Celebrating Our 10 Year Anniversary

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The Official Magazine of the MicroCap Stock Market Since 2006

Fall 2016

Apivio Systems, Inc.
Page

TSX-V: APV
Rob Bakshi, CEO
www.apivio.com

16

Energy Fuels Inc.
Page

22

Delicious

IEG Holdings Corporation
Page

12

OTCQX: IEGH
Paul Mathieson, CEO
www.investmentevolution.com

NYSE MKT: UUUU / TSX: EFR
Stephen Antony, President and CEO
www.energyfuels.com

TapImmune Inc.
Facebook
Page

FEATURED ARTICLES

8

Slash Dot

Flickr

Twitter

MySpace

StumbleUpon

Mixx

Skype

Technorati

YouTube

LinkedIn

Google

Google Talk

30 MicroCap Guru Jim Collins
32 The Cyclical Nature of Investing in

43 Exciting News: All Investors Can Now Get

64 The Time to Buy the Miners, Gold,

50 XTI Aircraft Company - Reg A+

Reddit to Buy and SellFriendFeed
MicroCap Stocks
72 When

39 Adjusting to Public Company Life

Offering Circular

57 As a Millennial Investor, Why Should I

82 MicroCaps - First Mover Advantage

Resources Rick Rule

After Ringing the Bell Margaret Rosenfeld

40 Reg A+ “From Converting Reservations Into
www.stocknewsnow.com
Buy Orders
and Exit Strategies”
David Weild and Daniel Barfield

Into Select IPO’s Daniel Mulcahy

Have a Diversified MicroCap Portfolio?
Robert Kraft

Retweet

OTCQB: TPIV
Digg
Glynn Wilson, Ph.D., Chairman
and CEO
www.tapimmune.com

and Silver is Now! David Morgan

Sam Namiri

Maj Soueidan
Newsvine

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and Sister, Sammi Kane Kraft
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W

E D I T O R I A L

hen I look back on my Wall
Street career I realize I have
been in the microcap stock
market for over 35 years. Before I went to
Wall Street I cut my teeth starting and managing small businesses in both the industrial
sewing machine industry and the garment
center. My education, startup company experience and managing a Wall Street microcap
underwriter-market maker has given me a
macro perspective of the microcap market
and has put me in the perfect position to
publish the MicroCap Review magazine,
which we have now been publishing for 10
years.
Many investors like myself, for as long as I
can remember, struggled to find information
on low-priced emerging growth microcap
companies. Unfortunately, the majority of
microcaps are not covered by broker dealer
research analysts and professional newsletters focus on small cap or higher. MicroCap
Review helps fill this void.
The microcap market has evolved over the
past 10 years of our publishing. Since our
humble beginnings, there has been a ground
swell of interest in microcap stocks that has
grown into a tidal wave of individual and
institutional investor interest in microcap
companies today of record proportions. And
you, our subscribers and readers, who are
either high net worth accredited investors,
individual investors, self-directed investors,
fund managers, family offices, wealth managers, microcap fund managers, service providers, research analysts, newsletter writers,
lawyers, CPAs, and the growing cadre of
millennial and value investors are searching
for the next big winner.
The microcap market attracts investors for
many reasons, however, their intentions are

about the same: take greater risk to achieve
greater rewards. This is our world; we are
all part of the microcap investor community! Hooray for us! Many call the MicroCap
Review the “Forbes of MicroCaps”, others
have called it the microcap due diligence
portal; I just call it a labor of love.
In this 10th Anniversary issue, I thought
about significant events over the last ten
years as positive tipping points and catalysts
in the MicroCap Stock market. Three stand
out: The first is the full integration of OTC
Markets, which brought transparency to
near 10,000 MicroCap Stocks; the second is
Barack Obama signing The Jobs Act, which
includes Regulation A+, and the third is
the growth of MicroCap Conferences where
investors meet and mingle with C level execs,
other investors and the street.
But number One is definitely the Law…
Today Reg A+, AKA Mini IPOs, an outgrowth of the Jobs Act, how it is changing
the markets. It reminds me of the early days
of the mid 1980s to1990’s, when MicroCap
IPOs saw investors start to invest in risky
IPOs, many times quite successfully and
other times not so good, ultimately throwing money at IPOs in an all-out bull market
buying frenzy. The overheated IPO market
slowed to a crawl due to market conditions, which lead to the disappearance of
traditional market makers and underwriters,
as surviving underwriters focused on refinancing products, alternative and secondary
offerings.
Thanks to the JOBS Act, Reg A+ Mini
IPOs is a new beginning for the microcap market and a renaissance for emerging growth small business opportunities
available for all investors whether accredited or non-accredited, retail or institutional.

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 be construed to be provided herein. MicroCap Review Magazine and its owners, employees and affiliates are not, nor do any of them claim to be, registered broker-dealers or registered investment
advisors. This publication may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to,
any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services
or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking
statements of or concerning the companies mentioned herein are subject to numerous uncertainties and risk factors, including uncertainties and risk factors that may not be set forth herein, which could
cause actual results to differ materially from those stated herein. Accordingly, readers are cautioned not to place undue reliance on such forward-looking statements. This publication undertakes no obligation
to update any forward-looking statements that may be contained herein. MicroCap Review Magazine, its owners, employees, affiliates and their families may have investments in companies featured in this
publication, may purchase securities of companies featured in this publication and may sell securities of companies featured in this publication, at any time and from time to time. However, it is the general
policy of this publication that such persons will refrain from engaging in any pre-publication transactions in securities of companies featured in this publication until two trading days following the publication
date. This publication may contain company advertisements/advertorials indicated as such. Information about a company contained in an advertisement/advertorial has been furnished by the company, the
publisher has not made any independent investigation of the accuracy of any such information and no warranty of the accuracy of any such information is provided by this publication, its owners, employees
and affiliates. Pursuant to Section 17(b) of the Securities Act of 1933, as amended, in situations where the publisher has received consideration for the advertisement/advertorial of a company or security,
the amount and nature of such consideration will be disclosed in print. Readers should always conduct their own due diligence before making any investment decision regarding the companies and securities
mentioned in this publication. Investment in securities generally, and many of the companies and securities mentioned in this publication from time to time, are speculative and carry a high degree of risk.
The disclaimers set forth at http://www.microcapreview.com/disclaimer/ - disclaimer are incorporated herein by this reference.

MicroCap Review Magazine 10 Year Anniversary Issue

3

We are proud to be part of the microcap
community doing our part in the capital markets
to keep information flowing to our like-minded
audience.
MicroCap Review is dedicated to providing
coverage to this renewed investor interest in
microcaps and access to information about
the Reg A+ capital formation process. In
this issue, we have provided expert editorial
and educational articles about Reg A+, an
example of a Reg A+ issuer, XTI Aircraft,
an ad for a full service brokerage firm and

service providers all participating in the Reg
A + capital formation process.
This issue also contains 15 exciting microcap company profiles in various business
sectors. The four companies on this issue’s
front cover are: Apivio Systems,” technology”, IEG Holdings, dba “Mr. Amazing
Loans”, a “fintech company”, Energy Fuels,

a “uranium producer” and Tapimmune, an
“immune-oncology company”. The remaining profiled companies include: cannabis,
gold mining, biotech, pharma, consumer
products, medtech, radiation detection
equipment manufacturer and a healthcare
and technology innovation holding company. Profiled companies are listed on NYSE/
Amex, Nasdaq, OTC Markets, TSX, or the
TSX Venture.
We are proud to be part of the microcap
community doing our part in the capital
markets to keep information
flowing to our like-minded
audience. Thank you all for
your loyal support over the
last 10 years. n

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MicroCap Review Magazine 10 Year Anniversary Issue

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The Planet MicroCap Showcase brings together the best companies and the top dealmakers in
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in the nation’s #1 destination for meetings and entertainment.
Meet C level company executives, investors, finance professionals and industry leaders in the
MicroCap stock market for an unequaled experience in networking and dealmaking.
Presentations by selected pre-IPO and MicroCap company management.
Pre-arranged and spontaneous one-on-one meetings, with investors, management and professionals.
Daily networking opportunities over breakfast, lunch & cocktails and nightly networking receptions
and event-exclusive concierge services to facilitate private meetings and entertainment.
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MicroCap Review Magazine 10 Year Anniversary Issue

5

Your livelihood, empowered.
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Independent expertise provides assurance for life in the public eye.

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CONTENTS
STOCKNEWSNOW.COM
FALL 2016

F E AT U R E D A RT I C L E S
30 MicroCap Guru
By Jim Collins

46 Regulation A+, Engaging the Crowd – Testing the Waters
By Michael Colon

32 The Cyclical Nature of Investing in Resources
By Rick Rule

50 XTI Aircraft Company - Reg A+ Offering Circular

39 Adjusting to Public Company Life After Ringing the Bell
By Margaret Rosenfeld

57 As a Millennial Investor, Why Should I Have a
Diversified MicroCap Portfolio?
By Robert Kraft

40 Reg A+ “From Converting Reservations Into Buy
Orders and Exit Strategies”
By David Weild and Daniel Barfield

58 Coal will be 3rd Most Popular Source of Energy
in 2030
By Karl Douglas

42 So, What’s Wrong with Reg A+?
By Louis A. Bevilacqua, Esq.

64 The Time to Buy the Miners, Gold, and Silver is
Now!
By David Morgan

43 Exciting News: All Investors Can Now Get Into
Select IPO’s
By Daniel Mulcahy
44 Regulation A+ Observations One Year Later
By John Lowy

Resources Corner

21 MicroCap Action in the
Uranium Space By Nick Hodge

Legal Corner

53 Ask the Legal Experts
By Eric Hellige and
Francesca Djerejian

Charts

72 When to Buy and Sell MicroCap Stocks
By Sam Namiri
82 MicroCaps - First Mover Advantage
By Maj Soueidan

Cyber Security Corner

76 Cyber Security
By Yoram Golandsky

Cannabis Corner

88 The Coming Election Season
Cannabis Stock Trade
By Alan Brochstein

Opinion

84 The ABCs of Sustainable Investing
By Shelley Goldberg
86 The Zika Virus Epidemic . . .
Risks to Americans
By Dr. Eugene Seymour
91 The Private Side of Cannabis
By Leslie Bocskor

Comic Strip

63 Comparison Chart of Various
Securities Offerings
Provided by Mintz Levin Cohn
Ferris Glovsky and Popeo PC

81 What Am I Buying?
By Chris Lahiji

20 WallStreet Chicken - Episode 14
“Wall Street Weekend”

77 New Formations
By David Alsup

Profiled Companies

35 Eurasian Minerals, Inc.
NYSE MKT: EMXX, TSX-V: EMX

Commodities Corner

68 Commodities in Review
By Mark Shore

Asia Corner

70 Global Risks Weighing on Hong
Kong Stocks
By Leslie Richardson

Accounting Corner

74 MicroCaps in SEC Cross Hairs of
Non GAAP Measurement Debate
By Corey Fischer

www.stocknewsnow.com

8 TapImmune Inc.
OTCQB: TPIV

11 Safeguard Scientifics, Inc.
NYSE: SFE
12 IEG Holdings Corporation
OTCQX: IEGH
16 Apivio Systems, Inc.
TSX-V: APV
22 Energy Fuels Inc.
NYSE MKT: UUUU / TSX: EFR
26 Pressure BioSciences, Inc.
OTCQB: PBIO
29 Reign Sapphire Corporation
OTCQB: RGNP

36 Theralase Technologies Inc.
TSX-V: TLT, OTC PINK: TLTFF
62 US Nuclear Corp.
OTC PINK: UCLE
67 Millrock Resources, Inc.
TSX-V: MRO
78 Nano Dimension Ltd.
Nasdaq CM: NNDM
90 Endexx Corp.
OTC PINK: EDXC
94 Grow Solutions Holdings, Inc.
OTCQB: GRSO

MicroCap Review Magazine 10 Year Anniversary Issue

7

PROFILED COMPANY

tapimmune inc.
otCqB: tPiV

T

apImmune, Inc (OTCQB: TPIV) is an Immuno-oncology
company focused on the treatment of breast and
ovarian cancer.

Glynn Wilson, Ph.D., Chairman and CEO

The Company’s lead product (TPIV 200) is
entering multiple Phase II clinical trials for
the treatment of triple negative breast cancer
and ovarian cancer.
After conventional
therapies (surgery, radiation and chemotherapy) patients in these indications are
at high risk of cancer recurrence with poor
overall prognosis. TPIV 200 stimulates the
body’s cellular immune system to recognize
and fight cancer cells and in particular targets metastatic disease which is the biggest
threat to survival. The Company’s approach
is to broadly stimulate T-cells to recognize
and remember specific targets (antigens) on
tumor cells throughout the body.

and breast cancer completed at the Mayo
Clinic, Rochester, MN, both technologies
were shown to be safe and well tolerated, and
produced robust T-cell immune responses
in over 90% of patients treated. TPIV 200,
which contains 5 (Class II) peptide antigens,
has been formulated and manufactured as
a single lyophilized product that in Phase I
protocols was administered once a month
for six months. It is an “off the shelf ” product
that can be administered through a simple
injection.

leVeraGinG tranSlational
MeDiCine reSearCH at Mayo
CliniC

Based on the exciting results from Phase I
studies TapImmune plans to conduct multiple Phase II studies on TPIV 200 in triple
negative breast and ovarian cancer starting
in 2016. Initial studies will test the ability of
vaccines in a therapeutic setting to prevent or
slow disease recurrence in patients that have
completed standard therapies. In triple negative breast cancer a large 280 patient, double-blinded, placebo-controlled study will
be started at the Mayo Clinic, Jacksonville.
This study will be funded by a $13.3 million
grant awarded to the Mayo Clinic by the
US Department of Defense (DOD) and will
start later in 2016. TapImmune will provide
TPIV 200 for these studies and will have
access to clinical results. The endpoints of
this study will be time to disease progression.
A smaller (80 patients) TapImmune spon-

TapImmune has a worldwide exclusive
license to commercialize proprietary vaccine technologies discovered in the laboratory of Dr Keith Knutson at the Mayo
Clinic. These technologies (called multiple
epitope vaccines) are against cancers that
over-express the HER2neu (in HER2neu
breast cancer and ovarian cancer) or Folate
Receptor Alpha (in ovarian, triple-negative
breast and non-small cell lung cancer) antigens. Vaccine compositions were derived
from studies in cancer patients that showed
that the immune system could recognize
a number of small peptide antigens. In
Phase I studies in patients with ovarian

8

MicroCap Review Magazine 10 Year Anniversary Issue

CliniCal DeVeloPMent

www.stocknewsnow.com

sored open-label study (already enrolling)
will study the vaccine dose and boost strategy and the endpoints will be safety, immune
responses and therapeutic responses. This
study has already started at multiple centers.
Two studies are planned in ovarian cancer.
The first has started at Memorial Sloan
Kettering Cancer Center, New York, NY, and
will study the combination of TPIV 200 and
a PL-1 inhibitor (durvalumab; AstraZeneca)
in 40 patients with platinum resistant ovarian cancer. An additional study will also
examine the efficacy of TPIV 200 as a maintenance therapy in ovarian cancer patients
that are responding to platinum treatment.
The Company also plans to complete formulation and manufacturing on TPIV 110
so that they can start trials in HER2neu
positive breast cancer at the start of 2017.
Thus, TapImmune anticipates a number of
clinical milestones including submission of
new INDs to the FDA, start of new clinical
programs and recruitment and treatment of
patients.
The clinical pipeline for TPIV 200 is summarized in Table 1.

Sponsor:
IND Holder

Robust T-cell responses in over 90% patients
treated with TapImmune’s T-cell vaccines. Multiple
Phase II studies to study clinical efficacy have been
initiated.
Patient Population –
Market Opportunity
It is predicted that Immunotherapy will
become the leading treatment for cancer
with sales of $41 billion predicted for 2020
(http://www.researchandmarkets.com/
research/qjhgbh/global_and_usa). It is the
Company’s view that its cancer vaccines
will be use as stand-alone therapies or in
combination with other immunotherapy
approaches.
The current markets have an urgent need
for new therapies to prevent cancer recurrence.
Triple negative breast cancer represents ~ 15% of breast cancer patients

Collaborators

Status

N

Indication

Study Design

Mayo Clinic
(MC1015)

Tapimmune

Completed

22

Breast and
Ovarian
Cancer

Phase I
Safety & Immune
Response

TapImmune
(FRV-002*)

Multiple Sites

Recruiting
First patient
treated

80

TNBC

Phase II
Dose & Boost
Safety & Immune
Responses

Sloan
Kettering
Cancer
Center
(FRV-003**)

AstraZeneca
Tapimmune

Recruiting
First patient
treated

40

Platinum
Resistant
Ovarian

Phase II
Combination with
durvalumab
Time to disease
progression

Mayo Clinic

TapImmune

Planned 2016
Start

280

TNBC

Tapimmune
(FRV-004)

Multiple Sites

Planned 2016
Start

80

Platinum
Sensitive
Cancer

Phase II
Time to disease
progression
Phase II
Time to disease
progression

* clinicaltrials.gov/ct2/show/NCT02764333?term=TapImmune&rank=2
** clinicaltrials.gov/ct2/show/NCT02764333?term-ovarian+AND+Jason+Konner&rank-1

www.stocknewsnow.com

with over 40,000 new patients in the US
being diagnosed each year. Standard of
care includes surgery, radiation and chemotherapy but after these treatments there
is a high probability of cancer recurrence.
Approximately 30,000 new patients in the
US are diagnosed with ovarian cancer and
the 5 year survival rate is ~ 45%.
In
HER2neu breast cancer (which represents ~
30% of all breast cancer patients) Herceptin
(Roche) is currently standard of care. This
monoclonal antibody can effectively treat
~20% of patients that have the HER2neu
antigen and has annual sales ~$6 billion.
TapImmune’s ability to treat over 85% of the
patient population provides large market
opportunities. As TPIV 200 and TPIV 110
can be used as stand-alone products or in
combination with other therapies it gives the
Company significant market flexibility.

ORPHAN DRUG AND FAST
TRACK STATUS
The FDA has granted TapImmune Orphan
Drug Status for TPIV 200 in ovarian cancer
which will give the Company tax benefits
and a period of market exclusivity when
the drug comes to market. The FDA has
also designated the investigation of multiple-epitope Folate Receptor Alpha Peptide
Vaccine (TPIV 200) with GM-CSF adjuvant
for maintenance therapy in subjects with
platinum-sensitive advanced ovarian cancer as a Fast Track Development Program.
Designation as a Fast Track product for a new
drug or biological product means that the
FDA will take such actions as are appropriate
to expedite the development and review of

MicroCap Review Magazine 10 Year Anniversary Issue

9

Lead product TPIV 200 is a multi-epitope vaccine
against Folate Receptor Alpha over-expressed in
triple negative and ovarian cancer.

the application for approval of such product.

NEXT GENERATION VACCINES
TapImmune has developed internally a novel
DNA vaccine technology called PolyStart
with the potential to become the next generation of T-cell stimulating vaccines. This
technology facilitates the expression of multiple peptide antigens to produce a stronger
immune response. It has the potential to
be a stand-alone vaccine platform. Patent
claims on the technology were recently
issued. The Company’s immediate goal
is to complete preclinical work to include
PolyStart constructs into current clinical
programs and to seek out-licensing and collaborative opportunities for PolyStart in both
cancer and non-cancer indications.

