THE STEWART REPORT HOTLINE

Thursday, December 28, 2006

(Next HotLine Recording Scheduled for Friday, January 26, 2007)

“What’s in a name?  That which we call a rose by any other name would still smell as sweet.”

Okay, fine.  I’m not one to disagree with Shakespeare.  But I will tell you this:  If Shakespeare found himself alive today and vested in Amarillo Biosciences, Inc. (NASDAQ/BB: AMAR – $0.63), he’d be the first to agree that the Company deserves a new name – or at least a new Stewart Report.

There’s no arguing that the Amarillo Biosciences I first recommended a few years back is NOT the same Amarillo Biosciences we own today.  Not even close.  Some of the changes have been gradual and have come in fairly even measures.  Others – particularly those of late – have arrived in meteoric bursts announcing profound new uses for the technology, powerful new board members or strategic relationships (both here and abroad) involving entire governments, and some serious coin.

Step by step and leap by leap, we’ve documented and appraised virtually every event along the way.  Net/net, the accumulated evolution has propagated an intrinsic revolution – as well as the recent revelation that, if Dorothy were to click her heels today, she’d realize that Amarillo is not just in Texas anymore.

In 2006, the “International Angle” greatly altered the way the Company operates, with whom it operates, the operation's overall value – and even where there those values are traded.  (In point of fact, there were several weeks – even entire months – when AMAR’s share volume in Germany exceeded the share activity on its own native NASDAQ.)

As we enter 2007, the synergy of the “International Angle” will be even more pronounced – and therefore even easier to appreciate.  I believe this heightened appreciation will equate to share price escalation, as well. Especially when investors see how Amarillo is using U.S. laws to fast-track the FDA process of approving its drugs here in America, getting foreign corporations to pay for and perform clinical trials abroad, and then allowing all concerned to benefit from the drugs at all points in between.  It’s a win/win formula that the Company has learned to replicate and thereby apply more than once.  It’s also one that gives a much clearer perspective to the timing of the overall process, the odds of each approval being granted, the number of FDA trials that can be performed concurrently and the market size and share the Company is likely to enjoy in the end.  Already the figures are in the hundreds of millions. Somewhat amazing for a Company that, as you know, has a market cap of just $15 million.

Before it’s all said and done, I think we’re going to make a small fortune – which is why I also believe that all that’s been done deserves to be retold.  I also believe that, to be right in the re-telling, the story should be told from scratch.  This is why I’ve decided to write a brand new, eight-page Stewart Report on Amarillo Biosciences, Inc., and feature it as a “New Recommendation.”  And, even though it will be an all new research document (outlining what may as well be an entirely new situation), I wouldn’t feel right charging my subscribers for the same stock idea twice. So, I’m charging the Company instead.

The Board of Directors recently approved a reasonable budget to cover my out-of-pocket expenses for the postage, printing, advertising, list rental and other such items – enough to cover a mailing of nearly 50,000 pieces.  They’ll be going out to an entirely new audience, including the respondents to a full-color, half-page ad in FORTUNE magazine (which hit the shelves late last week).

The new Stewart Report will be mailed third-class/bulk in a week or two, so we’re talking about a fairly slow boat.  Also, because the ad appears in the coveted year-end issue (“Investor’s Guide 2007”), this particular FORTUNE stays on the stands until March 18.  Thus, it may take a while for the entire project to fully express itself.  That’s fine by me because, if all goes well, Amarillo Biosciences will attract a whole new tribe of stockholders, and The Stewart Report will be welcoming more than a handful of new members – but not until after we take care of our existing members.

The very first copies of the new Report will go straight from the printing press, to the Post Office, to you (First Class, of course).

I began working on the new AMAR Report just before Christmas, and I’m now about two-thirds of the way through.  At first, I was worried it might read like yesterday’s newspaper to someone who’s already familiar with the Company.  But it doesn’t.  Even for me, it’s a fairly “fresh read,” so already I know that I’m correct in seeing the Company as something that’s entirely revamped for 2007 – and I’m right to market it accordingly.

