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Hello Readers,

And so, the bull rally continues, for no real reason other than great spin. We still believe that the markets will test new lows. When? Good question, although we thought we would be there by now. The one thing we do know is that bull rallies in a bear market have ended badly, and this one looks to be no exception. And no, we do not believe that this is the start of a new bull for the simple reason that nobody still has a clue as to the depth of the losses at all of the “too big to fail” financial institutions. There have been too many smoke and mirror tricks perpetuated by the Fed and the Treasury to get any true sense of those losses. This, plus over half a million monthly job losses, gives us pause to get overly enthusiastic. You hear gurus say that the jobless rate is a lagging indicator. Hey, when over 600,000 people are losing their jobs every month, that is not a lagging indicator, it is a leading indicator.

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.

Iisilon Systems (ISLN)(3/20/09). ISLN and de Vinci showcase real-time 2k digital intermediate color enhancement at trade show. To report earnings on April 23 and expects to take a loss as it plans a 10% jobs cut.

O2Micro (OIIM)(3/20/09). Issued patent for Class-D amplifier architecture. Granted key power patent.

Opnext (OPXT)(3/5/09). Cutting staff, salaries, and perks.

Virage Logic (VIRL)(3/5/09). IBM selects company as its PowerPC partner.

TomoTherapy (TOMO)(2/20/09). Says encouraging results published on use of TomoTherapy in lung cancer treatment. Settles with shareholder.

AuthenTec (AUTH)(2/5/09). World’s first fingerprint-enabled netbook features AUTH’s TruePrint technology and touch-powered functionality.

SuperGen (SUPG)(2/5/09). To highlight oncology pipeline data at the AACR annual meeting April 18-22.

MakeMusic (MMUS)(1/20/09). Slates earnings call for May 6.

Endwave (ENWV)(1/5/09). Sets earnings news for April 30.

AXT, INC (AXTI)(12/20/08). Earnings news scheduled for April 29.

Market Leader (LEDR)(12/20/08). Slates earnings news for April 28.

Akeena Solar (AKNS)(10/20/08). To report 1stQT results on April 29. To present at America Growth Capital’s confab on April 29.

SCM Microsystems (SCMM)(10/5/08). Names new CEO.

Planar Systems (PLNR)(9/20/08). Sets earnings call for May 5.

Endeavour Silver (EXK)(9/5/08). Reports some pretty upbeat FY2008 numbers.

Icagen (ICGN)(8/5/08). To present results of Phase I program of ICA-105665. Xmark Opportunity Fund requests ouster of ICGN CEO.

Bridgeline Software (BLSW)(6/5/08). Company’s iAPPS Content Manager powers Intranet for leading Midwest regional bank and is selected by a leading national philanthropic organization.

Kopin (KOPN)(4/20/08). Announces initial shipment of new VIPER head-mounted display technology.

Rodman & Renshaw (RODM)(3/20/08). Alan Greenspan to keynote RODM’s global investment confab on September 9. Once again ranked #1 investment bank in PIPE market by deal volume. This is still on the “Endangered List”.

ActivIdentity (ACTI)(3/5/08). Co-operative Financial Services selects ACTI to secure online transactions. Delivers new deployment and authentication options in market leading versatile authentication server.

Amicas (AMCS)(1/20/08). Completes merger with Emageon. Announces general availability of AMICAS PACS version 6.0.

Move, Inc (MOVE)(1/5/08). CFO resigns.

Santarus (SNTS)(11/20/07). FDA accepts new drug application for ZEGERID tablet product.

Sunesis Pharmaceuticals (SNSS)(11/5/07). Based on recent balance sheet, we are placing this on the “Endangered List”.

American Technology (ATCO)(10/5/07). To report record revenue of over $5.5 million for 1stQT FY2009 and over $8 million for first half of FY2009. LRAD deployment by Japanese “navy” helps thwart pirate attack off of Somalia.

XATA Corporation (XATA)(9/20/07). To present at ACG 5th Annual InfoSec and West Coast Emerging Growth Conference on April 21. Heyl Truck Lines buys navigation and color displays from company.

AP Pharma (APPA)(8/5/07). Gets NASDAQ delisting warning. Usually not a good sign.

Alliance Fiber Optic Products (AFOP)(7/20/07). 1stQT earnings call set for April 22.

Pharmacyclics (PCYC)(6/20/07). Initiates Phase 1 clinical trial of novel oral Btk inhibitor for Refractory B-cell non-Hodgkin’s lymphoma.

Oncolytics Biotech (ONCY)(6/5/07). Announces positive results of UK Phase II REOLYSIN and radiation combination clinical trial.

ECtel (ECTX)(5/5/07). Sets earnings call for May 6.

TTI Team Telecom (TTIL)(3/5/07). Launches a global video-based advertising program. Announces successful integration test between Huawei iManager M2000 and TTIL’s service assurance solutions.

UQM Technologies (UQM)(2/5/07). FEV, Inc. to unveil Dodge caliber-based range extended electric concept vehicle powered by a UQM propulsion system and generator at the 2009 SAE World Congress.

Endologix (ELGX)(1/20/07). Sets 1stQT earnings call for April 22.

Lantronix (LTRX)(12/5/06). Launches improved embedded wireless networking module for enhanced mobility and connectivity.

TRI-S Security (TRIS)(5/5/06). Subsidiary awarded contract for United States Marshalls Services.

