Very nice job shorting ERS, researcher. In the long run, fundamentals do ultimately win out.

Valuemind, CPHI had a great Q1 report. However, they will need to raise cash at some point this year, given that they only have 74k on the balance sheet at the end of Q1.

Some other observations:

1. OCF was -452k in Q1. That used up nearly all the cash they had at the end of last quarter. Reason? See #3.

2. An increase in stock was authorized:
"During the period ended March 31, 2006, the Company amended its articles of
incorporation to increase its authorized shares from 30,000,000 shares to
60,000,000 shares."


3. A/R takes a long time to collect (normal in China):
"Analysis of financial position
------------------------------
At March 31, 2006, cash and cash equivalents of $74,924, which were 4.34% of the
total current assets, were decreased by 83.76% compared to the same item at
December 31, 2005. The net value of property and equipment was $ 2,757,705,
13.6% of the total assets.

The trade accounts receivables were $8,251,166 and the valuation of inventory
was $6,550,268 at March 31, 2006. Trade accounts receivable and inventory
amounted to 40.7% and 32.3% respectively of the total assets. The dramatic
increase of sales revenues from the subsidiary of TS in China, Helpson, caused
the increase of the value of trade receivables. The long collection period of
accounts receivable also caused that the accounts receivable was increased by
44.51% compared with at December 31, 2005. Considering the slow collectibility,
the Company plans to pay more attention to collecting trade accounts receivable,
try to use cash-sales when selling products to new customers or small-sized
customers.

4. Risk factor as outlined in 10K:
WE MAY NEED TO RAISE ADDITIONAL CAPITAL WITHIN THE NEXT TWELVE MONTHS TO FUND
OUR OPERATIONS AND FAILURE TO RAISE ADDITIONAL CAPITAL MAY FORCE US TO DELAY,
REDUCE, OR ELIMINATE OUR PRODUCT DEVELOPMENT PROGRAMS

Due to the large funds required for research and development and the subsequent
marketing of products, the pharmaceutical industry is very capital intensive.
The industry is characterized by large receivable turnovers, which signifies
that we will need more working capital as our revenues increase. We have
traditionally been committed to biomedical R&D, and are now developing
traditional chemical medicines within specific market segments such as those of
anti-flu and anti-infection. It is likely that we will need to raise additional
capital within the next twelve months. Additional capital may be needed for the
development of new products or product lines, financing of general and
administrative expenses, licensing or acquisition of additional technologies,
and marketing of new or existing products. There are no assurances that we will
be able to raise the appropriate amount of capital needed for our future
operations. Failure to obtain funding when needed may force us to delay, reduce,
or eliminate our product development programs.

--------------------
The company needs to borrow money or issue stock or some combination of the two. I think I'll wait until I see what they decide to do, as my guess is that it will be a dilutive PIPE deal. They could try the cash up front approach on any new sales, but that will hurt sales growth.

They are in a tough spot right now. Other Chinese OTCs have make the difficult hurdle, but they'll have to be smart about who they get in bed with. AOBO is good example of the pros and cons of early PIPE financing.

Nice catch Mandjb. Here's something interesting in the deal:

"Dear Richard Pierce,

I understand that you and/(or your associates) are the principal shareholder(s) of GFR Pharmaceuticals Inc. (“GFRP” or the “Company”) a Nevada corporation, which is a public corporation that has approximately 18 registered shareholders, and is looking for combination with an operating business. You have offered to sell 200,000 shares out of the total of 570,000 shares in the Company which you own or control for the cash sum of $350,000, as part of the transactions outlined herein. There are currently a total of 1,079,940 shares outstanding.

-------------

That cash paid equals 1.75/share, and the stock is now trading at 1.25. Looks like we could go as high as that, but you're right to be wary of this deal. No financials for Pallane Medical have been posted.

If there are any ANII shareholders still out there....be warned the company just filed its proxy statement today and it intends to do a reverse split of 1:500 that will essentially enable the company to delist itself from the OTC.

--------------------------

Introduction

Our board of directors has unanimously adopted resolutions approving a proposal to effect a reverse split of our common stock, subject to the approval of our shareholders. The reverse split, as approved, will combine our outstanding common stock on a one share for 500 shares basis. In other words, once the reverse split takes place, every 500 shares of common stock held by shareholders will be reduced to one share. Accordingly, the 4,733,678 shares currently issued and outstanding will be reduced to approximately 9,467 shares (subject to rounding) issued and outstanding.

Reasons for the Reverse Split

As of the date of this proxy statement, we have over 2,500 record and beneficial shareholders, numerous of whom own less than 500 shares. It is expensive and time consuming for us to communicate with these shareholders. Additionally, brokerage commissions make it expensive for shareholders to sell small numbers of our shares. Upon approval of the reverse stock split and the payment of the fair market value of the fractional shares to shareholders with less than 500 shares, we expect to substantially reduce the number of our shareholders and therefore the costs associated with communicating with these shareholders. Moreover, cash payments to shareholders will be based on the market price of our common stock and as described below and will not be diminished by brokerage commissions.
----------------------------------

I haven't owned ANII in well over a year, but still followed the stock. This kind of announcement has sadly become more common with the advent of new SOX rules.

Hweb, do you think that investors should back out stock option expenses (in general)? I've heard arguments on both sides, but I'm curious as to your view....

Any other comments are welcome, and it would be interesting to hear the consensus on this issue from the VMC group.

DAAT out with some pretty big news (IMHO) this AM: It announces an expansion of its Kmart/Sears relationship and also reveals that a big insider has been bought out. I think this is great news as it removes the periodic selling from this insider (Dan Lasater) that had been an overhang on the stock.

DAC Technologies Announces Private Transaction
Tuesday May 16, 8:45 am ET

LITTLE ROCK, AR--(MARKET WIRE)--May 16, 2006 -- DAC Technologies (OTC BB:DAAT.OB - News) today announced a private transaction in which accredited investors and DAC Technologies agreed to purchase all the outstanding shares (679,065 shares) from Dan Lasater and his family. Keane Securities of New York City handled this transaction.

ADVERTISEMENT
David A. Collins, Chairman and CEO, stated, "The Company has reached an agreement to put its GunMaster gun cleaning kits into Sears/Kmart's approximately 1,100 stores in the July/August time frame."

