Hello Readers,

Within two days after this Newsletter is posted, the markets will face new realities. The first is that the Democratic Congressional money spigot, while maybe not slowing to a trickle, will not be the constant gusher that Wall Street has reveled in for the last several years. The other truth is that the Fed may very well make up for any Congressional shortcomings. In other words, as one printing press slows down, the other revs up even more. The funny-money has been keeping the markets juiced for the last 20 months. How much longer can things keep going up before asset bubbles go pop? Honestly, we are still surprised that the party has continued for this long, which begs the question: How bad are things in the underlying economy that makes the Fed feel compelled to continued quantitative easing? What do Chairman Ben and company know that we don’t?

Our Current Portfolio has improved somewhat over the past few weeks, but, like the Russell 2000 Index, which measures small stock performance, has not enjoyed the same upturn as mid and big cap stocks.

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.

Inovio Pharmaceuticals (INO)(10/20/10). To present at investor conferences in New York and Miami. INO’s minimally-invasive DNA vaccine delivery device featured in the Journal of Gene Therapy. To present at several conferences and forums.

Blue Phoenix Solutions (BPHX)(10/20/10). To announce 3rdQT results on November 30.

Amicus Therapeutics (FOLD)(10/5/10). GlaxoSmithKline licenses Amicus drug in $230 million deal. Yes, this is big news.

Advanced Analogic Technologies (AATI)(9/20/10). Quarterly numbers not good and not bad; balance sheet still looks very strong.

Acadia Pharmaceuticals (ACAD)(9/5/10). Enters agreement with Biovail to conclude collaboration and regain North Ameircan rights Pimavanserin; receives $8.75 million payment to continue ongoing Phase III trials in Parkinson’s Disease psychosis.

U.S. Home Systems (USHS)(8/20/10). To report 3rdQT results on November 4.

Banner Corporation (BANR)(8/5/10). Recent numbers still show bad losses, mainly due to loan loss provision.

Rexahn Pharmaceuticals (RNN)(7/20/10). To use MedAvante centralized ratings in MDD Phase 2b study.

NAPCO Security (NSSC)(7/5/10). Announces signing of restated credit facility pact.

Aeterna Zentaris (AEZS)(6/20/10). To make poster and oral presentations on highly selective Erk inhibitor compound, AEZS-131, at cancer conference 11/2 to 11/4.

Aastrom Biosciences (ASTM)(6/20/10). To present at the Annual Oppenheimer Healthcare Conference on November 2, the day after we post this Newsletter. Forms strategic partnership with ATEK Medical. Maps out pivotal trial strategy with adult stem cell therapy. Submits special protocol assessment to FDA for its Phase 3 CLI. Receives FDA fast-track designation for Phase 3 CLI program.

DUSA Pharmaceuticals (DUSA)(6/5/10). Named to Deloitte’s 2010 Technology Fast 500 list of fastest growing companies in North America.

PHC, Inc (PHC)(5/20/10). Sets earnings call for November 10.

Adolor Corporation (ADLR)(5/5/10). Recent quarterly report shows nice sales increases; balance sheet still looks good. Wedbush upgrades stock. Initiates Phase 2 OIC study of ADL5945.

American CareSource (ANCI)(4/20/10). Adds Insurance Management Administrators client portfolio.

NovaBay Pharmaceuticals (NBY)(4/20/10). NVC-422 demonstrates up to 95% efficacy in 129 patient impetigo Phase 2 clinical trial, including 100% efficacy in MRSA infected patients.

Cerus Corp (CERS)(3/20/10). Company paring losses; balance sheet still looks good.

Achillion Pharmaceuticals (ACHN)(3/5/10). Balance sheet still looks strong.

Cytokinetics (CYTK)(2/5/10). Balance sheet still looks very strong and company reports encouraging results from two interim reviews of two ongoing Phase 2a evidence of effect trials of CK-2017357. Announces the selection of CK-2017357 to Windhover’s Top 10 Hot Space projects to watch.

NIVS IntelliMedia (NIV)(1/20/10). Slates earnings call for November 5. Engages China Century Dragon Media to lead branding and marketing development of new mobile phone series. To introduce new branded mobile phone series. Selected by GOME Electrical Appliances as key supplier.

BioSante Pharmaceuticals (BPAX)(9/20/09). To present at two upcoming investor confabs. Reports positive LibiGel data monitoring committee recommendation. Initiates a new controlled Phase 2b trial of CERE-120 for Parkinson’s Disease. Reaches key LibiGel safety study enrollment target.

BioClinica (BIOC)(8/5/09). Signs five-year agreement for Optimizer Technology with a top ten global pharma. Sets earnings call for November 3. Launches what it claims to be a clinical technology breakthrough with Trident IWR.

Performance Technologies (PTIX)(7/20/09). Earnings call slated for November 4.

USA Technologies (USAT)(6/5/09). This one is still on the “Endangered List” but we may need to rethink it as Deloitte names it to its FAST 500 List of Fastest Growing Companies in North America.

Durect Corporation (DRRX)(4/20/09). Sets earnings call for November 3.

Ligand Pharmaceuticals (LGND)(2/20/09). Plans to report 3rdQT results on November 9. To present at the Annual Oppenheimer healthcare conference on November 2, the day after we post this Newsletter.

Market Leader (LEDR)(12/20/08). To present at Singular Research confab on November 4. Grows 3rdQT revenue with SaaS-based vision products but losses grow somewhat; balance sheet still looks pretty good. Signs 250th Multiple Listing service agreement; now features more than 3.75 million home listings nationwide.

Oilsands Quest (BQI)(10/20/08). Announces best-efforts stock offering of up to $12.2 million.

