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Hello Readers,

Back in January, we said that our Current Portfolio was the worst it has ever looked and that the markets were the ugliest we have seen since the 1980s. Scratch that. This is now the worse and the ugliest. Yes, the Fed is acting to improve the liquidity situation, a situation that it helped to create, but there is now much shattered confidence, nose-bleed high oil prices, and, boy, aren’t we all excited about the next President! As we alluded in the last Newsletter, it would probably be better to let the markets capitulate rather than to have this death by a thousand knives. Sure, the Treasury, the Fed, and other regulators/agencies/whatever mean well, but their current actions are just delaying, or dragging out, the recession, thereby making things worse.

Now despite this rosy picture we just painted, we still feel that some ‘bottom fishing’ may be in order. Just don’t bait the rod with overly expensive flies and have some patience.

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

NetSol Technologies (NTWK) (3/5/08). Launches “Secure Pakistan” aimed at safeguarding the digital boundaries of that country. Wins Basel II consultancy contract with leading bank in Pakistan. And yes, these two news items probably should have sent the stock higher, but, as we have been saying for the last several months, good or great news seems to be falling on deaf ears in this market climate.

ActivIdentity (ACTI) (3/5/08). To exhibit Smart Employee ID solution at Novell BrainShare 2008 running March 16-21. Products earn high marks in Redmond Magazine Product Review. Smart Employee ID solution finalist for SC Magazine Awards. CFO stepping down. New directors appointed to board.

Entrust (ENTU) (2/20/08). Deploys IdentityGuard for Universa, Germany’s oldest private health insurer. South African company selects the IdentityGuard platform.

Neurogen (NRGN) (2/5/08). Slates earnings call for March 17, the day we post this Newsletter.

Hollywood Media (HOLL) (1/5/08). announces online ticketing partnership with B&B Theatres. Schedules earnings release for March 17, again, the day we post this Newsletter.

Move, Inc (MOVE) (1/5/08). Names new CTO. Funds owner calls for dismissal of CEO and CFO.

Hollis-Eden Pharma (HEPH) (12/20/07). Sets earnings news for March 19.

DigitalFX (DXN) (12/5/07). To launch national infomercial campaign.

Santarus (SNTS) (11/20/07). Latest revenue numbers look good, as does the balance sheet. Announces submission of New Drug Application (NDA) by Schering-Plough for ZEGERID branded OTC product. UBS upgrades the stock to a “buy”.

Linktone (LTON) (11/5/07). Sets earnings news for March 27.

Sunesis Pharmaceuticals (SNSS) (11/5/07). To present at various healthcare investor confabs. Latest balance sheet still looks pretty good. Reports positive interim data for drug in ovarian cancer test.

Boots & Coots (WEL) (9/20/07). Reports record revenues along with some nice-looking earnings; balance sheet still looks good.

Wave Systems (WAVX) (9/5/07). Releases good quarterly and year-end revenue numbers but losses inch up a bit; balance sheet could be a little better. Announces EMBASSY Support for Seagate FDE hard drives. To complete $3.5 million stock offering.

Kodiak Oil & Gas (KOG) (9/5/07). Gives a pretty upbeat outlook for 2008 projects; balance sheet still looks okay.

Iomai (IOMI) (8/20/07). To present at Cowen and Company healthcare conference on March 17, the day we post this Newsletter. Year-end results upbeat; balance sheet still okay.

A.P. Pharma (APPA) (8/5/07). Year-end balance sheet looks pretty good.

Oncolytics Biotech (ONCY) (6/5/07). To present reovirus research at AACR annual meeting April 12-16. Year-end balance sheet looks good.

Hana Biosciences (HNAB) (5/5/07). Sets earnings call for March 27.

Immunicon (IMMC) (3/20/07). Loses arbitration with Veridex over Cell Search; cuts 40% of its staff. We’ve placed this on the “Endangered List”.

Eon Communications (EONC) (2/5/07). To outsource U.S. operations management to Cortelco.

Neose Technologies (NTEC) (12/20/06). Year-end balance sheet okay. This one is on the “Endangered List”.

Lantronix (LTRX) (12/5/06). Announces new premier partner program; earns 5-star Award from VARBusiness.

WJ Communications (WJCI) (12/5/06). TriQuint to purchase WJCI for $1 a share; deal should close in 90 days. We expect more such acquisitions as long as this market climate continues.