Collins further stated, "Mr. Bob Goodwin, the Company's CFO, was recently hospitalized, but has now returned to work. This has caused the Company to file for a one week extension for the filing of its 10Q for the quarter ended March 31, 2006."

About DAC:

DAC Technologies Group International, Inc. is an outsource manufacturer of high quality, reasonably priced security safes, gunlocks, gun cleaning kits and security products, as well as accessory items for the sporting goods market. DAC distributes its products through mass merchandisers such as Wal Mart and Kmart, and sporting goods retailers and distributors such as Dick's, Big Five, Cabela's, Acusport, Jerry's, RSR and others. DAC also provides gunlocks to OEM gun manufacturers such as Glock, SigArms, Savage, Marlin and Taurus, as well as others. Also, DAC's products are distributed through catalog companies.

R59, I know you have some experience evaluating these insurers. What do you make of this and its possible impact next quarter and beyond for UVIH?

----------
<snip from Q1 06 10Q>

UPCIC's reinsurance contracts do not relieve UPCIC from its obligations
to policyholders. Failure of reinsurers to honor their obligations could result
in losses to UPCIC; consequently, allowances are established for amounts deemed
uncollectible. No allowance is deemed necessary at March 31, 2006. UPCIC
evaluates the financial condition of its reinsurers and monitors concentrations
of credit risk arising from similar geographic regions, activities, or economic
characteristics of the reinsurers to minimize its exposure to significant losses
from reinsurer insolvencies. UPCIC currently has reinsurance contracts with
various reinsurers located throughout the United States and internationally.
UPCIC believes in only ceding risks to reinsurers whom it considers to be
financially sound combined with distribution of reinsurance contracts adequately
minimizes UPCIC's risk from any potential operating difficulties of its
reinsurers. In addition, UPCIC does not have any unauthorized reinsurers which
have recoverable balances that are not secured by a letter of credit or that
have ceded balances payable that are greater than the amount of the recoverable.

The property and casualty reinsurance industry is subject to the same
market conditions as the direct property and casualty insurance market, and
there can be no assurance that reinsurance will be available to UPCIC to the
same extent and the same cost as currently in place for UPCIC. In light of the
four windstorm catastrophes Florida experienced in 2004, and three windstorm
catastrophes Florida experienced in 2005, an increase in catastrophe reinsurance
cost for the current year renewal is likely and could adversely effect UPCIC's
results.

In addition, effective June 1, 2006 the Company intends to reduce the
rate of cession on its quota share reinsurance. Quota share reinsurance is used
primarily to increase the Company's underwriting capacity and to reduce exposure
to losses. Quota share reinsurance refers to a form of reinsurance under which
the reinsurer participates in a specified percentage of the premiums and losses
on all reinsured policies in a given class of business. As a result of the
reduction of the Company's quota share reinsurance, the Company will retain and
earn more premiums the Company writes but will also retain more related losses.
The Company's increased exposure to potential losses could have an adverse
effect on the Company's business, financial condition and results of operations.
In addition, the return to the Company of previously ceded unearned premiums net
of associated ceding commissions will result in a material reduction in net
income in the second quarter of 2006.

Niles, I believe that the issuance of stock dividend shares are supposed to be treated as a reduction to your entire cost basis. So, if a company issues a 20% stock dividend, as in the case of LTFD, then your cost basis is reduced by 20% to reflect the 20% increase in shares. All shares sold subsequent to the dividend would carry this lower basis....

Knowledge, looks like there might be some seasonality with PFCO? They earned 0.18 for the full year last year, so 0.10 of that came in Q1 05.....eps were much less the rest of the way.

Also, its an insurance company....which is hard for me to get worked up about.

Hweb, Thanks for the heads-up on ACSEF. Looks like technical selling combined with a recent filing from the CEO that he sold some shares in the 10+ region may have led some to throw in the towel today. Major markets selling off has contributed to that too, I'm sure.

I picked up some shares at 7.10; 50 day EMA is around 6.50. I would think we should at least get some support there.

What do you guys think of the chance of Cramer pumping TGB after the "successfully" pumping of EZM last night? I am temped to buy some TGB on the dip and hold it into Mad money. If nothing happens, sell it tomorrow.

cl, I think this kind of speculation is what marks a top.....good luck.

I decided to take advantage of the "gift" from Cramer regarding the EZM pump to sell the rest of my EZM shares at 3 - 3.25. Wild trading, as there must have a market order placed right when that recommendation came out.

I was thrilled to get as high as 3.25...but most were filled around 3.

Niles, I got an alert from my Level II provider that AMEX has been experiencing "system problems" and anticipated a 10:17 AM opening.

Hweb, don't overlook the fact that PZA has 9.4MM of debt on its books as well....that dwarfs the total cash of 3.2MM.

Also, I noticed that PZA had a gain on sale of a building partially recognized in the quarter....although it is amortized over a 10 year period, so I guess we can certainly count on it being in the income stream for some time. I normally would back that out, but a strong argument could be made for leaving it in.

Tax rate was high in the quarter....so net should have been a bit higher.

I do think it may be slightly undervalued, but only if meat prices stay down. Rev mix also a bit of a wildcard:

"Company net sales were up about 2% and the Company realized net earnings of $148,119 in the 1st quarter of 2006 compared to a net loss of $162,676 for the 1st quarter of 2005. Both divisions contributed to the increased sales and the net earnings. The Company’s gross profit margin for the 1st quarter of 2006 was 8.7% compared to 6.2% a year ago. The Company’s margin increased from a year ago because the margins at both divisions increased due to lower meat costs a Swiss and higher selling prices at Royal."

Wade, be careful about getting too exuberant on forward PE multiples for UFPT. Their industry (packaging materials) isn't very sexy, and not likely to garner such a high number (20x) IMO:

Founded in 1963, UFP Technologies is an innovative designer and custom converter of foam, plastics and natural fiber products serving the consumer and industrial markets. The company operates in North America with ten factories and three satellite facilities.

The company comprises two divisions:
Engineered Packaging designs and manufactures interior protective packaging solutions utilizing molded fiber, vacuum formed plastics, and molded and fabricated foam plastic products. This division serves numerous markets, including computer electronics, medical / pharmaceutical, military, automotive, military and general industrial.

