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Hello Readers,

We did not close any positions since the last Newsletter, and we’re not overly surprised. For the last several weeks, the markets have been marking time, thanks to rising energy prices and with special emphasis on talk of $3 to $4 gasoline possible by year’s end. The oil companies blame the automakers and vice versa while the rest of us blame both. The markets are sorting all of this out, along with the spectre of even higher interest rates. For now, there appears to be a bump in the road.

Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.

ThermoGenesis (KOOL) (4/5/06). Gets 20 new patent claims for Thrombin-making device.

Cytogen (CYTO) (3/20/06). Sets earnings call for May 8. Submits IND for CYT-500 for treating prostate cancer. Reports on preclinical research of QUADRAMET for treating Osteosarcoma.

TII Network (TIII) (3/30/06). Reports 2005 transition year end results, which appear pretty good, as does balance sheet.

Poore Brothers (SNAK) (3/5/06). Sets earnings call for April 27. Seeks to change its name to The Inventure Group, Inc.

Adherex (ADH) (2/20/06). Executes clinical trail agreement for ADH-1 with the National Cancer Institute. Makes presentations on ADH-1 and Eniluracil at annual meeting of American Association of Cancer Research (AACR).

Gateway (GTW) (2/5/06). About two dozen releases. Most notable is that eMachines desktop PCs starting at $399.99. Also, Fortune writes a very fair assessment of the company, which is at

MIND C.T.I. (MNDO). Schedules earnings release for May 10.

8×8 (EGHT) (1/20/06). Coverage initiated by brokerage firm. Makes new appointments to management team. Castelle (CSTL) (1/5/06). Announces integration of its network fax servers with Ricoh’s new GlobalScan 2.0 software.

Digital Angel (DOC) (12/20/5). Reports record sales for ear tags in March. Gets patent approval for thermal microchip.

Fusion Telecom (FSN) (12/5/05). Licenses Global IP sounds technology to power its VoIP Softphone.

IONA Technologies (IONA) (11/5/05). Celtix Project achieves fifth key milestone. Iona and AmberPoint announce SOA infrastructure capabilities.

Discovery Partners (DPII) (10/5/05). To merge with privately-owned infinity Pharmaceuticals; new stock symbol should be INFI and the new entity may have in excess of $100 million cash/cash equivalents.

EntreMed (ENMD) (9/5/05). Presents preclinical results at AACR for Panzem device user interfaces.

Zi Corp (ZICA) (8/5/05). Joins forces with Trolltech to enhance mobile device user interfaces.

Telecom Systems (TSYS) (6/20/05). U.S. Coast Guard procures custom-configured TCS SwiftLink deployable SIPRNET solution for emergency uses. About half a dozen news releases on various products.

Commerce Energy (EGR) (6/5/05). Increases Houston residential customer base over 50% in the first week of the Houston consumer choice program.

Vion Pharma (VION) (5/20/05). Presents preclinical data on several drug candidates at the AACR meeting.

Verticalnet (VERT) (4/5/05). Files forms 8-K for unregistered sale of equity securities.

Applied Micro Circuits (AMCC) (11/20/04). Highlights StorSwitch architecture at road show. Sets earnings call for April 26. Plans to exit its operations in France. Announces industrial high-performance networking PowerPC-based microcompressor.

Nova Measuring (NVMI) (11/5/04). Fourth QT and year-end results not great; balance sheet seems okay. Believes infringement suit is without merit.

Choridant Software (CHRD) (9/20/04). Slates earnings call for May 4.

Network Engines (NENG) (6/5/04). Earnings call planned for April 27. Unipalm to distribute company’s NS Series security appliances throughout the U.K.

The Management Network (TMNG) (4/20/04). To acquire international operations of ADVENTIS, LTD.

Palatin (PTN) (4/5/04). To raise $27 million in equity offering to institutional investors.

OpenTV (OPTV) (3/20/04). To integrate core 2.0 Middleware with ICTV HeadendWare platform. About five to six other news releases on various products.

Somera Communications (SMRA) (2/20/04). Effects 1 for 10 reverse stock split, which usually isn’t good for existing shareholders. Accountants concerned about company’s future. Remember, this one’s on the “Endangered list”.

Actuate (ACTU) (1/5/04). Sets earnings call for April 25.

Insmed (INSM) (11/5/03). CE Unterberg Towbin gives the stock a “buy”.

AVIZA (AVZA) (10/5/04). Sued by IPS Ltd. for misuse of confidential information.

