Message-ID: <17570243.1075861161853.JavaMail.evans@thyme> Date: Mon, 19 Nov 2001 05:25:25 -0800 (PST) From: textsf@stockfirst.com To: alewis@ect.enron.com Subject: Research Report - PRBL Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: STOCKFIRST @ENRON X-To: alewis@ect.enron.com X-cc: X-bcc: X-Folder: \ALEWIS (Non-Privileged)\Lewis, Andrew H.\Deleted Items X-Origin: Lewis-A X-FileName: ALEWIS (Non-Privileged).pst RESEARCH REPORT POWERBALL INTERNATIONAL, INC. from STOCKFIRST and The Investor Online www.theinvestoronline.com/research/prbl111301.htm ____________________________________ We are a new financial service striving to find investment opportunities. We present to investors unique and hard-to-find publicly traded securities. Our profiled companies offer cutting-edge products and services, are led by strong, visionary management, and present impressive growth potential. Below is a Research Report for such a company. The information we provide comes from many sources, and saves you hours of research. We work closely with the profiled companies to insure you receive the latest, pertinent data. Each recommendation is extensively researched, utilizing traditional fundamental analysis, combined with leading-edge technical analysis. - The Investor Online If you have received this in error, or wish to be removed from the STOCKFIRST mailing list, please find instructions at bottom of page. ____________________________________ Powerball International, Inc. Symbol: PRBL Recommended: 11/13/01 Price at 11/13/01: $4.60 Target: $12.64 for FY 2003 52 Week Range: $1.50 - $9.25 ____________________________________ * Financial Summary Powerball International, Inc. (the "Company") was formed in July 1997 for the purpose of raising capital to invest in a joint venture to develop certain technology relating to the production of hydrogen, to generate hydrogen for sale, and to market hydrogen generating equipment and products. During 2000 the Company acquired the remaining interest in the joint venture, Powerball Technologies, LLC, ("Tech") which is now operated as a wholly owned subsidiary of the Company. The Company, through Tech, is involved in research and development efforts of commercializing the technology. Powerball expects that initial revenues will be generated primarily by the construction of a commercial sodium plant in Green River, Wyoming. Additional revenues may be derived from the licensing of the Technology and/or manufacturing and sale of hydrogen generation systems. Powerball had no revenues for the three and six months ended June 30, 2001 and 2000, respectively, and has had no revenues since July 9, 1997. For the three and nine months ended September 30, 2001, Powerball had total operating expenses of $146,455 and $433,550, respectively, compared to $126,831 and $293,026 For the three and nine month period ended September 30, 2000. The increase in operating expenses is attributable primarily to a substantial increase in research and development costs of $32,201 and $215,391, respectively, offset by small decreases in general and administrative expenses ($8,070 and $8,508, respectively) and professional fees ($1,613 and $10,612, respectively). The increase in research and development costs reflects the Company's acquisition of 100% ownership of Powerball Technologies, LLC ("Tech") in the second quarter of fiscal 2000, and consequent responsibility for all the research costs associated with Tech. As a result of the merger, Tech is the wholly owned subsidiary of the Company, and all the expenses of Tech are consolidated with those expenses of the Company. The Company expects that it will continue to incur operational losses for the next twelve months, primarily as a result of expenditures related to the operation of the Pilot Sodium Plant in West Valley City, Utah and the general overhead thereto. The Company believes that the Pilot Plant will demonstrate successful completion of the milestones set for it before the end of 2001. Once continuous operation and product quality have been verified in the Pilot Plant and Industrial Revenue Development Bond funding obtained, construction may begin on the commercial sodium facility in Wyoming that will produce initial revenues. ____________________________________ * Share-Related Items Recent Price (11/13/01): $4.60 Market Capitalization: $15.18M Shares Outstanding: 14.7M Float: 3.3M Daily Volume (10-day avg): 3.4K Delayed Quote: http://quote.yahoo.com/q?s=prbl.ob&d=v1 ____________________________________ * Business Description - Powerball Technologies is focused on innovative hydrogen distribution technologies. At the heart of its technology is the proprietary hydride pellets or Powerballs(TM) which dramatically increase the storage density and distribution efficiency for hydrogen through incremental and on-demand production of hydrogen for a wide range of applications from industrial hydrogen to portable fuel cell systems. - A revolutionary technology for the production of sodium metal from sodium hydroxide using natural gas energy is being demonstrated in a pilot plant facility. Sodium metal as produced by this recycling plant will be used in the manufacture of sodium hydride