Newsletter

September 29, 2006

Volume VII, Issue 75

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com

To OTC Journal Members:

Auriga Labs (OTC BB: ARGA) Forecasts Massive Growth

Auriga has not caught fire with investors, but if they deliver on the numbers they disclosed Friday after the market closed, investors will definitely pick up on this situation.

It's a unique company. While ARGA could be classified as a biotech company since they have some new therapies in development, they cross platform to a small pharmaceutical company through their already FDA Approved product lines and the prescription drug sales force.

If you own shares of ARGA, you own the upside of biotech with the stability of a pharma company with real sales and most likely earnings later in 2007.

Based on historical sales of their current product lines, ARGA formally announced today it expects to generate $26.4 million in revenues in calendar '07, up from $7.6 million in calendar on '06. That's a whopping 247% growth rate year over year. The last time a pharma company experienced 247% growth was when Amgen introduced blockbuster cancer drug Interferon in the last 80's.

ARGA also disclosed it expects to turn the corner to profitability sometime during 2007.

This is a pure numbers/growth situation. So, let's look at what the numbers could mean to the stock price. There are 36 million shares I&O yielding a market value of $54 million at $1.50. As a function of sales, where do most pharma/biotechs trade? It runs the gamut. As a general rule, the Price to Sales ratio of most biotech/pharma companies with growth is in the 5 to 10 range.

Therefore, if ARGA can deliver the forecast sales in '07, one can make a reasonable forecast that company would trade in the $137 million to $274 million range. Those numbers would put the stock $2.62 to $5 range.

I realize that's a fairly big range looking out into 2007. There are a lot of variables to consider. Firstly- when will the market be willing to price in this kind of performance? Secondly, if they can achieve the projected growth, can the continue the meteoric growth into 2008? If the market believes, the stock could easily trade north of the higher side of the trading range.

In my view, $54 million for a projected $26.4 million next year in this industry group seems like a very promising speculation with a lot of upside. If you wait for the revenues to appear in the rear view mirror, the stock will likely be much higher. That's the nature of speculation and a bet on the future. You will be rewarded as soon as the market believes. You have the advantage of knowing about it before the rest of the investing world.

The way this stock is behaving, a little volume could be worth a big move in price. I wouldn't be surprised to see it start to happen on Monday.

Here's the complete text of the news for your review:

Press Release Source: Auriga Laboratories, Inc.

Auriga Announces 2007 Revenue Guidance Forecast of $26.4 Million vs. $7.6 Million Forecast for 2006

Friday September 29, 4:01 pm ET

Company Anticipates Significant Revenue Through Distribution of Proprietary Products Targeting Multibillion-Dollar Markets

NORCROSS, Ga.--(BUSINESS WIRE)--Auriga Laboratories, Inc. (OTCBB:ARGA - News), a specialty pharmaceutical company formed to drive high-growth revenues through acquisition of valuable brand portfolios and innovative drug development programs, has released revenue guidance for the remainder of calendar year 2006 and for 2007, projecting significant revenue increases through sales growth of its FDA-authorized prescription drug products, including Extendryl® and other brands.

Auriga currently projects that it will generate an estimated $26.4 million of total revenue for the calendar year ending December 31, 2007, compared to total revenues of an estimated $7.6 million currently projected for the calendar year ending December 31, 2006, according to guidance released today by Philip S. Pesin, Auriga's Chief Executive Officer. Auriga generated approximately $507,000 of revenues during the three months ended June 30, 2006. Auriga generated $3.7 million of net losses during such three month period and anticipates that it will continue to generate losses until sometime in 2007.

"We are extraordinarily pleased to announce these forecasts which we believe are based on a realistic reflection of the marketplace value and strength of Auriga's business model and vision," said Mr. Pesin. "It should be clear to the investment community that Auriga has already made very substantial progress in the execution of its high-growth business path, most recently validated, we believe, by a series of key acquisitions and other strategic milestones. We are extremely excited by the successes we have achieved so far and by the outlook for the remainder of 2006 and for 2007."

The revenue forecasts are based on a number of assumptions and other factors, including historical sales of Extendryl® and Levall®, projected demand for the newly FDA-cleared product Aquoral(TM) and our ability to increase our commissioned sales force.

Auriga is targeting the multibillion-dollar cold, respiratory and allergy markets through its Extendryl® and Levall® families of prescription drug products. It also recently announced the acquisition of the exclusive license to market the FDA-cleared Aquoral(TM), a prescription-only product designed to treat the widespread condition xerostomia, representing a potential marketplace estimated to exceed $1 billion.

In addition, in an effort to maximize sales revenues, Auriga has also launched an innovative commission-only structure designed to enable Auriga to enlarge its sales force significantly during the next 18 months, while minimizing fixed costs. Based on its current business plan, Auriga estimates that the sales force could grow to in excess of 100 representatives within 18 months, compared to the current sales force of 30 representatives.