EXPERIENCED MANAGEMENT
AND DEVELOPMENT TEAM
TapImmune has established a top-tier management and development team that can
execute the Company’s plans. Chairman
& CEO, Dr Glynn Wilson has a broad
background in Product & Corporate

Development in large pharmaceutical
organizations (Ciba-Geigy; SmithKline
Beecham) and start-up organizations
(Tacora; TapImmune). He was responsible
for in-licensing vaccine technologies from
Mayo Clinic and in developing the current
product pipeline. The Company’s Strategic
Advisor, Dr John Bonfiglio has successfully
run several Biotech Companies, including
Peregrine, Immune Response Corporation,
Argos, and Oragenics, and has broad experience in product development and financing.
Dr Robert Florkiewicz, Head of Research,
is a molecular cell biologist with experience
at Synergen, TSRI, GSK and Seed IP, and
is the inventor of the PolyStart technology.
Dr Patrick Yeramian, Consultant Medical
Director has over 25 years experience in the
clinical development of new drugs, biopharmaceuticals and vaccines with corporate
experience at Viragen and Searle. This team
together with advisors has demonstrated the
ability to execute and progress clinical and
preclinical programs.

class T-cell vaccines for breast and ovarian
cancer. The Company’s business strategy is
to fund the completion of Phase II clinical
trials where successful results will provide
significant value inflection points. At a current market valuation of ~$40 million, in
one of the most attractive investment areas,
there is the potential for significant growth
and the Company represents a compelling
investment opportunity. n
The company paid consideration to SNN or its affiliates for this article.

BUSINESS & FINANCIAL
STRATEGY
TapImmune is positioned with the best in

TapImmune is positioned with the best in class
T-cell vaccines for breast and ovarian cancer.
The Company’s business strategy is to fund
the completion of Phase II clinical trials where
successful results will provide significant value
inflection points.
10

MicroCap Review Magazine 10 Year Anniversary Issue

www.stocknewsnow.com

nySe: SFe

PROFILED COMPANY

Safeguard Scientifics, inc.

F

or more than 60 years, Safeguard
Scientifics has been synonymous with
entrepreneurship and innovation.
Safeguard’s charter is to build value in earlyand growth-stage businesses by providing
capital as well as strategic, operational and
management resources to its “partner companies”, which generally refers to those companies in which Safeguard has an equity interest
and in which Safeguard is actively involved,
influencing development through board representation and management support.
Safeguard strives to create long-term value
for its shareholders by helping its partner
companies increase their market penetration, grow revenue and improve cash flow.
Safeguard focuses principally on companies
with initial capital requirements between
$5 million and $15 million, and follow-on
financing needs of between $5 million and
$10 million, with a total anticipated deployment of up to $25 million from Safeguard.

FounDation For GrowtH
Safeguard Scientifics was founded in 1953 as
the Lancaster Corporation, a holding company
with the express purpose of engaging directly or
indirectly in the development of high-potential
businesses. During that era, there was very little
venture capital at work anywhere and the notion
of investing in small companies was fairly new.
Safeguard was one of the first companies of
its kind to deploy capital and acquire controlling
stakes in a variety of businesses across a myriad of
industries. Safeguard’s distinguished track record
includes market leaders such as Novell, QVC,
Cambridge Technology Partners, CompuCom,
Internet Capital Group, Traffic.com, Clarient, Avid
Radiopharmaceuticals, Advanced BioHealing,
Portico Systems, ThingWorx, Alverix, Crescendo
Bioscience and more!
While Safeguard’s sector focus has evolved
over time, technology has been, and continues
to be, the epicenter of Safeguard’s strategic focus.
www.stocknewsnow.com

wHy own SaFeGuarD
(nySe:SFe)?
• Access to a diversified group of earlyand growth-stage companies
• SFE currently trades at significant
discount to net asset value
• Full value of partner companies not
reflected in share price
• Exits expected to demonstrate value
• Team has deep domain expertise and
operating experience
• Balance sheet demonstrates financial
strength, flexibility and liquidity
• Strong alignment of interests with
shareholders
Today, within select technology-enabled segments such as adtech, fintech, healthtech and
medtech, Safeguard identifies companies whose
business models are disruptive and/or respond
to an imminent and unmet market need. With
eyes primed for growth, Safeguard targets companies that have a proprietary capability relative
to their market competition, including patented
functionality or sustainable customer relationships; that can scale quickly in defined markets
that have significant size or potential for rapid
growth; and that have the opportunity to generate recurring revenue over time.

BuilDinG Value
Safeguard’s team of experienced entrepreneurs,
board members, financiers and operators drive
opportunities to transform early- and growthstage partner companies into high-traction market leaders. Safeguard’s ability to deploy capital,
build value and realize value rests in large part
on its deal team, which tirelessly identifies and
thoroughly analyzes partner company prospects.
Safeguard’s methodical screening process distinguishes opportunities in which Safeguard can
add value and drive growth, striving to achieve
aggregate cash-on-cash returns of at least two-

times cost over a three-to-five year period.
Safeguard plays an active role in developing
the strategic direction of its partner companies
to address critical success factors required for
long-term growth. Safeguard provides valuable support services in the areas of marketing,
operations, finance and legal. Its curated team
of industry experts and serial entrepreneurs
work alongside companies to lend strategic
insight and help management teams remain
focused on critical objectives. Most importantly, Safeguard leverages its vast network
for the benefit of each business through welltimed, well-placed introductions to contacts
and companies that may serve as strategic
partners, customers and/or potential acquirers.
Separately and cumulatively, these layers of
value formulate a powerful growth model for
Safeguard’s partner companies, ultimately driving value for Safeguard shareholders.

tHe oPPortunity aHeaD
Safeguard is continuously looking to identify
tomorrow’s success stories. As an active advocate
and catalyst for the success of early- and growthstage technology companies, Safeguard deploys
capital to accelerate a company’s growth and
build long-term value. As a result of Safeguard’s
steadfast focus, the company finds itself gaining
tremendous momentum from greater consistency in the amount of capital deployed and
capital realized. In addition, Safeguard continues
to further align its interests with the interests of
its shareholders and is incented to create and
maximize shareholder value.
Overall, Safeguard’s core business is sound
and its financial strength, flexibility and liquidity
remain the foundation of its evergreen business
model. The company is well positioned to continue to deploy capital in an appealing pipeline
of high-potential early- and growth-stage companies and believes that its steady execution will
continue to drive value for its shareholders. n
The company paid consideration to SNN or its affiliates for this article.

MicroCap Review Magazine 10 Year Anniversary Issue

11

PROFILED COMPANY

ieG Holdings Corporation
otCqX: ieGH
“Mr. Amazing Loans” – A Consumer Finance Vanguard
A Better Model In The Evolving FinTech Marketplace
CoMPany BeGinninGS

CEO, Paul Mathieson

12

IEG Holdings Corporation, which does business under the brand “Mr. Amazing Loans”,
is the realization of several long journeys
through finance, coupled and leveraged with
a decade of financial evolution. Mr. Amazing
Loans is the refined outcome of its Founder,
CEO, and Chairman Paul Mathieson’s background in finance – which includes over
21 years’ financial industry experience in
lending, funds-management, stock market
research and investment banking – and a
former Mathieson-led, Australian-based
business model that lent ~$48 million to
over 11,500 customers in the mid-2000’s.
Having realized success in using a prior,
less-efficient, technology and capital-constrained model Mathieson relocated to the
US in 2008 to replicate the base-platform
model already established; utilizing cash
flow from the runoff of the Australian loan
book to fund the current US setup and
utilizing the much improved global technology infrastructure to improve the second
iteration of the model. On the back of the
success of the Australian Mr. Amazing Loans
business was born a more evolved, more
FinTech leveraged model that has expanded
on the foundation of its quasi-predecessor.
“I believed I could set up a consumer loan
business and do it better than competitors
with superior branding, professional management and a much more cost-effective

MicroCap Review Magazine 10 Year Anniversary Issue

and fairer structure that was affordable to
consumers,” said Mathieson.

a ProBleM, a Solution, a
50% aPPliCation rate
With a customized, fully-integrated frontend website portal, back-end loan processing
system, credit checking system, bank statement retrieval system, and multiple lead providers, Mr. Amazing Loans is a web-based
property that has a cycle-tested 50%-plus
application rate from prospects. The end
result of this highly-efficient top to bottom
prospect-funneling system is a platform with
a low customer acquisition cost and a great
customer experience. This matters when
realizing that the Mr. Amazing Loans’ targeted consumer finance market tops out at ~$80
billion in the US alone. In Australia, using a
predecessor model that was both technology
and capital constrained, Mr. Amazing Loans
captured a 10% market share.
“Our product is significantly cheaper, at
23.9%-29.9% per annum, than the long established ‘payday lending market’ that has been
charging over 300% traditionally. In addition, other businesses are based on shortterm, high returns whereas Mr. Amazing
Loans possesses a model where we’re helping
the consumer and doing what the government intends. We’ve received a lot of support
for our model and consumers appreciate the
differences. Mr. Amazing Loans’ $5,000 loan
www.stocknewsnow.com

product sits right in the range of what the
consumer wants and is where we believe the
sweet spot is for targeting customers seeking $2,000 to $10,000 loans. Extensive historical static pool analysis leads us to believe
that credit losses increase significantly for
loans greater than $10,000 and customer
lead acquisition costs make sub-$5,000 loans
uneconomic. Further, short-term loans of
less than 5 years don’t enable enough duration to earn a desirable return taking into
account write-offs and customer acquisition
costs. We really think Mr. Amazing Loans
is a data-based, analytics-driven model that
can scale as a result of our positioning and
the economics we can achieve within this
positioning framework,” Mathieson noted.

A Unique Dynamic
Due to the significant regulatory and capital
barriers to entry, there are only a handful of direct competitors to Mr. Amazing
Loans; including: OneMain Financial, Avant,
Lending Club, and Prosper – which are all
capitalized at over $1.5 billion. Mr. Amazing
Loans’ indirect-competitors are credit card
lenders, “payday lenders” with multiple
storefronts and legacy physical infrastructure issues, online high-rate lenders, and
tribal lender companies operating via tribal
exemptions. Mr. Amazing Loans’ competitive advantages over these lenders include
a significantly lower overhead driven by
its highly-lean online model, its superior
branding, its targeted marketing strategy, its
affordable weekly repayments, and a strict
regulatory compliance.
“The advantages Mr. Amazing Loans has
over its competitors stem from the speed of
online application and funding for the client; without compromising our high-hurdle
underwriting standards we can take a loan
from application to funding within hours
of application completion,” said Mathieson.
He added, “Another key advantage is the
low weekly repayment cost of our loans
only being $37.03 a week (principal and
interest repayment) for a $5,000 loan over
www.stocknewsnow.com

Available States
Planned States

5 years. Even better for the borrower, this is
automatically direct debited from the customer’s account. We also hold the third largest number of state lending licenses of any
company in the US. Licensing is becoming

increasingly important as more state and
federal regulatory scrutiny is bearing down
on the industry. The regulatory scrutiny is
especially directed at peer-to-peer lenders
who don’t hold any licenses. Some of these

The advantages Mr. Amazing Loans has over
its competitors stem from the speed of online
application and funding for the client; without
compromising our high-hurdle underwriting
standards we can take a loan from application to
funding within hours of application completion.
MicroCap Review Magazine 10 Year Anniversary Issue

13

regulatory issues have been extremely high
profile as of late. Finally, for those considering the financials of the space, unlike peerto-peer lenders we actually hold loans on our
balance sheet, resulting in superior 29.9%
gross revenue margins compared to ~2%
gross revenue margins for many peer-topeer lenders. You can imagine, with holding
loans on our books, we want to do things the
right way when it comes to underwriting and
regulation.”

Data-Based, AnalyticsBased, Responsible Growth
Carla Cholewinski, COO of IEGH, stated,
“Current economic conditions provide the

14

perfect time for Mr. Amazing Loans to be
expanding across the US and rapidly growing our loan book. Demand for our loan
product is at an all-time high. It’s rewarding
to be able to provide risk-adjusted loans to
consumers that are neglected by mainstream
lenders such as banks and to be part of such
a dynamic, high-growth organization. I also
like that we have a model we believe generates a return that’s sustainable; one that we
don’t believe is dependent on any material
changes to current, status-quo assumptions
for long-term sustainability and growth.”
IEGH has only recently entered an accelerated growth phase having established
and refined its online operational platform,
added efficient customer lead sources, and

MicroCap Review Magazine 10 Year Anniversary Issue

most importantly having secured increased
capital. IEGH cumulative loan volume,
which again is a function of its capital availability, rose 2,168% from $587,000 at January
1, 2014 to $13,314,023 at June 30, 2016. Full
year revenue increased 2,815% from $62,949
in 2013 and 247% from $529,225 in 2014 to
$1,835,165 in 2015.
IEGH, currently doing business in 17 US
states, plans to expand into 25 US states
– encompassing ~75% of the US market
or ~240 million in total population. IEGH
also plans to grow new loan volumes by
leveraging a marketing strategy focused on
and around prequalified, direct mail outs,
online lead advertising with Google, Bing,
YouTube, adding other online partners, and
www.stocknewsnow.com

leveraging newly available, capital-driven
growth runway.

Sustainability Isn’t
Complicated, Neither Is The
Future
IEGH has a highly scalable business model
with low customer acquisition costs that
operates in a data-defined zone of risk optimization. IEGH operates in a financial vertical with strong barriers to entry and where
regulatory pressure will require competitors
to attempt to obtain licenses or buy a group
such as IEGH in order to continue to operate. IEGH is an emerging growth microcap
company in the truest sense and although it
still needs to further ramp up its volumes in
the US, it has a proven business model that

The business of Mr. Amazing Loans isn’t rocket
science and that’s by design. Growth is driven
by consistent risk-management and execution
of our cycle-tested model. Utilizing our leading
online loan platform, combined with cost-effective
customer lead acquisition, thorough and highly
efficient underwriting, and the ability to access
appropriate funding, we should be able to continue
to grow in a responsible, sustainable way.
works, having recognized a problem and
provided a solution. As IEGH expands and
executes the Mr. Amazing Loans strategy,
increasing corporate revenues should elevate
growth and shareholder value.
“The business of Mr. Amazing Loans isn’t
rocket science and that’s by design. Growth
is driven by consistent risk-management
and execution of our cycle-tested model.
Utilizing our leading online loan platform,
combined with cost-effective customer
lead acquisition, thorough and highly efficient underwriting, and the ability to access
appropriate funding, we should be able to
continue to grow in a responsible, sustain-

able way,” Mathieson stated. “My 5-year
vision is to become the McDonalds of small
loans, to operate licensed and to lend online
in 25 states within the US – which would
expose our services to ~75% of the population. In the mid-term we’d like to be NYSE
listed, carry a $1 billion plus loan book, and
to continue to provide a great product for
our customers and fantastic returns for our
investors,” Mathieson concluded. n
The company paid consideration to SNN or its affiliates for this article.

IEGH has a highly scalable business model with
low customer acquisition costs that operates in
a data-defined zone of risk optimization. IEGH
operates in a financial vertical with strong barriers
to entry and where regulatory pressure will require
competitors to attempt to obtain licenses or buy
a group such as IEGH in order to continue to
operate.
www.stocknewsnow.com

MicroCap Review Magazine 10 Year Anniversary Issue

15

PROFILED COMPANY

apivio Systems, inc.
tSX-V: aPV

A

pivio Systems, Inc. is engaged in the design, development,
marketing, and sale of Voice over Internet Protocol (“VoIP”)

communications equipment and software. Apivio began as
Moimstone Corporation in South Korea in 2003, which since then
has sold more than 5 million enterprise VoIP and Wi-Fi phones to
Korea’s largest telecommunications carriers.

Rob Bakshi, CEO

16

Rob Bakshi, Apivio System’s CEO, is an
entrepreneur who recognized the opportunity – and the pain – inherent with enterprise telephones that didn’t improve worker
productivity. After selling his last company,
Silent Witness Enterprises to Honeywell in
2003, he was involved with several other
businesses before being introduced to
Moimstone. Rob’s vision for innovation in
the enterprise phone market enabled him to
capitalize on Moimstone’s growing IP telephony business in Korea. “I recognized that
most vendors in the enterprise telephony
business were more focused on innovation
on the back end, leaving a lot of room for
improvement with the phones and other
endpoints,” said Rob Bakshi. “My vision is
that one day, every enterprise phone will be
a smart phone, thereby shifting the value
proposition from hardware to software.”
After becoming the CEO in 2013, he has
focused the Company on several innovations
that are redefining the enterprise phone
market.
In May 2014, Moimstone changed its

MicroCap Review Magazine 10 Year Anniversary Issue

name to Apivio Systems, and management
listed the company on the Toronto Venture
Exchange under the ticker “APV”. In 2014
Apivio brought aboard David Pais, a seasoned CFO who was involved in the sale of
Carmanah Design and Manufacturing Inc.
to NYSE-listed Kadant Corp (KAI). Apivio
has grown to a $60 million revenue business
with over $2 million in adjusted EBITDA in
2015. The Company has now been EBITDA
positive for the last eight quarters.

SMart DeSktoP PHoneS
During 2014, management invested a portion of Apivio’s cash flow into R&D to create the Monet-series of VoIP, enterprise,
desktop smartphones. The phones represent
a paradigm shift from “dumb” to “smart”
phones in enterprise telephony due to productivity apps and custom interfaces that
benefit user workflow, increase revenues,
and/or reduce enterprise costs. For example,
hotels can generate new revenues by streaming advertisements to guestroom Monets to
www.stocknewsnow.com

Figure 1: Rob Bakshi’s vision combines desktop phones and smartphones into the Apivio System’s Monet desktop
smartphone.

fill its restaurants or promote local shows
and sightseeing tours. Monet apps can also
reduce costs; hospitals, for example, can
lend Monets to discharged patients to monitor their recoveries via video calls, rather
than having patients return to hospitals for
expensive visits.
Apivio’s vision for enterprise smartphones
was shared by NEC Corporation of America,
a subsidiary of NEC Corporation, the world’s
third largest enterprise telephony provider.
NEC America ordered 10,000 Monet-Series
phones in 2015. Apivio delivered all 10,000
phones on schedule.
Order flow and integration of the Monet
series from NEC America continues to progress through 2016: NEC America issued
another 2,000 Monet purchase order to
Apivio in March 2016, and announced the
integration of the Monet with three of the
NEC Univerge Private Branch Exchanges
(PBXs). The largest of these PBXs can accommodate almost 200,000 users, illustrating
the potential size of the market for Monet
phones in larger NEC customer installations
in the future. NEC Corporation in Japan and
Apivio further solidified their relationship
in June 2016, announcing a letter of intent
to develop the next generation of Monet
phones and expanding distribution to NEC’s
customers globally.

NEC and Apivio understand the potential of
recurring revenue from enterprise applications, and
they are part of each company’s respective vision
to transition into an app-based recurring revenue
model.

FROM HARDWARE TO
ENTERPRISE APPLICATIONS
While the cell phone industry has experienced tremendous innovation with the
advent of apps on Android and iPhones,
the enterprise phone market has remained
stagnant. With the Monet phone, enterprises

can now access a range of Android based
applications. In addition, Apivio intends to
develop a number of apps targeted at specific
verticals. These enterprise applications are
not offered at low price points of most consumer targeted apps. These apps are priced
higher based on the utility and benefit to
enterprises using them. Many can be sold

Figure 2: Apivio Systems’ Monet Desktop Smartphone

www.stocknewsnow.com

MicroCap Review Magazine 10 Year Anniversary Issue

17

Figure 3: NEC envisions security, biometric, and hospitality applications for
Apivio’s Monet enterprise, desktop smartphones.

