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Hyves
Endexx [18]
Gespeg Copper [26]
Highpower International, Inc. [50]
Cutting Edge Superconductors [66]
Rick Rule – Sprott Global [6]
Jeffrey Kraws – Crystal Research [39]
S. Jeffrey Jones – HJ & Associates [42]
Steven M. Shelton –
Cornerstone Global Group [58]
SUMMER/FALL • 2014 microcapreview.com
$5.00
IEG Holdings Corp.
Page
8
BioLargo, Inc.
Page
30
Ticker: IEGH
CEO, Paul Mathieson
www.investmentevolution.com
Ticker: BLGO
CEO, Dennis Calvert
www.www.biolargo.com
Millennium HealthCare, Inc.
Page
22
Pressure BioSciences, Inc.
Page
34
Ticker: MHCC
CEO, Dominick Sartorio
www.MillenniumHCS.com
Ticker: PBIO
CEO, Richard Schumacher
www.pressurebiosciences.com
PROFI LED COMPANI ES
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E D I T O R I A L
This publication and its contents are not to be construed, under any circumstances, as an offer to sell or a solicitation to buy or effect transactions in any securities. No investment advice is provided or should
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T
his year the MicroCap stock market had
increases in volume, a huge amount of
funding events, and an enormous increase in
investor interest in emerging growth com-
panies. A good indication of the remarkable
microcap investor surge is the increasing
attendance at the growing number of finan-
cial conferences across the globe, the growth
in social media, and the new subscribers to
our print and digital magazine. Aside from
a few road bumps, 2014 should finish out
in spectacular fashion … famous last words.
The S&P, NYSE, NASDAQ and OTC
Markets have given record-breaking per-
formances and the microcap stock market
has mirrored the trend and roared to its
own new record highs. The increasing num-
bers of emerging growth companies due
to IPOs, APOs, and reverse merger activity
gives investors new ideas, new investment
choices and opportunities, but investors
searching for data are finding it increasingly
difficult to source timely and accurate infor-
mation, and independent research to dif-
ferentiate between one MicroCap company
and another.
MicroCaps are the magic in the mar-
ket that can grow like Apple, Amazon and
Google that all started in a garage. MicroCap
Review Magazine, the Official magazine of
the MicroCap Stock market, provides read-
ers with original content and market infor-
mation regarding public and private micro-
cap emerging growth companies.
This issue includes information about
exciting MicroCap companies, the changing
landscape and embryonic financial ecosys-
tem including private company start-up and
ramp-up companies to incubators and accel-
erators, from the crowd-funding community
to angel investors, venture capital, private
equity and Bitcoin.
For MicroCap companies it’s about raising
capital; from seed money to expansion capi-
tal; from organic growth to financing acqui-
sitions. The importance of market awareness
and visibility to investors has never been
more in demand as companies attempt to
attract investment. Over the last few years in
the U.S., several favorable laws and methods
to finance issuers became available including
general solicitation through new Rule 506(c)
under Regulation D.
This issue contains advertising pages per-
mitted by Rule 506(c), which allows private
companies, or their placement agents, to
publicly advertise a securities offering using
any instrumentality of media. General solici-
tation and advertising permits a company,
or its placement agent, to: 1. reveal that the
company is offering securities, 2. specify
that the investment is limited to accredited
investors only, who will need to have their
status verified; and 3. indicate where quali-
fied investors can obtain complete disclosure
information, such as a private placement
memorandum or other disclosure docu-
ments.
In a MicroCap bull market there are peaks
and valleys to buy, sell or hold your posi-
tions. Even the experts self admittedly can-
not pick tops and bottoms. So be smart. Stay
informed. Check out our websites. Invest
with your head not just your heart. Use the
best tools available like the MicroCap Review
and lastly never fall too deeply in love with
any stock. n
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C O N T E N T S
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Summer/Fall 2014
6 We’ve Been through the Pain... Will We See
a Gain?
By Rick Rule
12 Fallen Angels
By Holmes Osborne
14 Activist Investing
By Elizabeth Kopple
16 Bitcoin
By Andrei Serpik
28 Interest for Hong Kong Listing Remains
Active – Outlook Strong for 2nd Half
By Leslie Richardson
39 Independent Research
By Jeffrey Kraws
40 For Micro-cap Firms, Perception Is
Reality–4 Ways to Use PR to Improve
Your Reality
By Joy Schoffler
52 Seizing Opportunity, Embracing Change at
the Growth Capital Expo
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54 Decoding Online Alternative
Marketplaces
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57 Paradigm Shift in the Treatment
of Gastric Cancer
By Dr. Frank Grossman
58 How are MicroCaps Affected by What
Happens with the Small, Mid and Large
Cap Stocks?
By Steven M. Shelton
62 Exploration Insights
By Brent Cook
68 Biotech: Year in Review 2013/14 and Mid-
Year 2014 Outlook
By Seth Yakatan
70 PortTech
By John Dmohowski
75 Semi-Annual Adds & Subtracts of FINRA
Members
By David Alsup
87 A Primer on Public Company Disclosure
Through Social Media Websites
By Lawrence G. Nusbaum
92 Silver in 2014
By David Morgan
Accounting Corner
42 Post Reverse Merger Pitfalls By S. Jeffrey Jones
Legal Corner
44 A Look Back at General Solicitation and
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45 Blue Sun Energy Inc. – Rule 506(c)
46 Dynamics Capital – Rule 506(c)
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80 Waking Up to the Coffee Market By Mark Shore
Opinion
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Comic Strip
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Financial Puzzle
25 SNN StockWord Puzzle
Profiled Companies
8 IEG Holdings Corporation
18 Endexx Corporation
22 Millennium HealthCare, Inc.
26 Gespeg Copper Resources Inc.
30 BioLargo, Inc.
34 Pressure BioSciences, Inc.
50 Highpower International, Inc.
66 Cutting Edge Superconductors Inc.
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services specializing in these major
segments: Market Making and Trading,
Registered Investment Advisory (RIA),
and Boutique Investment Banking.
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El Segundo, CA 90245
310-544-3545 bma@bmasecurities.com
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Equities, options, and foreign exchange markets
Unparalleled execution and liquidation capabilities
in OTC, NYSE, and Nasdaq markets
Customizable algorithmic trading capabilities
State of the art trading software
Direct access to trade desk
Traditional brokerage
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Order Execution, RIA, and Boutique Investment Banking
Privately owned company
Headquartered in Los Angeles, CA with branch offices in
New York and Arizona.
Member of the Financial Industry Regulatory Authority
(FINRA), SIPC and MSRB.
40+ Employees
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6 MicroCap Review Magazine
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F E ATURE D ARTI CL E
financial firms in the world focused almost
exclusively on natural resources and precious
metals. Last year, I told audiences about ‘big
money’ circling the natural resource market.
Today, I would say that some of that money
has found a home.
Recently, we have won a couple of large
mandates to manage money in the resource
space. One mandate is with Zijin mining,
which is the largest publicly-owned non-
ferrous mining company in China, who has
contributed $100 million to a partnership
with Sprott. Zijin believes that some of the
largest financial firms in China will contrib-
n BY RICK RULE
This is not my first bear market in natural
resources; in fact, I have experienced four
bear markets through my career in the sec-
tor. When I remember the recovery that hap-
pened after each bear market – and the sub-
stantial rewards to investors in the sector –,
I am extremely optimistic about the future.
‘BIG MONEY’ ENTERING THE
SPACE…
There are a few reasons to be optimistic. As
an example, we should look at my employer,
Sprott Inc., which is one of the largest
We’ve Been through the
Pain… Will We See a Gain?
W
hen we look back over the last two years, our experience
has not been pleasant. And yet, I am extremely positive
going forward.
MicroCap Review Magazine 7
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ute substantial additional capital.
The other ‘big money’ source comes from
the South Korean Electric Power Company
and the South Korean National Pension
Service. These Korean investors have com-
mitted $750 million to be managed in part-
nership with Sprott.
The ‘big money’ that was circling last
year is ‘landing,’ which is very bullish for
the sector. Due to their cheapness, natural
resources have attracted the attention of
these extremely long-term investors looking
for the opportunity to enter the sector. This
is strategic, long term capital from investors
with the required sophistication, means, and
patience to make money in the sector.
ISSUERS STILL HOLDING BACK
ON FINANCING…
Where will these new funds, which will like-
ly total around $1 billion, end up? We see
lots of opportunity in the current market,
but we do not want to deploy this amount
of capital all at once. Instead, we want to
structure specific transactions in the view
of becoming stakeholders in companies
where we feel comfortable taking a long-
term position.
The pricing of deals that the issuers gave
to investors in the period from 2003 to
2010 was ludicrously optimistic. Part of the
problem today is that many of the issuers are
still set in the mind frame of the bull market
years. They have yet to face the reality of the
current market for exploration and mining
capital when it comes to deals and pricing
expectations.
For lack of a better expression, the pre-
cious metals sector is ‘bombed-out’ both
in terms of sentiment and participation.
Nobody likes the sector. The issuers need to
have a reality check.
WHY WE SHOULD STICK
AROUND…
Although I believe issuers are too optimistic
today, I agree with them that precious metals
and natural resource markets are attractive.
A market that has fallen in price by 80% is
arithmetically more attractive by 80%.
This move down in the precious metals
prices from the 2010 highs is not unprec-
edented. You will recall we had a 50% cyclical
decline in a secular bull market for gold back
in 1975 and 1976. The snapback from these
cyclical declines in secular bull markets can
be extremely rewarding.
When will the tides change? Investors
need to decide for themselves whether the
proposition upheld by governments and
other collective forces is appealing. They
have to ask themselves whether manipulated
interest rates are really in the best interest
of society; whether liquidity is a substitute
for solvency; and whether US Treasuries are
really a better investment than gold, silver,
platinum and palladium.
When it comes to physical precious met-
als markets, we found when we launched
our own Physical Trusts that even our rela-
tively modest amount of institutional buying
could have some effect on the metal price.
Large institutions are the main players on
the futures exchanges, which have mostly
been on the short side. I think it would take a
relatively modest amount of physical buying
from institutions to unbalance those futures
markets, giving the short sellers a truly ‘reli-
gious’ experience.
Most of you are likely natural resource and
precious metals investors to some extent.
Most of you have therefore had a very rough
ride in the last three years. Having hung
around for the pain, why not stick around
for the gain?
To read more regular opinion and commen-
tary from Rick Rule and other thought leaders
in the natural resource and precious metals
sectors, sign-up for our regular, thrice-weekly
e-mail “Sprott’s Thoughts” here.
Mr. Rule has dedicated his entire adult life to many
aspects of natural resource securities investing. In
addition to the knowledge and experience gained in
a long and focused career, he has a worldwide net-
work of contacts in the natural resource and finance
worlds. As Director, President, and CEO of Sprott US
Holdings, Inc., Mr. Rule leads a highly skilled team
of earth science and finance professionals who enjoy
a worldwide reputation for resource investment
management.
Mr. Rule is a frequent speaker at industry confer-
ences, and is interviewed for numerous radio, tele-
vision, print and online media outlets concerning
natural resource investment and industry topics.
He is frequently quoted and referred by prominent
natural resource oriented newsletters and advisories.
Mr. Rule and his team have long experience in many
resource sectors including agriculture, alternative
energy, forestry, oil and gas, mining and water. Mr.
Rule is particularly active in private placement mar-
kets, having originated and participated in hundreds
of debt and equity transactions with private, pre-
public and public companies.
Sprott US Holdings, Inc. is a holding company
made up of three separate and distinct companies:
Sprott Global Resource Investments, Ltd., a FINRA
Registered Broker/Dealer; Sprott Asset Management
USA Inc., an SEC Registered Investment Adviser
offering managed accounts; and Resource Capital
Investment Corporation, an SEC Registered
Investment Adviser managing partnerships. These
three companies make up the US Subsidiaries of
Sprott Inc. and are active in securities brokerage, seg-
regated account money management and investment
partnership management involving both equity and
debt instruments, across the entire spectrum of the
natural resource industry. n
Investors need to decide for themselves whether
the proposition upheld by governments and other
collective forces is appealing.
8 MicroCap Review Magazine
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IEG Holdings Corporation
Ticker: IEGH
ORIGIN/BACKGROUND:
Paul Mathieson is the Chairman/CEO and
Founder of IEG Holdings Corporation with
over 19 years’ finance industry experience
in lending, funds management, stock mar-
ket research and investment banking. Paul
founded and established a similar business in
Australia in 2005 that lent approximately $48
million to over 11,500 customers. Paul per-
manently relocated to the US in 2008 to rep-
licate the successful business model, utilizing
cash flow from the runoff of the Australian
loan book to fund US setup. On the back of
the success of the Australian Mr. Amazing
Loans business, Paul was awarded Ernst &
Young’s 2007 Australian Young Entrepreneur
of the Year (Eastern Region).
Paul Mathieson is a born entrepreneur,
starting his first computer business at age 12
and trading stocks and options at 14. By the
time he celebrated his 19th birthday he was
PROFILED COMPANIES
dba “Mr. Amazing Loans” – Global Leader in Consumer Finance Led
by CEO Paul Mathieson
an institutional stockbroker and research
analyst. “I came from a small country town
in Australia but I was always driven to suc-
ceed in the global finance world.” he says.
“I enrolled in an accelerated Bachelor of
Commerce degree program and did three
semesters a year, graduating by the time I
was 19.” During his 20s Mathieson went to
work for Daiwa Securities, the second-largest
Japanese brokerage firm, and then took a
position as Head of Research for a boutique
stock brokerage in Australia before becom-
ing an Investment Banker at ING Barings.
“I was heavily involved in researching indus-
trial companies, running IPOs and under-
writing committees, and preparing prospec-
tuses. After a short period doing M&A and
corporate advisory work for ING, I was
approached by a company in the consumer
finance space with multiple offices offer-
ing personal loans. I spent a month doing
due diligence with a view to conducting a
potential IPO and that opened my eyes to
the industry. Unfortunately, the deal couldn’t
proceed because that company lacked the
professionalism and the systems to become a
fully reporting public company.”
At 25 he started his own significant funds
management business. He managed over
$130 million of client funds for 5 years
and made investors returns via a structured
derivatives product he created based on
stocks that he researched. A considerable
amount of his time was spent building net-
works of investors and business contacts,
and as his 30th birthday approached he
was contemplating multiple opportunities.
CEO Paul Mathieson
MicroCap Review Magazine 9
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Meanwhile, a university friend working at
PricewaterhouseCoopers called and said he
was advising a company in the consumer
finance space and thought Paul should have
a look at it. “I didn’t think much about it
until a couple of weeks later when a neigh-
bor also approached me randomly and said
he and his friend wanted some advice about
a franchise they wanted to buy that was,
coincidentally, in the same lending business
that my friend was involved with. I guess
you could say it was fate or destiny as there
were too many coincidences that led to this
sector capturing my attention, so I suggested
that my neighbor and his friend consider
putting $200,000 into a brand-new business
instead of buying into a franchise. I believed
I could set it up and do better than com-
petitors with superior branding, professional
management and a much more cost effective
and fairer structure that was affordable to
consumers. So, on the first of February 2005,
Mr. Amazing Loans was formed.”
MARKET SIZE:
According to Mr. Mathieson, “We estimate
our targeted consumer finance market to be
approximately $50 billion plus per annum
in the US equating to approximately 100
times the size of the Australian market
where we previously captured 10% market
share. Our product is significantly cheaper
at 19.9% to 29.9% per annum than the
long established payday lending market that
have been charging over 300% for many
years. There are a lot of people against the
payday loan industry and while the Federal
Government doesn’t have authority to stop
it, seventeen states have enacted double-
digit rate caps which basically restrict their
ability to operate. Some companies use
loopholes but the government is closing
in on those too. The Consumer Financial
Protection Bureau is implementing mea-
sures that apply pressure on unfair prac-
tices, and a number of states are increasing
regulation of the industry. New York, for
example, just shut down the whole payday
loan industry and said if you charge more
10 MicroCap Review Magazine
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than 25 percent you’re out of business.
They also forgave all outstanding payday
loans. The Mr. Amazing Loans business
is fully compliant with the regulators and
positioned to capitalize on the regulatory
pressure on the payday lenders.”
“A payday lending product is designed
around a consumer needing $500 and being
required to pay it back within two weeks
at an exorbitant rate. If you haven’t got the
$500 one week how are you going to find it
the next? Our $3,000 loan costs the borrower
$22.23 a week over a five-year period. They
can pay it off early with no extra penalties
and no extra fees. And if our customer can’t
make payments, we can put them on hold
until they get back on track. It’s the conve-
nience of what we are doing at a fair rate
and it works for everyone. Their payment
is so low that it makes very little difference
to their weekly budget. That is our sell-
ing proposition. These other businesses are
based on short-term high returns whereas
we set up a model where we are helping the
consumer and doing what the government
intends. We have received a lot of support
for our model and the consumers appreciate
the differences. People come to us trapped
in a debt cycle from payday loans and we
help them out and offer them a much more
sustainable position. My philosophy is to try
to continually lower our rates as our cost of
funding goes down.”
COMPETITION:
Due to the significant regulatory barriers
to entry, there are only a handful of direct
competitors to Mr. Amazing Loans. They
are OneMain Financial (less than 10%
online), SpringLeaf (less than 10% online),
Avant Credit (online only but charging
significantly higher rates), Lending Club
and Prosper (both online only but peer to
peer rather than direct lender). The indi-
rect competitors are credit cards, payday
lenders with multiple storefronts, online
high rate lenders and tribal lender compa-
nies operating via tribal exemptions. The
competitive advantages over these lenders
include significantly lower overhead with a
highly lean online model, superior brand-
ing, targeted marketing strategy, affordable
weekly repayments, a strong management
team and regulatory compliance ensuring
long term success.
STRONG GROWTH STRATEGY:
Carla Cholewinski, the Chief Operating
Officer of IEGH stated “The current eco-
nomic conditions provide the perfect time
for Mr. Amazing Loans to be expanding
across the US and rapidly growing our
loan book with demand for our loan
product at an all-time high. It is reward-
ing to be able to provide our personal
loans to consumers that are neglected by
mainstream lenders such as banks and to
be part of such a dynamic high-growth
organization.”
IEGH is a Finance/Technology company
that has established and refined its online
operational platform, added more efficient
customer online acquisition partners and
secured increased funding. IEGH launched
online lending in July 2013 with cumulative
loan volume rising 765% from $237,000 at
June 30, 2013 to $2,050,001 as at June 27,
2014. Loan volumes have grown dramatical-
ly due to the recent engagement of seven top
national online lead generators with addi-
tional lead sources in short term pipeline.
In addition, the launch of the new substan-
tially improved www.mramazingloans.com
MicroCap Review Magazine 11
www.stocknewsnow.com • www.snnwire.com • www.MicroCapReview.com
website has significantly increased customer
click conversions.
Sam Prasad, the IEGH VP of Corporate
Finance stated that “Mr. Amazing Loans
continues to set monthly loan volume
records and expand across the United
States. The platform is now in place for
rapid further growth in the second half
of 2014 and we look forward to making
Mr. Amazing Loans a household name for
online personal loans.”
IEGH’s record June loan volumes have
grown by approximately 1800% to around
$750,000 compared to January’s $40,000
and nearly doubled May’s $410,001 monthly
volume. The rapid loan volume growth is
being driven by leading online lending web-
site www.mramazingloans.com, new joint
venture arrangements with low acquisition
cost lead sources and aggressive state license
expansion.
IEGH recently received lending licenses in
the states of Georgia, Virginia, Missouri and
New Jersey and began offering loans online
to consumers in these states in late May 2014.
The new licenses increased the previous 4
state coverage (Nevada, Illinois, Arizona and
Florida) to 8 states and increased the popula-
tion coverage by 81% from approximately 42
million people to approximately 76 million
people. IEGH has submitted applications for
licenses in Texas (26.5 million population)
and California (38.3 million population).
The Company also plans to apply for an
additional 23 state licenses over the next 6
months including other large population
states of New York, Pennsylvania and Ohio.
IEGH’s target is to increase US population
coverage by a further 274% from the cur-
rent 8 states and 76 million people to 33
states and 284 million people encompassing
approximately 90% of the US market in the
next 6 months.
FUTURE OF IEGH:
IEGH is an emerging growth microcap
company in the truest sense and although
it still needs to further ramp up its vol-
umes in the US, it has proven the business
model works. Paul Mathieson is a proven
entrepreneur that has recognized a problem
and provided a solution. This niche mar-
ket has been under regulatory scrutiny due
to capital greed by competitors, but Paul
seized the opportunity to provide a solu-
tion fairly using a practical sensible model.
As IEGH expands and executes the Mr.
Amazing Loans strategy, increasing corpo-
rate revenues will elevate the growth which
will increase shareholder value.
“The business of Mr. Amazing Loans is
not rocket science, the growth is driven by
consistent management execution utilizing
our leading online loan platform combined
with cost effective customer lead acquisition,
thorough and highly efficient underwriting
and the ability to access appropriate debt
and equity funding. My 5 year vision is to be
licensed and lending in most states of the US
and also successfully operating online under
the Mr. Amazing Loans brand in Australia,
Philippines, Canada and United Kingdom.
We would like to be the McDonalds of
small loans across the world. We aim to be
NASDAQ listed with a $1 billion plus global
loan book continuing to provide a great
product for our customers and fantastic
returns for our investors.”
SNAPSHOT:
IEG Holdings Corporation (“IEGH”) is an
OTC Pink Sheet listed US public company
providing direct online consumer finance in
8 US states with plans to expand to a total of
33 US states by late 2014
• Provides $3,000 - $10,000, 4 to 5 year,
unsecured, online personal loans at 19.9%
APR – 29.9% APR with zero application fees,
establishment fees or prepayment penalties
• Affordable weekly Principal & Interest
repayments: $22.23/week for a $3,000 loan
and $37.04/week for a $5,000 loan
• Offers loans under the consumer brand
“Mr. Amazing Loans” via www.mramaz-
ingloans.com
• State-licensed online installment lender
regulated by US state Financial Institutions
Divisions; compliant with all laws and the
“spirit” of the regulations unlike payday
lenders, tribal lenders or other fringe lenders
• Funds new loan originations via $10m
senior revolving credit facility and secured a
$5m equity line Dec 2013
• Commenced lending in Georgia, Missouri,
Virginia and New Jersey in late May 2014
• Conducting a 1:100 reverse stock split/fil-
ing S-1 in July 2014 and intends a NASDAQ
up-listing in April 2015
For more information about IEGH, visit www.
investmentevolution.com, www.mramazingloans.
com, www.otcmarkets.com/stock/IEGH, email
info@investmentevolution.com or call Paul
Mathieson Chairman/CEO at +1702-227-5626 n
The company paid consideration to SNN or its affiliates for this article.
Paul Mathieson is a proven entrepreneur that has
recognized a problem and provided a solution. This
niche market has been under regulatory scrutiny
due to capital greed by competitors, but Paul seized
the opportunity to provide a solution fairly using a
practical sensible model.
12 MicroCap Review Magazine
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F E ATURE D ARTI CL E
How has ever great stock picker made a
fortune? At one point in their career, they
bought a fallen angel. These are great com-
panies that have fallen from grace, often to the
point of trading less than a $1 a share. Buffett
did it with GEICO and bought at $2. Do you
remember when Krispy Kreme (KKD) was
trading for less than $1? It’s now $27. How
about Ford (F) at $2?
What are the parameters for making money
in fallen angels? The first is to buy at the point
where there is very little downside. At $1 or $2
a share, they can’t fall much further. The sheer
mathematics is what makes these so attractive.
If a $1 stock goes to $10, it can pull the value
of your entire portfolio up with it. You are not
going to make a fortune buying IBM (IBM) at
$100 and selling it for $150. A 50% profit is
nice but not enough to smooth out your losers.
The second parameter is that these com-
panies have to stay in business. There can be
a multitude of reasons why a company has
fallen. Perhaps its industry is out of favor (like
gold miners right now). Maybe management
has done something untoward. When you
buy a fallen angel, imagine what people will be
saying in five years. Look at old articles when
a stock is a $1 a share. Nothing but bad news.
Examine debt levels and see if the company
can maintain bond payments. If they can,
these are the types of companies that can turn
around. In 2008, I had the good fortune of
buying Finish Line (FINL) at less than $2. The
entire portfolio of fallen angels. 2001 and 2009
gave investors some chances of a lifetime. If
we have another big market pullback, you may
have another opportunity.
In the mean time, what is on sale? Miners
look very interesting. Market Vectors Junior
Gold Miners ETF (GDXJ) might be a great
investment if you want to diversify. It’s off its
52 week low of $28.82 and is trading at over
$34. A look at its holdings shows a lot of pro-
ducing miners trading in the doldrums. These
microcaps are greatly levered to gold: a small
movement in the price of gold could portend an
enormous jump in the stock prices of miners.
Uranium is another beaten down sector.
The disaster in Fukushima, Japan, looked tem-
porary but nuclear power has been out of favor
ever since. The Global X Uranium ETF (URA)
was trading at $65 just three years ago and is
now $14. A look at its holdings shows some
great microcaps that are down and out: Energy
Resources of Australia (ERA.AX) and Paladin
(PDN.AX) both trade in Australia which is one
of the top uranium producing countries in the
world. Ever hear of buy and hold? How about
buy and forget. That might be a better strategy
on some of these.
Look at the list of stocks trading at 52 week
lows. This is a great place to do some bottom
fishing.
The challenge with investing right now is
that the market has been on a tear for the last
five years. A pull back is going to bring these
down even further. Remember when I pointed
out how a $1 stock going up can do wonders
for your portfolio? A stock going from $2 to
$1 can hurt it too. If you like fallen angels,
keep your fingers crossed. There may be a fire
sale soon.
Holmes Osborne is principal of Osborne Global
Investors, a money management firm. Holmes
holds a bachelor’s in finance from Syracuse
University and the Chartered Financial Analyst des-
ignation. Holmes has spoken frequently on the
topic of the economy and financial markets and
previously had a television program on public
access. Publications that his articles have appeared
in include: The Motley Fool, TheStreet.com, Seeking
Alpha, and Investopedia. He was the featured advi-
sor in the April 2013 online edition of the Wall Street
Journal. Holmes has also served as an expert witness
in court cases involving financial ethics. n
n BY HOLMES OSBORNE
markets were worried that a law suit from a
failed merger with Genesco (GCO) was going
to bring the company down. Finish Line had
no debt and companies with no debt rarely go
out of business (Circuit City being the excep-
tion). I sold at $8. If I’d held on longer, I would
have made even more as it was at $30 recently.
When was the time to buy internet stocks?
Was it in the late 1990s when they were sky
rocketing? No. It was when they crashed and
were trading at less then what they had in cash
in the bank. Of course, the pundits weren’t
telling you to do this. You have to figure this
out on your own. Fallen angel investing can be
quite lonely at times.
These fallen angels don’t always work out. I
remember people buying Washington Mutual
at less than $2 a share. Guess what? It went
to $0. Don’t put too much in any one issue.
There is risk involved.
Remember, stocks that trade less than $5
a share are by definition penny stocks. So at
one point in time, Ford and Bank of America
(BAC) were penny stocks. If their market caps
fall below $500 million, they are considered
micro-cap.
Investing in falling angels is an exercise
in behavioral finance. It’s being able to buy
something when everyone else is running for
the door. Brains aren’t always going to help in
these situations. A stomach lined with iron will
serve you much better.
Typical research doesn’t always help in these
situations. Often times, the financials look
awful and you are having to look into the
future. They can be attractive if they trade at
a huge discount to book value or even better,
net asset value (the true value of assets minus
liabilities). Buying at the right time is key. I
bought Pier One (PIR) at $8, gave up, and sold
at $5. It bottomed out at $1 and was at $25 not
too long ago. Darn. Missed that one.
When markets crash, you can assemble an
Fallen Angels
14 MicroCap Review Magazine
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F E ATURE D ARTI CL E
to company performance. Or management
should return surplus cash to shareholders
in the form of a dividend. A CEO may be
investing valuable resources in a pet project
that has no chance of success. A division is
worth more if it is sold off. If a majority of
investors believe in a critical change, man-
agement needs to listen to their suggestion
and carefully consider its implementation.
Some activist targets have taken advan-
tage of investors to a degree that is almost
comical. In one of my contests, a CEO built
a swimming pool at company headquarters
for the exclusive use of his family. In another
case, a key executive did not come into the
office for three full years. In yet another
company, a board voted to award bonus
payments based upon estimated revenue
numbers. After the bonuses had been paid,
they announced that they had missed sales
forecasts.
n BY ELIZABETH KOPPLE
A small cap company may not get the same
press when it makes a bad business decision.
Operating activities can be less transpar-
ent to investors. Board members are more
likely to be friends of management who were
placed on the board to be agreeable. Finally,
smaller companies often have shareholders
with less buying power. The smaller funds
and investors may not have the resources
or the expertise for a proxy fight. Without
an activist partner, these investors cannot
gain the publicity and the public pressure
needed to convince management to agree to
improve things.
Investors should consider activism when
all other efforts have failed. When they have
reached a wall. Typically, fund managers
have watched their investment drop in value
for years. Management has promised earn-
ings figures and failed to deliver quarter after
quarter. Perhaps compensation is not tied
Activist
Investing
The Need for Small Cap Activism
S
mall cap and micro cap activist investing plays an impor-
tant role in maximizing shareholder value for this sector.
In many ways, activism is more valuable at small public com-
panies than at large caps.
MicroCap Review Magazine 15
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What makes a stock a good candidate for
activists? Here are some of the patterns for
successful activist targets:
• Wide shareholder support for changes to
the board and management team
• Large executive salaries rewarding poor
performance
• Insiders own less than 10% of the com-
pany
• Cash is being spent on frivolous acquisi-
tions
• Quality employees are leaving due to
poor management
• Management has lost its focus and is not
driving growth
• Management is misstating financial
results
• Valuable patent portfolio value is being
squandered
• The company is trading for less than the
sum of its parts
Proxy contests can be expensive for those
without expertise. Investors can reduce their
costs by working in partnership with an
experienced activist investor. Experienced
activists can often reduce this cost substan-
tially. They are high volume clients who have
formed special relationships with expert
legal advisors and proxy solicitors.
Certain shareholder demands are more
likely to generate a positive investment
return. Hedge funds are usually better at
implementing plans that can be crafted with
publicly available information. This includes
selling an asset or paying a dividend. Funds
have not been as successful, on the whole,
when they create new business plans that
require confidential, inside information
1
.
Once an activist investor team has decided
to move forward with a proxy contest, they
must work through a specific process. First,
shareholders must be contacted and con-
vinced to support the activists. You will need
to have detailed presentations demonstrat-
ing the changes you suggest and your cred-
ibility to implement these changes. Next,
investors must reach out to proxy advi-
sory firms such as ISS and Glass, Lewis and
explain the key issues. These proxy advisory
firms can choose to recommend that share-
holders vote in support of your proxy. It
is critical to have support from ISS and/or
Glass, Lewis. It sends a powerful signal to
incumbent management, board members as
well as investors. Next, activists usually nom-
inate representatives to join the Company
board. These nominees must be experienced,
capable executives with industry experience.
Finally, a form DEF 14A must be filed with
the SEC and a proxy letter must be written to
shareholders and the incumbent board.
It can be challenging to gain a majority of
shareholder approval. First, it is helpful if the
management team owns less than 10% of the
stock. This usually means that management
is more worried about their salary and perks
than the stock price. It is important to find
the connectors within the shareholder base.
The connector could be a small individual
investor who knows the largest sharehold-
ers and keeps them all connected. He may
post regularly on the message board and
send specific alerts to shareholders when
something is amiss. Again it is sometimes
the smaller shareholders that wield the most
power.
Activists need a focused plan for improv-
ing the company that they can sell to inves-
tors. It is not enough to point out the weak-
nesses of the current Board or management
team. Demonstrate what you can improve.
For example, an activist may present the fol-
lowing outline and then provide details on
how they will execute:
• Focus on free cash flow
• Reduce corporate overhead
• Attract and retain talent
• Exit unsuccessful businesses
• Pay for performance
Throughout the entire process, investors
should be open to negotiating with manage-
ment and agreeing to reasonable terms for
a settlement. It is much better when man-
agement agrees to terms before the proxy
contest is completed. Sometimes the credible
threat of a proxy contest is enough to settle
the dispute with management. And that
credible threat is the reason small cap activ-
ism is critical to ensuring investment returns
and maintaining efficient markets.
1. Bratton, William W., Hedge Funds and Governance
Targets: Long-Term Results (September 8, 2010).
University of Pennsylvania Institute for Law &
Economics Research Paper No. 10-17
Elizabeth Kopple is a Director with IDWR Multi-
Family Office, an organization that invests its own
capital in small cap proxy contests. She can be
reached at ekopple@idwr-office.com. Ms. Kopple is
also a member of The Activists Association: www.
activistsassociation.com n
Activists need a focused plan for improving the
company that they can sell to investors. It is not
enough to point out the weaknesses of the current
Board or management team.
16 MicroCap Review Magazine
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Bitcoin
Tech’s New Darling
FEATURED ARTICLE
to established exchanges (MtGox controlled
over 80% of traffic at one point), which
made a decentralized currency centralized
once again. This would not be a huge prob-
lem if the exchanges acted with integrity and
transparency, but as we saw with MtGox,
many of them did not. MtGox was run
by a twenty-something-year-old coder, who
was rumored to have Asperger’s Disease.
BitStamp and BTC-E, currently the two lead-
ing exchanges, are faceless, non-transparent
entities run out of Eastern Europe. The
failures of MtGox and other exchanges (like
Flexcoins) were not necessarily malicious.
They were simply the product of manage-
ment that was not equipped to deal with
such large volumes of traffic and money –
the infrastructure was simply lacking.
Luckily, I believe this is all about to
change. With the soaring prices of Bitcoin,
2013 brought crypto-currencies into the
limelight, and in 2014 it seems that VC’s and
investor whales are finally jumping on board.
In April of last year, the Winklevoss broth-
ers bought $11 million- worth of Bitcoins
and are now launching a Bitcoin trust.
Andreessen Horowitz, a leading venture
capital firm, announced that it had led a $25
million fund-raising round for Coinbase, a
Bitcoin start-up in San Francisco. In March,
Perseus Telecom and Atlas ATS announced
At the time crypto-currencies were new,
flashy, and completely unregulated. While
some people were vehemently anti-regula-
tions (and remain so today), most people
including myself understood that some type
of oversight was inevitable, and I was fas-
cinated by the opportunity to witness the
birth of a brand new, unique regulatory
framework.. In 2012, Bitcoin was much more
underground and ideological then it is today,
but it was quickly gaining momentum. It was
unclear if or how the current securities laws
would be applied to something that wasn’t
technically a security, or whether Bitcoin
would last long enough for it to even mat-
ter. The speed of Bitcoin’s evolution since
2012 has been staggering. With the price
skyrocketing to over $1,000 per coin in 2013,
serious investors and institutions with fund-
ing and business experience have begun to
take notice, and this attention may be the
n BY ANDREI SERPIK
I
first bought Bitcoins in 2012 when they were worth around $14
dollars. I had just begun my second year of law school and was
looking for emerging fields where my newly found knowledge might
one day prove to be useful.
very push this decentralized crypto-currency
needs.
The only exchange when I first started
buying Bitcoins was MtGox. The exchange
was moving thousands of Bitcoins even
before the Bitcoin protocol became a truly
disruptive technology. As with anything new,
hiccups will occur – as those records disap-
peared along with 700,000 Bitcoins, when
MtGox shut down its trading engine and
filed for bankruptcy protection in February
2014.
The problem with Bitcoin in the past was
that no one was taking it seriously. Not even
the most devoted believers ever thought the
price would break $1,000. It started as an
experiment, and all the tech-heads jumped
aboard. Unfortunately, these tech-heads
didn’t have business or PR experience. When
coins were worth less than $10 dollars, these
shortcomings could be ignored, but with
the current eight billion dollar market cap,
these qualities are vital. Of course exchanges
and the people that run them are really
not needed for Bitcoin. The whole point of
Bitcoin is that the currency is supposed to
be decentralized. People could trade coins
with each other while cutting the exchange
out of the equation; this way there could be
no central point of failure. However, Bitcoin
did not evolve this way. Instead, people fled
MicroCap Review Magazine 17
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a partnership to launch a first-of-its-kind
exchange geared toward high-frequency
trading, paving the way for large institutions
to become involved in Bitcoin on a deeper
level. At the end of July, venture capitalist
Tim Drapper won the highest bid for 30,000
government auctioned bitcoins (currently
valued at $18 million) that were seized from
the underground illicit market place, The
Silk Road, earlier last year. He has pledged to
use these coins as liquidity for exchanges he
plans to develop in emerging markets.
What does this mean for the average
Bitcoiner? Well, for starters, it means that
the Bitcoin protocol is evolving from an
experiment to a widely recognized well-
funded machine. It is getting more difficult
to claim that Bitcoin is just a fad as more
companies are willing to adopt the protocol.
Overstock.com was the first major retailer
to start accepting bitcoins and has already
received over $1 million dollars’ worth of
bitcoin transactions in the first month.
Overstock.com has quickly been followed
by Dish Networks, Dell and Newegg. The
trend does not seem to be slowing down, as
more household names continue to enter
the Bitcoin ecosystem. It also means more
financial instruments will start emerging
based on Bitcoin. Bitcurex.com already has
a derivatives market for Bitcoin, and this
is just the beginning. We must remember
that Bitcoin is an open-source protocol. It’s
potential is infinite and relies on the users
to develop new uses for it—where the only
limit is what can be imagined. At the end
of the day, I believe that while the coders
are still in control of innovation, the influx
of funding and managerial experience will
ensure a robust, well-managed and widely
accepted low-fee payment system.
Andrei Serpik is a recent graduate of Washington
University School of Law and a long time bitcoin
proponent, enthusiast, and trader. Andrei has been
actively trading as well as using bitcoins since early
2012 and has been attending crypto-currency con-
ferences both in California and in St. Louis where he
has lived for the last three years. Andrei has also been
an active investor in alternative currencies includ-
ing Litecoin, NameCoin, NovaCoin and DRKcoin.
Andrei plans to use his law degree to enter the field of
securities regulation with an emphasis on emerging
crypto-currency regulation and litigation. n