which can be pelletized and individually encapsulated with polyethylene plastic for the highly dense yet safe storage and distribution of hydrogen. - Hydrogen gas is produced incrementally and upon demand through the use of a patented portable hydrogen generator system. The plastic coated pellets are sliced open one at a time within the generator to provide hydrogen as needed. A gallon of sodium hydride is capable of producing 1,307 gallons of hydrogen gas, which is an equivalent hydrogen storage density more than 6.4 times greater by volume than a compressed hydrogen tank storing hydrogen at 3,000 psi. - Since the powerball fuel pellets can be delivered and utilized at near room temperature and pressure, the usual problems and costs for highly pressurized hydrogen or cryogenically stored hydrogen can be safely eliminated. Additionally, the pellets are considerably more energy dense and can provide hydrogen for an end user at a cost less than through the more traditional means of delivering hydrogen. - An exciting future potential use for powerball fuel pellets is for the supply of hydrogen to fuel cell vehicles. To supply hydrogen fuel as powerball plastic coated hydride pellets is unique. More conventional methods for supplying a fuel to a vehicle usually require that a hydrocarbon is pumped from the ground, refined and then burned onboard the vehicle to provide energy. There are a number of problems with a "business as usual" approach to fuel supplies for vehicles. 1. More than 1/2 of all transportation fuel for vehicles is currently imported from other countries, which makes the USA potentially vulnerable to and dependant upon other foreign countries. 2. As hydrocarbons are burned onboard vehicles either by reformers or by combustion engines, the CO2 emissions are exhausted into the atmosphere. More than 6200 million metric tons of carbon as CO2 waste is exhausted into our air each year. The incredibly large amounts of CO2 waste are beginning to have costly environmental impacts on our planet. 3. As hydrocarbon fuels are transferred from refineries into trucks, from trucks into tanks at fuel stations, and from fuel stations into vehicles, a large amount of hydrocarbon emissions are produced which contribute to unhealthy air with negative impacts on health to millions of people living in cities around the world. 4. Hydrocarbon fuels are produced by the earth at a rate more than 1,000,000 times slower than we are consuming them which means that hydrocarbons are a non-renewable resource. - Powerball fuel pellets can be produced using a variety of energy sources. Powerball's current recycling plant is powered by natural gas. When natural gas is used to produce powerballs, CO2 is produced. Conveniently, CO2 from a central plant can be stored, unlike CO2 produced onboard a vehicle which cannot be stored and must be exhausted into the atmosphere. Even more exciting is that solar energy, wind energy, hydroelectric energy, or even fusion power (if developed) could be used to produce powerballs. Since powerballs are merely an energy storage medium, and not an energy source, whatever energy source is available can be used to produce the coated fuel pellets. Powerball technology, if used on a large scale nationally, would enable the USA to produce its own fuel for vehicles without having to rely on other nations for oil. We have large supplies of natural gas in the USA which can be used to produce NaH powerballs from waste NaOH. Additionally, as powerballs are shipped, stored, or transferred from tank to tank, there would be zero harmful hydrocarbon emissions. Polyethylene coated pellets cannot evaporate and neither NaOH solution or water produces harmful emissions. - The cost for producing powerballs from waste NaOH and recycled polyethylene ball shells is greatly reduced by producing very large volumes of pellets. Powerball is focused on the production of hydride pellets in large volumes from waste NaOH. As the technology is improved and as the production volumes increase, the powerball pellets will represent an inexpensive alternative source of hydrogen for hydrogen customers who currently receive hydrogen in bulky and expensive compressed hydrogen tube trailers. Eventually, as very large volumes of fuel pellets are produced, the pelletized fuel along with ordinary tap water could one day become the infrastructure fuel of choice for fuel cell vehicles. Web site: www.powerball.net For more see Expanded Business Description - www.theinvestoronline.com/research/prblbusdesc.htm ____________________________________ * Analyst Summary "The Powerball concept allows for cheap, easy and safe storage of hydrogen, and requires very little in the way of specialized storage. There are no special temperature or compression considerations that need to be worried about." -- Princeton University Chemistry Department The concept behind Powerball Technologies is to tame energy, (so to speak) and to store one powerful element - sodium (or sodium hydride) - in order to later get Hydrogen on Demand. Powerball(TM) fuel pellets store and produce hydrogen on demand. Each gallon of powerball fuel pellets produces hundreds of gallons of hydrogen upon contact