June 2006 Vol. 1 No. 1
ISSUE PRICE $6.50
The Fall 2006
Global Equities Conference In Las Vegas
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editor’s letter Welcome to the premier issue of Wall Street Insider. We have created Wall Street Insider because we know that every investment decision is based on your own unique criteria. While the historical performance of a company's stock is one factor, it typically isn't the only one. Is the company in an industry you understand? What are the strengths of the company's management? Do they have a unique niche market? Are their products or services innovative? These are some of the factors that Wall Street Insider was created to address. Most importantly, all of us here at Wall Street Insider are investors too. We recognize the challenge, and excitement, of uncovering a diamond in the rough. Wall Street Insider will focus your attention on smaller capitalization companies. Companies which don't yet have a big following, but have the potential to become a gem in your portfolio. We believe the small capitalization marketplace is where the real value is, and the proof is in the performance. The Russell 2000 index, which tracks smaller capitalization stocks, continues to outperform the larger indices such as the Dow Jones Industrial Average and the S&P 500. Don't worry, we won't be filling our pages with charts and formulas, just common sense reporting designed to inform and educate. Whether you are an individual or professional investor, our goal is to provide you with an inside view of Wall Street: the issues, people and trends that affect your investment decision making. In our premier issue we take a look at online gaming. Is Washington trying to silence the billion dollar marketplace, or do they just want a piece of the action? Turn to page 6 to find out more. We're pleased that Wall Street Insider is being launched in conjunction with the 2006 Global Equities Conference sponsored by Friedland Investment Events. We've included a special advertising section featuring some of the more interesting privately-held and publicly-held companies who are presenting at this Las Vegas event. We look forward to having you as a subscriber, and to your comments, questions and feedback. For a complimentary charter mail subscription to Wall Street Insider please go to www.thewallstreetinsidermagazine.com/subscribe. You can also email me with questions, comments or suggestions at email@example.com.
INSIDE [COVER STORY]
IS GAMING STILL HOT? YOU BET!
ONLINE GAMING - IS THE END NEAR?
Youbet.com® is looking to parlay a strong post position into a long-term win
BLAST ENERGY SERVICES INC.*
Innova Holdings lays foundation for robotics advancements
BRAINSTORM CELL THERAPIES*
A Look Inside: Stem Cell Research
[ F E AT U R E D C O M PA N I E S ]
PRIVATELY TRADED COMPANIES
PUBLICLY TRADED COMPANIES
editor, publisher Dena Szpilzinger
art director FAO Printing
JUNE 2006 INSIDER
THE INTERVIEW: Davis BLAST ENERGY SERVICES, INC. (OTCBB: BESB)
LAST has been pretty busy completing the repairs on its Proprietary Abrasive Fluid Jetting Rig with its patented “down-hole” technology - when is it expected to get out in the field? Rig repairs are going well. It appears that we are on track to complete repairs by the lower end of our announced 8-10 week timeline, which would put us back in commercial operation during July.
Adams and John O’Keefe Co-CEOs entire formation, resulting in low producing volumes. In the case of our AFJ process, no concussion or heat is generated; we cut much larger diameter holes and reach farther out into the formation, which results in more surface area open to production. More surface area means more oil and gas volumes. Why would an oil or gas producer want to “re-enter” older wells - isn’t it more productive to just drill new ones?
What makes your technology unique? We are the first Company to bring abrasive fluid jetting into the small confines of the down-hole environment. Abrasive jetting is a powerful method to cut though steel well casing and into the rock of the oil and gas producing formation. We believe we can perform these down-hole services more quickly, at a lower cost and with higher productive results than existing conventional services being offered in the oil patch. We are a 50% owner of this patent-pending technology, along with our partner Alberta Energy Partners, which primarily includes the down-hole equipment, specialty designed nozzles and the computer control equipment to make specialty cuts in the casing. How is your approach “more productive” than conventional methods?
