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Hello Readers,

Since the last Newsletter we closed two positions, one for a nice gain and two for losses.

NEUROGEN (2/5/08). Closed position 3/20/08 at $3.40 for a 70% GAIN.

WJ COMMUNICATIONS (12/5/06). Closed position 3/20/08 at 95 cents for a 52% LOSS.

CYTOGEN (3/20/06). Closed position 3/20/08 at 57 cents for a 83% LOSS. At the time we closed it, we had no clue as to why Neurogen soared almost $1.25 in a day, and, in this market, why ask questions; someone knew something or thought they did. The deal between TriQuint and WJ Communications looks as if it will go through at $1.00 a share, so, why hang around for the extra nickel? Ditto for Cytogen, which is being bought by EUSA Pharma.

Once again, our Current Portfolio remains pretty much the same as it did several weeks ago, and several months ago. As we said in the last Newsletter, the more that the Fed and the government “help” things the more prolonged will be the pain. Actually, if one looks closely, both in appearance and in recent actions, George Bush is transforming into LBJ and Ben Bernanke is resembling Lenin. We now have nearly complete socialism of the markets. The rich masses have been saved from themselves! The best thing the Fed/Treasury could do is to allow the other types of Bear Stearns to fold; after all, they abetted this mess. Then, instead of lower interest rates, which are near zero once again, rates should be raised and that move would strengthen the dollar and maybe ease commodity prices.

So, we continue to say “bottom fish”, but, remember, think long-term. The Fed has your back.

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

Rodman, Renshaw (RODM) (3/20/08). To acquire M&A advisor Miller Mathis, which probably has pressured the stock; acquisitions can do that. Names new CFO.

Barrier Therapeutics (BTRX) (3/20/08). Granted second interim patent term extension for Vusion ointment. Names new CFO.

NetSol (NTWK) (3/5/08). Selected for additional land record automation project for the Islamabad Capital Territory. Growth fund puts a ‘buy’ on the stock. Chinese automotive finance firm chooses company’s LeaseSoft solution. Announces one million share repurchase authorization. Updates LeasePak and Equipment Portfolio Module.

ActivIdentity (ACTI) (3/5/08). Teams with Innovative Card Technologies to launch Smart DisplayCard, which incorporates a one-time passcode display and a PKI chip into a wafer-thin card format. Deloitte Ireland mobilizes workforce with ACTI’s Smart Employee ID solution.

GSI Technology (GSIT) (2/5/08). To present at the B. Riley annual investor conference on April 2.

Hollywood Media (HOLL) (1/5/08). Full-year revenues have a nice increase, but 4thQT was weaker than same period a year ago; balance sheet still looks good.

Move, Inc. (MOVE) (1/5/08). Company says year-over-year growth outpaces real estate category by 57%.

Catalyst Pharmaceutical (CPRX) (12/20/07). Gives pretty upbeat year-end report; balance sheet still looks healthy.

Hollis-Eden Pharmaceuticals (HEPH) (12/20/07). Year-end cash position still looks good. Reports positive preliminary data from ongoing Phase I/II clinical trial with TRIOLEX in obese insulin resistant subjects.

Amerityre (AMTY) (12/5/07). Acquires manufacturing assets from Kik Technology.

DigitalFX (DXN) (12/5/07). Boasts of record revenue during FY2007, but suffers losses; balance sheet still looks okay. Restructures previously announced finance agreement. Upgrades FirstStream Studio.

Linktone (LTON) (11/5/07). Gross revenue takes a hit; balance sheet still looks pretty good.

American Technology (ATCO) (10/5/07). To debut new LRAD-X AHD product line at ISC West 2008.

Wave Systems (WAVX) (9/5/07). To present at security confab on April 7. SigniaDocs chooses Wave solution for its e-services mortgage platform.

Kodiak Oil & Gas (KOG) (9/5/07). To present at petroleum association symposium on April 7; and at Howard Weil energy confab on April 9-10.

Iomai (IOMI) (8/20/07). Study finds single dose of Iomai Patch with pandemic flu vaccine achieves protective levels.

Siga Technologies (SIGA) (8/20/07). Successfully completes ST-246 multiple ascending dose human clinical trial. Files application supporting emergency use approval of ST-246.

A.P. Pharma (APPA) (8/5/07). Announces stock option grants.

