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Hello Readers,

A recent front-page story in The Wall Street Journal declared that small investors are now AWOL from the markets, which, though the news is old to us, is a pretty fair assessment of the situation. Who can blame them? For seven straight days the markets tanked on modest volume, then, for nearly seven more days, shot up on dismal volume. Even the little guy is now sensing all is not right with the world. We’ve said it a zillion times, the government needs to stop trying to regulate the economy and let the markets be the markets. And yes, our Current Portfolio is still in the dumper and it has been well over a month since we have closed any positions.

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. NOTE: We are still in a slow news cycle due to the summer, but that will change, soon, once earnings season starts this week.

AEterna-Zentaris (AEZS)(6/20/10). Perifosine receives FDA Orphan Drug Designation for treating Neuroblastoma.

Aastrom Biosciences (ASTM)(6/20/10). Initiates IMPACT-DCM extension study for control patients. To pursue Phase 3 clinical program for cell therapy treatment for CLI (critical limb ischemia).

Adolor (ADLR)(5/5/10). Cuts 30% of workforce as it restructurres. This is making us nervous.

Novabay Pharmaceuticals (NBY)(4/20/10). Receives Notice of Allowance from U.S. Patent Office on anti-infective NVC-612 and related compounds.

China Direct Industries (CDII)(4/5/10). To acquire 80% interest in Ruiming Magnesium for $6.6 million cash and stock deal.

Novavax (NVAX)(4/5/10). Names new scientific officer.

Cerus (CERS)(3/20/10). To release 2ndQT results on July 29.

Cytokinetics (CYTK)(2/5/10). To present at International Congress of Neuromuscular Diseases on July 21.

BioSante Pharmaceuticals (BPAX)(9/20/09). Starts LibiGel learning and memory study in women.

Performance Technology (PTIX)(7/20/09). Announces that its SEGway Signaling Solution with point code emulation chosen as piece of Union Telephone’s network evolution.

Durect Corp (DRRX)(4/20/09). Secures $50 million committed equity financing facility.

Market Leader (LEDR)(12/20/08). To release earnings August 3.

Oilsands Quest (BQI)(10/20/08). Posts Axe Lake SAGD pilot project summary. Extends deadline of sale of oil shale assets. Provides bitumen resource update.

Life Quotes (QUOT)(9/5/08). Tender offer for company extended until August 12 by LQ Acquisition.

Bridgeline Digital (BLIN)(6/5/08). Acquires eMagination and eMagination Intelligence Group.

GlobalScape (GSB)(5/20/08). Announces availability of managed hosted services for small, medium, and large enterprises following Rackspace partnership.

Biolase Technologies (BLTI)(4/5/08). Makes additional cost cutting measures by cutting 20 jobs, CFO out.

Move, Inc (MOVE)(1/5/08). Sets earnings call for August 5.

Sunesis Pharmaceuticals (SNSS)(11/5/07). Issued European patent covering Voreloxin combination. This is on the “Endangered List”.

LRAD Corp (LRAD)(10/5/07). Says it will report over $3 million in 3rdQT revenues. Awarded $700,000-plus LRAD 100X/300X order from U.S. military.

XATA Corp (XATA)(9/20/07). Freight carrier implements XATA Speed Management for enhanced safety and speed visibility.

Alliance Fiber Optic (AFOP)(7/20/07). Schedules special shareholder meeting on August 10 to consider reverse split, which, in our opinion, hardly ever work out for current shareholders.

VocalTec (VOCL)(4/20/07). Junto Telecom of Brazil selects company for Class-5 and enterprise VoIP. This is on the “Endangered List”.

Endologix (ELGX)(1/20/07). Slates earnings call for July 22.

Inventure Foods (SNAK)(3/5/06). To hold earnings call July 27.

8×8 (EGHT)(1/20/06). To present at Oppenheimer annual technology confab on August 10. Plans earnings news for July 28.

Our picks for this Newsletter are another AMEX-traded biotech and an equipment supplier, also trading on AMEX.

REXAHN PHARMACEUTICALS, INC. (AMEX: RNN) – $1.42. Twelve-month hi-low has been $3.68 – 40 cents. Located in Rockville, MD, with about 15 employees, this biotech has 75.2 million shares outstanding, $8.34 million in total current assets, $10.41 million in total assets, little debt, and $2.01 million in total liabilities. Institutional ownership is around 1%. One analyst rates the stock a “strong buy”.

