Union Dental: The Best Deal on the Board at Two Cents?

A conversation with an interested investor a few days ago led me to a pretty interesting question: could Union Dental Holdings Inc. (OTCBB: UDHI) really be one of, if not the most, undervalued companies on the board priced around $.02?

While I have no claim to an elite methodology for scouring the OTC Bulletin Board for every company at two pennies, nor the time to conduct and report on a complete evaluation, what I can do is go with what I know, which when it comes to the bulletin board, happens to be more than many.

While we found a plethora of organizations around $.02, some with real revenues, and a boatload of others characterized as what we like to call “story” companies – UDHI is one of the few, if any, we found that has a perfect combination of: significant historical revenue growth, a proven business plan that is being executed to a T, and a management team that has made the acquisitions and relationships necessary to not only tell the story, but live it.
So here's the quick and dirty on the huge upside here:

1. Current Operations Are Facilitating Steady Growth

UDHI reported revenues of nearly $745K for Q2 ’07 in their hot off the press 10-QSB filing – marking both a 4th consecutive quarter of growth and an increase of more than 43% over the corresponding period during last year.

In addition, Union Dental continues to expand its dental network and generate increasing sales. This advancement facilitated an improved net loss per share figure from (.02) in Q2 ’06 to $0.00 in ’07.

2. Management Buying Shares like Wildfire

President/CEO Dr. George D. Green has literally put his money where his mouth is, building a nearly 30,000,000 share, or 50% ownership position in Union Dental Corp.

3. Big Move Should Facilitate Near-Term and 5yr. Growth of 400% and 2400% Respectively

UDHI just announced plans to execute a $10 million acquisition of the grand daddy of all dental practices, check out past blogs for more info. The move will essentially make Union Dental cash flow positive and grow revenues from roughly $2M to $10M with five year revenue potential of nearly $50M.

4. Enormous Upside Potential

To totally comprehend the size of UDHI’s legitimately addressable target market, in the U.S. alone, we think it may be helpful to take a look at the sheer size of some of the company’s labor union clients:

Communications Workers of America (CWA) - (700,000 members)
International Brotherhood of Electrical Workers - (IBEW) – (750,000 members)
United Association of Plumbers and Pipe Fitters (UA) – (300,000 members)
Association of Flight Attendants - Communications Workers of America (AFA-CWA) – (55,000 members)

Bellflower (’06 adjusted EBITDA of $521,000) aside, if the company is able to double its local union client base with the Communications Workers of America (CWA) over the next few years, bringing adoption rates to approximately 20%. CWA contracts alone would provide access to a market opportunity in excess of $1 billion. Since union workers typically receive only $1,500 in annual allowable dental expenditures - a 30% discount, which UDHI can provide for dental prosthetics discount pretty essentially brings any worker in one of UDHI's coverage areas through the door. How’s that for potential?

XKEM vs. UDHI

For the sake of today’s discussion, let’s take a look at Xechem International, Inc. (OTC BB: XKEM - News). Since I’ve conducted a great deal of due diligence on the company in the past, am fairly well acclimated with their business plan and historical performance, and shares trade at around $.02, what the heck. For the record, XKEM has built a massive following of investors and traded on volume of 4,337,142 on 8/13.

How about this for a sexy story? XKEM is strictly focused on commercializing NICOSAN™, a drug for the prophylactic management of Sickle Cell Disease (SCD). The disease is most prominent in Nigeria (home of more than 4 million SCD sufferers) and therefore XKEM has a deal with the Nigerian government that has helped secure funding for an initial production facility.

The Bottom Line:

XKEM is selling limited quantities of the drug from its state-of-the-art R&D scale facility and has not logged more than $202,000 in revenues over the past three years. The company also had a net income applicable to common shares of ($3.2M) as of the last quarterly filing.

While XKEM has recently received the funding required to by the company’s account “purchase the U.S. manufactured pre-fabricated corporate offices, warehouse, plant equipment and machinery needed by Xechem Nigeria to establish a state-of-the-art facility in the outskirts of Abuja, Nigeria, which is slated for completion during the fourth quarter of this year.” - the only problem is that this means more debt and more potential dilution AND many more facilities like this will be needed to achieve even 25% penetration of Nigeria’s SCD sufferers.

While I like XKEM as a long-term investment, in my opinion it still remains a “story” company. If I’m looking for some returns in the near-term versus the next 5-10 years, I’m buying UDHI. Furthermore, a quick peek at shares out pushes the weight even more of UDHI’s favor (60.8M vs. 1.64B)

The Wrap-UP

Quite similar to the way us humans must first crawl before we walk, and walk before we run – many micro-cap ventures need to gain their footing and build up some steam before achieving their true potential. Although both UDHI and XKEM appear to be doing so, Union Dental is creating real value by the day. Check back on the Blog for more comparisons in the coming weeks. Got a comp that you’d like to see our opinion on? Feel free to email us with any requests.

