OTCPicks.com Stocks to Watch for Tuesday, March 31st PGYC, DDRX, GENT, PRSC

Our Stocks to Watch tomorrow include Patriot Energy Corp. (OTC: PGYC), Diedrich Coffee Inc. (Nasdaq: DDRX), Gentium S.p.A. (Nasdaq: GENT) and The Providence Service Corp. (Nasdaq: PRSC).

PATRIOT ENERGY CORPORATION (OTC: PGYC)

"Up 150.00% on Monday"

Patriot Energy Corp. is a management holding corporation, which owns a wholly owned subsidiary named Telteck Solutions and owns a 99 year exclusive leased license agreement with Tectane Technologies Corporation for the Dual H2O Engine Oxygenator and New Tri-Brid Engine (Electric/Flex-Fuels/H2O) Technologies. Patriot Energy specializes in the development and marketing of energy efficient technologies with a focus on reducing America's dependence on Foreign Oil.

PGYC News:

March 30 - Patriot Energy Confirms Receipt of an All Cash Purchase Offer

Patriot Energy Corporation (OTC: PGYC) confirmed that the board of directors has received a formal purchase offer from a Fortune 500 Corporation.

According to the company, the initial offer, which was structured as an all cash transaction, was short of the discounted cash valuation of the carbon credit trading revenue, which is estimated at $113,715,000 or approximately $0.57 per share. The company is continuing its negotiation and believes that an all cash purchase offer could be concluded shortly and is expected to be somewhere between the initial offer of $65,000,000 or 0.33 per share and the net discounted cash value of $113,715,000 or $0.57 per share. However, it should be noted that upon receipt of a new offer, several milestones will need to be met including a legal and technical due-diligence, and a shareholders meeting to seek acceptance of the offer. Management is very confident that the due-diligence both the legal and technical will be concluded without any issues. The Fortune 500 Company has requested that its name be kept confidential until such time as the offer is accepted by the board of directors and presented to shareholders for approval.

"We had been in discussions for sometime, but this sudden formal all cash offer did catch us a little by surprise" said Tony Bisante, President of Patriot Energy Corp. "We have a strong product, a sound business model and the green shift has forced the hands of many multi-nationals to action. Carbon credits and the reduction of America's dependence on foreign oil are strong advantages in the present and the future economy" further added Mr. Bisante.

DIEDRICH COFFEE INCORPORATED (NASDAQ: DDRX)

"Up 221.43% on Monday"

With headquarters in Irvine, California, Diedrich Coffee specializes in sourcing, roasting and selling the world's highest quality coffees. The Company roasts and packages coffees under three brands - Diedrich Coffee, Coffee People and Gloria Jean's Coffees. Diedrich Coffee sells its coffees through wholesale accounts including office coffee service distributors, restaurants and specialty retailers, and via the Company's web stores.

DDRX News:

March 27 - Diedrich Coffee Agrees to Sell U.S. Gloria Jean's Coffees Franchisee Operations

As part of its strategy to capitalize on the growth of the wholesale specialty coffee market and its strength as a premier roaster and distributor of the world's finest coffees, Diedrich Coffee, Inc. (Nasdaq: DDRX) announced that it has signed a definitive agreement with Praise International North America, Inc., an affiliate of Gloria Jean's Coffees International, for the sale of its Gloria Jean's Coffees domestic franchise operations. Gloria Jean's Coffees International holds the rights to the Gloria Jean's Coffees brand for all international countries excluding the U.S. and Puerto Rico.

The sale of the Gloria Jean's Coffees domestic franchise operations to Praise International North America includes a total of 102 franchise and company-operated locations in 24 states. The purchase price is approximately $3.1 million and the transaction is anticipated to close within 60 days. Terms of the sale include a five-year roasting agreement and rights to use the Gloria Jean's Coffee brand names in perpetuity in the Company's various wholesale business channels and Keurig K-cup product lines.

"In late 2006, Diedrich Coffee announced the sale of certain company-operated Diedrich Coffee and Coffee People retail stores as part of our plan to expand our wholesale business and focus the retail side of our business on our Gloria Jean's franchise operations. With the transaction announced today, we will take that strategy one step further and focus primarily on the sale of specialty coffees in our wholesale business channels," said J. Russell Phillips, president and chief executive officer of the Company.

"With demands for specialty coffees for restaurants, offices and specialty retail stores continuing to trend up, Diedrich Coffee has experienced significant growth in its wholesale business especially in the sale of Keurig K-cups."