18 MicroCap Review Magazine
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Technology Solutions for the
Growing Cannabis Industry


ENDEXX CORPORATION 5855 E. SURREY DR. CAVE CREEK, AZ. 85331 Page 1

Technology Solutions for the Growing Cannabis Industry

M3Hub: the Compliance Standard for the Cannabis Industry
The path to marijuana legalization is through regulations, traceability, compliance and administrative oversight. The
right to be a participant in the cannabis industry comes at the cost of compliance. As barriers to entry become more
stringent so do the rewards. License holders have the unique opportunity to make a lot of money, provided, they
invest in tracking, compliance and quality control processes.
Failure to comply is guaranteed to cease your opportunity to generate revenues and profitability, especially in the
cannabis industry. Like the passing of prohibition, the legalization of cannabis will bring government mandated
complexities to the industry that will create opportunities for compliant forward looking companies. M3Hub may be
early, but it is right on target. M3Hub is the future of the cannabis industry’s compliance standard.

Endexx Corporation Beginnings
In search of growth sector niches to complement its diversified portfolio acquisition strategy, Todd Davis, CEO of
Endexx Corporation, has developed and nurtured since 2011 through business associations and networking, a human
resource collective composed of industry professionals and consultants with many years of experience in their
respective fields and an in depth understanding of the challenges and specific needs of the marijuana industry.

Mr. Davis realized that the most pressing prerequisite for the marijuana industry to develop and mature in the face of
the great legal challenges was to focus on standardization, security and compliance.
Taking clues from the pharmaceutical industry, and in partnership with supply chain management developers with a
background in “seed to sale” management solutions for agricultural application (wineries), a Cloud based Tracking
system was developed that formed the basis for the M3Hub concept. The M3HUB is specifically configured to reflect
each market’s needs and adapt to any regulatory environment.
During both the biotech and the dot-com booms, investors speculated on concepts that didn’t come to fruition for 10-
20 years. Some of these became huge success like Amgen, Genentech, Amazon and Google. The cannabis industry
on the other hand has already reached early stage successes being both tangible and viable today. A key to
unlocking the value and benefits of this industry will come from development and innovations from the massive
talent pool found in American entrepreneurial spirit and intelligence. When a new industry is born, there is a
spawning of new millionaires, even some billionaires. However, along with a perceived right to financially prosper, so
come the rules, regulations and government control. Abuse of the rules leads to a very unhappy ending.

From Cartels to Legalization
As the cannabis market inexorably shifts from an illegal market to a fully legalized and legitimate industry, state and
local laws and regulations are designed to circumvent federal laws. This leads to disparity, fragmentation in the
regulatory landscape and creates local enforcement issues which have hampered the development of a standardized
infrastructure. However, within the last few years, States like Colorado and Washington are leading legalization
momentum and shifting this now legal multi-billion dollar market into the most compelling new business opportunity


ENDEXX CORPORATION 5855 E. SURREY DR. CAVE CREEK, AZ. 85331 Page 1

Technology Solutions for the Growing Cannabis Industry

M3Hub: the Compliance Standard for the Cannabis Industry
The path to marijuana legalization is through regulations, traceability, compliance and administrative oversight. The
right to be a participant in the cannabis industry comes at the cost of compliance. As barriers to entry become more
stringent so do the rewards. License holders have the unique opportunity to make a lot of money, provided, they
invest in tracking, compliance and quality control processes.
Failure to comply is guaranteed to cease your opportunity to generate revenues and profitability, especially in the
cannabis industry. Like the passing of prohibition, the legalization of cannabis will bring government mandated
complexities to the industry that will create opportunities for compliant forward looking companies. M3Hub may be
early, but it is right on target. M3Hub is the future of the cannabis industry’s compliance standard.

Endexx Corporation Beginnings
In search of growth sector niches to complement its diversified portfolio acquisition strategy, Todd Davis, CEO of
Endexx Corporation, has developed and nurtured since 2011 through business associations and networking, a human
resource collective composed of industry professionals and consultants with many years of experience in their
respective fields and an in depth understanding of the challenges and specific needs of the marijuana industry.

Mr. Davis realized that the most pressing prerequisite for the marijuana industry to develop and mature in the face of
the great legal challenges was to focus on standardization, security and compliance.
Taking clues from the pharmaceutical industry, and in partnership with supply chain management developers with a
background in “seed to sale” management solutions for agricultural application (wineries), a Cloud based Tracking
system was developed that formed the basis for the M3Hub concept. The M3HUB is specifically configured to reflect
each market’s needs and adapt to any regulatory environment.
During both the biotech and the dot-com booms, investors speculated on concepts that didn’t come to fruition for 10-
20 years. Some of these became huge success like Amgen, Genentech, Amazon and Google. The cannabis industry
on the other hand has already reached early stage successes being both tangible and viable today. A key to
unlocking the value and benefits of this industry will come from development and innovations from the massive
talent pool found in American entrepreneurial spirit and intelligence. When a new industry is born, there is a
spawning of new millionaires, even some billionaires. However, along with a perceived right to financially prosper, so
come the rules, regulations and government control. Abuse of the rules leads to a very unhappy ending.

From Cartels to Legalization
As the cannabis market inexorably shifts from an illegal market to a fully legalized and legitimate industry, state and
local laws and regulations are designed to circumvent federal laws. This leads to disparity, fragmentation in the
regulatory landscape and creates local enforcement issues which have hampered the development of a standardized
infrastructure. However, within the last few years, States like Colorado and Washington are leading legalization
momentum and shifting this now legal multi-billion dollar market into the most compelling new business opportunity
M3HUB: THE COMPLIANCE
STANDARD FOR THE CANNABIS
INDUSTRY
The path to marijuana legalization is
through regulations, traceability, compliance
and administrative oversight. The right to
be a participant in the cannabis industry
comes at the cost of compliance. As barriers
to entry become more stringent so do the
rewards. License holders have the unique
opportunity to make a lot of money, pro-
vided, they invest in tracking, compliance
and quality control processes.
Failure to comply is guaranteed to cease
your opportunity to generate revenues
and profitability, especially in the cannabis
industry. Like the passing of prohibition, the
legalization of cannabis will bring govern-
ment mandated complexities to the industry
that will create opportunities for compliant
forward looking companies. M3Hub may be
early, but it is right on target. M3Hub is the
future of the cannabis industry’s compliance
standard.
ENDEXX CORPORATION
BEGINNINGS
In search of growth sector niches to com-
plement its diversified portfolio acquisi-
tion strategy, Todd Davis, CEO of Endexx
Corporation, has developed and nurtured
since 2011 through business associations
and networking, a human resource collec-
tive composed of industry professionals and
consultants with many years of experience in
their respective fields and an in depth under-
standing of the challenges and specific needs
of the marijuana industry.
Mr. Davis realized that the most pressing
prerequisite for the marijuana industry to
develop and mature in the face of the great
legal challenges was to focus on standardiza-
tion, security and compliance.
Taking clues from the pharmaceutical
industry, and in partnership with supply
chain management developers with a back-
ground in “seed to sale” management solu-
tions for agricultural application (wineries),
a Cloud based Tracking system was devel-
oped that formed the basis for the M3Hub
concept. The M3HUB is specifically config-
ured to reflect each market’s needs and adapt
to any regulatory environment.
During both the biotech and the dot-com
booms, investors speculated on concepts
that didn’t come to fruition for 10-20 years.
Like the passing of prohibition, the legalization of
cannabis will bring government mandated complex-
ities to the industry that will create opportunities
for compliant forward looking companies.
Ticker: EDXC
MicroCap Review Magazine 19
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ENDEXX CORPORATION 5855 E. SURREY DR. CAVE CREEK, AZ. 85331 Page 2

in the last 25 years in North America.. Recognizing both the challenges and opportunities of this industry, Endexx
created the M3Hub platform which brings standardization, security, transparency and compliance to the cannabis
industry and provides the tools for industry participants to cost effectively manage their workflow processes.


The Cost of Non-Compliance
In a benchmark study of 46 international organizations by the Ponemon Institute titled “The True Cost of
Compliance”, the cost of non-compliance has been found to be 2.65 times greater than the cost of compliance. The
major consequences of non-compliance for businesses include business disruption, productivity loss, revenue loss,
fines and penalties, legal fees, and more specifically to the marijuana industry, the loss of license and of the right to
be in business.

Medical Marijuana: A “Growing Industry” – Market Size
U.S. medical marijuana sales totaled an estimated $1.5 billion in 2013 and are forecasted to grow to $7-$8 billion by
2018. Presently, medical marijuana sells for $1600-$4500 per pound (depending on market and strain). Each plant
yields 0.5-0.75 lbs. per growth cycle and each plant produces 3-5 yields per life cycle. Therefore, each plant yields a
minimum of $4800 and a best-case scenario of $22,500.
What product in the world does this at such a low cost of goods? In most supply chains, many components are
assembled to make a product, constantly escalating the price of a good. At each product level, mark ups are added
to the product, including profit margins, taxes, regulations, shipping, packaging and so on. In the medical marijuana
arena, one plant is separated into and transformed into many products, creating a quantitatively more complex
supply chain.
Some of these became huge success like
Amgen, Genentech, Amazon and Google.
The cannabis industry on the other hand
has already reached early stage successes
being both tangible and viable today. A key
to unlocking the value and benefits of this
industry will come from development and
innovations from the massive talent pool
found in American entrepreneurial spirit
and intelligence. When a new industry is
born, there is a spawning of new million-
aires, even some billionaires. However, along
with a perceived right to financially prosper,
so come the rules, regulations and govern-
ment control. Abuse of the rules leads to a
very unhappy ending.
FROM CARTELS TO
LEGALIZATION
As the cannabis market inexorably shifts
from an illegal market to a fully legalized
and legitimate industry, state and local laws
and regulations are designed to circum-
vent federal laws. This leads to disparity,
fragmentation in the regulatory landscape
and creates local enforcement issues which
have hampered the development of a stan-
dardized infrastructure. However, within
the last few years, States like Colorado and
Washington are leading legalization momen-
tum and shifting this now legal multi-billion
dollar market into the most compelling new
business opportunity in the last 25 years in
North America.. Recognizing both the chal-
lenges and opportunities of this industry,
Endexx created the M3Hub platform which
brings standardization, security, transpar-
ency and compliance to the cannabis
industry and provides the tools for industry
participants to cost effectively manage their
workflow processes.
THE COST OF NON-
COMPLIANCE
In a benchmark study of 46 internation-
al organizations by the Ponemon Institute
titled “The True Cost of Compliance”, the
cost of non-compliance has been found to
be 2.65 times greater than the cost of com-
pliance. The major consequences of non-
compliance for businesses include business
disruption, productivity loss, revenue loss,
fines and penalties, legal fees, and more spe-


ENDEXX CORPORATION 5855 E. SURREY DR. CAVE CREEK, AZ. 85331 Page 3



M3Hub Technology: The Science of Medical Marijuana Management – Standards and Practices
M3Hub brings pharmacy grade compliance and standardized technology solutions to the medical marijuana industry
and full accountability through “seed to sale” inventory management and tracking. The M3Hub is designed to adapt,
integrate and facilitate all transactions and manage patient concentric data and incorporate HIPAA compliance, the
HiTech Act (Health Information Technology for Economic and Clinical Health Act), Patient Privacy, Patient Care and
follow through. Through verification, privacy, legal and transparent controls, the M3Hub platform legitimizes the
entire transaction process.

Chain of Custody: “Seed To Sale”
Seed > Grow Cycle > Processing > Lab/Testing > Packaging > Transportation > Dispensary > Gateway > Patient



Materials
56%
LighGng
17%
Labor
14%
Lease
8%
Compliance
5%
20 MicroCap Review Magazine
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ENDEXX CORPORATION 5855 E. SURREY DR. CAVE CREEK, AZ. 85331 Page 3



M3Hub Technology: The Science of Medical Marijuana Management – Standards and Practices
M3Hub brings pharmacy grade compliance and standardized technology solutions to the medical marijuana industry
and full accountability through “seed to sale” inventory management and tracking. The M3Hub is designed to adapt,
integrate and facilitate all transactions and manage patient concentric data and incorporate HIPAA compliance, the
HiTech Act (Health Information Technology for Economic and Clinical Health Act), Patient Privacy, Patient Care and
follow through. Through verification, privacy, legal and transparent controls, the M3Hub platform legitimizes the
entire transaction process.

Chain of Custody: “Seed To Sale”
Seed > Grow Cycle > Processing > Lab/Testing > Packaging > Transportation > Dispensary > Gateway > Patient