Figure 4: Apivio’s Liberty Wi-Fi
phone

on a subscription basis – with payments
either monthly, quarterly or annually. And
since the costs of developing these apps are
expensed when incurred, gross margins are
usually very good.
NEC and Apivio understand the potential of recurring revenue from enterprise
applications, and they are part of each company’s respective vision to transition into
an app-based recurring revenue model. To

NEC has more than 3,000 dealers globally and over 700 dealers in North America
alone. The dealers are the first line of contact
with the customer. NEC trains and educates
their dealers so that they have all the right
tools to sell the NEC suite of products and
services. With desktop smartphone applications, NEC dealers can leverage their existing customer base to sell new Monet phones
and productivity tools and apps for recurring revenue streams. NEC communicates to
Apivio, ideas and comments from customers who ask for customized apps to serve
their specific needs. Apivio choses to build
some apps, whereas the rest are built by the
Android app development community.

support this vision, in December 2015, NEC
America launched its App Store, and for
every Apivio app that is sold on a Monet,
Apivio receives a percentage of the revenue.
Apivio also receives a percentage of the revenue generated by third-party apps. Third
party app developers are happy to have their
apps distributed in an app store targeted at
the enterprise market and are happy to share
a part of the revenue with NEC and Apivio.

NEC trains and educates their dealers so that they
have all the right tools to sell the NEC suite of
products and services. With desktop smartphone
applications, NEC dealers can leverage their
existing customer base to sell new Monet phones
and productivity tools and apps for recurring
revenue streams.
18

MicroCap Review Magazine 10 Year Anniversary Issue

THE LIBERTY SERIES Wi-Fi
PHONE – ANOTHER GAME
CHANGER
Beyond Apivio’s Monet hardware and associated applications, another leg of growth will
likely come from its Liberty series Wi-Fi
phone. Similar to how a cell phone works
www.stocknewsnow.com

Figure 5: Apivio’s base business continues to grow each year.

within the cellular coverage area, a Wi-Fi
phone can work within any Wi-Fi coverage
area. The Liberty™ allows enterprise workers
to remain connected as long as they are within the range of any accessible Wi-Fi hotspot,
essentially enabling workers to carry their
deskphones around their workplace. This
enables workers in any distributed workplace, such as warehouses, airports, factories,
and even those traveling abroad, to use their
deskphones while they are on the move - no
more voicemail for hard-to-reach workers
since they are always connected with a Wi-Fi
enabled Liberty™ phone. Apivio has sold
more than 100,000 Liberty™ phones in Korea
and Apivio’s management is adapting the
phone for North America before bringing it
to the U.S. and Canadian markets.
“I want Apivio to be the leading innovator
in the enterprise phone industry,” said Mr.
Bakshi, “I see an industry that has tremendous room for change and improvement. We
want to produce the best enterprise smartphones in the market and make them available on a number of platforms. The whole
value proposition for enterprise phones will
change when enterprise customers experience the benefit of a smartphone on their
desk, running applications designed for their
environment. Apivio intends to distribute
enterprise specific apps to any vendor of
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The whole premise of our business model is that
hardware is an enabler whereas our software based
products and solutions will bring more value to our
customers and recurring revenue to the Company.
Android smart phones through its Apivio
app store. The whole premise of our business
model is that hardware is an enabler whereas
our software based products and solutions
will bring more value to our customers and
recurring revenue to the Company. I am
excited about the growth opportunities and
look forward to communicating more about
our industry-leading products and solutions
in the future.”

to identify and convert business opportunities into products and establish partnerships
with large enterprises for sales and marketing. For company information, please visit
Apivio’s Website at apivio.com. For regulatory documents and financial filings, please
visit www.sedar.com. n
The company paid consideration to SNN or its affiliates for this article.

FOR MORE INFORMATION
Apivio Systems (TSX-V: APV) is a global
VoIP telephony provider with an established and broadening Korean business, an
expanding relationship with NEC America
to deliver Monet, desktop smartphones and
applications to enterprises, and a nascent
Wi-Fi smartphone business.. Apivio’s management team has demonstrated the ability
MicroCap Review Magazine 10 Year Anniversary Issue

19

20

MicroCap Review Magazine 10 Year Anniversary Issue

www.stocknewsnow.com

RESOURCES CORNER

MicroCap Action in the
Uranium Space
This article was supposed to be about gold.
There are plenty of people talking about
gold at this point. Its rise after a protracted
bear market was inevitable, and over a third
of the world’s debt moving into negative
yield territory drove enough capital into the
yellow metal to turn the market around. We
know it’s going higher.

n NICK HODGE

www.stocknewsnow.com

So
let’s
talk
about
uranium.
That  other  metal that’s supposed to be in a
bull market by now.
It’s had all the classic markings of a coming bull market for several years now. Fear
subsiding after Fukushima. Japanese restarts.
Rapid nuclear growth in China, Russia, and
India. Sustained low prices that took enough
supply offline to correct the balance.
Indeed, the price of uranium has been
below $50 per pound for nearly four years
now, and is below $30 now. At current
prices, more than half of primary supply is
underwater.
These low prices are at a time when the
outlook for nuclear energy – and therefore uranium demand – remain robust. The
U.S. has nearly 100 operable reactors. China
could have that in a decade. There are more
than 200 reactors being built, licensed to be
built, or in advanced planning worldwide.
The International Energy Agency (IEA)
has said the world needs to double its current
installed nuclear capacity to 930 gigawatts
by 2050 to meet the international goal of
limiting the global temperature rise to two
degrees Celsius by the end of the century.
As the world continues to build out its
nuclear fleet, a uranium shortfall scenario
could emerge fairly quickly, which is why
many banks and analyst are calling for much
higher uranium prices in the longer term.
Prices right now aren’t high enough to
spur new production. But over the next
decade that will have to change as the world
needs to bring 80 million pounds of new

uranium supply online annually.
New uranium supply isn’t that easy to
come by, so the few publicly-traded producers out there will yield good returns as this
scenario plays out over the next few years.
The $4 billion Cameco comes to mind.
But believe it or not, there is plenty of
microcap action in the uranium space as
well. In fact, of the four companies currently
producing uranium in the U.S., three of them
have market capitalizations below $100 million. The fourth is Cameco.
And when it comes to exploration, it’s
nearly entirely a small and microcap game.
Nine out of ten of the world’s best undeveloped uranium assets as ranked this year by
the prestigious  Mining Journal  have market
caps below $300 million. Seven of them are
below $100 million.
These tiny uranium companies can
increase by many multiples once the sector
gains more wide stream favor. We saw it in
2006 and 2007 after the flooding of the Cigar
Lake mine, when microcap uranium explorers ran thousands of percent in months.
I believe we are staring directly at another
uranium bull market – this one driven by
demand. n
Founder and President of The Outsider Club, and
Investment Director of Early Advantage, Nick Hodge
has been in the investment publishing business since
graduating Loyola University in 2006.
Known for a “call it like you see it” approach to
money and policy, his insights have led to numerous
appearances on television and in various outlets on
the Web, including the Business News Network and
Yahoo!’s Daily Ticker.

MicroCap Review Magazine 10 Year Anniversary Issue

21

PROFILED COMPANY

energy Fuels inc.
nySe Mkt: uuuu / tSX: eFr

A

Leading Producer of U.S. Uranium Positioned for
Global Growth in the Nuclear Sector

President and CEO, Stephen Antony

22

Despite all the talk about wind and solar
these days, nuclear energy produces more
zero-emission, zero-carbon energy in the
United States than all renewable sources
combined – and by a wide margin. Because
of nuclear energy’s clean air attributes, the
sector is growing – significantly – led by
China, India, South Korea, Russia, and the
U.S. Indeed, many people don’t know that
the U.S. currently has the largest fleet of
nuclear reactors in the World, we just started
a new unit in Tennessee earlier this year, and
we have four more units under construction
in Georgia and South Carolina. All nuclear
reactors – in the U.S. and around the world
– are fueled by uranium.
Energy Fuels Inc. (NYSE MKT: UUUU
& TSX: EFR) is positioning itself to become
the largest producer of uranium in the U.S.
and a major global supplier. Already in
2016, Energy Fuels expects to be the 2nd largest producer of uranium in the U.S., behind
only Cameco.
However, uranium is a misunderstood
commodity right now, and uranium producers like Energy Fuels are surprisingly
seeing little love from investors. Look at the
10-year stock charts of uranium companies
like Energy Fuels, Cameco, Paladin, and
Rio Tinto subsidiary, Energy Resources of
Australia, etc. The sector has been decimated – most names in the space are down well
over 90% since 2007. Here is an unbelievable
statistic: if you remove Cameco from the
equation, today an investor can buy every

MicroCap Review Magazine 10 Year Anniversary Issue

single publicly-traded, pure-play uranium
producer in the World – for under a billion
dollars. That’s mind boggling considering
the global nuclear space is actually growing.
According to the World Nuclear
Association, today there are 444 operable
nuclear reactors in existence, along with 62
new ones under construction, and another
509 on order, planned, and proposed. China
has officially announced that it intends to
double the size of its nuclear fleet – in the
next 5 years – and they expect to have up to
6 times more nuclear capacity installed by
2030. Nations around the World are seeking
to address climate change and air pollution,
as demonstrated by the recent COP21 Paris
Agreements. This is not a declining sector by any means – to the contrary, nuclear
is experiencing very strong global growth.
And, this growth will be fueled by uranium.
Consider this: 1.6 billion people around
the World have no electricity at all. 3 billion
more people will be born in the World by
2050. Reliable electricity results in cleaner
air, cleaner water, better healthcare, better
education, and stronger economies. Nuclear
energy is on the rise, yet uranium prices are
near multi-year lows.
The main reasons for the weak performance of uranium prices are largely tied
to the 2011 nuclear disaster in Japan and
unexpected growth in production from
Kazakhstan, today’s leading producer.
Despite these developments, there is reason
to believe the oversupply of uranium is about
www.stocknewsnow.com

to reverse course. Kazakh production has
already plateaued, and Japan is returning
reactor units to service – albeit slowly. In
addition, major uranium mines are depleting, others are reducing production, and
the low prices of the past several years have
severely curtailed new uranium exploration
and mine development. There are only two
new major mines coming online now – Cigar
Lake and Husab. The World is expected to
need several more large mines at some point
in the next 10-15 years, and there are none
on the horizon, as it typically takes 10+ years
– at least – to explore, license, finance, and
construct a major new uranium mine.
When the market finally turns, existing
producers like Energy Fuels are likely to be
the main beneficiaries, since demand will
outweigh supply – perhaps dramatically so
– and that could drive uranium prices much
higher.
Energy Fuels is uniquely positioned,
because it provides the “double-barreled”
benefits of lower cost production and the
potential to significantly increase production
when uranium prices rise. Energy Fuels is
an established uranium producer with current sales to major nuclear utilities. They
are not an exploration or development play
– they have a proven track-record of producwww.stocknewsnow.com

tion and sales. While the company makes
sales internationally, it largely focuses on the
United States, which is the World’s largest
nuclear market.
In 2016, the company expects to produce
about 1 million lbs. of uranium form its
lower-cost sources of production. However,
it has the capacity to produce over 11.5 million lbs. annually in a higher price environment. The company also has the largest NI
43-101 uranium resource in the U.S., among
producers and near producers. Arguably,
no other company can claim these levels of
scalability.
Energy Fuels has emerged as the dominant uranium producer in the U.S., especially since Cameco has announced that it is
reducing U.S. production to focus on largerscale production in Canada and Kazakhstan.
Energy Fuels is also the only company in the
U.S. – and one of only three companies in the
World – with uranium production that utilizes both conventional and in situ recovery
(“ISR”) methods. In very general terms, ISR
is typically lower cost, while conventional is
typically more scalable and better suited to
increasing to higher levels of annual production over a longer period of time.
Energy Fuels owns and operates two ISR
production facilities, the Nichols Ranch

Project in Wyoming and the Alta Mesa
Project in Texas. The company has grown
significantly over the past several years
through acquisitions that are consolidating
the U.S. uranium space. Their most recent
acquisition added the Alta Mesa Project to
the company’s portfolio. This was a highly
strategic move by Energy Fuels. Alta Mesa
is a fully-licensed and constructed ISR plant
and mine that is currently on standby – it
ready to go back into production within
about 6 months of a “go” decision. It produced almost 5 million lbs. of uranium
between 2005 and 2013. Indeed, the company expects Alta Mesa to have the lowest
cash costs of any project in its portfolio once
it goes back into production. The company
also expects to publish a maiden NI 43-101
resource report on Alta Mesa in the summer
of 2016, and the project has considerable
exploration potential on the nearly 200,000
acres of private land comprising the project.
By the way, this is about a quarter the size of
Rhode Island!
Energy Fuels’ Nichols Ranch Project is an
ISR plant and mine currently in production.
Nichols Ranch began operations in 2014,
and it is expected to produce about 300,000
lbs. of uranium in 2016. The company is
currently regulating production in order to
maintain the in-ground resources for the
higher prices expected in the future. As uranium prices rise, a significant amount of the
company’s near-term, lower-cost scalability
is expected to come from Nichols Ranch.
Energy Fuels is also the only conventional
producer of uranium in the U.S. The company owns the only conventional uranium
mill in the U.S., the White Mesa Mill. The
company expects to produce about 650,000
lbs. of uranium from the White Mesa Mill
in 2016.
Energy Fuels is also currently in the process of developing a conventional mine in
Arizona, called the Canyon mine. Shaftsinking is underway to mine the deposit,
and as of this writing, the shaft is at a depth
of over 1,000 feet. They are also in the midst
of an underground drill program to further

MicroCap Review Magazine 10 Year Anniversary Issue

23

evaluate the resource. The company has currently identified about 1.6 million pounds of
uranium with an average grade of about 1%
U3O8 contained in 83,000 tons of inferred
resources. However, they hope to significantly expand the resource through underground drilling and upgrade the resource to
a higher classification.
Finally, the company has a number of
other future production sources, including
three large conventional projects currently in
permitting. The Roca Honda Project in New
Mexico is one of the largest and highestgrade resources in the U.S., and the company has a published preliminary economic
assessment (PEA) which estimates average
annual production of 2.7 million lbs. of
uranium for nine years. Roca Honda is also
within trucking distance of the White Mesa
Mill – which has ample excess capacity – so
there is a fully licensed and operating facility available to produce this resource. The
Henry Mountains Project in southeast Utah
is another large resource within trucking distance of the White Mesa Mill. The company
has a NI 43-101 report which shows that
Henry Mountains has indicated uranium
resources totaling 2.4 million tons with an
average grade of 0.48% containing 12.8 million pounds of uranium, along with inferred
uranium resources totaling 1.6 million tons
with an average grade of 0.47% containing

24

8.1 million pounds of uranium. The company has a 3rd major conventional project – the
Sheep Mountain Project – located in central
Wyoming. Energy Fuels published a NI
43-101 preliminary feasibility study (PFS)
that estimates average annual production of
1.5 million pounds of uranium over 15 years.
As recently as 1980, the U.S. was the
World’s largest producer of uranium, and
in the coming years, the U.S. could become
a major player again. That bodes well for
Energy Fuels, since the company has the
management and technical team to execute
on their growth strategy. Management has
decades of experience in all phases of the
U.S. uranium mining industry. President
and CEO, Steve Antony, has worked in
the U.S. uranium mining space since the
mid-1980’s, including stints with Mobil Oil’s
uranium division, Energy Fuels Nuclear, and
Power Resources. Harold Roberts, who runs
all of the company’s conventional operations, including the White Mesa Mill and
the Canyon Mine, has over 30 years of
experience with the company’s assets. Paul
Goranson oversees all of Energy Fuels’ ISR
production and is a recognized leader in
this method of production. The company
also recently added Mark Chalmers as Chief
Operating Officer. He previously served
as Executive General Manager for Paladin

MicroCap Review Magazine 10 Year Anniversary Issue

Energy in Australia, where he was involved
in the Langer Heinrich and Kayelekera mines
and oversaw sustained, significant increases
in production and reduced operating costs.
Energy Fuels continues to use today’s
quiet uranium market to position itself for
the coming price recovery. They are closely
monitoring market conditions to determine
the best time to increase production. They
are continuing to manage their cash, debt,
inventory, and production rates. They have
a strong balance sheet, including $37.5 million of working capital as March 31, 2016.
Later this year, they hope to announce positive drill results at their Canyon Mine, along
with updates on production, uranium sales,
and utility contracting. Energy Fuels offers
current uranium production, lower costs,
scalability, and excellent potential leverage to
the increasing prices expected in the future.
Energy Fuels is listed on the NYSE MKT
under the symbol UUUU and on the TSX
under the symbol EFR. Further information on the company can be found at www.
energyfuels.com. n
The company paid consideration to SNN or its affiliates for this article.

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BUSINESSES
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SINCE 1912

Congratulations to MicroCap Review and
SNN Inc. on its 10 year anniversary issue!

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For Emerging Growth Companies in Public Capital Markets
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MicroCap Review Magazine 10 Year Anniversary Issue

25

P R O F I L E D C O M PA N Y

Pressure BioSciences, inc.
OTCQB: PBIO

P

ressure BioSciences, Inc. (OTCQB: PBIO) is a life sciences tools company
focused on the development, marketing, and sale of proprietary
laboratory instrumentation and associated consumables based on the
Company’s game-changing Pressure Cycling Technology (“PCT”).

Richard T. Schumacher Founder/CEO

26

PCT is a patented, enabling technology platform that uses alternating cycles of hydrostatic pressure between ambient and ultra-high
levels (up to 90,000) to safely, conveniently
and reproducibly control the actions of molecules (i.e., inactivate, break (lyse), liberate, extract, and/or prepare for downstream
analysis) from biological samples, such as
cells and tissues from human, animal, plant,
and microbial sources.   The Company is
focused on the development and sale of PCT
systems (instruments and consumables) to
address the challenging problems inherent
in biological sample preparation, a crucial
laboratory step performed by thousands of
scientists worldwide working in biological
life sciences research.
Sample preparation is a term that refers to
a wide range of activities that precede most
forms of scientific analysis. Sample preparation is often complex, time-consuming, and
one of the most error-prone (but crucial)
steps of scientific research. It is a widely-used
laboratory undertaking, the requirements of
which drive a large and growing market, estimated currently at approximately $6 billion
worldwide. PBI’s PCT systems can be used
to exquisitely control the sample preparation process. PCT uses internally developed
instrumentation that is capable of cycling
pressure between ambient and ultra-high
levels, at specific temperatures and time
intervals, to rapidly and repeatedly control
the interactions of bio-molecules, such as
DNA, RNA, proteins, lipids, metabolites,

MicroCap Review Magazine 10 Year Anniversary Issue

and other small molecules. Our product line
includes five different models of pressuregenerating instruments and over a dozen
different consumables. Our website contains
over 100 publications, many from worldrenowned scientists, addressing key advantages of PCT.   
Through March 31, 2016, PBI has sold
or leased over 275 PCT Sample Preparation
Systems to approximately 175 leading academic, government, biotech, and pharmaceutical companies. Current customers use
the PCT Platform for a wide assortment
of important applications, including sample
preparation for biomarker discovery, biotherapeutics characterization, vaccine development, soil and plant biology, forensics, histology, and counter-bioterror applications.
There are a number of existing methods used by scientists for biological sample
preparation, including mortar and pestle
grinding, sonication, homogenization, and
bead beating. The Company believes that
PCT offers significant advantages over these
methods, including safety, speed, reproducibility, versatility, and ease- of-use, often
with a substantial increase in the quality
of the final results. There are a growing
number of scientific publications and presentations from independent laboratories
that we believe highlight and confirm these
clear advantages of PCT over other current
methods.
Our primary efforts are focused on the
development and sale of PCT-based prodwww.stocknewsnow.com

ucts and applications for the preparation of
samples used in the discovery of biomarkers,
a primary focus of thousands of scientific
researchers worldwide. These researchers
work in academic, biotechnology, pharmaceutical, and government laboratories. A
2012 market research report by ASDReports
has estimated the worldwide market for
biomarkers to be approximately $26 billion.
The Company derives its revenue from
the sale, lease, or rental of our Barocycler
instruments, as well as from the recurring
purchase of consumables required for the
PCT process and from instrument service
contracts, replacement instrument parts,
and grants.
Richard T. Schumacher, Founder,
President, and CEO of PBI, said: “We believe
that there are approximately 80,000 laboratories worldwide that require the extraction
of DNA, RNA, proteins, lipids, and small
molecules from biological samples for their
research studies. Based on market research,
our 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, we believe that a large number of these
laboratories will benefit from the advantages
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of the PCT Sample Preparation System. We
believe that we can capture a reasonable
share of this existing market over the next
3-5 years, and that by doing so, we will
become a highly respected and profitable
life sciences instrument and consumables
provider.”
Mr. Schumacher continued: “In addition
to our patented and cutting-edge technology platform, we have both a hard-working, results-driven management team and
an experienced and supportive Board of
Directors. We believe the combination of
these factors will help ensure the success
of our company with a concomitant strong
return-on-investment for all stakeholders
in PBI.”

