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Hello Readers,

That rising tide in the Dow and S&P averages we mentioned in the last Newsletter still is eluding most small stocks, which many explain why we have not closed more positions this year. Actually, many pundits have commented on how this rally has been light on volume and on breath. That should be a warning sign, but, with the rest of the world in some sort of financial turmoil, people prefer putting their funds into the U.S. markets where there is a perception of safety. So, when does more of this money start to filter down to the small and micro-cap stocks? When the Big Caps are deemed to be over-valued and funds start a new rotation. We sense this may be happening soon.

As we are about to post this Newsletter gold has been getting hammered, which has upset the equities markets, somewhat. Is this cause for concern? It would be if not for the fact that the world’s central banks are flooding the globe with buckets of money, which may shore things up, for now.

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 substantial.

iPass (IPAS)(4/5/13). To report earnings on May 8. M1 Limited to offer global Wi-Fi data roaming services from iPass.

XOMA Corp. (XOMA)(4/5/13). Opens patient enrollment for clinical study of Gevokizumab.

Joe’s Jeans (JOEZ)(3/20/13). Reports pretty good revenue numbers; balance sheet still looks okay.

Peregrine Pharmaceuticals (PPHM)(3/5/13). Presents data at the AACR annual meeting.

Echelon Corp. (ELON)(3/5/13). OSRAM integrates ELON technology in intelligent street lighting solution.

AlphaTec Holdings (ATEC)(2/20/13). Sets earnings call for April 30.

TranSwitch (TXCC)(2/5/13). TELES selects Atlanta 2000 solution for 3G cellular broadband gateways. Closes secondary offering, which has put pressure on stock price.

Apricus Biosciences (APRI)(2/5/13). Sells non-core assets.

GEVO, Inc. (GEVO)(1/20/13). Overcomes 110 rejections in USPTO reexamination. Wins court ruling in Butamax biofuels patent lawsuit.

Unilife (UNIS)(1/5/13). Signs long-term customization and commercial supply agreement for EZMix dual chamber syringe.

Limelight Networks (LLNW)(11/20/12). Selected by iconic gaming industry brand to enhance digital presence.

TeleCommunication Systems (TSYS)(11/5/12). Slates earnings news for May 2. Supports ATIS/TIA interim text to 9-1-1 solution for emergency text communication.

Delcath Systems (DCTH)(10/20/12). Stock feels a little pressure as FDA extends cancer system review.

Anthera Pharmaceuticals (ANTH)(10/5/12). Refinances existing debt with new credit facility. Bilisibimod enters Phase III.

Zynga (ZNGA)(10/5/12). The usual few dozen news stories and releases.

AXT, Inc. (AXTI)(9/5/12). Sets earnings call for May 1.

SemiLEDS (LEDS)(8/20/12). Revenues weaken while losses are pared; balance sheet still looks strong.

Novatel Wireless (NVTL)(8/5/12). Company’s CDMA2000 1X M2M module certified on the Aeris Cellular Network. Sets earnings results for May 7.

pSivida (PSDV)(8/5/12). Ladenburg Thalmann gives the stock a “buy” rating. Announces tech evaluation agreement with leading global pharmaceutical. Reports on FDA resubmission.

Athersys (ATHX)(75/12). To present at the 2013 Regen Med Investor Day on April 17.

Capstone Turbine (CPST)(5/20/12). Receives three different orders totaling nearly $8 million.

Senomyx (SNMX)(5/20/12). Amends Sweet Taste Program agreement with Firmenich.

Mattson Technology (MTSN)(4/5/12). Establishes a $25 million revolving credit facility.

Ballard Power Systems (BLDP)(3/20/12). Ships its 500th ElectraGen ME fuel cell system for telecom backup power. Brokerage firm Sidoti initiates coverage with a “neutral”, whatever that means.

Anadigics (ANAD)(11/20/11). Sets earnings call for April 29. Murata selects ANADIGICS 802.11ac FEIC for WiFi module.

ECOtality (ECTY)(11/5/11). Expands EV partnership with Kroger. Releases eye-popping revenue numbers and major paring of losses; balance sheet still looks good.

Synthesis Energy Systems (SYMX)(8/20/11). Company technology selected for coal gasification project in China. Files for $75 million shelf registration. Forms a joint marketing pact with GE.

Cover-All Technologies (COVR)(7/20/11). Adds multinational insurance carrier to its customer list.

Neostem (NBS)(5/20/11). To present at five different conferences during the last half of April.

Thermogenesis (KOOL)(4/5/11). Gets new AXP customer in Portugal.

Real Good Solar (RSOL)(1/20/11). Latest numbers not real good; balance sheet still looks sunny.

Pixelworks (PXLW)(11/20/10). Sets earnings news for April 25. Collaborates with ACCESS on Officeviewer to enable content viewing and presentations without a PC.