HOOKING UP: The Blast Rig ready for deployment
The best way to answer that is to describe the process a well goes through once the drilling is complete and it commences completion operations. Conventionally, in order to penetrate the steel casing to allow oil and gas to migrate into the well bore, an explosive device with small shaped charges is lowered into the well and fired-off at the depth of the producing formation. While effectively creating many small holes in the casing and penetrating a few feet out into the formation, it also generates tremendous heat and concussion. This heat causes the formation to “glass” over, leaving only about 30% of the surface area with the ability to produce oil and gas. Also, the concussion can sometimes damage the
No, for several reasons. First, new technologies make it possible for producers to harvest additional reserves from existing wells at very reasonable costs. Companies are generally more successful finding more oil and gas where it has already been discovered. We feel our AFJ application can be used to re-enter an existing well in an old field, open up more surface area in the producing formation, thereby increasing overall production without the need for expensive new in-field drilling programs. Second, with rising prices and increasing public pressure for the U.S. to curb its oil and gas importing, if not its appetite, producers are finding it economically worthwhile to pursue untapped or previously uneconomic resources here in the United States. Finally, recent changes in U.S. tax laws provide incentives to keep smaller oil and gas wells pumping even at lower energy prices. Operators of the nation’s 650,000 marginally producing wells, representing approximately 25% of total U.S. production, receive tax credits of up to $9 per well per day. We believe such credits will be reinvested by the operators toward services such as ours in an effort to increase production and the value of their oil and gas fields. There is no denying that we are deploying this new technology into a very favorable market environment. Now, besides the AFJ technology, you also operate a Satellite Services business. What is that about? Much of the energy business takes place in remote locations, such as the Rocky Mountains, the waters off the Gulf of Mexico, or the deserts of North Africa. These places have no land-based communication infrastructure where operations can have telephones and broadband internet services. Our satellite business provides these services on a mark-up basis for equipment, installation and three year broadband satellite service contacts. The large satellite companies do not find it profitable to work on such an individual, customized approach, so we are filling that need in the oil patch. Our customers include ExxonMobil, BP, Apache, and Noble Continued on p.14
INSIDER JUNE 2006
This advertisement has been approved by the subject company, which has paid for inclusion of it in Wall Street Insider
INNOVA HOLDINGS lays foundation for robotics advancements (OTC:BB) he first half of 2006 has been very exciting for Innova Holdings as we've added another company to the fold and have made strategic alliances with other businesses and academia. The foundation we have laid thus far, we believe, will further enable development of all robotics across the spectrum of industries, potentially leading to newer â€œsmarterâ€? robots that will serve mankind and save lives.
In May, we welcomed CoroWare Inc. as the newest member of the Innova Holdings team. Based in Redmond, Washington, the mobile service robotics specialist has expertise in robotics technologies, Web services integration, and embedded systems development for applications such as recon-
naissance, surveillance, disaster recovery and rescue, and security and surveillance. CoroWare also develops mobile service robotics and Web service application framework solutions in close cooperation with Microsoft Corp.
and with law enforcement agencies in the United States. In the education arena, Innova Holdings has an ally in Embry-Riddle Aeronautical University in Daytona Beach, Florida. This university offers a wealth of expertise in aeronautics, engineering, flight training and unmanned vehicle exploration.
Innova Holdings is dedicated to continue to bring together the visionaries needed to further advance the industry across a variety of emerging markets. We'll also be demonstrating and exhibiting our technologies at the Association for Unmanned Vehicle Systems International Unmanned Systems North America event in
Innova Holdings has an alliance with Mesa Robotics, based in Madison, Alabama Mesa's' rugged robotic vehicles include Matilda and Marv -- unmanned vehicles that have been used in the United States, Middle East and Japan and Afghanistan. The companies are working on integrating Innova Holdings' software technologies with Mesa's full line of unmanned ground vehicles in development of platforms applicable for military, security and civilian markets.
The CoroWare deal also brings CoroWare Test Labs in Pittsburgh, Pennsylvania, to Innova Holdings. CoroWare Test Labs has the facility and a suite of test applications for vendors to test unmanned vehicles for conformance with Joint Architecture for Unmanned Systems (JAUS) standards. JAUS, a Department of Defense initiative, is designed to ensure interoperability and communication standards across the unmanned vehicle domain. CoroWare Test Labs is the sole commercial developer of test services and products for JAUS compliance.
