The best 19 cents you’ll ever spend… (Patrick Cox DNA Security Tease)

Sniffing out the company recommended by Cox's Breakthrough Technology Alert, special report "Harnessing DNA to Fight Counterfeiting and Build Lasting Wealth"

By Travis Johnson, Stock Gumshoe, December 12, 2012

The odds will tell you that the stock we’re going to unveil today is probably a terrible stock to buy at the current price, since it’s a penny stock that has already been driven up by Patrick Cox’s subscribers and is getting a lot of attention for recent news … but we’re going to reveal it for you anyway.

That’s our disclaimer up front: Cox tells us that he’s limiting this report to 400 subscribers at $2,000 a pop, though I presume that he has also already told his existing subscribers about it. And I certainly hope he has more than 400 existing subscribers. They’re using this pitch to sell his Breakthrough Technology Alert for $2,000, so that merits attention in itself — I’ve given Agora Financial a hard time in the past for setting a falsely high retail price and always offering a tantalizing “discount” on their newsletters, and I’ve never before seen a promotion for Breakthrough Technology Alert where they charged more than $800, so I can no longer say that they’ve no longer advertised the letter at the full retail price.

Does that mean they’re genuinely more excited about this stock than past ones? That I don’t know. But we can at least name the stock for you, and trust you to be adults and make rational choices with your money.

The ad didn’t catch my eye last last week when it started running, but that’s just because I was traveling — it’s exactly the kind of thing that we usually love to uncover for you, so I’m sorry that we didn’t do so with a bit more time before Cox’s teased “deadline” of … today. Here’s how he puts it in the PS:

“I expect major news about this company’s future – news that may push their share prices 1,000%-3,000% more than what they are now – as soon as December 13th… That’s less than a week from now.”

So yep, that’s a LOT less than a week from now. It’s really quite completely now-ish.

But that said, what’s the stock? We’ll be quick so I can send this to you as fast as I can. More clues:

“Shares of this leading tech firm trade for just 19 cents each. That means you could pick up more than 2,600 shares for as little as just $500….

“their technology is a scientific breakthrough – its accuracy was just audited by the Department of Defense in late October, 2012.

“The DOD’s findings?

“According to the government’s own report:

“This technology worked 100% of the time….

“The Defense Logistics Agency just mandated that all supplies provided to the Department of Defense use this small firm’s technology.

“Said a different way, this tiny firm… with just 21 employees… has been granted a monopoly by the United States government.

“As an intelligent reader, I think you can imagine what a mandate like that could do for a tiny, 19-cent firm.

“Their share price could triple, and I think it would still be undervalued.

“In fact, in mid-September the company’s share price more than doubled in just a two-week period!

“But the big gains… the life changing gains… should be yet to come.

“On December 13th, my research leads me to believe the next big announcement will be made about this tiny company.

“If I’m right, the announcement will be made during a small conference being held in the posh Waldorf-Astoria, on Park Avenue in downtown NYC.

“Don’t bother trying to look up the conference, or attempting to claim a seat inside – access is invitation only.

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“At the event will be approximately 200 insiders from the government, CEOs of leading security firms, and private money managers.

“The news should break sometime between 1:15 – 4:45 PM, EST. If the announcement comes, we should see this tiny firm among the ‘highest intra-day’ gainers list.”

And what does the company actually do? More clues:

“You’re about to discover the smallest, most explosive stock opportunity I’ve found in my 30-year career as an Economist and market analyst.

“Right now, this company has just 21 employees. But the recent Defense Logistics Agency monopoly changes all that – they’re now on a wild hiring spree, trying to keep up with demand for their technology.

“That’s right – in a world full of missed earnings and corporate layoffs – this company is defying all odds.

“Their sales are up more than 88% this year – and that’s BEFORE the Department of Defense’s mandate….

“… technology has been mandated for use in all computer supplies delivered to the Department of Defense…”

Cox goes on to describe the problem with counterfeit chips and parts in military equipment, a problem I’ve never heard of but that is apparently substantial, getting the attention of John McCain and others who are particularly worried about Chinese control over the tech supply chain that goes into many products for the defense department. This company sells some sort of marking technology that they tested and found 100% accurate, something they use to identify “legit” parts and semiconductor chips and prevent counterfeiting. Here’s where he says the company is now:

“18 months ago… the Defense Logistics Agency went on a search to find the technology that ends the problems from counterfeit chips.