2016 MAJOR ANNOUNCEMENTS

2320EXT, the next generation PCT instrument expected to be the centerpiece of its
co-marketing program with global life sciences leader SCIEX. The Company also
announced that six presentations were made
on the advantages of the PCT platform at a
recent key scientific conference.
May 18, PBI announced Q1 2016 financial
results, including a 16% increase in total
revenue and a 26% increase in products and
services revenue.
April 7, PBI announced the close of its
$5M PIPE at an over-subscribed amount of
$6.3M. All five of the Company’s Board of
Directors participated in the final tranche of
the PIPE. The Company also announced
that 100% of its floorless debt had been
eliminated, without any lender converting its
loans into Company shares.
January 28, in a report focused on the
exclusive co-marketing agreement between
SCIEX and PBI, Emerging Growth LLC indicates the combination of the two company’s
technologies could result in superior biological insights and discoveries and in rapid and
dramatic revenue growth for PBI.
January 12, SCIEX, a global leader in life
science analytical technologies, and a whollyowned subsidiary of Danaher Corporation
(NYSE: DHR), announced a two-year, exclusive, worldwide co-marketing agreement
with PBI to improve protein quantitation in
complex samples. n
For more information about PBI, please click on the
following website link:
http://www.pressurebiosciences.com
Please visit us on Facebook, LinkedIn, and Twitter

The company paid consideration to SNN or its affiliates for this article.

July 21, PBI announced it has shipped the
first five Barocycler 2320EXT Systems, three
of which will be used in an important longterm cancer research program by CMRI
of Sydney, AU. It was also announced that
CMRI had just been named by the White
House as a collaborator in President Obama’s
“Cancer Moonshot” initiative.
July 13 PBI unveiled the Barocycler
MicroCap Review Magazine 10 Year Anniversary Issue

27

28

MicroCap Review Magazine 10 Year Anniversary Issue

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P R O F I L E D C O M PA N Y

a Sapphire in the rough Miner’s Gate to retail:
a Sapphire’s Journey to the new age

otCqB: rGnP

I

n 2014, entrepreneur Joseph (Yossi)
Segelman set out to launch a revolutionary, premium, global, direct-toconsumer Sapphire Jewelry brand, aptly
named Reign Sapphires. Today, Reign
Sapphire Corporation (OTCQB; RGNP),
has emerged as a growing publicly traded
company recently launching its stunning
inaugural jewelry collection at www.reignsapphires.com.
Reign Sapphire Corporation is the world’s
first vertically integrated “Miners-Gate to
Retail” model featuring Australian Sapphires
and Fine Sapphire Jewelry.
Reign’s distinction, and marked competitive
advantage, derives from its unique approach
to gemstone sourcing, quality and supply
chain controls, coupled with sophisticated,
targeted Brand Identity. Reign Sapphire’s allnatural, conflict free, ethically processed sapphires are mined in Australia from verified
sources and jewelry is designed and manufactured in Los Angeles. Reign purchases rough
sapphires in bulk directly from commercial
miners in Australia and closely controls and
manages each step along the supply chain,
from sorting, polishing and cutting to design
and manufacturing and direct to consumer
sales of Reign branded fine jewelry.
Reign’s disruptive brand identity is founded upon a modern take on classic designs.
The brand offers three distinct collections,
Reign Opulence, offering statement pieces
at a higher end price point, Reign Signature,
a fine jewelry collection, and Reign Classics,
an “accessibly priced” line. Taking a nod
from old Hollywood, the pieces reflect
the decadence from a by-gone era while

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designed with a very modern approach.
Jewelry from the Company’s inaugural collection was worn on the Red Carpet at the
2016 Golden Globe Awards, 2016 Screen
Actors Guild Awards, 2016 British Academy
of Film and Television Awards (BAFTA) and
the 88th Academy Awards.
Reign’s go-to-market initiatives are as
bold as the design approach, aspiring to penetrate the underserved colored gemstones
retail jewelry segment, where only 8% of
total sales include colored gemstones. Reign
has kicked off its consumer marketing by
leveraging social and digital media networks
with striking digital marketing and advertising campaigns, and influencer/blogger outreach. Reign intends to expand their efforts
through establishing exclusive distribution
partners, marketing its products in boutique jewelry store windows, and finally by
growing its retail presence through its own
future Beverly Hills flagship Reign Sapphires
Store. Reign’s compelling, highly competitive

business model and stunning appeal have
the potential to REIGN down large future
profits, if CEO Segelman’s vision comes to
full fruition.
Learn more about Reign Sapphire
Corporation at www.reignsc.com and www.
reignsapphires.com n
The company paid consideration to SNN or its affiliates for this article.

MicroCap Review Magazine 10 Year Anniversary Issue

29

F E AT U R E D A RT I C L E

MicroCap Guru
W

elcome to the world of the MicroCap Guru. I’m Jim
Collins and in conjunction with SNN, the publishers
of MicroCap Review, I’m launching a newsletter dedicated to
microcap stocks.

A few questions should be answered:
What is a microcap stock?  A stock
with a market capitalization of less than
$500 million.   Because of their size, these
companies tend to be ignored by the research
departments of investment banks. Therein
lies the opportunity for the savvy, wellinformed investor.  
Why am I a Guru?  Well, guru-ness may
be in the eye of the beholder, but I have
spent my entire adult life analyzing stocks.
For 11 years I worked in equity research for
big investment banks (Lehman, DLJ and
UBS) based in New York and in London,
attaining the CFA designation along the
way.   I’ve traveled the world researching
companies and spent countless hours poring
over financial statements of all manner of
companies. 

n BY JIM COLLINS

30

Where else can I find your services? The
asset management services I provide via my
company, Portfolio Guru, LLC, are on an
invitation-only basis. I also write for several
financial publications. I write 5 columns per
month for Forbes and 8 per month for Real
Money @ TheStreet.com. I’ve also been featured on Fox Business, BNN and quoted in
the Wall Street Journal, New York Times
and, of course, Microcap Review. 
Why subscribe to the MicroCap Guru
newsletter? First and foremost, the MicroCap
Guru is going to be a research-focused publication. I am not compensated by the companies I will write on, and all ownership
positions will be disclosed. 
How will the MicroCap Guru differ from
other small-stock newsletters?
There will be no exclamation points!!!!!!!!
Seriously, I’m just so sick of having to muck
through 347 e-mails per day with idiotic
come-ons advertising services that guarantee “8,000 percent returns!” from individual
stocks or warn of a “coming catastrophe!”
to scare investors into owning commodities
that have no intrinsic value. There will be
no idiotic conspiracy theories about “secret
pipelines” or “government manipulation” in
the MicroCap Guru. 
So, MicroCap Guru won’t be filled with
nonsense, but will it contain?  Each 8-page
monthly issue will have the following:
• market overview

MicroCap Review Magazine 10 Year Anniversary Issue

• 2-page company-specific research report
• another 2-page company-specific
research report
• sector spotlight
• MicroCap Guru performance update
Aren’t the research reports that will be
contained in MicroCap Guru typically
reserved for large corporate and institutional investors?    Yes, and that’s the true
value for the MicroCap Guru subscriber: real
research on underfollowed stocks. 
Will there be specific stock recommendations in the MicroCap Guru?  Yes, each of
the research reports will contain a detailed
valuation and 12-month target price for that
stock. If that target price is at least 50% of
the current stock price, I›ll tell you to buy it.
If I›m buying it for myself and my Portfolio
Guru, LLC asset management clients, I›ll tell
you that, too.
Is 50% upside too much to look for in a
stock? No. Due to their small size and typical
lack of liquidity, microcaps are inherently
risky. Thus there must be a higher potential
reward to justify their inclusion in your
portfolio. Not every recommendation will
work, but I promise to keep an accurate
record of performance of all highlighted
stocks and to publish that data in each
monthly issue. 
How do I subscribe?  Subscription info is
in the advertisement on the facing page. n

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Delivered to your inbox every month:
Stock Picks
Each monthly newsletter will contain actionable
analysis of undervalued, underfollowed
and undiscovered MicroCap companies.

In-Depth Company Specific Research

MicroCap Guru is a
monthly email newsletter
that delivers actionable insights
from a MicroCap expert.

Each month at least two companies will be
highlighted via detailed Wall Street quality
research notes with earnings estimates,
valuations and price targets.

Macro Context
The MicroCap Guru will also provide research
driven analysis on the overall MicroCap market and
attractive subsectors within the MicroCap universe.

Highly Experienced Analysis
Jim Collins, the author of the MicroCap Guru, has
25 years of experience with major Wall Street
Investment Banks and with his own money
management firm, The Portfolio Guru, LLC

Subscribe Now at

MicroCapGuru.com

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Yearly
Subscription

$595

MicroCap Review Magazine 10 Year Anniversary Issue

31

F E AT U R E D A R T I C L E

The Cyclical Nature of
Investing in Resources

E

xcerpt from the Planet MicroCap Podcast, “Episode 21 – The Cyclical Nature of Investing in Resources with
Rick Rule, U.S. Sprott Holdings, Inc.”

“The Cyclical Nature of Investing in
Resources” – some would argue that you could
replace ‘resources’ with any sector. Everything
is cyclical. I would argue, sure – that may be
theoretically true, but is there any other sector
that relies so heavily on understanding whether or not we are in a bear or bull market? As
you’ve probably noticed in our interviews
with individuals like Rick Rule, we usually
ask, “So, where are we at in the mining cycle?”
This is a common question he gets quite often
because, quite frankly, that is a big indicator
as to when to play this market. The following
excerpt is from my recent interview with Rick
Rule from the Planet MicroCap Podcast that
discusses why understanding cycles can help
you determine when and how to participate
in the natural resources market.
B: How many cycles have you been through
in your lifetime thus far?
R: Well…. let me see, um, I guess this is my
fourth major cycle. The first one of course took
place in the decade of the 70’s, the makeable
market and I’m...You know at a point in time
when I experienced that I was at once too inexperienced to understand what was going on,
but I’ve been through three cycles since, that I
have been completely cognizant of.

n BY RICK RULE

32

B: What does a cycle mean? What does this
mean especially in mining?
R: Well Robert, that’s a wonderful question…all of the natural resource industries
are extremely capital intensive, which means
that they are extremely cyclical. When you
look at the cost associated with a commodity, there are many costs that are in addition
to the cash costs associated with extracting
the resource. The front end cost, including
the capital for plant construction are very
large factors and construction can take a very
very very long time. What that means, is that
when the price of a commodity goes up, the
supply of the commodity doesn’t go up in
commensurate fashion, quickly. So, you get
these extraordinary up moves in commodity
prices…the producer can’t respond to price
signals quickly, they do so overtime. But
overtime, just as the thesis associated with the
commodities being very well demonstrated
in the market, the high price of the commodity begins to constrict demand and increase
supply and when that happens, of course the
price of the commodity falls. When the price
of the commodity falls the industry itself
doesn’t cut production as fast as they would
in other industries, because the cash cost of
production isn’t the same as the total cost
of production, which includes the capital.
What that means, is that the margins in the
industries and the price of the commodity
fluctuates very wildly relative to median and
to the mean. And what it means further for
an investor, is that you have two choices, you
have to be a contrarian or you’re going to be
a victim. You have to be in these businesses
when nobody wants to be in them, and when

MicroCap Review Magazine 10 Year Anniversary Issue

they return to favor, in particular hyper-favor,
you need to remember to sell.
B: So that actually leads into my next question when it comes to philosophy. When
understanding natural resources and when
I first got into it and I started learning
and listening to you and reading Brent’s
Newsletter, it seemed more often than not,
that this word contrarian continued to come
up, over and over again. So how do you
become the best contrarian?
R: Experience is what did it to me. In the
1970’s, as a young man, I made an extraordinary amount of money, while all of my peers
were losing money in the general market. Like
all young men, I think, I confused a bull market with brains. And when the sector turned
down, I went from being a very wealthy
young man to having a negative net-worth.
There’s nothing like experiencing it up-close
and personal to turn you into a contrarian.
Most of the younger generation, who became
involved in natural resources and precious
metals, became involved towards the end of
the last decade. In other words, they came
into a bull market and any of them who have
experienced the bear market that was the
necessary consequences of the bull market
have enough experience now that they are or
will be contrarians. Think about what you saw
in the small cap natural resource market: you
saw the index in the last bull market, go up
five or six fold. You saw numerous stocks that
went up 2,000 or 3,000%. And then after that
you saw the index, the TSX-V resource index,
fall by 90% in real terms. That’s a market that
fell by half and then for good measure, fell by
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MicroCap Review Magazine 10 Year Anniversary Issue

33

half again, and then for good measure, fell by
half again. The experience of being in a market that goes up 10 times, then comes off by
90%, is probably ample illustration of the fact
that you either must be a contrarian or you
will be a victim.
B: When you’re a contrarian you have different ways in which you’re now going to go
in and pick certain companies to invest in.
Rather than giving an over arching “what
are you looking for”, I want to know in
this current market, what are you looking
for and when do you believe it is the right
time to start looking at MicroCaps in the
resource sector?
R: Well, certainly if you’re under invested
in the gold space, the right time is now in
gold and precious metals. The truth is we’re
through the bear market and into the bull
market. Now, we’ve had a pretty substantial
up move in the metal and in particular in the
stocks. So it wouldn’t surprise me if for the next
3 to 4 months both the metal and the stocks
stayed flat, but the truth is remember we are in a
market in terms of equities which is off by 90%.
So a 50% up move basically recoups less than
10% of what was lost. So if you’re underweight
precious metals and precious metals equities, I
would suggest that the time to get involved in

34

that sector of the market is now. If you have a
good portfolio position in the precious metals
stocks, by contrast you might want to take a
little, tiny bit of the table. The truth is you need
to get paid all the way through a bull market.
In the broader material segment, I think we’ve
bottomed. In other words, I think we have
seen the worst, but I think we’re going to have
a saucer shaped recovery and my expectation
is that a really robust bull market in the nonprecious metals resource space will take 18 to 24
months to materialize and my suspicion is that
in particular in the oil and gas space that you’re
going to see a lot of credit market dislocation in
energy. Beginning in the junk bond markets and
that part will begin in the third or fourth quarter
of this year. So you may see weakness, further
weakness, in the sub-billion dollar market-cap
space in the oil and gas sector and you’re going
to see, not so much weakness with microcap
stocks, but certainly you’re going to see massive
dislocation in the junk bond markets in the
energy space. But you need to remember, that
when you are hearing about, reading about or
even experiencing absolute carnage in the market and if all of your competitors are afraid, it’s
time for you to be brave. So, beginning sort of
9 months from now, through 18 months from
now, would be a really good time to position in
the industrial materials markets.

MicroCap Review Magazine 10 Year Anniversary Issue

B: And where could our audience go to
find more information?
R: Well I would love it if your audience
would come to the Sprott Global website: www.
Sprottglobal.com. Two comments with regards
to that; we have an in house blog from Sprott,
which catalogues our best ideas and information. I know your audience will get their
money’s worthfrom it, because it’s absolutely
free. That’s called “Sprott’s Thoughts”, you go to
www.SprottGlobal.com for that information.
Second thing though is a special offer for
your subscribers and listeners, which is I
personally will do a portfolio review if they
send me an email with their junior resource
portfolio, in the text, not as an attachment,
with both name and stock symbols. Send that
to contact@sprottglobal.com, I will personally
review and rank their portfolio, no obligation
and send it back to them by return email. n
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 network of contacts in the natural resource and finance
worlds. As Director, President, and Chief Executive
Officer 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 conferences, and is interviewed for numerous radio,
television, 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 markets, having originated and participated in hundreds
of debt and equity transactions with private, prepublic 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, segregated account money management and investment
partnership management involving both equity and
debt instruments, across the entire spectrum of the
natural resource industry.

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PROFILED COMPANY

eurasian Minerals, inc.
nySe Mkt: eMXX, tSX-V: eMX

E

urasian Minerals, Inc. got its start
when gold exploration geologist
Dave Cole gambled security, a steady
income and rolled the dice. He left his eighteen years of work and elevated position at
one of the world’s largest gold producers,
Newmont Mining. The time seemed right
and Mr. Cole raised money and interest by
pounding on the doors in North America’s
natural resource capital, Vancouver BC, along
with teaming with metals and energy venture
investor and magnate, Rick Rule. Cole quickly assembled a team of seasoned exploration geologists from Turkey, Czech Republic,
Scotland and the US; the majority of them
wielding Ph.D.’s and long histories of Big
Company experience. The early years were
spent prospecting for gold and copper in geographic backwaters, but mineral rich countries such as Romania, Serbia and Kyrgyzstan.
As the portfolio of promising exploration
properties began to expand, industry insiders
began to take notice. Once again the timing
was right and the Company publically traded
its first shares in early December, 2003.
Eurasian Minerals quickly developed a
track record of success in minerals exploration discovery, minerals royalty generation,
and strategic investment. The Company’s
global property and royalty portfolio is situated in the Western USA, Sweden, Norway,
Australia, New Zealand, Haiti, Slovakia and
Peru, as well as legacies from the early days
in Serbia, Turkey and Kyrgyzstan. Strategic
investments in mineral property companies
have also been placed with key players operating in Chile and Far Eastern Russia.
Eurasian’s primary focus is on gold and copper. But its diversified approach to business provides a broad spectrum of exposure to multiple
opportunities, while mitigating a litany of risks.

www.stocknewsnow.com

The Company enjoys cash flowing royalties emanating from gold production on
Nevada’s world famous Carlin Trend. In
addition, EMX has a stream of advance royalty payments from organically grown royalty properties that have yet to reach production. Royalty payments, in addition to funds
received from partners for periodic property
payments, milestone payments and management fees, help to cover operating expenses
and provide capital to quickly exploit emerging business opportunities.
At the heart of Eurasian’s business model is
Prospect Generation. EMX, as many of the staff
call the company, acquires early-stage mineral exploration properties with unrecognized
upside, advances the project on a low cost
basis, and then seeks partners with the geologic expertise and funding to further advance it
to discovery and onto production. This methodology is very similar to the bio-tech model
of developing new pharmaceuticals.
The Company’s preferred M.O. is to execute agreements where partners can earn
a 100% equity interest with work commitments, milestone payments and advance
royalty payments, with EMX retaining a

production royalty. Cole is fond of saying:
“We sell the risk and keep the reward”.
The natural resource sector has suffered a
long, difficult downturn, taking many companies to the edge of the mine shaft where
some have fallen in. Eurasian has dug in
admirably well and appears well poised to
take advantage of what now seems to be a
new bull market in metals. With a growing
royalty portfolio, ongoing cash flow and a
host world class partners such as Newmont
Mining and Rio Tinto advancing their assets,
their future may indeed glisten like gold.
Eurasian Minerals Inc. trades in Canada
under the symbol EMX and in the USA
under EMXX. n
The company paid consideration to SNN or its affiliates for this article.