Proxim Wireless (PRXM) (11/5/06). Latest numbers nothing to cheer about; balance sheet looks okay. Appointed by SUPER AGURI F1 Team as official wireless networking supplier. Teams with to enable social inclusion for 3000 users across 15,000 square kilometers in Germany.

Hydrogenics (HYGS) (9/20/06). Year-end numbers show nice revenue growth but losses are still a drag, though not as bad as a year ago; balance sheet still looks good. Awarded six orders valued at $11.6 million for onsite hydrogen generation units.

TVI Corp (TVIN) (9/5/06). Year losses pretty ugly. This one is on the “Endangered List.”.

Advanced Life Sciences (ADLS) (7/20/06). Receives NASDAQ non-compliance letter over minimum bid price; company has some time to fix this. As we have said for the last few Newsletters, this has happened a lot during this market.

NTN Buzztime (NTN) (7/5/06). Quarterly and FY numbers not great; balance sheet still seems okay.

02Diesel (OTD) (5/20/06). Enters into a licensing agreement with KL Process Design Group to develop next generation cellulosic ethanol. This is on the “Endangered List”.

TRIS-S (TRIS) (5/5/06). To release numbers on March 27. Expects 2007 revenue to be $89.1 million and gives 2008 guidance of $125-$130 million.

Cytogen (CYTO) (3/20/06). As we said above with WJ Communications, expect more acquisitions. CYTO to be acquired by EUSA Pharma at 62 cents a share. About ten years ago, Cytogen was one of our all-time high fliers when we first picked it. Then, a few years ago, we picked it again, and learned that maybe you really can’t walk down the same road twice. Also, company releases 2007 results.

8×8 (EGHT) (1/20/06). Wins VON Magazine innovator award. Awarded new video patent.

Digital Angel (DIGA) (12/20/05). To give year-end results on March 17, the day we post this Newsletter. Several other releases.

Westell Technologies (WSTL) (10/20/05). Authorizes share repurchase program of up to $10 million of its stock. We would prefer that companies not do this. How about putting the money into R&D, or maybe pay a dividend (there’s a novel idea).

RAE Systems (RAE) (10/5/05). Posts some pretty nice-looking revenue numbers which pulled the stock up from death’s door, but losses need to be pared; balance sheet still looks good.

EntreMed (ENMD) (9/5/05). Announces 2008 corporate and clinical program priorities. Year-end balance sheet still shows good cash position, but long-term debt is a little troubling.

N.A. Scientific (NASI) (8/5/05). Slates earnings news for March 19. CFO resigns. This is on the “Endangered List”.

Vion Pharmaceuticals (VION) (5/20/05). Earnings call set for March 18. Regains NASDAQ compliance thanks to 1 for 10 reverse stock split, which didn’t seem to help shareholders one bit as stock has lost nearly a third of its value since the split. This is on the “Endangered List”, and, yes, if you are counting, this is the most companies in the Current Portfolio that we have ever had “Endangered”. Sign of the times, unfortunately.

Nova Measuring Instruments (NVMI) (11/5/04). Gets follow-on order from China’s largest foundry for its metrology solutions.

Aviza Technology (AVZA) (10/5/04). To sell HQ property for $13 million. Also, on “Endangered List”.

Network Engines (NENG) (6/5/04). Changes its name to NEI. Yeah, okay.

TMNG Global (TMNG) (4/20/04). Signs a second U.S. pilot for its Ascertain revenue-assurance toolset.

Palatin Technologies (PTN) (4/5/04). Reports positive results of a Phase 1 clinical study. Looks like too little too late. This, too, is on “Endangered List”.

OpenTV (OPTV) (3/20/04). Names new CEO. Partners with AUSTAR to launch quad tuner PVR for combined satellite and terrestrial service. This is on the “Endangered List” because of the length of time it has been in the Current Portfolio.

Our selections for this Newsletter are an investment company and another biotech with a focus on dermatology.

RODMAN & RENSHAW CAPITAL GROUP, INC. (NASDAQ: RODM) – $2.00. Twelve-month hi-low has been $9.99 – 51 cents. Based in New York City, this investment brokerage firm has 33.8 million shares outstanding, $54.83 million in cash/cash equivalents, $71.87 million in total assets, little debt, and $10.85 million in total liabilities. Institutional ownership is around 19%. Two analysts give the stock a “strong buy” and one as a “strong sell”.

