’s infrastructure technologies to provide a complete, integrated software-based contact center

    Altigen has announced distributor and Partner agreements with major distributors around the world. Some are already selling product and services; others are in active negotiation with major international customers. The stage is now set for what I think could be dramatic growth. Software and direct sales to large customers (5,000 users) are replacing legacy product sales to VARs and small customers (400 users). As a result, I think that AltiGen is now is in a much better business and competitive position.

    The company is  scheduled to release earnings and host a conference call on November 9th

    Harris L. Berenholz, CFA

    Note: I own ATGN shares

    Nov 05 10:34 PM | Link | 2 Comments
  • International Fuel Technology($IFUE) predicts a 25-fold increase in revenues next year to a $5 million run rate


    “Our decision to join with recognized distributors in our markets of interest is already bearing fruit….one European rail operator is already using DiesoLiFTTM 10 commercially and at least three others, including the national rail system of an EU country, are expected to follow in 2012…concludes Mr. Burst (Company Chairman and CEO ) based on information received from distribution partners, current market conditions and our internal analyses, we think it’s possible that IFT’s total sales could be at a $10 million annual run rate in 2012.”  

    This is the first piece of evidence supporting my conclusions about the Company and its prospects.I expect the next few months to bring additional announcements of product sales. Often overlooked is this technology company’s expanding portfolio of patents. I think we will be seeing positive developments on this front as well.

     

    In response to this release, the stock rose sharply on heavy volume. I continue to like and own the stock for both fundamental and (now) technical reasons.

    Harris L. Berenholz, CFA

     

    Oct 27 1:34 PM | Link | Comment!
  • International Fuel ($IFUE) Proprietary,Disruptive Technology products are now hitting the market

     

    As you know, I like small and microcap companies that have solid balance sheets; are in the early stages of change for the better and lack Wall Street coverage.  Although International Fuel (OTCPK:IFUE) lacks the balance sheet and revenues now, it does have a valuable asset in the form of proprietary, liquid diesel fuel additives that enhance the performance of liquid hydrocarbon fuels and, at the same time, help preserve the environment. The products, having been repeatedly tested in the lab and in the field, are just now beginning to gain traction in what is potentially a huge marketplace. This makes the company and its stock worth a close look.

     Trying to commercialize a revolutionary, breakthrough technology is a long, arduous process. Despite clear evidence of efficacy in the lab and in the field, there is always resistance to change-- especially from those existing products that have the most to lose. International Fuel faced enormous roadblocks in its efforts to launch its proprietary formulations that not only improve fuel economy but also reduce pollution and engine maintenance costs and are easy to use (“splash blending”).

    I have been monitoring developments at International Fuel  since it began transitioning from a development stage technology company to a commercial entity during 2002. The company has persisted and the payoff from its efforts to commercialize finally appears to be at hand. This year the company announced marketing and distribution agreements with key distributors to the rail industries in Western and Eastern Europe. Backed by extensive laboratory and field testing supporting the product’s claims, these distributors are aggressively disseminating information to customers—and generating interest, inquiries and orders. I believe that the company is on the verge of explosive growth—starting with the rail industry-- and expect to see significant order inflows over the next 12 months, if not sooner.

    In my opinion, success is in the large worldwide rail and bio fuel markets will be only the first step. Any diesel fuel user is a potential customer. This includes power generation, marine and surface transportation industries.

    The company and its products

    In a report commissioned by an International Fuel Technology shareholder, (not the company or its management) Stuart A. Brown, an award-winning science and technology writer and reporter (stuartfbrown.com) 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).

     A Nobel Laureate heads research

    Director of Science & Technology Dr. Sergio Trindade is a globally recognized consultant and expert in sustainable development and energy, with especial reference to bio fuels.

    He served five years as the Assistant Secretary General of the United Nations for Science and Technology and continues to provide consulting for the UN system, including the World Bank, and many private organizations worldwide, regarding energy, technology and the environment. 

    Dr. Trindade is a co-laureate of the 2007 Nobel Peace Prize as a member of the International Panel on Climate Change - IPCC. He provides expert technical consulting for IFT and its commercial clients and plays an integral part in the research, development and demonstration of IFT products, as well as the protection of IFT’s intellectual property rights.

    Distributors and outsourcing manufacturing are winning strategies

    Between 2006 and 2010, Interfleet Technology Ltd (a worldwide consultancy group providing comprehensive rail industry consultancy services) coordinated a series of trials in the U.K. that showed the effect of using DiesoLiFT™10 in various rail engine types and fuel types. The engines tested were light rail engines common throughout the U.K. rail industry and in light rail passenger service throughout the world. The results confirmed that the use of DiesoLiFT™10, provided a significant improvement in fuel economy and power.

    In my view, the marketing and distribution agreement with Unipart (part The Unipart Group of Companies) the U.K.’s leading distributor to the rail industry, was a major step forward for the company and will expedite the conversion of test results into revenues in the U.K rail market.

    The German-based distribution partner, Nordmann Rassmann’s  (“NRC”), successful marketing  of DiesoLiFTTM 10 to numerous European rail operators and the expectation that it  will arrange as many as eight or more commercial opportunities with rail operators in 2011 and 2012.

