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"With COOX trading today for pennies on the dollar, one way to look at COOX is as a perpetual call option on the future success of the company.
In our opinion, the risk in owning COOX is no greater than owning an out of the money six month call option on Intel, Cisco, or Microsoft.
You may lose all or some of your money or you could make a killing."
Company Report
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| Naturol Inc. (NASDAQ OTCBB: COOX) |
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Six Month Target Price: $1.00 |
| 52-Week Range |
$0.12 - $0.69 |
| Shares Outst. (fully diluted) |
75.0 million |
| Approx. Float |
25.0 million |
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Reasons to OWN COOX:
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Patented technology with multiple applications in the Nutraceutical, Pharmaceutical, Food, Fragrance, Industrial Oils and Biocide industries |
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COOX’s expect’s to grow revenue this year and to be profitable in 2003 |
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Nutraceuticals and dietary supplements in the United States have a market size, according to Frost and Sullivan, of about $6.7 billion in annual sales. This figure is expected to grow exponentially to an amazing $21 billion by 2007 |
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Research and Development Government funds secured for product development |
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License based business model ensures rapid expansion with minimal increase in overhead expenses |
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| About Naturol Inc. |
| Coronado Explorations Ltd, a Delaware corporation, was incorporated on February 2, 1999. On January 17,2002, COOX completed a reverse triangular merger between Coronado Subsidiary Corp, a Nevada corporation and wholly owned subsidiary of Coronado and Naturol Inc, a Nevada corporation which holds the exclusive North American licence to manufacture, develop, produce market, distribute and sub-license the products of Naturol Ltd, a private UK based company which was formed five years ago to complete the development of several plant extract technologies. The prior board of Coronado has resigned and been replaced by the Naturol Inc board. The name of Coronado will be changed to properly reflect the business of Naturol.
Naturol, Inc. is the North American licensee for unique new plant extraction technologies, using novel solvents, developed by Naturol Limited in England. The technology is now entering into its commercial phase in North America. The technology involves the extraction of valuable bioactive compounds and oils from plants. Few people, outside the industry, know that the extraction of oils and bioactive compounds from plants is a multi billion dollar global business, growing every year, especially in the United States and Western Europe.
The technology used for the extraction of these oils and compounds has changed little in the last 100 years. COOX believes that Naturol's technology is better, cheaper and safer than any competing technology in the world today. COOX is now commercializing their technology in the United States and expect growing revenue this year and to be profitable in 2003. COOX corporate objective is to become the world's leading supplier of plant extraction technology within the next five years and, based on the evidence COOX has, COOX believes they have every chance of achieving this.
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| Products |
| The license gives COOX the exclusive right to commercially exploit a number of patents (both issued and applied for) relating to the extraction of oils and bioactive compounds from organic materials. The technology involves the use of novel and Eco-friendly solvents to extract a very wide range of plant oils and compounds for the Pharmaceutical, Nutraceutical, Food and Fragrance industries.
Naturol’s unique low cost technologies involve the use of new solvents developed to replace ozone destroying CFC’s.
- ITFM is an ideal, safe, solvent for extracting organic matter and could well replace hexane , the principal solvent now used, within the next decade. Naturol’s ITFM based processing system has lower production costs and produces higher product quality and yields than hexane based processes
- Naturol technologies are superior in cost and quality for extracting most “fixed oils” such as commodity oils like Soybean, Peanut, Cotton, Canola (RapeSeed,), Sunflower and Flax.
- Using product specific ‘cocktails’ of different solvents, the technology has the ability to target specific compounds within a particular plant and selectively separate and recover these.
- Naturol expects, next year, to become a significant player in the extraction of Taxanes from Yew trees. Taxanes are the precursors for one of the world’s most important anti-cancer drugs, Pactlitaxel. Bristol Myers Squibb generates sales of around $1 billion annually from its pactlitaxel based drug, ‘Taxol’.
- The technology has the unique capability of extracting oils and compounds at room temperature. This leads to greatly enhanced recovery of food grade proteins over conventional systems like hexane.
Market Sector
Plant based compounds and oils are used extensively in the Pharmaceutical, Nutraceutical, Food and Fragrance industries. Around 20% of all medicines and drugs used today in the US and Europe are derived directly from plants and 75% of the world’s population depend almost entirely on plant based medicines and drugs.
