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Hello Readers,

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

KOPIN (4/20/08). Closed position 5/27/09 at $3.85 for a 50% GAIN.

VIRAGE LOGIC (3/5/09). Closed position 5/19/09 at $4.05 for a 50% GAIN.

NAS MEDICAL (8/5/05). Closed position 5/18/09 at 2 cents for a 99% LOSS.

There was any real game-changer that we can see that moved Kopin, and, as we have said hundreds of times over the years, if it’s a gain, we don’t care what jacked the stock. Virage Logic had stayed pretty much in positive territory ever since we picked it, and the stock got a boost on a new tech development at the company. And, we closed NAS Medical for one of our all-time ugly losses.

Guess what? The markets are about at the same place as they were several weeks ago. Too many of us are still grasping at the “green shoots” and have been ignoring the dandelions. Sure, this thinking has been a boost for stocks over the last few months, but, once, again, we urge you to exercise great caution. There will be more pullbacks, perhaps even retesting the old lows, and that will be the time to get excited. As we have said in previous Newsletters, this rally has been more about perception than about reality. Once the markets retest old lows, then future rallies should be more about realities caused by better earnings. Isn’t that what really moves markets?

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.

Intellon (ITLN)(5/20/09). Brokerage Canaccord Adams gives the stock a “buy”. Named “The fastest growing wired communications semiconductor company in 2008” by The Linley Group.

Sonic Solutions (SNIC)(5/5/09). Recent numbers about as expected, not great; balance sheet still looks good. Subsidiary Roxio introduces Easy VHS to DVD for Mac. Qflix technology helps put Hollywood hits at consumers’ fingertips.

CSP, Inc (CSPI)(4/5/09). Subsidiary Modcomp Systems & Solutions renews its Cisco Silver Certification; is recognized for Cisco customer satisfaction excellence in the USA. Named to Globe 100 for second consecutive year.

Isilon (ISLN)(3/20/09). Stronghold Data powers virtual data center with Isilon IQ.

AuthenTec (AUTH)(2/5/09). To present at UBS Global confab on June 9.

AXT, Inc (AXTI)(12/20/08). To present at UBS confab on June 10.

Akeena Solar (AKNS)(10/20/08). Several law firms file shareholder suits against the company. Launches a new direct to installer sales channel.

SCM Microsystems (SCMM)(10/5/08). Now offers CHIPDRIVER solution aimed at the transportation industry. Upgradeable Mobile terminal eHealth500 receives certification for German eHealth program.

Lexicon Pharmaceuticals (LXRX)(9/20/08). To present clinical data for LX1031 and LX1032 at Digestive Disease Week on June 1, the day we post this Newsletter.

Uranium Energy (UEC)(8/20/08). Coverage initiated by CIBC World Markets. Receives production Area-1 draft authorization at Goliad.

U.S. Geothermal (HTM)(8/5/08). HTM’s Neal Hot Springs Oregon project selected for DOE program.

Bridgeline Software (BLSW)(6/5/08). Receives six Horizon Awards.

GlobalScape (GSB)(5/20/08). Partners with Intelligent Decisions in government IT market.

Catalyst Pharmaceutical Partners (CPRX)(12/20/07). Stock tanks as Phase II trial for cocaine addiction fails to meet primary endpoint. Receives NASDAQ notice on equity requirement.

Santarus (SNTS)(11/20/07). To present at UBS Pharma conference on June 3.

Linktone (LTON)(11/5/07). To announce 1stQT results on June 10.

American Technology (ATCO)(10/5/07). Unveils latest addition to LRAD product line.

XATA Corp (XATA)(9/20/07). Adds TREQ-M4 in-cab color display.

TTI Telcom (TTIL)(3/5/07). Recent numbers not great, but company still shows a profit; balance sheet still looks good.

UQM Technologies (UQM)(2/5/07). FY numbers show revenue growth and slight paring of losses; balance sheet still seems stable.

8×8 (EGHT)(1/20/06). Company and Aastra roll out co-branded Internet protocol business phones at Office Depot retail stores. FY numbers show revenue growth but losses; balance sheet still looks good.

RAE Systems (RAE)(10/5/05). To exhibit gas detection products at industrial hygienists confab on June 1-3.

The picks for this Newsletter are another solar company and a business service provider, both trade on NASDAQ.

REAL GOODS SOLAR, INC. (NASDAQ: RSOL) – $2.05. Twelve-month hi-low has been $8.49 – $1.42. Located in Louisville, CO, with about 175 employees, this alternative energy provider has 17.9 million shares outstanding, $26.08 million in total current assets, $36.13 million in total assets, little debt, and $6.52 million in total liabilities. Institutional ownership is around 27%. Two analysts give the stock a “moderate buy” and one has it as a “hold”.

