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Hello Readers,

As we alerted you in the last issue, this Newsletter is being posted a few days earlier than usual, and we apologize if there is any inconvenience.

Despite April’s tragic events and a plunge in commodity prices, which caused a minor sell-off, the markets have survived pretty well, thanks to the continuous liquidity being provided by the world’s central bankers. And now we hear that some European countries may lighten up on their austerity programs in favor of more government pump-priming. Easy money has now become an addiction, and, like all addictions, it will not be easy to break. We only wish more of it would spill over to small stocks. The last few months have been a conundrum. This has been one of the few times in market history when small stocks have not really benefited from the rising tide of the mid and big caps. And yes, this has been driving us nuts, but, at some point, this maddening wait will end.

No doubt you have heard the adage, “sell in May and go away”. We are not so sure this will be the case this May. There is just simply too much new money from all over the globe flowing into the perceived safety of U.S. markets. This year is shaping up to be another 1998 or 2004 when it was non-stop petal to the metal.

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 is highly significant.

Synacor (SYNC)(4/20/13). Sets earnings news for May 7.

XOMA Corporation (XOMA)(4/5/13). Sets earnings call for May 8.

Echelon Corporation (ELON)(3/5/13). Schedules earnings news for May 2.

Gevo, Inc. (GEVO)(1/20/13). Earnings news slated for April 30, the day after we post this Newsletter.

EnteroMedics (ETRM)(1/20/13). Sets earnings news and update for May 1.

Unilife (UNIS)(1/5/13). Slates earnings call for May 9. Develops Unifill Assure to enhance patient self-injection of biologics.

Limelight Networks (LLNW)(11/20/12). Wins 2013 Killer Content Award. To issue earnings results on May 9.

Lionbridge Technologies (LIOX)(11/5/12). Announces new integration with Adobe Experience Manager to support multilingual web content management. Unveils GeoFluent real-time translation for search engine discoverability.

Zynga (ZNGA)(10/5/12). The usual several dozen stories, most notable appears to be a disappointing earnings report.

Novatel Wireless (NVTL)(8/5/12). To boost it MiFi platform. Partners with Quatenus and Optimus for telematics market in Portugal.

Aviat Networks (AVNW)(7/20/12). Plans earnings call for May 1.

Metabolix (MBLX)(7/5/12). Sets earnings call for May 8.

Athersys (ATHX)(7/5/12). Earnings news slated for May 14. Receives stem cell trial approval in the U.K. To present at the Needham Healthcare Conference on May 1.

Vermillion (VRML)(6/20/12). Gets R&D agreement with the U.S. Army.

Avanir Pharmaceuticals(AVNR)(6/5/12). Receives positive CHMP opinion for approval of NUEDEXTA in Europe.

Senomyx (SNMX)(5/20/12). Recent numbers not great but rest of 2013 outlook more upbeat; balance sheet still looks good.

Axcelis Technologies (ACLS)(4/5/12). “Purion M” medium current implanter selected by leading foundry for advanced logic device manufacturing. Sets earnings news for May 2.

Mattson Technology (MTSN)(4/5/12). Misses on the top line but beats on the bottom line; balance sheet still looks good.

Ballard Power Systems (BLDP)(3/20/12). Sets earnings call for April 30, the day after we post this Newsletter. Launches air-cooled fuel cell stack for commercial market applications.

Geron Corporation (GERN)(2/5/12). To present at the Needham conference on May 1. Balance sheet still looks healthy.

ECOtality (ECTY)(11/5/11). Vista Partners initiates coverage on the company.

On Track Innovations (OTIV)(6/20/11). Subsidiary awarded multiple contracts in Poland.

Jamba, Inc. (JMBA)(3/20/11). Sets earnings call for April 30, the day after we post this Newsletter.

Real Goods Solar (RSOL)(1/20/11). To power 18 Stockton, CA, district schools with solar energy. RSOL and Church Farm School energize 1.1 MW solar array.

Pixelworks (PXLW)(11/20/10). Recent numbers disappoint; balance sheet still looks okay.

Inovio Pharmaceuticals (INO)(10/20/10). Reports promising study on universal H1N1 influenza vaccine.

Novavax (NVAX)(4/5/10). Slates earnings call for May 7. To present at the Needham Healthcare Conference on May 1.

Our picks for this Newsletter are a medical device maker and another biotech, both trading on NASDAQ.