Materials
56% LighGng
17%
Labor
14%
Lease
8%
Compliance
5%
cifically to the marijuana industry, the loss
of license and of the right to be in business.
MEDICAL MARIJUANA: A
“GROWING INDUSTRY” –
MARKET SIZE
U.S. medical marijuana sales totaled an esti-
mated $1.5 billion in 2013 and are forecasted
to grow to $7-$8 billion by 2018. Presently,
medical marijuana sells for $1600-$4500 per
pound (depending on market and strain).
Each plant yields 0.5-0.75 lbs. per growth
cycle and each plant produces 3-5 yields per
life cycle. Therefore, each plant yields a
minimum of $4800 and a best-case scenario
of $22,500.
What product in the world does this at
such a low cost of goods? In most supply
chains, many components are assembled to
make a product, constantly escalating the
price of a good. At each product level, mark
ups are added to the product, including
profit margins, taxes, regulations, shipping,
packaging and so on. In the medical mari-
juana arena, one plant is separated into and
transformed into many products, creating a
quantitatively more complex supply chain.
M3HUB TECHNOLOGY:
THE SCIENCE OF MEDICAL
MARIJUANA MANAGEMENT –
STANDARDS AND PRACTICES
M3Hub brings pharmacy grade compli-
ance and standardized technology solu-
tions to the medical marijuana industry
and full accountability through “seed to
sale” inventory management and tracking.
The M3Hub is designed to adapt, integrate
and facilitate all transactions and manage
patient concentric data and incorporate
HIPAA compliance, the HiTech Act (Health
Information Technology for Economic and
Clinical Health Act), Patient Privacy, Patient
Care and follow through. Through verifica-
tion, privacy, legal and transparent controls,
the M3Hub platform legitimizes the entire
transaction process.
CHAIN OF CUSTODY: “SEED TO
SALE”
Seed > Grow Cycle > Processing > Lab/
Testing > Packaging > Transportation >
Dispensary > Gateway > Patient
M3hub “Seed to Sale” is customizable to
each unique business or client need, and
can be adjusted on a state-by-state or gov-
ernment-by-government basis to meet any
unique regulatory requirements.
Tracking
• Sales Chain
• Process Tracking
• Work Flow
• Deep-Tracking - Business Process Analysis
• QR & Bar Coding - Automated Document
Management
Management
• Integrated CRM - Workflow Automation
• Business Groups - Administrative over-
sight
• Geo-Synchronization
• Dynamic report generation in multiple
formats
• Enterprise Systems - Cloud and APIs
Synchronization
• Portal Controls
Sales
• Purchase Orders
• Manifests
• POS Systems
• Pricing - Items, Batches, Wholesale, Retail
• Merchant Processing - Payment Gateway,
POS Integration
M3Hub brings pharmacy grade compliance and
standardized technology solutions to the medical
marijuana industry and full accountability through
“seed to sale” inventory management and tracking.
MicroCap Review Magazine 21
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Security
• HIPAA Compliant
• Administrative Permissions
• WatchDog Firewalls
• Zero-client Server Spoofing
• Real Time Threat Assessment
Autospense™ is an industrial grade, vault-
like, hightech automated dispensing system
that is specifically designed to control trans-
actions and manage inventory.
Features
• Unmatched flexibility and security
• Handles wide variety of sizes and types of
items
• Average dispense time under 10 seconds
• Holds 780 unique items or SKUs
• ID Verification
• Debit or cash transactions
• Powerful screen search capability
• High inventory density
• Purchase or lease (36 months)
• Displays items pictures
• Displays lab testing data for each item
• Shopping Cart technology for single
checkout and payment
• Secure access control
• Tracking of item, lot, patient, expiration
date
• 174 standard reporting functions
• Reports emailed automatically to PC or
tablet
Benefits
• Provides a safe, legally compliant and
professional access to medical marijuana
• Real time management of inventory and
distribution
• Enhances business efficiency
• Enhances security, accountability, supply
chain management and profitability
SUSTAINABILITY AND
ALLIANCES
The medical marijuana and recreational
marijuana industry growth rate is on a
dramatic upside curve. Sustainability for
the industry requires standardization and
reliable compliance methodology. No one
company can do everything, rather, an alli-
ance network within the industry collabo-
rating together will assure the longevity
and success of this industry which is still in
its infancy. The M3Hub platform incorpo-
rates multiple service channels including:
Consulting, Financial Solutions, Insurance,
Security Monitoring, Vending, Distribution
Controls, RFID Tracking, Taxation
Collection Service, POS Management,
Biometric Protocols, Applications, Doctor
Referral and Verification, Centralized Lab
Testing, Quality Control Management, POS,
CRM and Vending/Dispensing Services. The
M3Hub also fosters an outer layer service
providing Referral Networks, Policy and
Legal association, Social Media, News and
Scientific literature distribution and collec-
tive industry affiliation partners.
THE MEDICAL MARIJUANA
MOVEMENT
A persistent, national movement has gen-
erated unstoppable momentum towards
public acceptance and adoption of canna-
bis as both a viable therapeutic treatment
and a responsible adult choice recreational
consumer product. Now as a multi-billion
dollar industry it is necessary for Endexx
Corporation to provide the efficiencies and
methods to sustain the quality and growth
of this new industry. As with all lucrative
industries, government oversight becomes
inevitable and the cost of making money
rises. Investing in compliance and industry
standards will build the foundation for a
worldwide growth industry for the next sev-
eral decades. Endexx Corporation embraces
the responsibility and opportunity presented
and will continue to provide both guidance
and products throughout the cannabis eco
system and work toward the establishment
of industry and regulatory accepted stan-
dards and practices.
The M3Hub technology has been thor-
oughly tested and given a “Seal of approval”
by key policy makers and marijuana enforce-
ment officials through our collaboration
partners at Vicente Sederberg LLP. Endexx is
working diligently on becoming the standard
technology platform that regulators and all
marijuana growers, processors and retailers
will adopt to reliably meet all their compli-
ance needs regardless of their legislative
landscape. n
The company paid consideration to SNN or its affiliates for this article.
A persistent, national movement has generated
unstoppable momentum towards public acceptance
and adoption of cannabis as both a viable therapeu-
tic treatment and a responsible adult choice recre-
ational consumer product.
22 MicroCap Review Magazine
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Millennium HealthCare
Deeply scarred by the loss of his mother
from a misdiagnosis, Dominick made it
his mission to help bring more advanced
testing and preventative diagnostics using
innovative technology to better help physi-
cians detect disease early so something like
this would never happen again. As a result,
he assembled a consortium of cardiologists,
oncologists, surgeons, medical device man-
ufacturers, reimbursement specialists and
legal experts in a concerted effort to pro-
vide physicians with lifesaving, non-invasive
diagnostic tests that could cost patients little
to no out of pocket expense, while being
reimbursable to physicians by both private
PROFILED COMPANIES
Why Is Millennium HealthCare Bringing The Most Potentially
Advanced Life-Saving Diagnostics To Patients For Little to No Cost?
insurance and Medicare.
Soon afterward, Mr. Sartorio became the
CEO of Millennium HealthCare (Ticker:
MHCC). One of the first items he and
his team analyzed was the regulatory and
reimbursement changes occurring within
healthcare and how these changes may
affect primary care physicians, cardiolo-
gists and their practices. MHCC’s manage-
ment researched, studied and analyzed the
operations of physician practices, healthcare
clinics and hospitals to better understand
and become more proficient in their organi-
zational infrastructure and cash flows. With
this knowledge, they became an experienced,
highly qualified team, and began specializing
in credentialing, medical billing and coding,
with emphasis on ICD-9conversion to ICD-
10, which requires the use of a very costly
and complex system of over 100,000 codes.
Millennium learned that primary care
physicians can commonly be the lowest paid
physicians in the industry and their practices
can often experience potentially weak cash
flow. The irony of this is that the primary
care physician has a very significant impact
on the healthcare industry with approxi-
mately 400,000 physicians/practices.
After identifying and working closely with
S
everal years ago, Dominick Sartorio’s mother went to her doctor
because she felt pain in her abdomen. After performing a rou-
tine examination and finding nothing, the doctor dismissed her pain
as a common stomach ache and sent her home. She left the doctor’s
office, and died later that day of a heart attack.
Doctors are eager
to sign up for
Millennium’s exclusive
diagnostics because
they can help save
lives at little to no
cost to their patients
and be a profitable
new revenue stream
for their practices.
Ticker: MHCC
CEO Dominick Sartorio
MicroCap Review Magazine 23
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primary care practices, clinics and hospi-
tals, MHCC’s management determined that
affordable, accurate, non-invasive diagnostic
tests for the early detection of heart dis-
ease and cancer were likely key components
in the successful reduction of healthcare
costs. These very specifically profiled diag-
nostics immediately became the foundation
of Millennium’s business model.
The Company, led by Mr. Sartorio, began
to focus its efforts on identifying diagnostic
devices that had the potential to greatly
reduce long-term medical costs. These diag-
nostics had to fit Millennium’s highly spe-
cific criteria, including being FDA cleared
and approved, having established billing
codes for reimbursement and being primar-
ily used for , the early detection of common
diseases, such as cardiovascular disease or
cancer. Additionally, to protect, enhance and
benefit Millennium and its shareholders,
these devices and diagnostics would have to
be exclusive to Millennium.
The first products Millennium identified
and pursued were OralCDx™, for the early
detection of oral cancer, and DermCDx™
for the early detection of skin cancer. Oral
cancer is one of the fastest growing diseases
because it is one of the most untested and
undetected diseases. Skin cancers, like mela-
noma, can quickly become life threatening if
not detected or treated early.
Oral and skin cancers are currently detect-
ed through a chunk biopsy; a procedure that
requires using a scalpel for deep cutting and
stitches to close the wound. Chunk biopsies
are typically accompanied by pain, patient
recovery time and sometimes infection, par-
ticularly if the wound is in the mouth, which
has a high bacterial count.
Much like the Pap smear that revolu-
tionized the diagnosis of cervical cancer,
OralCDx™ and DermCDx™ use a non-
invasive brush to contact and collect samples
of any visible dysplasia (red or white spots
in the mouth, tongue and throat or suspi-
cious spots that may appear on the skin).
The OralCDx brush obtains a complete
transepithelial biopsy specimen collecting
cells from all three layers of the epithelium:
the superficial, intermediate and the basal
layer. Specimen samples from the brush are
placed on a glass slide for analysis for which
lab results have shown a 98% accuracy in
the detection of cancer and pre-cancerous
cells. Millennium has successfully secured
the exclusive rights to these revolutionary
diagnostic tests.
Medicare is also currently trying to con-
trol unnecessary referrals from primary care
physicians to expensive cardiologists and
other specialists for very expensive tests
that may yield negative results. Millennium
believes they have identified a potential solu-
tion to this problem through their second
product offering
VasoScan™, a simple but highly innova-
tive cardiovascular test developed at MIT.
In three minutes, this technology, using
an LED fingertip sensor with sophisticated
algorithmic software, can accurately assess
and diagnose patients for cardiovascular
disease whether they are symptomatic or
not. According to Mr. Sartorio, “Being able
to detect heart disease for early intervention
and treatment could potentially help the
600,000 people who perish annually from
cardiovascular disease in the United States.”
VasoScan™ appeals to Medicare and reim-
bursement agents because it can provide
evidence to support a patient’s referral to a
specialist, where high diagnostic costs are
typically incurred. Prior to VasoScan™, these
costly referrals were based on EKG’s that
often provided inadequate or incomplete
data; family history; weight; blood pressure;
cholesterol data; diet; and smoking habits.
These metrics are essential, but insufficient
for optimal patient assessment and diag-
nosis.
VasoScan™ is more accurately predictive
and a more reliable assessment of cardiovas-
cular health because it measures the elastic-
ity and stiffness of a patient’s blood vessels
as well as the biological age of the arteries
and changes in blood pressure, blood flow
and velocity.
OralCDx™, DermCDx™ and VasoScan™
are expected to be powerful diagnostic tools
to aid the healthcare industry in accurate
preventative diagnostic testing, but are only
the beginning. Millennium continues to
identify new and innovative devices and
preventative tests and diagnostics that fit
the same model for breast cancer and other
common diseases.
Subsequent to Millennium securing the
24 MicroCap Review Magazine
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exclusive sales and marketing rights to these
“state-of-the-art” diagnostics, they started
to introduce them to physicians, practices
and large physician groups such as ACO’s
(Accountable Care Organizations), IPA’s
(Independent Practice Associations) and
MSO’s (Managed Service Organizations).
The overwhelming clinical need combined
with little or no cost to patients and the
additional potential revenue stream suffi-
ciently peaked physicians’ interest to cause
them to engage and ultimately contract with
Millennium in order to implement and pro-
vide these devices and tests within their
practices.
Initial distribution and market testing of
these products are resulting in overwhelm-
ing interest and early adoption. Millennium
began offering its diagnostics only 6 months
ago in December of 2013 and since then have
contracted with 1,300 physician office loca-
tions. They potentially have another 1,000
locations currently evaluating formal con-
tracts, and several thousand more expressing
high levels of interest.
There are over 400,000 primary care phy-
sicians/practices in the U. S. today with an
average of between 2 and 5 physicians per
practice. Each physician can see an average
of up to 40 patients per day.
The average physician, nurse or medical
assistant can perform approximately 10 to
20 tests per day, with some multi-physician
offices performing up to 100 tests per day.
A physician can be reimbursed an estimated
$150 to $240 per test.
Mr. Sartorio says, “We want to strategically
manage our growth and expect to reach up
to 5,000 contracted locations within 3 years.”
Mr. Sartorio added, “We can recover most,
if not all of our unit cost in approximately
30 days of its implementation and self-fund
growth from sales after that. With antici-
pated growth of this magnitude, we need
to focus on implementation and control
of our first few thousand practices before
we look to offer our products to the entire
marketplace.”
Millennium is currently evaluating vari-
ous options to finance additional equip-
ment/capital expenditures and further prod-
uct rollouts.
With the current trend of consolidation of
practices and practices merging into ACO’s
IPA’s and MSO’s, it is anticipated that the
process for Millennium to reach large num-
bers of physicians and their practices and
patients will be streamlined and more effi-
cient than ever before. Instead of speaking
with a single physician office one at a time,
Millennium can now deal with one or several
ACO’s, IPA’s or MSO’s that represents dozens
or hundreds of practices and negotiate a
large number of locations in a relatively very
short time.
Dominick Sartorio’s dream and passion
to provide physicians with potentially life-
saving, early detection diagnostics and ser-
vices is now a reality with positive patient
outcomes already being realized. According
to Mr. Sartorio, “Early results from partici-
pating practices with VasoScan™ for non-
symptomatic patients have already resulted
in successfully identifying patients with car-
diovascular issues”.
Millennium’s state-of-the-art diagnostics
have a very real potential to save lives and
contribute enormous savings for the health-
care system. Their diagnostics are currently
reimbursable by Medicare and insurance
carriers making them available to patients
for little or no cost and are extremely attrac-
tive to physicians as they can substantially
increase practice income without any capital
investment.
You are invited to www.MillenniumHCS.
com n
The company paid consideration to SNN or its affiliates for this article.
OralCDx Brush
MicroCap Review Magazine 25
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StockWord Puzzle
TM