“On October 31st of this year, they issued a press release requiring contractors to provide items that have been marked with the anti-counterfeiting technology of the 19-cent per share company I’ve been telling you about.

“See, during their 18-month study they marked 20,000 circuits with this small company’s anti-counterfeiting technology.

“Blind samples were taken, and marked versus unmarked chips were distinguishable with 100% accuracy.

“Not a single mistake.

“That’s why the Defense Logistics Agency didn’t say that items need to be marked by any technology… they said this specific company’s technology.

“For you and me… that means for the time being, the government has granted this small company a monopoly over all the supplies being bought by the Department of Defense.”

He says the company has a total worth of just $110 million, and could “control” a portion of the parts and supplies that are under Defense purview, a total amount he puts at $94 billion. The numbers jump out at you, though note that we’re talking about just the anti-counterfeit marking that’s used to identify new products being delivered, and presumably the cost per item is going to be low and shrinking as volumes increase. Not that this can’t be substantial for a $110 million company, but the $94 billion means only that it’s a big job, not that $94 billion will have any direct relation to the size of this company’s bank account.

So what’s the stock? This is, the Thinkolator is quite sure, Applied DNA Sciences (APDN), which is indeed a company that uses DNA signatures for anti-counterfeiting and authentication in a variety of industries.

And the conference they’re presenting to is indeed going on today, their presentation will be at 3:15 according to this press release. I don’t know if that presentation will contain substantial news or just be a summary of the big news that APDN has already seen over the last few months.

APDN’s product in question here is called SigNature DNA — it uses plant DNA that can be somehow embedded or applied to paint, fabric, whatever and can be detected with handheld scanners, and it looks like they can use it either to identify a real Hermes bag or a real replacement microchip for night vision goggles.

And the big deal with the government is that SigNature DNA marking will be used to identify new items that are in the class “Electronic Microcircuits” — the announcement was made back in August, and the program expanded a bit in November, and they appear to be on track to build it out, including a third party service and at least once licensee so far (licensing their technology to other companies seems to be their best chance at a fast track to a big profit boost, from what I can tell — let others spend the money to increase production and collect a royalty … but that’s just my impression).

So there you have it, APDN is almost a $150 million company now, thanks to the runup in the shares with Cox’s recommendation and special report over the past few days, and they lose money hand over fist (lost almost $10 million over the last year), and now trade for almost 70X sales and 100X book value so this is clearly all about the technology and whether it will become mainstream in the near future to dramatically ramp up the company’s revenue over the next few years. This year is the first time they’ve ever booked more than a million dollars in revenue in a year, with revenue almost doubling over the past year, but that’s still absolutely teensy — driving revenues high enough to reach profitability would mean at least a 1,000% increase in sales. That’s certainly possible in these kinds of tiny companies, especially if their deal with the Defense Logistics Agency leads to adoption by the prime contractors (as opposed to just the direct sale of microcircuits to DLA, which is what the rule seems to be now), or even to the (much more price sensitive) consumer electronics companies to weed out counterfeit chips … but it’s a big deal.

And yes, the big news has been out on this company for several months and the share price has appreciated considerably, though I have no idea what they might say at the Conference this afternoon. The stock is entirely driven by news and guesses about what the Defense deal will end up meaning to their bottom line, as far as I can tell, and the stock is extremely illiquidi so it’s easy to see the stock moving 30-50% … not the kind of stock you’d want to buy if you had any notion that you would be able to sell it with a 10% stop loss if things go South, it seems to move a lot harder and faster than that and the stock is inflated by attention right now, so please do use some caution if it tickles your fancy. Unless, of course, you think they really are going to see a huge impact from upcoming deals and fulfillment and see their technology become mainstream and drive the shares to $2, $3 or $10 as Cox speculates in his ad.

Fun story, interesting speculation, and wild moves in the stock already … but I have spent very little time looking at the stock and their financials, just enough to confirm that this is Cox’s pick so I could write about it quickly for you, so you can check it out on your own and let us know what you think. Give ’em a gander if you’re so inclined, and use the friendly little comment box below to share … thanks!


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