CSP, INC. & THESTREET.COM, INC.

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Hello Readers,

No doubt about it, March was a fun month for the bulls. Even much of our decimated Current Portfolio got a lift from the bottom of the abyss, even some that are on the “Endangered List”. However, our optimism for the next several months is still restrained, to say the least. We still feel that new market bottoms are on the horizon, and we hope that the blow-off comes soon. It would make future planning a lot easier. Why are we still pessimistic? Think about what really triggered the recent bullishness. The CEOs of Citi and Bank of America said their banks were profitable in January and February, though that was stretching the truth. Then, the Fed sustained the rally by doubling its balance sheet, followed by the Treasury Secretary with his smoke and mirrors plan to fix the toxic assets problem. So, in sum, the market had a surge based upon spin from the same guys who got us into this mess. We will feel more comfortable once the markets begin to rally on better earnings, which is what they are suppose to do.

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.

Isilon Systems (ISLN)(3/20/09). Stifel Nicolaus gives the stock a “hold” rating, an upgrade.

O2Micro (OIIM)(3/20/09). Slates earnings call for April 29.

Opnext (OPXT)(3/5/09). Introduces CFP MSA compliant optical transceiver for 100 Gbit/s ethernet application, and announces multi-source pact for same with Finisar and Sumitomo.

TomoTherapy (TOMO)(2/20/09). Announces first Middle East installation of Hi-Art cancer treatment system.

Ligand Pharmaceuticals (LGND)(2/20/09). Company and GlaxoSmithKline collaboration identifies new lead compound for inflammatory indications. FABLYN approved in Europe for treating osteoporosis.

AuthenTec (AUTH)(2/5/09). Wins ASUSTeK Computer Best Partner Award. Inks pact with Motion Computing. Provides patent infringement lawsuit update and further expands its patent portfolio. Adds security features to the New Motion J3400 rugged tablet PC.

AXT, Inc (AXTI)(12/20/08). CEO resigns as company announces support of interim operations.

Acadia Pharmaceuticals (ACAD)(11/20/08). Forms collaboration with Meiji Seika Kaisha to develop and commercialize a new class of pro-genitive schizophrenia drugs.

The Orchard Enterprises (ORCD)(11/20/08). Announces array of significant new label signings. Releases some decent-looking numbers and is optimistic for 2009; balance sheet still seems okay.

Akeena Solar (AKNS)(10/20/08). Announces supplier partnership and U.S. license with MS Solar Solutions for Andalay AC solar panel. Powers “Extreme Makeover: Home Edition” on ABC.

SCM Microsystems (SCMM)(10/5/08). Hirsch Electronics shareholders okay merger with SCMM.

Planar Systems (PLNR)(9/20/08). Company’s Thin Film Electroluminescent (TFEL) selected by Jetronic for China markets.

Endeavour Silver (EXK)(9/5/08). Set to release earnings on April, the day we post this Newsletter. Releases updated NI 43-101 reserve/resource estimates: silver-equivalent reserves/resources increase 24% over last year.

Uranium Energy (UEC)(8/20/08). UEC joint ventures grants Ridge Project in New Mexico with Uran Ltd. of Perth, Australia.

Digirad (DRAD)(8/20/08). Receives 510(k) for Cardius X-ACT rapid cardiac SPECT/VCT imager.

Icagen (ICGN)(8/5/08). Provides update on ICA-105665, which has been put on partial clinical hold.

Hythiam (HYTM)(7/20/08). Recent balance sheet okay, but company may need to raise funds within a year. Announces results of two double-blind, placebo-controlled studies on impact of PROMETA treatment program for alcohol dependence.

Applied Energetics (AERG)(7/5/08). FY2008 numbers better than 2007; balance sheet still looks pretty good, and that is why we don’t place it on the “Endangered List” even though the stock has dropped off the cliff.

Neurobiological Technologies (NTII)(7/5/08). Hires advisor to help with selling the company. Wait and see, obviously.

Energy Focus (EFOI)(6/5/08). Selected by U.S. Army to develop LED infrared flare. Recent numbers not great; balance sheet still looks good.