Across
3. PPM acronym stands for
4. Not interest but still income
6. Precious metal found in very few locations
7. Reverse split of shares which reduces shares has this
affect on stocks
9. Water company in this issue
10. This stock category is under $300 Million in market
capitalization
15. New method in producing oil
16. Most important criteria when investing in any ompany
18. Company sit down with investors at conferences
20. This index has hovered around 1700 this year
21. Seed capital source
23. IPO syndicator
24. Junk bonds are
25. Who’s newsletter helps building my hard asset portfolio
27. VPR is an acronym for this
29. Away to go public but not an IPO
31. Search engine optimization
35. More valuable resource than platinum
37. These expire after ninety days
39. OTC stocks are traded by
40. 506c is part of this SEC Reg
41. If a stock price is under $5 per share it’s known as a
43. Friends and family
45. Form 10-K
52. Jeff Jones new column
53. Higher valued stock than common shares
54. If you borrow stock you are
55. Bit ‘
58. These funds trade electronically
60. Venture Capital
61. This is a measure of a stocks volatility
62. Sprott Global US expert
65. Short player slogan
67. lEG Holdings is in this business
68. Wall Street Chicken had this kind of meeting
71. Long term options
72. Super sector in 2014
74. Gespeg resource
75. Commodity featured
77. Jeff Christian writes on this
78 The Asia market author
79 No investor has ever lost money in history doing this
80. Specializing in wire
81. Phase 1, 2, or 3 trials take place mostly in this sector
82. SNN fagship website
83. Increasing trading volume
Down
1. Penny stocks trade under
2. I can fnd microcap company information in every
issue of this magazine
8. Very popular way for funds to meet issuer managers
9. Marketmaker advertising in this issue
10. Offcial website of the MicroCap stock market
11. Lenders with a key marketing plan
12. Dominick Sartorio
13. Away for accredited investors to invest in companies
14. Legalization is responsible for this growth industry
15. Osborne writes about
17. Use these to fnd out scuttlebutt
19. An exit strategy is one of these for investors
22. Not really green products
26. Fundamentalist advice to investors
28. Away for startup companies to begin operations
30. Most under performing sector in 2014
32. Units usually comprised of common stock & these
33. Russell writes this column
34. Traders advice
36. Parent company of this magazine is
38. This company helps in identifying molecules
41. Larry Nussbaum
42. Fund assets minus liabilities
44. MicroCap Financial Conference in April in Las Vegas
46. Buying illiquid stocks usually result in this
47. Your have to be this to invest in crowd funded equity
48. Board takeover is a business
49. Jeff Kraws Crystal Research is well known for this
50. Most sophisticated investors do this with their
marginable stocks
51. OTC companies seek to do this when they achieve
higher market capitalization
56. Bio on cover
57. Subject of Joy Schoffer’s article
59. Get real time stock quotes here
63. Inexpensive method for an issuer to raise capital
64. Medical marijuana administrative company
66. Buy low
68. Alternative trading system that does not display
bids and offers in quotes
69. Leverage is
70. Highpower’s business
73. Jack Leslie column
76. Convertible debt converts into
26 MicroCap Review Magazine
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Gespeg Copper
Resources Inc.
Over the last 14 years, Gaspe Copper
changed hands multiple times, being owned
periodically by Falconbridge, Xstrata and
now owned by Glencore\Xstrata. A resource
of 180 million¹ tons is still present in the
Murdochville camp. ¹ (non 43-101 source
MB95-44)
The properties are divided in 5 different
sectors: Vortex, In Between, Port Daniel,
Murdochville A-B, R-Jean.
Vortex is a project in the sector of copper,
molybdenum and gold. Located 25 kilometers
west of Murdochville with 130 claims and
having an area of 68 square kilometers. This
project is seperated in five blocks Madelaine
de Vercheres, Courcy, B-O,Sullipeck East
and Sullipeck which is historically known for
its 5.5 Mt at 0.88% non-compliant with Rule
43-101 and shared with X-Strata. Over 46.535
meters of drilling spread over 347 surveys
indicates the presence of Skarn and the pos-
sibility of open pit operation. Sullipeck occu-
pies only 0.15 square kilometers of Project
Vortex, which comprise of Sulipeck East
where an announcement in 2012 showed a
discovery of 29m @ .94 % copper at 5.20m
from surface this property hosts a similar geo-
logic environment as Gaspe Copper.
Originally claimed in 2011, In Between
covers 517 sq/km and 920 claims. An air-
borne survey was flown in 2012 and followed
in 2013 by a soil survey to determine the sec-
tors with potential.
These surveys led us to divide In Between
into four distinct blocks: the Landry block,
the Wares block, the MacNeil block and the
McDonald block,which now consists of 200
sq/km and 315 mining claims. Additionally,
geophysics and soil surveys were com-
pleted in 2012 and 2013, and the portion
between Sullipek East and Gaspe Copper, the
MacNeill Block, is showing multiple new tar-
gets for further exploration and drilling The
properties are part of NTS 22A13 and 22H04
In fall of 2013 Gespeg acquired the Port-
Daniel property located inside the Gaspésie
Peninsula, along the portion of Baie des
Chaleurs at approximately 15 km north of
the Municipality of Port-Daniel. It over-
laps the northern border of the Port-Daniel
Wildlife Reserve. Gespeg recently completed
a sampling program with assays pending.
The property is included in the NTS 22A07.
The Murdochville property is located
inside the Gaspé Peninsula, at approximately
2 km east of Murdochville and the former
Gaspé Copper Mines. It overlaps the NTS
22A/14 map sheets, as well as the Holland
township. It is subdivided into two adjacent
blocks: the Murdochville block and the B
block.
The R-Jean property is located inside the
Gaspé Peninsula in Quebec, at approxi-
mately 10 km south of Murdochville and
the former Gaspé Copper Mines. It over-
laps with the NTS 22A/13 and 22A/14 map
sheets, as well as BonneCamps and Holland
townships.
The lithostratigraphic formations, as well
as the presence of magnetic signatures on the
property, make it a prime target for explora-
tion. These are similar to those that may be
seen in the Gaspé Copper Mines environ-
ment and have not been subjected to major
exploratory work in the past.
G
espeg Copper Resources Inc. (“Gespeg”) is an exploration company listed
on the TSX Venture Exchange under the symbol GCR. Gespeg concen-
trates its exploration efforts in the Gaspe Peninsula region of eastern Quebec.
The Gaspe Peninsula has had multiple producing mines historically, one of
them being the Gaspe Copper Mine (“Gaspe Copper”) in Murdochville, which
produced approximately 141 million tons @ 0.85% copper from 1954 to 1999
under Noranda.
Ticker: GCR
PROFILED COMPANY
MicroCap Review Magazine 27
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Gespeg is managed by an experienced
team and a very high level board of directors.
TOM MACNEILL, CHAIRMAN
Mr. MacNeill is the Founder, President and
CEO of 49 North Resources Inc., a Canadian
resource investment company headquar-
tered in the Province of Saskatchewan. (TSX-
Venture symbol FNR). As the first entity of its
kind in the Province’s history, 49 North is a
pioneer in what is rapidly becoming one of the
world’s most renowned resource jurisdictions.
As a third generation resource developer
with over 25 years of direct experience in
resource investment and corporate finance,
Mr. MacNeill has extensive connections both
in Canada and internationally. Tom is a well-
respected member of the resource industry
and part of a worldwide network of explora-
tion professionals and resource developers
which enables him to source and structure
projects
SYLVAIN LABERGE PRESIDENT
& CEO, DIRECTOR
Sylvain became part of a new company
founded in 1999, Renmark Financial
Communication an enterprise specialising
in Investor Relations, where he became
Vice –President and develop an interest for
emerging companies and especially mining
exploration. Having an entrepreneur spirit
and wanting to achieve new goals Sylvain
founded S.D.N.L. Financial Communication
in 2007 where he is still President.
BERNARD-OLIVIER(B.O)
MARTEL GEO. VICE PRESIDENT
EXPLORATION
Bernard-Olivier Martel graduated from the
University of Quebec in Montreal in 1999.
He is a member of the Order of Quebec
Geologist and act as a Qualified Person
under Canadian standard 43-101. His expe-
rience includes government services, engi-
neering and geological and mineral explo-
ration. Before and after his graduation, he
worked on various mapping projects for the
Department of Natural Resources of Quebec.
Subsequently, as a founding member of an
engineering laboratory, he became an expert
specializing in pyritic backfill and mitiga-
tion of negative impacts on the foundations.
Since 2004 he works exclusively for the min-
ing industry as a consulting geologist for
various exploration companies throughout
Quebec and Ontario. As a geologist respon-
sible for work of exploration for Threegold
Resources Inc. for projects in Gaspesie,
Bernard-Olivier Martel has acquired the
knowledge and expertise essential to mineral
exploration in this region.
ANDREW DAVIDSON, CA
– CFO, SECRETARY AND
DIRECTOR
A graduate of the University of Calgary
(BComm), Mr. Davidson is a Chartered
Accountant with Certification in both
Saskatchewan and Alberta. Mr. Davidson’s
extensive experience in Canadian and inter-
national financial reporting standards has
been gained through years of experience
in public practice accounting in both the
Alberta and Saskatchewan markets, focusing
specifically on assurance for publicly listed
enterprises. Mr. Davidson is currently the
Chief Financial Officer and Secretary of 49
North, an Exchange listed issuer under the
stock symbol FNR. He also sits as a direc-
tor of Allstar Energy Limited, Prairie First
Energy Inc., Olympic Resources Inc. (TSX-
V: OLA and Vicarage Capital Ltd.
TIM TERMUENDE –
INDEPENDENT DIRECTOR
Mr. Termuende is a professional geologist
with over 25 years’ experience in the min-
eral exploration industry. Since obtaining
his degree in Geological Sciences at the
University of British Columbia, Tim has
worked on exploration projects throughout
North, Central and South America and has
inspected mineral deposits in the former
Soviet Union. Mr. Termuende is current-
ly the President and CEO of Eagle Plains
Resources Ltd. (TSX-V: EPL), and currently
oversees a broad range of ongoing explo-
ration projects located throughout British
Columbia, Saskatchewan, the Yukon and
Northwest Territories.
DENIS CLEMENT –
INDEPENDENT DIRECTOR
A graduate of Sir George Williams University,
the University of Ottawa and the London
School of Economics, Mr. Clement has 27
years of experience in corporate finance, law
and management. Mr. Clement is currently
a director of CGX Energy Inc. (an Exchange
listed issuer under the stock symbol OYL),
Azabache Energy IncTSX-V AZA), Vena
Resources Inc. (TSX:VEM) DNI Metals as
well as a number of private oil and gas and
mining companies. n
The company paid consideration to SNN or its affiliates for this article.
The lithostratigraphic formations, as well as the pres-
ence of magnetic signatures on the property, make
it a prime target for exploration. These are similar to
those that may be seen in the Gaspé Copper Mines
environment and have not been subjected to major
exploratory work in the past.
28 MicroCap Review Magazine
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F E ATURE D ARTI CL E
include China CNR Corp (HK:6199), the
world’s largest train maker by sales which
raised $1.2 billion, Harbin Bank (HK:6138)
which raised $1.1 billion, Tianhe Chemical
n BY LESLIE RICHARDSON
Aiding Hong Kong’s strong momentum was
HK Electric Investment (HK:2638), the larg-
est global IPO during the first quarter which
raised $3.1 billion. Other major listings
Interest for Hong
Kong Listing Remains
Active – Outlook
Strong for 2nd Half
H
ong Kong’s IPO market kept its place as one of the
top global markets in the first half of 2014. The
exchange raised $11.5 billion on 48 deals for a 187%
increase over the first half of 2013.
MicroCap Review Magazine 29
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(HK:1619), which raised $654 million and
Qingdao Port International (HK:6198) Co,
which runs the world’s eighth largest con-
tainer port and raised $377 million. The
top performing IPOs so far this year are
Perfect Optronics Ltd (HK:8311), Wang Tai
Holdings Ltd (HK:1400) and real estate
company Redco Properties Group Ltd.
(HK:1622) which are up 217.0%, 89.5% and
31/0%, respectively, from their IPO price.
In February, the first Chinese stock del-
isted in the U.S. went public. Listed in the
U.S. as Gushan Environmental Energy Ltd.,
the company raised $70.5 million in net
proceeds in Hong Kong through its holding
company China Metal Resources Utilization
Ltd. (HK:1636). The company’s founder
and chairman, Yu Jiangqiu, paid $21 million
to take Gushan private in October 2012, he
then transformed the company’s strategy to
increase focus on building its copper recy-
cling business while reducing focus on its
biodiesel operations. China Metal Resources
Utilization Ltd., raised almost 10 times its
take-private valuation as the IPO was over-
subscribed by over 17 times with more than
4,000 subscribers signed up for shares. Even
though the stock fell over 6% on its first
day of trading, as of June 30, the stock is up
8.2%. Following the China Metal Resources
IPO, another previously U.S. listed Chinese
company, the Chinese display advertising
company, Focus Media, announced its plans
to list in Hong Kong. Focus Media, was
taken private in May 2013 by a consortium
of private equity investors in conjunction
with company management, is expected to
list towards the end of 2014 or early 2015
and raise up to $1 billion. The privatiza-
tion deal valued the company at $3.8 bil-
lion.
While the HKEX saw an increase in funds
raised during the first half of the year, the
exchange did experience a few major set-
backs including Alibaba’s announcement to
list on the NYSE and the postponement of
highly anticipated IPOs from WH Group
and AS Watson. The world biggest pork
producer, WH Group, decided to postpone
its planned April listing after cutting the deal
by two-thirds from around $5.3 billion to
$1.9 billion on weak demand. Retailing unit
AS Watson switched from its plan to raise $6
billion through a public listing to sell a $6
billion stake in its company to Singapore’s
Temasek.
In spite of the setbacks, expectations are
for a stronger IPO market in the second half
of the year due to improved global liquid-
ity, sustained recovery of European econo-
mies and continued strong performance
in the U.S. capital markets. Noteworthy
IPOs includes $2 billion offerings by China
General Nuclear Power Corp, China Railway
Materials Co, the Bank of Shanghai and
China National Biotec Group, as well as
a proposed $5.5 billion listing by China
Guangfa Bank. Two Chinese dairy firms,
Shengmu Organic Milk Ltd. and Beijing
Sunlon, are planning to raise as much as $1.3
billion combined through an IPO this year,
tapping into investor demand for access to
China’s fast-growing dairy industry. Smaller
size deals include Chinese property manage-
ment company, Colour Life Services Group
Co. (HK:1778), which is seeking to raise
up to $148 million and Tian Ge Interactive
Holdings Ltd., operator of a social-media
video platform with live video content rang-
ing from music to talk shows, which is rais-
ing up to $208 million. China Auto Rental,
China’s top car rental site and service, recent-
ly filed to raise $400 million in Hong Kong
with the intention of using about 70 percent
of the proceeds to purchase new cars. The
company, which is 20 percent owned by
Hertz (NYSE:HTZ), has expanded to 55,400
self-drive rentals from just a few hundred in
2009. Beijing-based Guorui Properties Ltd
is hoping to raise $242 million from buyers
who are interested in China’s real estate mar-
ket. China hotel trust Jinmao Investments
and Jinmao (China) Investments Holdings
(HK:6139), recently started taking orders
for its $437 million IPO in Hong Kong, and
Yida China Holdings and the developer of
the successful chain of Dalian Software Park
(DLSP) projects across China is planning a
listing that could bring in as much as $219
million.
Hong Kong has been widely known for
some time as actively promoting itself as a
gateway to China for foreign investors as
there are more than 800 PRC companies list-
ed on the HKEX with a total market capital of
$1.76 trillion. With the recent introduction
of the Shanghai-Hong Kong Stock Connect
pilot program and the availability of mutual
stock market access between Hong Kong
and the Mainland, Hong Kong is poised to
make substantial headway in consolidating
its position as the gateway for Chinese out-
bound investment. Furthermore, China’s
IPO market has been on again, off again
during the year as it started out with a boom
of new listings after a 15-month freeze dur-
ing which the China Securities Regulatory
Commission (CSRC) tried to overhaul rules.
The CSRC allowed 48 companies to list in
January and February before again halting
new listing to implement some key amend-
ments. China has since reopened its IPO
market stating that it was planning about
100 new listings this year, for a total of 150
IPO for 2014 or only half the number origi-
nally anticipated by investors. Currently
there are around 670 companies awaiting
approval for first-time share sales, according
to EY. The long queue of companies waiting
to list could drive more IPO candidates to
list in overseas markets such as Hong Kong.
Additionally, CSRC said it is considering
abolishing a policy requiring mainland com-
panies planning a listing in Hong Kong to
first seek approval from the regulator mak-
ing it easier and faster for mainland compa-
nies to raise capital on the Hong Kong stock
exchange in the future. n
30 MicroCap Review Magazine
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Is BioLargo’s
“AOS Filter” The World’s
Most Valuable Technology?
PROFILED COMPANIES
covered with water, but 97% is saltwater and
not usable for consumption, agriculture or
most other industrial purposes. There are
countless desalination plants around the
globe, but there is no technology that con-
BioLargo’s AOS Filter: A Scientific Breakthrough In Treating Contaminated Water
W
ater is now being called ‘the new gold’ because usable water is growing scare
and is arguably our planet’s most valuable resource. We use it to produce oil
and gas. We power our cities and run our factories with it. We grow crops and feed
livestock with it. Like the air we breathe, water is essential for life.
CEO Dennis Calvert
Relative to the seemingly endless supply of
water, ‘usable water’ is becoming more dif-
ficult to find while demand continues to
increase.
Two thirds of the surface of our planet is
Ticker: BLGO
MicroCap Review Magazine 31
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verts salt water to fresh water cost-effectively
and in the vast amounts needed. Of all the
water on the planet, less than 1% is fresh
water. That freshwater is found in rivers,
lakes and groundwater, but flooding, natural
disasters, and industrialization are rapidly
polluting much of that and reducing it even
further.
One of many sources of water pollu-
tion comes from the recovery and refining
processes to produce the oil and gas we
need for our homes, our cars and our facto-
ries. It is estimated that oil production will
have to double in the next 20 years just to
keep up with the increased demand. That
may seem like a challenging but achievable
objective, but with the advent of non-con-
ventional, but essential supply sources like
oil sands and shale gas, meeting that goal
could require 4 gallons of water to produce
one gallon of oil from oil sands or fracking,
and another 4 gallons of water to refine one
gallon of gas. In light of the heavy water
requirements, the heavy water pollution, and
the growing opposition to water pollution,
the goal to expand energy production sud-
denly becomes daunting.
There are two formidable obstacles related
to the water that is absolutely essential to
the oil industry. First, there is a shortage
in many regions that is already acting as a
restraint on production. Second, the enor-
mous amounts of wastewater produced from
the recovery process is increasing the threat
of toxic contamination of rivers, lakes and
groundwater, and is becoming an economic
and political barrier to further oil and gas
production until more usable water can be
found and until the toxic wastewater can be
decontaminated quickly, cost-effectively, and
safely returned to the earth.
The massive amounts of wastewater from
oil recovery, fracking and refining are prob-
lematic, but are only the tip of the iceberg.
According to EPA estimates, oil & gas and
mining use about 1% of the useable water
supply while agriculture uses about 37%.
The wastewater from oil & gas and min-
ing is highly toxic, but the wastewater from
agriculture also contains large amounts of
toxic chemicals and nutrients that are pol-
luting much of the remaining usable water.
Furthermore, the United Nations estimates
that up to 90% of toxic wastewater in devel-
oping countries is sent untreated into rivers
and open water bodies.
Agriculture and oil and gas are not the
only source of contaminants threatening
our water supply. Mining, industrial manu-
facturing, chemicals, and pharmaceuticals
greatly add to the problem. Evidence of the
enormous scope of contaminated water is
supported by the fact that there are close to
a hundred different wastewater treatment
technologies.
If any of the traditional solutions were
truly cost-effective at a scale capable of
tackling these high volume needs, then there
would be no problem. We would have ample
clean and safe water for all our needs, but
the simple truth is that not one of these
traditional technologies works well enough
Proof of Claim Bench Scale Model
Version 1 Pilot Scale Model
32 MicroCap Review Magazine
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to solve the entire problem. They are often
too costly and they typically do not process
adequate volumes in a short time frame.
With the high cost and lengthy time of cur-
rent water treatment technologies, supply
shortages and price increases for clean water
seem inevitable.
The Global Water Intelligence reports that
water is estimated to be a $360 billion-dollar
industry and that fact helps explains why
there are so many competing technologies.
Just one tiny little sliver of $360 billion is
a lot of money. Clearly, a technology that
could cost-effectively decontaminate water
from agriculture, oil and gas, industrial,
and mining operations would be extremely
valuable.
Biolargo’s Patented AOS Filter was recent-
ly validated in proof of concept testing at the
University of Alberta. It was shown effec-
tive at dismantling recalcitrant contaminants
(the most difficult and hard to manage) in
seconds versus hours, and, further, it accom-
plished the task at 1/20
th
the power con-
sumption of the nearest competitor, point-
ing to its future as a disruptive contender in
just about every water industry segment.
Iodine is the broadest and most potent
disinfectant known. BioLargo’s AOS Filter
combines iodine with well-understood tech-
nologies like carbon filter media, ceramics or
membrane technologies to extract contami-
nates from a water-flow. The BioLargo AOS
Filter converts a traditional filter mechanism
into a reactor by adding electricity and oxi-
dizing chemistry across the surface area of
the filter media. The device delivers power-
ful oxidization to dismantle contaminants
as they flow through the filter, all the while
consuming an incredibly low level of energy.
The device features high rates of oxida-
tion, low power, high speed and a continu-
ous flow. The dismantled contaminants are
small enough in size that most of them pass
through the filter without clogging. AOS
therefore greatly extends the filter life.
The net result is expected to yield unparal-
leled cost effectiveness.
BIOLARGO’S AOS FILTER IS
WELL POSITIONED
University of Alberta has begun a pilot study
to design and build a commercial version of
BioLargo’s AOS Filter to prove scalability as
well as optimize its functionality for use in
the oil sands and across a host of other water
treatment segments.
BioLargo recently announced it achieved
another important milestone in the pilot
testing of the device successfully replicat-
ing earlier proof of claim results and it
confirmed the role of advanced oxidation
within the AOS Filter reactor. This recent
pilot work included bench-scale testing of
contaminated water taken from actual field
operations and it has proven the AOS Filter’s
effectiveness at dismantling and removing
targeted naphthenic acids, which are con-
sidered high-value and hard to contain con-
taminants of keen interest to the oil sands
industry for more than 15 years.
Professor Lynn McMullen at the Department
of Agricultural, Food and Nutritional Science
at the University of Alberta, recently agreed to
expand the AOS Filter pilot testing into areas
of interest in food processing and agricul-
tural production, including livestock related
areas. The initial targets include clean in place
(CIP), carcass and food washing and animal
drinking water applications.
BioLargo is a founding member of a
research chair sponsored by NSERC, Natural
Sciences and Engineering Research Council
of Canada, which organized in 2011 to
solve the wastewater tailings ponds problem.
Other founding members joining BioLargo
include Suncor Energy, Syncrude Canada,
Shell Canada, and Canadian Natural
Resources, EPCOR, Environment Canada
and Alberta Innovates.
BioLargo’s CEO, Dennis Calvert com-
mented, “Our business is very exciting and
certainly dynamic. Our patented technol-
ogy is right on the leading edge and our
AOS Filter has recently opened up a huge
commercial opportunity for BioLargo. Our
company’s culture is entrepreneurial at heart
and we thrive on the challenge and adven-
ture to create, validate and commercialize
our break-through technologies. Our Chief
Science Officer, Kenneth Reay Code con-
tinues to set the technical performance bar
to the highest standards and his discipline
has proven invaluable as we introduce new
technology to industry and gain acceptance.
Our team is comprised of an impressive list
of associates that are both leaders and patent
holders from the top ranks of industry. Our
future is quite bright.”
BioLargo’s mission is to make life better. It
has the technology, the team, and the driving
purpose to succeed. BioLargo is a platform
technology company that expects to generate
the bulk of is revenues through licensing its
AOS Filter and other platform technologies
it developed that have important application
in water, healthcare, energy, and consumer
products segments.
The AOS Filter is expected to have a pow-
erful impact on all uses of water around the
world.
BioLargo (Symbol: BLGO) is an emerg-
ing technology company with world-class
science that has been validated by a lead-
ing university and that is expected to have
a dramatic impact on large industries, the
environment; and to substantially increase
the world supply of safe usable water. Any
technology that cleans water efficiently, cost-
effectively, and in unlimited flow rates will
be one of the world’s most treasured and
valuable technologies. n
WWW.BIOLARGO.COM
The company paid consideration to SNN or its affiliates for this article.
34 MicroCap Review Magazine
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Pressure BioSciences, Inc.
The remaining officers of PBI all have
advanced degrees in their areas of expertise,
which they combine with many years of
hands-on, highly successful experience in
the life sciences marketplace. In addition to
Mr. Schumacher, the Company’s Board of
Directors is comprised of four outside direc-
tors, each of whom is a successful entrepre-
neur who has also had great success as a life
sciences business leader.
The Company is focused on solving the
challenging problems inherent in biological
sample preparation, a crucial laboratory step
performed by an estimated 500,000 scientific
researchers worldwide working in the biological
life sciences. Sample preparation is a term
PROFILED COMPANIES
that refers to a wide range of activities
that precede virtually all forms of scientific
analysis. Sample preparation is often com-
plex, time-consuming, and one of the most
error-prone steps of scientific research. It is
nonetheless a ubiquitous laboratory under-
taking whose requirements drive a large and
growing market, worldwide.
WHAT IS PRESSURE CYCLING
TECHNOLOGY - PCT
PBI has developed and patented a novel,
enabling technology platform that can exqui-
sitely control the sample preparation process.
It is based on harnessing the unique proper-
ties of an entirely new dimension in ther-
modynamics for life sciences laboratories –
cycled hydrostatic pressure. This cutting-edge
process, called pressure cycling technology
(“PCT”), uses alternating cycles of hydro-
static pressure between ambient and ultra-
high levels (up to 100,000 psi) to safely,
conveniently, and reproducibly break cells
and release important biomolecules (e.g.,
DNA, RNA, proteins, and lipids) from the
samples to be studied(e.g., cells and tissues
from human, animal, plant, and microbial
sources). Figure C shows a cell being broken
and the biomolecules being released for study.
For the purpose of reference, the pressure at
the bottom of the Marianas Trench, at six
miles down the deepest part of any ocean on
earth, is approximately 16,000 pounds per
square inch (“PSI”). See Figure 1.
P
ressure BioSciences, Inc. (“PBI” or the “Company”) is a publicly-traded company
(OTCQB: PBIO) located approximately 30 miles south of Boston, with nine fulltime
employees. The Company’s founder and CEO, Mr. Richard T. Schumacher, is a seasoned
entrepreneur, having founded or co-founded three previous publicly-traded companies with
a combined market capitalization of over $1 Billion.
Pressure Cycling Technology (PCT)
Primary Sample Preparation for Biomolecular Analysis:
Cell Lysis
9
Figure C
Mr. Richard T. Schumacher, CEO
Ticker: PBIO
MicroCap Review Magazine 35
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MARKET SIZE
PBI believes the overall market for bio-
logical sample preparation products is very
large. Virtually every laboratory engaged
in any form of biological research is faced
with the necessity of routinely preparing
samples prior to testing and analysis. The
Emmes Group (2008) estimated that this
market is comprised of up to 80,000 labo-
ratories and 500,000 researchers worldwide.
A report produced by BCC Research LLC,
a well regarded provider of market intel-
ligence, estimated that the global market for
sample preparation reagents and products
used in life science research was $4.6 billion
in 2012, will grow to $11.5 billion by 2018,
and register a five-year compound annual
growth rate (CAGR) of 16.3% from 2013 to
2018.
Recently, important data have been pre-
sented by independent scientists from the
US and international research communi-
ties on the advantages of PCT compared to
existing, competing methods for biologi-
cal sample preparation. These presentations
have been in the areas of biomarker discov-
ery for cancer, stroke, heart disease, diabetes,
Alzheimer’s, and a number of infectious
diseases; drug development; forensic sci-
ences; counter-bioterror; soil and plant biol-
ogy; extraction of biomolecules from micro-
organisms (i.e., oil-eating bacteria); and
PCT-enhanced protein digestion. Data from
these various applications have been pre-
sented at meetings by scientists from a num-
ber of leading research groups, including
ThermoFisher, Pacific Northwest National
Laboratory (“PNNL”), Amgen, the United
States Army Medical Research Institute for
Infectious Diseases (“USAMRIID”), the
U.S. Department of Agriculture (“USDA”),
Harvard School of Public Health, Lawrence
Berkeley National Lab, the University of
North Texas, Merck, and Target Discovery.
These presentations are part of over 100 sci-
entific publications and testimonials that can
be found on the PBI website. (See Figures D
and E)
PCT USED IN THE DISCOVERY
OF BIOMARKERS IN SAMPLE
PREPARATION
The Company’s primary efforts are focused
on the development and sale of PCT-based
Pressure Cycling Technology (PCT):
16,000 psi, Marianas Trench
PBI equipment reaches pressures up to
60,000 psi in <1 second.
Complex mul?cellular life exists at a
depth of 10,000m on the boBom of the
Marianas Trench
Figure 1
Professor Wayne Hubbell - UCLA
"Protein flexibility is the new frontier in understanding protein
function and regulation. The study of proteins under pressure
has great ability to reveal salient features of protein flexibility,
and hence provide new insights into protein function and
rational drug design. In my opinion, high pressure will
play a central role in the discovery process that lies ahead in
the exciting field of protein science, and the PBI hardware will
make major contributions to this field.”
December, 2012
Distinguished Professor of
Chemistry & Biochemistry,
and Jules Stein Professor at
UCLA
Dr. Henry C. Lee
“We are excited about this opportunity to collaborate with
Pressure BioSciences to examine the potential applications of
their PCT Platform in improving the collection of forensic
evidence, particularly DNA, in several important areas of
forensics…such collaborations not only provide new, effective
technologies for forensic DNA testing of samples that have
been difficult or unsuitable using today’s standard techniques,
but can also provide new and more effective ways to
reexamine old biological evidence in cold cases.”
Professor of Forensic Science and
founder of the Forensic Science
Program at the University of New
Haven; founder of the HC Lee
Institute of Forensic Sciences; and
former Commissioner of Public
Safety for the State of Connecticut.
Figures D & E
36 MicroCap Review Magazine
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products and applications for the prepara-
tion of samples used in the discovery of
biomarkers. The discovery of biomarkers is
a primary focus of thousands of scientific
researchers worldwide. These researchers
work in academic, government, biotech-
nology, and pharmaceutical laboratories.
A 2012 market research report by ASD
Reports has estimated the worldwide market
for biomarkers to be approximately $26 bil-
lion. Biomarkers are molecules (e.g., genes,
proteins, lipids) found in tissue (e.g., cells)
or body fluids (e.g., blood) that correlate
– directly or indirectly – with the presence
or absence, the progression or recurrence,
and/or the effects of treatment on a disease
or a disorder. Examples of biomarkers are
PSA (prostate cancer), LDL Cholesterol
(coronary heart disease), Her-2/neu (breast
cancer), and anti-HIV (AIDS infection).
The primary instrument used in the dis-
covery of protein biomarkers is the mass
spectrometer, a powerful laboratory instru-
ment that is playing an increasingly impor-
tant role in the analysis of biological samples
in life sciences research. Mass spectrometry
is es t i mat ed t o be a multi-billion dollar
market. PCT has been shown to offer sig-
nificant advantages in speed, quality, and
overall performance, compared to other
techniques used in the preparation of
samples for mass spectrometry.
RECENT NOTEWORTHY EVENTS
Over the past year, the Company reported
a number of noteworthy achievements,
including:
(i) five consecutive quarters with revenue
exceeding same quarter previous year;
(ii) the release of the long-awaited high
throughput Barozyme instrument, a game-
changer for PBI;
(iii) the development with a Harvard-led
research team of a novel, non-invasive, PCT-
enhanced method for lipid analysis using
fecal material;
(iv) the presentation by UCLA scientists of
an advanced, pressure-based method offer-
ing new insights into protein structure and
function for use in biomarker discovery and
rational drug design;
(v) the closing of two Private Placements,
each for a total exceeding the goal of the
financing;
(vi) initiation of equity research coverage
on PBI by Merriman Capital and See-Thru-
Equity; and
(vii) the publication of an Executive
Informational Overview on PBI by Crystal
Research Associates, led by top-ranked Wall
Street veterans Jeffrey Kraws and Karen
Goldfarb.
PCT BASED PRODUCTS AND
INTELLECTUAL PROPERTY
PBI has developed a number of PCT-
based products for use by the life sciences’
market, including five pressure generating
instruments, or “Barocyclers” (e.g., Figure
2 is the Barocycler NEP2320 and Figure 3 is
the Barocycler HUB440), a unique patent-
pending, mechanical sample homogeniza-
tion device, the “PCT Shredder” (Figure 4),
six different unique, single-use process-
ing containers, PULSE Tubes (Figure 4.1),
MicroTubes, BaroFlex 8-well processing
strips, Shredder Tubes, and the novel micro-
pestle: a patent-pending, single-use device
for the rapid and reproducible extraction
of biomolecules from small, biopsy tissues
(Figures X and Y), a number of different
reagent kits (Figure A), and several dozen
ready-to-use, application-specific protocols.
Many of these products are covered by
claims in our 24 issued US and foreign
patents.
On June 15, 2014 PBI launched the
newest Barocycler instrument, the first-
in-class, high throughput Barozyme HT48
for the enhanced preparation of proteins for
mass spectrometry (protein) analysis. See
Figure B. The bench-top Barozyme HT48
is capable of processing up to 48 samples
simultaneously using the Company’s new
and proprietary BaroFlex 8-well processing
strips. Figure B. The BaroFlex strips were
designed and manufactured to the industry-
standard micro-titer plate format, which
the Company believes will allow the new
Barozyme HT48 system to integrate well
with the automated, standardized, high
throughput liquid handling robotic and
analytical systems installed in tens of
thousands of biological research laborato-
ries worldwide. The Company believes the
Barozyme HT48 High Throughput System
can significantly fuel growth and increase
revenue for existing and new PCT-based
applications and products and greatly facili-
tate the commencement of new strategic part-
nerships.
PCT VS. EXISTING METHODS
There are a number of existing methods
used by scientists for biological sample
preparation, including mortar and pestle
grinding, sonication, homogenization, and
bead beating. P BI believes that PCT
Figure 2
Figure 3
MicroCap Review Magazine 37
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offers significant advantages over these
methods, including safety, speed, reproduc-
ibility, versatility, and ease-of-use, often with
a substantial increase in the quality of the
final results. There are currently over 100 sci-
entific publications and presentations from
independent laboratories that highlight and
confirm these clear advantages of PCT over
other current methods.
COMPANY REVENUES
PBI derives revenue from the sale, lease, or
rental of all of its five Barocycler instru-
ment models, as well as from the recurring
purchase of consumables required for the
PCT process, including single-use process-
ing containers (PULSE Tubes, MicroTubes,
BaroFlex 8-well processing strips, and
Shredder Tubes) and reagent kits, and from
instrument service contracts, replacement
instrument parts, and grants. The Company
also derives revenue from the sale of pres-
sure-based cell disruption instruments and
associated consumables used for larger scale
sample processing. These pressure-based
products are provided to PBIs by one of
our strategic partners, Constant Systems LLC,
from the UK.
WORLDWIDE MARKET
Industry estimates suggest that there are
approximately 80,000 laboratories worldwide
that require the extraction of DNA, RNA, pro-
teins, lipids, and small molecules from biologi-
cal samples for their research studies. Based on
market research results to date, and the fact
that PCT is a novel cutting-edge technology
currently uncontested in the field of small
volume, high pressure preparation of research
samples, it is expected that a large number
of these laboratories will benefit from the
advantages of the PCT Sample Preparation
System. The Company believes it can capture
a reasonable share of this existing market over
the next 3-5 years and become a highly suc-
cessful and profitable life sciences instrument
and consumables provider.
SALES GROWTH
Although the Company has nine employ-
ees, with just one in a fulltime sales capac-
ity, PBI has nonetheless installed approxi-
mately 250 PCT Sample Preparation Systems
(Barocycler instruments plus required con-
sumables, or “PCT Systems”) through June
30, 2014. Revenue for FY 2011 was approxi-
mately $988,000. Revenue for FY 2012 was
approximately $1,238,000. Revenue for FY
2013 was approximately $1,503,000, a 21%
increase over revenue for the same period
in 2012. During 2013, the Company posted
record quarterly highs for total revenue, prod-
ucts revenue, and consumable product sales.
Revenue for the first two quarters of FY 2014
Figures X & Y
Figure 4
Figure 4.1
Figure A Figure B
38 MicroCap Review Magazine
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was approximately $712,000, all of which was
derived from product sales. These results rep-
resented a 70% increase in product revenue
compared to the same two quarters in 2013.
During this same period, consumable prod-
uct sales increased 93%, year-over-year.
CUSTOMERS
Current customers include a number of
top nucleic acid (DNA, RNA) and pro-
tein research laboratories in the U.S. and
Europe, including government agencies and
research institutions such as the Food and
Drug Administration (FDA), Federal Bureau
of Investigation (FBI), National Institutes of
Health (NIH), Centers for Disease Control
(CDC), US Department of Agriculture
(USDA), the VA Hospital System, and
Pacific Northwest National Laboratories
(PNNL). PBI has also installed PCT
Systems in academia, such as the Harvard
School of Public Health, UC–San Diego,
UCLA, George Mason University, Thomas
Jefferson University School of Medicine, the
Barnett Institute of Northeastern University,
Vanderbilt University, Florida International
University, the University of New
Hampshire, the University of Kentucky, the
University of Wisconsin, the University of
North Texas, Montana State, and Lawrence
Berkeley National Laboratory. PBI also
has diagnostic, biotechnology, and phar-
maceutical customers, including Amgen,
Novartis, Biogen, Merck, Monsanto, Bristol
Myers-Squibb, Thermo Fisher Scientific,
Regeneron, Takeda Pharmaceuticals, and Target
Discovery.
In the coming months of 2014 the
Company expects to continue the develop-
ment of an aggressive sales and market-
ing strategy, which includes increasing
the Company’s internal direct sales and
marketing staff during the second half of
2014, combined with the sales and marketing
capabilities of one or more strategic partners
in specific areas of the life sciences. PCT is
well suited for partnerships with companies
already in the spectroscopy (NMR, EPR,
CD, Mass Spec) and forensics areas; the
Company is currently talking with signifi-
cant players in these areas.
FUTURE NEW PRODUCT
GROWTH
Although PBI expects to maintain a sharp-
ened focus on short and long-term business
goals going forward, primarily in the area
of biomarker discovery for drug design and
development), the Company has strong IP
and proprietary positions in other areas,
such (i) forensics (better processing of bone
DNA and enhanced rape kit testing); (ii)
infant healthcare (non-invasive methods for
the analysis of gut function to enable a
better understanding of the gastrointesti-
nal system); (iii) public health applications
(enhanced anti-bioterror, Lyme Disease, and
food-borne disease testing); and agriculture
(better detection of disease causing organ-
isms)
There i s al so the potenti al of using
PCT for enhanced enzymatic reactions in the
area of bio-fuel development, using PCT for
the inactivation of pathogens in the develop-
ment of vaccines, and in other important
areas of sample preparation. These strong
positions lend themselves well for potential
technology spin-offs and licensing possibilities.
IN SUMMARY
Pressure BioSciences’ management’s vision
is to further develop pressure cycling tech-
nology and the PCT-based product line
with its collaborators and customers so as
to increase the quality of research and speed
the time to scientific discovery, which in
turn will improve healthcare and save lives,
worldwide. n
The company paid consideration to SNN or its affiliates for this article.
Figure B1
MicroCap Review Magazine 39
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F E ATURE D ARTI CL E
In a highly competitive environment where
companies compete to have investors aware of
what their company offers, being heard correct-
ly and in an unbiased factually accurate manner
is of critical importance. It is not enough to just
have investors hear a message; rather the infor-
mation right down to the source needs to be
factually accurate and credible so that investors
can build their knowledge base with confidence,
making decisions to take further steps with a
company wherever that may lead them.
Every investor knows that the market
involves risk. Nobody expects a guaranteed
profit. But what every investor expects and
deserves is honest investment analysis that is
untainted by conflicts of interest.
“The old model of stockmarket research
is changing”
“Independent research outfits offer an
alternative. Though small, their share of
the ‘research vote’, an estimate of market
share produced by Greenwich Associates, has
grown since 2011. They are untainted by the
conflicts of interest that bedevil banks offer-
ing research on clients, and that led to a 2003
settlement enforcing stricter separation of
investment banking and research in America.”
- the Economist, Sep 21, 2013
Conflicts of interest pose significant dilemmas
for research coverage, beginning with research
analysts themselves. As analysts write research
reports and make buy/sell/hold recommenda-
tions, their analysis may be influenced by finan-
cial (and career-related) incentives to directly or
and no siren call of stock price prognosticators.
This type of research allows investment profes-
sionals to make fully informed and educated
investment decisions based on the most impor-
tant recommendation: their own.
THE NATIONAL INVESTOR
RELATIONS INSTITUTE (NIRI)
The National Investor Relations Institute
(NIRI) concurs with this model of indepen-
dent research.
“...Such reports should contain factual
research conducted by a qualified analyst and
should avoid the expression of opinions about
the company’s prospects and must not contain
a recommendation that one should acquire
the stock.”
Those on the buy-side are already working
to accommodate the need for this type of inde-
pendent coverage. Several investor-sponsored
entities have been established to report analyst-
free coverage aimed at providing investors with
unbiased research. While still performing on a
relatively small scale, the demand for this type
of research is growing.
Small-cap companies must seek out inde-
pendent research firms that can undertake the
same type of fact-based analysis or face the
consequences in the intense competition for
outside investor funding.
By implementing a new and innovative style
of independent research, it will be possible
to put these conflicts of interest in the back-
ground and bring about reform in a way never
thought possible. The unyielding call of inves-
tors for truly independent research in its purest,
most untainted form would then be answered.
Crystal Research offers paid for research, but
is paid for its time to insure what the reader
reads is factually accurate. This approach of
utilizing only facts and solid due diligence,
plays a meaningful role in helping companies
legitimize their offerings and in educating the
world about what it is that they do. n n BY JEFFREY KRAWS
indirectly support investment banking business
initiatives on behalf of their employers.
While some major financial institutions
endeavored to challenge these accusations
by separating their investment banking and
research units, an even more radical pro-
posal has taken root: a separate research
entity, funded by the settlement payment
from several firms under investigation. This
entity acts as a liaison between investors
and the firms in which they hold interests.
By eliminating the financial obligation, the
industry hoped to eliminate the potential for
biased analysis and coverage.
This goal was laudable and honorable, but
the reality is that many worthy and important
companies are being overlooked in the keen
competition for analyst attention. In some cases
the only viable option for companies will be to
pay a third party to provide the needed coverage
and exposure. Paid-for analysis thus represents
a clear example of highly subjective recom-
mendations based upon direct financial incen-
tives. To this end, time and again, great stories
have gone unrecognized because subjective and
inherently biased ratings/target prices leave the
financial community questioning the objectiv-
ity, validity, and integrity of the analysis. As a
result, many of these paid-for stock reports are
discarded by investors and even banned from
many reputable PR and financial distributors
for being promotional rather than credible.
From this example, it may appear that there
is no feasible way to avoid the numerous pit-
falls of tainted research. We believe the answer,
therefore, is not in the affiliation, but in the
content of the reports.
Independent research attracts and entices the
investment community by providing them with
the necessary tools and information with which
to make sound investment decisions. We believe
the best reports distill and present only the
essential facts of the covered company: no pro-
jections, no buy/sell ratings, no overwhelming
financial jargon or highly technical information,
Independent Research
40 MicroCap Review Magazine
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F E ATURE D ARTI CL E
While the use of investor relations firms is
common practice in the micro-cap world,
the engagement of financially savvy public
relations firms to increase a company’s over-
all brand awareness is occurring on a much
smaller scale, giving those who change the
way they are perceived in the market a much
nicer reality.
Investor relations and public relations are
often used interchangeably, and while there
are some similarities, there are key differ-
ences as well. Broadly speaking, investor rela-
er –without ever stepping over the bounds of
generally soliciting.
Large consumer-facing companies by
nature tend to merge investor relations and
public relations well. They marry regular
shareholder communication and analyst
outreach with content marketing, high-value
media placements and other brand-building
items that give investors the feeling of stabil-
ity and security they need to be confident in
the company. In large companies, investor
relations tends to be a division of public
relations, working hand-in-hand with the
overall public relations strategy, directing
sensitive messaging, crisis communication,
and even evaluating the overall appearance
of leaders when health or other sensitive
issues arise to ensure the company is putting
its best foot forward.
Microcap companies, not under the same
intense scrutiny as a Fortune 1000 company,
tend to benefit just as much—if not more—
from well-executed public relations cam-
paigns. Since the Great Recession, investors
tions is a branch of public relations, where
public relations is an umbrella term for any
and all sorts of communication between a
brand and the public, including investors.
For many, investor relations evokes visions
of road shows, shareholder meetings and
investor calls, all activities geared toward
increasing, stock volume, liquidity and share
price. However, the picture of how pub-
lic relations can affect investors’ perception
remains unclear for many. Public relations
include all public-facing communications,
which includes media relations, analyst
outreach, crisis communication, reputation
management, newsletters and other exter-
nal communications. It is the practice of
controlling a brand’s message and overall
perception in the public eye—because if you
don’t control it, someone else will.
On the surface it may appear like just
one more line item on a budget, however,
if done well a good public relations strategy
can make everything from sales to employee
communication to raising capital much easi-
For Micro-cap Firms,
Perception Is Reality—4
Ways to Use PR to Improve
Your Reality
n BY JOY SCHOFFLER
M
ost people have heard the saying that perception is real-
ity, and in the micro-cap world, where the C-suite is con-
stantly looking to increase performance and push value, this is
especially true.
MicroCap Review Magazine 41
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are eyeing their holdings and investment
advisors with increased skepticism. Stability,
growth and market leadership are items
every company needs to be concerned with,
especially in the microcap world.
GOOD PUBLIC RELATIONS
STRENGTHENS INVESTOR
RELATIONS EFFORTS
Learning why and how to effectively com-
bine investor relations and public relations
is something I learned during the first half
of my career working on the buy side of a
private equity firm, which grew from four
to75 employees in one and a half years, mak-
ing the Inc. list twice. Sourcing high-quality
commercial real estate assets in a competi-
tive market and educating investors on new
acquisitions as a young private equity firm
was often an uphill battle. I found, however,
when the firm secured media coverage, my
job got a whole lot easier. At that time
general solicitation was illegal, we had to
promote with caution ensuring high qual-
ity content that did not cross the line into
investment promotion. Through the process
of using public relations in the microcap
world a few key lessons about the power of
the pen emerged:
Digital Presence Enhancement. There are
few items less critical for a company than its
digital presence when raising capital. With
many investors starting the due diligence
process with a good “old-fashioned” Google
search, the quantity and quality of search
results matter. Do you look like the leader
in your industry? Is your C-suite out on top
of current news and trending topics for the
industry? Are the investment publications
talking about you? Do you look like you’re
running a hot company? Perception is real-
ity—what is the perception when Googling
your company and CEO?
Lead Generation. The private equity
world is a competitive business, in addition
to fighting for investor dollars, deal flow is
also up for grabs. An article placed in the
right publication with the right message can
direct targeted traffic to a business—even
if it is not planning on utilizing the new
general solicitation laws to market securities
offerings.
Investor Marketing Materials. During the
capital raising process, one of the most chal-
lenging times is after the executive summary
and other investment documents have been
sent to prospective investors. If you don’t go
for the close, you won’t raise the capital. At
the same time, pushing too hard can give
off the appearance of desperation. Having a
stream of high-quality press mentions that
weave in market data and other facts that
are interesting to a company’s stakeholders
arms the investor relations team with tools
that allow them to do a strong outreach to
prospective investors.
Winning the Mind Game. There is a
whole psychology to the investor relations
process, and making the wrong choice has
ramifications that go way beyond loss of
capital. No one wants to make a poor deci-
sion, especially not one that involves loss of
their nest egg. While all good press coverage
in the world will not fix past fraud, poor
management and over-aggressive projec-
tions, it will help good companies with a
good track record and realistic projections
look like a more serious player.
In the end, public relations is simply a
conduit to reach, communicate and engage
with a company’s target audience. It is a
process that identifies what is important to
a company’s audience, develops messages
that speak to these targets and delivers these
messages through a variety of media chan-
nels. In this way, a company of any size can
have the tools to improve its perception, and
therefore its reality.
Joy Schoffler is the award-winning founder and
principal of Leverage PR, a strategic communica-
tions firm specializing in the finance and technol-
ogy industries. She is a nationally recognized author
and speaker on the topics of investor relations and
marketing, public relations strategies and invest-
ment crowd funding. Prior to launching Leverage
PR, Joy consulted and worked with a number of
growth-phase firms, including serving as director of
acquisitions for The PPA Group, an award-winning
investment firm. n
42 MicroCap Review Magazine
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pany is deemed to be the reporting company
and thus continues to carry the requirements
for the quarterly and annual assessments.
The Company auditors need to be con-
sulted early and often when a reverse merger
transaction is going to occur. Instead of con-
sidering auditors to be a necessary evil and
another hurdle to get over, they should be
considered to be a valuable part of the team.
An auditor’s expertise and insight can save a
company thousands of dollars and assist in
avoiding regulatory pitfalls.
This article is not an attempt to dissuade
persons from the use of a reverse merger,
they can, and do, work effectively when they
are approached in the proper manner and
when management is aware of potential
problems.
One key to a successful reverse merger
transaction is to consult with the auditors
early. Take advantage of their expertise and
insights Ask questions and make sure that
the Operating Company has an infrastruc-
ture in place to support the required finan-
cial reporting requirements going forward.
S. Jeffrey Jones, CPA has been in public accounting
for 18 years specializing in SEC reporting companies
including first time audits, reverse mergers and regis-
tration statements. He is a founding partner with HJ
& Associates, LLC located in Salt Lake City, Utah. In
his spare time, he enjoys running and spending time
with his wife and three daughters. Jeff can be reached
at 801-328-4408 or at jjones@hjcpafirm.com n
O
ften times the last person that
gets consulted about a reverse
merger is the auditor. This article
will attempt to convey, from an accounting
viewpoint, some of the potential pitfalls of a
reverse merger.
HJ & Associates specializes in auditing of
small and emerging public companies. We
have seen a myriad of different approaches
to reverse mergers. Invariably each reverse
merger comes with unintended consequenc-
es.
ACCOUNTING CORNER
Post Reverse
Merger Pitfalls
Some of the most common problems
include:
1) Not being able to get the audit complet-
ed within a 71 day period when the merger
is with a company that is not deemed to be
‘shell’ filer, or within 5 days when the merger
is with a ‘shell’ filer.
2) Not realizing that an audit is required
for a reverse merger. This is particularly
the case when assets, but not the stock of a
company, are purchased. The SEC has long
taken the position that if the assets are inte-
gral to the operations of a business, then the
operating history of those assets needs to be
presented.
3) Completing the merger before the pri-
vate company is audited and then finding
out that the private company is not audit-
able, or that the results of the audit are not
as expected.
4) Not having the infrastructure in place
to continue public company filings in a
timely manner. There are deadlines and
time tables that are in place which are often
new to the management of the operating
company. Many times these deadlines
conflict with family or personal plans such
as vacations.
5) Not realizing that the Company is now
immediately subject to Sarbanes-Oxley rules
prohibiting related party advances or loans.
There can be no new loans or advances to
related parties and any advances outstanding
at the time of the reverse merger need to be
paid back in a consistent and timely manner.
6) Not having the infrastructure in place
to be able to complete managements’ assess-
ment of internal controls in a timely manner.
With a reverse merger, the operating com-
n BY S. JEFFREY JONES
44 MicroCap Review Magazine
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L E GAL CORNE R
A
s we approach the first anniver-
sary of the ability to use general
solicitation and advertising for
private offerings to accredited investors,
we have learned that the advent of what
is now called Rule 506(c) has been neither
overly intrusive into the private affairs
of investors nor the revolution in private
capital formation that some anticipated.
Instead, Rule 506(c) has been an evolution
- taking its place as one more strategy in
private offerings - and a logical extension
of the long-held SEC view that accredited
investors are largely able to fend for them-
selves.
The concept behind Rule 506(c) is sim-
ply stated – an issuer or its placement
agent can now find investors who were
previously not individually known to
them by means of any modality of general
solicitation and advertising. All the Rule
firms – and others – have been explor-
ing the development of on-line and other
platforms to promote their own – and
others’ – Rule 506(c) offerings. The plat-
forms can be as vast as the methods of
general solicitation and advertising itself
– anything from traditional print and
broadcast media to the latest instruments
of social media. As more issuers, and
placement agents, engage in direct offer-
ings under Rule 506(c), these platforms
can be expected to multiply as a way to
drive investor traffic to deals about which
they might not be aware and match issuers
doing direct offerings to investors they do
not know how to reach on their own.
All of this has led to a mischaracteriza-
tion in many quarters that Rule 506(c) is
a form of crowdfunding. It is not, and the
SEC never once used the word “crowd-
funding” in referring to Rule 506(c). For
one thing, accredited investors are like-
ly not going to be “crowded” into any
investment – they are almost universally
thoughtful and deliberate in reviewing
investment opportunities. While many
investors are young and tech savvy, many
more are older and may not know how to
respond to a tweet about a hot new invest-
ment; and if they knew how to respond,
the issuer might not want to hear what the
investor had to say about such a message.
As noted, all Rule 506(c) does is create a
new way to find accredited investors. But
that is quite enough as capital formation
continues to evolve under the JOBS Act. n
n BY LANCE JON KIMMEL
does is liberalize how to locate inves-
tors. It does not change the fundamentals
of private capital formation. It does not
change the need to provide full and fair
disclosure – PPM, business plan wrap or
the equivalent.
The Rule does change the way to deter-
mine the accredited investor status of an
investor. The introduction of this need
to “verify” accredited investor status pro-
duced weeks of hand-wringing and webi-
nars in Fall 2013 with endless speculation
that this requirement would result in a
stillborn Rule. No such thing happened.
Verification has gone along its merry way,
with accredited investors producing the
income and/or asset documentation that
they have long produced to their mort-
gage brokers, commercial banks and other
financial institutions.
Investment bankers have approached
the new Rule tentatively. In most cases,
placement agents already have connec-
tions with a large pool of investors and
many firms do not need to run an offering
with general solicitation and advertising.
Still, there are benefits in introducing new
potential investors to a firm’s products and
services and, once first contact is made,
those investors will have a pre-existing
relationship with the firm in subsequent
dealings. Investment banking firms have
neither run toward nor run away from
Rule 506(c). They use it when it makes
sense to do so.
As a result, several investment banking
A Look Back at General
Solicitation and Advertising
under Rule 506(c)
FOR ACCREDITED INVESTORS ONLY
Blue Sun Energy Inc.
is pleased to announce the offering of
6,000,000 shares of its Common Stock at $2.50 per share
in a private offering pursuant to Rule 506(c) of Regulation D
under the Securities Act of 1933
____________________
Offering is made to accredited investors only,
and is subject to prior sale or termination of the offering
and various other terms and conditions contained in the offering documents
____________________
To receive more information and offering documents contact:
John Reilly
Managing Director of Investment Banking at WestPark Capital, Inc.
jreilly@wpcapital.com | 310-203-2905
From: "Unitron Media (tony)" <tony@unitronmedia.com>
Subject: Fw: Fwd: Ad for Magazine
Date: August 15, 2014 1:24:22 PM EDT
To: Jason Enterline <enterlinedesign@mac.com>
Reply-To: "Unitron Media (tony)" <tony@unitronmedia.com>
1 Attachment, 23.7 KB
Tony,
This ad has the correct numbers which are 2500 not 25,000 and $10,000 not $100,000
FOR ACCREDITED INVESTORS ONLY