So, is it “dead cat bounce” time for a few battered financials? Maybe, and Rodman & Renshaw Capital Group, Inc. may be worth a look right now. Yes, revenues are down due to the market woes, but the balance sheet appears to be strong, which should give the firm some wiggle room down the road.

Founded in 2003, and trading on NASDAQ for less than a year, simply put, Rodman & Renshaw is a full-service investment bank that provides investment banking services to companies that have recurring capital needs, in particular to the biotech sector which is a capital intensive market. It also provides research and sales and trading services to institutional investors that focus on such companies.

Through its life science investment banking unit, Rodman & Renshaw provides corporate finance and strategic advisory services to biotechnology, specialty pharmaceutical, medical device, and other like companies. Corporate finance activities are mainly focused on public and private equity products, including private investment in public equity, or PIPEs, where a public reporting company sells unregistered securities of a class and/or convertible or exchangeable for a class that is already publicly traded; registered direct offering (RDs), which are direct placements of securities that have been registered under a shelf registration statement; private placements; and public offerings. The company also provides strategic advisory services for mergers, acquisitions, dispositions, and similar transactions; and, of course, merchant banking.

To give one example of what the company does, in early March, Cell Therapeutics announced that it will issue about $51.7 million of new 2012 convertible senior notes. Rodman & Renshaw was the exclusive placement agent for the offering. In mid-February, the firm opened a London-based subsidiary.

For FY2007, ending 12/31/07, revenue was $71.43 million with $4.75 million in net income compared to 2006 revenue of $61.26 million and $16.18 million in net income. Why the drop in net income? A pretty bad 4thQT that saw $1.57 million in net losses compared to FY2006 4thQT net income of $9.8 million.

Rodman & Renshaw’s life blood is, of course, investment fees made on offerings. In this market, offerings are a little thin, to say the least. At some point, things change and those who are able to survive the storm should see better days.

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

For more information, contact RODM at 212-356-0500;

BARRIER THERAPEUTICS, INC. (NASDAQ: BTRX) – $3.05. Twelve-month hi-low has been $7.60 – $2.44. Based in Princeton, NJ, with about 90 employees, this biotech has 35 million shares outstanding, $64.42 million in total current assets, $67.41 million in total assets, little debt, and $33.5 million in total liabilities. Institutional ownership is around 66%. Three analysts give the stock a “strong buy” and three have it as a “hold”.

What sort of company should do well in a recession? How about one that plays on vanity, sort of? Barrier Therapeutics, Inc. also has a pretty decent balance sheet, and looks to be one of those small biotechs that has turned the corner toward the revenue side of things. We also like the number of favorable analysts behind the company.

Founded in 2001 and public for nearly four years, Barrier Therapeutics develops and sells products aimed at the dermatology field. The company markets three prescription products in the U.S.; one in Canada, along with two other products, for which Barrier serves as the exclusive distributor in Canada. The company has wholly-owned subsidiaries in Geel, Belgium and Toronto, Canada.

Barrier markets Xolegel, a topical gel for treating seborrheic dermatitis; Vusion, a topical ointment for treating infants and children with diaper dermatitis; Solage, a topical solution for treating solar lentigines; Vaniqa, a topical cream for slowing the growth of unwanted facial hair in women; and Denavir, a topical antiviral medication for treating herpes. In addition, the company’s product pipeline includes Hyphanox, which is in Phase III clinical trial for treating onychomycosis; Azoline, in Phase IIb, for treating skin and mucosal fungal infections; Oral Rambazole, in Phase IIb, for treating psoriasis; Topical Rambazole, in Phase IIa, for treating acne; and Hivenyl, in Phase IIa, for the oral treatment of allergic reactions of the skin.

For FY2007, ending 12/31/07, revenue was $24.08 million with $53.69 million in losses compared to FY2006 revenues of only $6.73 million and $52.72 million in losses. Obviously, the company has made a big revenue turn and expects things to be even better in 2008 with projected revenues of $46 million to $50 million and losses of between $30 million to $35 million, which would be a paring of nearly 40%.

We like the ‘turn’ that Barrier is making, and if it can come close to its 2008 estimates during a recession, then the stock may be a good bet.

Our 24-month target for the stock is $5.25 – $5.75.

For more information, contact BTRX at 609-945-1200;

Look for the April 5, 2008 Newsletter to be posted on April 1 or April 2.

Have a good holiday, George

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