Since last year, Auriga has bolstered its product portfolio following the milestone acquisitions of exclusive distribution rights to Extendryl®, Levall® and Aquoral(TM). The Company intends to continue to acquire new prescription drug brands. It also plans to extend existing brands with proprietary drug-delivery technology and to further develop its pipeline of new drug candidates.

Auriga develops pharmaceutical products based on patented drug delivery technologies that match an understanding of patient physiology with advances in cellular biology, material science, and pharmaceutics. Its business strategy has been designed to minimize the capital requirements, risk and product time-to-market through the acquisition and reformulation of undervalued products for extended market exclusivity.

About Auriga Laboratories(TM)

Auriga Laboratories(TM) is a specialty pharmaceutical company capitalizing on high-revenue markets and opportunities in the pharmaceutical industry through proactive sales, integrated marketing and advanced in-house drug development capabilities. The Company's high-growth business model combines acquisition of proven brand names, powerful product development strategies and rapidly-growing national sales teams and marketing operations. Auriga acquires valuable brand portfolios that are no longer a strategic focus for large pharmaceutical companies, then capitalizes on untapped marketplace opportunities through brand extension and directed sales/marketing programs. The Company's drug-development pipeline leverages novel material science and advanced drug delivery technologies to produce improved formulations of successful brands to further expand markets, sales and clinical indications for proven, successful products. Auriga's exclusive product portfolio currently includes the Extendryl® and Levall® families of prescription products, indicated for relief of symptoms associated with a range of acute respiratory diseases. Auriga plans to become a fully integrated pharmaceutical company by acquiring its own manufacturing and development capabilities. Moving forward, the Company will seek to acquire and/or in-license additional products and technologies to further grow revenues. For more information, please visit: www.aurigalabs.com. For investor-specific information and resources, visit http://www.trilogy-capital.com/tcp/auriga/. For an informational video overview, visit http://www.trilogy-capital.com/tcp/auriga/video.html. To view current stock quotes and news, visit http://www.trilogy-capital.com/tcp/auriga/quote.html.

Forward-Looking Statements

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, those factors that are disclosed under the heading "Risk Factors" and elsewhere in our documents filed from time to time with the United States Securities and Exchange Commission and other regulatory authorities. Statements regarding the Company's ability to increase its sales force and the success of such sales force in selling our products in light of competitive and other factors, the regulatory status and/or regulatory compliance of our products, our ability to secure additional financing, our ability to sustain market acceptance for our products, our dependence on collaborators, our ability to find and execute strategic transactions, our potential exposure to litigation, our exposure to product liability claims, and our prices, future revenues and income and cash flows and other statements that are not historical facts contain predictions, estimates and other forward-looking statements. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved and these statements will prove to be accurate. Important factors could cause actual results to differ materially from those included in the forward-looking statements.

Contact:

Auriga Laboratories, Inc.
Philip Pesin, 877-287-4428
investors@aurigalabs.com
or
Financial Communications
Trilogy Capital Partners, Inc.
Paul Karon, 800-592-6067
paul@trilogy-capital.com

Source: Auriga Laboratories, Inc.

Shutterfly Opens For Trading With a Muted Bang

For those of you who are following this arbitrage situation, shares of Shutterfly (NASDAQ: SFLY) opened for trading on the NASDAQ today. 5.8 million shares were priced at $15 by the underwriters. On its opening day, the stock printed at a high price of $16.73, and closed at a muted premium of $15.55- an 11% premium to the IPO price.

While this is far from a screaming IPO success, of significant interest was the volume in the stock. SFLY traded a whopping 8.6 million shares. 48% more shares traded than we issued in the whole IPO- a relatively astonishing number.

This stock will probably continue to trade at a moderate premium to the IPO price for the next week or two, and then begin to head higher. It is clear from today's trading activity that all the short term players who received allocations were able to get out. From here, the stock can probably firm up. I am not expressing an opinion about the stock. If you buy it, you are on your own.

The market cap of SFLY is just north of $350 million. The closing bid of $.22 on PHCHF yields a market value of $66 million. Both companies are in the online photo print space, with one major difference. SFLY is a direct B2C online photo developer. You go to their web site, you upload your digital images, you order your prints, and they come in the mail. Good business, but requires a massive infrastructure and the burden of the cost of customer acquisition.

PHCHF on the other hand, is a B2C business model. They are the silent back end for a number of retailers who have implemented an "Online To Retail" strategy. You go to the web site of your local CVS pharmacy, WalMart Canada, Costco Canada, and a plethora of other retailers. You then upload your photos, and pick them up in one hour at your local store. The web site might say CVS, but you will find "Powered by PhotoChannel" somewhere on the page.

