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Hello Readers,

Since the last Newsletter, we closed five positions; three for gains, and two for losses.

Vical (7/20/09). Closed position 7/29/09 at $4.16 for a 60% GAIN.

AUTHENTEC (2/5/08). Closed position 7/28/09 at $3.00 for a 82% GAIN.

AXT (12/20/08). Closed position 7/28/09 at $1.88 for a 50% GAIN.

DIGITAL ANGEL. Closed position 7/28/09 at $1.44 for a 58% LOSS.

WESTELL. Closed position 7/28/09 at $1.22 for a 68% LOSS.

We will repeat this often and loudly – seldom do picks take off within days of being recommended, but that’s what happened as Vical soared on news that companies began shipping seasonal flu vaccines and that Kaufmann Brothers was going to invest $10 million in the company. We are in the dark as to what sent AuthenTec to nosebleed levels, and we don’t care. Ditto for the mini-tear that AXT went on. And, we finally closed Digital Angel and Westell, both of which had been on the Endangered List for some time.

During the last half of July, the markets rocketed for reasons that we still do not comprehend. The main reason given was that companies beat earnings estimates, which were ridiculously low to begin with. Of course, the talking heads toned down the fact that most of the top lines, revenues/sales, were on average 12% to 20% below a year ago. We keep wondering how much longer the spinmeisters can keep changing the flavors in the Kool Aid, since we don’t believe the market movement since March truly reflects the current, or long-term, condition of the economy. However, the good news is that, over the last five months, much our Current Portfolio saw life after its near-death experience during the last half of 2008 and the first few months of this year.

Here are the headlines since the last Newsletter about companies in our 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.

Performance Technologies (PTIX)(7/20/09). Quarterly results were not great, but were probably as expected; balance sheet still looks strong. Hawaiian Telcom chooses SEGway X401 signaling solution for network organization.

PDF Solutions (PDFS)(7/5/09). 2ndQT numbers lousy, but company see improvement in coming quarters; balance sheet still looks strong.

Salary.com (SLRY)(7/5/09). Slates earnings news for August 6. Announces Global User Group events. Launches CompetencyManager, a solution for building and deploying job models and competency libraries.

Integrated Silicon Solution (ISSI)(6/20/09). Releases a so-so earnings report, but expects a better second half for 2009; balance sheet still looks strong.

USA Technologies (USAT)(6/5/09). Company and Visa to expand Visa payWave acceptance nationwide with ePort solution. Expands “Quick Start” program. Issues update letter to shareholders.

Health Grades (HGRD)(5/20/09). Quarterly report shows both revenue growth and earnings; balance sheet still looks good.

The Hackett Group (HCKT)(4/20/09). Sets earnings call for August 11.

CSP, Inc (CSPI)(4/5/09). Sets earnings call for August 11.

Durect (DRRX)(4/20/09). Earnings news slated for August 3, the date we post this Newsletter.

TomoTherapy (TOMO)(2/20/09). Recent quarterly report disappoints; balance sheet still looks strong.

Ligand Pharmaceuticals (LGND)(2/20/09). Company and Organon mutually end collaboration and license pact. Sets earnings call for August 3, the date we post this Newsletter.

SuperGen (SUPG)(2/5/09). To present at BMO Healthcare Conference on August 5. Recent balance sheet looks strong.

MakeMusic (MMUS)(1/20/09). Releases SmartMusic 2010. Earnings call set for August 5.

Aetrium (ATRM)(1/5/09). Records worst quarter since going public in 1993, but sees industry trends improving though activity within its customer base is uneven (talk about being honest!); balance sheet still looks good.

Endwave (ENWV)(1/5/09). Recent numbers not great, but company bolsters its balance sheet with sale of its defense electronics and security business.

The Orchard (ORCD)(11/20/08). Partners with Digonex to extend dynamic pricing for digital downloads.

Akeena Solar (AKNS)(10/20/08). Recent earnings report not great, but company sees a better second half for 2009 and 2010; balance sheet still okay but has weakened since end of 2008.

Oilsands Quest (BQI)(10/20/08). Announces filing of disclosure documents.

SCM Microsystems (SCMM)(10/5/08). Receives market leadership award in North America.

Lexicon Pharmaceuticals (LXRX)(9/20/08). Provides clinical pipeline update; balance sheet still looks good.

