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Hello Readers,

Between the market sell off and Hurricane Sandy, October was a lousy month. The market downturn, once again, battered our Current Portfolio, and, as many of you know, small stocks get banged up even more than large and mid-cap stocks during such periods. What will November bring for the markets? Who knows? Will Romney or Obama be better suited to fix the economy and prevent the Fiscal Cliff? A case can be made for both gentlemen, although Romney seems to have a better background for such challenges. Will Europe keep it together? Will the Fed’s QE Forever policy be ignored in favor of fundamentals? As shocking as this may seem, many market pros, such as fund managers, would prefer keeping Obama and the status quo of easy money.

We did not close any positions in the Current Portfolio over the last few weeks, but will probably be closing some, soon, because of takeover prospects or, in some cases, bankruptcies.

Here are the headlines since the last Newsletter about companies in the 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 highly significant.

Delcath Systems (DCTH)(10/20/12). Announces CE marking for Hepatic Chemosat delivery system for use with Doxorubicin injection. Sets earnings call for November 7.

Anthera Pharmaceuticals (ANTH)(10/5/12). Recent balance sheet still looks healthy.

Zynga (ZNGA)(10/5/12). Needham upgrades stock as company revenue beats Street estimates and touts a $200 million share buyback; balance sheet still looks good.

ImmunoCellular Therapeutics (IMUC)(9/20/12). Announces secondary offering.

Hansen Medical (HNSN)(9/20/12). Expands agreement with Intuitive Surgical.

AXT, Inc. (AXTI)(9/5/12). Sets earnings news for November 1 – the day we hopefully post this Newsletter – we say hopefully because Hurricane Sandy knocked out our power, along with millions of others.

Meru Networks (MERU)(8/20/12). Post upbeat revenue numbers as it increases customer count to over 7000; balance sheet still looks good.

Novatel Wireless (NVTL)(8/5/12). Files additional patent infringement lawsuit against ZTE. Plans to release earnings news November 7. Supplies Thrifty Car Rental with enhanced vehicle tracking solution.

Overland Storage (OVRL)(7/20/12). Expands total addressable market with new scale-out NAS solution. Also, an update about the patent infringement suit.

Aviat Networks (AVNW)(7/20/12). To release quarterly numbers on November 1, the day we hopefully post this Newsletter. To present at several upcoming conferences.

Metabolix (MBLX)(7/5/12). To post earnings on November 1, the day we post this Newsletter.

Athersys (ATHX)(7/5/12). Sets earnings news for November 8. Prices secondary offering, which probably put pressure on the stock price.

Vermillion (VRML)(6/20/12). Sets earnings news for November 12. Ladenburg Thalmann upgrades company. Shareholder group expresses concern over debt repayment.

Avanir Pharmaceuticals (AVNR)(6/5/12). The Michael J. Fox Foundation awards grant to support AVNR clinical study of AVP-923 for Levodopa induced Dyskinesia in Parkinson’s Disease.

Capstone Turbine (CPST)(5/20/12). Sets earnings call for November 8.

Senomyx (SNMX)(5/20/12). Plans earnings release on November 8 – that seems to be a big date for many companies.

Bacterin International (BONE)(5/5/12). Sets earnings news for November 7. To present at the Singular Research confab on November 1, the day we post this Newsletter.

Axcelis Technologies (ACLS)(4/5/12). Sets earnings release for November 1, the day we hopefully post this Newsletter. To present at the Piper Jaffrey confab on November 7.

Mattson Technology (MTSN)(4/5/12). Latest numbers not great; balance sheet still looks okay.

Ballard Power Systems (BLDP)(3/20/12). Quarterly revenues not great but company expects a better 4th quarter; cash reserves still look good. Ballard 1MW ClearGen fuel cell system begins operation at Toyota headquarters campus.

Majesco Entertainment (COOL)(3/5/12). Announces release of several more games.

Geron Corporation (GERN)(2/5/12). BioTime makes offer for GERN’s stem cell assets. Balance sheet still looks strong.

Anadigics (ANAD)(11/20/11). Launches new GaN line amplifier. Reports EPS in line, beats on revenues.

Synthesis Energy (SYMX)(8/20/11). To report quarterly results on November 7. Completes closing of $15.5 million secondary.

Cover-All Technologies (COVR)(7/20/11). Old Republic General Insurance selects COVR’s solutions.

On Track Innovations (OTIV)(6/20/11). Several articles on some shareholder discontentment.

Idera Pharmaceuticals (IDRA)(6/5/11). Presents new data that show toll-like receptor antagonists inhibit inflammosome activation and suppress induction of Interleukin 1 beta in autoimmune disease models.

NeoStem (NBS)(5/20/11). To present at multiple conferences in November. Redeems some preferred stock.

Oculus Innovation Sciences (OCLS)(3/5/11). Sets earnings call for November 1, the day we hopefully post this Newsletter.

Real Goods Solar (RSOL)(1/20/11). Sets earnings call for November 6.

Sprint Nextel (S)(1/5/11). The usual several dozen news articles.

Astex Pharmaceuticals (ASTX)(12/5/10). To present at EORTC-NCI-AACR November 7-9. Recent numbers look good as does balance sheet. Signs strategic drug discovery alliance with Newcastle University. Initiates AT 13387 Phase 2 study in non-small cell lung cancer.

PixelWorks (PXLW)(11/20/10). PXLW’s MotionEngine Processor powers tier 1 Korean TV OEM’s 4Kx2K ultra definition TV. Recent numbers not bad but not great; balance sheet still looks good.

