AMICAS, INC. & NANOPHASE TECHNOLOGIES CORPORATION

***We no longer follow the companies mentioned in these backdated newsletter issues. These samples of past newsletters are generated to give you an idea of what you can expect when you subscribe. Please do not use any of the information contained in the samples below as current advice. If you would like to purchase a newsletter subscription, please click here. ***

Hello Readers,

A few weeks ago, several pundits were crowing that the markets were “out of correction territory”. Well, excuse us for being a little trepid. To our new readers, we urge you to scan the last four or five Newsletters so as to understand our anguish. The small stock indicator Russell 2000 is now down nearly 10% for the year – that’s this year, 2008, which is not yet three weeks old. We have not seen small stocks take this sort of beating since the late 1980s, and, yes, we were around at that time. Our own Current Portfolio still looks as if it has been through a nuclear war, but, for the bravehearts, this may be a good time to do some bottom fishing. Why?

The market is usually a barometer for economic activity over the next six to eight months. Currently, the market is signaling that we will be in the doldrums at least through the summer. However, should oil prices go down and the Fed finally wakes up, the markets could turn on a dime, to be trite. This could happen sooner than people think. Trouble is who will be the first to catch a knife by the handle?

Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them. Please note that companies normally do not have much news during the first half of January.

Move, Inc (MOVE) (1/5/08). Gets a negative mention in a Fortune article, but we suspect the writer didn’t look at the company’s balance sheet.

Amerityre (AMTY) (12/5/07). Here’s one being dragged down for no apparent reason, except that the market is throwing a lot a babies out with the bath water; sorry, again, for being trite. Company says it is moving aggressively into the global tire fill market.

Santarus (SNTS) (11/20/07). Reports positive clinical results with ZEGERID capsules in controlling gastric activity over 24 hours.

American Technology (ATCO) (10/5/07). To begin LRAD 1000X deliveries to the U.S. Navy this quarter. Announces orders for Azerbaijan and Sacramento Sheriff’s department. Receives NASDAQ listing compliance notice. Reports improved FY2007 revenue and operating results; balance sheet still looks good. To amend 6/30/07 quarterly statement, but, right now, this doesn’t appear to be detrimental.

A.P. Pharma (APPA) (8/5/07). Dutton Associates rates the stock a “strong speculative buy”. CFO to leave company.

Radcom (RDCM) (7/20/07). To publish 4thQT and full-year results on February 4.

American Fiber Optic Products (AFOP) (7/20/07). Slates FY2007 earnings conference for January 30.

Pharmacyclics (PCYC) (6/20/07). Company president blasts FDA on CNBC. It’s about time someone had the guts to do so.

Xenonics (XNN) (6/5/07). To launch infrared illuminator for use with its SuperVision HD night vision system.

Oncolytics (ONCY) (6/5/07). Brokerage Rodman & Renshaw initiate coverage on stock. Announces publication of research on combination reovirus and Cyclophosphamide treatment. Announces filing of Phase 1/2 clinical trial with REOLYSIN.

Encorium Group (ENCO) (5/20/07). Signs $1.7 million in contracts with leading international biotech for clinical trials in oncology and rheumatology. Signs $2 million contract for data management services for a global pharmaceutical company.

UQM Technologies (UQM) (2/5/07). Receives production order for auxiliary motor to be used on golf carts manufactured by Club Car.

Endologix (ELGX) (1/20/07). Expects total 2007 revenue of over $27 million, nearly an 88% increase from $14 million in the prior year. Normally, this sort of news would have sent the stock flying, but, in this market?

Lantronix (LTRX) (12/5/06). The Planet, world’s largest privately-held hosting company, selects Lantronix SecureLinx Spider KVM-over-IP solution.

WJ Communications (WJCI) (12/5/06). Receives order for new TD-SCDMA MCM chipset. Company and Mouser Electronics sign global catalog and Internet sales channel agreement. Raises its 4thQT revenue view. Delivers new range of WiMAX products.

