THE STEWART REPORT HOTLINE

Sunday, August 20, 2006
(Next HotLine Planned for Sunday, August 27, 2006)

OVERVIEW:
In the financial markets, very few events occur in a regular pattern or with a reliable measure. Quite the opposite. On Wall Street, events of great significance usually come in waves. Relative to all three of our positions, I strongly anticipate the upcoming waves of news to be almost tidal.

It has been a long time coming, so it’s strange that it should all come at once. However, it’s clear to me that each of our stocks is on the threshold of attaining critical mass. Because of this, I believe that we, as investors, are standing on the edge of a great transition. Accordingly, The Stewart Report will accommodate its subscriber/members by transitioning as well. Beginning with this HotLine and continuing on – probably through the next four or five editions – look for a new message every seven to ten days.

This will be necessary because, at present, all three companies appear to be exceptionally close to finalizing a number of long-term efforts. The nature of these efforts varies, of course, from company to company. However, they include extremely important projects like large contract negotiations, the attainment of valuable international trade certificates, independent research reports authored by powerful equity firms, new products that are very nearly developed, millions in favorable funding for research and growth, new patents, new partnerships, etc., etc. In short, virtually everything now presently up in the air is about to land – and land profitably.

At least that’s my sense of it.

Periods such as this are not all that frequent, but they sure are money makers. The last time I witnessed the concurrent gelling of this many events affecting this many of our stocks was probably eight years ago, when Y2K created so many quick opportunities. As a consequence, the companies I followed generated a large and rapid stream of press releases to report on. In the coming weeks, that’s precisely what I expect will be coming from Amarillo Biosciences, Emergency Filtration Products and International Card Establishment, Inc.

If I’m right about all the pending news – and if I allow that news to accumulate – we’ll miss a number of opportunities. Besides, when I allow too many events to stack up, HotLines become a daunting task for me to write – and a marathon event for you to read. So, out of necessity – as well as greed and avarice – The Stewart Report will return to the previously successful strategy of producing brief, but frequent advisories covering all stocks every issue. I’ll begin with your best short-term opportunity:

EMERGENCY FILTRATION PRODUCTS, INC. (Nasdaq/BB: EMFP – $1.10) – STRONG BUY
I can’t believe you guys! I take off to play at Pebble Beach; I’m gone for just a week. And, when I get back to the office, what do I see? EMFP at 87 cents – and for no reason at all. Not a good one, anyway.

My personal paper loss aside, the thing I found most disturbing is that the selling at the non-professional level was largely due to a number of dilettantes who got spooked by some bogus, sour-grapes chat-room comments made on “Raging Bull” – which, in this particular instance, should more aptly be titled “Raving Bull,” because that’s all it was: A bunch of bull!

A small renegade dealer for EMFP, who was retailing masks on the Internet and collecting via PayPal®, came to be in arrears to the Company for approximately $110,000. Fortunately, EMFP’s attorneys were able to put a lien on this guy’s PayPal® account and recover about 90% of the debt. So, what does this character do next? Stupidly, he switches to an inferior mask and sets out to say entirely rude, completely unnecessary and totally untrue things about the Company, its products and CEO Doug Beplate. The Company had no choice but to slap him with a defamation of character suit.

I spoke with Doug yesterday, and he said, “The salad days are behind us. We don’t have to take this crap from anybody. There’s no doubt in my mind we will win the suit, clean his clock and take him for everything he’s got – and then some. For now, the important thing is that we got most of our money back. Also, we have successfully shut him down – and shut him up.”

The timing of this hiccup couldn’t have been worse because it dispersed a shadow of doubt on the Company’s other $3.4 million in accounts receivable. Granted, if the Company was doing $40 million in sales, having $3.4 million outstanding would be no big deal. But, as it stands, for the first six months the Company did just over $4 million, so the $3.4 million is proportionately monstrous. But publicly, privately and in print, Doug, his accountants and legal counsel all agree the receivables are easily collectable and will be paid in full when they are due.

The only reason the amount collectable is such a high percentage of net sales is because Doug thought it was only fair that EMFP grant its international dealers favorable terms. After all, he said, the dealers had been forced to wait for supplies because the Company was slow in making good on the massive overnight influx of orders while it scrambled to tool up its manufacturing effort. That’s now done. Also, EMFP’s dealers were experiencing certain across-the-border paper problems in making their overseas sales legally perfect. In short, everybody needed more time – and EMFP used its new financial resources to provide it.