Component Products designs and manufactures engineered component solutions utilizing laminating, molding and fabrication technologies. This division provides the "product within the product" to the automotive, beauty, medical, industrial, military and sports and leisure product markets.

http://www.ufpt.com/

It can be argued that the estimates need to be raised based upon the Q1 results.....but why should this get more than 10-15x forward earnings? While I'm sure you might find some comps that justify your 20x figure, I just don't like the industry that much due to competition and margin pressures. I would be a buyer, but not until after we have had some drifting down time. That's a huge gap in the chart that needs a bit of backfilling before the decline is done, IMHO.

Curlews, re: EZM.

If you back out all the hedging expenses (copper and currency), Q1 06 pretax income would have been closer to 53.4MM Canadian, according to my calculation. Using a 25% pf tax rate, and 558MM shares, fd and fully taxed eps for Q1 would have been 0.07 Can.

The stock is now trading at 3.00 Can. Assuming that copper production rises in future quarters AND prices don't slump dramatically from current levels, we could expect that Q1 would have the lowest revs from copper sales for the rest of the year. Plus, the wild card with EZM is the zinc production that could come online as early as Q3, further boosting net.

I wonder if the company is contemplating any hedging for FY07? They were very conservative last time and its hurt their operating results in FY06....can't imagine that they wouldn't want to lock in some prices here!

As far as forward PE ratios go, I'm hesitant to give a mining company anything more than a 10x forward estimate using my own pf numbers, which adjust for all the 'bad stuff' and might represent peak earnings. Still, I think EZM is on a run rate of at least 0.28 Can. Given that I think this could easily be the low point for the year, 3.00-3.50 Can isn't unreasonable for a price target. That's not a huge premium over current levels, so I'm comfortable holding a much smaller position at present and will join the consensus here who are waiting to pick some up a little lower.

Still crunching some numbers estimates for the rest of the year; CC should be interesting.

Hweb, LTFD's rev seasonality is misleading, IMHO. Yes, total revenues are typically higher in Q2 vs Q1, but the revenue mix will not be as profitable (hospitality v entertainment). Add to that the additional shares from the stock dividend and eps will probably be lower sequentially than Q1.

Hweb, I think with AEY we saw classic sales mix variation, which can play havoc with margins:

"This past quarter, we experienced strong demand for our new equipment offerings, however, demand for our higher margin refurbished product offerings was slightly lower."

They did say they expect this to improve:
"For the balance of fiscal 2006, we anticipate the demand for our refurbished products to increase and improve consolidated margins."

....but I don't think investors are in a forgiving mood with AEY today.

I know I felt this was going to be an "easy" quarter for AEY to beat last year's bad result, but it looks like they decided to dump some one time expenses in this quarter:

"Net income for the prior year did not include the effect of a new accounting requirement for the expensing of stock option grants totaling $88,537 as well as incremental costs related to increasing the bad debt reserve, the recruitment of a new chief financial officer and the increased professional fees associated with changing our independent accountant, totaling approximately $220,000.

"During the quarter we also experienced increased operating expenses including recognizing stock grant compensation, bad debt accrual and increased professional fees.

-----------------------
Without these "one-time" and non-cash expenses, pretax (operating) income would have been closer to 1.9MM (vs. 1.7MM y/y). Pretax margins were still down y/y, but eps would have been closer to 0.11 v 0.09.

Will be interesting to see what the organic growth rate was in the quarter. Revs were helped by the Jones acquisition....

Rruff, the key words in that statement from CHID's acting CEO:

Yu Xi Sun, president of China Digital, will purchase up to 1 million shares of the company in the open market between April 20 and June 20.

That gives her some wiggle room. But ask yourself, where does a 33 year old Chinese person get the money to buy that many shares? At current prices, that would require nearly $1MM.....

Looking at her background, unless she comes from money, she's got to have some hidden benefactors somewhere. Its all part of the confusing and complicated web of transactions that often surround Chinese stocks.

TTES surpassed my initial price target a little while ago. I wouldn't feel comfortable owning it at its current levels, but my price target was too conservative. Its tripled from lows it hit last year....

NOTE to SKILLZ: you said you hadn't seen a stock with an RSI greater than 90? TTES is currently sitting at a mind-boggling 95....it needs to take a rest, and soon.

Sskillz1, what are your settings for the RSI? I use the standard settings on Prophet Charts, which says RSI, EMA(14). Are yours different?

MSGI, R59, and Michael T, there is a lot of confusion out there about CHID's fds count. I had assumed that there were 54.5MM shares as of 12/31, which is what the income statement shows in the 10k. However, as Michael noted, there is a little paragraph at the beginning of the 10k that says:

"The number of shares outstanding of the issuer's Common Stock as at
March 22, 2005 was 72,960,626."

(NOTE: there is a typo here; this date should be March 22, 2006)

So which number is correct? I looked for some explanation in the subsequent events paragraph, thinking that if shares had been issued this would have been noted....but there is no explanation there.

So I called the company rep here in the US, Roy Teng. He told me that those numbers (73MM) included shares that were issued for the purposes of aquiring Shenzhen Zhou Tong:

http://biz.yahoo.com/prnews/060216/neth011.html?.v=48
"Pursuant to the acquisition agreement, China Digital will acquire 100% of UPE in an all stock transaction valued at approximately US$11.1 million. China Digital will issue 18.5 million shares to the shareholders of UPE in exchange for all of the shares UPE. Upon completion of the acquisition, the shareholders of UPE will own approximately 25% of China Digital."

-----------------

OK, but there is a big problem. The acquisition has not yet closed, so how can the shares have been issued and included in the fds count? He agreed that this was probably the right assessment and will call the auditors to make sure that Q1 numbers accurately reflect this.

This is sloppy work done by CHID's auditors (Kabani) and CHID's management team on the 10k, who should have reviewed this and caught the error before letting it be filed. Of course, I missed that on the first go around too, so mistakes can and will happen. They should file an amended 10K noting this small error, but I doubt that will happen.....

Hopefully that addresses the question.

I'll grant you that the details surrounding the Harbin/BBC transaction are murky and raise a red flag.

One of the things about Chinese companies that I've noticed is the often interlocking and complicated nature of the financial relationships between the corporation and its major shareholders or related parties. Small companies in China often don't have the benefit of credit lines or other debt financing so they have to get creative. Sometimes they shift cash around, other times they get loans or advances, often they require hedge funds or other sharks to fund their growth via PIPEs or convertible debt. BBC and Harbin both had to rely on these in their early days, and now some have been cashing in. Is what Harbin did illegal? I doubt it, given that they filed a Form 144 when selling their shares and disclosed the ownership of marketable securities on its 10K. Of course, they didn't disclose the identity of the security, which they probably should have done.