is pleased to announce the offering of

2500 shares of its Real Estate Investment Opportunity at $10,000.00 per share

in a private offering pursuant to Rule 506(c) of Regulation D
under the Securities Act of 1933
____________________

Offering is made to accredited investors only,
and is subject to prior sale or termination of the offering
and various other terms and conditions contained in the offering documents
____________________

To receive more information and offering documents contact:

Karim Jaude
www.dynamicscapital.com
Phone: (310) 471-0650
Fax: (310) 471-2815







Let’s start with an overview of IDA Ire-
land. What does your organization do?
IDA Ireland (Industrial Development Agen-
cy) is responsible for the attraction to and
development of foreign investment in the
Republic of Ireland. IDA provides a range
of services and incentives, including grants
that are available to those considering for-
eign direct investment in Ireland. In par-
ticular, it offers a free one stop shop ‘hand
holding’ concierge service to its clients.
Why Ireland? What are the benefts of
moving to a city in Ireland?
Forbes voted Ireland the number one loca-
tion for business, in December 2013. Why?
Because it’s an easy place to do business.
Companies can register their company with-
in a few days with the company registration
ofce and Irish Revenue (our equivalent of
the IRS).
Additionally, Ireland is a very young and
educated country Nearly 50% of the popu-
lation (4.5m) is under 35 years of age and
the average age (35 years) is the youngest in
the EU. We have a large supply of educated
talent as we have a free education system
from elementary school right up to univer-
sity level.
Plus, because Ireland is a member of the
EU, we have access to a large talent pool of
500 million people, visa free! In their Dub-
lin ofce, Google employs over 2000 people
comprising 71 different nationalities. 75
percent of their staff has relocated from
overseas to work in Ireland. Lastly, Ireland
is the only English-speaking member of the
Eurozone countries.
Which industries whether technology,
healthcare, or manufacturing would
distinguish Ireland the most desirable
country in the world?
All of those sectors, plus fnancial and
business services, have been successful in
Ireland. For example, Ireland can boast the
presence of: 8 of the top 10 ICT companies, 9
out of the 10 top pharmaceutical companies,
the top 10 global “born-on-the-internet”
companies (i.e. Facebook, Linkedin), a world
class medtech industry cluster
Many early stage technology companies
are selecting Ireland as their European
headquarters such as New Relic, Zendesk,
Adroll, Twitter, Gilt Group. They are either
using Ireland as a location for their shared
services or business development activities
(Hubspot, Dropbox, Qualtrics) or software
development (Gilt Group, Zendesk) or cus-
tomer contact centre (Viagogo, Gilt Group).
Many of the operations are multilingual
where Ireland offers global standard multi-
cultural talent.
An excerpt from our chat with Barry O’Dowd of IDA Ireland:
The New Column Coming
to StockNewsNow.com
Read the full interview at
StockNewsNow.com
April 12 – 14, 2015 | Caesars Palace | Las Vegas
Growth Capital Expo 2015
The Premier Event in Emerging Growth Company Investment & Finance
The Growth Capital Expo brings together the newest ideas, the best companies and the top
dealmakers in emerging growth finance for three days of education and networking in the
nation’s premier destination for meetings and entertainment.
Join 500 of the top growth company executives, investors and finance specialists in the
pre-IPO and public micro-cap market for an unparalleled experience in education,
networking and dealmaking.
Two full days of educational panels and presentations by the leading
experts in investment in late-stage private and early-stage public
emerging growth companies.
Presentations by 100 selected pre-IPO and micro-cap growth company
management teams.
Pre-arranged and spontaneous one-on-one meeting opportunities with
investors, management, and finance advisers.
Nightly networking receptions and event-exclusive concierge
services to facilitate private meetings, dinners and entertainment.
For more information and to register, go to GrowthCapitalExpo.com
Or follow us @growthcapexpo • info@GrowthCapitalExpo.com
888.895.6807
S
A
V
E

T
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Sponsors
Special Thanks to Our Sponsors
April 12 – 14, 2015 | Caesars Palace | Las Vegas
Growth Capital Expo 2015
The Premier Event in Emerging Growth Company Investment & Finance
The Growth Capital Expo brings together the newest ideas, the best companies and the top
dealmakers in emerging growth finance for three days of education and networking in the
nation’s premier destination for meetings and entertainment.
Join 500 of the top growth company executives, investors and finance specialists in the
pre-IPO and public micro-cap market for an unparalleled experience in education,
networking and dealmaking.
Two full days of educational panels and presentations by the leading
experts in investment in late-stage private and early-stage public
emerging growth companies.
Presentations by 100 selected pre-IPO and micro-cap growth company
management teams.
Pre-arranged and spontaneous one-on-one meeting opportunities with
investors, management, and finance advisers.
Nightly networking receptions and event-exclusive concierge
services to facilitate private meetings, dinners and entertainment.
For more information and to register, go to GrowthCapitalExpo.com
Or follow us @growthcapexpo • info@GrowthCapitalExpo.com
888.895.6807
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Special Thanks to Our Sponsors and Presenting Companies
April 12-14, 2015 | Caesars Palace | Las Vegas, NV
For more information: info@growthcapitalexpo.com
Phone: 888.895.6807 | Follow us @GrowthCapExpo
April 12 – 14, 2015 | Caesars Palace | Las Vegas
Growth Capital Expo 2015
The Premier Event in Emerging Growth Company Investment & Finance
The Growth Capital Expo brings together the newest ideas, the best companies and the top
dealmakers in emerging growth finance for three days of education and networking in the
nation’s premier destination for meetings and entertainment.
Join 500 of the top growth company executives, investors and finance specialists in the
pre-IPO and public micro-cap market for an unparalleled experience in education,
networking and dealmaking.
Two full days of educational panels and presentations by the leading
experts in investment in late-stage private and early-stage public
emerging growth companies.
Presentations by 100 selected pre-IPO and micro-cap growth company
management teams.
Pre-arranged and spontaneous one-on-one meeting opportunities with
investors, management, and finance advisers.
Nightly networking receptions and event-exclusive concierge
services to facilitate private meetings, dinners and entertainment.
For more information and to register, go to GrowthCapitalExpo.com
Or follow us @growthcapexpo • info@GrowthCapitalExpo.com
888.895.6807
S
A
V
E

T
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E

D
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Presenting Companies
Special Thanks to Our Sponsors and Presenting Companies
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Phone: 888.895.6807 | Follow us @GrowthCapExpo
50 MicroCap Review Magazine
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Highpower International
These are all appetizing aspects to the driv-
ers behind the rechargeable battery busi-
ness, and they’ve helped boost HPJ’s shares
almost 300% over the last twelve months.
At the same time these are very prospective,
rendering any forecasts based on them highly
speculative.
Recently we took our skepticism on a visit
to the company, meeting with senior man-
agement and touring each of the company’s
subsidiaries in Shenzhen and Huizhou. (We
were also invited to the company’s new bat-
tery recycling company in Ganzhou, Jiangxi
Province, but elected to save that for another
time.) Electric vehicles, mass retailers, and
wearable electronics are all mouth-watering
stories, and we get the appeal.
The company is selling into these seg-
ments, and each provides exciting prospects.
Still, we were surprised to find a much more
promising, near-term earnings driver –meat
amid the side dishes.
Capital Investment
Highpower is, at its core, a manufacturing
company. It develops products that feeds
these emerging markets with power. The
company is largely industry-trend agnostic,
with flexibility to go in a number of different
directions / applications depending on what
PROFILED COMPANIES
Side Dishes Aside
customers require of it. Hence, the focus on
new applications of their battery products.
However, for the company to grow it needed
to expand and was at the forefront of our
initial hesitancy in visiting their facilities.
Since 2010 HPJ has been investing about
US$30 million to build and equip a new
facility that, with some additional produc-
tion lines added in phases, is poised to enable
double-digit revenue and earnings growth
over the next several years.
In 2013 the company’s original Shenzhen
facilities ran at near capacity, so the capac-
ity addition is overdue. But that isn’t the
exciting part: the facility is part of an effort,
already visibly underway, to scale up for
larger customers and production runs, and
focused on higher-margin lithium polymer
batteries.
For this the company has also been invest-
ing in recruitment of experienced leadership
and technicians for the plant, R&D, sales
and marketing. These operating expenses,
more accurately thought of as investment in
the new capacity launch, have weighed on
profitability over the past few years. Since
2009 HPJ’s profits have actually fallen at a
double digit rate even as revenues grew at a
17% CAGR. This trend is poised to reverse as
F
ollow news flow around south China-based rechargeable battery maker
Highpower International (NASDAQ: HPJ) and you might think
earnings performance is driven by battery sales for electric vehicles, initial
sales to Costco, and the growing adoption of ‘wearable’ electronics.
n BY MIKE KOBAL
Ticker: HPJ
MicroCap Review Magazine 51
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HPJ leverages this investment.
We see revenues continuing to grow at
double digit rates, but for earnings to accel-
erate and grow over 40% per annum from
their current low base as they rebound with
force from depressed levels.
Rising above the U.S. Listed, Small-Cap
Fray
That HPJ has been able to bring this
capacity online this year is no small feat.
The last several years have not been easy
for growing small-cap Chinese companies,
and particularly for those listed in the US.
Not only has the Chinese government kept a
tight lid on lending to the private sector, but
reputable and legitimate Chinese companies
have found it increasingly difficult if not
impossible to raise capital in the US, where
investors have been burned by a succession
of fraudulent listings.
Like the Energizer Bunny, HPJ invested
in Huizhou by bootstrapping internal cash
flow and inexpensive short-term lending,
only recently (April ’14) selling about 1.0mil
in shares for $5.05 in order to help finance
operating needs as production ramps at the
new plant.
Our tour started early in the day at
Shenzhen Highpower, the company’s origi-
nal Ni-MH rechargeable battery plant. This
plant has capacity to produce batteries for
what seems to be every company in the space
including Energizer, Rayovac, and … well,
you can fill in the blanks. It would likely be
more challenging to find a rechargeable bat-
tery brand NOT being produced at Shenzhen
Highpower. These are the rechargeable bat-
teries one is likely to find on sale at every
North American retailer. This plant runs
at near capacity, currently generating gross
margins just shy of 19%.
Nearby we visited Springpower
Technology, which was the company’s first
foray into offering Lithium batteries. Here
the company can produce up to 2.5-mil bat-
teries per month, including both cylindrical
and polymer types. This facility has also
been running near full capacity for almost
two years.
Lithium-based batteries, used in both por-
table electronic devices and electric vehi-
cles among other applications, is where the
most promising growth opportunities exist.
Lithium-polymer is particularly suited for
the demands of smaller, lighter, portable
consumer electronics. Not only do the bat-
teries pack increased energy density, but
their form factor is malleable to the particu-
lar needs of the product in which they are
encased. It is in lithium-polymer that the
new Huizhou facility is focused.
In Shenzhen we also visited subsidiary
ICON Energy System which develops more
complete battery systems for new products.
Here we saw a number of products from
well-known brands – including some battery
powered gloves meant for very cold weather
conditions, various hand-held communica-
tion devices – simply a wide assortment of
products requiring portable battery power.
In Huizhou, which only launched pro-
duction in 1Q14, manufacturing was much
more highly automated, the clean-room spec
significantly more stringent. Here we met
key leadership with experience designing
batteries for many of the world’s leading
portable device manufacturers.
A key requirement for winning large
orders for tablet and handset batteries is
obviously scale, something HPJ has lacked
until this point. During our visit the com-
pany’s first production line in Huizhou was
churning out mobile device batteries in high
volume.
Personnel at the plant related how many
of the largest Taiwan-based electronics man-
ufacturers, some of whom manufacture on
an OEM basis for the world’s most highly
regarded electronics brands, had all recently
visit the Huizhou facility and explored a
new or growing relationship. Amid boom-
ing demand for portable devices, naturally
OEMs will seek to diversify their supply of
key components.
Having spent several years in Taiwan fol-
lowing local electronics manufacturers, we
have a fair sense for how they think about
bringing on a new supplier like HPJ: ‘Yes!’
For investors, getting caught up in ‘sexy’
ideas can be exciting, but it is also danger-
ous. In HPJ we found the buzz around recent
hot sectors like electronic vehicles has over-
shadowed something more fundamentally
important for investment performance: the
meat is cooked, and it is about to hit the
table.
Mike Kobal is a Chartered Financial Analyst who has
spent over a decade in China, Taiwan, and SE Asia
conducting bottom-up fundamental research on
companies in the region. He has worked both inde-
pendently and for well-known sell side research teams
including Jardine Fleming, JPMorgan (Taiwan), and
Arete Research (Asia). He speaks fluent Mandarin,
and currently splits his time between China and the
US Pacific Northwest.
In the US: 1-425-328-9393
In China: +86 1500-286-2197 n
The company paid consideration to SNN or its affiliates for this article.
Lithium-based batteries, used in both portable elec-
tronic devices and electric vehicles among other
applications, is where the most promising growth
opportunities exist. Lithium-polymer is particularly
suited for the demands of smaller, lighter, portable
consumer electronics.
52 MicroCap Review Magazine
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F E ATURE D ARTI CL E
A
n atmosphere of optimism and
excitement pervaded the hallways
and forums at the microcap growth
market’s newest national conference, the
Growth Capital Expo. Emerging growth
company management teams and investors
explored capital investment opportunities at
the event, and learned from leading experts
of the innovations in investment and capital
formation that are transforming the market.
More than 400 emerging growth company
investors, bankers, executives and profes-
sionals came together at Caesars Palace in
Las Vegas on April 29 to May 1, 2014, to
discuss the latest market trends in equity
private placements, initial and alternative
public offerings, and private growth capital.
Management teams from more than 60 pub-
lic and later-stage private emerging growth
companies made presentations and partici-
pated in over 350 one-on-one meetings with
investors and placement agents over the two-
most active emerging growth issuers in the
first half of the year, riding the industry’s
IPO momentum generated in the last half of
2013, despite a pullback in the stocks early
this year. Biotech companies raised $1.7
billion in 76 transactions in the first half of
2014 for an average raise of $22.4 million.
That’s only $300 million short of the total
proceeds raised by biotech firms in all of
2013 in 124 transactions.
Asia-based U.S.-listed companies were a
resurgent area of emerging growth equity
investment in the first half of the year. Issuers
from China and Singapore raised $105 mil-
lion in 11 EPPs in the first half of 2014, four
more deals and $35 million more in proceeds
than the same period last year.
The booming IPO market drove inter-
est in the Expo’s pre-event workshop, the
IPO Bootcamp. More than 100 pre-IPO
and early-stage public company executives
packed the room for the half-day session
n BY BRETT GOETSCHIUS
day Expo. Many joined the pre-conference
IPO Bootcamp on April 29 to get insight
and practical advice on navigating the going-
public process, choosing the right option for
their companies, and preparing for life in the
public markets.
The conference took place against a back-
drop of strong market performance in the
year’s first half that imbued the event with
energy and a focus on dealmaking. Emerging
growth issuers midway through 2014 raised
$6.2 billion in 349 transactions for an aver-
age deal size of $17.6 million, a year-over-
year increase of $1 billion in dollar volume
growth while the number of transactions
grew by 40, according to PlacementTracker,
a service of Sagient Research. So far, the
equity private placement (EPP) market is on
pace to match or surpass the dollar and deal
volume of $11.6 billion and 642, respectively,
posted in all of 2013.
Biotechnology companies were by far the
Seizing Opportunity,
Embracing Change at the
Growth Capital Expo
Investors, Executives and Advisers Meet for Three Days
of Education, Presentations and Dealmaking
THANK YOU FOR PRESENTING AT GROWTH CAPITAL EXPO 2014
MicroCap Review Magazine 53
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on preparing for, executing, and thriving
after a going-public transaction. The work-
shop was keynoted by small cap corporate
board adviser and former emerging growth
fund manager Adam Epstein of Third Creek
Advisors.
Epstein, author of The Perfect Corporate
Board: A Handbook for Mastering the Unique
Challenges of Small Cap Companies (New
York: McGraw Hill, 2012), noted that going
public can be a “huge benefit” for compa-
nies with the right management, internal
controls, financial visibility and corporate
governance in place – but “an expensive,
business jeopardizing waste of time” for
those which do not. Epstein outlined the key
elements of a successful going-public trans-
action, noting the avoidable yet repeated
mistakes company boards make during the
process: thinking public status will ensure
access to capital (access is earned by per-
formance he says), using stock as ready
currency for acquisitions (the greater fool
theory in action), or that an IPO will provide
a ready exit for early investors and manage-
ment (maybe, and maybe not), among the
most common.
Epstein joined public offerings experts
from the emerging growth banking, legal
and investment worlds to lead the work-
shop’s afternoon panel discussions. The pan-
els offered the attending executives advice,
tips and tools for deciding whether, when
and how to go public; the essential prepara-
tion period, executing the transaction, and
succeeding in the post-public aftermarket.
The first day of the Expo’s general session
was devoted to trends and issues impacting
the institutional emerging growth equity
market. The morning featured discussion
panels on equity private placements, regis-
tered direct offerings, confidentially-mar-
keted public offerings (CMPOs) and at-the-
market offerings (ATMs). The discussions
were led by representatives from the leading
investment banks and law firms active in
emerging growth company finance, includ-
ing Lazard, Cantor Fitzgerald, William Blair,
Lowenstein Sandler and Goodwin Procter.
The afternoon sessions focused on liti-
gation and enforcement issues, alternative
public offerings, depository trust clearing
and chill issues, and investor activism in
small cap companies. Legal counsel from
top-ranked securities practices at Venable,
BuckleySandler, Schulte Roth & Zabel,
Ellenoff Grossman & Schole, and Mintz
Levin joined with investor relations experts
from Sharon Merrill and Sitrick & Co. to
offer advice and analysis to attendees.
Day Two of the Expo was devoted to the
changes being thrust onto the emerging
growth company finance market by the JOBS
Act. Howard Leonhardt of the California
StockXchange keynoted the day, speaking
on the “New Age of Deal Marketing” the Act
has ushered in with the repeal of the ban on
securities marketing and the advent of crowd
finance via online investment portals.
The morning sessions focused on the new
requirements for employing general solicita-
tion to market equity investments online
to both accredited investors and the gen-
eral public via Rule 506(c) offerings. Leading
legal experts and crowd finance entrepre-
neurs from Davis Wright & Tremaine, Troy
Gould, MicroVentures, and IssuWorks
explored the opportunities and pitfalls of
this brave new world with forum attendees.
Later Day Two sessions focused on the
proposed expansion of Reg A offerings to
allow companies to raise up to $50 mil-
lion with reduced reporting requirements,
led by Cromwell Coulson of OTC Markets
Group, and examples of successful early-
movers in the race to develop institutional-
quality online funding platforms, includ-
ing David Manshoory of AssetAvenue,
Alon Goron of Invested.in, Scott Jordan of
HealthiosXchange, and Adam Hooper of
REALCrowd.
The last panel of the Growth Capital Expo
2014 proved to be one of the most popular
of the conference, as investors and senior
executives of public companies in the legal
marijuana market held forth on the oppor-
tunities and risks of operating in this boom-
ing industry. Troy Dayton of the ArcView
Group moderated the discussion with Dr.
Lawrence May of Tauriga Sciences, Justin
Hartfield of Ghost Group, Kurshid Khoja of
Greenbridge Corporate Counsel, Dr. Mark
Rabe of Medical Marijuana Sciences, and
Doug Leighton of Dutchess Capital.
The Growth Capital Expo returns next
April to Las Vegas for its second year.
Information on the event program, dates
and venue will be announced soon at
GrowthCapitalExpo.com. n
54 MicroCap Review Magazine
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F E ATURE D ARTI CL E
I
n its annual survey of alternative funds
under administration, eVestment
reported a 6.23 percent growth in assets
from the second half of 2013, compared
to the first half of 2013, due to increased
investor demand. The survey ranked hedge,
private equity and real estate funds as the
expected top asset gainers in 2014.
Against this backdrop, a new alternative
fund distribution channel has emerged as a
viable option. Since the passage of the 2012
JOBS Act, which lifted the ban on general
solicitation, online platforms have appeared
that allow financial advisors and investors
to invest directly in hedge, private equity
and real estate funds. The platforms match
accredited investors with alternative funds
in their active fundraising phase and offer
many benefits to investors.
investors with a dashboard that allows them
track their investments, research fund per-
formance and invest in new deals. Marketers
have access to a sophisticated customer rela-
tionship management system and can track
deal flow right from the site. Fund managers
can communicate to investors and alert them
to new investment opportunities.
As online platforms continue to prolifer-
ate, it’s important that investors perform due
diligence on these sites before participating.
In particular, it’s essential to research who’s
behind the site. Be wary of sites that have
strong technical expertise but no financial
services experience, or vice versa. Both are
needed for success. It’s also important the site
is associated with a reputable broker-dealer.
Without one, investors may as well invest
offline and perform their own due diligence.
Online platforms offer significant benefits
to investors. Transparency, cost savings and
risk management are among the most pow-
erful. Choose your platform wisely and then
sit back and reap the benefits of the post-JOB
ACT world.
Alon is CEO and co-founder of Invested.in and
INVST (http://inv.st). He has developed technology
that powers websites and financial transactions for
Fortune 500 companies and well-known founda-
tions such as Coca-Cola, ATB Financial and Global
Philanthropy Group. He also created a white label
fundraising portal for individuals and businesses
seeking to crowdfund ventures independently of
major platforms. His support of the JOBS Act and
day-to-day interactions with investors and financial
professionals inspired him to create INVST (http://
inv.st), an online platform that matches investors
with hedge fund managers and marketers. Invested.
in was named “Best Marketplace Platform” by the
Los Angeles Venture Association in 2013, and Alon
was named to the Socaltech 50 for his work with
Invested.in. n
n BY ALON GOREN,
CEO OF INVST
First, they eliminate the need to search
for funds and determine which funds are
open to investments. This can be extremely
time-consuming for financial advisors and
do-it-yourself high-net-worth investors.
Most alternative fund managers have strong,
established relationships with institutional
investors and approach those investors first
when they are raising money for a new fund.
This leaves many investors chasing funds
that no longer have capacity. An online mar-
ketplace eliminates this problem. Managers
only list funds on the site that are open to
investors. At INVST (http://inv.st), an online
marketplace, launched this month, we have
been able to attract premier managers to our
site, which lists institutional-quality funds.
Managers are drawn to the platform because
it attracts high-quality investors.
Secondly, good platforms perform
extensive due diligence on fund manag-
ers before listing funds on the site. INVST
(http://inv.st), for example, has partnered
with a number of former E*TRADE execu-
tives at Carillon Capital, LLC, and Bendigo
Securities, LLC, to serve as financial advisors
to the platform, provide financial services
expertise within the fund management busi-
ness and act as registered broker-dealers for
the site. These partners verify an investor’s
accredited status, perform alternative fund
manager due diligence and ensure compli-
ance with regulatory and legal requirements.
Thirdly, successful sites offer time-savings
capabilities to investors, fund managers and
fund marketers. This is important in that
these benefits attract participants to the
site and keep them there. INVST provides
Decoding Online Alternative
Marketplaces
How Investors Can Benefit
PROFIT PLANNERS INCORPORATED (OTCBB:PPMT)
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Tel: 212.402.5200 Email: info@ProfitPlannersMgt.com
The unforgettable scenery, elite-level support, premier accommodations and professional athlete appearances are just some of
the features that make the CAF Cycling Challenges one-of-a-kind. But at the end of day, it will be the life-changing experience
of cycling alongside the very challenged athletes that benefit from your fundraising that will leave you breathless.
THREE EPIC RIDES.
ONE INCREDIBLE CAUSE.
Mazda Foundation Million Dollar Challenge:
San Francisco – San Diego
7 Days, 620 Miles Oct. 11-17, 2014
CAF Cycling Challenge:
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2 Days, 200 Miles Aug. 16-17, 2014
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Ojai Valley
3 Days, 270 Miles Sept. 12-14, 2014
Join the Challenged Athletes Foundation for the rides that will change your life.
To learn more about CAF cycling events, please contact cycling@challengedathletes.org
or visit www.challengedathletes.org/cycle
MicroCap Review Magazine 57
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F E ATURE D ARTI CL E
G
astric cancer is an aggressive dis-
ease with largely unmet medical
needs. Every year, approximately
200,000 patients are diagnosed with gas-
tric cancer in the European Union and the
United States.
Up until now, stomach tumors are only
diagnosed in late stages with a very inaccu-
rate macroscopic-endoscopic examination
that captures location, tumor size and offers
histological confirmation.
Treatment options are limited and very
expensive, invasive and painful. To ensure
adequate elimination, a massive resection of
the stomach has to be performed, indepen-
dently of the size of the lesions. Additionally,
patients have to undergo a combination
of radiation therapy, chemotherapy and/
or immune therapy, which have severe side
effects. Patients’ quality of life is severely
compromised and their five-year survival
rate is below 20%.
These facts show the imminent need for
new screening techniques that allow for early
and reliable diagnosis of gastric cancers and
an affordable treatment with increased sur-
vival rates.
invasive – no need for surgery.
4. The tumor is removed completely with-
out damaging any healthy tissue.
5. No radiation therapy or chemotherapy
is needed
6. Quality of life is massively improved
7. Duration and cost of treatment are
much smaller compared to today’s treatment
This approach, which is being devel-
oped together with the Steinbeis Center
Heidelberg and the University of Zurich, also
opens up possibilities for the development of
additional therapies.
OPPORTUNITY FOR IMPACT
INVESTORS
Having funded the initial research and devel-
opment through a grant from the Swiss
Federal Commission for Technology and
Innovation CTI, the next steps of the project
development are to be financed through
impact investment. This allows socially com-
mitted investors worldwide to participate
and invest in the development of new inno-
vative treatments and help patients in a
sustainable manner. Another benefit is that
all participants turn into a built-in mar-
keting team, which helps to promote the
gastric cancer project within a broader net-
work. Orphanbiotec plans to start the impact
investment round this autumn.
Find more information at: www.orphan-
biotec.com n
n BY DR. FRANK GROSSMAN
Small biotech companies and start-ups are
driving innovation in Orphan (rare) disease
Orphan Drugs have exciting growth rates
driven by regulatory benefits such as extend-
ed marketing exclusivity, tax benefits and
accelerated approval procedures. In the past
years this has led to increased interest by
large pharmaceutical companies to enter
into this area. Nevertheless, innovation in
this field is still driven by small, independent
and innovative biotech companies.
One of them is Orphanbiotec, a socially
responsible, research-based pharmaceutical
enterprise specializing in rare diseases. The
company is currently working on a project
that could revolutionize the treatment of
gastric cancer.
Orphanbiotec‘s research pursues a smart
photodynamic approach that combines can-
cer selectivity with anticancer mechanisms.
It allows for early detection of gastric cancer
through the selective delivery of diagnostic
imaging. The therapy agent removes malig-
nant tumors while sparing healthy tissues.
Orphanbiotec’s approach represents a par-
adigm shift in cancer treatment for patients
and medical specialists. Studies in Japan
suggest that early diagnosis of gastric cancer
would increase the survival rates to 98%.
There are several major advantages of this
new approach compared to today’s treat-
ment:
1. Accurate and early detection of cancer
at an early stage
2. Studies show that early detection and
treatment can increase the survival rate to up
to 98% (compared to only 20% at present)
3. Diagnosis and treatment is minimally
Paradigm Shift in the
Treatment of Gastric Cancer
58 MicroCap Review Magazine
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F E ATURE D ARTI CL E
• When equity and junk bond markets
begin to falter, I believe they are reflecting
the attitudes of market participants in mass
who then react behaviorally in a framework
of fear or greed or both, fear being the
strongest
• Historically, they tend to view large cap
consumer staple stocks with dividends more
favorably than smaller cap stocks during
times in which their attitude (mood) is
becoming negative
• In this case, which I believe is slowly
forming now, small cap stocks tend to under-
perform the large caps, as investors sell out
of fear that they will decline more than large
caps and out of greed to capture profits
• At the same time, the product or service
that the micro-cap makes is paramount to
the downside potential but remember that
in behavioral markets, up or down, market
particpants move them too far and then they
eventually over time revert to the mean
• Now, mean reversion should resonate in
this global market but who is talking about
it, as this is the “New Normal”……heard
that before only it was stated “It is different
this time”!
• Perhaps, in all this opinion, there is a
response which you may or may not agree
with
The purpose of this article from Cornerstone Global
Group LLC is to provide a general sense of glob-
al market direction and intermarket relationships.
Analysis is subjective and is not mathematically or
model derived. This article is not to be used for buy-
sell signals and is not providing investment advice to
any specific person or portfolio and should not be
considered by anyone or any entity as providing such.
Its accuracy cannot be guaranteed. Investing carries
the risk for substantial losses. Past performance is not
indicative of future returns. Investing in bonds (or
any security product) that carries fees for investing
will affect return. Securities and investment advice
offered through Investment Planners, Inc. (Member
FINRA/SIPC) and IPI Wealth Management, Inc.,
respectively, 226 W. Eldorado St. Decatur IL 62522,
217-425-6340. Cornerstone Global Group LLC is
not affiliated with Investment Planners, Inc. or IPI
Wealth Management, Inc. Cornerstone Global
Group LLC does not offer securities advice and is
not a member of FINRA/SIPC. Material is only
intended for use with institutional investors and not
intended for use with retail investors. All contents
copyright ©2014 Cornerstone Global Group LLC.
Reproduction, retransmission or redistribution in
any form is illegal and strictly forbidden. n
n BY STEVEN M. SHELTON
• During that time, IPO’s may become
very difficult, as risk is off and sometimes, as
in 2007-2009 and beyond, risk was way off
• In my opinion, micro-cap stocks are the
most speculative and therefore more volatile
with the potential for more downside pres-
sure and very wide bid/ask, if such even
exists
• I would expect volume to dry up even
more with micro-caps as compared to other
larger cap stocks, with downside volume
greater as compared to upside volume, very
lopsided
• However, I do believe that during times
of duress, such as in the 2007 and beyond,
micro-caps eventually come back strong as
inventors and entrepreneurs become even
more creative and focused
• That potentially offers great potential for
investors who enter after a confirmed low so
as to decrease risk, with more upside than
perhaps large caps on a percentage basis but
with more risk, as it should be
• However, the probable limited downside
to near zero on these inexpensive stocks is
worth noting
• Note that during the 2009 slide, some
expensive large caps were in danger of being
delisted, as they dropped and kept dropping!
• In summary, I believe global markets
and economies are so connected that as large
caps are hit, the smaller the capitalization of
the stocks, the more probable the weakness
and with less stability
• That is simply my opinion and one could
say that if a stock gets so cheap, some may
just sit on it and see if it comes back
How are MicroCaps Affected by
What Happens with the Small,
Mid and Large Cap Stocks?
microcapreview.com
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A private or publicly traded company that has a market
capitalization under $300 million. The smaller the
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SNN INCORPORATED AND MICRO-CAP REVIEW MAGAZINE SURVEY
On behalf of you, our subscribers and readers, additional information about companies in this issue will be
forwarded to you by checking the box and submitting your request. Information will be forwarded to you
by mail or email.
q144 Opinions
qA Look Back at General Solicitation and Advertising under
Rule 506(c) – Lance Jon Kimmel
qA Primer on Public Company Disclosure – Lawrence G. Nussbaum
qAccounting Corner - Post Reverse Merger Pitfalls – HJ &
Associates, LLC – S. Jeffrey Jones
qActivist Investing: The Need for SmallCap Activism – Elizabeth
Kopple
qBioMaryland – From Reasearch to Reality
qBiotech Year in Review – Seth Yakatan
qBitcoin – Andrei Serpik
qBlue Sun Energy, Inc. 506(c) – Advertisement
qBMA Securities
qCaveat Emptor – Shelly Kraft
qChallenge Athletes Foundation – Roth Capital
qCommodity Corner: Waking up to the coffee market – Mark Shore
qCompliance Corner: Russell C. Weigel III Esq.
qCrystal Research – Jeffrey Kraws
qCutting Edge Superconductors, Inc.
qDecoding Online Alternative Marketplaces: How Investors
Can Beneft – Alon Goren
qEditorial – Shelly Kraft, Publisher
qExploration Insights – Brent Cook
qFallen Angels – Holmes Osborne
qFireRock Conference
qFor MicroCap Firms, Perception Is Reality - 4 Ways to
Use PR to Improve Your Reality – Joy Schoffer
qGespeg Copper Resourses Inc. – GCR
qGrowth Capital Expo Conference
qHighpower International, Inc. – HPJ
qHow are MicroCaps Affected by Small, Mid and LargeCap stocks –
Steven M. Shelton
qIEG Holdings Corporation – IEGH
qInterest for Hong Kong Listing Remains Active – Leslie Richardson
qInvestment Opportunities in Sustainable Fracking – Shelley Goldberg
qIs BioLargo’s “AOS Filter” The World’s Most Valuable
Technology? – BLGO
qLAVA – Los Angeles Venture Association
qLowenstein Sandler LLP
qMarcum LLP
qMerriman Capital, Inc. – MERR
qMillenium Healthcare, Inc. – MHCC
qMicroCap Review Magazine
qMZ Group
qNew Formations – Fishbowl Strategies – David Alsup
qNew Orleans 2014 NOIC Conference
qOmbudsman – Jack Leslie
qOswald & Yap
qParadigm Shift in the Treatment of Gastric Cancer – Dr. Frank Grossman
qPortTech: A Market-Centric Approach To Clean Tech
Innovation – John Dhombrowski
qPressure BioSciences, Inc. – PBIO
qQuoteMedia, Inc. – QMCI
qSNN Q & A IDA Ireland
qSeizing Opportunity, Embracing Change at the Growth Capital
Expo – Brett Goetschius, Partner
qSetting the Stage for the Big Move – David Morgan
qStock News Now
qTechnology Solutions for the Growing Cannabis Industry – EDXC
qWallStreet Chicken – Episode 10: “The Due Diligence Meeting”
qWe’ve been through the pain… Will we see a gain? – Rick Rule
1. What is your microcap investor profle?
q I’ve invested $500,000 to $1,000,000 in MC stocks
q I’ve invested $250,000 to $500,000 in MC stocks
q I’ve invested $100,000 to $250,000 in MC stocks
q I’ve invested under $100,000 in MC stocks
3. Would you invest in a microcap medical marijuana
company?
q Yes q No
q Need more information
5. Would you use bitcoin to purchase the following:
qMerchandise
qProfessional services such as legal or accounting fees
qYes, whenever I can
qWhat is bitcoin?
2. Would you invest in a microcap private company
through crowd funding?
q Yes
q No
q Need more information