Mr. Phillips said the Company believes that the Gloria Jean's franchisees will embrace the new opportunities available to them as a result of the sale to Praise International North America as part of the Gloria Jean's International franchise system. Following the 2005 sale of the international franchising operations to Gloria Jean's Coffees International, they have grown considerably and have proven to be a solid franchisor in the retail specialty coffee segment.

"In looking at Gloria Jean's International's results as a franchisor, their commitment to each franchisee and the Gloria Jean's brand, Praise International North America was the obvious successor and is in the best position to serve our Gloria Jean's franchise community," Mr. Phillips commented.

"Our franchisees will benefit from the vast support, experience and resources Praise International North America's management brings to their businesses. In addition, with more than 1000 locations across 35 countries worldwide, Gloria Jean's Coffees International is one of the largest, most experienced franchise coffee companies in the world."

Nabi Saleh, a principal in Praise International North America and executive chairman of Gloria Jean's Coffees International, said, "The acquisition of the franchising rights in the U.S. and the U.S. retail operations of Gloria Jean's Coffees is the next step in the expansion of the Gloria Jean's Coffees brand and franchise business. Since 1998, we have seen exponential growth in our retail business in Australia and other countries. We see a great potential in the North American market."

ABOUT PRAISE INTERNATIONAL NORTH AMERICA, INC.

Praise International North America, Inc. has been established to be the U.S. master franchisee of Gloria Jean's Coffees International, the Australian operator of more than 1000 coffee houses worldwide. With locations in 35 countries, Gloria Jean's Coffees is a leading specialty coffee retailer and one of the fastest growing franchise organizations in the world. Gloria Jean's Coffees provides consumers with a large range of specialty coffee including estate, origins and delicious flavored coffees, and a complete menu of espresso-based beverages such as lattes, cappuccinos, chillers, cocoas and gourmet teas through its retail stores.

GENTIUM S.P.A. (NASDAQ: GENT)

"Up 21.76% on Monday"

Gentium S.p.A. is a biopharmaceutical company focused on the research, discovery and development of drugs derived from DNA extracted from natural sources, and drugs that are synthetic derivatives, to treat and prevent a variety of vascular diseases and conditions related to cancer and cancer treatments. Defibrotide, the Company's lead product candidate, is an investigational drug that has been granted Orphan Drug status by the U.S. Food and Drug Administration and EMEA to prevent and to treat VOD and Fast Track designation by the U.S. FDA for the treatment of severe VOD in recipients of stem cell transplants.

GENT News:

March 29 - Gentium Announces Preliminary Results from a Phase 2/3 European Pediatric Prevention Trial for Veno-Occlusive Disease at the European Group for Blood and Marrow Transplantation Annual Meeting

Gentium S.p.A. (Nasdaq: GENT) presented preliminary unaudited top-line results from the Phase 2/3 European pediatric prevention clinical trial of Defibrotide. The results were presented by Selim Corbacioglu, Department of Pediatrics, University of Ulm, Germany, principal investigator of the clinical trial, at the Annual Meeting of the European Group for Blood and Marrow Transplantation (EBMT) in Göteborg, Sweden.

The Phase 2/3 European pediatric prevention trial is a multi-center, open label, randomized clinical trial to evaluate the prophylactic use of Defibrotide in pediatric patients undergoing stem cell transplantation who are at high risk for hepatic Veno-Occlusive Disease (VOD). In this two-armed trial, patients were randomly assigned to receive Defibrotide. Patients in the prophylaxis arm received 25 mg/kg/day of Defibrotide in four divided doses beginning at the time of conditioning. Patients in the control arm, however, did not receive Defibrotide for VOD prophylactic measures. The primary endpoint of the study was development of VOD within 30 days post stem cell transplantation (SCT) based on the modified Seattle criteria.

The results from this clinical trial demonstrated a 40% reduction in incidence of VOD within 30 days after SCT and achieved a statistical P-value of 0.0539, with a hazard ratio of 1.68 (95% confidence interval of 0.98-2.86), in the intent-to-treat analysis of 180 patients in the prophylaxis arm and 176 patients in the control arm. In addition, the analysis of data pursuant to the protocol (patients who completed 30 days in the study), which included 164 patients in the prophylaxis arm and 169 patients in the control arm, showed a 40% reduction rate of the incidence of VOD within 30 days and achieved a statistical P-value of 0.0366, with a hazard ratio of 1.78 (95% confidence interval of 1.03-3.08). The data also demonstrated the excellent safety profile of Defibrotide showing no difference in adverse events between the prophylaxis and control arms.