MicroCap Review Magazine 10 Year Anniversary Issue

35

PROFILED COMPANY

theralase
technologies inc.
tSX-V: tlt, otC Pink: tltFF

R

oger Dumoulin-White was a senior executive for Ford Electronics Manufacturing
Corporation, a division of Ford Motor Company, running a $30 million a year

business for Ford with 400 employees reporting to him.

Roger Dumoulin-White, President
and CEO

36

Life was good for Roger, or so it seemed, and
then a call came, which would change his
life forever.
In 1993, Roger’s father, a jeweler called
him one evening to proclaim that he had
been introduced to a new medical technology and wanted to speak to Roger about it.
Roger travelled to his father’s jewelry store
for a meeting. His father stated that he has
met an inventor in Belgium, who had developed a therapeutic laser that was able to heal
tissue. Roger the penultimate skeptic, asked
to see it. Oddly enough, his father stated that
he couldn’t show it to him because it was an
invisible laser. Now Roger was really skeptical and thought that his father had gone off
the proverbial deep end. Roger persisted
and his father produced a rough prototype
of a medical laser that produced an invisible
laser light. His father proceeded to place it
on his own arm to demonstrate and Roger
instantly snatched it out of his father’s hand
proclaiming, “Dad, if it is a laser, it will burn
you. Lasers burn tissue.” His father claimed
that it healed tissue and Roger tired from the
banter, and clearly not convinced, stated that
he had to leave, as he had to work early the
next morning. His Dad produced a one page
document, translated from Flemish, which

MicroCap Review Magazine 10 Year Anniversary Issue

detailed how fibroblasts (the building blocks
of connective tissue, like tendons) had an
increased mitosis rate (cell division leading
to growth of new tissue) of 100% under the
influence of this mystery invisible laser light.
Roger took this page and pondered on the
drive home, “How on earth could an invisible
laser light influence the growth of biological
tissue?” After all, we are not plants, we don’t
require sunlight to complete photosynthesis.
Roger being a technical person at heart
decided to research this phenomenon to see
if it had any validity. After a year and of due
diligence, Roger had discovered that this
technology had merit. It was in its infancy in
Europe, was unheard of in North America,
but had solid scientific data supporting its
biological effect on tissue, although not well
understood by scientific researchers or medical doctors.
Roger flew to Belgium in July 1994, met
the inventor, the doctors who were using it
and the patients who were being treated and
fell in love with the technology. He negotiated the worldwide exclusive rights to the technology and flew back to Toronto where he
walked into head office for Ford Electronics
and promptly resigned his position, starting Theralase from scratch August 1, 1994.
www.stocknewsnow.com

Theralase Technologies Inc. (“Theralase”)
(TLT: TSXV, TLTFF, OTC) was born.
Roger’s research indicated that this technology had the power to heal tissue with
none of the side effects of surgery or pharmaceutical drugs, such as ineffective treatments, long healing times, scar tissue or
addictions. His vision was to design, manufacture and distribute a therapeutic laser
which met the stringent criteria of Western
medicine and delivered safe and effective
treatments to patient’s suffering from a wide
range of nerve, muscle and joint conditions.
Theralase designed 3 successively more
effective therapeutic laser platforms, the
TLC-500, the TLC-1000 (which completed
$2 M in sales in 2015) and now the TLC2000, which uses patented CellSensing® technology to automatically detect injured tissue
and adjust the power and time (“dose”)
of laser light based on a patient’s physical
characteristics (skin color, subcutaneous fat,
muscle thickness, etc.) to deliver effective
treatments with healing rates in excess of
90%.
In 2000, Roger was reading an obscure
www.stocknewsnow.com

article in a trade magazine called Laser
Focus World where he read a two line article
about a female chemistry professor that was
starting to develop new drugs called Photo
Dynamic Compounds (“PDC”), which had
an attraction to cancer cells and when light
activated could destroy the cancer cell from
the inside out.
This caught Roger’s eye and he wrote to
the researcher of his interest. She sent her
latest research on the subject and Roger
couldn’t understand a word about the technology, but after a year of due diligence and
research was able to partially understand the
complex chemical formulas that comprised

her research. Again, Roger fell in love with
the technology, flew to Virginia Tech (“VT”)
in Blacksburg, Virginia and negotiated the
worldwide exclusive rights to the technology.
Roger set to work designing laser systems
that could activate these next generation
anti-cancer drugs; however, something was
missing, where would the technology be
used to treat patients? What type of cancer
patient would respond best to the technology? Roger then negotiated a working relationship with one of the top 3 research cancer institutes in the world, the elite Princess
Margaret Cancer Centre, part of University
Health Network (“UHN”) based in Toronto,

Roger’s research indicated that this technology
had the power to heal tissue with none of the side
effects of surgery or pharmaceutical drugs, such
as ineffective treatments, long healing times, scar
tissue or addictions.
MicroCap Review Magazine 10 Year Anniversary Issue

37

In 2012, Theralase and VT won the Popular
Mechanics Award for one of the best ten
technologies in the United States.
Canada.
The trilogy was now complete, VT would
design and manufacture the PDCs, Theralase
would manufacture the lasers to effectively
activate them and UHN would test the combination on cancer patients to prove their
safety and efficacy.
In 2012, Theralase and VT won the
Popular Mechanics Award for one of the
best ten technologies in the United States.
There were numerous announcements and
media coverage, which caught the attention
of another female chemistry professor from
Acadia University in Nova Scotia, Canada,
who was also designing and developing
PDCs. She contacted Roger and Roger now
fully versed on the PDC science, reviewed
her research and again fell in love with the
technology, negotiating the worldwide exclusive rights to this new platform of PDCs.
Theralase the penultimate visionary
acquired the worldwide exclusive rights to
two groundbreaking technologies: therapeutic lasers to heal pain and PDCs to destroy
cancer.
Roger then set upon hiring the right engi-

neers, sales and marketing professionals,
scientific researchers and clinical staff to
build the Company, but quickly realized
that these high priced heads all cost significant money, so in 2003 Roger negotiated a
Reverse Takeover with a public shell and
took the Company public raising a small
amount of funds at the time.
Fast forward to today, multiple rounds
of financing and strategic hiring has placed
the Company on the cusp of greatness. It
received Health Canada and FDA approval
of its next generation TLC-2000 therapeutic laser with CellSensing® technology in
December 2015 and is strategically rolling this technology out in Canada and the
United States. Theralase expects to grow this
division into $50 million annually in the next
5 years as it enters mainstream medicine in
the United States.
Theralase is also commencing a Phase Ib
first-in-man clinical trial for Non-Muscle
Invasive Bladder Cancer (“NMIBC”)
in August 2016 at UHN, pending Health
Canada approval of its laser system used to
activate the PDC.

It received Health Canada and FDA approval of its
next generation TLC-2000 therapeutic laser with
CellSensing® technology in December 2015 and is
strategically rolling this technology out in Canada
and the United States. Theralase expects to grow
this division into $50 million annually in the next
5 years as it enters mainstream medicine in the
United States.
38

MicroCap Review Magazine 10 Year Anniversary Issue

The US pain market is estimated at $100
billion dollars annually and growing rapidly
with the aging population, a large addressable market.
The US cancer market for NMIBC is estimated at $4 billion annually and Theralase
expects to secure 25% of this market on
commercialization of its anti-cancer technology at the end of 2018.
So Theralase after 22 years of hard work
has finally reached an inflection point and
is set to attack 2 multi-billion dollar behemoths in the world; namely, eliminating pain
and destroying cancer.
To complete these daunting tasks,
Theralase has hired a direct sales and marketing force in Canada and the United States
to sell its next generation therapeutic laser
and has signed agreements to work with one
of the top 3 cancer research institutes in the
world to prove that its next generation anticancer technology has the ability to safely
and effectively destroy cancer. As a bonus,
the PDC technology has demonstrated the
ability to prevent cancer recurrence through
an immune mediated response that vaccinates the patient against further cancer
attacks. An elegant one-two punch to a deadly disease, destroying the primary tumour,
one, and then preventing its recurrence, two
and knockout.
Further developments for the Company
include commencing research into the
destruction of lung cancer and brain cancer
with its next generation anti-cancer technology, later this year. n
For more information: www.theralase.com
The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com

F E AT U R E D A RT I C L E

Adjusting to Public Company
Life After Ringing the Bell

P

articipating in the opening bell ceremony on your first trading day as
a public company may feel like the
quintessential Times Square New Year’s Eve
celebration for you and your team: lights,
cameras, ticker-tape and a clock counting
down to that single celebratory moment
on the cusp of your future. But back in the
office, what will January 2 as a public company look like?
Implementing. Along with a ticker symbol
comes a full suite of new or revised corporate documents, including updated charters, bylaws and board committee charters.
Provide support and training for your Board,
which may be experiencing new or changing
membership, to ensure that they understand
and fulfill their enhanced responsibilities.
Prepare management and other key stakeholders for compliance with insider owner-

n BY MARGARET ROSENFELD

www.stocknewsnow.com

ship and trading regulations and periodically
refresh them on your company’s trading
policy. Pay close attention to the disclosure
controls and procedures that your company
adopts and be ready with a communications
plan. Actively addressing changes will help
ensure a smoother, swifter transition.
Monitoring. Newly public companies are
not accustomed to continually evaluating
whether corporate activities trigger public
disclosure. Entering into a significant acquisition agreement may naturally raise a yellow
flag, but what about adopting a new form
of equity award agreement, entering into a
new headquarters lease or soliciting interest
in the sale of a facility? Many activities that
you may think of as mundane may require
a time-sensitive SEC filing. In addition,
the listing exchanges will require advanced
notice of certain disclosures – so take care to
not overlook those requirements. Ensuring
that the appropriate personnel are mindful
of the disclosure requirements and communicate pertinent developments to the
appropriate people can help avoid the consequences of late or missed securities filings
or listing exchange communications. Be sure
to also keep abreast of new rules as they
become effective and understand how they
will affect your organization; many rules will
apply differently, or not at all, to newly public
and/or smaller public companies.
Communicating. Even small public companies have investor relations functions
(either in-house or out-sourced) dedicated
to understanding and communicating with
the company’s institutional shareholder base.
In addition to creating and maintaining
interest in your stock, proactive investor

outreach can help evaluate how such shareholders may be influenced by proxy advisory
firm recommendations, anticipate or avoid
shareholder proposals or determine the
impact such shareholders may have on vote
outcomes. Your company will need to carefully control the timing and content of all
disseminations of information, from quarterly earnings releases to tweets by senior
management, to ensure that only appropriate
information reaches the public marketplace.
These are just a few areas that will draw
increased time and attention from your company’s personnel once public. The process
of going public can appear overwhelming.
After what sometimes feels like a crash
course on permissible marketing, the finalization of offering materials and ringing the
bell draped in your company’s logo, the value
of being prepared for the transition into the
rest of your public life cannot be underestimated. n
Partner Margaret Rosenfeld has more than 20 years
of experience with public companies and she leads
the global Microcap practice at Smith Anderson
law firm (SmithLaw.com). Founded in 1912, Smith
Anderson is the largest business and litigation law
firm headquartered in the world-renowned Research
Triangle region of North Carolina. Smith Anderson
provides a full range of legal services to a diverse
group of regional, national and international companies and is well-versed in assisting small public
companies with initial public offerings, ongoing
public reporting and corporate governance requirements, structured financings such as PIPEs, registered directs, CMPOs, rights offerings, ATM/equity
lines, convertible preferred and convertible debt, and
alternative financings under Title II, Title III and
Title IV of the JOBS Act.  Smith Anderson is proud
to have represented Groundfloor Finance as the first
company to qualify an offering under Regulation A+. 
For more information, please contact Margaret
Rosenfeld at mrosenfeld@smithlaw.com or 919-8216714.

MicroCap Review Magazine 10 Year Anniversary Issue

39

F E AT U R E A RT I C L E

Reg A+ “From Converting Reservations
Into Buy Orders and Exit Strategies”

A

s Reg A+ deals begin the rigors of marketing and taking reservations from potential investors can you explain the process of converting a “reservation” into an actual buy? What is the process and who
does it?

A “reservation” is a very soft indication
of interest that is received by a Company
during a “Testing the waters” marketing
campaign of a Reg. A+ deal. It is a nonbinding indication of interest that may
take place before anything is filed with the
SEC (Securities & Exchange Commission).
During “Testing the waters” there is no
offering and thus there is no mechanism to
accept cash into escrow. Companies that
use “Testing the waters” must, if they later
decide to pursue a Reg. A+ offering, file with
the SEC under Tier II of Reg. A+ because
otherwise “Testing the waters” activities are
likely to cast them afoul of state regulations (see accompanying Chart from Mintz
Levin entitled, “Comparison Chart of Various
Securities Offerings”).
The use of “Testing the waters” (not to
be confused with the version that precedes

n BY DAVID WEILD
AND DANIEL BARFIELD
WEILD & CO.

40

the filing of an S-1 or full-blown IPO and
is used to poll institutional investors) and
“reservations” in Reg. A+ is intended to help
the Company gauge the likelihood that a
deal can get done BEFORE the Company
decides to incur the cost of preparing and filing Form 1-A (the Regulation A+ placement
memorandum) with the SEC. The investor may place a non-binding “reservation.”
Because there is no obligation on the part
of the person making the reservation, some
reservations will be inflated in size or simply
fabricated by individuals who have no intention of making an investment.
Testing the waters in Reg. A+ is generally
accomplished through email or social network messaging to the natural affinity group
of a given company. For consumer companies, their affinity group is typically made
up of customers. For social networking
companies, their affinity group will be made
up of users. For companies that are posting on a crowdfunding portal, their affinity
group will include members of the portal.
Companies with larger and more “engaged”
affinity groups are likely to see a greater
number of “reservations” from a testing the
waters exercise. These companies, market
conditions aside, should have a higher likelihood of raising more money than companies with smaller and less engaged affinity
groups.
Why is it that although Reg. A+ is gaining in
popularity but the closing of deals is off to a

MicroCap Review Magazine 10 Year Anniversary Issue

slow closing rate? And many deals are not
closing at all.
Weild & Co. advises companies on putting
together management groups for underwritten offerings (e.g., traditional IPOs filed
under Form S-1). We are beginning to do
this for Reg. A+ issuers (e.g., offerings filed
under Form A-1). Recently, we reached out
to and spoke to as many active Reg. A+ filers
as would speak to us. What we discovered is
an emerging marketplace where companies
and service providers are learning as they go,
and in the process, making every mistake
in the book. The market is characterized
by naïve but eager participants and a lack of
quality advice on deal structure, packaging,
distribution and marketing. This combination, we expect, will lead to a very high
failure rate for these companies. Common
mistakes we see being made include:
i. Unmarketable deal structures – Whether
it be the use of non-voting shares or deal
sizes that are too large for the stage of
company or the size of the affinity group,
many issuers have expectations that are not
grounded.
ii. Poorly articulated story – Investors
and sales people need to immediately “get”
a company’s value proposition, its business
and how the company will provide returns to
investors. If the story isn’t made obvious and
it doesn’t “resonate” the offering won’t stand
much of a chance of getting done.
iii. Institutional story in a largely retail
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market – Crowdfunding and Reg. A+ will
largely succeed by attracting retail investors. This is because institutional investors
require greater liquidity than small offerings
can typically provide. While there are some
exceptions to this, those institutions tend to
be private placement buyers and the terms
and conditions that those buyers require are
markedly tighter than what is typically experienced in public offerings.
iv. Inadequate distribution – Most of the
distribution groups that we see backing Reg.
A+ offerings are undersized. Having priced
over 500 IPOs earlier on in my career, I was
frequently asked, “How much of the offering
should go institutional and how much should
go retail?” I would reply, “That is the wrong
question?” You should be asking, “How can
we maximize demand to create allocation
options and leverage?” Companies need to
come to market as if they have to sell 100%
of the deal out the direct retail channel, the
retail broker channel and the institutional
investor channel. They need to bring their
“A” distribution game. Most Reg. A+ issuers
are mounting a “D” distribution game. At
this point, I would be giving out no “As” and
may one or two “Bs.” That doesn’t bode well
for completion percentages.
v. Inadequate marketing budget – It costs
money to market stocks and we find that
many companies are woefully underestimating the war chest that they will need in order
to adequately support the marketing of their
offering.
Looking ahead into the future, what can
investors in Reg A + deals expect as their
exit strategies?
There are likely to be two types of Reg. A+
transactions: 1) Ones that trade publicly and
2) Ones that don’t trade publicly. In the case
of a publicly traded Reg. A+ offering, the
investor’s exit path is to sell the stock in the
public market. However, be careful, because
if the stock is traded in the OTC Market
and the original placement was quite small,
the stock is apt to be illiquid, unsupported,
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and the transaction cost may be very high
as measured by trading “spread” and impact
on the stock price. For larger offerings and
offerings that are listed on NASDAQ or
NYSE, it may be easier to sell the stock. For
Reg. A+ offerings whose shares are restricted
from trading, the investor will generally
need to wait for the Company to be sold or
to do a formal IPO. Thus, for investors that
are considering an investment in a company
whose shares will not be traded, investors
should factor into their investment decision
the likelihood of an exchange listing, IPO
or sale of the Company. If the Company
does not paint a credible picture of a path
to liquidity, investors are less apt to buy the
stock.
Traditional Wall Street investment bankers
look to company valuations when determining capital formation looking at before
capital infusion and after capital infusion for
valuation and deal pricing. How would you
compare determining Reg A+ companies’
valuations methods to traditional Wall Street
methods?
Reg. A+ companies are still companies.
Reg. A+ investments are still investments.
As such, the valuation methodologies used
should be no different than those applied by
professional investors, investment bankers
and research analysts that are “reasonably
schooled in the art.” Treat investors with
respect. Provide value. Have a good business model and a qualified management
team. Don’t look to the Reg. A+ market as
a place where you can get take shortcuts or
inflate values because it will end badly for
everyone. As is standard for all types of
investments, if there is no liquidity (e.g. private placement) or the prospect of limited
liquidity, investors will demand a significant
discount to the valuations of larger, more
established and liquid companies.