Our picks for this issue are another NASDAQ-listed biotech and an AMEX-listed brokerage firm.

PHARMOS CORPORATION (NASDAQ: PARS) – $2.42. Twelve-month hi-low has been $4.00 – $1.94. Based in Iselin, NJ, with about 50 employees, this biotech has 19.1 million shares outstanding, $47.39 million in total current assets, $48.99 in total assets, little debt, and $3.76 million in total liabilities. Institutional ownership is around 6%. One analyst rates the stock a “strong buy” and two have it as a “hold”.

We add to the Current Portfolio a biotech that had a stumble a little while ago, but may see better days ahead. It also helps that Pharmos Corporation has a very healthy-looking balance sheet; however, the stock price may be depressed for the short to mid-term because the company is acquiring another biotech, mostly through equity financing. Founded in 1982, and public for over a decade, Pharmos is developing immunomodulatory and anti-inflammatory therapeutics to treat a range of disorders of the central and peripheral nervous systems. These include neuropathic pain, post-surgical pain and a range of autoimmune diseases such as multiple sclerosis, rheumatoid arthritis, and inflammatory bowel disease. Its proprietary technology platform focuses on discovering and developing what are known as synthetic cannabinoid compounds. The company’s lead product candidate, Cannabinor, which is a CB2-selective class compound in Phase 1 clinical trial, is used as an analgesic to treat moderate to severe pain of various etiologies.

Pharmos also has several other noteworthy products in development. Its neuroprotective drug candidate, Dexanabinol, a Phase 2a trial completed product, is used as a preventive agent against post surgical cognitive impairment. PARS’ NanoEmulsion drug delivery system is in clinical stage development for topical application of analgesic and anti-inflammatory agents. The company also has various other compounds in preclinical studies.

In mid-March, Pharmos agreed to acquire privately-held Vela Pharmaceuticals for $5 million and 11.5 million shares. Vela also specializes in developing medicines related to diseases of the nervous system; its most advanced drug candidate is R-tofisopam for treating diarrhea-predominant and alternating-type IBS (irritable bowel syndrome). Pharmos is typical of many small R&D biotechs in that it has little revenue and some hefty losses. For FY2005, ending 12/31/05, revenue was nil with net losses of $2.93 million; helping to ease the bleeding was a non-recurring milestone payment from Bausch & Lomb, a former marketing partner.

The acquisition of Vela expands PARS’ pipeline with later-stage clinical drug candidates.

Our 24-month target for the stock is $4.25 to $5.00.

For more information, contact PARS’ Gale Smith at 732-452-9556;

INVESTORS CAPITAL HOLDINGS, LTD. (AMEX: ICH) – $3.18. Twelve-month hi-low has been $5.03 – $2.18. Located in Lynnfield, MA, with about 65 employees, this securities dealer has 5.8 million shares outstanding, $13.68 million in total current assets, $16.03 million in total assets, little debt, and $5.65 million in total liabilities. Institutional ownership is around 6%.

One of the most boring companies we could add to the Current Portfolio is a brokerage firm, but many of them now have pretty good balance sheets, and in the case of Investors Capital Holdings, Ltd. it has been making money for at least the last three and a half years. This is not an endorsement to trade through them; the publisher does not. Founded in 1995, and public for just over five years, Investors Capital, through its subsidiaries, operates as a general securities/stock broker and asset manager in the U.S.

The company provides broker-dealer services related to trading and investment in corporate equity and debt securities, U.S. government securities, municipal securities, mutual funds, and variable annuities, as well as variable life insurance. ICH provides market information, Internet trading, and portfolio tracking facilities and records management. In addition, Investors Capital offers investment advisory and asset management services and it manages two retail mutual funds. The company also provides portfolio and mutual fund services to individual investors and institutional clients, such as banking firms, pension funds, endowments and trusts.

At the end of February, Investors Capital had more than $5 billion in assets under management. The company has a broker-dealer network of about 750 representatives. In early April, the former president and CEO of Greenwich Global Financial Group joined the company to run its Connecticut and New Jersey regions. For the year ending 3/31/05, revenues were $55.16 million with $619,000 in net income.

During the first nine months of the current FY, revenues were $48.36 million with net income of $265,000. The company is on track to see 20% year-over-year revenue growth.

Over the years, we did well with the one or two other brokerage plays we had. Of course, the bet here is that the markets will keep on rolling. For more information, contact ICH’s Darren Horowitz at 781-593-8565; ext. 261;

Look for the May 5, 2006 Newsletter to be posted on 5/1 or 5/2.

Thank you,


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