This transaction goes back before HRBN or BBC were fully reporting OTC:BB companies, as far as I can tell. We may never know the full details of why it happened, but HRBN was able to help finance BBC's early growth via accepting stock in lieu of collecting a loan/rec from Bodisen. BBC was starved for cash for growth and needed this to help get it off the ground. As its financials solidified and profitable growth ensued, the stock took off. HRBN sold near the top, so kudos to them.

Your other questions revolve around NY Global and Wei. If Wei was hired by BBC to promote them, then perhaps they will re-assess this relationship after the Post broke this news of past regulatory difficulties. Anyway, I care more about what the company is saying and reporting then what NY Global or Wei have been up to. I haven't determined any relationship other than the consulting fee they got for helping to place shares with institutions over in England. Presumably, those institutional buyers all kicked the tires pretty well on this one and weren't just relying on the information provided to them by NY Global. If anything, its NY Global that has to fear from the ramifications of the NY Post article, not BBC. It sounds like Wei has been doing some shady things in his past, but he doesn't appear to control much (if any) BBC stock. If BBC reports in-line with previous estimates and continues to re-iterate its reasons for expecting a strong year ahead, I think the stock should recover to the 15-16 area again.

2morrowsgains, I'm a little confused. You quoted a lot of stuff from the article.....but didn't highlight what the primary issue was for you. Wei's past regulatory problem?

Jonesie, Sun just filed her first Form 4...bought 30k @ 0.715 May 1.

CHID interim CEO, Yu Xi Sun, just filed a Form 4, reporting that she bought 30k shares at 0.715 on May 1. Earlier, she had announced her intention to purchase one million shares over a two month period.

China Digital Communication President To Purchase Up To 1 Million Shares in Open Market
Tuesday April 4, 6:15 pm ET

LOS ANGELES and SHENZHEN, China, April 4 /PRNewswire-FirstCall/ -- China Digital Communication Group (OTC Bulletin Board: CHID - News), one of the largest and fastest growing battery components manufacturers in China, announced today that Yu Xi Sun, president of China Digital, will purchase up to 1 million shares of the company in the open market between April 20 and June 20.
--------------------

Obviously, the MMs have gotten wind of her buying presence and have moved the price up accordingly in the past few days. Wait until this news hits that she is actually starting to follow through on her promise.....

R59, re ISAC. Two things about their forward guidance....

"Fiscal 2006 Operating Forecast

The company's previous guidance was that it would grow first half diluted earnings per share by 10% over the results achieved during the first half of 2005, and its full year diluted earnings per share by 20%. The company is raising its guidance and now believes it will earn $0.21 to $0.23 per diluted share in the second quarter on an approximate revenue increase of 15%. This would represent a 24-30% increase in earnings for the first half compared to the same period of 2005.

For the full year, the company now expects to sustain a pace of 15% revenue growth and to realize full year diluted earnings per share of $0.76 to $0.79, approximately 25-30% over 2005's operating result of $0.61 per diluted share. As a reminder, fiscal 2005 fully diluted earnings per share were reported as $0.48 due to a one-time charge of $0.13 per diluted share related to the settlement of arbitration proceedings against a former executive."

1. I wonder how much of the projected net eps are merely tax benefits? Q1 had 277k in tax benefits, and the company has taken an average benefit of 1.1MM over the past two years. This is a sneaky way of pumping up earnings in the present.....why should the company be rewarded with a higher PE multiple for sustaining horrific losses in the past?

2. Look at the FDS count. It dropped by nearly 5% sequentially.....although its highly doubtful the company bought back shares, given their debt. My guess is that due to the drop in the share price last quarter, there are now some anti-dilutive options or warrants that could bump up the fds count in the future if the stock price stays up in the 6s. Was this factored into the guidance?

BBC out with a company statement this AM. Looks like they've addressed some of the recent issues very nicely:

Press Release Source: Bodisen Biotech, Inc.

Bodisen Biotech Inc. Issues Statement Regarding Recent Events
Wednesday May 3, 9:43 am ET

NEW YORK--(BUSINESS WIRE)--May 3, 2006--Bodisen Biotech, Inc., (AMEX:BBC; LSE:BODI; website: www.bodisen.com) the first China based environmentally friendly bio fertilizer company listed on a US stock exchange, and dually listed in London, today issued a statement regarding recent events involving the posting of unauthorized and inaccurate information on a company-owned website.

On April 15, 2006, unauthorized information was posted by an employee on a Bodisen-owned website that contained two false news pieces stating that (1) the company's CEO and Chairman Karen Qiong Wang was seriously ill and resigning from her position and (2) that road construction in front of the company's older facility would seriously impact the company's 2006 revenue and earnings guidance. The company has taken action to prevent unauthorized information from being disseminated in the future.

Subsequently, this erroneous information was used by an equity analyst in a report issued on the company.

Following the posting of this erroneous information, the company has disclosed the following factual statements:

* On April 18, 2006, the company stated that CEO and Chairman Karen Qiong Wang was taking temporary sick leave to undergo a routine medical check-up procedure, following surgery that was performed at the end of 2005. Subsequently and as stated in a news release issued on April 26, 2006, Ms. Wang has returned to her duty after a routine medical check up. At no time preceding or during her temporary medical leave was there any discussion of Ms. Wang resigning from her position. Ms. Wang is the CEO and Chairman of Bodisen Biotech, Inc.
* On April 18, 2006, the company issued a news release stating that road construction had begun in front of the main entrance to the company's older production facility and was expected to last for several months. The company also stated that construction was not expected to affect Bodisen's product inventory and shipment operations and reaffirmed its 2006 sales and earnings guidance. Again, the company expects no material impact to its financial performance as a result of the current road construction.

The erroneous information has been removed from the website. Bodisen's official website is www.bodisen.com, which contains the latest information on the company.

About Bodisen Biotech, Inc.