Where is it headed? What needs to be done?
The Reg. A+ market is a “Bad News | Great
News” Story. The Bad News is that many
people are experimenting and there will be
many mishaps and lots of failure. The Great
News is that there are a lot of people experimenting that this will drive learning curves,
innovation, lobbying and improvements in
outcomes, rules and regulation enabling
small business to access capital.
We are on the ground floor of a revolution
that will, when fully developed, reshape the
U.S. economy for the benefit of generations
to come. The road to public capital formation had been closed to small companies.
Today, it’s open, but there are potholes,
roadblocks and detours in the way. Just
like any great infrastructure project, there
will be companies that will navigate past the
potholes, roadblocks and detours while others will never make it to their destination.
However, the armies of entrepreneurs that
have been unleashed by the JOBS Act in the
name of “Access to capital” will, we believe,
grind away the potholes and roadblocks
while removing the detours. We will look
back on this chapter in our history and find
that Reg. A+ became a formidable contributor to America’s growth economy. n
David Weild is known as the “Father of the JOBS Act.”
He is CEO of Weild & Co., the disruptive investment
bank creating a network of investment bankers to
rekindle small cap, microcap and private company
finance. Weild was vice chairman of The NASDAQ
Stock Market and head of equity capital markets and
investment banking at a major investment bank. He
testifies frequently in Congress, at the SEC and has spoken at the G-20, OECD, Budapest Economic Forum,
European Federation of Exchanges, Arab Federation
of Exchanges and numerous conferences on the JOBS
Act and emergent forms of finance including Reg. A+
and Crowdfunding. Weild is a graduate of Wesleyan
University and the Stern School of Business. (See www.
weildco.com)
Daniel Barfield is a banking, legal and legislative analyst at Weild & Co. He is a graduate of the University
of Texas at Austin.

You are a well-known and sophisticated person in the small company space, what’s your
opinion on the state of Reg A+ at this time?
MicroCap Review Magazine 10 Year Anniversary Issue

41

F E AT U R E D A RT I C L E

So, What’s Wrong with Reg A+?

O

n June 19, 2015 amendments to Regulation A commonly known
as Regulation A+ became effective.

Since the adoption of the rules, there has been
much fanfare. The poster child for Regulation
A+ is Elio Motors, a designer and manufacturer of a three-wheeled, low-cost, efficient and
environmentally friendly vehicle. Elio Motors
launched its Regulation A+ campaign last year
around the time that Regulation A+ became
effective. After unrivaled marketing efforts
Elio Motors was able to raise $17 million in
February of 2016 at a pre-money valuation of
about $325 million. This successful deal has
not had many followers, however, Regulation
A+ deal activity is on the rise. According to
Rod Turner, the CEO of Manhattan Street
Capital, SEC qualified Regulation A+ filings
accelerated to 2.5 per week during May 2016.
Several articles have addressed the benefits of Regulation A+, which include the
ability of an issuer to “test the waters” before
filing an offering statement with the SEC, the
ability to sell securities to both accredited
and non-accredited investors and raise up
to $50 million, state blue sky preemption,
a more streamlined offering statement and
SEC review process, lesser ongoing reporting
requirements, the ability to sell unrestricted
securities and, most importantly, the ability to leverage all different types of deal
marketing avenues like social media, direct

n BY LOUIS A. BEVILACQUA, ESQ.

42

mail, internet, radio and television. So,
what is wrong with Reg A+? I have polled
the Reg A+ brain trust, including Steve
Dresner, the CEO of Dealflow.com, Lou
Taubman of Hunter Taubman Fischer LLC,
and Rod Turner, the CEO of Manhattan
Street Capital. This article discusses some of
the challenges that were identified.
The biggest challenge for issuers raising
capital in a Regulation A+ offering is the cost
to conduct the offering. From start to finish
a Regulation A+ offering will cost between
$250,000 and $500,000 mostly depending on
how big the marketing budget is. This range
does not include fees payable to an underwriter. Although the cost is much less than
a traditional IPO, which can easily exceed
$1.5 million in fees, it is still a sizable sum for
an emerging company trying to raise capital.
The solution, of course, is bridge financing. It
seems that issuers are willing to provide generous terms for the bridge money, yet hedge
and VC funds are slow to move into the space.
Another serious challenge faced by
Regulation A+ issuers is the lack of institutional investor acceptance. Given the relative novelty of Regulation A+, it is difficult to attract
institutional money. Ideally, the “crowd” would
be used to round out institutional investments
that have already been secured and piggyback
off of institutional level due diligence. It may
take some time and several successful offerings
before institutions begin regularly investing in
Regulation A+ offerings.
Lack of liquidity is also at the top of the
list of Regulation A+ challenges. Issuers will
need to conduct aggressive investor relations campaigns, seek research coverage and
provide heightened levels of transparency
in order to increase volume following their

MicroCap Review Magazine 10 Year Anniversary Issue

Regulation A+ offering.
Other challenges like the requirement for
placement agents to submit to a FINRA Rule
5110 compensation review, the lack of preemption for secondary transactions in securities, the
inability of public companies to use Regulation
A+, and the sometimes disjointed process of
depositing Regulation A+ securities in a brokerage account are also worth mentioning.
Overall Regulation A+ will provide issuers
with greater access to capital and allow for
online capital formation. Challenges exist,
but they are not insurmountable and will
be overcome as the number of successful
Regulation A+ offerings increase. n
Mr. Bevilacqua is the founding member of Bevilacqua
PLLC (www.bevilacquapllc.com), a boutique transactional corporate and securities law firm. He is
also co-founder, President and General Counsel
of Digital Offering LLC (www.digitaloffering.com),
a FINRA registered investment bank. Previously,
Mr. Bevilacqua was a partner in the Corporate and
Securities Group at Pillsbury Winthrop Shaw Pittman
LLP and held that position since October 2008. Mr.
Bevilacqua counsels companies of every size ranging
from entrepreneurs with just an idea to established
companies whose securities trade on the NYSE or
NASDAQ. He has broad experience representing
issuers in public offerings and private placements
of securities, Exchange Act compliance, angel and
venture capital financings, and other areas of equity
and debt financing. Mr. Bevilacqua also advised his
clients on mergers, acquisitions and other business
combinations, including “roll up” transactions. Mr.
Bevilacqua has several years of experience working
with microcap public companies whose securities are
quoted on the Over-the-Counter Bulletin Board, and
he understands the special needs of these companies.
He also represented companies with international
operations, including companies based in the People’s
Republic of China and Taiwan, Republic of China,
Latin America, Europe and Australia. Mr. Bevilacqua
graduated Cum Laude from Fordham University and
obtained a Juris Doctor from Fordham University
School of Law where was a member of the Order
of Coif. Mr. Bevilacqua is Chambers ranked in
Capital Markets (International Firms) (Experts Based
Abroad) and USA Capital Markets: Debt & Equity
(Foreign Experts).
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F E AT U R E D A RT I C L E

Exciting News: All Investors Can Now
Get Into Select IPO’s
“IPO does not stand only for “initial public offering.” More accurately, it is also
shorthand for: It’s Probably Overpriced,
Imaginary Profits Only, Insiders’ Private
Opportunity, or Idiotic, Preposterous, and
Outrageous.” (Jason Zweig, The Intelligent
Investor rvsd ed.)
There was a time when IPO’s presented
themselves as an opportunity to be an early
investor in a company that has shown promise. Today when you look at an IPO you
have to ask yourself “is this a growth stage
investment opportunity or is this a liquidity
event for the true early shareholders?” The
historical return of IPO’s can vary widely, but
according to Renaissance Capital 51% of the
companies that had an IPO in 2015 are trading below their issue price. It’s not hard to
understand that when you look at the valuations companies are going public at.
Hopefully, this trend will begin to change
with the advent of the JOBS Act and the
revised Reg A+ IPO. Title IV of the Jumpstart
Our Business Act (JOBS) provided individual investors with the ability to invest in IPOs
of smaller private companies seeking growth
capital. Ideally, this was designed to help
fast-growing companies gain access to capital, along with providing all investors—not
just the wealthy elite—the ability to invest in
promising young companies prior to going
public.

n BY DANIEL MULCAHY

www.stocknewsnow.com

Reg A of Title IV of the Jobs Act, is potentially the biggest opportunity for investors to
gain exposure to promising growth companies in the last 80 years. You do not need to
be an accredited investors to invest in these
new Mini IPO’s and you do not need to have a
brokerage account at a major brokerage firm.
Below is a brief summary of the potential
benefits available for investors and issuers alike into what are being called “Reg A
securities “.
It’s all relative, but Reg A+ allows investors “to be early investors”. Are you an early
investor if you buy in at $1BN valuation?
These companies are significantly smaller
than what’s become the norm for traditional
IPO’s and could be better compared to the
IPO’s of the 80’s and 90’s; Microsoft raised
$61M in their 1986 IPO (inflation adjusted
$122M). Reg A+ IPO companies can’t have
more than $75M in public float and can only
raise $50M. Is it easier to go from $10M to
$50M in revenue or from $100M to $500M?
Allows private companies to raise new
capital in a significantly faster and more cost
efficient manner than ever before.
Whereas private securities and the new
crowdfunding securities are generally not
freely transferable, Reg A securities are freely
transferable; meaning you can trade them to
others or on a public exchange( once they are
listed on that exchange).
Investors and Companies can benefit from
the new ability to cut out the middleman and
sell shares directly to investors; bypassing
intermediaries such as broker dealers and
their fees.
Investors will actually get to know about
companies considering or pursuing an IPO,
possibly well ahead of time. In contrast to traditional IPO’s, wherein companies, their leadership, and financial advisors are forbidden or

otherwise severely limited in the information
they can release to the public during the SEC
review period, Reg A not only allows companies to use general solicitation to gauge investor interest (“test the waters”) prior incurring
the expense of preparing for an IPO, they can
also continue to use general solicitation until
the shares become effective.
Whereas, 100’s of public companies stock
languish on the smaller exchanges, limiting
both the investors ability to get a fair price
and the issuers ability to raise additional
capital, Reg A shares have two attributes that
may help protect investors and issuers from
the previously mentioned pitfalls:
First, it is expected that a new genre of
exchanges will emerge referred to as “Venture
Exchanges”, these exchanges will likely be
niche focused in area’s such as healthcare,
biotech, manufacturing, or etc… thereby
providing investors an alternate and possibly
a more targeted means of gaining liquidity.
Second, companies and investors may get
a viable secondary market sooner as a result
of using general solicitation. As mentioned
above, the traditional IPO model restricting
communications with the public as it relates
to stock promotion, 100’s of companies stock
languishes on the smaller exchanges because
they do not have any exposure to investors;
it’s arguable, but if there was sufficient general
solicitation in the lead up to the effective date,
one could assume the prospect for a viable
second market is more likely to develop sooner than under the traditional IPO process. n
Mr. Mulcahy is responsible for the evolution and
development of Zacks capital raising platforms, www.
zacksinvest.com as well as the coordination and execution of due diligence, advertising, and placement
efforts. Mr. Mulcahy has more than 20 years of experience in diverse leadership roles in management,
sales, private investments, finance and real estate. Mr.
Mulcahy n holds Series 7, 24, 66, and 79 securities
licenses. dmulcahy@zacksinvest.com.

MicroCap Review Magazine 10 Year Anniversary Issue

43

F E AT U R E D A RT I C L E

Regulation A+ Observations
One Year Later

E

veryone in the microcap community is talking about Regulation
A+ (“Reg A+”): it was the featured topic at the Growth Capital
Expo in Las Vegas, held on May 3-5, at which I was on the first panel
to discuss this new method of public financing.

n BY JOHN LOWY

44

Then, at the Marcum Conference in New
York on June 1-2, Reg A+ garnered a lot of
attention (not as much attention as Newt
Gingrich’s keynote address, but a lot).
So, what’s all the fuss about Reg A+,
which became effective on June 15, 2015,
and which allows companies to raise up to
$50,000,000 in a public offering that can be
made directly to the public? Assuming that
it’s a viable way for microcap companies
to get financed—and it definitely is—what
insights have some of the recent Reg A+
deals given us?
As of the date that this article went to
press, the only company to successfully
complete a Reg A+ capital raise and begin
to trade (besides a few community banks)
has been Elio Motors, which raised nearly
$17,000,000 (gross proceeds) in its Reg A+
offering, which closed in February, 2016, at
a price of $12 per share. As of this writing,
ELIO is listed on the OTCQX and trading comfortably above its offering price,
although with limited trading volume.
What were the ingredients in ELIO’s
success? According to Jason Paltrowitz,
Executive Vice President of Corporate
Services for OTC Markets Group, with
whom I spoke on June 9, CEO Paul Elio
himself was one of the three keys to ELIO’s
success. Jason described him as a vision-

MicroCap Review Magazine 10 Year Anniversary Issue

ary, who was passionate about his automobile, and—the second key—invested good
money to get a concerted marketing and
crowdfunding campaign: remember the Wall
Street axiom, “Deals are not bought, they
are sold”. The third key ingredient--and in
my opinion the key to a successful Reg A+
offering--is the ability to combine selling a
company’s stock with selling its product to
consumers, hopefully the company’s existing customer base.
In ELIO’s case, there were more than
50,000 pre-orders to purchase the automobile when it becomes commercially available. What better way to raise capital than
to have those same enthusiasts also buy
your company’s stock? Indeed, ELIO now
has approximately 6,600 shareholders, so it’s
a good assumption that many of them are
among the 50,000 pre-order customers.
Moreover, ELIO’s public filings show that
the company raised nearly $17,000,000 in
gross proceeds at a cost of less than $900,000,
i.e. about 5.3% of the gross proceeds, which
was far less than the traditional costs of
doing an S-1 through an investment banking firm.
However, as with any attempt to raise capital, there have been unsuccessful offerings or
attempted offerings in the Reg A+ arena. As
they say in life, you learn more from your
www.stocknewsnow.com

failures than from your successes. So, here
is a brief review of two offerings which were
withdrawn after the offering commenced,
without the shares having been sold:
RalliBox was a complete startup—no revenues and not even any assets—that wanted
to raise $3,000,000 to enable it to start a
cooperative network of online retail merchants. Candidly, the Offering Circular
was not well-written, and I suspect that
there wasn’t much of a marketing/promotion effort put into it. If your idea is to “go
it alone,” i.e. post your offering only on your
company’s website and hope for the best,
you should expect the worst (again, deals are
sold, not bought).
Sun Dental, another post-qualification
deal that was withdrawn after not selling,
was nowhere near a startup—more than
$9,000,000 in revenues for the first six
months of 2015 in its Offering Circular.
However, its products are sold only to dentists and dental labs; so, in my opinion, even
though Sun Dental is a real company, its
stock would appeal only to the .001% of people who actually like going to their dentist!
As Jason Paltrowitz pointed out when I
spoke with him on June 9, because Reg A+
offerings can be marketed directly to the
public without having to go through investment bankers, millennials are an entirely
new and different breed: they are evaluating companies less on their balance sheet
and more on their like or dislike for the
product. Hence, while traditional investment banks, institutions, etc. might think
that ELIO’s post-money valuation of nearly
$318,000,000 was far too high, the fact that
it’s trading at a premium over the offering
price shows that, ultimately, the market itself
is the best judge of value.
So, after approximately one year of Reg A+,
and one successful capital raise (not including a few community banks), some failures,
and with several more in the works, what is
the future of Reg A+? Jason Paltrowitz has
publicly stated, “This is going to be transformative. It’s just going to take some time. The
reality is that the market for small company
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However, as with any attempt to raise capital, there
have been unsuccessful offerings or attempted
offerings in the Reg A+ arena. As they say in life,
you learn more from your failures than from your
successes.
capital raising is broken and this was a way
to try to address it and fix it. . . . So our view
here at OTC Markets is that this is threeto-five years out. This process, with tweaks,
still is probably the best thing to happen in
recent memory to help small businesses raise
capital, and it does it in a way that allows
it to be open and transparent. It’s open, it’s
democratic, it’s social and it’s online, it’s all
these great things.”
Like any financial undertaking, Reg A+ is
not for the faint of heart. It takes patience
and persistence to successfully raise capital,
whether debt or equity, in a private or a
public offering, or via S-1 or Reg A+. So, a
year after it was promulgated, here are my
thoughts about Reg A+:
It’s an excellent way for a company to raise
up to $50,000,000, especially a company that
sells its products to individual consumers.
Put together a solid business plan, be sure
to have audited financial statements, experienced legal counsel, a good funding portal,
and be prepared to spend on marketing—
this time, for marketing the stock along with
the products your company sells.
Many thanks to Jason Paltrowitz, Andy
Kyzyk, and the outstanding team at OTC
Markets Group for their assistance. n

has led or participated in more than 200 such transactions, creating market value in excess of $5 billion.
He has been instrumental in leading the process by
which many companies have raised capital or reverse
merged, and achieved listings on the NASDAQ or the
AMEX, or have been sold to larger companies.
In addition to the U.S., John has completed transactions for clients based in Australia, Brazil, Canada,
the Caribbean, China, Hong Kong, India, Korea,
Philippines, Singapore, South Africa, Turkey, UK,
Vietnam and other nations. The sectors in which
these clients are engaged range from high tech to low
tech, real estate, pharmaceuticals, medical devices,
oil and gas, mining, solar power and other renewable
energy, entertainment, food, forestry, agriculture,
education and retail, among others.
John received his B.A. from Tufts University
and began practicing law after graduating from the
University of Pennsylvania Law School. He is a frequent contributor to MicroCap Review.

John Lowy is the founder (in 1993) and CEO of
Olympic Capital Group, Inc. (www.ocgfinance.com),
and is the principal of his law firm John B. Lowy
PC, both based in New York City. John is a highlyrespected and acknowledged expert in reverse mergers, capital formation, financial consulting and initial
public listings of all types. He recently founded and
is the CEO of Platform A+, Inc. (www.platformaplus.
com), which provides a turnkey advisory service to
companies that want to raise capital via Regulation
A+.
As an attorney, an advisor or as a principal, John
MicroCap Review Magazine 10 Year Anniversary Issue

45

F E AT U R E D A RT I C L E

Regulation A+, Engaging the Crowd –
Testing the Waters
Y
ou could almost hear the cheers when
President Obama signed the JOBS Act
into law in April, 2012. We were coming out
of a historic recession when access to capital
had dried up, and the JOBS Act promised
to ease regulations and make it easier for
companies to raise capital. Crowdfunding,
while still in its infancy, was touted as the
platform that would deliver the promise of
the JOBS Act, and after 29 long months the
SEC adopted the rules behind Reg A+.
While the JOBS Act started with cheering,
Reg A+ has gotten off to a slow start. Since
being approved, only one company, Elio
Motors, has successfully made it through the
entire process. As a result, some have begun
to question the viability of Reg A+. There
are varying opinions as to why Elio Motors
succeeded and others haven’t. In my opinion
there are several factors at play, but it starts
with companies assuming that everyone will
want to invest in their company.
Reg A+ Tier II allows companies to promote
their offering and gather indications of interest
prior to filing with the SEC. This means everything from emails, letters, and even phone calls
to prospective investors. The ability to engage
“the crowd” is one of the most powerful provisions of Reg A+. Of course that assumes the
company has a network large enough to benefit from the provision. In reality most don’t.
Rather than taking the time to build a network

n BY MICHAEL COLON

46

organically, they turn to marketing companies
to try and create one.
The problem with that plan is that most
companies forget that investing is personal.
Investment Bankers know this, which is why
they spend so much time building relationships. Social and associative marketing, and
targeted email campaigns can be effective in
making introductions, but that’s merely the first
step in establishing a relationship. Early Reg A+
offerings have shown us that if “the crowd”
doesn’t truly know your company, they’re not
likely to open your email let alone invest.
So how do you build a network big enough
to benefit from Reg A+? Start by introducing
your company to the right prospective investors. Targeting investors with an interest in
your sector is a good start. And while investing is personal, sometimes a local connection
can be just as powerful. Subscribing to a
service that gives you access to a database of
local investors and their investment interests
is a must. Mail them letters and tell them
what you’re doing as a company. Invite them
to open houses where they can meet and get
to know you. Put out relevant press releases
on a regular basis. Virtual roadshows can be
especially effective. A steady flow of information demonstrates transparency, which creates
engagement, and eventually leads to trust.
We should still be cheering for the JOBS
Act and Reg A+ and not be surprised by the
challenges. After all Reg A+ represents the
first meaningful change to a set of regulations that were established decades ago. Elio
Motors may have been the first, but it will
not be the last.
Mr. Colón is Vice President of Corporate
Development for Issuer Direct and leads the
company’s Regulation A+ practice.  Prior to
joining Issuer Direct Mr. Colón was the
founder and CEO of SEC Compliance

MicroCap Review Magazine 10 Year Anniversary Issue

Services, an XBRL service provider.    Issuer
Direct acquired SEC Compliance Services
in 2012. Mr. Colón received his Masters
of Business Administration (MBA), and
Bachelors of Arts in Management from St.
Mary’s College of California.
While Reg A+ represents a significant
improvement over Reg D, it’s not for everyone. Successfully accessing “the crowd”
requires a network, but it also requires a few
things that may seem like common sense:
Build/have an amazing management team.
Vision is important, but nothing beats past
performance. A young team can be augmented with a strong Chairman and Board of
Directors. But, only if they truly have control.
Boards of advisors are less valuable because
they lack fiduciary insight and control.
Have a track record, or a unique model/
idea. Once again, nothing beats past performance. Pre-revenue companies that are
trendy or derivative (ex: Uber for babysitting)
probably won’t be as well received as companies that already have traction in the market.
A business plan, or at a minimum a solid
executive summary, and 3-years of financial
projections. This is important even if you have
an established company. The only thing that
beats past performance is a plan that shows
how you’re going to continue to perform.
We should still be cheering for the JOBS
Act and Reg A+. The original promise still
holds true: Entrepreneurs have access to
more capital, and individuals can invest like
venture capitals. n
Mr. Colón is Vice President of Corporate Development
for Issuer Direct and leads the company’s Regulation
A+ practice. Prior to joining Issuer Direct Mr. Colón
was the founder and CEO of SEC Compliance Services,
an XBRL service provider. Issuer Direct acquired SEC
Compliance Services in 2012. Mr. Colón received
his Masters of Business Administration (MBA), and
Bachelors of Arts in Management from St. Mary’s
College of California.
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Powered by Issuer Direct

Create the right crowd to cultivate relationships
using Classify, powered by Issuer Direct.