Labels: Union Dental Holdings Inc.

It is a bit difficult, after years of investing in start up and small cap companies, not to look at the world for the demands that are burgeoning and whether or not they are being met by the current market.

I constantly enjoy seeing an ingenious product or service or, even better, a dramatic improvement on a service or product. This business side of me has a constant eye on developing trends and markets being tapped or untapped, and then promptly puts my foot in the door. This weekend was no exception.

DineWise On The Rise

Labels: DineWise Inc., DineWise., DWIS, DWIS.ob, Nighthawk Systems, Nighthawk Systems Inc., NIHK, NIHK.ob, OTC BB: DWIS, OTCBB: NIHK

Its a busy week here at MicroStockProfit. With the end of earnings season, good press from portfolio companies and summer's end nearing, we have a lot to share.

Leading off with some big corporate news is SuperClick, Inc. (OTCBB: SPCK) is now the brand of choice for major hotel properties worldwide. Announcing an initial 1,000 plus room contract this morning with a very prestigious Asian brand, SPCK is gaining a very promising early entrant position in the world's fastest growing hospitality market.

With their hooks now firmly in the flesh of leading hoteliers on at least three major continents, the $2M in revenues logged during the first half of the year could seem nominal once year-end filings become available.

Forget Vegas, Growth's in the Far East


By every account, the Asian hospitality market is thriving unlike ever before. As evidenced by the chart below, Tourism in Asia outpaced that of other key regions during the winter months. With the number of hotel rooms in APAC expected to surge from about 1.8 million to nearly 3 million over the next two years (Ashok Kumar of New Media Systems) and industry organizations such as the Hospitality Sales & Marketing Association International pushing for a standardized Asian hotel rating system, the region needs exactly what SuperClick provides. And they need it yesterday!

Whether Beijing or Boston, Monetizing Web Traffic

Whether it's Beijing for the 2008 Olympics or a gambling junket to Macau, people are visiting the APAC region in droves, and just like in the North American marketplace we are so well acclimated to, high speed Internet access is a necessity.

Fueled by the investment dollars of some of the Middle East's deepest pockets and biggest oil industry tycoons, it appears the growth has just begun. Commenting on this, Tim Hansing, Senior Vice-President, Acquisitions & Development of London and Dubai listed Kingdom Hotel Investments (KIH) recently stated in Gulf News Report "Capital flows from the region to emerging markets have just begun and hospitality sectors in these markets are likely to attract a significant portion of these investments. The Middle East capital is not any different from capital from any other part of the world as most investors are just seeking opportunities and maximum returns,"

One fact mentioned by Hansig in the above article that sent me for a loop is this: "Asia, particularly China has huge investment opportunities for strategic investors looking for attractive investment opportunities in the hospitality sector. With more than 47 international airports currently under construction, we expect an all-round boom in hotels and hospitality business,"

This wouldn't have hit home so hard if I hadn't seen mention of it on TV the other day. In a piece regarding the horrible state of our air traffic control system, it stated that our country hasn't developed one - that's right ONE - new International airport in years ( I believe Dallas - Forth Worth back in '74). If they are investing the resources to build these airports and resorts, you better believe they have some pretty solid incentive.

Just the Tip of the Iceberg

One comment in today's release by CEO Sandro Natale is that SPCK expects to announce further penetration of the APAC region during the second half of the year. If the company is able to leapfrog any potential cultural and regional differences and provide the same high level of service now provided to North American and European clients; I wouldn't put my money against Asia-Pac becoming the bread winner, sooner rather than later for SPCK, at least for the near term.

Standards = Cash Flow

As mentioned above, the powers that be in the hospitality industry, namely the Hospitality Sales & Marketing Association International (HSMAI) want to make sure that the region is as tourist friendly as possible. They recently demanded, and I think rightfully so, the creation of a governing body to institute and enforce the standardization of services, metrics and ratings for the industry. The body, in theory, would also conduct a dynamic audit of Asian Hospitality practices. Why not? I'd be pretty fumed if I showed up at what I thought was a 4-star resort in Seoul and ended up with in the South Korean version of a Motel 6.

So standards are great for the guest, but, if enacted, they will wreak havoc on the bottom lines of many inefficient hospitality organizations. Although SPCK isn't in the business of making aesthetic improvements, the company's impact is felt at the client's bottom line, and that is why we expect such great things going forward.

Superclick - An Easy Sell

Now with a foot in the door to an explosive market opportunity, SPCK will soon have a complete APAC install under its belt, a very favorable bargaining chip going forward.

