THE STEWART REPORT HOTLINE

Interim Subscriber Update for Friday, June 29, 2007

The original “Vision” was to execute an excellent road trip in a fine and worthy road machine. Round trip, it was to cover 3,280 miles and five very large states: California, Arizona, New Mexico, Texas and Oklahoma. The “Mission Statement” – or at least the version of the mission statement offered to the girlfriend – was this: “To travel forth and visit my beloved, fatally ill, gray haired daddy, one last time.” The “one last time” thing was the critical element because it had a “humanitarian” ring to it – and nobody, not even a possessive girlfriend, can argue with a humanitarian mission. Right? … Right.

In truth, my Dad is probably more healthy than I am. Either that, or he’s been dying from the same heart attack for 25 years. Regardless, this did stop the aforementioned girlfriend from accusing me of making the trip to “secure an inheritance.” I wish. 

When a man, now age 69, has been retired since age 44, lived on three continents and in six different nations, excelled at living the good life, imbibed only the best scotch whisky, flown only first class and suffered all of the costs associated with decades of multiple child support and alimony payments … Well, let’s just say there is nothing left to inherit except for some really terrific stories of international adventure and a wicked sense of humor … as well as the honor of being his son. For close friends, this brought forth the obvious question: “If neither altruism nor financial considerations were the motive, what was? 

Answer: The real reason for the road trip was “The Road” itself. For me, “The Road” is the future.

I’ll let you in on a secret. My personal ambition is – within no more than three year’s time – to fully capitalize on the pregnant wins that I believe to be inherent in each of our three stocks: AMAR, EMFP and ICRD. When I (we) cash out, there should be sufficient millions to pursue my third and last retirement, as well as my next and no doubt greatest adventure. 

For me, said adventure will be the creation of a non-fiction book of probable madness stylized after the works of the late, great Hunter S. Thompson. It will be titled, “The Outlaw Driving Manual.” The trip to see my Dad – and also to visit and talk with my Editor and Dr. Joe Cummins, both in Amarillo – was part of the larger “Road Trip.” It will likely be Chapter Six.

“Z” Experience
The car chosen for the event was a 2002 Corvette Z-06. (The “Z” designation is to honor the legacy of Zora Duntoff; originator of the Corvette marquee for GM.) Ostensibly, the Z-06 is just another black-on-black Corvette with red accents – but what lies beneath the hood is a different matter entirely:

It’s a gas-crazy 405 horsepower motor, tied to a six-speed gear box. The fiberglass body panels encompass rare combinations of drilled steel, polished aluminum, titanium and balsa wood, all wrapped in carbon fiber, with F-16 fighter jet technology that provides “wireless” steering and “heads-up” holograms that float in the windshield to keep you informed as to performance. And the performance values are insane.

In short, the Corvette Z-06 was General Motors gift to the little guy.

For just $60,000, Detroit was offering a sports car that was race-track ready right off the showroom floor, complete with a built-in roll bar, “gummy” race tires and track-sensitive suspension that’s every bit as fast as a $260,000 Ferrari Modena. I’m not saying the car is a good investment. After taxes, license, insurance, storage, maintenance and repairs, few cars are. But the Z-06 is a good value. As a private professional investor – investment or no – value is what I look for. Regrettably, so do the police. Apparently, “The Boys in Blue” ascribe a high value to harassment. 

A Profile of American Profiling
Consider this: Between Dana Point, California, and Amarillo, Texas, I got pulled over three times. Not one ticket was written. Between Amarillo and Tulsa, Oklahoma, they left me alone. But on the flip-flop back toward California, I was tagged four more times. Again, they were not able to cite me for any infraction. Not one. Clearly, this was a case of profiling. In retrospect, I would have been better off suffering through the ugly Southern stereotype of being a black man in a Cadillac than I was as the modern stereotype of a white man in a black Corvette. 

More ironic still was a jailhouse conversation I had with an Oklahoma lawman who was curious as to my car’s performance statistics. So I told him: “Zero to 60 mph in just under 4 seconds; 0 to 100 mph in 10.5 seconds; and a top speed of 187 mph.” 

His reply? “Son, knowing that you have a car that’s faster than any police car on the road and just as fast as any helicopter we have in the air, I’m willing to bet that you’re a bank robber.”

Another day lost to confinement.

After seven arrests in three states, there were no convictions. Even without the usual benefit of my Century City attorney, no jurisdiction could find me guilty of anything more specific than being the well-tanned owner of a very fast car who was stupid enough to go through NASCAR country wearing a presidential Rolex, fire-proof Formula One driving shoes and an original Steve McQueen racing jacket. 

I don’t think California license plates helped either. 

By the time I made it to Amarillo, I was very much behind schedule, and my long-standing love affair with “The Road” had soured. So, I ditched the Corvette at the Ambassador Hotel off of I-40, left instructions for my Editor to retrieve and store her for an indeterminate period of time, then caught the last flight westward to John Wayne International – where I finally felt safe again.

He’s Back
So much for this largely uninformative diatribe. You must forgive me, but this piece offers me the opportunity to vent my long-standing dislike for stupid people in general – and law enforcement officials in particular. It also gives me a forum to share my new-found empathy for anyone and everyone – post-9/11 Muslims included – who find themselves being wrongfully “profiled” by the current government.

Lessons were learned. Like I said, these lessons will be thoroughly articulated in “The Outlaw Driving Manual.” All paid subscribers will receive a copy – no charge – as payment (bribery) for enduring this missive without complaint. Putting disappointments on paper is usually an exercise in selfishness. But it can also be exceptionally cathartic. So I thank you. 