GlobalScape (GSB)(5/20/08). Recent numbers not great; cash on hand increases. Teams with Carahsoft to provide government with secure information exchange solutions.

Ziopharm (ZIOP)(5/5/08). Recent balance sheet still seems okay, but company may need to raise more money, soon, from the looks of things. This one is making us nervous.

Biolase Technology (BLTI)(4/5/08). Announces settlement with NLT. Receives deficiency letter from NASDAQ. Recent numbers not great; balance sheet seems okay.

Rodman & Renshaw (RODM)(3/20/08). Terminates offer to buy Cowen Group. This is on the “Endangered List”.

ActivIdentity (ACTI)(3/5/08). West Midlands Police selects ACTI to secure the digital identities to 16,000 people.

IncrediMail (MAIL)(2/20/08). Approves $4.6 million dividend and continuation of share buyback program.

Amicas (AMCS)(1/20/08). Forms exclusive partnership with Australia’s Healthinc.

Nanophase Technologies (NANX)(1/20/08). Numbers weaken year over year; balance sheet still looks pretty good.

Hollywood Media (HOLL)(1/5/08). Posts $6.6 million 4thQT loss; balance sheet still looks good. MovieTickets.com inks 150th theater chain partner.

Catalyst Pharmaceutical (CPRX)(12/20/07). Balance sheet still looks okay.

Sunesis (SNSS)(11/5/07). Sets earnings call for April 1, the day we post this Newsletter.

Linktone (LTON)(11/5/07). Unaudited results show 4thQT was profitable; balance sheet still looks strong.

American Technology (ATCO)(10/5/07). Announces over $1 million in new LRAD orders from Asia.

XATA (XATA)(9/20/07). Company’s MobileMax helps TransAm optimize fleet operations.

A.P. Pharma (APPA)(8/5/07). Recent balance sheet seems okay, but it looks as if the company may need more funding before next year.

Radcom (RDCM)(7/20/07). Will delist from the Tel Aviv Stock Exchange. To expand service assurance solution in Asian UMTS operator.

Heska (HSKA)(7/5/07). Recent numbers not great, especially 4thQT; balance sheet still looks okay, and, once again, this is why we do not place it on the “Endangered List” even though stock has fallen like a rock.

Oncolytics Biotech (ONCY)(6/5/07). Completes enrolment in combination REOLYSIN/Gemcitabine trial. Presents various research at industry meeting.

Endologix (ELGX)(1/20/07). Raises 2009 revenue guidance, now expects growth of 25% to 33% over 2008. Presents first report of clinical outcomes from the Powerlink Suprarenal extension trial.

Lantronix (LTRX)(12/5/06). Introduces new Linux capability with embedded device server MatchPort AR.

Hydrogenics (HYGS)(9/20/06). Although 4thQT wasn’t great, company greatly pared its losses both in the quarter and FY year-over-year; balance sheet still looks good.

Tri-S Security (TRIS)(5/5/06). Company shows strong revenue growth in recent numbers, but losses need to be trimmed; balance sheet could look a lot better. Forecasts even better revenue numbers for 2009.

TII Network (TIII)(3/20/06). Latest numbers not good; balance sheet still looks good.

8×8 (EGHT)(1/20/06). Introduces hosted IP PBX phone service for enterprise-sized businesses. EGHT’s MobileTalk international calling service now available for new Blackberry devices.

B.O.S (BOSC)(1/5/05). Company shows pretty nice revenue growth, but balance sheet weakens, so, we are placing this on the “Endangered List”.

Nova Measuring (NVMI)(11/5/04). Company’s metrology solution selected for 45nm copper by a leading foundry.

Our picks for this Newsletter are a software and services company and a well-known name in the stock market, both trading on NASDAQ.

CSP, INC. (NASDAQ: CSPI) – $2.83. Twelve-month hi-low has been $6.33 – $1.51. Located in Billerica, MA, with about 150 employees, this software and services company has 3.7 million shares outstanding, $36.56 million in total current assets, $45.23 million in total assets, little debt, and $21.62 million in total liabilities. Institutional ownership is around 21%. www.cspi.com

At first glance, CSP, Inc. is one of those non-sexy companies, but it has a pretty good balance sheet and seems to be hanging in there during this stressful business cycle.

