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Hello Readers,

Since the last Newsletter, we have closed two positions; one for a gain and one for a loss.

NOVAVAX (4/5/10). Closed position 9/13/13 at $3.48 for a 51% GAIN.

GLOBALSCAPE (5/20/08). Closed position 9/13/13 at $1.60 for a 32% LOSS.

As most of you know, it usually does not take us this long to close positions, and we are happy to finally close Novavax for a nice gain; it jumped on news of the potential protective effects of its RSV vaccine candidate. A few issues ago, we said we were thinking about closing GlobalSCAPE because it had been in the Current Portfolio for way too long; yes, we believe in patience, but this pushed us to the limits.

So far, the typical September swoon has been avoided and a monster rally took place thanks to a convoluted U.S. foreign policy toward Syria; and the expectation that if the Fed starts tapering this month, it will only amount to between $8 billion and $10 billion monthly, or basically chump change in a multi-billion economy. And so, the market keeps going up, up and away and when it tops out is anyone’s guess. Keep enjoying the ride, while it last.

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.

Transcept Pharmaceuticals (TSPT)(9/5/13). Adopts tax benefit preservation plan.

Gale Biopharma (GALE)(8/20/13). Initiates RELIEF patient registry for Abstral (fentanyl) sublingual tablets. Stock sells off a little as company announces secondary offering for $35 million.

Mindspeed Technologies (MSPD)(8/20/13). Introduces next generation integrated laser driver for small form-factor pluggable (SFP) optical transceivers. Extends gigabit passive optical network (GPON) leadership with next-generation burst-mode transimpedance amplifier (TIA). Announces Crosspoint Switches for 4K ultra HDTV.

Commtouch Software (CTCH)(7/5/13). Enters into email infrastructure partnership with

Flow International (FLOW)(6/5/13). Quarterly numbers only so-so; balance sheet still looks good.

InspireMD (NSPR)(5/20/13). To report earnings on September 17, the day after we post this Newsletter.

Synacor (SYNC)(4/20/13). Partners with Arkadium to offer casual games to more than 20 million premium content subscribers.

Oncothyreon (ONTY)(3/20/13). Initiates Phase 1 trial of ONT-380 in combination with Trastuzumab in patients with brain metastases from HER2+ breast cancer.

Echelon (ELON)(3/5/13). Teams up with IXYS to provide a reference design for LED drivers for streetlight control.

Ventrus Biosciences (VTUS)(2/20/13). Announces positive results from clinical dermal safety and pharmacokinetic studies of Diltiazem (VEN 307).

Horizon Pharma (HZNP)(12/20/12). Announces Sanofi Compiegne as additional manufacturing site for DUEXIS.

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

Overland Storage (OVRL)(7/20/12). Recent numbers not so great; balance sheet could be better. Company hires new sales VP, which is probably a good idea. Introduces new scale-out NAS platform with more features, more capacity, and more intelligence.

Aviat Networks (AVNW)(7/20/12). Named by Infonetics Research as the number one microwave specialist.

Capstone Turbine (CPST)(5/20/12). Gets another follow-on order for large Australian coal seam gas company.

Anadigics (ANAD)(11/20/11). Launches ProVantage power amplifier family.

Synthesis Energy Systems (SYMX)(8/20/11). Announces financing to restart ZZ joint venture plant in China. To report financials on September 19.

Cover-All Technologies (COVR)(7/20/11). Says Antilles Insurance to upgrade to the new Cover-All policy platform for commercial lines underwriting and policy.

Our picks for this Newsletter are a research provider and a business service provider, both NASDAQ-listed.

NEOGENOMICS, INC. (NASDAQ: NEO) – $2.50. Twelve-month hi-low has been $4.20 – $2.05. Based in Fort Myers, FL, with about 260 employees, this research provider has 48.9 million shares outstanding, $22.74 million in total current assets, $33.61 million in total assets, and $14.79 million in total liabilities, of which $2.84 million in long-term debt. Institutional ownership is around 30%. Two analysts rate the stock a “strong buy”, two as a “buy”, and one as a “hold”.