4. Are you an accredited investor?
qYes qNo
qNot sure
6. How did you receive this issue of the MicroCap
Review?
qI received my issue in the mail
qI received my issue electronically
qI picked up my issue at a fnancial conference:
qI picked up my issue at an investment ban
kers offce
qI picked up my issue at a newstand
Please take the time to answer some simple survey questions so that we may provide the most
comprehensive information, stories of interest, investment ideas, and industry analysis in future issues of
Micro-Cap Review. We thank you in advance for your participation.
Send completed surveys to: SNN Incorporated or Respond to survey online at: www.StockNewsNow.com
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7. Do you manage your equity portfolio?
qYes, I make all my own decisions
qNo, I use a fnancial professional

9. How many microcap stocks do you have in your
portfolio?
q 1-10 q 11-25 q Over 25 q Other
11. What is the most important criteria in your
purchase of a microcap company’s stock?

q Management q Profts
q Revenues q Sector
q Liquidity q Information Availability
13. Do you buy private placements in public microcap
companies?

q Yes
q No
q Depends on the sector
q Depends on the price
q Depends on liquidity
15. Which company(s) in this issue would you invest in?
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
8. How do you prefer to receive your fnancial
information?
q I use the Internet
q I subscribe to newletters
q I attand fnancial conferences
q I listen to my stockbroker
10. What percentage of your microcap stock portfolio is
invested in life science companies?

