BIOSTAR PHARMACEUTICALS, INC. & GSE SYSTEMS, INC.

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Hello Readers,

Since the last Newsletter, we closed two positions; one for a gain and the other for a loss.

INHIBITEX (3/5/11). Closed position 4/1/11 at $4.78 for a 103% GAIN.

OILSANDS QUEST (10/20/08). Closed position 4/1/11 at 50 cents for a 66% LOSS.

In the last Newsletter, we said that we would soon close Inhibitex since it had just crossed our 50%-plus threshold; the day we posted that Newsletter, it doubled its gain to score our best gain of 2011. And, we closed Oilsands Quest for a loss, since it appears that not even $110 oil can help move the stock.

The markets are about where they were two weeks ago, which, when taking into account all of the global turmoil, is an achievement. However, we cannot help but think that the markets look tired, and every time we have said this, the averages keep pushing upward. This simple reason for this is cheap money, thanks to an overly-generous Federal Reserve.

Here are the headlines since the last Newsletter about companies in the Current Portfolio; dates in parentheses are when we first recommended them. We are not giving updates about companies on the “Endangered List” unless we feel the news to be highly significant.

Vical, Inc. (VICL)(4/5/11). Announces key European patent for TransVax Cytomegalovirus vaccine.

ThermoGenesis (KOOL)(4/5/11). Stem cell device approved in India; commercial sales expected to begin in current quarter.

Jamba, Inc. (JMBA)(3/20/11). Celebrates grand opening of first Philadelphia airport location.

Pluristem (PSTI)(3/20/11). Says cell therapy trial results are positive. To expand test of PLX cells for treating radiation exposure.

AdventRx Pharmaceuticals (ANX)(2/20/11). Completes acquisition of SynthRx.

Network Engines (NEI)(2/5/11). Sets earnings call for April 28.

Great Basin Gold (GBG)(1/5/11). Sets earnings call for May 17. Let’s hope they can shed some light as to why their stock is in limbo as the price of gold keeps soaring.

Sprint Nextel (S)(1/5/11). The usual several dozen stories and articles. Stock price has recovered somewhat since being knocked down a few weeks back on news of the AT&T/T-Mobile merger.

SuperGen (SUPG)(12/5/10). To acquire Astex Therapeutics for $25 million in cash. New company will be called Astex Pharmaceuticals and trade under the NASDAQ symbol ASTX.

Pixelworks (PXLW)(11/20/10). Sets earnings call for April 20. Announces put option notification for 1.75% convertible subordinated debentures due 2024.

Inovio Pharmaceuticals (INO)(10/20/10). OncoSec Medical closes purchase and license agreement for tumor therapy technology with company.

Advanced Analogic Technologies (AATI)(9/20/10). Introduces feature rich, high efficiency lighting management unit that reduces system cost for smartphones and enhances battery life. Changes disclosed compensation plan. Settles lawsuit with Linear Technology.

CombiMatrix (CBMX)(8/20/10). Partners with Clarient to commercialize its genomic profile tests for cancer. Closes $6.76 million private placement.

NAPCO Security (NSSC)(7/5/10). Trade association awards “Best of Show” for company’s new Gemini C-Series combo panel product.

Novavax (NVAX)(4/5/10). Company’s VLP influenza vaccine named one of top 100 drugs in development today by editors of R&D Directions magazine.

Cerus Corp (CERS)(3/20/10). Sets earnings call for April 28.

NIVS IntelliMedia (NIV)(1/20/10). Lawsuits keep piling up and we have added this to the “Endangered List”.

BioSante Pharmaceuticals (BPAX)(9/20/09). FDA accepts NDA filing for male testosterone gel.

USA Technologies (USAT)(6/5/09). Says its transaction volume growth continues; says March volume increased 17% over February, which increased 93% over March 2010.

U.S. Geothermal (HTM)(8/5/08). Receives key reservoir certificate for Neal Hot Springs Oregon project.

Bridgeline Digital (BLIN)(6/5/08). iAPPS product suite selected as finalist for two 2011 CODiE Awards.

MicroVision (MVIS)(5/20/08). Establishes first global R&D center at Nanyang Technological University in Singapore.

Hollywood Media (HOLL)(1/5/08). Recent numbers could have been better; balance sheet still looks okay.

Move, Inc (MOVE)(1/5/08). Realtor.com renews Gold Standard partnership with Century 21.

Linktone (LTON)(11/5/07). Provides update on recent activities.

LRAD Corp (LRAD)(10/5/07). Sets earnings news for May 4; says it will report record quarterly revenues of $15.4 million.

XATA Corp (XATA)(9/20/07). Receives Frost & Sullivan Price Performance Value Leadership award.

Our picks for this Newsletter are another small biotech trading on NASDAQ and a software/services provider trading on the AMEX.