Accredited
& Retail
Investors
sales@issuerdirect.com
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US Toll-Free: 877.481.4014

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MicroCap Review Magazine 10 Year Anniversary Issue

47

As submitted on June 29, 2016 to the
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1-A
REGULATION A+ OFFERING CIRCULAR
Under The Securities Act of 1933*
*The actual Form 1-A and Offering Circular may be found at

https://www.sec.gov/Archives/edgar/data/1638850/000164460016000157/xti_oc8.htm
which you should read before making any investment

XTI AIRCRAFT COMPANY
A Delaware corporation

Up to 20,000,000 Shares of Common Stock
Minimum purchase: 350 Shares ($350)
We are offering up to 20,000,000 shares of common stock on a “best efforts” basis. Since there is no minimum amount of
securities that must be purchased, all investor funds are available to the company upon commencement of this Offering
upon one or more closings, which may take place at the company’s discretion, and no investor funds will be returned if an
insufficient amount of shares are sold to cover the expenses of this Offering and provide net proceeds to the company.
Sale of these shares commenced on July 21, 2016, after the Offering Statement filed with the Commission was qualified.
There is currently no trading market for our common stock. The company announced on February 18, 2016, that we
intend to establish a secondary over-the-counter market for the shares sold under this Offering.
The shares may be purchased on the StartEngine platform: www.startengine.com/startup/xti
World-class highly experienced management team
Game-changing breakthrough aircraft with large
global market
Three years of engineering and market analysis
completed
Discussions with major component suppliers
ongoing




David E. Brody
Founder and Chairman
dbrody@xtiaircraft.com
(303) 503-5660



First prototype currently in development
Popular Science named the TriFan 600 one of the
100 greatest innovations of 2015
One patent issued, others pending

Andrew Woglom
Chief Financial Officer
awoglom@xtiaircraft.com

Scott A. Pomeroy
Senior Financial Advisor
spomeroy@xtiaircraft.com
(303) 522-8936

Centennial Airport, 13000 Control Tower Rd., Suite 217, Englewood, Colorado 80112
50

www.xtiaircraft.com

MicroCap Review Magazine 10 Year Anniversary Issue

www.stocknewsnow.com

XTI Aircraft Company
startengine.com/startup/xti

XTIaircraft.com

Combining the speed, range and comfort of a business jet
with the ability to take off and land like a helicopter.

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MicroCap Review Magazine 10 Year Anniversary Issue

51

PRIMARY CAPITAL LLC
www.primaryllc.com
Full Service Crowd Funding Broker Dealer
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52

Companies
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Financing@Primaryllc.com
MicroCap Review Magazine 10 Year Anniversary Issue

Portals
Partner with Primary Capital
Jleo@Primaryllc.com
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LEGAL CORNER

A S K T H E L E G A L E X P E RT S

Section 16 Best Practices
for MicroCap and
SmallCap Companies

S

ection 16 of the Exchange Act of
1934 (the “Exchange Act”) governs
the regulatory requirements that
must be met by “insiders” of companies
that have registered a class of equity securities under Section 12(b) or Section 12(g) of
the Exchange Act. For micro cap and small
cap companies that may not have in-house
counsel or legal departments, ensuring compliance with Section 16 presents an ongoing challenge due to the intricate reporting
and compliance obligations imposed by the
rules. Developing a comprehensive Section
16 compliance program is a best practice
for smaller public companies to ensure that
reportable transactions in securities by insiders are properly disclosed and that insiders
do not run afoul of the prohibitions on
“short-swing profits” set forth in the rules.

to wHoM Do tHe rePortinG requireMentS unDer
SeCtion 16 aPPly, anD wHat
ForMS are requireD to Be
FileD By SuCH PerSonS?
n BY ERIC HELLIGE AND

FRANCESCA DJEREJIAN

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A person is deemed an insider for purposes
of Section 16 if he or she is a director or

executive officer of a public company or a
stockholder of a public company who directly or indirectly beneficially owns more than
10% of the company’s equity securities. The
reporting obligations for Section 16 insiders include an initial statement of beneficial
ownership on Form 3, disclosure of changes
in beneficial ownership of any class of a
company’s equity securities on Form 4 and
annual statements of beneficial ownership
on Form 5.

wHat tyPeS oF tranSaCtionS triGGer SeCtion 16
rePortinG oBliGationS?
In practice, in addition to open market or
other purchases or sales of stock, many
transactions in the ordinary course of business will trigger Section 16 reporting obligations. For example, the appointment of a
new director or executive officer will result
in a Form 3 filing obligation, receipts of
grants of stock options, restricted stock or
stock appreciation rights, the cashless exercise of stock options and the vesting of
restricted stock units must be disclosed on
Form 4.

MicroCap Review Magazine 10 Year Anniversary Issue

53

What are the consequences of violating the reporting obligations under
Section 16?

What steps can companies take to improve their
Section 16 compliance protocol?

Consequences of not filing the forms
required by Section 16 in a timely manner include a requirement that companies
publicly report any delinquent filings by
officers and directors (both in their annual
proxy statements pursuant to Item 405 as
well as on the cover of their annual report on
Form 10-K), significant fines and penalties
arising from SEC enforcement actions and
potential liability under federal securities
laws, such as Rule 10b-5. Because Section 16
is a strict liability statute, the SEC has made
clear that inadvertence is no defense to filing
violations. Therefore, both issuers and their
insiders are on the hook for violations of
Section 16.

Given the many ambiguities and potential
pitfalls that can be encountered in ensuring compliance with Section 16, it is best
practice for companies to implement formal policies that identify triggering events
and establish robust communications among
companies, their insiders and counsel. Steps
that companies can take to bolster their
compliance program include the following:

What transactions are
prohibited by the “ShortSwing Profits” rules?
Section 16(b) applies to transactions in company securities by Section 16 insiders and
imposes strict liability for realizing “shortswing” profits from certain transactions.
It provides that any profit realized by such
insiders from the purchase and sale, or sale
and purchase, of any equity security (including derivative securities such as options,
warrants and certain fixed-price convertible
securities) that occurs within a six-month
period must be paid to the issuer, irrespective of whether proof of actual abuse of
inside information or intent to profit on the
basis of such information can be established.
The transactions do not have to involve
the same shares and may be “matched” if,
for example, the insider is deemed to have
a pecuniary interest in the shares in question (such as a sale of shares by the insider’s
spouse). In addition, ceasing to be an insider
does not prevent a transaction from being
matched with one made prior to such insider’s departure.

54

• Making a determination of which executive officers and beneficial owners qualify as
insiders under the rules;
• Requiring mandatory pre-clearance of
transactions by insiders with outside counsel
and/or a designated compliance officer;
• Providing periodic pre-clearance
reminders to insiders;
• Giving Section 16 compliance reminders
to insiders with information on triggering
events;
• Preparing a Section 16 filing calendar
which includes information on known triggering events for the coming fiscal year
(such as annual equity grants and vesting of
restricted stock units) and notes the filing
deadlines for each such event;
• Ensuring that officers, directors and 10%
beneficial owners are aware of the triggering events and sending periodic reminders
regarding filing obligations;
• Requiring reporting persons to execute
powers of attorney authorizing the company’s secretary or outside counsel to sign
Section 16 forms to ensure timely filing;
• Keeping track of other individuals who
are responsible for transactions in equity
securities by insiders, such as trust administrators and financial advisors;
• Delegating responsibility between the
company and outside counsel for the preparation of necessary filings with Section 16
insiders;
• Making sure that the company’s chief

MicroCap Review Magazine 10 Year Anniversary Issue

financial officer and outside counsel are
informed of all option grants before they
occur;
• Requesting certifications from all insiders in their D&O Questionnaires that they
have timely filed all Section 16 forms for the
prior fiscal year; and
Monitoring all trading activity by insiders
to prevent any short-swing trading violations.
With the assistance of outside counsel,
micro cap and small cap companies can
develop a formal, written Section 16 policy
that incorporates all of the above-listed best
practices. Inevitably, unique interpretive
questions will come up in the course of executing such policies because of the particular
complexity of Section 16’s requirements. If
properly implemented and well-coordinated,
however, Section 16 policies can go a long
way in providing built-in assurances of compliance and helping to prevent unintended
violations of the federal securities laws. n
A premier, midsized law firm with headquarters at
7 Times Square and a satellite office in Los Angeles,
Pryor Cashman is known for getting the job done
right, and doing it with integrity, efficiency and élan.
Over 145 attorneys strong, we are dedicated to our
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their businesses, industries and cultures. For more
information, please visit www.pryorcashman.com.

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MicroCap Review Magazine 10 Year Anniversary Issue

55

F E AT U R E D A RT I C L E

As a Millennial Investor, Why Should I Have a
Diversified MicroCap Portfolio?
Early lessons I’ve learned in MicroCap Investing
intro
One thing I have heard my entire investing
career (albeit, not that long) is that I should
diversify my portfolio. Whether that bit of
advice is right or wrong, I’m not sure – it’s
been right for some and not for others. Based
on my experience, and on the experiences of
others whom I’ve interviewed on my podcast, I think most, if not all, would also agree,
diversification requires analysis.

wHat DoeS DiVerSiFieD
PortFolio Mean?
Diversification, as defined on Investopedia.
com, “is a risk management technique that
mixes a wide variety of investments within a
portfolio. The rationale behind this technique
contends that a portfolio of different kinds of
investments, on average, yield higher returns
and pose a lower risk than any individual
investment found within the portfolio.” In
other words, you want to limit your exposure
to risk by making sure your spreading your
investment money across multiple stocks, and
that could include: stocks in different sectors
or multiple stocks in the same sector. I go into
greater detail on the differences below. We
have all heard: “spread your risk”.

n BY ROBERT KRAFT

www.stocknewsnow.com

DiVerSiFiCation aCroSS MultiPle SeCtorS
This form of diversification is the most common – constructing a portfolio with stocks
that covers a more than one industry or
sector, for example, owning a junior mining or exploration company, a cyber-security
company, a biotech company in early clinical
trials, a coffee producer and distributor, or
an online gaming company to mention a few.
The point of this strategy is to diversify risk.
Now, what if I told you this strategy wasn’t
the most efficient? Think about it – you want
to know the companies as best you can; that
requires being fairly knowledgeable in multiple sectors. Using the example above, you’d
probably want to know about geology, cybersecurity, the science behind the biotech’s molecule and global coffee market, and the gaming sector That seems like a lot, wouldn’t you
say? Not insurmountable by any means, especially if you’re interested in all these things,
but daunting nonetheless. Disclaimer: These
are just ideas I considered in my early years
of being an investor from what I surmised for
myself. Obviously your likes and dislikes will
vary from mine so make your own decisions.

DiVerSiFiCation witHin one
SeCtor
Within every industry, there are multiple
sectors. Using the example from the last
section, the junior mining company is part
of the “Basic Materials” industry, a cybersecurity company is also a “Technology” company, a biotech company would fall into the
“Healthcare” category and the coffee company
would be “Consumer Goods” company and so
on. I’ve done both strategies, and I personally

have multiple interests, however, I’ve found
that a narrow approach works better for me.
I’ve made my mistakes in “Healthcare” companies because, quite frankly, I didn’t know
enough about the science or the companies I
invested in which I probably should have, my
learning experience cost me money. I refer to
that as a passive investment, and it didn’t turn
out so well. However, I walked away with a
valuable lesson – narrowing my focus, figure
out what I find interesting which translates
into being more particular and investigative about my approach to due diligence I’m
about to do for any potential investment. This
experience has helped me while I’m in my
early years of investing and now I feel more
confident in my investing decisions. I’m not
saying I’ll never invest in another MicroCap
healthcare company, but rather I now know
how to become an educated investor.

ConCluSion
The key overlap when it comes to diversification, and my approach to investing in
MicroCaps, is that I focus on what I know
and, more importantly, what I’m interested
in. When I’m excited about a company and/
or industry, it makes doing that arduous due
diligence actually fun (okay, more interesting)! At any one time, I could be invested
in multiple industries or just one depending
on the market conditions and companies.
Diversification is something I’m still learning
about, however, what’s been most important
for me is keeping a narrow focus that follows
my developing investment strategy. n
Robert Kraft is SNN Inc. Chief Operating Officer,
Editor-in-Chief of StockNewsNow.com, The Official
MicroCap News Source, Host of the popular
MicroCap podcast, the Planet MicroCap Podcast.
He is also the Co-founder and CEO of Sammi Girl
Productions with his brother, Frankie.

MicroCap Review Magazine 10 Year Anniversary Issue

57

F E AT U R E D A R T I C L E

Coal will be 3rd
Most Popular Source
of Energy in 2030
C

oal will slip behind natural gas in 2030 and maintain the number three
position well beyond 2040. Run a quick search on “coal and dead” and
you’ll get hundreds of articles projecting the death of coal.

Figure 1:

n BY KARL DOUGLAS

58

Source: U.S. Energy Information Administration, Annual Energy Outlook 2016 Reference case

The recent spate of coal bankruptcies effecting once considered “invincible” companies
such as Peabody Energy, Arch Coal and
Alpha Natural Resources, has led many to
conclude coal is in fact a dead sector, relegated to the buggy whip graveyard. But the
Energy Information Administration (EIA),
a division of the Federal Government says
otherwise. How often do you get to invest in
an industry responsible for supplying 33%
of a $15 Trillion-dollar economy’s electricity
demand for pennies on the dollar?

MicroCap Review Magazine 10 Year Anniversary Issue

Indeed, the short term outlook is far from
obvious as coal’s share of electricity generation will continue to fall. Coal was burned
to generate 50% of US electricity production
in 2005 and 33% in 2015. It is projected to
fall to 21% by 2030 and eventually 18% by
2040. How do you make money in an industry slated to shrink by 27% over the next
14 years? Invest in strong balance sheets!
It’s the un-leveraged companies that will
emerge as tremendous cash flowing opportunities offering growth fueled by massive
www.stocknewsnow.com

industry consolidation.
Many of the recent bankruptcies are arguably self-inflicted; the result of significant
overleverage, in some cases as much as
>10X EBITDA. As Figure 1 demonstrates,
the onset of abundant low cost natural gas,
a competing fossil fuel, directly offset a significant percentage of the coal burn through
“coal-gas switching”. In fact, the industry
contracted 34%, with electricity from coal
dropping 17 points from 50% of all electricity to 33%. The resulting commodity price
drop, margin erosion, over leverage and a
decade of anti-coal lobbying and media presence by environmental activist groups, produced a coal industry in a tailspin! So what
makes this pariah of an industry potentially
tomorrow’s darling of an investment opportunity? Things to consider:
We can’t do without it! Even under the
most aggressive EPA assumptions, coal will
still represent about 10% of US energy consumption by 2040, a quarter century from
now. It will still be used to generate 18% of
US electricity by 2040, a statistic that must
be quite a disappointment to green lobbyists.
Scrubber Capex Investment – The power
industry has already invested over $500B in
environmental remediation equipment such
as NOX/SOX scrubbers. They will need the
depreciation from these investments to keep
electricity prices down.
Low Gas Prices Unsustainable – Gas
prices are rising steadily as environmental
regulation increases and exploration activities become more costly. Rig count has fallen
to a three year low and at costs above $2.50
per MMbtu, coal starts to look competitive
again.
Global demand will continue: India and
China will remain the largest consumers of
coal through 2040. The EIA forecasts coal
consumption to grow at the slowest rate
of the competing fuels, at a mere .6% per
annum.
No alternative for steel production: We
haven’t found a steel making alternative to
the use of metallurgical coal in the steel making process.
www.stocknewsnow.com

Figure 2: World energy consumption by source 1990 - 2040.

Fresh balance sheets – Previously overleveraged companies that emerge from
bankruptcy and newly formed companies
managing the vestigial assets of the doomed
ones will have stronger balance sheets and
hopefully debt-phobic management.
Renewables benefit from coal – Newer
transmission lines built to support renewable power producers would be financially
unsustainable without the additional use by
base load power producers that generally
utilize coal for their base load generation.
Technology - Coal can be burned with
zero emissions if the right technologies are
used. As energy production costs continue
to rise from competing sources, clean coal
will reemerge as a cheap source of energy,

Source: EIA

potentially tipping the scale back in favor of
the black stuff!