q 1-10% q 11-25%
q Over 25% q 100%
12. When do you liquidate your microcap stock holding?
q Once the price increases by 20%
q Once the price increases by 50%
q Once the price doubles
q I hold long term regardless of price
q Once the price decreases by 10% or more
14. Which of the following best describes you?
q Investor q Trader q Professional
q Analyst q Student
16. Do you believe we are currently in:
q A microcap Bull market
q A microcap Bear market
All participants in surveys receive a FREE lifetime subscription to MicroCap Review Magazine.
Name: ____________________________________________________________________
Address: __________________________________________________________________
Email: _______________________________ Phone: ______________________________
www.MicroCapReview.com
q Aerospace
q Alternative Energy
q Auto
q Banking
q Basic Minerals
q Batteries
q Biotech
q Bitcoin
qBusiness Services
q Chemicals
q China
q Clean Energy
q Coffee
q Commodities
q Communication
q Construction
q Consumer Products
q Consumer Services
q Crowd Funding
q Currencies
q Defense
q Direct Marketing
q Education
q Crowd Funding
q Currencies
q Defense
q Direct Marketing
q Education
q Electronics
q Electronic Medical Records
q Energy
q Energy Savings
q Entertainment
q Finance
q Financial Trade Shows
q Food & Beverage
q Fracking
q Gaming
q Green Technology
q Growth Capital Expo
q Healthcare
q India - Asia
q Industrial Goods
q Industrial Metals & Minerals
q Information Technology
q Insurance
q Legal
q Life Sciences
q Manufacturing
q Media
q Medical Devices
q Metals
q Mining
q Mobile Apps.
q Oil Drilling & Equipment
q Oil & Gas Producers
q Oil & Gas Exploration
q Organics
qPharmaceuticals
qProfessional Relations
qPublishing
q Rare Earth Elements
q Real Estate
q REG D
q Resource Exploration
q Retail
q Security
q Social Media
q Software
q Technology
q Telecom
q Transportation
q Travel
q Veterinary Products and
Services
q Water
q Wellness
q Wireless Communications
Check off areas of interest:
62 MicroCap Review Magazine
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F E ATURE D ARTI CL E
n BY BRENT COOK
Exploration Insights:
Turning Rocks Into Money
source: John Timmer: Building a better way to Understanding Science, 2009.
F
or a virtual letter titled Exploration Insights, we seem to devote
an inordinate amount of text to mining, metallurgy, infrastruc-
ture, discounted cash flows, social license, permitting and, working
capital.
MicroCap Review Magazine 63
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Not today. Today we want to consider min-
erals exploration, a scientific process that is
largely intuitive and that is being degraded
by an over reliance on snappy technology
and the blind rush to make an easy buck.
John Timmer’s diagram above provides
some insights into the complexity and itera-
tive processes behind true exploration and
discovery.
Minerals exploration is essentially the sci-
entific method applied to a particular field
of science (geology) in which many of the
underlying observations, assumptions, and
facts are subject to variable interpretations
because:
1) More often than not the subject of
scientific inquiry is under a pile of rocks,
swamp, or jungle. Hard data is extremely
limited.
2) The “control group”, meaning the
deposit type on which you are basing the
research, is generally out of control. Each
mineral deposit is the result of multiple
geologic events imposed on differing rock
types over a considerable period of time,
and, therefore, no two deposits are exactly
the same. It is not uncommon for even the
actual genesis of a deposit type to be in con-
tention amongst the experts. Battles still rage
over how two of the most important gold
deposit types, Carlin and Witwatersrand,
formed.
One of the byproducts of the inherent
uncertainty associated with minerals explo-
ration is an entire industry based out of
Vancouver that survives, nay, profits, from
the hunt for hidden treasures that very few
really understand. The lack of both scientific
consensus and explicitly defined parameters
for success means the average speculator in
this industry believes (hopes) that the dis-
covery process is little more than punching a
hole or two into a target that was presented
with sexy colored maps by a hotshot geo-
promoter.
But, you may ask, how hard could it be to
find a gold deposit?
Actually, really hard. An in-house study
by Newmont Mining determined that, in
round numbers on a yearly basis, 1 in 1,000
prospects turn up an economic deposit and
1 in 10,000 become a major gold deposit
of over 4 million ounces. Many of the rea-
sons behind such a poor success rate have
been posted on the EI website and covered
in our letters, namely geology, metallurgy,
deposit depth, infrastructure, social realities
and politics, ad infinitum. The disconnect
between the scientific method and specula-
tors’, and all too often mining companies’,
desire (need) for immediate gratification
is another major reason for the statistically
poor rate of discovery. For the most part,
the two goals are fundamentally incompat-
ible. One side wants to turn a quick buck or
submit a positive quarterly report, while the
other gets bogged down in esoteric geologic
discussions that have very little relevance to
turning a profit.
Exploration is a process during which
concepts are tested, using someone’s money,
in the search for economically viable miner-
alization. The process needs time to play out,
for ideas to ferment and be revised based on
the interpretation of new data. It takes years,
not months, to understand what Earth did
to a deposit during and after its formation.
Success requires:
1) The ability to conceptualize a legiti-
mate target that offers the possibility of a
meaningful economic deposit.
2) Teamwork and open minds to revise
and adjust the exploration target concept
based on new data.
3) Money, plus an investor base that is
willing to let the exploration process play
out.
4) The ability to rapidly recognize and
accept failure and walk away from a project
that once held great potential.
To me, item number 4 is probably the
single most important skill any exploration
team can possess, and is the determining fac-
tor in buying into an exploration company.
We know the odds are long, money is tight,
and exploration costly, so it is critical to cut
bait ASAP. However, all too many geologists
and companies either view their work as a
science experiment and treasure hunt, or
don’t have the experience or courage to tell
their shareholders, “We struck out”. They
persist in literally throwing money down a
worthless hole.
That, my friends, is not the way to make
serious money in exploration.
Although there are over 1,000 publi-
cally traded junior exploration companies,
I’ve found that very few possess the four
qualities listed above. Additionally, because
most speculators don’t have the technical
background to differentiate a prospect with
legitimate, world class potential from worth-
less moose pasture, hard earned money goes
almost indiscriminately to these 1,000 or so
junior exploration companies—at least in a
bull market.
The net result is that good money is
wasted on improbable geologic concepts and
properties that, even if “successful”, aren’t
worth much. We know this to be a fact; the
statistics bear it out. In my consulting years,
maybe 70% of the projects I was sent to
evaluate were obvious dogs that needed little
more than a day on the ground to reject. The
fatal flaws were either overlooked by all too
enthusiastic geologists, or ignored by fast
talking, highly incentivized, promoters.
This is how we make money…
We also know (and have expounded
One side wants to turn a quick buck or submit
a positive quarterly report, while the other gets
bogged down in esoteric geologic discussions that
have very little relevance to turning a profit.
64 MicroCap Review Magazine
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upon many times in past EI issues) that
the gold mining industry is not replacing
what it mines with new economic deposits
(Fig. 2 below). Exploration budgets have
been decimated, and fewer and fewer junior
companies have the technical and financial
resources to afford the time it takes to make
a discovery. The pipeline of new deposits is
shutting down-- to the point where, eventu-
ally, the few companies left standing in this
Dust Bowl of a market will be valuable in
their own right. If they can find something
of economic importance, all the better.
Today, and probably through at least the
end of 2014, the junior mining and explo-
ration markets are in real financial trou-
ble. The gold price is down, profits almost
nonexistent, exploration and development
expenditures severely curtailed, and new
money extremely hard to come by. The
macro questions that investors into this sec-
tor need to answer are: 1) Will metal demand
increase over the next few decades? 2) Will
mining companies need new deposits to
replace what is being mined? 3) Will discov-
eries keep up with production?
If the answers to those questions are yes,
yes, and no, then, it seems obvious to me that
all one has to do to make serious money is to
accumulate shares in the best deposits and
most competent explorers, and wait. The
mining sector has always been cyclical; when
we come out of the market bottom, the pres-
sures and issues we have covered above tell
me it is going to come out hard and strong.
That’s the way I see it.
BRENT COOK
Economic Geologist and Author Exploration
Insights.
Brent Cook, a renowned exploration analyst and
geologist, is the author of Exploration Insights,
(www.explorationinsights.com). He has over thirty
years of experience providing economic and geologic
evaluations to major mining companies, resource
funds and investors. He was principal Mining and
Exploration Analyst to Global Resource Investments
from 1997 through 2003 where he provided analysis
to retail brokers and two in-house funds managed
by Rick Rule. He has worked in over 60 countries on
grassroots through mine feasibility projects evaluat-
ing virtually every mineral deposit type. Exploration
Insights is an independent newsletter that discusses
what Brent is buying, selling and avoiding in the
junior mining and exploration investment sector.
DISCLAIMER
This letter/article is not intended to meet your
specific individual investment needs and it is not
tailored to your personal financial situation. Nothing
contained herein constitutes, is intended, or deemed
to be -- either implied or otherwise -- investment
advice. This letter/article reflects the personal views
and opinions of Brent Cook and that is all it purports
to be. While the information herein is believed to be
accurate and reliable it is not guaranteed or implied
to be so. The information herein may not be com-
plete or correct; it is provided in good faith but with-
out any legal responsibility or obligation to provide
future updates. Research that was commissioned and
paid for by private, institutional clients are deemed
to be outside the scope of the newsletter and certain
companies that may be discussed in the newsletter
could have been the subject of such private research
projects done on behalf of private institutional cli-
ents. Neither Brent Cook, nor anyone else, accepts
any responsibility, or assumes any liability, whatso-
ever, for any direct, indirect or consequential loss
arising from the use of the information in this letter/
article. The information contained herein is subject
to change without notice, may become outdated
and my not be updated. The opinions are both time
and market sensitive. Brent Cook, entities that he
controls, family, friends, employees, associates, and
others may have positions in securities mentioned, or
discussed, in this letter/article. While every attempt
is made to avoid conflicts of interest, such conflicts
do arise from time to time. Whenever a conflict of
interest arises, every attempt is made to resolve such
conflict in the best possible interest of all parties, but
you should not assume that your interest would be
placed ahead of anyone else’s interest in the event of
a conflict of interest. No part of this letter/article may
be reproduced, copied, emailed, faxed, or distributed
(in any form) without the express written permission
of Brent Cook. Everything contained herein is subject
to international copyright protection. n
(Gold discoveries 1991 to 2013. Source: Blackrock Natural Resource Team and
Bloomberg. Note there is a lag in discoveries and time)
66 MicroCap Review Magazine
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B ringing Next Generation
Cryogen-free 1.5T MRI to
Market Next Year, 2015
Mr. Kim, a Physics Professor at the University
of Puerto Rico, Mayaguez Campus, has been
working on superconductivity for more than
20 years. Mr. Kim has identified the super-
conducting mechanism of the new super-
conducting material, MgB2.
In November 2011, Mr. Kim founded
Cutting Edge Superconductors Inc. to com-
mercialize his worldwide patented technolo-
gy and provide industry with the next gener-
ation cryogen-free 1.5T and 3T MRI. Cutting
Edge produces MgB2 powders, wires, and
tapes. These products are used to manufac-
ture magnets for next generation cryogen-
free 1.5T and 3T MRI. Our The company’s
MgB2 wire technology and products replace
NbTi superconducting wire technology in
MRI equipment.
CUTTING EDGE TECHNOLOGY
BENEFITS AND IMPROVEMENTS
ON CURRENT TECHNOLOGY
The benefits of our product over the cur-
rently used ones are the following:
1. The resulting MRI is simple and almost
maintenance-free, increasing the lifetime of
MRI from 5-7 years to 10-20 years
2. The resulting MRI allows more versatile
designs, including the completely open MRI,
eliminating claustrophobia of some patients
3. The resulting MRI is helium cryogen-
PROFILED COMPANIES
free, reducing the installation cost signifi-
cantly
4. MRI scan cost will be reduced up to
40%, significantly enhancing public health
service
The current 1.5T (Tesla) MRI uses an old
material NbTi which requires 1,700 liter of
expensive liquid Helium to operate at a very
low temperature, 4.2K (Kelvin). Therefore it
is complicated and easily broken, leading to
5-7 years of lifetime and high MRI scan cost.
In 2001, a new higher transition temperature
superconducting material, MgB
2
, was found,
promising Next Generation Cryogen-free
MRI. Indeed, in 2007, three Italian com-
panies produced MgB
2
-magnet based 0.5T
Open MRI. It is in the market now, with a
limited success due to lower image qual-
ity than that of the current 1.5T MRI. The
C
utting Edge Superconductors Inc. is a unique technology com-
pany and the story begins with its founder, Mr. Yong-Jihn Kim.
MicroCap Review Magazine 67
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global MRI market size is about $6 Billion
in 2014.
Cutting Edge Superconductors (CES) has
a worldwide patented technology for improv-
ing MgB
2
wires and tapes, enabling Next
Generation Cryogen-free 1.5T MRI. In 2013
and 2014 National Science Foundation (NSF)
awarded CES Small Business Innovation
Research (SBIR) funding of $180,000 for the
feasibility test of the technology. Puerto Rico
Science, Technology, and Research Trust pro-
vided a matching fund of $210,000. For that
purpose CES is collaborating with LUVATA,
the leading superconducting wire company,
and GENERAL ELECTRIC (GE), the leading
MRI company. The following figure shows
the MgB
2
wire, drawn by LUVATA.
Late July, 2014, Cutting Edge
Superconductors has successfully proved the
feasibility and scalability of its worldwide
patented technology for next generation
cryogen-free 1.5T MRI.
The following figure shows the current
carrying capacity, i.e., critical current I
c
, of
its tape as a function of magnetic field, com-
pared to that of Columbus Superconductors.
The test was done at the Applied
Superconductivity Center at National High
Magnetic Field Laboratory at Florida State
University. Columbus Superconductor pro-
duced MgB
2
tapes for the cryogen-free 0.5T
MRI. The data was from Braccini et al.,
Physica C 456, 209 (2007). The tape of CES
shows higher critical currents for any mag-
netic fields and better magnetic field depen-
dence. Better quality control of the manufac-
turing process of MgB
2
wires and tapes will
increase Ic a few times easily, leading to Next
Generation Cryogen-free 1.5T MRI.
Currently Cutting Edge Superconductors
has business partnership with LUVATA and
GENERAL ELECTRIC (GE) to manufacture
next generation cryogen-free 1.5T MRI. CES
desires to provide its license to most MRI
companies, such as Siemens, Philips, Toshiba
and Hitachi, and most wire companies, such
as Columbus Superconductors, Hypertech
Research, Bruker EST, and KISWIRE, shown
below.
Cutting Edge Superconductors announces
that the Next Generation cryogen-free 1.5T
MRI will hit market next year, 2015. The
advantage of Next Generation MRI is almost
maintenance-free and 40% reduction of
MRI scan cost.
In 2013 Cutting Edge Superconductors
won the Frost & Sullivan Innovation
Leadership Award for Superconductor
Technology for MRI.
CES business will continue to partner
with mass production partners for its pat-
ented MgB
2
powders, wires and tapes. For
more information, please see http://ceswire.
com or call Yong-Jihn Kim, President and
CEO at 787-955-4361. n
The company paid consideration to SNN or its affiliates for this article.
68 MicroCap Review Magazine
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F E ATURE D ARTI CL E
Therapeutics companies, which composed
75% of the offerings, increased an average
39.7% from their IPO price. After a blaz-
ing hot summer for these new issues, when
20 companies completed IPOs, many of
which were upsized, oversubscribed, and
likely overvalued, the pace of IPOs cooled
towards the end of 2013. Overall financing
proceeds generated from IPOs increased by
241.8% from 2012 to 2013, while proceeds
from follow-on offerings more than doubled
during the period.
MERGERS AND ACQUISITIONS
Even more amazing is that value of merg-
ers and acquisitions of biotech and medical
technology companies climbed more than
20% over the levels seen in 2013, to repre-
n BY SETH YAKATAN
2013: YEAR IN REVIEW
It is clear that 2013 was one of the best years
ever enjoyed by the Biotechnology industry,
in the financial markets, ever.
EQUITY MARKETS
US Biotechnology equities out-performed
the broader financial markets which soared
to record highs in 2013. Both the AMEX and
NASDAQ Biotech indexes almost doubled
the performance of the broader exchanges.
The share prices of 81 biotechnology com-
panies more than doubled in 2013.
In excess of 55 life sciences companies
went public on US exchanges last year, rep-
resenting the largest grouping of such ini-
tial public offerings in well over a decade.
Biotech: Year in Review
2013/14 and Mid-Year 2014
Outlook
MicroCap Review Magazine 69
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sent in excess of $131.8 billion in transac-
tion value. Thermo Fisher Scientific’s $13.6
billion acquisition of Life Technologies and
Amgen’s $10.4 billion takeover of Onyx
Pharmaceuticals were the biggest deals of
the year. The top 100 deals alone had a com-
bined value of $150 billion, with 26 deals
having a value of or exceeding $1 billion.
Most 2013 M&A deals involved big biotech
and big pharma companies snapping up
smaller companies in order to bolster pipe-
line and capabilities, a trend which has been
a constant theme for the last decade..
PRIVATE FINANCINGS
While the public market and M&A activity
was at an all-time high in 2013, it was still
difficult to raise private capital. Burrill & Co.
reported that private life sciences companies
raised $11.5 billion globally during 2013,
only a modest 2.1% percent more than in
2012. Early-stage financings continued to be
difficult.
PARTNERING
Partnering activities continued win the bio-
technology area during 2013 as pharma-
ceutical companies continued to external-
ize their research operations, gain product
pieline, and offset patent losses. Of the
$35.4 billion in potential value of partner-
ing deals with disclosed values, $14.2 billion
were discovery or pre-clinical collaborations,
often with an option to license when the
compound achieved proof-of-concept. The
majority of the top 50 largest licensing deals
during 2013 were for molecules at Phase
II stage of clinical development. In 2013,
the top 50 collaborations, partnerships and
licenses cost an average of $99 million in up-
fronts and $641 million in total deal values.
Unsurprisingly, up-front payments in 2013
were directly proportional to the stage of
development, with less money being paid
out for early-stage deals.
The question that looms for 2014 is will
these trends continue?
2014: YEAR TO DATE
The biotech sector had a fantastic 2013 (NBI:
+65%; S&P: +29%) driven by strong demand
for the sector’s key products, many posi-
tive phase 3 studies and a wave of successful
IPOs. While 2013 was extremely robust from
a pubic capital markets and mergers and
acquisition perspective, it was about average
from the perspective of private capital raises
and partnerships. This robust performance
has left many investors and participants in
the sector seeking more capital and more
molecules. It has left many inside and outside
the industry wondering what will 2014 bring?
EQUITY MARKETS
Conventional wisdom would provide that
the boom seen in 2013 cannot be sustained.
Through mid-July 2014 the bull marches on!
Q1 2014 saw a record-setting first quarter
for the sector which brought in $2.1 billion
in biotech IPOs. However , drug developers
have had a rough go on Wall Street in recent
weeks. Last month, one company pulled
the plug on an $86 million offering due to
unfavorable market conditions, and three
others failed to complete planned offerings
that would have totaled nearly $400 million.
Now, r 6 additional life sciences companies
are lining up to go public this in late July. If
all are successful, they’ll bring in nearly $300
million, getting the third quarter out to a
promising start.
MERGERS AND ACQUISITIONS
Already this year we see one trend continu-
ing, specialty pharmaceuticals and generics
companies will be buyers as a way to bolster
pipeline with more branded components.
Already in 2014 we have seen Actavis is
extending its deal spree when it agreed to
buy Forest Laboratories for about $25 bil-
lion. Given its management troubles and
the second-lowest valuation among the 11
major global generics makers there is much
speculation that Teva Pharmaceuticals will
be taken over during 2014.
Drug companies have actively pursued
acquisitions and lower tax rates in recent
years. Now AbbVie appears to be near a deal
for Shire ($SHPG) that would trim its effec-
tive tax rate to 13% from about 22%, and
medical device giant Medtronic has signed
up to acquire Irish rival Covidien in search
of similar savings.
Seth Yakatan recently joined Invion, Ltd. as Vice
President of Business Development. Seth brings
more than 24 years of experience as a life sciences
business development and corporate finance pro-
fessional, actively supporting small cap and major
companies in achieving corporate, financing and
asset monetization objectives through the successful
structuring and management of strategic transac-
tions and investments totaling more than several
billion dollars in value.
Prior to Invion, over the past fiteen years as a co-
founder of Katan Associates, Seth has successfully
structured and managed strategic alliances and deals,
based on his insight and expertise in the US and
Global Life Science sector, including numerous buy-
and sell-side M&A transactions.
Seth has authored several publications and lec-
tured and guest lectured at corporate workshop
and universities on valuation theory and real-world
practice and case studies, and consulted to several
state and provincial governments worldwide on com-
mercialization and capital access initiatives.
Seth holds an MBA in Finance from the University
of California, Irvine and a BA in History and Public
Affairs from the University of Denver.
Seth enjoys being a Dad to his two children, par-
ticipating in triathlons and cycling. n
Partnering activities continued win the biotechnol-
ogy area during 2013 as pharmaceutical companies
continued to externalize their research operations,
gain product pieline, and offset patent losses.
70 MicroCap Review Magazine
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PortTech
Although the economic, environmental
and sustainability benefits of clean technolo-
gies are accepted and appreciated; key suc-
cess factors necessary to commercialize these
technologies are not as well understood.
Clean tech entrepreneurs must overcome a
unique set of challenges and constraints in
order to develop a marketable physical prod-
uct and viable business.
The difficulties and length of time to
adopt new technologies in legacy infrastruc-
ture and traditional markets is a long, com-
plicated process due to extended sale cycles
and a preference for incremental changes
instead of true innovation. Entrepreneurs
also do business with industries that often
require large-scale infrastructure upgrades
while meeting strict regulatory demands.
These market challenges are compounded by
the fact that engineer founders are focused
more on product and technology and not
enough on business models, customer devel-
opment and understanding their potential
markets. They lack the institutional knowl-
edge an existing company already has about
the marketplace.
Within the current investing environment,
FEATURED ARTICLE
A Market-Centric Approach To Clean Tech Innovation
businesses with clean tech products are not
as attractive as businesses with pharmaceuti-
cal and information technologies. The busi-
ness models, rapid scaling potential, effects
of low marginal costs, revenue trajectories,
capital efficiency and risk profiles of biotech
and IT industry sectors are understood.
Investing in clean tech is relatively young
with approximately 85% made in the last
eight years.
In 2013 almost $30 billion of venture
capital was invested in approximately 4,000
deals. A little over $7 billion of that was in
internet specific deals according to the PwC
Shaking the MoneyTree Report. For the last
decade, venture capital investors have put
almost 25% of their capital into software and
slightly more than 17% into biotechnology.
Clean technology entrepreneurs are in the
business of building things. Actual products
require raw materials, mechanical draw-
ing packages, make/buy decisions, parts
lists, testing, bills of materials and access
to manufacturing facilities that are limited
and potentially expensive. In the best cases,
the first prototype is good enough to test.
In many cases, flaws in design or lack of an
A
ccording to the Cleantech Group of San Francisco: “Clean technology
represents a diverse range of products and services and processes, all
intended to provide superior performance at lower costs, while reducing or
eliminating negative ecological impacts, and at the same time improving the
productive and responsible use of natural resources.”
n BY JOHN DMOHOWSKI
MicroCap Review Magazine 71
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engineered part or difficulty manufactur-
ing the product or part as designed cause
a return to the lab and drafting table. A
prototype needs to be produced for proof
of concept and often causes a return to pre-
prototype state to be redesigned and tested
again. A significant milestone is reached
when a startup is ready to produce the first
products for pilot projects.
Even when designs are solid and proto-
types provide the anticipated results, there
is no guarantee of startup success. Clean
technology entrepreneurs invariably find
themselves needing the last and most crucial
element – an additional influx of funding
after developing a successful pilot process.
Access to capital through traditional means
isn’t readily available. As clean technology
entrepreneurs take on thousands of dol-
lars in debt to reach marketability, attract-
ing angel investors and venture capitalists
becomes problematic as the path to profit-
ability extends further into the future. At
this point entrepreneurs have exhausted all
of their resources.
THE VALLEY OF DEATH, OSAWA
AND MIYAZAKI, 2006
This prolonged stage from proof of concept
to production and market acceptance is
commonly referred to as the Valley of Death.
While the progression of events from design
to marketability is arduous, it’s crucial to
creating a clean technology with product-
market fit. Clean technology entrepreneurs
take on great financial burdens and must
overcome investor hesitation to bring tech-
nologies to market. That’s where PortTech
Los Angeles steps in to help.
PORTTECH’S COMPETITIVE
ADVANTAGE
PortTech is a commercialization center and
incubation program dedicated to creating
sustainable technologies that enable ports
and maritime-related businesses to meet
their environmental, energy, security and
transportation goals. Our non-profit orga-
nization brings together entrepreneurs, stra-
tegic partners and investors to accelerate
innovation, advance clean technologies and
create economic opportunities.
PortTech provides standard incubator
services including management guidance,
technical assistance and consulting tailored
to emerging-growth companies. PortTech
also gives clients access to appropriate rental
space and flexible leases, shared basic busi-
ness services and equipment, technology
support services and assistance in obtaining
the financing necessary for company growth.
After five years, businesses that were nur-
tured in a business incubator have a sur-
vival rate of 87% compared to a 44% sur-
vival rate for start-ups without incubator
support. Furthermore, 84% of companies
that graduate from an incubator stay in the
communities where they were incubated.
— National Business Incubator Association
estimates
However, PortTech goes beyond tradition-
al incubator services to address the Valley of
Death clean technology entrepreneurs face,
which starts with connecting entrepreneurs
to the marketplace and potential customers
during early stages of development. Instead
of going through ideation and research in
isolation, PortTech clients have access to
port representatives, maritime executives,
industry experts, academics and government
leaders through trainings, events and one-
on-one meetings.
PortTech hosts workshops on Small
Business Innovation Research and Small
Business Technology Transfer (SBIR/STTR)
PortTech is a commercialization center and incu-
bation program dedicated to creating sustainable
technologies that enable ports and maritime-related
businesses to meet their environmental, energy,
security and transportation goals.
72 MicroCap Review Magazine
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grants that feature government representa-
tives who share insider knowledge on how
to navigate the federal application process.
Bi-monthly forums bring entrepreneurs in
direct contact and conversation with service
providers, port representatives and investors
to discuss technology advancements, busi-
ness opportunities and needs in the mari-
time markets.
Entrepreneurs showcase their clean tech-
nologies each year during the PortTechEXPO,
an event that draws more than 600 people
to explore emerging technologies and net-
work with business prospects at Southern
California’s ports. In conjunction with the
EXPO, PortTech holds an Entrepreneur
Pitch Competition. Participants receive free
coaching from a panel of judges that includes
investors, business consultants and represen-
tatives from both the Port of Los Angeles and
the Port of Long Beach. Past finalists have
received greater exposure for their products,
won California Energy Commission grants
and developed business relationships that
led to new opportunities.
In addition, PortTech provides entrepre-
neurs with access to experts at some of the
world’s great research universities, including
the University of Southern California, the
University of California Los Angeles and the
California Institute of Technology. PortTech
works closely with the Port of Los Angeles’
and Port of Long Beach’s Technology
Advancement Program, which is tasked with
the responsibility of evaluating and helping
fund technologies that support the Ports’
Clean Air and Clean Truck Action Plans.
PortTech serves as a conduit between the
ports and maritime industries helping entre-
preneurs become a part of a much greater
and interconnected business ecosystem.
Many PortTech clients are at the proto-
typing phase of development, an expensive
time-consuming process with limited access
to manufacturing facilities. To accelerate the
rate at which the market accepts new clean
technologies—and thereby accelerate eco-
nomic development and job growth—this
year PortTech expects to launch a collabora-
tive manufacturing and rapid prototyping
facility adjacent to the Port of Los Angeles to
support entrepreneurs as they move toward
product commercialization.
According to a study by the University of
Michigan, incubator services designed to
assist clients with production processes were
statistically significant as related to 14 mea-
sures of improved client performance. At the
top of this list are manufacturing assistance
and access to specialized equipment.
The prototyping and manufacturing cen-
ter will reduce the amount of time and
money it takes for clients to transition from
prototyping to pilot projects where they
gain crucial market validation and receive
feedback and acquire onsite sales. This will
in turn allow entrepreneurs to reduce debt,
de-risk product development and help them
traverse the Valley of Death.
By 2020, PortTech plans to be the nexus
of a thriving technology and advanced man-
ufacturing-based business cluster focused
on addressing the global challenges and
opportunities of Port and maritime-related
industries worldwide while providing an
economic development engine in the Los
Angeles region surrounding the Port com-
plex of Los Angeles and Long Beach.
PortTech’s secret sauce is a set of tailored
practices, partnerships, events and connec-
tions to investors, customers and industry
leaders with a vested interest in clean tech
startup success. These methods, relation-
ships and activities enable PortTech clients
to accelerate product development, product
launch and market acceptance in maritime
oriented enterprises—as difficult a market
space as most startups will encounter. It is
driven by the recognition that these types of
startups need to generate revenue as soon as
practical and do so as effectively as possible.
It is by design that entrepreneurs and com-
panies graduating from PortTech emerge on
the upslope of the Valley of Death intact,
generating revenue and growing smartly.
John Dmohowski is a serial entrepreneur, early
stage executive, leader, designer, developer and start-
up guru in technology-based businesses. He has
over 20+ years of founding, developing and man-
aging technology-based enterprises. His expertise
in founding and consulting extends from concept
through fundraising to launch for a dozen start-up
organizations and advisor to dozens of start-ups and
emerging growth companies. Through these compa-
nies, he has raised $40M+ in institutional investment
and participated in two liquidity events. He currently
sits on the Board of Directors of the Los Angeles
Venture Association (LAVA). Among his many asso-
ciations, John co-chairs the Green LAVA special
interest group. n
Entrepreneurs showcase their clean technologies
each year during the PortTechEXPO, an event that
draws more than 600 people to explore emerging
technologies and network with business prospects at
Southern California’s ports.
• Access capital
• Refne your business strategy
• Find a business location
• Grow your workforce
• Promote your business
• Develop partnerships
• Expand your network
RESOURCES TO HELP YOU
www.Bio.Maryland.gov
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Baltimore, MD 21202
410.767.0505
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301.762.9214
BioMaryland Center
F
our decades of history
— throughout some of
the most turbulent and
uncertain times in investing —
have demonstrated that there
is no better place to find
strategies and recommenda-
tions than the legendary
New Orleans Investment
Conference.
But this year’s blockbuster 40th Anniversary
event will be one of the most exciting in the
long history of the New Orleans Conference.
First off, the star-studded roster this year includes Dr.
Alan Greenspan, Porter Stansberry, Dr. Charles
Krauthammer, Dr. Marc Faber, Peter Schiff, Doug
Casey, Rick Rule, Robert Prechter...
...Mark Skousen, Louis James, Marin Katusa,
Adrian Day, Eric Coffin, Lawrence Roulston, Brent
Cook, Mary Anne and Pamela Aden, Nick Hodge and
more.
But the excitement doesn’t end there...
Greenspan vs Stansberry vs Faber:
The Truth Comes Out!
Attendees this year will witness some of the most ex-
hilarating and enlightening events we’ve ever hosted.
Including...
• An historic panel featuring the “Maestro” himself,
Alan Greenspan, facing off with Porter Stansberry
and Marc Faber in a lively question-and-answer ses-
sion designed to rip away the curtain hiding the Fed’s
involvement in gold, equi-
ties and the economy...
• A scintillating debate pit-
ting Charles Krautham-
mer (conservative) against
Doug Casey (libertarian)
and our liberal Mystery
Speaker in an intellectual
fire-fight that they’ll be
talking about for years.
A Quadruple-Your-Money
Ironclad Guarantee
This powerful roster of speakers is one reason why
the New Orleans Conference can offer an unprecedented
money-back guarantee:
We will refund your entire registration fee if you
find the Conference doesn’t provide profits more than
quadruple your cost to attend over the first six months
following the event.
No risk, and huge potential rewards — just the kind
of investment you need in today’s uncertain times.
But time is very short if you want to attend New Or-
leans 2014. If you want to be a part of this year’s block-
buster event, you simply must act immediately by visiting
www.neworleansconference.comor by calling toll free at
800-648-8411 to register.
LIMITED SPACE AVAILABLE:
Call Toll Free 800-648-8411
or visit www.neworleansconference.com
to secure your place now
2014 NOIC Full Page Ad.qxp_Layout 1 7/3/14 1:25 PM Page 1
MicroCap Review Magazine 75
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Semi-Annual adds & subtracts of FINRA Members
Jul 2014, as of 30 June compiled by DAVID ALSUP
Financial Industry Broker Dealer data Aggregator

2014 Jan-June: 84 New Formations... and 119 Withdrawals.
2013 Jan-June Stats 58 New formations… and 125 Withdrawals
(The three-year average is 10.6↑ New Formations and 22.3↓ Closures per month.)

84 New Firms were admitted. (Jan-June)
 24 Firms admitted will trade equities
 46 firms admitted were Private Placement firms
 9 firms admitted were classified as “Other”
 5 were Mutual Fund firms



119 Firms Withdrew (Jan-June)
 65 were equities trading firms.
 28 were Private Placement firms
 19 firms were classified as "Other"
 9 were Mutual Fund/MF Sponsor firms
 62 firms had less than TEN reps
 13 firms were involved in a CONSOLIDATION

Monthly chart showing the number & types of firms admitted.













Monthly BDW Chart showing the number & types of firms that are closing.











As of June 30, 2014, there are 4187 FINRA Member firm CRD Numbers. (Note: There are some bankrupt firms still
carried in CRD, such as Lehman Bros, & MF Global.)

The above data has been sourced from regulatory agencies publications' and statistics, along with some independent third parties. While it is believed to be
reliable there can be no guarantee of the accuracy of the data. The numbers have been cross-checked for accuracy, and they should be within plus/minus two
percent. For example, there may be as many as 8 firms NOT included in these statistics and NOT reported that filed for a BDW prior to June, 2014.

