Dow Jones 10799.23 +51.87 2:35 pm PDT, July 18, 2006 NASDAQ 2043.22 +5.50 For info, visit access.smallcapnetwork.com S & P 500 1236.86 +2.37 Change your subscription status here Russell 2000 681.64 +3.95 VOLUME 06: ISSUE 54 We've got a lot of news to get through today on three of our companies, but it's all good news. Execute Sports surpassed another sales milestone, this time with flotation vests, Clearly Canadian got a cash infusion to finance advertising and operations during this peak selling season, and Novelos just started phase 2 testing of NOV-002 for treatment of ovarian cancer. In all three cases, each company - and shareholders - stand to gain.   Clearly Canadian Completes $3.3 Million Financing Deal  A few weeks ago in the blog we mentioned Clearly Canadian (OTCBB: CCBEF) was taking measures to secure some additional financing. At the time, the dollar amounts weren't disclosed, although we knew it was going to be a non-brokered (private placement) of CCBEF shares in exchange for cash. At the time, the reported terms of the deal included a per-share price of $2.75. The proceeds from the sale were going to be used to finance marketing initiatives this summer. After all, this is the company's (and the industry's) peak selling period, and Clearly needs to be able to compete. The completed deal would ensure the company has the resources it needs for the summer season.  Well, the details are in. Clearly Canadian has added $3.3 million to its war-chest by selling 1,205,000 common shares of CCBEF. The math does indeed work out to be $2.75 per shares, as originally stated. There was also a finder's fee paid, although the dollar amounts involved in that negotiation are relatively minor compared to the financing deal.  President Brent Lokash restated the funding would be used in conjunction with an enhanced marketing and sales plan. However, although the initial discussion didn't quite define what the financing was specifically intended to do, he laid out a few more details today. His concern was making sure he had the right resources in place to be able to produce and deliver the product now that the marketing effort had whipped up some demand (and a staggering heat wave doesn't hurt sales either). That's fine - you need both pieces of the puzzle to compete. The best sales and marketing in the world is pointless if you have no product to deliver, and having all the product and delivery trucks in the world is pointless if the sales and marketing effort is ineffective. Brent Lokash 'gets' the bigger picture, recognizing the company has to execute near-flawlessly on both fronts. A lot of CEOs wouldn't get it, and drop one ball or the other.  We've said it before, but we'll say it again now - our take on the deal is a positive one. For some companies, a cash infusion is a short-term patch designed to cover up a bigger, long-term problem. That's why we'd be a little skeptical of any corporation - large or small - giving little pieces of itself away (i.e. shares) in exchange for cash...you can only do that for so long. But in Clearly Canadian's case, we have no doubt the money is going to be well spent. Or, maybe we should say it's going to be well-invested in their future, infrastructure, and promotional efforts. Why so confident? Clearly Canadian really is turning the ship around...with real dollars. Don't forget, it was only a few weeks ago in our blog we highlighted a vast improvement in the company's top and bottom lines. The annual operating loss is shrinking, plus, some debts have been restructured which will give the company a little more financial flexibility.  As for the stock, it's been tough over the last month or so. After peaking at 4.55 in mid-June, shares followed the rest of the market lower, reaching 2.90 late last week. However, that's the nature of small cap stocks - the volatility works in both directions. The big runup in early May was unchecked, and ultimately led to a wave of profit-taking. Of course, we can also attribute a large portion of CCBEF's recent ebb and flow to the simple fact that stocks tend to follow the lead of the overall market. The good news is the stock looks like its coming out of an oversold condition, largely aided by support at the lower Bollinger band. Of course, this makes the current price of $3.16 a very palatable entry point. We'll also highlight the recent volume, or more specifically, the lack thereof. The May/June rally attracted a lot more buyers than the number of sellers we've seen since the peak. It's just a not-so-subtle hint that this recent weakness does not express the majority opinion of the market. To view the press release in its entirety: http://biz.yahoo.com/bw/060718/20060718005566.html?.v=1   Novelos Announces Entry Into Phase 2 of Ovarian Cancer Trial  Good news from Novelos (OTCBB: NVLT) today - the company has begun phase 2 of its experimental cancer drug currently just known as 'NOV-002'. The first-ever recipient of this particular treatment is an ovarian cancer patient at the Dana-Farber/Partners Cancer Care. This particular patient will receive a combination of NOV-002 and carboplatin. The combination of the two is believed to be effective for platinum-resistant ovarian cancer patients. Novelos plans to treat up to 25 women as part of the phase 2 research. The treatment is specifically geared towards platinum-resistant ovarian cancer, which as it turns out, is not uncommon among the 20,000 women in the United States who are diagnosed with ovarian cancer each year. Effectiveness results are expected to begin being measurable by early 2007.  