Radcom (RDCM) (7/20/07). Receives NASDAQ delisting notice due to minimum bid requirement. So, company plans to ask shareholders to approve a reverse split, and these seldom benefit current stockholders.

Xenonics (XNN) (6/5/07). Launches SuperVision tactical package.

Oncolytics (ONCY) (6/5/07). Is issued 26th U.S. patent. Announces publication of research on immune response to REOLYSIN during a Phase I clinical trial.

Encorium Group (ENCO) (5/20/07). Gets $1.6 million contract for a Phase 2 trial of a vaccine for treating hypertension. Releases pretty good year-end numbers; balance sheet still looks good. Announces $2.5 million in contracts.

Hana Biosciences (HNAB) (5/5/07). Balance sheet still looks okay.

ECTel (ECTX) (5/5/07). Telekom Srpske places first time order for company’s fraud management solution.

TTI Team Telecom (TTIL) (3/5/07). Releases some pretty nice looking revenue and earnings numbers; balance sheet still okay.

Eon Communications (EONC) (2/5/07). To sell investment in Spark for $300,000.

UQM Technologies (UQM) (2/5/07). Delivers motor for use in fuel cell powered switch locomotive.

Lantronix (LTRX) (12/5/06). Nissin Systems selects Lantronix technology platform to support IPv6, which could be the next-generation Internet protocol.

CardioTech (CTE) (12/20/06). Sells catheter and disposables technology for $1.2 million to TACPRO, Inc.

Proxim Wireless (PRXM) (11/5/06). Malmaison and Hotel du Vin hotel chains install Proxim Wi-Fi and Wi-Fi mesh systems for guest Internet access. Selected by Tata Communications as supplier of mesh and point to multipoint unlicensed broadband equipment.

HealthStream (HSTM) (10/20/06). Earns HFMA’s Peer Review designation.

NTN Buzztime (NTN) (7/5/06). Signs co-branded video content agreement.

Tris-S Security (TRIS) (5/5/06). Quarterly and FY numbers show pretty good revenue growth; balance sheet still looks good. Revises 2008 revenue up to $140-$150 million. Gets Department of Homeland Security contract for Los Angeles, San Diego, and San Ysidro border crossing.

Lipid Sciences (LIPD) (2/20/06). Year-end balance sheet could be a lot healthier. Strong trend of effectiveness indicated in LIPD’s first-in-man clinical trial of HDL selective delipidation. Lipid’s mimetic peptide demonstrates ‘significant’ anti-atherosclerosis effect in a key animal model.

Adherex (ADH) (2/20/06). Year-end balance sheet still looks good. Announces Phase III trial with STS in collaboration with the Children’s Oncology Group. To present ADH-1 Phase I/II melanoma trial data at annual oncology confab. This is still on the “Endangered List”.

Digital Angel (DIGA) (12/20/05). Year-end results somewhat disappointing, given all of the PR that this company churns out; balance sheet could be better.

RAE Systems (RAE) (10/5/05). Implements cost reductions and starts by cutting 10% of its staff.

Zi Corporation (ZICA) (8/5/05). Reports yearly results. This is on the “Endangered List”.

N.A. Scientific (NASI) (8/5/05). Reports yearly results. This, too, is on the “Endangered List”.

Vion Pharma (VION) (5/20/05). Despite that reverse split, and most of you know how we feel about those, the company still receives a NASDAQ delisting notice for minimum equity requirements. This is on the “Endangered List”.

B.O.S. (BOSC) (1/5/05). Releases some good-looking revenue numbers; balance sheet still okay. Expects 2008 growth of 123% in proforma revenues.

TMNG Global (TMNG) (4/20/04). To present at B.Riley investor confab on April 3.

Our picks for this issue are another biotech and a maker of dental products, both trading on NASDAQ.

REPLIDYNE, INC. (NASDAQ: RDYN) – $1.35. Twelve-month hi-low has been $7.50 – $1.29. Based in Louisville, CO, with about 85 employees, this biotech has 26.8 million shares outstanding, $92.69 million in total current assets, $94.69 million in total assets, little debt, and $12.29 million in total liabilities. Institutional ownership is around 27%. One analyst rates the stock a “strong buy” and one as a “moderate buy”.