Another New Year’s item has to do with subscription renewals.

The season for giving has come and gone, along with any hope I might ever have of mending my relationship with every major credit card company in America – unless I get my hands on a few thousand dollars. Fast. The only problem is, I don’t know how many subscribers owe me money, who they are or when it’s due.

You might recall that, last summer, TSR had a massive computer mishap that destroyed two entire data fields, while simultaneously reasserting the Peter Principle.  You know, that’s the one that says a person shall rise to attain their highest level of incompetence. During a full systems upgrade, our “computer expert” (that’s me – or at least, it was me) managed to dump the subscriber information fields that held your e-mail addresses and your subscription expiration dates.  Fortunately, everyone was kind enough to provide us with all of the e-addresses that got erased.  (There was even an upside to the debacle because we received many new addresses from subscribers who otherwise might not have thought to offer them.)  

The only real negative was the self-deprecating experience of standing in front of a mirror long enough to fire J. David Stewart for falsely impersonating a computer geek.  That, plus the expense of hiring an actual IT professional.  You know when you have a good one because you’re 100-percuent sure that none of their salary goes towards wardrobe. Based on that alone, let’s just say that Jim Webb (AKA “Cousin IT”) is a good one.  Since he decided to stay in-house, so has all of our data – except for the subscription info I just mentioned.

Without that, you’re probably curious as to how I plan to bill for services due.  Easy:  I’ve decided to make the best of an awkward situation, simply trust that each of you are still imbued with the holiday spirit (or just plain intoxicated) and do the whole re-subscription thing using “The Honor System.”

At first, the idea of using the honor system to receive subscription monies was a bit perplexing – but only because the friend who suggested the idea used mini-bars to illustrate the point.  That’s when I became concerned.  Not because I don’t trust you.  I do.  Really.  It’s just that I also believe in karma – and therein lies the rub ...  Back in the day, if you were to know how blatantly, thoroughly, efficiently and habitually I abused the honor bar system at virtually every single Hilton between New York and LA … well, let’s just say that you’d be concerned about your karma, too.

I kid you not, I took the American pastime of ripping off the mini-bar and turned it into a major league sport.  I mean, I really enjoyed it.  To this day, I’m not clear as to why – although I do know that my favorite target was the Hilton chain, which I pillaged almost exclusively for at least a decade.  It all started with a complimentary hotel copy of Baron Hilton’s self-serving autobiography, “Be My Guest,” which was only slightly more interesting than the Gideon’s Bible.  More than once, I was forced to read one or the other because Hilton’s sundry shops always seemed to close too early for me to buy a good novel.  As a late night guest, that left me with little else to do except to raid the mini-bar – and then devise new and interesting ways to cover my tracks.

I was quite good at it, too. Someday I plan to publish all that I learned in some kind of tell all book, where I rat myself out completely.  Until then, I should probably consider making amends to the Hilton Corporation.  Then again, perhaps I could use my overt disdain for Paris and that other sister to rationalize my own wrongful activities into pure nothingness?  I’m too conveniently busy to decide, so we’ll just call it “TSR’s Last Rant for ’06” and move forward.  After all – personal karma, computer circumstances and the madness of mini-bars aside – the honor system really does make perfect sense.

Payment for every stock I ever bought or sold was based on little more than a handshake, so why not stock letters, too?  In fact, I like the idea so much, I may very well continue with it, asking members to re-subscribe at the end of each year – but only if they feel they owe money. I’ll just pretty much leave it at that.

Alright then.  Shortly after January first, look to receive the new Stewart Report on Amarillo Biosciences.  Enclosed will be a subscription envelope that you can return to me, if appropriate.  As a small thank you, existing subscribers will be given a $10 discount on a one-year membership.  Benefits are basically the same.  I will never write just for the sake of writing – meaning that, if you get a new Report, it’s because I have a new idea, not just a deadline.  