Add into the mix the fact that , SPCK sales reps can stroll into their hotelier of choice and inform the manager that a 100 room property can realize a 455% return on investment (ROI) in just two years after deploying its patent pending Media Distribution System (MDS) - not to mention the other extensive benefits of its products and services - and increased sales seem like a no-brainer.

In the midst of SuperClick's ongoing Asia- Pacific expansion it's easy to lose sight of the rapid progress being made stateside and just across the pond with big names including Four Seasons Hotels & Resorts, Swisscom International and Transbeam Inc.

Doing so could prove burdensome on the bank account, particularly since shares have trended upwards over the past few months, from less than $0.05 to nearly $0.25, before SPCK even tapped into the burgeoning Asian market.

Labels: Asian Hospitality, Asian Tourism, OTCBB:SPCK, Superclick, SuperClick Inc., SuperClick Inc. (OTCBB:SPCK)

With recent studies indicating that low-carbohydrate/smart carbohydrate dieting is not linked to increased cardiovascular risk and also that vegetable based low-carb dieting is associated with a 20% - 30% reduction in heart disease risk – the low-carb market is experiencing a paradigm shift.

After assessing the market opportunity and immense customer demand relayed through a company sponsored poll – DineWise Inc. (OTCBB: DWIS) recently announced the addition of Low Carb chef prepared meals to their nutritional product line.

At its peak, Opinion Dynamics (ODC) estimated that as many as 16% of Americans were on some sort of “low-carb” diet in 2004. Most research that I have seen since pegs that percentage at around 10% or 11% today.

One major factor that led to sales declines for many low-carb offerings was a lack of consumer interest in specialty foods designed to serve as an alternative to high-carb foods. This is where DWIS is well poised to chip away at the market and capitalize on consumer demand for tasty, yet healthy dining options.

Smart Carb, Not Just Low-Carb

A key point highlighted by many dietary experts is that Americans have been historically poor in their selection of carbohydrates, often passing over steamed veggies for French fries. By providing a healthy low-carb offering, DWIS has positioned itself in yet another very lucrative and under-served market.

In a time where even Mickey D’s and Michelob are making a push to meet customer demand for low-carb offerings and the nation is spending billions of dollars on said offerings, DWIS is developing a quite unique position in a very lucrative market.

Making Life Easier For Mom

So how does the working mother accommodate the needs of a family with varying tastes, diets, and schedules – while preserving some essential “family time” at the dinner table June & Cleaver style? DineWise Inc. can help. The DineWise ® brand, which has experienced record growth in 5 consecutive quarters now meets the needs and pleases the pallets of just about any type of consumer.

From Diet to Lifestyle Choice

After being flooded with specialty/replacement products, the market has felt a push back from consumers. Tired of bars, shakes, and crappy microwave dinners, consumers want to eat the foods they desire. Even those with the most commendable willpower often fall off path after a period of time due to the monotony of many diets.

Consumers are still shelling out billions of dollars on low-carb foods and carb counting has outpaced calorie counting in many circles. Also, there is a huge “low-carb” promotion going on right now in supermarkets, in restaurants, online, etc. The bottom line here is that a huge opportunity has presented itself for providers of good tasting, chef prepared, low-carbohydrate selections.

Labels: DineWise Inc, DineWise Inc., DWIS, DWIS.ob, OTC BB: DWIS

Yesterday, I spent my afternoon watching the game and thinking about work. I just hate how that always seems to happen! At any rate, there I am recumbently watching a slow going game on a warm afternoon when I can no longer control the urge and decide to see what was on CNBC.

However, to my utter confusion, the remote was not next to me as it should be. I was suddenly hit with panic. Where could that darn thing be?

Labels: Nighthawk, Nighthawk Systems Inc., NIHK, NIHK.ob, OTCBB: NIHK

With the fall market just around the corner, we are all revving up to lose the khaki shorts and get back into the swing of trading. In the meantime, we are wrapping up our last summer trading month with a few companies showing increased revenue and progressive market strategy - both features of course being highly ranked.

First on the chalkboard today is ATSI Communications Inc. (OTCBB: ATSX). Announcing a 12th consecutive quarter of record revenue this morning, ATSX is proving to be one of the biggest micro-cap turnaround stories of the past 5 years.

Growing Growing Growing

Labels: ATSI, ATSX, TOOT, TOOT.ob, Tootie Pie Co., Tootie Pie Company Inc.

Eagle Broadband Inc. (OTCBB: EAGB) recently announced financial results and briefed the investment community on plans to expand IT Services Sattellite Group operations in Dallas, TX.

Although Eagle took a body blow in regards to its net loss from operations of $7.3M, the company seems to be shaking it off and pushing forward with improved margins, cutting gross margin loss nearly in half (-18%) for the Q on a YoY basis.