A Delaware company, Bodisen is headquartered in Shaanxi, China's agricultural hub. The Bodisen brand is a highly recognized fertilizer brand in China. Its environmentally friendly "green" products support the mandate of the Chinese government to increase crop yields for the purpose of decreasing China's dependency on food imports. Utilizing proprietary agricultural technologies, Bodisen sells over 60 packaged products, broken down into 4 product categories: Organic Compound Fertilizer; Organic Liquid Fertilizer; Pesticides & Insecticides, and agricultural raw materials. Bodisen's organic fertilizers are government certified as "organic" and can be absorbed by plants within 48 hours and enrich soil conditions without the damaging effects associated with chemical fertilizers. Bodisen's products address grains, vegetables, and fruit crops and have been proven to increase crop yields by 10% to 35% while being environmentally friendly. Among China's population of 1.3 billion, approximately 900 million are farmers or have agriculture related jobs whose incomes depend on their crop yields. With approximately 600 (and growing) nationwide distribution centers, Bodisen has experienced rapid growth in its existing business.

Safe Harbor Statement

This press release may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of Bodisen Biotech, Inc. management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.


Contact:

The Piacente Group, Inc.
Investor Relations:
Debra Chen, 212-481-2050 x604

Michael, don't overlook the tax benefit contained in the Q1 numbers for ISAC.ob:

"Net income for the first quarter of 2006 included an income tax benefit of $318,000 as well as a $152,000 charge for stock compensation expense resulting from the company's adoption of SFAS 123®, Share-Based Payment, with effect from January 1, 2006. "

I think we're going to have to get used to these stock option charges and adjust earnings models accordingly.

Anytime i see an tax benefit, you can usually expect higher rates on the income statement in following periods. Won't know until I look at the Q more closely, but I usually model in a 35% pro-forma rate anyway.

Q1 pretax numbers were slightly down vs y/y numbers, even adjusting for the option expense. Revs were also down y/y for Q1. Backlog up nicely, but retail stocks don't get much respect these days....

This is just a quick reaction to the PR from yesterday. There could be other factors I've overlooked.

2morrow, I did some digging after your post. Here is some of what I found.

First, SovGem has owned both HRBN and BBC in the past:
http://bigcharts.marketwatch.com/news/articles.asp?guid={B30C90DB-0FE8-4BFB-989E-81CD85107BCA}&n...

"SovGEM initially purchased 450,000 BBC at a price of $4.50 in November 2004; currently we hold 70,000 shares that closed on 9 November 2005 at $12.40. In February 2005 SovGEM purchased 500,000 shares of HRBN, today we hold 200,000 shares valued at $7.80 at the close of business on 9th November 2005. We remain extremely excited about the potential news flow from these two companies as well as the future of AOBO."

It appears that they may have added to their position in BBC during the recent AIM offering:

"Bodisen was and remains a rapidly growing business, which has
effectively doubled in size each year. The company was in the process of
building an additional plant to cope with increasing demand at the time
of our investment. This new plant has now opened.

The investment offered significant potential capital growth for its
shareholders. It also intended to move up a division to the AMEX market,
which would further enhance value as this market attracts institutional
investors that do not invest in the Bulletin Board.

The shares have been sold throughout the year, and have generated
significant profits. Bodisen sought a listing on AIM, which it achieved
last month. We participated in the London listing with the purchase of
around 38,000 shares and we believe the company's prospects remain
strong.
http://www2.cdn-news.com/scripts/ccn-release.pl?/current/0321003n.html

It appears there was a relationship between SovGEM and NY Global at one time:

http://www.growthcompany.co.uk/sector/8700/financial-services/22674/sovgem.thtml
"SovGem’s shares were suspended for five months this year, while chief executive Hugh de Lusignan attempted unsuccessfully to negotiate a reverse takeover. This left the company with an exclusive agreement to support some of the pre-IPO fundraisings carried out by Chinese specialist finance boutique Benchmark, now part of New York Global. Some investors felt this was too restrictive. De Lusignan has now managed to extract SovGem from this agreement, meaning he can select investments from a wider variety of sources.

I did some more digging in Harbin's financials regarding how they came to own shares in Bodisen. The 10k listed "marketable securities" but didn't disclose the name of the investment:

"6. INVESTMENT IN MARKETABLE EQUITY SECURITIES

The Company’s investments in marketable securities are classified as “available for sale” securities, and are carried on the financial statements at fair market value. Realized gains and losses are included in earnings, unrealized holding gains and losses are reported as a separate component of stockholders’ equity as a component of “Other Comprehensive Income.” The average cost method is used to determine cost of securities.

The following is a summary of the Company’s investment in marketable equity securities, all of which are classified as available-for-sale securities, as of December 31, 2005:



Cost

Estimated fair value

Unrealized gain
Equity securities

$ 520,846

$ 1,005,772

$ 484,926


"During the year ended December 31, 2004, the Company received marketable securities of $508,245 in settlement of accounts receivable of $508,245.

What's curious is that when you go to HRBN's 10k for 2004, there is no mention of this A/R settlement.

Either way, it looks like HRBN sold this investment in BBC earlier in the year:

TIANFU, YANG N/A CHN 2/1/2006 N/A Form 144 N/A 180,000 N/A N/A 2,869,200 N/A / N/A N/A
HARBIN TECH FULL N/A CHN 2/1/2006 N/A Form 144 N/A 70,000 N/A N/A 1,115,800 N/A / N/A N/A

I guess some of those shares were registered to Tianfu, not HRBN.....

In fact, looking at the BBC chart, it appears that these shares may have been dumped at or near the top (around 1/31/06). A lot of other shares were listed for sale around the same time.

This would be an interesting item to dig into, but since the shares appear to be from an old debt/obligation from Bodisen to Harbin/Yang, and all the shares appear to have been sold, what difference does it really make now?

Not sure if this was all that helpful, but it may fill in some of the blanks.

Interesting WSJ article on option expensing and how companies might "game" the accounting methods:

Option Expensing Leaves Room
For Tallying the Volatility Factor
By STEVEN D. JONES
May 2, 2006; Page C3

New stock-option accounting rules have created a brisk trade in crystal balls.

Corporate executives now have to calculate a value for stock options granted today that employees won't cash in for years. Those values in turn influence the hit to profit companies take when booking the options.

Stock options give employees the right to purchase their company's shares in the future at a predetermined price. In the past, companies had only to report the potential cost of options, as well as the assumptions behind their value, in footnotes to financial statements. Accounting rule makers, reasoning that the cost of buying the stocks to provide to employees exercising options is a real expense to companies, insisted the options be booked as an expense against earnings.