PHCHF then makes a couple of pennies on every print without having to own the printing, shipping, or have the customer. The top line will look much smaller, but the profits will actually be far greater. In my view, the PHCHF business model is far less risky and capital intensive.

PHCHF had a very strong week. The stock closed at $.22 bid- up about 22% from the level I suggested entering earlier in the week. Volume was very strong, topping 1 million shares 2 of the 5 trading days.

One word of caution; I anticipate PHCHF will engage in a 10 for 1 reverse split in the not too distant future. I believe it is a very good move for the company at this time. They are done raising capital, and have the company positioned for institutional participation after five years of struggle. Since reverse splits are viewed as a negative by many investors, the news could push the stock down temporarily. If it does, it would represent a buying opportunity in my view.

Subscribe

Information is power and timely information is profitable. Become informed and profit from OTC Journal Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the OTC Journal Email Newsletter on a regular basis.

To ensure newsletter delivery, you can add any additional email addresses you may have to the OTC Journal Member List. Receiving the OTC Journal Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the OTC Journal recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery.

Note: Your email address will be kept strictly confidential, and will not be shared with any other entity for any purpose at any time. If you no longer wish to receive the OTC Journal, simply follow the instructions located at the bottom of every OTC Journal Newsletter Edition.

Disclaimer

The OTCjournal.com Newsletter is an independent electronic publication committed to providing our readers with factual information on selected publicly traded companies. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. Moreover, as detailed below, this publication accepts compensation from certain of the companies which it features. Likewise, this newsletter is owned by MarketByte, LLC. To the degrees enumerated herein, this newsletter should not be regarded as an independent publication.

Go Here to view our compensation on every company we have ever covered, or visit the following web address: http://www.otcjournal.com/disclaimer.html for our full profiles and http://www.otcjournal.com/trading-alerts/disclaimer.html for Trading Alerts. MarketByte LLC has been paid a fee of $50,000 by Auriga Labs for coverage of the company. In addition, Trilogy Capital Partners has pledged 90,000 warrants convertible at $1.90, and 22,500 warrants convertible at $2.50 to MarketByte LLC for coverage of Auriga.

All statements and expressions are the sole opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.

From time to time MarketByte LLC sells shares in the open market it receives as compensation for coverage of client companies. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, the editors do not view the sale of the shares as contradictory to any advice delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies.

The editor, members of the editor's family, and/or entities with which they are affiliated aside from MarketBtye LLC itself, are forbidden by company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publication unless specifically disclosed in the newsletter. Some of the companies featured in the OTC Journal pay a cash ESP fee to an affiliated technology company ranging from $2,000 to $5,000 per month for internet related technology services.

The Trustee of the MarketByte LLC Defined Benefit and Trust (“the MarketByte Pension Plan”) has invested approximately $140,0000 in Dutchess Private Equities II LP (“the Dutchess Limited Partnership”), a limited partnership in which the MarketByte Pension Plan is a limited partner. The Trustee of the MarketByte LLC Defined Benefit and Trust (“the MarketByte Pension Plan”) has invested approximately $190,0000 in the Longview Fund (“the Longview Limited Partnership”), both limited partnerships in which the MarketByte Pension Plan is a limited partner. No one associated with the MarketByte Pension Plan has any knowledge, information, or control as to any past, present, or future investment activities of the Dutchess Limited Partnership or the Longview Fund. The Dutchess Limited Partnership is one of two hedge funds managed by Dutchess Advisors. Dutchess Advisors and Longview periodically refers companies to MarketByte LLC for possible coverage by one of the MarketByte LLC publications, which publications include The OTCJournal.com Newsletter. Dutchess Advisors or Longview may or may not own shares in the companies that it so refers to MarketByte. MarketByte has no information (outside of information readily accessible to the general public such as SEC filings) as to whether Dutchess Advisors or Longview owns any shares in the companies that it refers to MarketByte LLC. The above relationships should be viewed as a potential and/or actual conflict of interest by shareholders and prospective shareholders of MarketByte LLC client companies.

The profiles, critiques, and other editorial content of the OTCjournal.com may contain statements that appear foward relating to the expected capabilities of the companies mentioned herein.

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF THE EDITORS OF OTCjournal.com.

We encourage our readers to invest carefully and read the investor information available at the web sites of the Securities and Exchange Commission ("SEC") at http://www.sec.govand/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at http://www.sec.gov/consumer/cyberfr.htm. Disclaimer ID:$subst('Recip.userid') Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site. MarketByte LLC's mailing address is 4653 Carmel Mtn Rd Suite 308 #402, San Diego, CA 92130.

You can unsubscribe from this list at any time by Clicking Here. If you are having difficulty removing yourself or wish to change your address please go to http://www.otcjournal.com/opt.html?.