One of the main reasons, other than a bad market, that the stock price of Rexahn Pharmaceuticals, Inc. has fallen is that the company is doing a secondary offering, further diluting its float a little. A company usually doesn’t garner support in a down market unless its drug candidates are somewhat promising.

Publicly-trading for over five years, Rexahn is developing treatments for cancer, the central nervous system (CNS), sexual dysfunction and other novel cures. Its drug candidates in Phase 2 clinical trials include Archexin, an inhibitor of the protein kinase Akt for treating pancreatic cancer and renal cell carcinoma; Serdaxin for treating depression and neurodegenerative disorders; and Zoraxel, a drug for sexual dysfunction that modulates the sexual activity control center in the brain. Its preclinical pipeline products include RX-1792, a molecule targeted anticancer drug candidate; RX-5902, a molecule microtubule inhibitor anticancer drug candidate; RX-3117, a molecule anti-metabolite nucleoside anticancer drug candidate; RX-8243, a molecule aurora kinase inhibitor anticancer drug candidate; RX-0201-Nano, a nanoliposomal anticancer Akt-1 inhibitor; RX-0047-Nano, a nanoliposomal anticancer HIF-1 alpha inhibitor; and RX-21101 and RX-21202, a nano-polymer anticancer.

Rexahn has various collaborative R&D relationships with universities, research institutions, and other organizations, including Teva Pharmaceutical, Thera-Target, Korea Research Institute of Chemical Technology, The University of Maryland-Baltimore, and Revaax Pharmaceuticals.

In early May, Rexahn announced that it will initiate a Phase IIb clinical trial for Zoraxel for treating erectile dysfunction (ED). The study is designed to assess Zoraxel’s efficacy in about 225 male subjects, ages 18 to 25, with ED. It is expected to begin in the second half of this year with preliminary data expected to be available in 2011.

Rexahn is pretty typical of many small biotechs in that it has little revenue and some big losses. For example, during the quarter ending 3/31/10, revenue was $19,000 with $1.57 million in losses.

We like Rexahn because it is not a Johnny One-Note in that it has multiple drug candidates in the pipeline that seem to have the interest of some pharma heavyweights.

Our 24-month target for the stock is $2.50 to $2.75.

For more information, contact RNN at 240-268-5300.

ALPHA PRO TECH, LTD. (AMEX: APT) – $1.88. Twelve-month hi-low has been $7.60 – $1.75. Based in Markham, Ontario, Canada, with about 190 employees, this equipment supplier has 22.4 million shares outstanding, $31.38 million in total current assets, $37.32 million in total assets, little debt, and $2.73 million in total liabilities. Institutional ownership is around 22%. One analyst has the stock as a “hold”.

Sometimes we pick one of those really unexciting companies that have had the capacity to survive during good times and bad, and, for the most part, have managed to make money. Alpha Pro Tech, Ltd. seems to be one of them.

Founded in 1983, and public for nearly sixteen years, Alpha Pro Tech makes and sells disposable protective apparel products, building supply products, and infection control products. The company offers disposable protective wear, such as shoecovers, bouffant caps, coveralls, gowns, frocks, and lab coats for cleanroom, industrial, and pharmaceutical markets; and building supply products comprising construction weatherization products, such as house wrap and synthetic roof underlayment products to construction supply and roofing distributors. The company also provides infection control products consisting of face masks and eye shields; medical bed pads to the extended care market; and a line of pet beds to pet distributors and retailers. Alpha Pro Tech sells through a network of purchasing groups, national and local distributors, and independent sales reps, as well as through its own marketing force under the company name and under a private label.

For FY2009, ending 12/31/09, revenue was $59.69 million with $9 million in net income. During the 1stQT of the current FY, ending 3/31/10, revenue was $11.6 million with $687,000 in net income.

As we said, nothing sexy about this company, but one must think that this is the sort of stock that is occasionally picked up by fund managers.

Our 24-month target for the stock is $3.25 to $3.50.

For more information, contact APT’s Al or Donna Millar at 905-479-0654;

Look for the August 5, 2010 Newsletter to be posted on 8/2 or 8/3.

Thank you,

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