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Hello Readers,

Since the last Newsletter, we closed seven positions; four for some nice gains and three for ugly losses.

SONIC SOLUTIONS (5/5/09). Closed position 6/11/09 at $3.64 for a 66% GAIN.

REAL GOODS SOLAR (6/5/09). Closed position 6/8/09 at $4.00 for a 95% GAIN.

INTELLON (5/20/09). Closed position 6/8/09 at $4.30 for a 56% GAIN.

ISILON SYSTEMS (3/20/09). Closed position 6/3/09 at $3.50 for a 65% GAIN.

ADVANCED LIFE SCIENCES (7/20/06). Closed position 6/3/09 at $1.35 for a 54% LOSS.

B.O.S. SYSTEMS (1/5/05). Closed position 6/3/09 at 42 cents for a 88% LOSS.

ADHEREX (2/20/06). Closed position 6/2/09 at 5 cents for a 95% LOSS.

How often have we said this over the years: what happened with Sonic SolutionsReal Goods Solar and Intellon is the exception rather than the norm; seldom, do our picks skyrocket within days or a few weeks after we pick them. SNIC got a nice lift after announcing that it now provides broader access to Hollywood hits, RSOL soared after news of the company receiving a $30 million solar power contract, while ISLN kept climbing on pretty good products news. And, we closed B.O.S., Adhexex, and Advanced Life Sciences for some bad losses.

By now, most of you know our feelings about this market, but we will keep repeating them. The markets are grossly over-bought for the simple reason that perception has been the propellant rather than reality. One of the head gurus at Morgan Stanley recently said it best, “Anyone who thinks we are due for a V-shaped recovery is living in fantasyland”, and we couldn’t agree more. The same people who led us into this mess are the same people who are now building a new house of cards on top of the old one. Be very careful.

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 significant.

USA Technologies (USAT)(6/5/09). Announces availability to customers of ePort EDGE.

Health Grades (HGRD)(5/20/09). Identifies hospitals receiving 2009/2010 Outstanding Patient Experience Award.

CSP, Inc.(CSPI)(4/5/09). Announces new FPGA development platform. (TSCM)(4/5/09). Sets 2.5 cent quarterly dividend.

TomoTherapy (TOMO)(2/20/09). Names new CFO. University of Kentucky’s Markey Cancer Center brings advanced TOMO treatment technology to brain and body radiosurgery program.

AuthenTec (AUTH)(2/5/09). AUTH and Phoenix Technologies develop pre-boot authentication solution for Calpella-equipped PCs.

MakeMusic (MMUS)(1/20/09). Publishes monthly subscription report. Release Finale 2010 upgrade.

The Orchard (ORCD)(11/20/08). Joins with Traffic Entertainment to transform marketing and distribution of independent hip-hop.

Oilsands Quest (BQI)(10/20/08). Announces extension of permit leases.

Akeena Solar (AKNS)(10/20/08). Receives SEIA Industry Innovator Award.

Planar Systems (PLNR)(9/20/08). Announces Clarity Matrix LCD video wall system.

Endeavour Silver (EXK)(9/5/08). Acquires El Porvenir Cuatro properties along trend from Porvenir Silver Mine, Durango, Mexico. (NSUR)(9/5/08). Announces most and least expensive vehicles to insure. Awarded A+ grade from the BBB.

Uranium Energy (UEC)(8/20/08). Receives final draft permit for first production area at Goliad ISR project. Announces dismissal of lawsuit.

ICAgen (ICGN)(8/5/08). Completes enrollment in Phase II exercise-induced asthma trial. Provides strategic update.

Energy Focus (EFOI)(6/5/08). Announces new line of energy efficient LED landscape lights.

Ziopharm (ZIOP)(5/5/08). Presents positive Darinaparsin clinical data.

Amicas (AMCS)(1/20/08). Showcases vendor-neutral archive solutions at SIIM 2009. Launches new patient and payer services.

Hollis-Eden Pharmaceuticals (HEPH)(12/20/07). Names new president and CEO.

Santarus (SNTS)(11/20/07). Announces Schering-Plough response submission to FDA for OTC ZEGERID. Presents positive PK data from investigator-initiated pilot study with ZEGERID.

Linktone (LTON)(11/5/07). Recent quarter not great; balance sheet still looks strong. Expects higher revenues in current quarter.

Pharmacyclics (PCYC)(6/20/07). Files for rights offering.

Oncolytics Biotech (ONCY)(6/5/07). Company’s collaborators present positive Phase II Sarcoma trial results.

UQM Technologies (UQM)(2/5/07). Announces $2.77 million in military orders.

Endologix (ELGX)(1/20/07). To present at the SMH Capital Small Cap Spotlight Series on June 17. Announces full commercial launch of IntuiTrak express delivery system.

Hydrogenics (HYGS)(9/20/06). Announces non-dilutive financing.

ThermoGenesis (KOOL)(4/5/06). Gets two-year $500,000 grant from National Institute of Health.

RAE Systems (RAE)(10/5/05). To introduce fixed and wireless toxic and flammable gas detection solutions for liquid terminal operators. Introduces AutoRAE Lite fast calibrations station for QRAE II toxic gas monitor.