Insure.com (NSUR)(9/5/08). Recent quarterly results so-so; balance sheet still looks good.

Digirad (DRAD)(8/20/08). Stocks surges from doldrums after company posts good quarterly results; balance sheet still appears to be strong.

ICAgen (ICGN)(8/5/08). Slates earnings news for August 4.

U.S. Geothermal (HTM)(8/5/08). Announces $10.9 million Canadian private placement financing.

Applied Energetics (AERG)(7/5/08). Receives contract for delivery of laser to U.S. Navy.

Energy Focus (EFOI)(6/5/08). Selected to receive $1.4 million contract to provide LED lighting for Virginia class attack submarines.

GlobalSCAPE (GSB)(5/20/08). To announce quarterly results on August 12. Teams with nuBridges to protect sensitive data in motion and at rest.

Biolase Technology (BLTI)(4/5/08). Sets earnings call for August 6.

ActivIdentity (ACTI)(3/5/08). Sets earnings release for August 6.

Rodman & Renshaw (RODM)(3/20/08). We have removed this from the “Endangered List”, for now, as stock price has climbed back from the dead, and company posts record revenues and earnings; balance sheet still looks good.

Amicas (AMCS)(1/20/08). Booth Radiology extends and elevates partnership with company. Sets earnings call for August 5. To join the Russell 3000 Index.

Nanophase Technologies (NANX)(1/20/08). Quarterly earnings report due out on August 4.

Hollywood Media (HOLL)(1/5/08). Recent earnings report not great; balance sheet still looks ok.

Move, Inc (MOVE)(1/5/08). Earnings call slated for August 5.

Santarus (SNTS)(11/20/07). To present at the BMO Capital Markets confab on August 5. Earnings news due on August 3, the day we post this Newsletter.

Nucryst Pharmaceuticals (NCST)(10/5/07). Receives FDA 510 clearance for its silver coated anti-microbial barrier dressing. This is on the “Endangered List”.

American Technology (ATCO)(10/5/07). Earnings release set for August 4.

XATA Corp (XATA)(9/20/07). Earnings news set for August 5. Florilli Transportation renews contract.

Alliance Fiber Optic Products (AFOP)(7/20/07). Second QT results better than 1stQT as company reports 13th consecutive profitable quarter; balance sheet still looks strong.

Heska (HSKA)(7/5/07). Second QT earnings results set for August 10.

Xenonics (XNN)(6/5/07). Signs exclusive U.S. distribution pact with Aardvark Tactical. Sets earnings call for August 14.

Oncolytics Biotech (ONCY)(6/5/07). Balance sheet still looks good. Successfully completes 100-litre cGMP production of REOLYSIN. Completes Lyophilization process for REOLYSIN.

ECtel (ECTX)(5/5/07). Brazilian mobile provider Vivo selects ECtel’s latest version of fraud management platform. Sets earnings call for August 5.

UQM Technologies (UQM)(2/5/07). Here is another one that roared back from death’s door as company announces deal with Coda Automotive to supply electric vehicle propulsion systems. Recent numbers show improvement over a year earlier; balance sheet still looks good.

Endologix (ELGX)(1/20/07). Does secondary offering of 3.9 million shares at $4.10 a share.

Lantronix (LTRX)(12/5/06). Teams with Spectrum CNC to wirelessly network over 250 computer numerically controlled machines.

HealthStream (HSTM)(10/20/06). Stock gets a nice jump on earnings news and a favorable 2009 outlook; balance sheet still looks good.

The Inventure Group (SNAK)(3/5/06). Posts some pretty good revenue and earnings numbers; balance sheet so-so.

8×8 (EGHT)(1/20/06). Earnings still in the black as company announces stock buyback program; balance sheet still looks good.

RAE Systems (RAE)(10/5/05). Earnings call scheduled for August 5.

Nova Measuring (NVMI)(11/5/04). Slates earnings call for August 4.

Our picks for this Newsletter are a networking device maker and a medical researcher, both listed on NASDAQ.