Bottom Line: One highly superficial setback involving one of its smallest dealers stole the fire from a record-breaking second-quarter and six-month earnings release – even though the fly-sized problem was quickly squashed. No matter. In my mind, it only served to cull weak investors from the herd and create a buying opportunity for the rest of us. Although that buying opportunity was more attractive Friday morning, before the stock rocketed 27 cents higher on more than 600,000 shares, I believe both the price action and share volume validate and vindicate everything I just mentioned. It also serves to signal a clear reversal and a blazing green-light opportunity. BUY this stock – and be neither casual nor tardy in your action. I will personally be a buyer at some time early Monday.

AMARILLO BIOSCIENCES, INC. (Nasdaq/BB: AMAR – $0.80) BUY
By now, I think most of you know this story inside out so there’s not much point in repeating it. Either you get it – or you don’t. Fortunately, in addition to all the new investors and new money derived from sources close to the Company, serious interest outside our group continues to grow. Plus, others are now telling the AMAR story. Specifically, knowledgeable sources say a couple of very large investment firms in New York have taken a keen interest in AMAR’s intellectual property and may be writing it up. I’ve also heard that an enormous, multi-million dollar investment into the Company might be in the works.

If this is true, Amarillo President and CEO Dr. Joe Cummins would have enough money to complete every FDA study he wants. That could greatly expand the overall market for interferon, taking it well beyond Bird Flu to include all of the other diseases – both human and animal – that interferon might successfully address and help conquer.

In the meantime, Joe tells me a recent follow-up study using mice has validated earlier findings by Amarillo associate Dr. Manfred Beilharz confirming interferon’s effectiveness in influenza suppression. The study was conducted at Beilharz’ Nobel Prize winning Department of Biomedical, Biomolecular and Chemical Sciences at The University of Western Australia.

The successful studies should promote more widespread interest in testing low-dose oral interferon as a low-cost preventative measure against Bird Flu – and promote even greater interest in the stock. I, of course, am already interested, as evidenced by my holdings of roughly 200,000 shares – and I encourage you to increase your interest as well. BUY.

INTERNATIONAL CARD ESTABLISHMENT, INC. (Nasdaq/BB: ICRD – $0.18) – BUY
Here, too, I foresee a number of press releases in coming weeks. Most will likely validate the projections and plans outlined in the Company’s two prior news announcements, all of which can now be implemented thanks to ICRD’s successful recent issuance of a non-dilutionary $1 million interest-only note.

Cost-cutting is also in full force, with Chairman Bill Lopshire and all other members of general management limiting their personal salaries to just $3,000 per month – about what a secretary here in Orange County is paid.

The new business plan is now so firmly directed, reasonably financed and entirely doable that, for me, the attainment of recent objectives is a near certainty. Specifically, that means the Company should turn cash flow positive in the current Q3 – and turn the entire operation profitable during Q4.

As for Q2, those numbers should be released sometime this week. Until that information is made public, there’s no point in me phoning Bill – I doubt he’d even he’d answer. No matter. If there are any surprises, they’ll likely be to the upside – and I’ll look forward to reporting them in the next issue.

CONCLUSION:
The current situation is very exciting because the soon-to-be realized scenarios at all three companies are far from adequately reflected in current share prices. Not even close. Individually, each of these companies is engaged in a multi-billion-dollar industry. And yet, the total market capitalization of all three combined is less than $70 million.

It simply doesn’t equate.

Here we are with three outstanding enterprises. Each is highly unique to its own field. Each is selling for a fraction of the capital used in its building process. And all are now perfectly positioned to emerge from the ranks of the “developmental stage” and achieve true “emerging-growth” status. Although each of the stocks is noticeably higher than nearly all of my recommended buy points over the last 18 months, the fact is that all three are today selling for about half their respective 52-week highs.

Times of transition are the best times to buy a company’s shares – and these three should be bought now. Buy all three, as a group, and I’ll bet you will double the value of your portfolio in less than six months.

ONE FINAL NOTE:
If you’re not aware, we’re still trying to rebuild our subscriber/member e-mail list. If you are presently listening to the audio version of the HotLine, please send your e-address to us at StewartReport.com. If you are reading this HotLine on the Internet but would also like access to the audio format, kindly dial 949-583-6057 and enter the pass code at the prompt. That number is currently 66.

As always, 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. J. David Stewart owns 150,000 common shares of International Card Establishment, Inc. David has also subscribed to purchase an additional 100,000 ICRD shares Restricted under Rule 144. J. David Stewart also owns 100,000 shares of Amarillo Biosciences, Inc., common stock and another 100,000 shares of Amarillo Biosciences Restricted under Rule 144. J. David Stewart and affiliates of The Stewart Report may also have other 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.