EMCORE CORPORATION GLOWPOINT, INC.

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Hello Readers,

The last few weeks have probably seen the worst market action in over a year, and the same holds true for our Current Portfolio, which has been pretty well tattered. And, obviously, we did not close any positions during this period.

A few months ago, the markets were much healthier despite rising interest rates, climbing energy prices, and a steady dose of Iraq on our TV sets 24/7. Like now, we even had a slew of good to great earnings and economic news. So, without sounding like a broken record, we still feel that the major drag on the markets is the uncertain political situation. The markets are not in love with Bush, but he has become a known commodity, while Kerry has many market pros very very worried. We had been outright bulls for the coming summer months, but as Dubya keeps sinking in the polls so does our enthusiasm.

Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.

Digital Power (DPW) (2/20/01). 1st QT results not great and this one’s making us a little nervous.

Arotech (ARTX) (6/5/01). Reports pretty good quarterly numbers and a backlog of $27 million.

ViroLogic (VLGC) (7/20/01). Announces nationwide distribution pact with Quest Diagnostics for portfolio of HIV phenatypic tests. Quarterly results not bad and balance sheet still looks nice.

Orthovita (VITA) (12/20/01). Also reports pretty good quarterly numbers and a balance sheet that still appears very healthy.

Generex (GNBT) (8/5/02). Receives key Japanese patent for novel technology to enhance T helper cell recognition of cancer and bioterrorism antigens. Reports preliminary results of key clinical study of Oralin.

Trio-Tech (TRT) (10/20/03). Corrects 3rd QT income from 1¢ to 6¢ per share.

Insmed (INSM) (11/5/03). Recent balance sheet still looks good. Company’s rh1GFBP-3 selected as a candidate in clinical trials for breast cancer treatment.

V.I. Technologies (VITX) (11/20/03). Quarterly numbers not great but balance sheet still seems viable.

AVANT Immuno (AVAN) (12/5/03). Announces start of HIV vaccine trial by U.S. Army based on AVANT’s Therapore technology. Vaccines preserved with AVAN’s VitriLife technology show good stability at room temperature and above.

Actuate (ACTU) (1/5/04). Challenges Cognos ReportNet to a head to head scalability test. Benchmark tests showcase Actuate as the industry’s most scalable enterprise reporting platform. Gets mention in Business Week. U.S. Air Force implements Actuate to manage tactical data links, gateways and network management programs.

Oplink (OPLK) (2/20/04). Needham & Co. upgrades stock to a “buy”.

Transgene(TRGNY) (3/5/04). Recent balance sheet looks pretty good.

OpenTV (OPTV) (3/20/04). Executive chairman named CEO. 1st QT results better than year-ago 1st QT; balance sheet still appears to be very strong. OPTV and Motorola ink five-year licensing deal. Charter Communications renews agreement with OPTV. Company launches new sports and news multi-video interactive applications. OPTV and QVC to launch first U.S. real-time two-way interactive TV shopping service.

Socket Communications (SCKT) (3/20/04). New Annual report. Delivers enhanced cordless software for tablets, laptops, notebooks, and desktops.

NexMed (NEXM) (4/5/04). Reports quarterly numbers. Completes an interim analysis of nail fungal study.

Palatin Technologies (PTN) (4/5/04). Recent balance sheet still looks strong. Company’s PT-141 Phase 2b study in men with erectile dysfunction presented at urological association meeting.

AVI BioPharma (AVII) (4/20/04). Balance sheet still looks very healthy. Presents additional data on West Nile virus clinical trial.

Management Network Group (TMNG) (4/20/04). Balance sheet still looks good, but quarterly numbers were disappointing and stock price took a hit, which was exacerbated by overall recent market slide.

Glenayre (GEMS) (5/5/04). 1st QT numbers not great but company expects an improvement during second quarter.

GRIC Communications (GRIC) (5/5/04). The Street was hoping for better quarterly numbers and so were we. Didn’t happen and stock had a huge sell off which was overkill, and, like TMNG above, was further exacerbated by a bad market decline. Despite this, stock gets an upgrade from Kaufman Brothers.

Our picks for this issue are a supplier of semiconductor based components and a communication services provider, both on the NASDAQ.