David Alsup A Detailed analysis (or Customized) is available by Subscription.
949-468-0111
david@fishbowlstrategies.com
F
our decades of history
— throughout some of
the most turbulent and
uncertain times in investing —
have demonstrated that there
is no better place to find
strategies and recommenda-
tions than the legendary
New Orleans Investment
Conference.
But this year’s blockbuster 40th Anniversary
event will be one of the most exciting in the
long history of the New Orleans Conference.
First off, the star-studded roster this year includes Dr.
Alan Greenspan, Porter Stansberry, Dr. Charles
Krauthammer, Dr. Marc Faber, Peter Schiff, Doug
Casey, Rick Rule, Robert Prechter...
...Mark Skousen, Louis James, Marin Katusa,
Adrian Day, Eric Coffin, Lawrence Roulston, Brent
Cook, Mary Anne and Pamela Aden, Nick Hodge and
more.
But the excitement doesn’t end there...
Greenspan vs Stansberry vs Faber:
The Truth Comes Out!
Attendees this year will witness some of the most ex-
hilarating and enlightening events we’ve ever hosted.
Including...
• An historic panel featuring the “Maestro” himself,
Alan Greenspan, facing off with Porter Stansberry
and Marc Faber in a lively question-and-answer ses-
sion designed to rip away the curtain hiding the Fed’s
involvement in gold, equi-
ties and the economy...
• A scintillating debate pit-
ting Charles Krautham-
mer (conservative) against
Doug Casey (libertarian)
and our liberal Mystery
Speaker in an intellectual
fire-fight that they’ll be
talking about for years.
A Quadruple-Your-Money
Ironclad Guarantee
This powerful roster of speakers is one reason why
the New Orleans Conference can offer an unprecedented
money-back guarantee:
We will refund your entire registration fee if you
find the Conference doesn’t provide profits more than
quadruple your cost to attend over the first six months
following the event.
No risk, and huge potential rewards — just the kind
of investment you need in today’s uncertain times.
But time is very short if you want to attend New Or-
leans 2014. If you want to be a part of this year’s block-
buster event, you simply must act immediately by visiting
www.neworleansconference.com or by calling toll free at
800-648-8411 to register.
LIMITED SPACE AVAILABLE:
Call Toll Free 800-648-8411
or visit www.neworleansconference.com
to secure your place now
2014 NOIC Full Page Ad.qxp_Layout 1 7/3/14 1:25 PM Page 1
76 MicroCap Review Magazine
www.stocknewsnow.com • www.snnwire.com • www.MicroCapReview.com
Capital Raise Red Flags –
The Top Four Financing
Scams on Securities Issuers
COMP L I ANCE CORNE R
general solicitation of the sale. Without any
prior published guidance to my knowledge,
the SEC took the position in litigation that
Minnesota’s blue sky provisions did not meet
the requirements of Rule 504. Therefore,
the issuer had issued stock in an illegal Rule
504 transaction in violation of the federal
registration requirements. Minnesota was
the last state to my knowledge that argu-
ably qualified for the Rule 504 free-trading
result. Issuers should beware promoters or
financiers promoting Rule 504 transactions
and claiming that free-trading stock can
be issued. Being on the wrong side of this
scenario can result in an enforcement action
against all participants in the transaction,
including the issuer and its management.
THE DEBT-CONVERSION.
The debt-conversion transaction is often
pitched to issuers by a financier who claims
to have purchased the Company’s corporate
Each financing scenario is legitimate in a
properly conducted transaction, but each
method is frequently misused at the expense
of the issuer. Fueling the deception on
company executives is the probability that
they have heard of these financing terms
or transactions and therefore assume their
propriety. However, finance promoters have
misused the legitimate techniques to trick
issuers into participating in illegal unregis-
tered stock distributions. In each scenario
stock issuers are duped into issuing pur-
n BY RUSSELL C. WEIGEL, III
C
ompany executives, do not let your desperation for oper-
ating cash blind you to these four typical financing scams
perpetrated by finance promoters: the Rule 504 offering, the
debt-conversion, the “backdoor offering,” and the Section 3(a)
(9) court-approved offering.
portedly “free-trading” stock, which often
enables the promoters to reap large returns
from dumping cheap stock but exposing the
issuers and distribution participants to SEC
enforcement actions.
THE RULE 504 OFFERING.
In December 2012, the SEC took the posi-
tion in litigation that “Minnesota” Rule 504
offerings conducted for the purpose of issu-
ing free trading stock are illegal in circum-
stances where the stock issuance transaction
is not registered in Minnesota. News of this
situation is not widely known. Rule 504 for
many years has provided that stock issued
in accordance with its requirements may be
free trading if it is registered in a state where
advertising and general solicitation of the
offering is permitted, or where the buyer’s
state does not require registration when the
stock is issued to an accredited investor in
a transaction that allows advertising and
MicroCap Review Magazine 77
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debt and now wants to exchange the debt for
free trading stock. Rule 144 permits a swap
of debt for equity provided that the original
security has been held for at least one year.
Trade debt, however, is not the investment
security envisioned by Rule 144. Thus, an
issuer that issues its stock in exchange for
trade debt can only issue restricted stock to
the trade debt-holder. Issuing unregistered
stock without a qualifying transactional
exemption from registration, of course, is
illegal. The debt-conversion transaction is
often coupled with a promise by the finan-
cier to loan the issuer some part of the pro-
ceeds from the ensuing sale of illegally issued
stock as additional inducement.
THE “BACKDOOR OFFERING.”
The backdoor offering is a transaction typi-
cally involving a promoter, an existing com-
pany shareholder, and a public company.
The shareholder is induced to sell his free
trading shares, usually directly through his
brokerage account, and remit the proceeds
to the promoter and the public compa-
ny in exchange for receipt of replacement
restricted shares. This backdoor offering is
deemed by the SEC to violate the spirit of the
registration requirement because the selling
shareholder acts as a conduit for the account
of the issuer and not for his own account. It
is therefore an illegal transaction that vio-
lates the registration requirement.
THE SECTION 3(A)(9) COURT-
APPROVED OFFERING.
Section 3(a)(9) of the Securities Act of 1933
classifies stock as exempt from registration
if it is issued in a transaction approved by
a court. Debt-conversion transactions in
which otherwise restricted stock are prop-
erly issued in exchange for trade debt are
frequently consummated with a proviso
that a court must approve the transaction.
The game here is to convert the restricted
stock immediately into free trading stock
and thereby avoiding the one-year hold-
ing requirement of Rule 144. The issuer is
required to sign court-documents which
may well be filed with a court for “settle-
ment-approval.” These transactions rarely
are properly conducted in accordance with
applicable SEC guidelines, although courts
may well authorize the transactions. Even if
a court approves the transaction, an improp-
erly conducted transaction may still subject
the issuer to the risk of an enforcement
action for unregistered stock sales.
Each of these four scenarios is real. Before
engaging in an unsolicited financing trans-
action, no matter how badly your company
needs working capital, consult competent
securities counsel before leaping at a financ-
ing offer. The cost of a legal review is far
less than the cost of hiring defense counsel
to fight SEC charges, and fighting unregis-
tered stock sale charges brought by the SEC
are difficult or impossible to defend. Just be
smart.
Doing business as InvestmentAttorneys, the law firm
of Russell C. Weigel, III, P.A. practices corporation and
securities law nationwide and specializes in taking
companies public, helping public companies prepare
SEC filings and stay compliant with federal and state
securities laws, preparing transaction and disclosure
documents for Rule 506 offerings, and defending issu-
ers and other securities industry participants from SEC
and FINRA enforcement actions and from customer
arbitrations.
Russell C. Weigel, III, was a branch chief and
special counsel at the U.S. Securities and Exchange
Commission and served during the years 1990-2001. n
Each of these four scenarios is real. Before engag-
ing in an unsolicited financing transaction, no mat-
ter how badly your company needs working capital,
consult competent securities counsel before leaping
at a financing offer.
StockWord Puzzle
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exploration and production basins in North America. Miller's
focus is in Cook Inlet, Alaska and in the heart of Tennessee's
Appalachian Basin including the Mississippian Lime and
Chattanooga Shale. Miller is headquartered in Knoxville,
Tennessee with ofces in Anchorage, Alaska and Huntsville,
Tennessee.
www.millerenergyresources.com
Torchlight Energy Resources
NASDAQ: TRCH
Torchlight Energy Resources, based in Plano, Texas, is a high
growth oil and gas Exploration and Production (E&P)
company with a primary focus on acquisition and
development of highly proftable domestic oil felds. The
company currently holds interests in Texas, Kansas and
Oklahoma where their targets are established plays such as
the Eagle Ford Shale, Mississippi Limestone and Hunton
Limestone trends.
www.torchlightenergy.com
Arabella Exploration
OTCQB: AXPLF
Arabella Exploration is an independent oil and natural gas
company focused on the acquisition, development and
exploration of unconventional, long life, onshore oil and
natural gas reserves in the Southern Delaware Basin in West
Texas. The Company has an experienced management team
with experience drilling multi-lateral wells and is primarily
focused on the formations that the industry refers to as the
Wolfbone play, which includes the Wolfcamp and Bone
Spring shales.
www.arabellaexploration.com
Cardinal Energy Group
OTCQB: CEGX
Cardinal Energy Group is a U.S. producer of oil and natural
gas within the United States. Cardinal focuses on known
formations that have signifcant proven reserves remaining
that can be produced economically. Cardinal targets felds
with wells that may need remediation due to neglect or
undercapitalization. The Company is based in Dublin, Ohio.
www.cegx.us
Arabella
E X P L O R A T I O N
80 MicroCap Review Magazine
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Waking Up to the
Coffee Market
COMMODI TY CORNE R
In some less developed countries, coffee
exports may account for more than 50% of
the country’s foreign exchange earnings. In
some coffee producing countries, the prod-
uct is considered second in value only to
crude oil as a source for foreign exchange.
2
A few historical notes; the Boston Tea Party
Coffee also known as Coffea, is one of the
largest commodity markets in the world, but
what do we really know about it?
It is believed coffee plants originated in
the Ethiopian province of Kaffa. By the 15
th
century, via the port of Mocha, coffee was
cultivated in Yemen. By the late 1600’s cof-
fee was discovered by consumers around the
world with the Dutch often given credit for
introducing the product to various coun-
tries. By the 1830’s Brazil became the larg-
est producer of coffee. By the early 1900’s
Colombia became a global producer. The
opening of the Panama Canal was influential
to Colombia’s exporting.
According to the Commodity Research
Bureau Yearbook, Puerto Rico and Hawaii
are the only two areas of the U.S. for sizeable
coffee production. It is a slow production
cycle as the coffee plant will not produce the
W
e drink it every day; we love the flavor in various foods
and beverages, we use it to wake up in the morning
and we “grab” a cup for meetings.
n BY MARK SHORE
first full coffee bean crop until it is five-years
old. After 15 or 20 years the plant loses pro-
ductivity. In an average year, a coffee plant
produces enough beans to make an estimat-
ed 1 ½ pounds of roasted coffee. Interesting
to note, wine was the first known drink
made from coffee cherries, honey and water.
1
Chart 1: NY Coffee (KC) monthly nearest futures contract basis May 2014 from February
1989 to February 2014.
Source: www.barchart.com
MicroCap Review Magazine 81
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was planned in a coffeehouse, the NYSE,
the Bank of New York and London Stock
Exchange began in coffeehouses.
In 1882 coffee futures began trading on
the New York Cocoa Exchange. Later part of
the New York Board of Trade and acquired
by the Intercontinental Exchange (ICE) in
2007. Arabica coffee futures are traded in NY
and at the Brazilian BM&F Bovespa. Robusta
contracts are traded at the NYSE-LIFFE
London exchange. Spreading strategies of
the contracts are common between these
exchanges.
3
Chart 1, contains the monthly nearest
futures prices over the last 25 years of New
York Arabica coffee. As noted, the volume
and open interest continues to increase,
especially since 2002. Coffee, similar to other
commodity markets is a mean-reverting
market. It tends to rally to quick spikes of
high prices and then gradually falls back to
an average or equilibrium price. 2014 started
the year with a rally. As of February 13, 2014
Coffee is up 26.2% in 2014.
4
According to the International Coffee
Organization
5
, Coffee is part of the Rubiaceae
botanical family. Arabica coffee (about 60%
of world production) and Robusta coffee,
economically are the two most important
of at least 25 known species of coffee. Lesser
known and grown on a smaller scale are
Libercia coffee and Excelsa coffee. Coffee
plants cover the spectrum from small shrubs
to large trees. The leaves tend to be dark
green, yellowish, bronze or with some pur-
ple.
After viewing Table 1, you may ask your-
self, I hear the terms Arabica and Robusta all
the time, and drink it often, but what is the
difference? Arabica and Robusta were first
described about 1753 and 1895 respectively.
Robusta plants tend to be more resistant to
Table 1: Lists the top 10 countries of coffee production 2010—2011 crop year, ranked by thousands of bags. One bag weighs 60 kilograms
(132 pounds).
Total Beans Arabica Beans Robusta Beans
Brazil 54,500 Brazil 41,800 Vietnam 18,150
Vietnam 18,725 Colombia 9,500 Brazil 12,700
Colombia 9,500 Ethiopia 4,400 Indonesia 7,950
Indonesia 9,325 Honduras 4,000 India 3,600
India 5,100 Peru 4,000 Cote d’Ivoire 2,100
Ethiopia 4,400 Guatemala 3,900 Uganda 1,900
Honduras 4,000 Mexico 3,500 Malaysia 1,000
Peru 4,000 Nicaragua 2,000 Thailand 900
Guatemala 3,910 El Salvador 1,700 Cameroon 525
Mexico 3,700 Costa Rica 1,575 Togo 525
Total 117,160 Total 76,375 Total 49,350
Source: Bloomberg News http://www.bloomberg.com/news/2011-08-19/world-s-top-10-coffee-producing-countries-in-2010-2011-table-.html and USDA
Table 2: Lists the differences between Arabica coffee and Robusta coffee
Arabica Robusta
Time from flower to ripe cherry 9 months 10 to 11 months
Flowering After rain irregular
Yield (kg beans/ha) 1,500-3000 2,300 to 4,000
Root System Deep Shallow
Optimum temperature (yearly average) 15-24° C 24-30° C
Optimal rainfall 1,500 to 2,000 mm 2,000 to 3,000 mm
Optimum altitude 1,000 to 2,000 m 0 to 700 m
Caffeine content per bean 0.8% to 1.4% 1.7% to 4.0%
Shape of bean flat oval
Brew characteristics Acidity Bitterness, full
Body Average 1.2% Average 2.0%
Source: http://www.ico.org/botanical.asp
82 MicroCap Review Magazine
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disease than Arabica.
The Arabica coffee plant tends to be a
large-sized bush with dark green oval leaves
and oval fruit. The flat seeds inside the fruit
are the coffee beans. The plants are com-
monly grown in Latin America, Central
and East Africa, India and to a lesser degree
in Indonesia. The Robusta plant may be
either a shrub or a small tree. The fruits are
rounded and the seeds are oval. Robusta
is commonly grown in West and Central
Africa, South-East Asia and to a lesser degree
in Brazil.
As noted in Table 3, the largest consumers
of coffee tend to be the largest importers.
They will import about as much as they
consume each year. Any negative supply
shocks will likely influence an upward price
movement. Many commercial distributors
of coffee, such as retail stores tend to hedge
in the futures or forward markets to reduce
commodity price risk.
Chart 2 demonstrates both coffee produc-
tion and exporting is growing over the last
three decades, especially in the last 10 to
15 years. As long as consuming countries
are importing similar numbers as they are
consuming, it causes constant pressure for
exports to be maintained and for commer-
cial end-users or distributors to hedge their
commodity price risk.
The next time you sit down for a cup of
coffee, or “java” or “joe” with some friends,
you can discuss how this simple drink is such
a meaningful commodity both in history
and to several producing countries.
(Endnotes)
1 http://www.barchart.com/commodityfutures/
Robusta_Coffee_10-T_Futures/profile/RM*1
2 h t t p : / / w w w. i c o . o r g / c o f f e e _ s t o r y .
asp?section=About_Coffee
3 https://www.theice.com/publicdocs/ICE_Coffee_
Brochure.pdf
4 www.signalfinancialgroup.com
5 http://www.ico.org/botanical.asp
Copyright ©2014 Mark Shore. Contact the author
for permission for republication at info@shore-
capmgmt.com Mark Shore has more than 25 years
of experience in the futures markets and managed
futures, publishes research, consults on alternative
investments and conducts educational workshops.
His research is found at www.shorecapmgmt.com
Mr. Shore is also an Adjunct Professor at DePaul
University’s Kellstadt Graduate School of Business
where he teaches a graduate level managed futures/
global macro course. He is a board member of DePaul
University’s Arditti Center for Risk Management and
a frequent speaker at alternative investment events.
He is a contributing writer for the Eurex Exchange,
CBOE Futures Exchange, Reuters HedgeWorld,
Yahoo.com, Examiner.com and Micro-Cap Review.
Prior to founding Shore Capital, Mr. Shore was
Head of Risk for Octane Research Inc ($1.1 bil-
lion AUM) in NYC, where he was responsible for
quantitative risk management analysis and due
diligence of Fund of Funds. He chaired the Risk
Management Committee and was a voting member
of the Investment Committee.
Prior to joining Octane, he was the Chief
Operating Officer of VK Capital Inc, a wholly owned
Commodity Trading Advisor unit ($250 million
AUM) of Morgan Stanley. Mr. Shore provided
research and risk management expertise on port-
folio construction, product development and busi-
ness strategy. Mr. Shore graduated from DePaul
University with a degree in Finance. He received his
MBA from the University of Chicago.
Past performance is not necessarily indicative of
future results. There is risk of loss when investing
in futures and options. Futures can be a volatile and
risky investment; only use appropriate risk capital;
this investment is not for everyone. The opinions
expressed are solely those of the author and are only
for educational purposes. Please talk to your financial
advisor before making any investment decisions. n
Table 3: Top 7 countries and regions of coffee consumption and import in the 2012/13 crop
year
2012/13 Yea Crop Yearr Consumption Import
European Union 43,805 European Union 44,890
United States 23,447 United States 23,360
Brazil 20,615 Japan 7,460
Japan 7,450 Switzerland 2,340
Philippines 4,275 Canada 2,330
Russia 4,070 Russia 2,025
Canada 3,555 Algeria 1,900
Source: USDA http://apps.fas.usda.gov/psdonline/psdHome.aspx
Chart 2: Coffee production and exports from 1979/80 to 2012/13 crop year per thousands
of bags
Source: USDA
@StockNewsNow
Robert Kraft : rkraft@stocknewsnow.com
youtube.com/SNNWire
StockNewsNow.com
The future is now.
The MicroCap World is Watching
84 MicroCap Review Magazine
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The crossroads for the economic growth of the U.S. is at a critical point. In order for
the cycle to stay on course, vigilance is imperative. Regulatory agencies have sent mixed
signals to the market. Crowd funding is being presented as a solution to the troubled
equity raising dilemma of emerging growth companies. The Broker Dealer community
must abide by strict guidelines to advertise and market their services must pass exams
and constantly face regulatory scrutiny which requires recurrent training to maintain
their licenses. What training is required for someone to put up a site and offer a service
to the potential client that wants to raise funds through crowd funding?
I have recently attended a few seminars that offer services to the executives trying to
raise capital. The “expert” presenters were not licensed, some provided tax advice, some
gave legal advice, some simply ask for money for the company to list on a website that
would be set up for them. The concept that initial funds must come from families and
friends was presented in a meeting in recent weeks by a company attempting to sell
their services as a provider for crowd funding was very interesting to me. When does a
solicitation to raise money require a license and when does it require some credential
verification of the parties offering these services? Who will come to the aid of an inves-
tor or the company paying for these services if the service provider misrepresents the
company? What about verification of the company information? Who is setting up
Due Diligence? Who is checking for any bad actors raising money? A number of states
are regulating after the fact. Some states have proposed a limit of $5,000 per year, per
person, to invest in a company which is in their state and only through a portal using an
escrow account at a bank. To me this seems reasonable unless the investor has borrowed
money from their credit cards then all bets are off. This brings up the FINRA suitability
requirements which apparently do not apply to crowd funding, service providers, or
investors in crowd funding entities. In large part required Disclaimers are also missing
in most power points I observed.
Crowd funding opportunities may exist for the Broker Dealer community. As
licensed participants they could and should offer consulting services to potential clients
and set parameters for existing clients when they want to invest through crowd funding
and specifically they must be available to answer questions that apply to your state only.
For FINRA members, many services they provide would potentially lead to finding
new clients and give them further a reason to call their existing clients. My advice is to
be proactive or someone else will. These crossroads can be a stepping stone to industry
changes in the current environment and help grow profitability for the Broker Dealer
enterprise. Change is inevitable, so embrace it and follow the course in a new direction
which could be successful. Lastly, use a creative approach to find good transactions for
your accredited investors and make yourself visible in this environment. n
Ombudsman
V I E W P O I N T S
T
he crossroads
for the
economic growth
of the U.S. is at a
critical point.
n BY JACK LESLIE
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MicroCap Review Magazine 87
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F E ATURE D ARTI CL E
One of the basic principles of the federal
securities laws, is full and fair disclosure by
issuers subject to the reporting requirements
of the Securities and Exchange Act of 1934
as amended, (the “1934 Act”), when involv-
ing sales of its securities and/or “material”
events. For many years after the adoption of
the Securities Act of 1933, as amended (the
“1933 Act”), and the 1934 Act, SEC rules
and regulations regarding public disclosures
were easily adhered to by public companies.
The standard process for disclosing material
events was that the issuer would issue a press
release on a major news wire while simulta-
neously filing a Current Report on Form 8-K
(an “8-K”) and either attach the press release
as an exhibit to the 8-K or disclose the infor-
mation within the body of the 8-K.
In 2000, the SEC adopted Regulation FD
which generally provides that public com-
panies disseminate material information to
the public in a manner such that all inves-
tors have equal access to such informa-
tion at the same time. The SEC, through
n BY LAWRENCE G. NUSBAUM
The SEC, to its much deserved credit, has
not only recognized the changing landscape,
but also adopted releases and amendments
to its rules and regulations and published
guidance to assist practitioners and public
companies in keeping up with the ever
evolving and rapidly changing electronic
communication technology.
The SEC’s rules and regulations regarding
how public companies file required periodic
reports and disclose required information
to the investing public have been particular
areas where the SEC has recognized the need
for integration of new technologies to meet
the needs of public issuers and the investing
public in the 21
st
century. Advancements in
technology have also dramatically altered
certain areas of the securities industry,
including providing public companies with
alternative disclosure methods of dissemi-
nating required disclosure to the investing
public. As a result questions over less tradi-
tional means of public company disclosure
have arisen.
A Primer on Public Company
Disclosure Through Social
Media Websites
The Do’s and Don’ts for Compliance with Rule FD
A
s technology evolved and electronic communication became standard,
issuers were presented with alternative means of communication and
disclosure. The Securities and Exchange Commission (the “SEC”) realized
the need to integrate new technologies into its rules and regulations regard-
ing filing of SEC reports and disclosure in order to promote efficient and
transparent capital markets.
88 MicroCap Review Magazine
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regulation FD, sought to eliminate selective
disclosure, a situation where certain inves-
tors received material information about a
public issuer before other investors. A public
issuer, when a material event occurs, must
publicly disclose all such material informa-
tion in a manner reasonably designated, in
a non-exclusive methodology, to provide all
investors concurrent access to the material
information.
1
Publicly disclosing material
information ensures an equal and equitable
marketplace for all investors looking to pur-
chase and/or sell securities of an issuer.
In 1993 the SEC mandated the electronic
filing of certain required reports and other
documents through EDGAR with the adop-
tion of Regulation S-T.
2
In June 2003, the
SEC took the electronic filing mandate one
step further by requiring Forms 3, 4 and 5 be
filed on EDGAR. In Release No. 33-8230 the
SEC explained their rationale: “Mandated
electronic filing benefits members of the
investing public and the financial commu-
nity by making information contained in
Commission [SEC] filings available to them
minutes after receipt by the Commission
[SEC].”
3
The release also mandated posting
of Forms 3, 4 and 5 by public issuers that
maintain a corporate website on their web-
site by the end of the business day following
the filing with the SEC. The SEC explained
in the release that “one objective of the
amendments is to encourage availability of
this information in a variety of locations, so
that it is broadly accessible.”
4

In January 2009, the SEC continued to
update filing standards as different tech-
nologies were introduced and /or improved
in furtherance of the SEC’s goal to promote
efficient and transparent capital markets.
1 Selective Disclosure and Insider Trading, S.E.C.
Release Nos. 33-7881, 34-43154, and IC- 24599,
73 S.E.C. Docket 3, 2000 WL 1201556, at *7 (Aug.
15, 2000)
2 Rulemaking for Edgar System, S.E.C. Release No.
33-6977, 1993 WL 57730 (Feb. 24, 1993) [58 FR
14628].
3 Mandated Electronic Filing and Web Site Posting
for Forms 3, 4 and 5, S.E.C. Release Nos. 33-8230,
34-47809, 35-27674, IC-26044; File No. S7-52-02,
68 FR 25788-01, at * 25789 (Tuesday, May 13,
2003).
4 Id., at p. 25789
The SEC adopted rules requiring public issu-
ers to post their financial statement informa-
tion to their websites and filed with the SEC
in XBRL (eXtensible Business Reporting
Language) format in order to improve the
usefulness of such information to investors.
5

Instead of treating financial information
as a block text, XBRL enables automated
processing of business information by com-
puter software. In this format, the informa-
tion contained in financial statements can
be downloaded directly into spreadsheets,
searched and analyzed in a variety of ways
using commercial off the shelf software,
and used within investment models in other
software formats.
6

Effective in August 2008, the SEC released
new interpretive guidance for public issuers
regarding disclosure on such issuers’ website
in accordance with federal securities laws.
The release provides guidance as to when
posting data or information on a company’s
website is ‘public’ for purposes of Regulation
FD. As companies began to disclose informa-
tion on their websites, the SEC apparently
determined that an unfair advantage could
be given to certain investors if such investors
knew where to look for material information
posted by a public issuer while other inves-
tors are unaware when or if such material
information was posted by the public issuer.
In the guidance release the SEC focuses on
the actions a company takes to inform inves-
tors that the company will post material
public information on its website, and the
manner in which the information is posted
in order to determine whether a compa-
5 Interactive Data to Improve Financial Reporting,
S.E.C. Release Nos. 33-9002, 34-59324, 39-2461;
2009 WL 223616, at *1 (Jan. 30, 2009). [74 FR
6776].
6 Id., at p.1
ny’s website posting satisfies Regulation FD.
The release explains that “…in evaluating
whether information is public… companies
must consider whether and when: (1) a
company web site is a recognized channel of
distribution, (2) posting of information on a
company web site disseminates the informa-
tion in a manner making it available to the
securities market place in general, and (3)
there has been a reasonable waiting period
for investors and the market to react to the
posted information.”
7

According to the SEC’s guidance release,
a company’s website will be considered a
recognized channel of distribution when
the company has made an effort/taken steps
to inform the market that it will use its
website to disclose public information. For
companies whose websites are known to
investors as locations of company’s informa-
tion, dissemination is determined by (1) the
manner in which the information is posted
on a company’s website and (2) the timely
and ready accessibility of such information
to investors and the markets.
8
For the first
two items, the release lists non-exclusive fac-
tors that companies should consider when
making a determination whether the website
is a recognized channel of distribution and
whether the information released on a com-
pany’s website is adequately disseminated.
The list includes factors such as whether the
company adequately markets its website as
a location for important information about
the company, how does the company regu-
larly disclose information about itself, and
whether the investor information disclosed
7 Commission Guidance on the Use of Company
Web Sites, S.E.C. Release No. 34-58288, 2008 WL
4068202, at *6 (Aug. 1, 2008).
8 Id., at p.6
Publicly disclosing material information ensures
an equal and equitable marketplace for all inves-
tors looking to purchase and/or sell securities of an
issuer.
MicroCap Review Magazine 89
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on the website is easy to find and use.
9
If the
first two elements are satisfied, the informa-
tion on the company website will be deemed
properly publicly disclosed once investors
are given a reasonable waiting period to
react to the information.
The 2008 release’s recognition of a com-
pany’s website as a possible location for
dissemination of material public informa-
tion led to questions as to how the SEC’s
2008 Guidance applies to disclosures made
through social media sites. With the rise of
social media sites like Facebook and Twitter,
companies increasingly used social media
to communicate with shareholders and the
market in general.
10

In 2013, the SEC tackled the issue of dis-
closure through social media in SEC Release
No. 69279. The release addressed the issue
of whether the posting of material informa-
tion on a public company or its executive’s
social media page constituted selective dis-
closure under Regulation FD. The issue was
triggered when the CEO of Netflix, Reed
Hastings, disclosed on his Facebook page
that Netflix’s monthly viewing exceeded one
billion hours for the first time in June 2012.
9 Id., at p.7
10 Report of Investigation Pursuant to Section 21(a)
of the Securities Exchange Act of 1934: Netflix,
Inc., and Reed Hastings, S.E.C. Release No. 34-
69279, 2013 WL 5138517, at *1 (Apr. 2, 2013).
The SEC indicated that this information
was material to investors as the amount of
time viewers spent streaming showed “wide-
spread adoption and usage of the service.”
11

Mr. Hastings had never disclosed company
metrics on his Facebook page before, and
Netflix had not previously taken steps to
inform the investing public that Hasting’s
Facebook page would be used to dissemi-
nate Netflix company information.
12
At the
time, Hastings’ had over 200,000 Facebook
followers, including securities professionals.
In the release, the SEC explains that issuer
communications made through social media
channels must be analyzed for compliance
in accordance with Regulation FD, thus the
Commission’s 2008 Guidance is as appli-
cable to social media channels of corporate
communication as it is to disclosure made
through the company’s website.
13

The 2008 and 2013 releases present public
companies with alternative disclosure medi-
ums in corporate websites and social media
platforms, yet public companies should not
risk violating Regulation FD by solely dis-
closing material public information on a
single alternative disclosure medium unless
11 Id., at p.3
12 Id., at p. 4
13 Id., at p.7
the Company has consistently informed the
investing public in its filings with the SEC
and in public releases that the Company
may, and reserves the right to, disclose mate-
rial information on specifically disclosed
websites and social media sites that are avail-
able and accessible to the investing public.
The SEC should be credited for proactively
integrating new technologies, such as social
media, to help ensure the promotion of
efficient and transparent capital markets but
it is essential for public companies to realize
that Regulation FD isn’t necessarily satisfied
by disclosing material public information
though alternative disclosure mediums.
Accordingly, while alternative means of
disclosure may present attractive and less
burdensome options for disclosure, public
dissemination of material information by
public companies seeking to avoid possible
regulatory issues in the 21
st
century should
strongly consider disclosing public infor-
mation through both alternative and stan-
dard disclosure methods in order to ensure
compliance with Regulation FD. Moreover,
in order to use such alternative disclosure
methods, public companies should consis-
tently and prominently disclose in their
SEC filings and press releases the specific
websites and /or social media sites where the
Company and/or its affiliates may disclose
material information about the Company
and ensure that the public is able to view
such material information on such sites with
equal access and at the same time.
Lawrence G. Nusbaum is a name partner of Gusrae
Kaplan Nusbaum PLLC and the Department Head
of the Firm’s Corporate/Securities practice. Mr.
Nusbaum is one of the leading corporate/securities
and transactional attorneys in the United States with
more than 25 years of experience representing public
and private, domestic and international entities, bro-
ker-dealers, investment banks, hedge funds, private
equity firms, high net worth individuals, registered
representatives, financial advisors, officers and direc-
tors, board of directors and special committees in a
wide range of corporate and securities matters. For
more information about Mr. Nusbaum or Gusrae
Kaplan Nusbaum PLLC please visit their website:
GusraeKaplan.com n
© 2013 Lowenstein Sandler LLP.
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92 MicroCap Review Magazine
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Silver in 2014
Setting the Stage for the Big Move
F E ATURE D ARTI CL E
CONFIDENCE – BACKBONE OF
THE CENTRAL BANKS’ PLAYBOOK
The Powers that Be absolutely need the public
to retain confidence in their pronouncements.
Whether it’s reporting on the unemployment
rate, housing starts, the inflation rate - or their
supposed gold holdings, “confidence” (belief/
trust) is everything. The Internet’s global
reach “force multiplier” has placed everything
governments say and do - or don’t do - under
a microscope. Discrepancies get out more
quickly than ever before. And it’s only going
to get worse – for them.
Don’t forget that the term “confidence”
contains the term “con” – in this case the
possibility of a “scam”, “confidence” or
“con game”. Are the increased levels of pre-
cious metals’ buying by the public due to
a decreasing amount of confidence in what
the authorities are saying? Could this be
connected to the spreading belief, that the
‘banksters’ are running a confidence game –
at the public’s expense?
n BY DAVID MORGAN
I have long stated that “the day of reckon-
ing” is when the physical market begins to
seize up– we’re not quite there yet, but the
signs are becoming more pronounced. Mark
my words, before the end of this year – 2014
- the crowd of disbelievers is going to be a lot
smaller than it is right now.
The disconnect started coming to peo-
ple’s attention last year when Germany’s
Central Bank requested the return of a
relatively small amount (about 300 tonnes)
of the reported 1,500 tonnes of gold the U.S.
Federal Reserve had supposedly been storing
for them for the last 50 years. The time frame
reported is seven years to return this gold.
Some imply Germany knew it would take
this long due to swap and lease agreements,
but others say—are you kidding?
Soon thereafter, Switzerland began con-
sidering whether or not its foreign-held gold
should be returned. Austria has asked for
an audit. Is this a “repatriation trend” in the
making?
I
have often discussed the concept of the “Paper Paradigm versus the
Physical Reality” of the precious metals. A sea change in the ongoing
disconnect between the price (and availability) of physical gold and silver in
relation to the increasingly theoretical “price discovery” of the paper mar-
kets – futures, leased gold, ‘hypothecated’ gold, etc. is currently underway.
MicroCap Review Magazine 93
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IN 2013 AND SO FAR IN 2014,
RECORD SALES OF AMERICAN
SILVER EAGLES
Last year, sales of American Silver Eagles, and
Canadian Gold and Silver Maple Leafs in the
West set annual records. Bears, long argu-
ing that precious metals are in a “bubble”
have a difficult time explaining why, if this
is so, people continue to buy more at a fast
clip even as prices decline. Though North
Americans as a group are scooping up record
numbers, it is unlikely that more than a
small percentage of us hold any precious
metals at all. Much of what little the average
person did have – in the form of jewelry - has
found its way into the hands of the “We Buy
Gold and Silver Here!” operators. However,
I believe the time is now approaching when
this outlook will change – dramatically.
INDIA MADE A PIVOT FROM
GOLD TO SILVER
Last year after India, in an effort to restore its
balance of payments and strengthen its cur-
rency, imposed a severe tax on gold imports,
silver imports went through the roof. In
the first 5 months, at least 2,400 tonnes –
equivalent to 10% of global silver produc-
tion, found its way onto India’s shores. (This
March, India’s custom’s department DGCIS,
reported that total silver imports for 2013
came to 6,125 tonnes - up 189% over the
previous year.) How many tea leaves like this
does a person have to read in order to get
the picture?
WHAT FULLY CONFIRMS THE
RETURN OF THE SECULAR BULL
MARKET TREND?
While signs abound that the lows for gold,
silver and many of the quality mining stocks
were printed in late June, 2013, there are still
caution flags flying which should temper
investors’ desire to bet the farm and go “all
in”. As this is being written, silver prices are
probing earlier lows around $18, and gold
is acting weak as well. Frankly I expected to
see more strength in this area, even though
early summer tends to be seasonally soft for
the metals.
It’s important to understand howev-
er that much of what is now going on
involves “chart painting” by the so-called
“Flash Boys” – High Frequency Traders using
computer-generated algorithms to move the
markets back and forth. One insidious tactic
is to submit a large series of small orders
staccato fashion, soaking up the bids and
hammering a stock lower. Another question-
able approach involves placing a large order
– which spooks other participants into sell-
ing – and then withdrawing that same order
before it’s actually filled.
As GATA’s Chris Powell has so famously
said on a number of occasions, “There are
no longer markets, only manipulations.” So
while charts are still important to watch,
they should be regarded as only one factor
in the decision-making process. Focus your
eyes on the bigger, longer-term picture. Keep
Spot Silver Weekly
94 MicroCap Review Magazine
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accumulating physical metal on a regular
basis. 3 billion people in Asia continue to
do so…
One still needs to be patient, because even
after the summer price support testing sea-
son finishes, a series of layers above current
gold and silver price levels need to be suc-
cessfully challenged and penetrated – I’d like
to see at least three days on a closing basis
above each one – in order to let us know
with some authority that we are correct in
our bigger picture analysis. The most crucial
“ceilings” to be taken out decisively are the
areas around $1,450 - $1,550 gold and $26
- $28 silver. How vigorously this is done will
determine when the so-called “golden cross”
of the 50 Day Moving Average rising above
the 200 Day MA – which many traders see
as proof of a major trend change – comes
about.
Above these levels are resistance layers -
spot silver charts show them up into $42.50),
where tired, old longs now underwater on
their positions, as well as new short sellers,
can be counted on to do some active trad-
ing. Then the price can move up the prover-
bial “wall of worry” as it attempts to surpass
$1900 gold and $48 - $50 silver. Thereafter,
on a thrust into new all-time nominal high
ground, I fully expect to see the public mania
we’ve all been anticipating, to begin shifting
into high gear.
DON’T WAIT FOR SOLUTIONS
OUTSIDE OF YOURSELF…
In one of my recent media interviews, I
stated the following:
We’re going to see more and more people
wake up to the reality, that regardless of what
spin-doctors in the mainstream financial press
say, things are not really better – there really
isn’t a recovery going on – so what’s the solu-
tion?
The solution starts with a change that you
can make on a personal basis. For most people,
this means acquiring hard assets that are
totally outside the banking system.
While there is still time – with the price,
premiums and availability of physical silver
at reasonable levels – empower yourself
by trading some of those “paper promises”
in your wallet for a nice stack of “physical
reality”. Hold in your hand “money”, which
can serve as both insurance and assurance
against the ravages of government-induced
inflation. If things really start coming
unglued, you’ll be able to spend a portion of
your stash, keeping your financial ship from
capsizing during the increasingly rough eco-
nomic waters building on the horizon.
We’ve witnessed a base-building/exten-
sion run in the better miners from the “sold-
out” levels prevailing as December closed the
year. Prices decline begrudgingly and bounce
back on the smallest excuse into a new
uptrend on good volume – supporting the
idea that accumulation by deep pocket play-
ers is taking place - just the kind of market
action we want to see.
Mining companies offer the opportunity
of substantial capital gains for sophisticated
investors. The leverage of these equities is
often two to three times that of the metals.
This means that a ten percent move up in
gold translates to a 30% move in a good
quality gold stock. At The Morgan Report we
divide our Asset Allocation table into Top
Tier, Mid Tier, and Speculations (small cap)
sections, in an effort to help you sort out
those choices.
While risk is highest with small cap com-
panies, rewards can be tremendous. Many
of our earlier picks in this sector went on
to become mines and the rewards for share-
holders were tenfold or greater. We have
had quite a number of successful picks, and
frankly a few companies that now cease to
exist. But if the balanced approach stated in
“How to use The Morgan Report” is followed,
our subscribers should find that the winners
more than make up for the losers!
Stop looking at things in the rear view
mirror and turn your eyes, thoughts and
behavior forward. Get some metal into your
possession. Research the mining sector in
selective segments like we do at The Morgan
Report. As we move deeper into 2014, my
strongly considered opinion is that you’re
going to be very happy you did.
David Morgan is a widely recognized analyst in the
precious metals industry and consults for hedge
funds, high net worth investors, mining companies,
depositories and bullion dealers. He is publisher
of The Morgan Report and is a featured speaker at
investment conferences in North America, Europe
and Asia. Go to www.TheMorganReport.com for
more information. n
No silver in this “Monster Box”
While there is still time – with the price, premiums
and availability of physical silver at reasonable lev-
els – empower yourself by trading some of those
“paper promises” in your wallet for a nice stack of
“physical reality”.