Over the years, most of our solar picks have worked out, and we are still waiting for Akeena Solar, which we recommended at the end of last year, to do the same. Actually, Akeena plunged to 57 cents before recovering to its current levels. The long and short of things is that solar stocks will basically move with the price of oil and, now, with Obama, how much the government is going to throw at solar energy. So, keep this in mind when deciding upon Real Goods Solar, Inc., which has a pretty good balance sheet and has been on an acquisitions binge, of late.

Founded in 1978, and public for just over a year, Real Goods Solar is a residential solar energy integrator; in fact, it sold the very first solar panel in the U.S. in 1978. The company offers turnkey services to their solar energy system customers, including design, procurement, permitting, build-out, grid connection, financing referrals, and warranty and customer satisfaction activities. It uses solar photovoltaic (PV) modules from manufacturers such as Sharp, SunPower, and Kyocera Solar. Real Goods Solar boasts of having installed over 4500 solar systems since its inception. The company has mostly been targeting the Colorado and California markets, since rebates and tax incentives in those states have made solar power systems more affordable.

Real Goods installs systems that are generally between 1 kilowatt and 250-kilowatts output, with the average residential installation being about four-kilowatts output. Oh, and because of those tax rebates, a typical 5kW system in CA now only costs an estimated $21,000, and in CO the cost is around $14,000.

As we said above, Real Goods Solar has been going on a buying spree. In January, 2008, its subsidiary acquired certain assets of Carlson Solar. In August, 2008, it bought 100% interest in Independent Energy Systems. Then, last October, 2008, the company acquired 100% ownership of Regrid Power through a merger into one of its subsidiaries.

For FY2008, ending 12/31/08, revenue was $39.22 million with $28 million in losses, much of the loss resulting from a non-cash charge related to goodwill impairment and certain acquisition costs. During the 1stQT of the current FY, ending 3/31/09, revenue was $9.53 million with $1.38 million in net losses. Since March 1, the company has signed sales contracts representing $30 million of revenue; so, if these hold, 2009 could be a pretty sunny year.

As some point, solar stocks should get hot, again, and Real Goods Solar should be part of the pack.

Our 24-month target for the stock is $3.50 to $4.00.

For more information, contact RSOL at 888-507-2561;

USA TECHNOLOGIES, INC. (NASDAQ: USAT) – $2.55. Twelve-month hi-low has been $6.49 – 90 cents. Located in Malvern, PA, with about 50 employees, this business services provider has 15.3 million shares outstanding, $13.55 million in total current assets, $28.88 million in total assets, and $6.2 million in total liabilities, of which $568,000 is long-term debt. Institutional ownership is around 18%. One analyst rates the stock a “strong buy”.

Sometimes, we pick a non-sexy company that appears to have potential thanks to its technology and a half-decent looking balance sheet. Such is the case with USA Technologies, Inc., which, like most companies, has taken a hit this year.

Founded in 1992, and public for about ten years, USAT is a supplier of cashless payment, remote management, reporting and energy management solutions serving the unattended point-of-sale market. The company’s network devices and associated services enable the owners and operators of distributed assets, such as vending machines, kiosks, personal computers, photocopiers, and laundry equipment the ability to monitor, control, and report on the results of the distributed assets, as well as the ability to offer their customers cashless payment offers. Its products include Intelligent Vending, an e-Port connect solution for the vending industry; eSuds, a solution for the commercial laundry industry; Business Express, a suite of office equipment; and KIOSK that offers a cash-free payment option, and Web-based remote monitoring and management for all kiosk types. The company also sells energy management products that reduce electrical power consumption, including VendingMiser, CoolerMiser, VM2IQ and CM2IQ, SnackMiser, and PlugMiser.

USAT has strategic partnerships with Mastercard, Honeywell, Blackboard, AT&T Mobility, and Coca-Cola. As of June 30, 2008, the company had approximately 38,000 devices connected to its USALive network; however, by the end of March, 2009, this number had soared to 48,000.

For FY2008, ending 6/30/08, revenue was $16.1 million with $16.42 million in losses company to FY2007 revenue of $9.15 million and $17,78 million in losses. During the first nine months of the current FY, ending 3/31/09, revenue was $8.37 million with $11.6 million in losses. Much of the losses appear to be from selling and distribution expenses, which, if it translates into future growth, is palatable.

Yes, the company has taken a big hit this year, but it has grown its locations at a maddening rate. Once the upturn comes, USAT’s distribution efforts should pay off.

Our 24-month target for the stock is $4.50 to $5.00.

For more information, contact USAT’s Stephen Herbert at 800-633-0340;

Look for the June 20, 2009 Newsletter to be posted on 6/16 or 6/17.

Thank you,

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