Naturol’s low production cost technologies can produce an enormous variety of high value compounds from plants. These include:
Pharmaceuticals
Paclitaxel (anti-cancer), Artemisia (anti-malaria).
Nutraceuticals
Virtually all the plant extracts used in the rapidly growing multibillion dollar market for Nutraceuticals and Dietary Supplements can be made better safer and more inexpensively using the Naturol process. Examples include Saw Palmetto (reduces male prostate), Lutein (slows blindness), Feverfew (anti-migraine), Soybean/Canola (protein recovery),Astaxanthin (for natural coloring in salmon farms)
Competitive Advantages
Plant extract technology in North America, Europe and other industrial nations has remained almost unchanged for the last 100 years. Solvent extraction is the preferred method in the industrial economies. The biomass to be extracted is mixed with a solvent, typically Methanol, Ethanol Isopropanol , Dichloromethane and Hexane. Of these, hexane is the most widely used. Hexane is a dangerous, flammable six-octane gasoline and a known carcinogen, which leaves measurable residues in all products extracted.
A recent and far safer competitor to Hexane is Super Critical CO2. However, CO2 systems have to operate at incredible internal pressures and consequently are enormously expensive (a Naturol extraction system would typically cost about 90% less than an equivalent CO2 system).
The key advantages of the Naturol technologies over the methods listed above are:
- Much lower cost of production
- Higher product yields
- Higher quality
- Totally safe to use; the solvents used are non-flammable and inert
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| Valuation and Conclusion |
Valuation
We think any investor looking into acquiring a position in Naturol Inc., or, for the moment, Coronado Exploration, should first look at the staggering growth of Nutraceuticals, the word is combination of nutrition and pharmaceutical, and wonder how to get into it.
You then have to ask yourself, as an investor, if all of these things are extracted from plants who are the companies that are going to be the winners? You would certainly expect that among the winners would have to be one or two of the companies that produce the plant extracts that are driving this multi billion dollar market. The company that can produce these products at the same high quality that the industry is used to and at a lower production cost must be a good candidate.
The stock market is probably the greatest discounter of what will happen in the future. By looking at company’s such as Amgen or Biogen at their earliest stages, the stock market gave them huge valuations based on their future prospects, without any revenues or earnings. By looking at pharmaceutical company’s such as Merck, Bristol Myers Squibb or any other major pharmaceutical company, the stock market gives valuations today based on their future pipeline of new drugs coming to market, and their potential market size.
As stated earlier the Nutraceutical Market could grow to $21 Billion in 2007. If over the next 6 months, COOX with their patented technology, and the commercialisation of their product, on an annualized basis were to generate just $8.5 Million Dollars in revenue, then applying the Price to Sales (TTM) multiple of 9.06 times, would equate to a market cap of $77 Million Dollars.
Thus, when applying the comparative group’s price to sales multiples (for Biotechnology and Drug's is currently 9.06 times) to COOX we can arrive at a relative valuation of $1.00 per share over the next 6 months.
Conclusion
COOX is a development stage company. With many development stage company’s, there are many risk’s as well as the potential rewards.
With the stock trading today for pennies on the dollar, one way to look at COOX is as a perpetual call option on the future success of the company.
In our opinion, the risk in owning COOX is no greater than owning an out of the money six month call option on Intel, Cisco, or Microsoft.
You may lose all or some of your money or you could make a killing.
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******* Important Notice and Disclaimer: Please Read *******
Investor Insights (II) publishes reports providing information on selected companies that II believes has investment potential. II is not a registered investment advisor or broker-dealer. This report is provided as an information service only, and the statements and opinions in this report should not be construed as an offer or solicitation to buy or sell any security. II accepts no liability for any loss arising from an investor's reliance on or use of this report. An investment in COOX is considered to be highly speculative and should not be considered unless a person can afford a complete loss of investment. II has been hired by a third party consultant, and is contracted to receive seven hundred thousand free trading shares of common stock for the publication and circulation of this report. II intends to sell all or a portion of the of the COOX stock at or about the time of publication of this report. Subsequently II may buy or sell shares of COOX stock in the open!
m!
arket. This report contains forward-looking statements, which involve risks, and uncertainties that may cause actual results to differ materially from those set forth in the forward-looking statements. For further details concerning these risks and uncertainties, see the SEC filings of COOX including the company's most recent annual and quarterly reports. |
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