EMCORE CORPORATION (NASDAQ: EMKR) – $2.77. Twelve-month hi-low has been $7.93 – $1.90. Based in Somerset, NJ, with about 740 employees, this supplier of semiconductor-based components has 38.8 million shares outstanding, $104.4 million in total current assets, $229.9 million in total assets, and $121.8 million in total liabilities, of which $96.1 million are convertible subordinated notes. Institutional ownership is around 50%. Four analysts have the stock as a “hold”. http://www.emcore.com

Back on April 1, Merrill Lynch launched its Nanotechnology Index with EMCORE Corporation as one of the initial 25 companies. Two weeks later, Merrill dropped EMKR from the index because the brokerage did not feel it was a pure nanotech play. Still, the fact that EMCORE was even placed in this index at all, along with a good-looking balance sheet, gives us enough reasons to add the company to our Current Portfolio.

Founded in 1984 and public for around seven years, EMCORE offers a portfolio of compound semiconductor products for the broadband and wireless communications markets and the solid-state lighting industry. Operating through several subsidiaries, the company’s solutions include optical components for fiber-to-the-curb/home/business, cable TV, and high speed data and telecommunications; solar panels and fiber optic satellite links for global satellite communications; and electronic materials for high bandwidth communications systems, such as Internet access and wireless telephones.

EMCORE has strategic alliances with Motorola, Sumitomo, AMP, and Space Systems/Loral, but perhaps its most interesting partnership is a five-year-old joint venture with GE Lighting called GELcore, of which EMKR has a 49% ownership. This venture develops and markets high brightness light emitting diode (HB-LED) technologies and systems. GELcore’s product line includes LED traffic and rail signals, and the GE Tetra brand of LED lighting systems for indoor and outdoor signage.

A couple of weeks ago, EMCORE raised guidance on 3rdQT revenues, now expected to be $25 million. At the end of April, the company transferred its ECX-7700 four channel CX4 XENPAK manufacturing to Asia and began volume shipping. In March, EMCORE was selected by Boeing to provide advanced triple-junction high-efficiency solar cells and panels for the latest 702 satellite.

For FY2003, ending 9/30/03, revenue was $113 million with $38.53 million in net losses. During the first six months of FY2004, ending 3/31/04, revenue was $46.3 million with a net income of $9.86 million.

EMCORE looks to be back on good footing and, if the company can meet expectations, the stock should do well.

Our 24-month target for the stock is $5.00 to $6.00.

For more information, contact EMKR’s CFO Tom Werthan at 732-271-9090; info@emcore.com

GLOWPOINT, INC. (NASDAQ: GLOW) – $1.89. Twelve-month hi-low has been $3.70 – $1.22. Located in Hillside, NJ, with about 70 employees, this communications services provider has 37.1 million shares outstanding, $17.6 million in total current assets, $33.5 million in total assets, little debt, and $3.8 million in total liabilities. Institutional ownership is around 20%. http://www.glowpoint.com

Over the last year or so, many small companies have strengthened their balance sheets and have seen renewed revenue growth, but their stock price has remained pretty much in a rut, like Glowpoint, Inc. We need to believe that, at some point, GLOW will catch up to the rest of the pack.

Formerly called Wire One Technologies and public for nearly ten years, Glowpoint bills itself as the nation’s first and leading carrier-grade, IP-based video communications services provider. It delivers to its customers such patent pending video calling features like Customer Point, which is a secure online customer account management tool, live video operator assistance, simple dialing capabilities to reach any other caller regardless of where they are or what technology they are using, multi-point conferencing, encryption, on-demand videoconference scheduling features and international least-call dialing. GLOW’s network spans 14 points of presence across three continents enabling customers to connect across the U.S. as well as to virtually every business center in the world.

Glowpoint was the first company of its kind to be designated a Cisco Powered Network. The company’s network now carries over 8,000 video calls a month, and since the GlowPoint Network was launched in 2000, it has carried over 17.4 million video conferencing minutes in video calls.

In April, Glowpoint bagged its largest single customer order – a three year contract expected to generate $1 million in revenue. Also, last month, GLOW entered into a strategic alliance with Tandberg, Inc. In March, the company announced the general availability of GlowPoint Webcasting, their new web-based streaming and content delivery service.

For FY2003, ending 12/31/04, revenue was $10.3 million with $22.44 million in losses versus 2002 revenue of $5.59 million in revenue and $58.6 million in losses. During the 1stQT of FY04, ending 3/31/04, revenue was $3.22 million with $8.22 million in losses.

The bet here is that Glowpoint can continue its revenue growth and slice its losses even more.

Our 24-month target for the stock is $3.50 to $4.00.

For more information, call GLOW at 973-282-2000; investors@glowpoint.com

Look for the June 5, 2004 issue to be posted on 6/1 or 6/2.

Have a safe Memorial Day,
George