BIOSTAR PHARMACEUTICALS,INC. (NASDAQ: BSPM) – $1.67. Twelve-month hi-low has been $5.51 to $1.62. Based in Xiangyang, China, with about 500 employees, this biotech has 27.39 million shares outstanding, $43.35 million in total current assets, $68.08 million in total assets, little debt, and $7.58 million in total liabilities. Institutional ownership is around 5.5%. One analyst rates the stock a “strong buy”. www.biostarpharmaceuticals.com

When we first came across Biostar Pharmaceuticals, Inc. we wondered why more analysts were not behind the stock, and, the only conclusion we could conjure up is that there is a sense that the Chinese markets are getting a little dicey, lately, due to interest rate nervousness. That may be true, but you cannot argue with a decent balance sheet, good revenue growth, and earnings growth; and we are talking about a small biotech. Small biotechs normally do not post such great numbers.

Founded in 1995, and trading on NASDAQ for a little over two years, Biostar manufactures and sells over-the-counter (OTC) and prescription pharmaceutical products and nutrient products for various diseases in China. Its primary product is Xin Ao Xing Oleanolic Acid Capsule, an OTC medicine for chronic hepatitis B. The company’s products also include Ganwang compound paracetamol and amantadine hydrochloride capsule for relieving the common cold, runny nose, sore throat pain, headache, and fever; and Tianqi Dysmenorrhea capsule, a traditional Chinese medicine used for treating pain and other symptoms associated with menstruation. Biostar’s prescription pharmaceuticals comprise Danshen granule for treating coronary heart disease, myocarditis, and angina pectoris; and Taohuasan pediatric medicine for treating bronchial congestion and coughs in children.

In addition, Biostar holds licenses to produce and sell thirteen nutrient products. The company sells directly to pharmacies, as well as through a network of twenty distributors. It has R&D agreements with the Fourth Military Medical University and Xijing Hospital State Drug Clinical Research Center to conduct clinical trials for new drugs. During 2010, the company launched five new products, accounting for about 8% of total revenue.

As we said above, Biostar has been growing very nicely, which is a rarity among small biotechs. For FY2010, ending 12/31/11, revenue was $80.2 million with $17.38 in net income compared to FY2009 revenue of $53.31 million and net income of $7.82 million.

This is a case of what’s not-to-like. Could the company see a slight letdown this year? Who knows? But we like the fact that the company is continuing to add new products that generate revenues right now.

Our 24-month target for the stock is $3.00 to $3.25

For more information, contact BSPM at 86-029-33686638; office@aoxing-group.com

GSE SYSTEMS, INC. (AMEX: GVP) – $2.35. Twelve-month hi-low has been $5.75 to $1.75. Based in Sykesville, MD, with about 200 employees, this software and services provider has 19.22 million shares outstanding, $45.94 million in total current assets, $53.61 million in total assets, little debt, and $16.71 million in total liabilities. Institutional ownership is around 72%. One analyst rates the stock a “strong buy” and another has it on “hold”. www.gses.com

Companies in any way affiliated with the nuclear industry have been hammered because of the Japan tragedy. We feel that many of them, like GSE Systems, Inc. was way oversold in the carnage. The company maintains a pretty nice balance sheet and has had some decent revenue growth over the last few years.

Founded in 1994, and public for nearly sixteen years, GSE Systems provides simulation and educational solutions and services to nuclear and fossil utilities, and chemical and petrochemical industries in the U.S., Europe, and Asia. It also provides plant monitoring, signal analysis monitoring, and optimization software primarily to the power industry. The company’s power simulation products include Java Applications & Development Environment that allows customers to access simulator and run simulation scenarios from anywhere they have access to the Web; eXtreme Tools, a suite of software modeling tools developed under the Microsoft Windows environment; RELAP5 R/T HD, which enables engineers to understand and control various internal functions of RELAP5, a safety analysis code; SimExec and OpenSim, which are real-time simulation executive systems that control real-time simulation activities and allow an off-line software development environment; and SmartTutor, a software for instructor stations.

GSE Systems’ power simulation products also comprise eXtreme I/S that allows the use of Microsoft Word and PowerPoint to control the simulation environment; Pegasus Surveillance and Diagnosis System, a software package for semi-automatic plant surveillance and diagnostics; SIMON, a computer workstation system to monitor the stability of boiling water reactor plants; and VPanel, an interactive visual training solution. The company provides consulting and engineering services, including application engineering, project management, training, site services, maintenance controls, and repair. It has strategic alliances with All Russian Research Institute for Nuclear Power Plant Operation, Kurchatov Institute, Risk Engineering, Ltd, Samsung Electronics, Toyo Engineering Corp., and Westinghouse Electric Company.

For FY2010, ending 12/31/11, revenue was $47.21 million with $2.25 million in losses compared to FY2009 revenue of $40.06 million and $797,000 in losses.

As much as many people would like to think that wind mills and solar panels will fulfill all of our energy needs, it isn’t going to happen anytime, soon. For now, we need nuclear, and once the current crisis ebbs, companies like GSE Systems could see a nice rebound.

Our 24-month target for the stock is $4.00 to $4.25.

For more information, contact GVP at 410-970-7800; investor@gses.com

Look for the May 5, 2011 Newsletter to be posted on 5/2 or 5/3.

Thank you,

George