Identive Group (INVE)(10/5/08). Will supply card readers to China Unicom to enable nationwide subscriber SIM card issuance. Announces CHIPDRIVE IT security kit for new German ID card.

Microvision (MVIS)(5/20/08). To host earnings call on November 1, the day we post this Newsletter.

GlobalScape (GSB)(5/20/08). Slates earnings news for November 10. Named to Deloitte’s 2010 Technology Fast 500.

Biolase Technology (BLTI)(4/5/08). We are removing this from the “Endangered List” as company gets two key patents and meets NASDAQ minimum equity requirement.

XATA Corp (XATA)(9/20/07). Ranked 363rd on Deloitte’s 2010 Technology Fast 500 in North America.

Endologix (ELGX)(1/20/07). Reports 30% 3rdQT revenue growth and raises 2011 guidance; balance sheet still looks strong. To present at Oppenheimer healthcare confab on November 2, the day after we post this Newsletter. Announces publication of clinical trial results supporting anatomical fixation with a Suprarenal aortic extension.

YM BioSciences (YMI)(11/5/06). Rodman & Renshaw give the stock a “buy” rating.

Inventure Foods (SNAK)(3/5/06). Stock gets a nice pop on some good earnings news; balance sheet still looks good.

8×8 (EGHT)(1/20/06). To present at a few conferences in the next several weeks. This stock also gets a nice uplift on good earnings news; balance sheet still looks good. Named to Deloitte’s FAST 500 technology list. Yes, it has taken almost five years to get to where we want it to go, but there are some companies that take a little time to be found.

Our picks for this Newsletter are a NASDAQ-listed biotech and a communications equipment provider that trades on the AMEX.

PEREGRINE PHARMACEUTICALS, INC. (NASDAQ: PPHM) – $1.52. Twelve-month hi-low has been $4.30 – $1.25. Based in Tustin, CA, with about 135 employees, this biotech has 56.2 million shares outstanding, $26.35 million in total current assets, $29.3 million in total assets, little debt, and $16.46 million in total liabilities. Institutional ownership is around 14%. One analyst gives the stock a “strong buy”.

And, yes, yet another small biotech, Peregrine Pharmaceuticals, Inc. has an interesting product pipeline and a half-decent balance sheet.

Founded in 1981 and public for around sixteen years, Peregrine develops monoclonal antibodies for treating cancer and viral infections. The company develops clinical programs with its novel compounds bavituximab and Cotara, which are the clinical candidates under its anti-phospahtidylserine therapeutics and tumor necrosis therapy platforms. Its pipeline products comprise Bavituximab Plus Docetaxel, and Bavituximab plus carboplatin and paclitaxel, which are Phase II clinical trial products for treating advanced breast cancer patients; and Bavitumimab plus carboplatin and paclitaxel a Phase II clinical trial product for treating non-small cell lung cancer; as well as Bavituximab, which is in Phase I monotherapy repeat dose safety study for treating solid tumor cancers, and in Phase Ib repeat dose safety study for treating chronic hepatitis C virus infection co-infected with HIV.

In addition, Peregrine’s pipeline products include Cotara, a product in Phase II, as well as a dosimetry and dose confirmation study for treating glioblastoma multiforme, an aggressive form of brain cancer. Further, the company, through its wholly-owned subsidiary, Avid Bioservices, provides contract manufacturing services for biotech and biopharma companies from pre-clinical drug supplies up through commercial-scale drug manufacture.

Like many small biotechs, the company has scant revenues and some nasty losses. For example, during the quarter ending 7/31/10, revenue was $3.2 million with $7.7 million in losses. Its revenue can have high or low fluctuations depending upon licensing fees.

The company seems to have a lot in the hopper and its stock price is at the lower end of its 52-week range.

Our 24-month target for the stock is $2.85 to $3.00.

For more information, contact PPHM’s Amy Figueroa at 800-987-8256;

RELM WIRELESS CORPORATION (AMEX: RWC) – $2.04. Twelve-month hi-low has been $5.75 – $1.65. Based in West Melbourne, FL, with about 85 employees, this communication equipment provider has 13.5 million shares outstanding, $21.11 million in total current assets, $32.66 million in total assets, little debt, and $3.38 million in total liabilities. Institutional ownership is around 20%. One analyst has the stock as a “hold”.

When we first looked at Relm Wireless Corporation we had to stop and say “huh?”. The stock is at its yearly lows, but the balance sheet looks good and the company is holding its own revenue and profit-wise.

Founded in 1957 and public for thirty years, RELM designs and makes wireless communication products, principally two-way land mobile radios (LMR), which it sells to two market segments: the government and public safety markets, including homeland security, fire, rescue, law enforcement and emergency medical personnel as well as military and various federal, state, and local agencies; and to the business and commercial markets, including disaster recovery, railroads, educational institutions, hotels, construction companies, and airlines.

RELM’s products include two-way land mobile radios, repeaters, base stations, and related components and subsystems. Besides its RELM/BK-branded land-mobile radio equipment, it offers P25 digital products under the BK Radio brand.

At the end of September, RELM received $2.5 million in orders from the U.S. Forest Services and order for P25 radios totaling $3.2 million fro multiple branches of the U.S. military. Also, at that time, the company introduced the first trunked versions of its expanding KNG-line of digital P-25 radio models.

For FY2009, ending 12/31/09, revenue was $27.98 million with $2.36 million in net income. During the first six months of the current FY, ending 6/30/10, revenue was $13.52 million with $340,000 in net income.

Okay, this is not the sexiest of companies and net income has been on the light side this FY, but we cannot help but think the stock has been somewhat oversold.

Our 24 month target for the stock is $3.25 to $3.75.

For more information, contact RWC at 321-984-1414.

Look for the November 20, 2010 Newsletter to be posted on 11/16 or 11/17.

Thank you,

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