ThermoGenesis (KOOL)(4/5/06). Names new CEO. Announces abstracts to be presented at upcoming stem cell conference May 3-6.

The Inventure Group (SNAK)(3/5/06). Earnings call set for April 23.

RAE Systems (RAE)(10/5/05). Ships wireless gas and radiation detection order to Middle East.

Zi Corp (ZICA)(8/5/05). We closed this position when the company was finally bought by Nuance Communications at 80 cents/share; will soon post it to Track Record.

Our picks for this Newsletter are a management services company and a drug maker, both listed on NASDAQ.

THE HACKETT GROUP, INC. (NASDAQ: HCKT) – $2.20 Twelve-month hi-low has been $6.65 – $1.78. Based in Miami, FL, with about 720 employees, this management services company has 39.2 million shares outstanding, $62.28 million in total current assets, $133.66 million in total assets ($63.6 million is Goodwill), little debt, and $38 million in total liabilities. Institutional ownership is around 76%. Three analysts rate the stock a “strong buy”.

This may not be a good time to buy a consulting company, but The Hackett Group, Inc. has an impressive client list, a pretty good-looking balance sheet, and three analysts who give the stock a big thumbs up.

Founded in 1991, and known as Answerthink until last year, and public for over ten years, The Hackett Group operates as a strategic advisory and technology consulting company in the U.S. and Western Europe. It provides benchmarking, business transformation, technology consulting and consulting services, including shared services, offshore and outsourcing advice. Hackett provides services in finance, human resources, IT procurement, supply chain management, corporate and customer services, and sales and marketing. It serves a wide range of industries, including automotive, consumer goods, financial services, technology, life sciences, retail, manufacturing, media, telecommunications, transportation, and utilities.

Using best practices and implementation insights from more than 4000 benchmarking engagements, executives use Hackett’s empirically-based approach to quickly define and prioritize initiatives. Through its REL brand, the company offers working capital solutions focused on delivering significant cash flow improvements. Through its Hackett Technology Solutions group, the company offers business application consulting services that helps maximize returns on IT investments. Now, here comes some fun factoids. Hackett has worked with 2700 major corporations, governments and agencies, including 97% of the Dow Jones Industrials, 73% of the Fortune 100, 73% of the DAX 30 (Germany), and 50% of the FTSE 100 (England).

For the FY ending 1/2/09, revenue was $192.1 million with $17.87 million in net income compared to a year earlier revenue of $177 million and $8.99 million in net income. The company has already said that the 1st quarter of the current FY will be below analysts’ estimates.

Even though the first QT of this year won’t live up to expectations, Hackett seems to have a lot going for it over the long run.

Our 24-month target for the stock is $3.75 to $4.25

For more information, contact HCKT’s Robert Ramirez at 305-375-8005; rramirez@thehackettgroup

DURECT CORPORATION (NASDAQ: DRRX) – $2.40. Twelve-month hi-low has been $6.17 – $1.40. Located in Cupertino, CA, with about 170 employees, this drug maker has 82 million shares outstanding, $60.28 million in total current assets, $74.87 million in total assets, little debt and $37.31 million in total liabilities, of which $19.77 million is deferred long-term liability charges. Institutional ownership is around 63%. Three analysts rate the stock a “strong buy” and one has it as a “hold”.

Like The Hackett Group above, Durect Corporation has a pretty nice balance sheet and three analysts giving the stock a major okay. The company also generates some revenues, which is uncommon for small biotechs, but like others of its genre, it also piles up some big losses.

Founded in 1998, and public for nearly eight years, Durect is an emerging specialty pharmaceutical company focused on developing systems based on its proprietary drug delivery platform technologies to treat chronic debilitating diseases, including pain, central nervous system disorders, and cardiovascular disease. These platform technologies include the SABER Delivery System, a patented and versatile depot injectable useful for proteins, peptides and small molecule delivery; the ORADUR sustained release oral gel-cap technology; the TRANSDUR transdermal patch technology; the DURIN Biodegradable Implant, a drug-loaded implant system; and the MICRODUR Biodegradable Microparticluates. Durect has five disclosed on-going development programs, of which four are in collaboration with pharmaceutical partners, such as King Pharmaceuticals.

Its products under Phase II clinical trials include POSIDUR, a release injectable to deliver bupivacaine, an off-patent anesthetic agent; TRANSDUR-Sufentanil; and ELADUR, a transdermal bupivacaine patch, which uses the TRANSDUR technology. Durect’s product portfolio also includes CHRONOGESIC pain therapy system, an osmotic implant that delivers sufentanil for an extended duration. The company also offers osmotic pumps used in lab research; as well as designing, developing, and making biodegradable polymers for clients for use as raw materials in their products.

In mid-March, the company reported positive Phase IIb data from a TRANSDUR=Sufentanil clinical program involving 74 patients; this is the pain patch. The trial was conducted by Endo Pharmaceuticals.

For FY2008, ending 12/31/08, revenue was $27.1 million with $43.9 million in losses compared to FY2007 revenues of $30.67 million and $24.34 million in losses. As we alluded above, these numbers are typical of small biotechs.

The company seems to have some nifty platform technologies and name partners assisting them.

Our 24-month target for the stock is $4.00 to $4.25.

For more information, contact DRRX at 408-777-1417;

Look for the May 5, 2009 Newsletter to be posted on 5/1 or 5/4.

Thank you,

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