As the market continues to throw out the babies with the bath water, the best we can do is still look for companies with at least good balance sheets, such as Replidyne, Inc. It’s also good to know that it still enjoys institutional support and a few “buys”.

Founded in 2000, and trading on NASDAQ for less than two years, Replidyne focuses on developing anti-infective products. Its lead product is Faropenem Medoxomil, an oral community antibiotic, which the company believes would be appropriate for use as a first-line antibiotic for certain respiratory and skin infections in adult and pediatric patients. Faropenem is in late stage clinical development in adult patients with acute bacterial sinusitis (ABS), acute exacerbation of chronic bronchitis (AECB), and community-acquired pneumonia (CAP). The various forms of Faropenem include oral liquid formulation, which has completed Phase II clinical trials for acute otitis media; 300 mg tablet that has completed Phase III clinical trial for ABS; and 600 mg tablet, which is in Phase III clinical trial for AECB. Faropenem has also completed Phase II clinical trials for pediatric patients with acute otitis media (AOM). Replidyne has a license agreement with Daiichi Asubio Pharma Co. to develop Faropenem in the U.S. and Canada.

Replidyne’s other product candidates include REP8839, a topical antibiotic, which is in Phase I clinical development for treating skin and wound infections; investigational antibacterial agent REP3123 that targets gram-positive C.difficile bacteria and C.difficile-associated disease (CDAS), better known as intestinal tract diseases; and DNA Replication, which is a discovery program to develop novel antimicrobial agents.

It should be noted here that last year, Replidyne received most of its revenue from Forest Labs but that their commercialization and development agreement has been terminated. The company had to streamline operations and is now seeking a new partner for the Faropenem program.

For FY2007, ending 12/31/07, net income was $7.69 million, but keep in mind that this was mainly earned from Forest Labs, which will not be included in future reports. In FY2006, net losses were close to $35 million, which is about par for many small biotechs.

There is a major push to find drugs for so-called “tough bugs” and Replidyne supposedly has some promising candidates. It appears that, for now, the company has the resources to go further, but finding a new partner would make life much easier. This is somewhat of a gamble.

Our 24-month target for the stock is $2.25 – $2.50.

For more information, contact RDYN at 303-996-5522;

BIOLASE TECHNOLOGY, INC. (NASDAQ: BLTI) – $3.05. Twelve-month hi-low has been $10.50 – $2.20. Located in Irvine, CA, with about 195 employees, this dental products maker has 24 million shares outstanding, $35.77 million in total current assets, $44.3 million in total assets, little debt and $27.82 million in total liabilities. Institutional ownership is around 44%. One analyst rates the stocks a “strong buy”, one a “moderate buy”, and another has it on “hold”.

This is probably as good a time as any to try a company in transition, and that’s what Biolase Technology, Inc. appears to be. FY2007 did not meet expectations, but the company feels it has done what is needed to have a good 2008.

Founded in 1984, and public for over a dozen years, Biolase makes and sells advanced dental, cosmetic, and surgical lasers and related products. These include dental laser systems that allow dentists, periodontists, endodontists, oral surgeons, and other specialists to perform various dental procedures, including cosmetic and surgical applications. The company’s laser system products include Waterlase System and Diode System. The Waterlase uses a patented combination of water and laser to perform dental procedures that use dental drills, scalpels, and other dental instruments for cutting soft and hard tissue. The Diode laser uses a semiconductor diode laser for soft tissue and cosmetic procedures, including tooth whitening. In addition, Biolase makes and sells accessories and disposables for its laser systems, such as hand pieces, laser tips, and tooth whitening gels.

Of note is that Biolase has more than 100 patents, of which two-thirds are related to its proprietary technology of combining water and laser. The latest technology is its ‘ezlase’ with ComfortPulse settings that delivers short, high-power cutting pulses with longer intervals for tissue thermal relaxation and that provides greater patient comfort with less anesthetic.

For FY2007, ending 12/31/07, revenue was $66.88 million with net losses of $7.3 million compared to FY2006 revenue of $69.7 million and $4.53 million in losses.

Anyone who has had laser work at a dentist office can understand Biolase products. The key here is that the company has its “transition” behind it.

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

For more information about BLTI, call 949-361-1200.

Look for the April 20, 2008 Newsletter to be posted on 4/16 or 4/17.

Thank you,

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