Besides, the way I figure it is this: If you’re going to fall off the planet for a month, it’s probably good to offer a reasonable accounting for the period while you were absent – and to let everyone you are responsible to know that you’ve returned. And I have … almost. I am back in the office. However, the HotLine might not be functional until a day or two after you receive this hard copy. After 12 years of continuous service, The Stewart Report’s HotLine service provider went under six days after I left. Fortunately, all of you had nearly a week to hear the previous message (which was also e-mailed and backed up with a hard copy via regular snail mail). 

A new provider has been signed up. And, when we’re back on line with their new system, the phone number [(949) 583-6057] will be the same. So will the current pass code (“63”). 

The website is 100 percent. Actually, it’s 110 percent because now, it too is pass-code protected. At the request of paid subscribers who felt that too much TSR information was available to the non-paying public, we recently modified access to critical links – the HotLine, the “Rabbit Report” and the most recent 8-page Stewart Report. Now, they can only be accessed using a pass code – also “63.”

No Harm, No Foul
Everyone says it’s better to be lucky than good. Personally, I strive to be both. This interim HotLine is a perfect example because, even though I’m a month behind schedule, so are each of our companies. And the real truth is, even if I hadn’t been hung up by technical difficulties and police interference, I’d really have almost nothing to say about our stocks beyond what has already been said – which is very little. There’s been some news – but nothing stellar has been released since I left. In short, I couldn’t have picked a better time to be absent if I’d had an oracle plan for it.

Good, bad or indifferent, that’s the reality of the present flow of information. Frankly (albeit it’s a lame excuse), I think the recent slippage in prices has as much to do with “The Summer Doldrums” as anything. Annually, the doldrums tend to affect non-institutional investments held mostly by small, private investors, who tend to forsake their portfolios to focus on summer vacations, home improvements and the like. Judging by the exceptionally light volumes recorded by each of our stocks during the first days of summer, this may in fact be a legitimate reason for weakness – though I don’t believe it’s one for concern.

The potentially rewarding part is that, within days, I’ll be positioned to write some very specific research documents. Based on the rumors of all that’s now pending, I fully anticipate there will be a need for three comprehensive HotLines over the next 30 days or so – i.e., one HotLine per stock every 10 days. 

If I were to venture a guess, the first HotLine will focus on ICRD. Shortly thereafter, some international news is expected from AMAR. I very much look forward to reporting on that. Finally, we might see strong evidence of the turnaround anticipated from EMFP. 

Using that same order, here’s what I believe to be happening with our companies at this time – as well as what we might expect to see within the next 30 days:

International Card Establishment, Inc. (NASDAQ/BB: ICRD – $0.16)
The meeting originally scheduled for May 10 has been postponed. It’s my belief the Company might have a new credit card in the offing. Something truly revolutionary. I’ve also heard that it was originally scheduled for a May launch date in one state. However, the Company postponed because it saw an opportunity to market the new card in all 50. If true, it’s like the classic fable where the young wolf says to his father, “Let’s run down the hill and get one of those sheep.” The father says, “I have a better idea – Lets walk down and take the whole flock.”

I was basically pleased with the recent financial statements. After special expenses and a one-time-only write off, the bottom line was not able to evidence the after-tax profit I’d anticipated – i.e., ICRD lost a penny per share as opposed to making the penny I last projected. However, year to year, Q-1 did show a 37 percent increase in gross profit. Most importantly, even though the Company sold most of its divisions (and therefore much of its revenues), it still managed to show a noticeable (9 percent) increase in first-quarter revenues – $2.5 million vs. $2.3 million in 2006. Visible too was the $179,000 quarterly reduction in G&A, including $310,000 that was taken away by management, from management, in the form of payroll expenses. My thought was that, if management is essentially working for free, then that means they really are working for stock.. And, if the insiders believe in the stock that much, then so should I. Last Friday, I picked up 20,000 shares at 17 cents. Strong BUY.

Amarillo Biosciences, Inc. (NASDAQ/BB: AMAR – $0.61)
On Friday, June 1, AMAR held its annual stockholders meeting at the same hotel where I left my Corvette – one day later. Blame the Oklahoma Highway Patrol. That aside, Amarillo Biosciences issued two news releases in my absence – one noting an expansion of its clinical test groups, and another updating us as to its studies into Behcet’s disease, oral warts and Hepatitis C – both of which can be accessed from my website. But, if you’d like to know their real value, consider what a subscriber recently mentioned to me. It was his observation that this is the only bio-pharmaceutical he’d seen or heard of that somehow always manages to get somebody else to pay for its clinical studies! His observation is as true as it is profound. When I return to Amarillo to fetch my car back to California, I’ll first schedule an appointment to see Dr. Cummins. Regardless, I still see this stock as an obvious long-term BUY that might also sport some really good short-term potential … especially at these prices.

Emergency Filtration Products, Inc. (NASDAQ/BB: EMFP – $0.41)
I have very little on EMFP beyond my scathing commentary of April 22 except to say that the FDA trials are what will make or break this Company. The FDA trials have not yet begun because the FDA has not yet returned its protocol for testing. Bottom Line: The stock is up 36 percent from last time, but the investment itself remains in limbo. HOLD

Thank you for reading and thank you for subscribing, 

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 earned 25,000 shares of AMAR and also holds 30,000 purchased in the open market. He also bought 100,000 shares of ICRD governed by Rule 144 and remain restricted, and recently purchased 70,000 additional in the open market. Stewart also owns 15,000 EMFP bought in the open market. 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 2007.