"We are encouraged by the preliminary results from the Phase 2/3 trial of Defibrotide to prevent VOD in children and anticipate announcing the final results in the second half of 2009," commented Dr. Laura Ferro, CEO of Gentium S.p.A. "We look forward to sharing the final results with the European Medicines Agency in order to determine the necessary steps for potential approval. In addition, we are hopeful that the progress indicated by the preliminary data will provide us with potential opportunities to allow us to complete the clinical and regulatory process so that we can provide patients with Defibrotide for this critical and unmet need."

"The results seen in this study provide a compelling case for a novel, safe, effective, therapeutic option for preventing VOD in pediatric patients undergoing SCT who have multiple unfavorable prognostic factors," said Professor Dietger Niederwieser, Department of Hematology and Oncology, University of Leipzig and President of the European Group for Blood and Marrow Transplantation.

ABOUT VOD

Veno-occlusive disease is a potentially life-threatening condition, which typically occurs as an important complication of stem cell transplantation. Certain high-dose chemo-radiation therapy regimens used as part of SCT can damage the lining cells of hepatic blood vessels and so result in VOD, a blockage of the small veins of the liver that leads to liver failure and can result in significant dysfunction in other organs such as the kidneys and lungs (so-called severe VOD). SCT is a frequently used treatment modality following chemotherapy or radiation treatments for hematologic cancers and other conditions in both adults and children. There is currently no approved agent for the treatment or prevention of VOD in the U.S. or the EU.

PROVIDENCE SERVICE CORPORATION (NASDAQ: PRSC)

"Up 27.64% on Monday"

Providence Service Corporation, through its owned and managed entities, provides home and community based social services and non-emergency transportation services management to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence does not own or operate beds, treatment facilities, hospitals or group homes, preferring to provide services in the client's own home or other community setting. The Company provides a range of services through its direct and managed entities to over 74,000 clients through 870 contracts at September 30, 2008, with an estimated six million individuals eligible to receive the Company's non-emergency transportation services related to its LogistiCare operations. Combined, the Company has a nearly $1 billion book of business including managed entities.

PRSC News:

March 27 - Providence Service Corporation Releases Fourth Quarter and Audited Year End 2008 Results

Impairment Analysis Complete; Increases First Quarter 2009 Earnings Guidance to a Minimum of $0.25 per diluted share

The Providence Service Corporation (Nasdaq: PRSC) announced results for the fourth quarter and calendar year ended December 31, 2008. Included in the results is a fourth quarter non-cash $28.9 million asset impairment charge related to the Company's intangible assets, which, when added to the $141.0 million non-cash interim asset impairment charge recorded by the Company during the third quarter of 2008, resulted in a total impairment of goodwill and other intangible assets of $169.9 million for the year, and a loss per share for the year of $12.42. The interim and annual impairment charges were triggered by a significant and sustained decline in the Company's market capitalization, as well as changes in the state payer spending environment, during the six months ended December 31, 2008. The non-cash impairment charge for 2008 reflects the magnitude of both the decline in the Company's market capitalization and the deterioration of the mergers and acquisitions market (which saw dramatically lower valuations for comparable companies sold) during that six-month period.

Fourth Quarter 2008 Results

For the fourth quarter of 2008, the Company reported revenue of $178.0 million, an increase of approximately 80% from $98.7 million for the comparable period in 2007. Revenue from Providence's social services segment grew to $81.4 million in the fourth quarter compared to $75.8 million in the prior year period while revenue from its non-emergency transportation (NET) services business, which the Company acquired in December 2007, totaled $96.6 million in the fourth quarter of 2008 compared to $22.9 million in the 2007 period.

The Company reported an operating loss of $32.3 million and a net loss of $22.0 million, or $1.74 per diluted share, in the quarter ended December 31, 2008. This includes the additional asset impairment charge of $28.9 million, which was in line with the Company's previously announced estimate. In addition, the Company recognized a $5.8 million expense for the vesting acceleration of all previously awarded and unvested stock options and restricted stock awards. By expensing these options and restricted stock awards in 2008 rather than in future periods (the vesting period is typically three years), the Company estimates that it will avoid recognizing approximately $3.1 million of stock-based compensation expense in 2009. In the quarter ended December 31, 2007, the Company reported operating income of $8.9 million and net income of $4.3 million, or $0.35 per diluted share.