ProPhase Labs (PRPH)(10/5/10). Rejects takeover offer of $1.60 a share.

ComiMatrix (CBMX)(8/20/10). To release earnings report on November 7. If report doesn’t show anything exciting, we may put this on the “Endangered List”.

NovaBay Pharmaceuticals (NBY)(4/20/10). To present at the Lazard Capital Markets healthcare conference on November 13.

Novavax (NVAX)(4/5/10). To report earnings on November 2, the day after we post this Newsletter. Reports positive results on its bird flu trials.

Qualstar (QBAK)(10/20/09). To report quarterly results on November 7.

Our picks for this Newsletter are a communication equipment provider and a language content provider, both NASDAQ-listed.

TELECOMMUNICATION SYSTEMS, INC. (NASDAQ: TSYS) – $2.10. Twelve-month hi-low has been $4.03 – $1.10. Based in Annapolis, MD, with about 1300 employees, this communication equipment provider has 57.9 million shares outstanding, $192.45 million in total current assets, $420.44 million in total assets, and $269.52 million in total liabilities, of which nearly $123.35 million is long-term debt. Institutional ownership is around 44%. One analyst rates the stock a “strong buy”, three as a “buy”, and one has it on “hold”.

Yes, Telecommunication Systems, Inc. has more debt than we like to see, but the company has been seeing steady revenue growth over the last few years and the debt does not appear to be life-threatening to the company, at the moment. Most of the debt seems to be from the issuance three years ago of convertible notes to fund acquisitions. The company has been around for quite some time and the stock is trading at the low end of its range.

Founded in 1987, and public for over a dozen years, Telecommunication Systems develops wireless technology for both commercial and government. The commercial segment provides commercial services and systems that allow wireless carriers to deliver location-based information, Internet content, and short text messages. Its hosted and managed services include mobile location-based applications, comprising turn-by-turn navigation, E9-1-1 call routing; and wireless applications that include navigation, people finder, and asset tracking. These customers use the company’s software functionality through connections to and from network operations centers and serves wireless carrier network operators, VoIP services providers, state and local governments deploying 9-1-1 technology, and automotive industry suppliers.

The government segment designs, furnishes, installs, and operates wireless and data network communication systems, including its SwithLink deployable systems, which integrate high speed, satellite, and Internet protocol technology with secure government-approved cryptologic devices. The company also owns and operates secure satellite teleport facilities; resells access to satellite airtime; and provides services, such as cyber security training to the Department of Defense and other government agencies.

Toward the end of October, the company received twelve U.S. patents advancing public safety, mobile location, messaging, wireless data, mapping, and secure communications technologies. At the end of September, Telecommunication Systems received $5.5 million in delivery orders from the U.S. Army. Also, at around that time, the company teamed up with Lockheed Martin and Northrup Grumman to produce affordable satellite terminals for protected communications.

For FY2011, ending 12/31/11, revenue was $425.4 million with $7 million in net income compared to FY2010 revenue of $388.8 and $15.87 million in net income. During the first nine month of the current FY, ending 9/30/12, $354.71 million with $107.31 million in losses, but most of this was a charge of impairment of goodwill and long-lived assets.

This company seems to be well-entrenched in its field and has proven its grit over the years.

Our 24-month target for the stock is $3.50 to $3.75.

For more information, contact TSYS’ Tom Brandt at 410-280-1001;

LIONBRIDGE TECHNOLOGIES, INC. (NASDAQ: LIOX) – $3.15. Twelve-month hi-low has been $3.78 – $1.94. Based in Waltham, MA, with about 4500 employees, this language content provider has 60.5 million shares outstanding, $126.7 million in total current assets, $181.88 million in total assets, and $124.97 million in total liabilities, of which $30.7 million is long-term debt. Institutional ownership is around 74%. Two analysts rate the stock a “strong buy”, three as a “buy”, and one as a “hold”.

This is a case of what’s not to like? Lionbridge Technologies, Inc. has a half-decent balance sheet, a sixteen-year history, and has been showing good growth over the last several years.

Founded in 1996, and public for over ten years, Lionbridge provides language, content, and testing solutions through a variety of segments. The Global Language and Content segment offers product localization services, such as creating foreign language versions of its clients’ products and service applications; content translation services; global marketing operations solutions, including search engine optimized Web translation, Website management and support, and campaign operation services; and Translation Workspace and GeoFluent software-as-a-service based language technologies to enterprises, freelance translators, and translation agencies. This segment also does technical authoring, producing, and integrating content for print, Web, multimedia, mobile device, and proprietary displays; and developing, releasing, testing, and maintaining multilingual content and technology applications.

The Lionbridge Global Development and Testing segment provides testing services comprising enterprise-scale managed test teams, test process design, test automation, functional and performance testing, globalization testing, and product certification services under the VeriTest name; crowd sourcing services; and search relevance testing, keyword optimization, and related search engine services. The company’s Interpretation Segment offers interpretation services for government, business, and healthcare organizations in approximately 360 languages and dialects.

For FY2011, ending 12/31/11, revenue was $427.85 million with $1.72 million in net income compared to FY2010 revenue of $405.23 million and $1.29 million in losses. During the first six months of the current FY, ending 6/30/12, revenue was $231.28 million with $1.58 million in net income, which means the company could greatly outpace last year’s revenues, at the current pace.

The stock price has been hanging at current levels for the last several months. Is an upside breakout in the offing?

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

For more information, contact LIOX’ Sara Buda at 781-434-6190;

Look for the November 20, 2012 Newsletter to be posted on 11/16 or 11/19.

Thank you,