Hydrogenics (HYGS) (9/20/06). Receives orders for seven fuel cell modules from Airbus Deutschland and the German Aerospace Center.

02Diesel (OTD) (5/20/06). Receives approval from Paraguayan government to market and distribute company’s fuel technology in that country. Provides year-end update and future outlook. This is on the “Endangered List”.

TRI-S Security (TRIS) (5/5/06). Subsidiary awarded $58 million contract for federal facilities in State of Georgia. Announces new $25 million credit facility.

Pharmos (PARS) (4/20/06). Completes private placement of its 10% convertible debentures. This is on the “Endangered List”.

ThermoGenesis (KOOL) (4/5/06). Provides update on second fiscal quarter.

8×8 (EGHT) (1/20/06). Slates earnings call for January 30. B.Riley & Co. gives the stocks a “buy” rating. Several other releases about its products.

Digital Angel (DIGA) (12/20/05). Acquires Geissler Technologies so as to enhance its animal RFID business. Several releases about product sales. As we have said several times over the last year, this one has been a big disappointment. It continually has a drumbeat of upbeat news, but the stock does nothing but go down. We may soon place this on the “Endangered List”.

Westell (WSTL) (10/20/05). Subsidiary ConferencePlus to host TeleSpan’s annual teleconferencing industry predictions. Introduces new UltraLine Series 3.

EntreMed (ENMD) (9/5/05). Gets FDA okay of IND application for Aurora Kinase/Angiogenesis inhibitor ENMD-2076.

Zi Corporation (ZICA) (8/5/05). Licenses eZiText and eZiType to Norway-based Trolltech.

Vion Pharmaceuticals (VION) (5/20/05). FDA lifts clinical hold on Phase III study of Cloretazine and Cytarabine in relapsed AML. As some of you recall, it was the FDA hold last May that send the stock into a downward spiral. Can VION’s stock recover, given the present market? It’s still on our “Endangered List”.

Applied Micro Circuits (AMCC) (11/20/04). Announces Mac OS X Leopard support. Announces schedule of investor conferences and Webcasts. PowerPC 405EX embedded processor named “Product of the Year” by Electronic Products Magazine. Sets January 23 for quarterly earnings news.

OpenTV (OPTV) (3/20/04). Selected by TrueVisions UBC for PVR launch. This is on the “Endangered List”.

Our picks for the Newsletter are another software/services company and a maker a nanomaterials, both trade on the NASDAQ.

AMICAS, INC. (NASDAQ: AMCS) – $2.85. Twelve-month hi-low has been $3.68 – $2.85. Headquartered in Boston, MA, with about 240 employees, this software/services provider has 44.8 million shares outstanding, $90.39 million in total current assets, $129.74 million in total assets, little debt, and $20.15 million in total liabilities. Institutional ownership is around 70%. One analyst rates the stock a “strong buy” and three as a “hold”. www.amicas.com

Stocks that trade in thin ranges rarely have held much appeal for us, but Amicas, Inc. has been holding steady during the recent carnage and the company has recently landed a pretty decent contract that could change the future revenue picture. And, let’s not overlook its very healthy balance sheet.

Founded in 1989 and formerly called InfoCure and public for over ten years, Amicas bills itself as a leader in radiology and medical information management solutions. The AMICAS Vision Series products provide a complete, end-to-end solution for imaging centers, ambulatory care facilities, and radiology practices. Acute care and hospital clients are provided a fully-integrated HIS/RIS-independent PACS. Completing the product family is AMICAS Insight Solutions which assist customers in the transition to digital.