To value options, companies have to make assumptions about interest rates, the number of years over which employees will use their options and the magnitude and speed of share-price swings in that period, a measure commonly known as volatility. In some cases, those assumptions can cause the options to become less costly to the company.

In other words, the requirement that options be counted as an expense has shifted the debate about the financial impact of these perks rather than ended it.

Volatility assumptions for 50 big companies with sales in excess of $20 billion, for example, dropped by an average of 13% from 2003 to 2005, according to a study to be released today by trade publication Compliance Week.

Although stock-market volatility as a whole has declined, some big companies have cut their volatility assumptions dramatically. The volatility assumed for options-calculation purposes, for example, dropped at CBS Corp. by 39% from 2003 to 2005, by 45.9% at Dow Chemical, and by 54.5% at Time Warner Inc., according to Compliance Week.

In a paper to be published this summer, Derek Johnston, assistant professor of accounting at Colorado State University, found that "volatility was the number most easily changed" to manage option expense. While he believes that subtracting the cost of options from earnings will make financial reports more "relevant," he worries that "companies can game the number" through assumptions.

There are two ways of calculating volatility. Implied volatility takes recent trends and projects them into the future; historical volatility considers past performance only. Both measures are usually computed over three to five years and expressed as a percentage of change in price over a 12-month period. For example, a $20 stock with implied volatility of 40% would be expected to move either up or down by $8 in the coming year.

When used to value options, lower volatility makes it less likely that an option will be exercised at a high price. When that lower percentage is plugged into the option-valuation formula, it produces a lower value and so a lower expense for the option -- and thus less of a burden to the company's bottom line.

Consider tech company Analog Devices Inc. It estimated that the value of options granted in 2005 was $10.85, down 60% from the value of options granted in 2004. The Norwood, Mass., company's share price had fallen in the 12 months between the valuations. But what sent the estimated value down most was a decline in volatility assumptions for Analog shares.

Multiplying the fair-value estimate of $10.85 by the number of options granted in 2005 meant Analog would have expensed $188 million before taxes for the stock-based compensation it paid employees. However, if the company had applied the same assumptions used in the calculation the prior year, Analog's option expense would have been closer to $250 million.

Such swings in value may become the norm as companies come to terms with the cost of stock-based compensation. They may also come about because companies switch from models using historical volatility to those using implied volatility, which could produce a lower figure.

Indeed, that is the switch that Analog made. The company says it did so because the historical measure went back through an extremely turbulent period for markets in 2000 and 2001, sending the volatility measure soaring, a spokeswoman wrote in response to questions.

Using the forward-looking method of calculating stock-price fluctuations, Analog's volatility fell to 27%. The spokeswoman said the use of the implied figure "will result in the best estimate of expected volatility."

Seeksup, re GASS. Yes, the CEO is only 28:
(from the Risk section of the 10k)
Our CEO has limited experience running a public company

While our CEO, Harry Vafias, age 28, has been actively involved in the management and operation of vessels for several years as an employee of the Vafias Group, he has not had prior experience as a CEO of a public company. Mr. Vafias will have to rely on the experience of the Vafias Group for the management of our vessels, as well as the advice and oversight of the Board of Directors, in his role as our CEO.

Here's the members of the Board:
http://www.stealthgas.com/corporate-details/management-board.html

I think there are sufficient greybeards to help the young pup make his way....LOL. The CFO is 50 years old, if that makes anyone feel better.

I don't think this business is rocket science. It takes a good sense of where the strong markets are (LPG) and then knowing when to spot trade vs locking up longer-term charter rates. Vafias seems to be a good "trader" in this sense:
http://tinyurl.com/kkcrr

To address your concerns about the direction about rates: yes, spot rates for most tankers are way down from y/y levels. However, longer-term t/c rates are not down as much, and GASS should benefit from the renegotiation of charters coming up for renewal this year that had rates from 2+ years ago, when prices were much lower. While the recent trends are worrisome, as long as global demand from Asia and Europe continues to be strong, I think rates will stabilize and move a bit higher next year. Predicting this is like guessing which way interest rates will go next year....hard to do!

The GASS IPO from last fall may hurt y/y comps, but if they can hit estimates of 1.94 for FY06, I don't see why they can't hit 8x estimates as an intermediate term price target.

I like MCX (another LPG shipper) better for the short-term (FY06) as i believe they have a chance to outperform estimates for the second half of the year. MCX has multiple ships coming up for charter renewal this year; these ships are coming off rates from 2003, which were much lower than current rates. They also just bought two new ships and rechartered them for decent rates.....should be fairly accretive for Q2-Q4.

New shipbuilding is something to watch out for, but smaller LPG ships aren't facing the same supply concerns that their bigger brethren are. All in all, it seems like a stable niche that has far outperformed all other shipping segments over the past year.

I know the NY Global Group sold a good chunk of BBC on the way up...

2morrowsgains, can you please show me where this occurred? I'm aware of the fee paid to this group for helping to place the shares among institutions, but I don't see where they sold shares...

Here's the fee arrangement:

"(e) The Group has an oral agreement with the Beijing office on New York Global Capital, Inc. for the payment by the Group of a corporate finance fee of $300,000. The fee is conditional on Admission taking place."

-from the Form 4241B filing in conjunction with the shares being placed on the London stock exchange (AIM)

I don't see any Form 144 filings for NY Global. There were some 144 filings from some of the early institutional investors in BBC:
http://www.nasdaq.com/asp/Holdings.asp?symbol=BBC&selected=BBC&page=holdingssummary

I think the info in the NYPost article was largely rumor and innuendo. The fact that some promoters of the stock have been fined for previous transgressions shows poor choices from BBC on who they should represent them to the US market. But what accounting issues did Byron say were actually wrong? Net margins are high, but so are those of a lot of Chinese stocks. There is near universal distrust among Western investors of the numbers reported by Chinese companies and the motives behind their major insiders, so they will continue to get a low forward multiple. I think this shows that Chinese companies are lean compared to their Western competitors. The fact that high margins are not uncommon makes me believe that the net margins are real and more likely due to the high barriers to entry in the Chinese markets, not accounting trickery.