    Outsourced manufacturing to Multisol (Europe) and Air Products (United States), two large, solid companies will allow IFT to meet and deliver orders in a timely and efficient manner.

     International Fuel stands to capture share in the worldwide bio-fuel market

    In a major (and surprise) announcement in June  International Fuel received a purchase order to supply its PerfoLiFT BD-4  product to Petrobras, a $139 billion (in revenues) company that has become one of the world's leaders in "green" fuel technology .is 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. It appears that Petrobras will promote the use of bio-diesel blended with diesel on a larger volume scale much as they previously implemented ethanol blended with gasoline in Brazil. The additive will be used in Petrobras' three wholly-owned bio-diesel manufacturing plants in Brazil that collectively produce over 150 million liters of bio-diesel per year. Last Summer, Petrobras took a 50 percent stake in local biodiesel company BSBIOS Industria e Comercio de Biodiesel Sul Brasil S.A. for  about  $128.4 million as  part of Petrobras’ initiative to more than double its bio fuel output over the next few years

    The worldwide production of bio-diesel as a diesel fuel renewable extender is rapidly increasing, catalyzed by the emergence of national and/or regional bio-fuel mandates. All these bio-diesel productions need to be stabilized in order to meet the oxidation stability specifications that have been adopted around the world to guarantee the quality of bio-diesel. The company’s engineered liquid fuel additive formulations are specifically designed to provide superior oxidation stability, long term storage stability, and deposit formation control to bio-diesel and bio-diesel fuel blends. Sales of PerfoLiFT BD-Series already have already been made in several European countries (Germany, Romania, The Czech Republic, Portugal and Cyprus) and in Brazil. The coming months should witness sales growth in Europe (including new countries such as Spain, Poland, and Austria), South America (Brazil, Argentina), North America (US and Canada) and Asia.

     

    The company products are gaining recognition as one of the top performing technologies for bio-diesel stabilization. It has 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.

    Patent position is strong

    In June, the company’s proprietary products were granted a patent by the U.S. Patent Office. The patent covers the company’s primary fuel “additive formulation, additive-containing fuel compositions and the method of manufacture.”

    Dr. Sergio C. Trindade, IFT’s Director of Science and Technology and Nobel Co-Laureate commented on this is landmark decision for the company: “For the Patent Office to conclude that our fuel additive for improving fuel efficiency is a unique and novel enough chemical formulation worthy of a patent, speaks volumes about its underlying science and efficacy.”

    The issuance of this patent will likely expedite the process in obtaining patents overseas in those markets where IFT has submitted applications.

    Recent developments

     ·       The Brazilian Fuels Regulatory Agency, Agencia Nacional do Petroleo (http://www.anp.gov.br/) (ANP), registered DiesoLiFT™10 as a fuel additive after an extensive and thorough evaluation process. DiesoLiFT™ 10, IFT’s proprietary fuel additive formulation has been scientifically proven to improve fuel economy in diesel fuel and bio-diesel fuel blends. 

     ·       Czech bio-diesel manufacturer PREOL made a repeat purchase of IFT’s PerfoLiFT™  BD-8 through IFT distribution partner Nordmann Rassmann

     ·       Romanian rail operator Regiotrans( the largest private passenger rail operator in Romania )  as part of its goal    of achieving  higher energy efficiency  has signed a memorandum of understanding (NASDAQ:MOU) with IFT to begin a formal field validation process for its entire fleet of locomotives  to confirm the fuel economy benefits of DiesoLiFT™ 10.  Nordmann Rassmann Romania SRL will help manage and oversee the field validation process.

      

    The balance sheet is under repair

    At yearend, the company had only $751,000 in cash and a $691,000 negative net worth.

    The 10Q for the June quarter, however, notes that

     “Our financial statements are presented on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred significant losses since inception and currently have and previously from time to time have had limited funds with which to operate. Management is in the process of executing a strategy based upon marketing technologies that offer enhanced engine performance and greater fuel economy along with pollution control benefits. We have several technologies in the commercialization phase and in development. We have received necessary regulatory and commercial acceptance for our products currently in the commercialization phase…  we believe that based on our recent equity raise efforts (cash proceeds of $1,000,000 received subsequent to June 30, 2011), projected sales for 2011 and 2012 and a remaining equity commitment of $1,000,000 (entered into with a related party Board member and significant shareholder of IFT during 2008), we have adequate cash and cash equivalents balances and commitments to fund operations through at least June 2012.  If we are unable to meet our projections and generate positive and sustainable operating cash flows by this time, we may need to raise additional capital to fund our future operations.

    As sales build so will cash and balance sheet.

                                                                                        

    The Stock

    ·       $25  mill market cap

    ·       137 million fully diluted shares outstanding

    ·       Avg. Daily Volume: 47,935 shares

    ·       52 week range: .07-.32

    ·       Insiders own 30%

    ·       Institutions own .1%

      

    Harris L. Berenholz, CFA

     Note: I and my family own IFUE shares



    Disclosure: I am long OTCPK:IFUE.
    Oct 19 10:32 AM | Link | Comment!
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