At present, I have two very good companies that I’ve been following for a while.  One is a local motorcycle manufacturer with strong ties to companies like Ford and International that might lead to expansion into the marine engine sector.  That could be a good one.  The other is a new company in the throes of organization.  Its focus is on nanotechnology, which is easily one of the most important sectors of the new millennium.  If this one is properly structured, we’ll likely run with it.  If not, we’ll just have to find another one because I feel half naked not having a nano deal in our portfolio.  (I considered a company that makes electronic alarm systems for hotel mini-bars, but …)

As for the stocks we hold already, paid subscribers will continue to receive periodic HotLine Updates (a minimum of one per month; more frequently if events necessitate).  This information will continue to be available in the format of your choice – i.e., via e-mail, or by dialing the 24-hour-a-day telephone HotLine.  Either way, I’ll usually follow with a printed version by U.S. mail, just as we began doing in the second half of ’06.

The only real change to the HotLine will be to the pass code(s).  The access number for the audio line will be changed in mid-January, just before the next HotLine.  It’s likely that a pass-code system to protect the HotLine will be incorporated at The Stewart Report’s website as well.  Regardless, whatever you need in the way of access information will be provided before Friday, January 26 – the date chosen for the next HotLine.

As for this present one, I have nothing new to report on International Card Establishment, Inc. (NASDAQ/BB: ICRD – $0.23) that hasn’t been said already – except to reiterate that, thanks to the successful restructuring efforts of 2006, ICRD enters 2007 as a very straight-forward, reasonably predictable business opportunity. That should translate into a stock that will probably double in price well before summer.  I fully intend to include ICRD in the new Report as an “update box” for the benefit of the new subscribers, and currently rate the stock as a Strong BUY.

Emergency Filtration Products, Inc. (NASDAQ/BB: EMFP – $0.46) is not so easy to call.  Everything is still up in the air as to FDA approval of the filtration technology – not to mention the ongoing debate as to the value of the Company’s receivables.  However, I do have a pair of observations that might be of value in the next few weeks:

1.  A few days ago, when I noticed the volume rise on no real news, I was told that Austin had started buying again. I can’t speak for his motives, but he is very wealthy, highly informed and rarely wrong.

2. With a 52-week high/low of $2.14 and $0.40, respectively, you can be fairly certain that tax selling has been a large factor in recent weeks.  This highly seasonal (and sometimes irrational) phenomenon lifts tomorrow, which is a big part of why I’m providing this HotLine one day early. BUY a little stock – and then say a little prayer.

On behalf of Larry (the Rabbit) Spears, Charisse (the daughter Stewart), Cousin IT and myself, thank you for listening, for subscribing and for re-subscribing, too.  And, in the New Year, may each of you enjoy the proper health and enormous wealth that American-style capitalism makes so entirely possible!

J. David Stewart

Analyst and Publisher, The Stewart Report

 

Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Any opinions expressed herein are statements of our judgment on this date and are subject to change without notice. Acting as an investor, and also as a consultant to the Company, David Stewart purchased 100,000 shares of AMAR restricted under Rule 144. The holding period expired in August making them free-trading, although he continues to hold. He also bought 100,000 shares of ICRD governed by Rule 144 and remain restricted. He plans on buying shares in EMFP in the open market shortly after this Report is issued to subscribers. Affiliates of The Stewart Report may also have additional long or short positions in these and other securities discussed herein, including warrants and/or options, and may buy or sell same at their own discretion. This report contains or may contain forward-looking statements within the meaning of the "safe-harbor" provisions of the US Private Securities Litigation Reform Act of 1995. This report is intended for informational purposes only and does not have regard for or take into consideration the reader's investment objective, financial situation or suitability for this security. Consult with your financial advisor and perform your own due diligence. Copyright © The Stewart Report 2006/2007.