In April we struck a strategic alliance with Mesa Robotics in Madison, Alabama, giving Innova Holdings exclusive rights for sales and marketing of Mesa's fullline of unmanned ground vehicles. Mesa's products are well proven in places like Iraq, Japan and Afghanistan,
PHOTOS COURTESY OF MESA ROBOTICS.
Orlando, Florida, from August 29th through the 31st. Innova Holdings Inc. (OTCBB: IVHG), through its subsidiaries, provides hardware and software systems-based solutions to the military, service, personal and industrial robotic markets.
INNOVA ROBOTICS INC.
INNOVA HOLDINGS INC. 17105 San Carlos Blvd. A6151, Fort Myers Beach FL 33931
This advertisement has been approved by the subject company, which has paid for inclusion of it in Wall Street Insider
JUNE 2006 INSIDER
Cover story Profile
Youbet.com® is looking to parlay a strong post position into a long-term win When Youbet started out eight years ago, “online” gaming was not much more than calling your bets in to a Company operator while watching low resolution, stop and go transmissions of races online. A few generations later - and some hiccoughs along the way and today You Bet is the largest provider of Internet racing content in the country. And the Company does not intend to give up its lead. The Company’s chairman, Chuck Champion, works tirelessly to keep Youbet on course to become a leader, not only in the horse racing sector, but the pari-mutuel* gaming market in general. His strategy is pretty basic offer customers the best product on the market and broaden share through acquisition and new product development. Since joining the Company in 2002, he has ushered Youbet through strategic acquisitions, technological advancement, and exclusive alliances with key industry participants. During his tenure, the Company has introduced numerous proprietary products and services, all designed to enhance users’ experience on the site, www.youbet.com. Youbet’s Players TrustSM revolutionized Advanced Deposit Wagering (“ADW”) by placing player deposits in the custody of a major U.S. financial institution rather than an obscure off-shore bank. The Company’s level of integrity and innovation make Youbet the “go-to” source for horse-racing content, as evidenced by exclusive provider relationships with ESPN and CBS Sports Line.
*In pari-mutuel wagering each patron is betting against all the other bettors for any given event. As each wager is placed, the odds are simultaneously adjusted to reflect the new pool, then broadcast to inform all the participants. Once the handle is tallied and the race is over, the manager secures a fee and the remainder of the purse is distributed to the winners. 6
INSIDER JUNE 2006
THEWEBSITE Designed to appeal to both new and experienced fans, Youbet.com is interactive, highly informative and user-friendly. With a high-speed Internet connection, racing fans can see sharp, clear video coverage of races on their computers. The Company’s proprietary closed loop network represents virtually 100% of the domestic horse racing and a growing field of international offerings. Customers can securely wager on horse races at over 150 race tracks in the U.S., the U.K., Canada, Japan, Australia, South Africa and Hong Kong, from the convenience of their home. Players receive the same odds and payouts they would if they were placing the bet at the window of their favorite venue. Beyond watching and wagering on races, once logged on, users have access to a vast amount of handicapping data; each horse’s history, information on the jockey, the track and the field for each race. Youbet offers members commingled track pools and simultaneous multi-race viewing. They can watch the replay of
any horse’s previous race, and with the Daily Racing Form’s Formulator software they have a library of past performances at their fingertips. Those that don’t want to place bets on the internet can utilize Youbet’s interactive voice recognition telephone system to do the same. The Company even offers player service agents, who are available 15 hours a day, seven days a week to provide technical support and address any wagering or funding questions. This level of ease and sophistication has translated into substantial improvements to market share. The handle processed through the Youbet website increased 25.4%, from $315.2 million in 2004, to $395.2 million in 2005. This growth is largely attributable to the Company’s ability to leverage its propriety database and related mining software, which generates detailed customer analyses including variables such as wagering propensities and preferences. Leveraging this information, Youbet then personalizes its product offerings, contests and promotions, so that they are reflective of each member’s particular profile.