The most damning thing that I saw in the NYP article was actually his retraction of an earlier statement:
"Correction: In last week's column a February stock sale by Bodisen Biotech was mischaracterized as unregistered private placement when it was actually fully registered. "

I think BBC was overbought and overvalued in the 20s. Now that it dropped back below 10 I added some shares. Company management has issued its statements that reiterated earlier guidance and maintain that some of the concerns regarding the health of the CEO and the road work going on outside its HQ shouldn't disrupt the operations of the company to materially impact future results.

While this is expensive on a TTM PE basis, I think a decent Q1 report will send this back into the 15-16 area again. Q4 was impacted by additional selling expenses and one-time int expenses on convertible debt conversions, so they may be able to hit their net margin projections for FY06.

Digi, my own estimate for DAAT's Q1 06 would be closer to 0.03 (0.032 out to the thousands decimal place). My guess is they'll be fortunate to match the pretax margins they had last year (12.1%) if GM are under pressure. My numbers assume 6.2MM shares and a tax rate of 40%.

Last year's Q1 eps were 0.025, as you noted, so eps growth could be decent but look flat because of the way that market convention rounds off small numbers at the hundreds decimal place. So, they might perform well in the weakest quarter of their year (Q1) and not get much notice. Q2 not much stronger than Q1, but they might have easier sales comps.

I like your estimate much better (LOL).

DAAT Insider purchase: David Collins (CEO) files a form 4 showing he purchased a modest 2,000 shares at 2.11 on April 13. Not much, but its the first open market purchase I've seen from him.

Stock has perked up a bit today, up 0.06 to 2.24. Recent March sales indicated a modest increase over last year's March sales, but last year included a special sale that wasn't going to be repeated this year:

http://biz.yahoo.com/iw/060501/0125928.html

DAC Technologies Announces Sales for March
Monday May 1, 8:30 am ET

LITTLE ROCK, AR--(MARKET WIRE)--May 1, 2006 -- DAC Technologies (OTC BB:DAAT.OB - News) today announced sales for the month of March 2006 of $1,002,473 as compared to $884,672 for March of 2005. This is an increase of $117,801 or 13%.

ADVERTISEMENT
[0]

David A Collins, Chairman and CEO, stated, "In March 2005 the company had a one time sale of $282,000 of its Sportsman Lighter. Without this one time sale and comparing sales on a product to product basis the company would have had $399,801 sales increase or 66%. This is the first time in company history we have achieved a one million dollar plus sales for the month of March. Also myself and company executives have just returned from a successful trip to China."

------------------------

So far, Q1 sales are 2.8MM, which compares to last years Q1 sales of 2.2MM, up 22%. Margins may be under some pressure this year, so net eps growth may not be as strong compared to prior years when the company was able to leverage its small size to great effect. Tax rates will be similar to last year, so y/y comps will finally be apples to apples.

NCNC Form 144 filed to sell 100,000 shares:

INSIGHT CAPITAL CONSULTANTS INC N/A PA 4/21/2006 N/A Form 144 N/A 100,000

See Vickers for confirmation.

Wow. I guess you can't trust how these insider trading web sites actually report the transactions. Clearly, Zeff is selling shares, not buying them although it is a bit misleading to say that he has "P"urchased shares that are being sold. The tip-off is in the fourth column that asks whether the securities are being "A"cquired or "D"isposed of. There all transactions are marked "D".
http://www.sec.gov/Archives/edgar/data/351789/000095015906000641/xslF345X02/zeff4_ex.xml

Perhaps these are derivatives (converts, options or warrants) of some sort that had to be purchased before being sold? Usually that's indicated by a different symbol....

DAAT's Q4 numbers were impacted by Walmart. Remember this comment?

"The major reason December sales were not as high as we anticipated was due to the fact that reorders from Wal-Mart permanent module items were not in line with retail sales at Wal-Mart, as they had been in previous months. Retail sales of DAC items at Wal-Mart for the month of December were up 45% over 2004, yet reorders were only up 6%. This problem was eliminated in January by DAC working closely with the Wal-Mart rebuyer, turning in reports twice weekly, to make sure reorders are sufficient to maintain store instock at a 97% to 98% level. "

--------------------------------------
Yesterday, this article came out in the WSJ:

Wal-Mart Ripple Effect Strikes Again:
Cutbacks Weigh on Supplier Earnings
By KRIS HUDSON
April 27, 2006; Page C1

If Wal-Mart Stores Inc. just sniffles instead of sneezes, its suppliers sell fewer tissues.

The world's largest retailer by sales is pushing to cut its inventory costs, and many of its suppliers are reining in their quarterly sales and earnings forecasts to reflect the change. Ultimately, suppliers say, the retailer wants to pare $6 billion in inventory costs, or 20% of its year-end total, to boost its margins and returns. Wal-Mart denies setting such a target.

The inventory-slashing effort has jolted some of the biggest names in the household-goods and personal-care industries, many of which rely on Wal-Mart for 10% to 30% of their sales. Among those that have responded by lowering their quarterly goals before reporting their results in the coming weeks: consumer-goods titan Procter & Gamble Co.; trucking firm YRC Worldwide Inc.; and battery maker Spectrum Brands Inc. Feminine-products company Playtex Products Inc. yesterday indicated that Wal-Mart's cuts have affected it, and analysts anticipate that others, such as Clorox Co. and Chattem Inc., a maker of beauty products, fragrances and other household goods, will follow suit.
[Retail Clout]

The adjustments momentarily spooked investors. P&G's stock sank more than 3% on March 14 after it blamed inventory reductions in cutting its quarterly projections for organic growth -- meaning sales growth outside acquisitions -- to a 5% to 6% range from 5% to 7%. The stock has since fallen an additional 3.3%. In 4 p.m. composite trading yesterday on the New York Stock Exchange, P&G's shares were up 74 cents to $58.01.

The stock of Spectrum plummeted 28% on April 6 after it blamed inventory reductions, skyrocketing zinc prices and slumping battery sales in chopping its forecast for second-quarter earnings to three cents to six cents a share from 35 cents to 40 cents. The stock has since recovered by about 4.1%, closing yesterday on the Big Board at $16.14, up 10 cents. Wal-Mart accounts for 18% and 16%, respectively, of sales by Spectrum and P&G.

"We've talked at length about the fact that we had a significant miss in [second-quarter] revenue in North America related to very tight control over inventories by some of our customers," Spectrum's president and chief operating officer, Kent Hussey, said at an investor conference earlier this month.