Inovio Pharmaceuticals (INO)(10/20/10). Receives $3.5 million biodefense grant for mass vaccination device. Announces negative data on its hepatitis C vaccine.

NovaBay Pharmaceuticals (NBY)(4/20/10). Enrolls first patients in Brazil global Phase 2b trial.

Novavax (NVAX)(4/5/10). Reports positive top-line results from Phase II clinical trial of RSV vaccine candidate in women of childbearing age.

Our picks for this Newsletter are a medical diagnostic maker with whom we have had previous success and an Internet information provider, both NASDAQ-listed.

NANOSPHERE, INC. (NASDAQ: NSPH) – $2.33. Twelve-month hi-low has been $3.89 – $1.51. Located in Northbrook, IL, with about 150 employees, this molecular diagnostics company has 56.1 million shares outstanding, $41.77 million in total current assets, $47.45 million in total assets, little debt, and $5.23 million in total liabilities. Institutional ownership is around 26%. Two analysts rate the stock a “strong buy” and three as a “buy”.

This is our second walk with Nanosphere, Inc. and, yes, the first time around worked out pretty well. The company still has a good balance sheet and promising technologies, so why not take another shot?

Founded in 1998, and public for just over five years, Nanosphere develops and markets an advanced molecular diagnostics platform, known as the Verigene System, which enables simple cost-effective, and highly sensitive DNA and RNA protein testing on a single platform, including both genomic and protein assays, from a single sample. The company has developed and launched a second generation Verigene system processor (Processor SP) that handles the same processing steps as the Original Processor and incorporates sample preparation.

Nanosphere has developed test for infectious diseases, personalized medicine, cardiology, and human genetics. The company’s nanoparticle probe technology enables high-sensitive, multiplexed detection of proteins in clinical samples. Detection of new and existing protein biomarkers at sensitivity levels 2 to 3 orders of magnitude higher than existing ELISA-based tests is being explored in several areas, including cardiology, oncology, and neurodegenerative disorders.

Verigene tests for respiratory viruses and c.difficile have been cleared by the FDA. In early March, Nanosphere obtained the European CE IVD mark for gram-negative blood culture test. This expands the company’s infectious disease test capabilities to include rapid detection of bacteria that can cause deadly bloodstream infections, an increasingly recognized health threat.

Nanosphere is pretty typical of most small R&D companies in that in earns little money and has huge losses. For FY2012, ending 12/20/12, revenue was $5.07 million with $32.87 million in losses.

With a bunch of analysts behind the company and the stock way off its yearly highs, it may be worth another shot.

Our 24-month target for the stock is $3.75 to $4.25.

For more information, contact NSPH’s Roger Moody at 847-400-9021;

SYNACOR, INC. (NASDAQ: SYNC) – $2.80. Twelve-month hi-low has been $18.00 – $2.72. Located in Buffalo, NY, with several hundred employees, this internet information provider has 27.1 million shares outstanding, $61.39 million in total current assets, $73.8 million in total assets, and $22.99 million in total liabilities, of which $1.7 million is long-term debt. Institutional ownership is around 30%. Six analysts rate the stocks as a “hold”.

When a company has what some would call a great revenue year and raises a nice chunk of change on an IPO, the last thing that investors want to hear is the phrase “transitional year”. And that is why share in Synacor got mercilessly punished to where the stock may be at way-oversold levels.

Founded in 2001, and public for about a year, Synacor provides authentication and aggregation solutions for delivery of online content and services. Synacor boasts of being behind the Cloud-based, multi-service platform delivering TV Everywhere, movies, games, music, sports, news, email services, next-gen portals, utilities, and more to tens of millions of consumers across multiple connected devices on behalf of cable, satellite, telecom, and consumer electronics companies. The company platform allows its customers to package an array of online content services with their Internet, communications, and television, and other offerings. Synacor’s platform includes web site design and development, unified registration and login (single sign-on), billing integration, personalization, video delivery capability, content management, toolbar and television listings. Its customers, of course, offer the services under their own brands on Internet-enabled devices. In addition, the company offers search and display advertising services.

Synacor has over 45 customers reaching 26 million high-speed internet households and its platform carries over 3.9 billion average monthly advertising impressions for 50 content partners and over 50 advertising partnerships. Some of the company’s customers are CenturyLink, Cable One, Cincinnati Bell, Consolidated Communications, Mediacom, Toshiba, Midco, and Verizon, to name a few.

For FY2012, ending 12/31/12, revenue was $121.98 million with $3.8 million in net income compared to 2011 revenue of $91 million and $9.9 million in net income. Most investors would be ecstatic with these numbers, but, for 2013, management forecast only modest revenue and income gains.

Was management being overly honest? Perhaps, and too often companies are punished for it, and we feel that with Synacor, the flogging was over-done.

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

For more information, contact SYNC’S Denise Garcia at 716-362-3309;

Look for the May 5, 2013 Newsletter to be posted between April 29 and May 1.

Thank you,