ENDTOEND MARKETPRESENCE In February 2006, Youbet completed its acquisition of United Tote for $31.9 million plus the assumption of approximately $14.7 million of the company’s secured debt. United Tote supplies pari-mutuel tote services to 94 racing facilities in North America, including Churchill Downs and New York Racing Association tracks, and 11 facilities in Korea, Mexico, Spain and other foreign markets. United Tote processed more than $7 billion in wagers in 2005, with almost no overlap with Youbet’s online customers. United Tote’s products and services will greatly facilitate the Company’s goal to become an end-to-end technology provider for the pari-mutuel industry. Going forward, Youbet will integrate United Tote’s betting terminals at racetracks with its online operation. United Tote’s new “F4 touch-screen terminals”, were named by Casino Journal as one of the “Most Innovative Gaming Technology Products” of the year. The company’s FastBetSM, a cashless and ticket-less wagering card, and EnterBetTM, a technology offering that allows easy touch-screen player wagering, are each state-of-the-art for the pari-mutuel marketplace. Finally, United Tote has been quite successful in developing novel, exciting games and contests which Youbet intends to promote heavily. Longer term the Company intends to diversify further, leveraging United Tote’s expertise to pursue other pari-mutuel markets. By broadening its scope, Youbet is securing multiple revenue streams and a greater presence in the market. Continued on p.12
The first online gaming site, a distinction claimed by Internet Casinos, Inc., launched in August 1995 with 18 casino-style games. Today there are estimated to be more than 2,300 Internet gambling web sites throughout the world, offering million dollar purses and a plethora of wagering options, well beyond the traditional sports betting, casino games, lotteries, poker and bingo. In fact, you can place bets online on virtually anything. Want to bet on the outcome of American Idol, odds can be found on BetUS.com, think you can predict who our next president will be go to willhill.com and put your money down. Irrefutably a lucrative business — at least for the house — the United Kingdom’s Betting Office Licensees Association (BOLA) estimate that global gaming, in all its forms is worth about $1 trillion a year. Online gaming represents an ever-increasing portion of that market and interest does not seem to be waning. Internet gambling revenue in 2005 was estimated at $11.9 billion and is projected to double by 2010, according to Christiansen Capital Advisors (CCA). CCA also estimates that nearly 23 million people gambled on the internet in 2005 in some form in over 70 countries. Approximately 8 million of those gamblers were from the United States and 38% of those people indicated they just started the activity in the last year. So who are these online gamblers? a survey conducted by Peter D. Hart Research Associates, Inc., determined the “typical” Internet gambler is a college educated male (68% versus 32% women), under 40, with a median age of 31, making more than $60,000 per year, plays poker and casino games in about equal numbers, and perhaps, most notably, gambles on the Internet not because he expects to make money, but because it is entertaining and convenient. So everything’s rosy, people are having fun, entrepreneurs and stockholders are making money, and analysts are predicting continuous, exceptional growth right? OK, so there is one small bone of contention — is on-line gaming actually legal? Well that’s the $64 billion dollar question that no one seems to have a definitive answer to right now. Continued on p.14
JUNE 2006 INSIDER
Alaron Financial Services offers individual and institutional investors On-line discount equity trading, managed futures products and public and private offerings including; initial public offerings, follow-on offerings, private investments in public entities â€œPIPEâ€? transactions and private placements of securities. Investments in these public and private offerings are speculative and involve a significant degree of risk due to, among other things, the nature of the investments. Investors should have the financial ability and willingness to accept the risks and lack of liquidity which are characteristic of the investments described here-in. On-line trading system response and access times may vary due to market volatility, system performance and other factors. Please note that options and futures transactions are not suitable for all investors. Alaron Financial Services is a member of the NASD, SIPC and a registered broker-dealer. Material on this Web-site is not an offer or solicitation of brokerage services or investment products in any jurisdiction where Alaron Financial Services is not authorized to do business or where such an offer would be contrary to securities laws or regulations of that jurisdiction.
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