The reverberations of Wal-Mart's inventory cuts underscore the retailer's heft in the U.S. economy and with its suppliers. The Bentonville, Ark., company slashed its inventories in the mid-1990s, leaving its suppliers scrambling for several quarters to recover.

Even if Wal-Mart's latest cuts mean the retailer will order only 4% more merchandise from a given supplier this year instead of an anticipated 5% increase, that seemingly minor cut could significantly change the supplier's outlook. "Since Wal-Mart is such a big customer for these guys, that can move the dial for them in terms of their [quarterly] plan," said Tom Swoffer, a portfolio manager at investment-management firm Wentworth, Hauser & Violich in Seattle whose funds include shares of Wal-Mart suppliers PepsiCo Inc., P&G and Estée Lauder Cos. Wentworth manages $8 billion.

Some Wal-Mart suppliers have proved more resilient. Snack maker Hershey Co.'s stock sank 1.8% on April 20 after it reported "modest" first-quarter sales growth due to factors including inventory reductions by major customers. However, Hershey's stock has since gained 7.6%, closing yesterday on the Big Board at $53.52, $1.23 higher. Some suppliers say Wal-Mart gave them ample warning to prepare for the reductions, and they set their initial 2006 sales projections accordingly.

The inventory pullback reflects Wal-Mart's strategy to cut its costs and widen its margins by pruning the offerings in its stores. Wal-Mart is revamping its distribution system to allow more frequent delivery to its stores of fast-selling items such as paper towels and light bulbs, thus fueling sales gains without stockpiling inventory in stores. Wal-Mart also aims to cut any inventory in its stores that isn't on its shelves. That includes inventory in back rooms, on overhead shelves and in off-site warehouses near the stores.

Suppliers say Wal-Mart executives in January outlined a goal of paring up to $6 billion in excess inventory. Wal-Mart denies setting such a target and declined to make executives available to comment. Wal-Mart's chief financial officer, Tom Schoewe, has said the retailer is striving this year for its inventory growth to amount to half of its sales growth. In the past two years, inventory growth has nearly matched or exceeded sales growth.

As it whittles its extra merchandise, Wal-Mart still is determining which offerings -- called stock-keeping units, or SKUs -- in each category sell best in each store. Once it has made those determinations, Wal-Mart might start eliminating SKUs, analysts say. Adrianne Shapira, a Goldman Sachs Group Inc. analyst, predicts that such eliminations will begin in a year or two. She rates Wal-Mart's stock "outperform" and predicts it will reach $53 within 12 months. Goldman has done business with Wal-Mart in the past year.

Chief Executive Lee Scott said earlier this month Wal-Mart isn't dropping SKUs.

"It may take Wal-Mart a while to get through it, but I think it is going to be a one-time hit for most suppliers," said Bob Millen, a portfolio manager at Jensen Investment Management, an investment-management firm in Portland, Ore., overseeing $2.6 billion. His funds include shares of P&G, Colgate-Palmolive Co., PepsiCo and Clorox.

--------------------

Comment: If sales continue to be strong, then this Walmart inventory adjustment will smooth out over time and could perhaps aid DAAT's Q1 or Q2 revenues if Walmart draws down on already low inventory. It will be interesting to track re-order patterns this year from Walmart.

Recent 8k filing from EDAC makes for interesting reading....big shareholder and (former) board member resigns and doesn't mince any words about why:


March 9, 2006
Mr. Glenn Purple
CFO
Edac Technologies
Dear Glenn:
I am formally tendering my resignation from Edac Technologies Board of Directors and relinquishing my role as Chairman of the Compensation Committee.
My decision is based on two items my fellow board members have repeatedly refused to address:
1. The board has discussed hiring a full time CEO for over two years. Instead the company has continued to employ Dominic Pagano for approximately two days a week at $180,000 per year. Despite repeated assurances by Chairman Daniel Tracy that this subject would be addressed and human resource firms brought before the board to discuss this situation, Mr. Tracy repeatedly did not follow through even though board resolutions had been passed to this effect. Besides being ineffectual as chairman, he has on his own initiative seen fit to not follow board wishes. The full potential of Edac Technologies will not be realized until a full time CEO is hired and changes are made to the board, in particular, Mr. Tracy.

2. Shareholders votes under Edac Technologies present by-laws in effect mean nothing. The company employs plurality voting which means if a director gets one vote he is re-elected. The form of voting which over two hundred companies including Intel have adopted is majority voting. Under majority voting a director must receive over fifty percent of the voted shares to be re-elected. Edac Technologies board is not willing to get in step with the growing trend in America. Instead they are protecting their positions and not letting the shareholders vote as to who is on the board. As a shareholder with over 500,000 shares, I am outraged by their protectionism as would I believe a much smaller shareholder. The Edac board has steadfastly refused to address this gross injustice. Shareholders are being “screwed”. I have tried to change this injustice for over two years. It is time for other shareholders to express their indignation. In summary, I urge the board to place a proposal on this year’s proxy statement to allow the shareholders to vote on a majority voting rule.
Edac’s most valuable resource is it’s wonderful employees. With a full time CEO and an effective board, Edac’s stock will continue to grow. Without changes at the CEO and Chairmanship level, it will stagnate at these levels. My opinions are in part based upon twenty years in the investment business. It is time to give this company back to the shareholders through majority voting.





I wish all my friends on Edac’s production floor good health and a bright future.
Respectfully,
/s/John Moses
John Moses

-------------------
Moses had been a steady seller of shares after his resignation from the board. Could be a signficant hurdle to overcome if Moses really gets serious about unloading.
http://biz.yahoo.com/t/97/4687.html

Hweb, I've been looking at EDAC this AM. Any guess as to the tax rate they'll have to use for FY06? They appear to have run out of their valuation allowance, which means they should be paying closer to a 35% rate, but they may still have some left to lower the rate.

Either way, EDAC had gains from debt forgiveness and tax benefits last year (FY05) that won't be repeated in FY06. Thus, they'll have some tough bottom line comps. Not fair to compare that perahaps, but as a result the forward PE may not be as low as you think.

If we were to use a 35% rate and back out for one-time gains, then EDAC earned 0.30 on a pro-forma basis in FY05. TTM adjusted PE: 14x. Not that far out of line with other small companies supplying parts for airlines. What do you expect the company to do for sales growth in FY06?