with water on an as-needed basis. Powerball fuel pellets offer a safe, compact, and inexpensive alternative to the delivery, storage and use of compressed or liquid hydrogen for a wide range of applications which require a clean source of hydrogen. Powerball fuel pellets are not an energy source. The Company will never drill a hole in the ground and discover a large reserve of hydrogen or hydride pellets. Instead, fuel pellets can be used as an efficient energy carrier. The hydride pellets can be produced using energy from diverse energy sources all over the world such as biomass, natural gas, wind energy, hydroelectric power, and solar energy. Because they are safe and energy dense they can be distributed to buses, boats, houses, and hydrogen users by rail, sea, or highway. Powerball fuel pellets offer new options for the distribution of energy that do not rely on oil pipelines or electricity transmission lines. Even a disruption in a natural gas pipeline, for instance, would not preclude the distribution of powerball fuel pellets via trucks, trains or ships to where energy is needed. Additionally, when powerballs are used to provide hydrogen to vehicles or stationary applications there are no point-of-use hydrocarbon emissions or CO2 emissions. When powerballs are transferred from one tank into another tank, there are also zero emissions. Therefore, powerball fuel pellets are a responsible and environmentally friendly energy carrier. Powerball is currently in the research and development stage in preparation for commercializing the technology. Revenue and profit projections show sales commencing in FY2003. The projections show steady growth from $22.9M in FY2003 to $33.6M in FY2004 to $37.0 in FY2005. Net profits forecasts are equally impressive; $2.6M in FY2003, $5.4M in FY2004, $6.6M in FY2005. The associated Earnings Per Share project to $0.79 for FY2003, $1.64 for FY2004, and $2.00 for FY2005. We place Powerball in the Energy sector. Utilizing the associated 16 to 1 Price to Earnings ratio for this sector, we target PowerBall's price to: o $12.64 for FY2003, a 174% return on investment from price at recommendation o $26.24 for FY2004, a 470% return on investment from price at recommendation o $32.00 for FY2005, a 595% return on investment from price at recommendation Note: To meet the suggested target prices, the Company would have to trade at least at the Energy sector multiples and the Company would have to achieve earnings and revenue estimates provided by management for this report. A divergence either up or down from the projections could materially affect the target prices. For more see Expanded Market Analysis - www.theinvestoronline.com/research/prblmarkets.htm ____________________________________ * Technical Analysis Daily Opinion: BUY The Bullish (up) move is accompanied by increased volume (154% of average), suggesting a continuation higher on the next bar. Short Term Opinion: HOLD On a short-term technical basis, the trend is Bullish (up) and the stock is above its 50-day moving average at 3.42 which also confirms its Bullish (up) trend. The stock is extremely overbought according to the Stochastic indicator (84.10), so look for a possible pullback. Long Term Opinion: HOLD On a long-term technical basis, the stock (PRBL) is trading below its 200-day moving average which implies it is in a negative trend. The stock has broken down through support at 5.56, so look for new support at 4.34. The stock has support at 4.34 and 4.09. If the stock breaks down through support at 4.34 then it will probably continue lower to 4.09. The stock has resistance at 5.10 and at 5.56. If the stock breaks up through resistance at 5.10 then it will probably continue higher to 5.56. The 200-day moving average is at 5.10. This will also act as resistance. Please go to http://tio.buysellorhold.com/isapi/delstockgif.dll?sym=prbl&EDate= 11/13/2001&CType=6&tempnum=2 to see complete Technical Analysis, including chart. ____________________________________ * Financial Reports November 14, 2001 - Quarterly Report - http://edgar.sec.gov/Archives/edgar/data/1048237/00010128950150 0143/0001012895-01-500143.txt August 14, 2001 - Quarterly Report - http://www.sec.gov/Archives/edgar/data/1048237/0001012895-01-5 00101.txt May 15, 2001 - Quarterly Report - http://www.sec.gov/Archives/edgar/data/1048237/0001012895-01-5 00076.txt April 17, 2001 - Annual Report - http://www.sec.gov/Archives/edgar/data/1048237/0001012895-01-5 00068.txt November 9, 2000 - Quarterly Report - http://www.sec.gov/Archives/edgar/data/1048237/0001012895-00-5 00116.txt ____________________________________ * Contact Information Powerball Technologies: information@powerball.net 2095 West 2200 South, West Valley City, Utah 84119 (801) 974-9120 Visit the Company Website at www.powerball.net. ____________________________________ Please go to www.theinvestoronline.com/research/prbl111301.htm to see the complete The Investor Online Research Report. _____________________________________________________ IMPORTANT DISCLAIMER The Investor Online is an independent electronic publication providing information on selected public companies. 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