Yes, we would like to see NeoGenomics, Inc. have a little more cash on its balance sheet, but easing our angst is that the company has been showing some good revenue growth and, dare we say, profits; yes, profits for the last two quarters, which probably explains the number of analysts following the company.

Founded in 2001, and public for over six years, NeoGenomics operates a network of cancer-focused laboratories providing literally dozens of different genetic and molecular testing services to hospitals, pathologists, oncologists, urologists, and various other healthcare professionals and facilities. The company performs analyses for hematopoietic cancers, such as leukemia and lymphoma; and solid tumor cancers comprising breast, lung, colon, and bladder cancer. It offers cytogenetics testing services to study normal and abnormal chromosomes and their relationship to diseases; fluorescence in-situ hybridization testing services that focus on detecting and locating the presence or absence of specific DNA sequences and genes on chromosomes; flow cytometry testing services to measure the characteristics of cell populations; immunohistochemistry testing services to identify cell proteins in a tissue section; and molecular testing services that focus on the analysis of DNA and RNA, as well as on the structure and function of genes at the molecular level.

Some NeoGenomics trademarks include NeoFISH, NeoFlow, NeoSITE, NeoArray, NeoType, and MelanoSITE. Over the last year or so, the company has added nearly a dozen more new tests to its arsenal.

For FY2012, ending 12/31/2013, revenue was $59.86 million with net income of $65,000 compared to FY2011 revenues of $43.48 million and $1.18 million in losses. During the first six months of the current FY, ending 6/30/13, revenue was $31.26 million with $276,000 in net income.

This is another instance of “what’s not to like?” The company is showing revenue growth, has products that seem to be in pretty good demand, is showing profits, and has some good analyst support.

Our 24-month target for the company is $4.00 to $4.50.

For more information, contact NEO’s Steven Jones at 239-325-2001;

HUDSON GLOBAL, INC. (NASDAQ: HSON) – $3.00. Twelve-month hi-low has been $4.90 – $2.10. Based in New York City, with about 2000 employees, this services company has 33.1 million shares outstanding, $143.44 million in total current assets, $175.36 million in total assets, little long-term debt, and $87.15 million in total liabilities. Institutional ownership is around 80%. One analyst rates the stock a “strong buy”, one as a “buy”, and one has it on “hold”.

Sometimes we migrate to so-called “boring” companies because their stock appears to be ready for some sort of bounce, and this is the case with Hudson Global, Inc. It also helps that the company has a half-decent balance sheet and seems to be established in its business. Remember, not all jobs are secured through Monster and other such sites.

Founded in 2003, and public for about the same amount of time, Hudson Global is a professional services firm specializing in legal, technology, finance, and human resources to large-sized corporations and government agencies worldwide. It offers permanent recruitment services; and contract consulting services, such as project management, interim management, and professional contract staffing services. The company also provides legal services, including eDiscovery solutions, which offer an integrated system of discovery management and review technology deployment for corporate and law firm clients; managed document review services comprising logistical deployment, project management, process design, and productivity management services; and contract attorney staffing services.

In addition, Hudson Global offers recruitment process outsourcing services, such as complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting services; and talent management services, including talent assessment, interview training, executive coaching, employee development, and outplacement. The company has more than 80 offices in about twenty countries throughout the Americas, the Asia-Pacific, and Europe.

For FY2012, ending 12/31/12, revenue was $777.57 million with $5.34 million in net losses compared to FY11 revenue of $933.73 million and $10.9 million in net income. During the first six months of the current FY, revenue was $337 million with $14.1 million in net losses. It should be noted that the company saw sequential quarterly progress in the last QT compared to the FirstQT.

Needless to say, over the last year, Hudson Global has been impacted by the overall global economic slowdown. However, the company believes things are stabilizing and feels it is turning the corner. We’re going along with this thinking.

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

For more information, contact HSON at 212-351-7300.

Look for the October 5, 2013 Newsletter to be posted on 10/1 or 10/2.

Thank you,