Dow Jones 11417.43 +68.88 5:31 am PDT, August 21, 2008 NASDAQ 2389.08 +0.00 For info, visit access.smallcapnetwork.com S & P 500 1274.54 +0.00 Change your subscription status here Russell 2000 731.60 +0.00 VOLUME 08 : ISSUE 74 Cashin' In On The Ugly Side of Wine For centuries wine has been a profitable industry. In fact, wine so engrained into our society now, the Wine Institute (yes, a legitimate organization) estimates wine sales totaled $26 billion in the U.S. alone a couple of years ago. That's a lot of dollars up for grabs. Of course, where there's money, you'll eventually find crooks.  The crime - and the potential profit if you can prevent the crime - is counterfeit wine. If the industry experts are right in their assumption that 5% of wines are fakes (i.e. the wine isn't what the label says it is), then about $1.3 billion worth of sham wine is purchased each year in the United States.  Needless to say, that's not good for legitimate vineyards; a marred name in the wine industry is the kiss-of-death. As such, I think these wineries are going to be willing to spend good money to make sure they can demonstrate the wine in the bottle is the real deal.  Thus enters Applied DNA.  I'm not going go into my whole background story again about who Applied DNA (OTCBB: APDN) is and what they do. Here it is in a nutshell - they've developed a way to identify counterfeit goods by looking for a particular strand of plant DNA. As you can imagine, it would be virtually impossible to replicate the company's DNA. Therefore, it can't be 'beat' by even the craftiest of counterfeiters.  Did you catch the key tidbit there? Applied DNA's technology can identify a specific strand of plant DNA. What is wine ultimately made of? Grapes. Yes, Applied DNA's BioMaterial Genotyping ability will provide a way of determining where a wine came from, geographically. It doesn't get any more bullet-proof than that.  The press release also mentions the other tool they'll be able to offer - a label for the outside of the bottle rather than a test for the contents inside the bottle. I suspect the exterior label will look and act a lot like the anti-counterfeit label we've already seen Applied DNA provide for Jaguar and other manufacturers.  Very cool stuff, and as the wine industry continues to attract new fans, the prevention of counterfeiting will become critical to vintners' and retailers' credibility.  So, I'm back to something I've said the last few times I've looked at Applied DNA ...there's a market for this product. They posted sales of $252K last quarter - the fourth straight quarter of increased revenue, and more than twice as much revenue as three quarters earlier. Now you can add the wine industry to the list of potential buyers.  Anyway, the reason I bring it up at all is not to preach about the merits of authentic wine. I just wanted to let you know Applied DNA's CEO James Hayward was going to be interviewed on NPR's 'American Public Radio's Marketplace' on Friday at 6:30 pm. Check www.npr.org to find your local station. Or, you can hear it from the company's website, www.adnas.com, after NPR airs the interview.    Just Goes to Show You, Advertising Works I'm not surprised to be telling what I'm about to -I'm just surprised to be telling you so soon. It was only a week and a half ago I was writing that SpongeTech Delivery Systems (OTCBB: SPNG) was starting a nationwide television commercial campaign to kick-start sales of their 'Uncle Norman' pet bath sponge. Today I'm telling you something even more exciting - it worked. The initial order placed in April (before the product even launched) was for $7.5 million. In the last few days - since the ads started - $3.5 million worth of new orders have been received. Like the press release said, the company can't tell us many of the details. I'm not sure why, but I suspect it has something to do with vendors not wanting to share competitive information. Fair enough. What I'm floored by is the speed with which this all happened. One week, and we already see $3.5 million worth of new orders? I knew the pet business was a booming one, generating $41 billion worth of sales in the United States last year. I'm just surprised how quickly SpongeTech was able to carve out a big hunk of that pie. For those of you keeping score at home, this should put the 12-18 month sales backlog somewhere between $34.2 million and $37.7 million, depending on how many sponges they've shipped out since August 8th. Also for those of you keeping score at home, the market cap is still right around $13 million. If you're familiar with the concept of price/sales ratios, you'll know that's SpongeTech's got a wildly low one. On the flipside, I know a big dose of potential dilution has made some of you nervous (me included), as they've financed the marketing effort via issuing stock. In their defense, the marketing effort has clearly more than paid off. It's still no fun for an investor to see their position diluted though. That said, I think I have the pinnacle question on the matter... On a per-share basis, are you better off with the benefits of any dilution, or are you better off without it, knowing they wouldn't have been able to finance any kind of marketing?  Personally I think the upside far outweighs the downside, but that's a decision you'll have to make for yourself. On a related note, I think it's getting close to time for SpongeTech's Q4 and full-year numbers. I'm not specifically looking for revenue and income; I'm quite certain we'll see a whole lot of both. What I'd like to see is some cash. If either of the pending buy-backs are going to happen, they'll need some money to do it. Just for reference, the company said at one time they were looking for sales of about $3.87 million in the fourth quarter. Based on the existing backlog, I'm also looking for nice increases in each of the next four quarters as well.     We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Subscribe Information is power and timely information is profitable. Become informed and profit from Small Cap Network Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. 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All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. Moreover, as described below, this publication accepts compensation from certain of the companies which it features. TGR Group, LLC which owns this electronic publication, also accepts compensation in connection with the dissemination of information regarding the companies featured. This publication should not, therefore, be regarded as an independent publication.  TGR Group, LLC has been paid a fee of $30,000 cash and 750,000 shares of newly issued restricted stock by Spongetech Delivery Systems Inc. for coverage of the Company. Additionally, one of the managing Members of TGR Group, LLC has purchased 150,000 shares of Spongetech Delivery Systems, Inc. in the open market with an average cost basis of $.035 cents per share. 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