Amicas products include Vision Series RIS, a web-based radiology information system designed to address the administrative functions for capturing radiology orders, detailing the patient demographic information, scheduling appointments and resources, processing transcriptions, and generating reports, as well as coding and preparing billing and reimbursement data; and Vision Series PACS, a web-based picture archiving and communications system designed to capture, store, manipulate, and distribute diagnostic images for radiologists, specialists, referring physicians, patients, and healthcare enterprises. The company’s product portfolio also comprise Vision Series Document Management, a module of web-based system for capturing digitizing, and associating paper records with digital information; Vision Series Financials, a patient accounting and revenue cycle management module, which facilitates claims submission, payor follow-up, and other billing and accounts receivable management activities; and EDI Services that offer transaction-based EDI functions, including patient billing, and insurance claims submission and remittance.

In mid-December, Amicas announced that it would repurchase up to $25 million of its stock. Although we would prefer to see companies put their money into R&D, repurchases make people feel good. What could be of significance is that at the end of November, 2008, MQ Associates, known as “MedQuest”, had chosen the AMICAS Vision Series PACS as the platform on which they will address their image management needs across their nationwide network of 92 outpatient imaging centers.

For FY2006, ending 12/31/06, revenue was $49.43 million with $1.02 million in losses. During the first nine months of FY2007, ending 9/30/07, revenue was $38.23 million with net income of $40,000.

In a better market climate, we would suspect that this stock was poised for a breakout. It may be worth bottom fishing for, right now.

Our 24-month target for the stock is $5.00 to $5.50.

For more information, contact AMCS’ Lisa Gould at 617-779-7892; lgould@amicas.com

NANOPHASE TECHNOLOGIES CORPORATION (NASDAQ: NANX) – $3.55. Twelve-month hi-low has been $7.46 – $3.05. Based in Romeoville, IL, with about 60 employees, this industrial materials maker has 21.1 million shares outstanding, $20.66 million in total current assets, $29.04 million in total assets, and $4.1 million in total liabilities, of which $1.52 million is long-term debt. Institutional ownership is around 24%. Two analysts rate the stock a “moderate buy”. www.nanophase.com

Yes, the stock price of Nanophase Technologies Corp. is bumping the high end of our price range, but it has a decent balance sheet, has been showing revenue growth, and seems to be paring its losses. Also, the company is in a pretty hot industry group.

Founded in 1989 and public for over six years, Nanophase is a nanomaterials developer and commercial manufacturer, and produces engineered nanomaterials for diverse markets, such as sunscreens, personal care, architectural coatings, industrial coating ingredients, plastic additives, water filtration, DNA bio-sensors, semiconductor polishing, optics polishing, and other markets. The company has complete capability from application and development and laboratory samples through pilot production, and finally, commercial production in metric ton(s) capacity.

Nanophase has two distinct and patented processes for the preparation and commercial manufacturing of nanopowder metal oxides, i.e. aluminum oxide, zinc oxide, cerium oxide, titanium dioxide, and several others. The company has developed what it calls Discrete Particle Encapsulation to coat the surface of its nanoparticles with a thin polymeric shell that enables compatibility of the particles with a wide variety of fluids, resins and polymers. Also, Nanophase has developed technology to permit the dispersion of its nanoparticles in water and a variety of polar and non-polar organic fluids. This allows the company to supply concentrated, ready-to-use nanoparticle dispersions, eliminating the need for customers to disperse the nanoparticles themselves.

Among its strategic partnerships, Nanophase has worldwide mutually exclusive relationships with BASF for the supply of zinc oxide into sunscreen applications, and with Rohm and Haas Electronic Materials for ceria dispersions used in CMP semiconductor applications.

For FY2006, revenue was $8.99 million with $5.2 million in losses. During the first nine months of FY2007, ending 9/30/07, revenue was $9.58 million with $2.43 million in losses.

Nanophase seems to be finding its legs with better revenue growth; let’s keep hoping the company continues narrowing its losses.

Our 24-month target for the stock is $5.50 to $6.00.

For more information, contact NANX at 630-771-6708; investor-relations@nanophase.com

Look for the February 5, 2008 Newsletter to be posted on 2/1 or 2/4.

Thank you,
George