Here's a quick look a some recent developments at EAGB and their potential impact on future profitability:

1. Eagle's leading hospitality customer has ordered $6.4 million worth IPTV set-top boxes;

2. OEN has agreed to pay Eagle $1.9 million for a portion of its fiber network over a period of 13 months with a clause for an additional $800,000 if OEN is purchased by a third party or sells the network to a third party; and

3. The IT Services Satellite Group exceeded expected revenue (>$525K) in its first three months and is now expanding in Dallas - a hotbed for high-tech services over the past two decades.
(Source: Federal Reserve Bank of Dallas)
4. Eagle is targeting the emerging (expected to hit $40 billion by 2010, with 50 million subscribers by 2009) IPTV market with what has proven to be, believe it or not, an industry leading solution. In the past few months, EAGB has entered into relationships with:

a. InfoValue Computing, Inc. (InfoValue), an expert in high-performance video streaming that got Eagle's IPTV top-boxes implemented in what the co. describes as "the world's largest hospitality HD deployment" at the opening of the Ritzy Wynn Hotel & Casino in Las Vegas; and

b. SecureNet, LLC - EAGB's 3rd IPTVComplete(TM) customer. Also a provider of High Speed Internet and IP telephone services that when combined with Eagle's IPTV solution, provides a triple-play of IP services designed for the exclusive residential market in the San Francisco Bay Area.

That adds up to quantifiable, potential incremental revenue increases exceeding $7.8M if all goes well, in addition to a number of unquantifiable prospects that could translate into some major sales volume with one big deployment. That would, in theory, take care of the $7.3M net loss from ops reported in Q3 '07.

I'm not saying that this is what's going to happen, but if EAGB does follow through with plans and continues to improve margins, a price of less than $.05 could represent an attractive, relatively low, entry point to consider.

Labels: AMEX: EAG, EAGB, Eagle Broadband, Eagle Broadband Inc.

With the U.S. Dept. of Energy estimating an investment of approximately $412 billion dollars (or roughly the Federal Deficit in FY 2004) will be required to provide enough additional electrical generating capacity to fuel the country over roughly the next quarter century - the need to conserve power is reaching epic proportions.

Another Big (Repeat) Order

In a world where conservation is crucial, Nighthawk Systems Inc. (OTCBB: NIHK) is cashing in on its proven ability to develop Telemetry or M2M products capable of remotely controlling virtually any electronic device in the world - from your kitchen light to a diesel generator.

Announcing a deal today with El Paso Electric (one of NIHK's largest historical customers) as part of an ongoing automation program, the company continues to log progressively larger orders and revenue figures with a growing number of repeat and first time customers. Simply put, business has never been better!

Big Names - Big Contracts

For those of you that are new to the deal, just one year ago, NIHK closed at $.04 (3/31/06). Since then, the stock has trended upwards, reaching a high of close to $.25, before settling back into the dime range where its sits today.

The run up has been by no means artificial. Nighthawk is now experiencing record revenue growth and positioning itself for very bright future in the surging M2M space via partnership with a terrific trio of telemetry partners in Verizon Wireless, American Messaging (formerly SBC Global), and Skytel (a division of Bell Industries).

Improving Utility Efficiencies

As electricity consumption increases (EIA estimates 40% bump in usage by 2030), trumping today's record levels - electrical utilities are still faced with an age old problem: Even as costs skyrocket and demand increases, it's the utility not the consumer that feels the pinch.

This is evidenced by electricity prices failure to keep pace with inflation during 1985-2000 (1.1% vs. 2.4% per yr.) as well as consumption reaching record levels today as average household spending declines.

In effort to optimize efficiencies and not get buried, the industry invests heavily in improvement. With electrical companies expending an estimated $1.9 billion on Demand Side Management (DSM) programs in '05 and saving enough electricity during 1985-2000 to power nearly 74 million average U.S. homes for one year - the willingness to pay for infrastructure enhancement is quite evident.

A Diamond in the Rough?

Although other options exist for quenching America's growing thirst for natural resources exist - such as simply ramping up current production levels and developing alternative/renewable energy sources - becoming more energy efficient is by far the most economical choice and seems to be where the industry is placing its chips for the time being.

This is where NIHK is poised to build a much improved position in the surging M2M marketplace - and remember - electrical utility optimization is just one of many potential cash cow applications at Nighthawk's fingertips (check the 7/11/07 on cell tower automation deal w/Verizon)

With Nighthawk expecting to report "its highest quarterly revenue results in four years, with revenues increasing more than 50% over the first quarter of 2007 and approximately 35% over the same quarter in 2006" and all industry trends pointing towards go, we think that NIHK is on the verge of building a blockbuster M2M hardware company.

Labels: M2M, Nighthawk, Nighthawk Systems, Nighthawk Systems Inc., NIHK, Telemetry