Our picks for this Newsletter are a semiconductor and a medical technology company, both listed on NASDAQ.

INTEGRATED SILICON SOLUTION, INC. (NASDAQ: ISSI) – $2.60. Twelve-month hi-low has been $6.10 – $1.31. Located in San Jose, CA, with about 440 employees, this semiconductor has 25.6 million shares outstanding, $93.5 million in total current assets, $142.12 million in total assets, little debt, and $25.17 million in total liabilities. Institutional ownership is around 56%. One analyst rates the stock a “moderate buy”.

Integrated Silicon Solution, Inc. is another in a long list of semiconductor stocks that has been beaten up pretty badly over the last year or so. And yes, the company has seen some revenue downside and losses, however, its balance sheet could carry it through while the current economic cycle works itself out.

Founded in 1988, and public for nearly fourteen years, ISSI is a fabless semiconductor that designs and markets integrated circuits for digital consumer electronics, networking, mobile communications, automotive electronics, and other industrial markets. Company products include high speed and low power SRAM and low and medium density DRAM. Its SRAM products are used in WLANs, cell phones, base stations, networking switches and routers, fiber to the home (FTTH), DSL modems, LCD TVs, set-top boxes, GPS systems, instrumentation, engine control systems, medical equipment, telematics, audio and video equipment, satellite radio, POS terminals, fax machines, copiers, tape drives, and other applications. ISSI’s DRAM products are used in WLANs, base stations, FTTH, DSL and cable modems, set top boxes, digital cameras, MP3, flat panel TVs, LCD TVs, HDTVs, video phones, VOIP, printers, disk drives, tape drives, audio/video equipment, GPS, telematics, and infotainment applications.

ISSI also designs and markets application specific standard products, including EEPROMs, Smart Cards, and ono-memory products. This past April, the company acquired Enable Semiconductor Corp. Some of the company’s customers include Apex, Changhong, D-Link, Samsung, Sony, 3Com, Alcatel-Lucent, Ambit, Askey, Cisco, Yahoo!, Bird, Ericsson, LG Electronics, Motorola, Nokia, Bose, Delphi, Philips, Siemens, GE, and Tyco.

For the FY ending 9/30/08, revenue was $235.22 million with $17.76 million in losses compared to the previous year’s revenue of $245.39 million and $15.36 million in profits. During the first six months of the current FY, ending 3/31/09, revenues were $68.91 million with $7.9 million in losses.

Yes, the company’s revenues have been pounded, as we mentioned above. But, we like ISSI’s broad customer base and the balance sheet still looks relatively strong.

Our 24-month target for the stock is $4.50 to $5.00.

For more information, contact ISSI’s John Cobb at 408-969-4631;

NMT MEDICAL, INC. (NASDAQ: NMTI) – $1.85. Twelve-month hi-low has been $6.05 – 52 cents. Located in Boston, MA, with about 75 employees, this medical technology company has 13.2 million shares outstanding, $20.97 million in total current assets, $21.83 million in total assets, little debt, and $10.98 million in total liabilities. Institutional ownership is around 37%. One analyst rates the stock a “strong buy”.

We have always had a fascination with companies possessing nifty technologies and a decent balance sheet, and NMT Medical, Inc. seems to fit that mold.

Founded in 1986, and public for over a dozen years, NMT develops and makes implant technologies that allow interventional cardiologists to treat structural heart disease through minimally invasive catheter-based procedures. Its products mainly include CardioSEAL, a cardiac septal repair implant device used for repairing structural heart disease and intracardiac shunts that result in abnormal blood flow through the heart; STARFlex, which incorporates a self-centering system that allows the implant to self-adjust to variations in the anatomy of a septal defect without deforming the septum or interfering with heart valve function; and BioSTAR, a bioabsorbable PFO implant and biological closure technology. The company also develops BioTREK, a biological closure technology, which incorporates a biosynthetic material that uses the body’s own regenerative capability to restore function naturally.

NMT Medical claims that over 27,000 septal defects have been closed using its proprietary technology. The company has recently completed clinical trials for: MIST (Migraine Intervention with STARFlex Technology) defined the “treatment effect” of closing a patent foramen ovale (hence the term PFO) in certain patients suffering from refractory migraine headache. BEST (BioSTAR Evaluation Study) demonstrated closure rates for the world’s first bioabsorbable septal repair implant to be “significantly better” than competing technologies. Ongoing clinical trials include CLOSURE I, which compares current medical therapy to PFO closure in patients who have experienced a stroke or TIA; and MIST III, which is a follow-on study to the completed MIST trial.

For FY2008, ending 12/31/08, revenue was $17.87 million with $18.1 million in losses compared to 2007’s $26.75 million and $9.1 million in losses. During the 1stQT of this FY, ending 3/31/09, revenue was $3.47 million with a net loss of $3.8 million.

NMT is another promising company that has been whacked by the current economic climate, but it feels that its technologies will still be well-received, and that 2009 revenue will be $16-$18 million.

Our 24-month target for the stock is $3.25 to $3.50.

For more information, contact NMTI’s Richard E. Davis at 617-737-0930;

Look for the July 5, 2009 Newsletter to be posted on 7/1 or 7/2.

Thank you,

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