Circle Group Holdings Inc (CXN)

[2bStealthy]

Circle Group at CEOcast...

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Circle Group Holdings, Inc. (OTCBB: CRGQ) $6.10

We have been saying for weeks that functional foods have been one of the hottest investment areas, so it is comes as little surprise that shares of Circle Group Holdings, Inc. have been on a tear recently. The company focuses on acquiring life changing technologies and assisting its portfolio of companies in their efforts to bring these products to the marketplace. It appears to have found a big winner in Fiber Gel Technologies, its subsidiary that owns the worldwide rights to Z-Trim.

What is Z-Trim and why is there so much excitement surrounding it? Z-Trim is a natural, zero calorie fat replacement developed by USDA Agricultural Research Service. The best part is it has no taste. In a series of traditional field and lab focus groups conducted late last year, respondents who sampled FiberGel's Z-Trim commercial fat substitute could detect no differences in taste between foods containing the company's low fat product and high fat versions of the same items. These taste studies included cream cheese, salad dressings, chili, chocolate cake and cookies. The ingredient, however, actually lowers calories and fat in cheese, baked goods, processed meats, dressings, confectionery products and a wide range of other prepared foods without affecting taste or texture. It can also carry other functional food ingredients such as Omega-3 fatty acid, phytosterol, beta glucan and beta carotene as an emulsion to decrease fat and calories and increase insoluble fiber in a va!
riety of products.

While there are many promising ingredients available today, few garner the attention of Nestle, which recently entered into a long-term agreement where the company will supply the Swiss food giant with Z-Trim. This is not its first commercial venture. Recently, the company launched a new line of gourmet cookies, in conjunction with The Cookie Garden, a Des Plaines, Illinois gourmet cookie producer. The cookies have 25% less calories from fat and contain significant levels of fiber. CRGQ has also increased its awareness among consumers with an appearance at HealthExpo, currently going on at the Florida State Fair.

The company also has ambitious plans overseas. Recently, it entered into an agreement with Zurich-based DKSH Group to bring the Z-Trim functional fat replacement products to European and Asian markets. DKSH operates in more than 35 countries and is the leading marketing, services and distribution provider in Asia and a major force in Europe serving the commercial food industries. This agreement provides FiberGel Technologies with a strong global marketing partner with extensive accomplishments in marketing and distribution of functional foods and nutritional supplements gained from more than 100 years experience in these industries.

The company, which was founded in 1994, owns other interests as well, although none that have demonstrated the same potential to date as Z-Trim. The company recently announced the establishment of Z-Amaize Technologies, Inc., a wholly owned subsidiary, to market a new line of Z-Bind industrial adhesive products for the plywood manufacturing industry. The Z-Bind products represent an affordable alternative to plywood manufacturers seeking superior and environmentally friendlier adhesives and are an outgrowth of its research for Z-Trim functional fat substitutes.

CRGQ?s revenues of $530,872 for the nine-month period ended September 30, 2003 represented an increase of 12% over the nine-month period results of $465,443 in 2002. Circle Group reported a net loss of $1.3 million for the nine-months ended September 30, or $0.05 per share. As of September 30th, the company had cash and cash equivalents of nearly $1.7 million.

The stock has generated eye-catching gains. Last year, shares surged from just 3 cents at the beginning of the year, to end the year at $2.08, good for a return of 68 times on an investment. Already this year, the stock has gained 193%. Last week, the stock jumped 37% on record volume. Despite these outsized gains, the company still has a market capitalization of just $168 million, based upon the number of shares outstanding as of its last quarterly filing. Although the company?s valuation has increased dramatically, investors who stay with strong stocks often outperform the market, as there are usually reasons for the big rise. The company currently qualifies for a listing on the AMEX, which could further increase investor interest. With functional foods being one of the hottest areas for growth, a recently announced deal with Nestle and growing interest in Z-Trim, Circle Group shares could head much higher.