MELA SCIENCES, INC. (NASDAQ: MELA) – $1.30. Twelve-month hi-low has been $4.69 – $1.08. Based in Irvington, NY, with about 70 employees, this medical device maker has 43 million shares outstanding, $9.68 million in total current assets, $17.27 million in total assets, little debt, and $3.3 million in total liabilities. Institutional ownership is around 26%. Two analysts rate the stock a “strong buy” and one as a “buy”.

There comes a moment in the life of every company when it now must sell the products they have been developing and that time has arrived for MELA Sciences, Inc. The company recently received a nice inflow of new money, not reflected in the above numbers, and should have a much sort-after product.

Founded in 1989 as Electro-Optical Sciences, and public for nearly seven years, MELA Sciences develops non-invasive instruments to assist in the early detection of melanoma. The company’s principal product, MelaFind, features a hand-held component that emits light of multiple wavelengths to capture digital data from clinically atypical pigmented skin lesions that can range up to as much as 2.5mm beneath the skin. These lesions are of course analyzed and the information provided can be used in the biopsy decision making process. As of now MelaFind is approved by the FDA for use in the U.S. It also has been approved for use in the European Union as well.

MELA Sciences launched MelaFind in March, 2012, with the aim of receiving revenues from two streams. First, the product is purchased by doctors for around $10,000. After the product is installed, the second revenue stream comes from each scan thereafter. It appears that the company receives $50 per scan, which is a relatively cheap cost for the physicians who can easily charge up to $350 per scan. Since the product launch of over a year ago, over 650 dermatologists have made inquiries and around 350 of those received in-depth demonstrations.

FY2102, ending 12/31/12, was the first year the company recorded revenues, which were $278,461 with a net loss of $22.7 million (ouch!). Over $122,000 of this came in the last quarter.

This is obviously a bet on the company’s ability to sell what appears to be a pretty good product and, with the stock at a little over a buck, it may be worth a flyover.

Our 24-month target for the stock is $2.20 to $2.50.

For more information, contact MELA’s Claudia Beqaj at 914-591-3783;

CYTORI THERAPEUTICS, INC. (NASDAQ: CYTX) – $2.70. Twelve-month hi-low has been $4.93 – $2.01. Based in San Diego, CA, with about 125 employees, this biotech has 67.2 million shares outstanding, $33.97 million in total current assets, $43.25 million in total assets, and $36.79 million in total liabilities, of which $12.9 million is long-term debt. Institutional ownership is around 25%. Three analysts rate the stock a “buy”.

Yes, Cytori Therapeutics, Inc. is a stem cell play, but, to the best of our research, these are not the kind from human fetuses. And yes, the company has more long-term debt than we like to see, but, for now, this does not appear to be life threatening. We are adding this one to the Current Portfolio because Cytori’s technology seems to be unique in the stem cell field.

Founded in 1996, and public for over ten years, Cytori develops cell therapies based on autologous adipose-derived regenerative cells (ADRCs) to treat cardiovascular diseases, burns, and other soft tissue injuries. This adipose tissue is harvested from a patient’s fat cells and the company believes it is one of the richest cell sources. With the company’s Celution system a patient’s own cells can be available to them in real time. It also offers the StemSource Cell Bank, a suite of products to allow hospitals or tissue banks to cryopreserve adipose-derived stem and regenerative cells; StemSource 900M/B, a research laboratory equipment; and Puregraft system that is designed to streamline the fat graft preparation process by selectively washing and filtering the tissue to remove contaminants in a closed and sterile field, as well as a range of ancillary products designed to optimize tissue harvest and graft delivery.

Cytori’s products also include Celution 800 System that has CE mark (European) approval for certain soft tissue procedures, such as breast reconstruction, tissue ischemia, deficiency or injury of skin, fat and muscle and fascia, as well as tissue wounds or fistulae associated with trauma, diabetes, ischemia, and radiation injury. The company’s technology has been used to treat over 4000 patients worldwide, including three completed clinical trials.

At the end of March, Cytori patented a method of treating renal diseases using ADRCs.

Cytori is typical of most small R&D biotechs in that it has earned little money while taking on some losses. For FY2012, ending 12/31/12, revenue was $4,000 with losses of $32,000.

This is another case of a company that has found a nice niche and has a lot in the hopper.

Our 24-month target for the stock is $4.75 to $5.00

For more information, contact CYTX’s Megan McCormick at 858-875-5279;

Look for the May 20, 2013 Newsletter to be posted on 5/16 or 5/17.

Thank you,