OCCAM NETWORKS, INC. (NASDAQ: OCNW) – $3.87. Twelve-month hi-low has been $5.38 – $1.80. Based in Santa Barbara, CA, with about 200 employees, this networking device maker has 20.4 million shares outstanding, $70.68 million in total current assets, $81.18 million in total assets, little debt, and $25.94 million in total liabilities. Institutional ownership is around 30%. One analyst gives the stock a “strong buy” and one has it as a “hold”. www.occamnetworks.com

Founded in 1996, and public for just under ten years, Occam develops and markets broadband access products designed to enable telecom service providers to offer voice, video, and data (Triple Play) services over copper and fiber optic networks. Its broadband loop carrier (BLC) is an integrated hardware and software platform that uses Internet protocol (IP) and Ethernet technologies allowing its customers to deliver services, including voice-over IP, Websurfing and other high-speed data communications, IP-based television, and HDTV. Occam’s products include the BLC 6000 System for telecom service providers to deliver Triple Play services to their subscribers. The BLC 6000 System comprises blades that transmit traffic upstream and downstream, interconnect various networks, and convert circuit-switched voice traffic to VoIP; chassis to house blade products, and perform cooling, power, and cable distribution; and OccamView, an element management system, which allows customers to manage Triple Play services from various secure Web browsers.

Occam’s BLC 6000 system also includes optical network terminals to terminate active Gigabit Ethernet or Gigabit point-to-multipoint FTTP services delivered by the BLC platform; and remote terminal cabinets to house BLC platform and protect the system from harsh environmental conditions. The company primarily has operations in North America, the Caribbean, Latin America, and the Pacific Islands. Occam has a strategic relationship with Tellabs, Inc.

In mid-July, Occam announced that California-based service provider Sebastian, of Kerman, CA, had chosen the BLC 6000 platform as part of its plan to implement a bonded DSL infrastructure and a new fiber buildout as part of a major network upgrade.

For FY2008, ending 12/31/08, revenue was $99.26 million with $6.72 million in losses compared to FY2007 revenue of $75.14 million and $10.39 million in losses. During the 1stQT of the current FY, ending 3/31/09, revenue was $19.4 million with $3.03 million in losses.

This is pretty basic boiler-plate hi-tech stuff, and, if there is a pop in tech spending, as Intel predicts, Occam could do well.

Our 24-month target for the stock is $6.00 to $6.50.

For more information, contact OCNW at 805-692-2900.

BIOCLINICA, INC. (NASDAQ: BIOC) – $3.60. Twelve-month hi-low has been $8.00 – $3.35. Located in Newtown, PA, with about 470 employees, this medical researcher has 14.4 million shares outstanding, $29.46 million in total current assets, $66.41 million in total assets, little debt, and $22.2 million in total liabilities. Institutional ownership is around 36%. One analyst gives the stock a “moderate buy”. www.bioclinica.com

Until a few weeks ago, this was known as Bio-Imaging Technologies and recently effected a merger with Phoenix Data Systems. The “new” BioClinica, Inc. has a good-looking balance sheet and has historically done pretty well on the P&E side of things. This is a company that seems to benefit from the biotech industry without taking much risk.

Founded in 1987, and publicly traded for just over seven years, BioClinica is a global clinical trial service outfit, providing medical image management and eClinical services, including electronic data capture and clinical data management solutions, to pharmaceutical, biotech, and medical service device companies and other organizations, including contract research organizations (CROs), engaged in clinical trials. The medical image management services assist clients in the design and management of the medical imaging component of clinical trials. The laboratory imaging services include the collection, processing, analysis, and regulatory submission of medical images and related clinical data.

So, basically, BioClinica, with approximately 2000 successful trials, helps bring various drugs from early phase development through final approval. They make money regardless of the test results, usually. The company has experience in every phase of clinical trials and in therapeutic areas, including oncology, cardiology, musculoskeletal, and neurology. It operates two FDA-compliant labs in the U.S. and Europe.

For FY2008, ending 3/31/08, revenue was $69.11 million with net income of $2.79 million compared to FY2007 revenue of $47.9 million and $2.33 million in net income, and FY2006 revenue of $40.51 million and $1 million in net income. During the 1stQT of FY2009, ending 3/31/09, revenue was $17.07 million with $786,000 in net income. That’s a nice progression of revenue growth and earnings.

Because the economy stinks, we could see a slight slump in revenue and earnings over the next quarter or two, but, for the long pull, BioClinica appears to be in good shape.

Our 24-month target for the stock is $5.75 to $6.50.

For more information, contact BIOC at 267-757-3000; ir@bioclinica.com

Thank you,

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