If all of this seems vaguely familiar, it should...although maybe not readily. You may recall a few weeks ago when we blogged Novelos' contention for a government contract. The Department of Health and Human Services was - and still is - reviewing proposals for a treatment against Acute Radiation Syndrome (ARS), which would ultimately be the result of a so-called 'dirty-bomb'. Novelos is still in the running for the contract, which as of right now is to be awarded in September. The particular drug treatment Novelos submitted was, you guessed it - NOV-002. And yes, this is the same NOV-002 that's being used in phase 3 trial treatments for lung cancer.  Although it didn't say it anywhere in any press release, you have to look at the bigger picture and the unstated implications. Novelos is putting a lot of effort (and money) into the development of NOV-002. And, in all cases so far, it's been allowed to progress to the next phase of development (the lung cancer treatment is now in phase 3, while the ovarian cancer treatment just went to phase 2). So, not only does the company have faith in the drug, but the FDA - the final authority on whether or not an experimental treatment merits moving on to the next phase of trials - is also satisfied with the progress. Investors should take note of that. With the kind of results we're seeing already from NOV-002, we'd definitely classify Novelos stock as a good risk, especially with shares only trading at 91 cents now.  In fact, it looks like other investors are already thinking the same way. Novelos was up more than 8% today, and made the rally on higher volume. This was the highest volume day we've seen since June 22nd, which was also a bullish day. It also happens to be the second highest volume day ever for NVLT, so yeah, the cat may be out of the bag in regards to NOV-002. To view the press release in its entirety: http://biz.yahoo.com/bw/060718/20060718005068.html?.v=1   Execute's Vest Sales Through Bass Pro Up 63% Year-Over-Year Although ‘firing on all cylinders’ is a little cliché, it‘s still a fitting description of Execute Sports' (OTCBB: EXCS) last few months. The company really is firing on all of its proverbial cylinders. For instance, last Friday, we learned how June's online sales of wetsuits and vests were three times as strong as March's revenues (when the online sales venue was launched). That was announced just a few days after a partnership was forged with Jet Pilot to begin production of a new wake skate line. Before that, Execute saw a 51% (year-over-year) increase in European sales of Academy snowboards. And even before that, we saw comparable increases of domestic snowboard sales. See the trend?  So, it's no surprise today to learn Execute's private-label XPS flotation vest sales through Bass Pro (a leading water-related retailer) are up in a major way. On a year-over-year basis, they're up by 63%. Same-store sales of XPS vests are up 45%. Either way you slice it, it's a huge increase in market share, and should ultimately be a huge win for the company was well as shareholders.  Although shares haven't been well-loved by the market recently, you have to weigh the current momentum against the perpetual improvements in the company's top lines...something's got to give soon. We still suspect investors are going to be impressed by real results, and end up pushing this stock higher with a solid buying effort. In fact, we may already be seeing early hints of such an effort. Although it hasn't necessarily moved higher recently, a clear support base has been established at 23 cents. That just may be the springboard the stock needs, now that it's been in a consolidation mode since late June.  To view the press release in its entirety: http://biz.yahoo.com/pz/060718/102253.html   We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com 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 Follow Up On Immunicon Back in early June, we mentioned that a company called Immunicon (NASDAQ: IMMC) was worth a closer look. We didn't want to initiate coverage on it, as it wasn't quite in line with our usual profile. However, we were impressed by the combination of its bullish chart and growing revenue. At the time, shares were trading at $5.19.  As of now, the stock is trading at $5.75. That's not a bad little 10.8% gain for a month's work, but we wanted to bring it up again today to reiterate the opportunity we saw then. Even on the heels of the gain, we still like the opportunity. In fact, most of the gain came in the last few days, as shares finally made a strong breakout move past $5.40. No, we're not going to start following it now, but yes, it's still worth a closer look.    Oil On The Way Down? Was the Middle East scare a little too much, and a little too unfounded, for the crude oil market to keep pushing at new highs? Crude futures rocketed to $79.50 (per barrel) on Friday, but have been easing back ever since then. Today they fell back to sub-$75. Is this dip an omen of oil falling even further?  From our perspective, yes, oil can - and is likely to - fall back...a lot. A similar frenzy was in place on February 1st, on August 31st (2005), and April 4th (2005), and each of those new peak highs in oil came right in front of an eight point drop in oil prices, and 2 of the 3 instances actually set up a 10+ point drop in crude futures. With gold getting crushed side-by-side with oil today, we have to think the commodities are better poised to slide lower than they are to keep cracking into new high territory.  Our tentative target for crude oil is $68, although that's subject to adjustment as the chart progresses.  Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the SmallCapDigest Email Newsletter on a regular basis. 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