Providence's direct client census was approximately 62,800 at December 31, 2008, up from approximately 52,600 at December 31, 2007 and 48,000 at September 30, 2008, and the Company had over six million individuals eligible to receive services under its NET contracts at December 31, 2008. The Company had 716 direct contracts at December 31, 2008 up from 638 at December 31, 2007.

Managed entity revenue, which represents revenue of the not-for-profit social services organizations the Company provides management and/or administrative services to in return for a negotiated management fee, decreased 5% to $57.0 million for the quarter ended December 31, 2008 from $59.9 million for the prior year period. The decrease in managed entity revenue from period to period was primarily attributable to the Company's acquisition and consolidation of substantially all of the assets in Illinois and Indiana of Camelot Community Care, Inc., a managed entity, on September 30, 2008. Managed entity revenue is presented to provide investors with an additional measure of the size of the operations under Providence's management or administration and can help investors understand trends in management fee revenue. Managed client census was approximately 24,500 at December 31, 2008 as compared to approximately 23,600 at December 31, 2007. Contracts of managed entities increased to 323 from 320 year over year.

Audited Full-Year 2008 Results

For the full year, revenue increased approximately 143% to $691.7 million from $285.2 million for the year ago period. Providence's social services segment grew 18.4% to $310.6 million with the NET service revenue comprising the remaining $381.1 million. Revenue of managed entities was $242.9 million and $225.0 million for 2008 and 2007, respectively. The Company reported an operating loss of $149.3 million for 2008, which includes the non-cash asset impairment charge of $169.9 million, compared to operating income of $25.7 million for 2007. The Company reported a net loss of $155.6 million, or $12.42 per diluted share, for 2008 compared to net income of $14.4 million, or $1.19 per fully diluted share, for 2007. Excluding the impairment charge and the expense for accelerated vesting, EBITDA for 2008 would have increased to approximately $39.1 million from $30.7 million in 2007 (see reconciliation). The Company's recently amended credit agreement, which reset financial covenant targets for the fourth quarter of 2008 and all of 2009, utilizes EBITDA calculations in its covenant calculations and is expected to facilitate a full year of anticipated covenant coverage without taking into account any potential sale of assets or debt repayments during this period.

At December 31, 2008, the Company had cash and cash equivalents of $29.4 million. Net cash from operating activities during 2008 was $12.4 million. In addition, the Company repaid approximately $8.7 million of its long-term debt during the year.

"We are happy to have 2008 behind us," said Fletcher McCusker, Chairman and CEO. "Excluding the impairment and accelerated stock compensation, the Company reported substantial EBITDA of $39.1 million for the year and net cash from operations of approximately $12 million. Looking ahead, we are optimistic that 2009 will see a return to more historic growth as well as better budget visibility as states plan for the fiscal year that begins July 1, 2009."

Guidance

The Company anticipates revenue of between approximately $170.0 million and $180.0 million for the first quarter of 2009 and diluted earnings per share of at least $0.25, based on diluted shares outstanding in the first quarter of 2009 estimated at approximately 13.2 million (not including an additional approximately 1.6 million shares that would be deemed outstanding if the effect of the Company's $70 million convertible debt is considered dilutive). This is based on unaudited January and February results. Guidance for the first quarter of 2009 includes approximately $1.5 million in costs and expenses related to the amended credit agreement, including arrangement, legal, accounting and other expenses, as well as approximately $300,000 in legal and other fees related to the now abandoned consent solicitation. Guidance does not include any retroactive rate adjustments or revenue pickups from prior quarters, only contracted rates.

Mr. McCusker concluded, "In December, we began to see signs of volume improvements and January and February were extraordinarily strong months for us. Additionally, the cost cutting programs implemented last fall are starting to see real traction so margins are improving as well. Based on continued strength seen in March, we have confidence in our ability to report at least $0.25 in diluted earnings per share in the first quarter, even after an estimated $0.08 in one-time expenses."

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Forward-Looking Statement: This press release includes "forward-looking statements" within the meaning of the federal securities laws, commonly identified by such terms as "believes," "looking ahead," "anticipates," "estimates" and other terms with similar meaning. Although the Company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from the Company's projections and expectations are disclosed in the Company's filings with the Securities and Exchange Commission. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions.

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