Founded in 1968, and public for nearly 17 years, CSP develops and markets IT integration solutions and high-performance cluster computer systems to industrial, commercial, and defense customers worldwide. It operates through its Multicomputer Division, or Systems Segment, and through the Modcomp subsidiary, or Service and System Integration. The Systems Segment designs and manufactures specialty, high-performance computer signal processing systems for the aerospace and defense markets. These systems are used on land, and in airborne and shipboard platforms for high-speed digital signal processing in radar, sonar, and surveillance applications. In addition, the Multicomputer products are designed to operate in environments that have low power, cooling, and space requirements.

The Modcomp segment provides computer maintenance and integration services, and third-party computer hardware and software services. This division also provides professional IT consulting services, including maintenance and technical support; implementation, integration, configuration, and installation services; enterprise security intrusion prevention, network access control, and unified threat management; IT compliance services; and custom software applications and solutions development and support.

For the FY ending 9/30/08, revenue was $76.78 million with $407,000 in losses compared to previous FY revenue of $94 million and $4.04 million in net income. During the 1stQT of FY2009, ending 12/30/08, revenue was $24.06 million with $380,000 in net income.

As one can see, the last quarter was a good one, and the company feels the demand environment for its businesses continues to look positive. In fact, it plans to increase its sales force.

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

For more information, contact CSPI’s Gary Levine at 978-663-7598, ext. 1200.

THESTREET.COM, INC. (NASDAQ: TSCM) – $1.95. Twelve-month hi-low has been $9.49 – $1.69. Based in New York City, with about 340 employees, this Internet information provider has 30.5 million shares outstanding, $89.32 million in total current assets, $172.18 million in total assets, little debt, and $19.2 million in total liabilities. Institutional ownership is around 71%. One analyst rates the stock a “moderate buy” and another has it on “hold”. www.thestreet.com

Fans of Jim Cramer will love TheStreet.com, Inc.; we’re only partial fans, since he seems to be going off the reservation more frequently. Putting that aside, despite the crummy market conditions, you gotta believe that a site such as this one should be okay over the long run; the balance sheet could help cushion disappointments, such as the 4thQT FY09 results, which were probably to be expected.

Founded in 1996, and public for nearly ten years, TheStreet.com, simply put, operates as a financial media company with its flagship site providing commentary, analysis, and news with financial coverage to individual investors. It also offers investigative journalism, commentary on market trends, specific stock and mutual fund analysis, and personal finance and lifestyle sections. The company also operates Stockpickr.com(sic), which provides both financial content and social networking; BankingMyWay.com, a site that enables readers to find competitive rates locally and nationally for various banking products such as CDs, checking and money market accounts, savings accounts, mortgages, and home equity and auto loans; and MainStreet.com, a site that presents original entertainment and celebrity news articles that illustrate a relevant personal finance topic.

In addition, TheStreet.com operates two subscription sites RealMoney, which provides real-time investing ideas, trading strategies, technical analysis, and market commentary; and RealMoney Silver, a compilation of three email services and the commentary from RealMoney. Further, the company offers various free newsletters, such as daily and weekly market bulletins, and recaps from TheStreet.com TV. It also provides interactive marketing services through Promotions.com, a provider of online and mobile custom interactive solutions for advertisers, marketers, and content publishers.

For FY2008, ending 12/31/08, revenue was $71.9 million with net income of $949,503 compared to FY2007 revenue of $65.4 million and $29.15 million in net income During the last QT of 2008, the company lost $2.44 million.

The company expects a difficult 2009 due to declining advertising revenue, but, as we said, they appear to be positioned so as to gut out the current market climate.

Our 24-month target for the stock is $3.50 to $3.75.

For more information, contact TSCM’s Rebecca Updegraph at 212-321-5008; ir@TheStreet.com

Look for the April 20, 2009 Newsletter to be posted on 4/16 or 4/17.

Thank you,
George

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