Before you open up your online trading
account and start buying coal stocks, there
are some very important considerations to
keep in mind. In terms of coal production
forecasts, the numbers vary significantly.
CPP or Clean Power Plan is an EPA initiative
to reduce CO2 emissions.
Ultimately if this plan gets fully implemented, US CO2 emissions will be reduced
by 45% relative to 2005 levels by 2040. As
the forecast indicates, there can still be a significant delta in demand, particularly starting in 2019, where under the CPPHOGR

Figure 3

MicroCap Review Magazine 10 Year Anniversary Issue

59

According to the EIA, US utilities burned 740
million short tons in 2015. So three of the
four most severe scenarios already call for more
production than is currently available. And with
the most recent announcement of Alpha Natural
Resources, additional production will go offline.
With 650M tons of thermal coal supply, well run
companies should be able to achieve reasonable cash
flow.
scenario we see demand fall to 650M tons by
2025. But there’s a silver lining in all these
numbers! According to the EIA, US utilities burned 740 million short tons in 2015.
So three of the four most severe scenarios
already call for more production than is currently available. And with the most recent
announcement of Alpha Natural Resources,
additional production will go offline. With
650M tons of thermal coal supply, well run
companies should be able to achieve reasonable cash flow.
The characteristics to look for are quite
simple: minimum leverage, low reclamation
liability, low production cost. Production
cost is usually a function of reserve quality
and logistics. Forward sales price is also sig-

nificant. Companies with long term off-take
agreements will offer significant ability to
ride out short term dips in the market which
based on EIA forecasts are expected between
now and 2020.
In the Microcap segment of the market,
Hallador Energy Company (NasdaqCM:
HNRG) is worthy of tracking. The company
is in the stable Illinois Basin. It has a market
cap of roughly $134M. Once again this company has demonstrated fiscal discipline, debt
is roughly $250M with EBITDA of $85.38M
as of 3/31/2016. Their operating margin
is 13.46%, slightly lower than much larger
analogs such as Alliance Resources, ARLP.
We think HNRG will be interesting if they
can make smart acquisitions with low to no

The volatility in the coal sector will continue to test
the mettle of coal companies through 2020. Only
the companies that have minimal debt will survive.
We believe many of the choice assets that will
become available through the bankruptcy process
will be acquired by private equity sponsored
companies.
60

MicroCap Review Magazine 10 Year Anniversary Issue

leverage, and grow their footprint.
Foresight Energy LP (NYSE: FELP) is
another Microcap with market capitalization of roughly $209M ($1.60 per share as of
7/5/2016). FELP is a significantly larger company. The company reported TTM revenues
of $912.02M with EBITDA of $236.64M.
Total debt is $1.6B, and operating margins
are reported as of 3/31/2016 of 4.5%. We
believe the leverage profile of FELP demonstrates the same type of risk profile that
has brought down many of the majors. We
consider over-leveraged assets (more than
5X EBITDA) an insurmountable risk in this
market place. On an EV/EBITDA valuation
basis, FELP is significantly overpriced relative to its peers.
The volatility in the coal sector will continue to test the mettle of coal companies
through 2020. Only the companies that
have minimal debt will survive. We believe
many of the choice assets that will become
available through the bankruptcy process
will be acquired by private equity sponsored
companies. Those same PE companies will
seek to exit into the IPO market and a sector
of hopefully deleveraged assets will join the
publicly traded coal sector. n
Note: This article is not an attempt to provide
investment advice. The content is purely the
author’s personal opinions and should not be considered advice of any kind. Investors are advised to
conduct their own research or seek the advice of a
registered investment professional. The author does
not own shares or any equity or debt interest in any
companies mentioned in this article before or at its
publishing.
About the author:
Karl B. Douglas is a management consultant at
PPMT Strategic Group, Inc., OTC PINK: PPMT an
advisory firm servicing microcap issuers. In addition to activities as a generalist, Mr. Douglas has
been investing in and advising companies in the coal
sector since 2006. He is an investor in and adviser to
several investment groups currently actively investing in the coal industry.

www.stocknewsnow.com

CELEBRATING 46 YEARS OF
EXCEPTIONAL SERVICE

RESOURCES

EXPERIENCE

RESULTS

CONTACT: MICHAEL PORTER - (212) 564-4700
INFO@PLRINVEST.COM

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SEVEN PENN PLAZA, SUITE 810
MicroCap Review Magazine 10 Year Anniversary Issue
NEW YORK, NY 10001
USA

61

P R O F I L E D C O M PA N Y

uS nuclear Corp. announces aerial
radiation Detection
otC Pink: uCle
US Nuclear Corp is proud to announce the
Aerial Radiation Detection instruments of
the DroneRAD system.
In this time of multiple threats to our
security: dirty bombs; cyber crime; shooters
in public places; homemade bombs; misinformation; etc. we feel extremely vulnerable;
perhaps more vulnerable than ever before.
With the advent of Drone technology now
available for commercial applications, technology previously only held by the military,
the opportunity has come to unite Drone
Technology with aerial sensors. Drone mounted aerial sensors are typically: thermal, radar,
camera, surveillance, and sensors to monitor
the UAV (Unmanned Aerial Vehicle) systems.
Now there is the DroneRAD. Radiation
detection instruments mounted on a Drone
for aerial radiation detection, surveillance,
and locating. Technical Associates, a division of US Nuclear Corp, provides sensors
for both airborne radiation and for the search
and location of radioactive materials: Alpha,
Beta, Gamma, Neutron. Gas filter sample
collection for chlorine, biological particulates,
and aerosols such as anthrax and nerve gas is
also available via the DroneRAD.
Partnering with FlyCam UAV the
DroneRAD detector system is mounted on
FlyCam UAV’s Cypher 6 drone for Aerial
Radiation Detection, the first of its kind.
Utilizing a six motor drone copter provides

62

aBout uS nuClear CorP.

security, a ten pound payload, and longer
flight times. Applications for this technology are diverse such as airborne radiation
detection in terms of a plume, search detector for dirty bombs or questionable packages, field surveys for depleted uranium.
The benefits of Aerial Radiation Detection
are many including: saving man hours compared to handheld detection of large areas;
protection of the operator by remote detection of smuggled source; remote surveillance
of buildings and vehicles; mapping airborne
plume emissions from stacks or other sources;
mapping background radiation of large areas;
monitoring facility perimeters which promotes
maintaining regulatory compliance; avoiding
exposure during a questionable event.
US Nuclear Corp provides the DroneRAD
Detector System: sensors and software and
readout technology; FlyCam UAV’s Cypher 6
drone with controllers and hard shell case for
ease of transporting the full system; and flight
and radiation measurement instruction.
Nuclear radiation sensor instrumentation
suitable for Drone application is new to the
market place. The DroneRAD system has a
widely diverse application and includes conducting Gamma and/or Neutron radiation
surveys of the ground, buildings, and vehicles,
Uranium surveys of landfills and K-40; background radiation surveys for construction
and development, and airborne hazards.
The DroneRAD system mounted on
FlyCam UAV’s Cypher 6 drone provides a
versatile, durable, and easy to use system and
has an approximate launch time of five minutes with wireless download of data.

MicroCap Review Magazine 10 Year Anniversary Issue

US Nuclear Corp is a fully-reporting, publicly traded company on the Over-the-Counter
Bulletin Board, traded under the ticker symbol UCLE. The Company’s operations are
principally engaged through its subsidiaries, operating two leading nuclear radiation
detection companies, Overhoff Technology
Corp. and Optron Scientific Company Inc.
dba Technical Associates. US Nuclear Corp
designs, manufactures and markets branded,
full line radiation detection and specialized
advanced Tritium technology both domestically and internationally for the nuclear
energy industry and other nuclear industries
such as hospitals and radiopharmacies.
In addition to the cutting edge instruments
of the DroneRAD Aerial Radiation Detection
system, US Nuclear Corp has developed specific detection instrumentation for emerging
technological processes such as Thorium
and Molten Salt (MSR) reactor technologies,
and real-time continuous water monitoring
for nuclear effluent, wastewater, and drinking water. With over three hundred instruments in the US Nuclear Corp catalog and a
reputation for meeting customer’s needs with
custom designed and tailored instruments
satisfied customers include United States
Government Agencies, the U.S. Military,
Homeland Security, National Laboratories,
Universities, Hospitals, and nuclear reactor
facilities in the United States, China, Canada,
South Korea, Argentina, Russia and others. n
For Further Information Contact:
Robert Goldstein
rgoldsteinta@gmail.com
818-883-7043
www.usnulearcorp.com
www.tech-associates.com

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Regulation A+
Tier 1

None.

None.

May rely in good faith on a determination
by an intermediary that an investor has
not exceeded the per-investor investment
limit. Intermediaries may rely on an
investor’s representation that it has not
exceeded limits.

Resales prohibited for one year, with
limited exceptions (including resales to
accredited investors and family members).
Yes. Each offering must be conducted
through a single intermediary that is a
registered broker or a registered funding
portal.

“Reasonable steps” must be taken to
verify that each purchaser is an
accredited investor. May not rely on
self-certification alone.

No

Unlimited number of Accredited
Investors and no more than 35 NonAccredited Investors, if each such
investor is sophisticated

Reasonable belief must be held that
each purchaser is (1) an accredited
investor or (2) a non-accredited
investor that, alone or together with
its purchaser representative, is
sophisticated. Purchaser selfcertifications are generally used.

Yes, securities sold under Regulation D Yes, securities sold under Regulation D
are restricted securities.
are restricted securities.

General Solicitation
Permitted

Investor Restrictions

Obligation to verify investor
status

MicroCap Review Magazine 10 Year Anniversary Issue

Disclosure Requirement to
Investors?

Integration Concerns

Combinations Permitted

Blue Sky Requirements
Preempted?

Regulation A+
Tier 2

Form C must be filed with SEC. Includes
two years of financial statements (must
be reviewed by an accountant for
offerings raising over $100,000 (or firsttime offerings over $500,000) and
audited for non-first-time offerings over
$500,000). Similar to disclosure in a
Securities Act registration statement.
Form C is not subject to SEC review.

Initial Public Offering

Registered Public Offerings
Confidentially Submitted Initial Public
Offering
(Emerging Growth Companies)

None.

None.

None.

None.

Must inform investors of the investment cap None after the registration statement is
for nonaccredited investors, and may rely
filed publicly. Before the registration
on an investor’s representation that it is in statement is filed publicly, TTW sessions
compliance with cap.
must be held only with QIBs/IAIs.

None.

None.

None.

None after the registration statement has
been filed.

None.

None.

Yes

Yes.

Yes, annual report on Form 10-K and
other periodic reporting is required.

None.

Yes

Yes.

Yes, annual report on Form 10-K and other
periodic reporting is required.

Form 1-A must be filed with the SEC,
including an offering circular and two years Yes, all information required in the Form Yes, all information required in the Form S-1 is
of audited financial statements. Similar to S-1 is required to be disclosed. Includes required to be disclosed. Includes description
Similar to disclosure in a Securities Act
description of business, risk factors,
of business, risk factors, audited financial
disclosure in a Securities Act registration
registration statement. Form 1-A is
audited financial statements, MD&A,
statements, MD&A, description of offered
statement. Form 1-A is subject to review
subject to review and comment by the and comment by the SEC. First-time issuers description of offered securities, etc.
securities, etc.
SEC and by state securities regulators. are eligible for non-public review by the SEC.
First-time issuers are eligible for nonpublic review by the SEC.

Form 1-A must be filed with SEC,
including an offering circular and two
years of financial statements, which
need not be audited.

None.

Per-investor investment cap for nonaccredited investors (unless the securities
are listed on a national exchange). The cap
is equal to 10% of the greater of: annual
income or net worth (for natural persons),
or annual revenue or net assets (for nonnatural persons).

Annual report on Form C-AR, including
Annual reports on Form 1-K (with audited
financial statements satisfying the
None, unless/until the issuer exceeds
financial statements), semi-annual reports
None, unless/until the issuer exceeds
None, unless/until the issuer exceeds
requirements applicable to its most recent
the threshold for becoming a
on Form 1-SA (with unaudited financial
the threshold for becoming a reporting
the threshold for becoming a reporting
offering statement. Form C-AR requires
reporting company under Exchange
statements) and current reports on Form 1company under Exchange Act rules.
company under Exchange Act rules.
information similar to the offering
Act rules.
U.
statement on Form C.
No. Issuers must comply with state blue
sky registration and qualification
Yes.
Yes.
Yes.
Yes.
requirements where offers and sales are
to be made.
Yes
Yes
Yes
Yes
Yes
Yes, if multiple offerings occur within Yes, if multiple offerings occur within
six months, must ensure that each
six months, must ensure that each
Limited to $20 million per 12-month
Limited to $1 million per 12-month period.
Limited to $50 million per 12-month period.
component satisfies the applicable
component satisfies the applicable
period.
exemption.
exemption.

No, but subject to anti-fraud
limitations.

Yes, but only if sales are made to any
non-accredited investors. Disclosure
requirements are similar to those for a
Securities Act registration statement.
In addition, a Form D must be filed
with the SEC.

Annual Reporting
Requirements

None.

None.

Intermediary Requirement

Limitation on Resales?

For investors with annual income and net
worth both above $100,000, the limit is
10% of the lesser of (i) annual income and
(ii) net worth, in each case with a
$100,000 cap on sales to any individual.

None.

Unlimited number of Accredited
Investors.

n/a

Testing the Waters

For investors with annual income or net
worth below $100,000, the limit is the
greater of (i) $2,000 and (ii) 5% of the
lesser of annual income and net worth.

Any amount

Maximum Raise

Yes

No Limit.

Any company, including publicly
traded and private issuers.

Regulation Crowdfunding

'33 Act, Section 3(b)(2)

(1) Must be US or Canadian issuer
(1) Must be US or Canadian issuer (2) Must
Must qualify as an Emerging Growth
(1) Must be US issuer
(2) Must not be a public company, an
not be a public company, an investment
Company (EGC). Generally, issuers that
(2) Must not be a reporting company; an
investment company, a "blank check"
company, a "blank check" company, a
have not completed a US IPO before
Any company, including publicly traded
investment company; a shell company; or company, a delinquent filer under Reg.
Any company.
delinquent filer under Reg. A+, a company December 8, 2011 and have less than
and private issuers.
an issuer that has failed to make any
A+, a company with a revoked Exchange
with a revoked Exchange Act registration,
$1 Billion in annual gross revenue can
required Form C filing
Act registration, or a "bad actor" (see
or a "bad actor" (see below).
qualify as EGCs.
below).
No Limit.
No Limit.
No Limit.
No Limit.
Must qualify as EGC
No Limit
No (although as a practical matter could
No (although as a practical matter could
Yes
Yes
Yes
Yes
present challenges)
present challenges)
Form D
Form C
Form 1-A
Form 1-A
S-1
S-1
$20M/12 Months. Issuer raising less
$50M/12 Months. Issuer raising less than
Any amount
$1M/12 Months
Any amount
Any amount
than $20M may choose between Tier 1 $20M may choose between Tier 1 and Tier
and Tier 2.
2.
Yes. Only to Qualified Institutional
Buyers (QIBs)/Institutional Accredited
Not Recommended Due to Range of
n/a
No
Yes
Not unless issuer is an EGC
Investors (IAIs) and only after the
State Laws
registration statement has been
submitted confidentially.
Issuers may only issue “tombstone” ads
Yes. Issuers also permitted to engage in
with specific limited information. No limits
Yes. Issuers also permitted to engage in
test-the-waters communications before
Yes, only after the registration
Yes, only after the registration statement has
on communications with potential
test-the-waters communications before and
Yes
and after the offering statement has
statement has been filed publicly.
been filed publicly.
investors through the intermediary’s
after the offering statement has been filed.
been filed.
platform.
Per-investor limits in any 12-month period:

Regulation D
Rule 506(c)

Exempt Transactions / Private Offerings
'33 Act, Section 4(a)(6)

Form D

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Issuer Size Thresholds
Rule 506(d) ("Bad Actor")
Disqualification
SEC Filing Requirement

Eligible Issuers

Regulation D
Rule 506(b)

'33 Act, Section 4(a)(2)

Comparison Chart of Various Securities Offerings
*This chart is a high-level summary only; one should consult the relevant statutes, regulations, and SEC guidance when engaging in any of the following transactions.

Comparison Chart of Various Security Offerings
Chart Provided by Mintz Levin Cohn Ferris Glovsky and Popeo PC

63

F E AT U R E D A RT I C L E

The Time to Buy the
Miners, Gold, and
Silver is Now!
O

n January 19, 2016 the final intraday washout of resource sector mining companies on the TSX and U.S. exchanges took place.
Yes, important bottoming action preceded
this in December 2015. In fact, as the silver chart below shows (mirror-imagery by
gold), a two-month classic triple-bottom
action formed during the December-January
period. Watching dozens of mining stocks
print new lows for the move, then reverse
on heavy volume to close near their highs
of the day was quite a sight. Nothing offers
greater confirmation of a solid bottom than
a heavy volume reversal after two or three

n BY DAVID MORGAN

64

tests of support.
The third and final major secular up leg of
the bull market in gold, silver and the miners
is underway. History tells us this leg will be
the biggest. The Morgan Report’s extensive
multiple-year research on the subject led us
to conclude the following:
The rush into gold is primarily by nation
states, but the rush into silver is basically
(by) ‘the people,’ - it’s not just ‘the people’ of
the U.S.’ - it’s ‘the people’ of the world. There

Silver - Gold’s mirror image triple bottom.

MicroCap Review Magazine 10 Year Anniversary Issue

www.stocknewsnow.com

will be a rush into gold, and then into silver,
like you have never seen before. This will
be a global phenomenon. It wasn’t the case
in 1979, but this time it will be.  You (will)
either have it or you won’t.  
What’s fascinating, and a bit surprising,
is how many analysts have been hesitant to
accept the validity of this year’s massive rally
off the 4 1/2 year cyclical bear market lows,
which knocked 45% and 70% respectively
off the 2011 gold and silver highs...along
with 90% + from the value of most TSX-Vlisted mining stocks. This year we’ve been
informed of several “topping formations”,
“bearish COT statistics” and “bearish dome
formations” - all of which were somehow
penetrated on the upside by Mr. Market who apparently does not read newsletters!
Yes, we will have violent corrections on
the way to the public mania blow-off we
see down the line, whether it takes us two,
three, five years...or more to get there. In the
process, the odds favor market action that
sees short, violent, relatively shallow retracements, compared to the drawn-out declines
of the last several years.
Our recommendation? If you have not
done so, pick up some physical gold and silver bullion - rounds, bullion coins, American
Eagles, Krugerrands, or Canadian Maple
Leafs (avoid numismatics!) from a trusted
source. Then consider establishing a core
position in a number of “junior” gold and
silver producers, a couple of streamers, and
some top tier stocks, for stability and safety, as
we outline in our Asset Allocation tables. It’s
possible that the usual summer softness in the
sector may play out as expected. If so, count
yourself lucky, so that you can “top off ” your
positions ahead of this fall’s strength.
After due diligence, establish positions
with several tranches (portions), buying
into weakness. Consider placing Limit/GTC
orders into downside price gaps or along
50/200 day moving averages. If a big rally
takes place, consider selling some of your
trading portion while holding tight to core
positions - and know the difference!
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Global Physical Silver Demand, 2015

Are your investment dollars working
hard enough for you?
There are a number of market letters you
can subscribe to in exchange for your hard
earned money. You can find them from $49
to several thousand dollars per year. But we
feel - and the surge in new subscriptions
we’ve been getting lately supports our belief
- that The Morgan Report offers greater value

for your dollars than any other letter out
there.
On or before the first Monday of each
month, David Morgan and the team at The
Morgan Report send our subscribers the highest quality analyses of the resource sector and
the metals. We bring you new and updated
company names - but only when we feel they
offer the best fit for consideration in helping

First Majestic Silver (NYSE: AG)
MicroCap Review Magazine 10 Year Anniversary Issue

65

If you have not done so, pick up some physical gold
and silver bullion - rounds, bullion coins, American
Eagles, Krugerrands, or Canadian Maple Leafs
(avoid numismatics!) from a trusted source.
expand your wealth and knowledge base.
From what we can tell, looking at some of
the other market letters, a number of writers, who perhaps placed too much value on
technical analysis when the fundamentals
and market action kept saying something
else...look to have caused those who took
their advice to miss as much as 30 - 60%
of this year’s explosive rally up from the
January lows to the June intermediate highs.
Below is a chart of First Majestic Silver
(which TMR Staff members hold in their

own portfolios) - the strongest primary silver
producer stock in this year’s rally. The Morgan
Report consistently followed AG, and it has
been in our Asset Allocation Tables for quite
awhile (since 2008). Subscribers understood
its business model, so they could choose to
buy it below US$3 a share in January...and
watch it rise over 400% higher. n
The Morgan Report Staff individually answers every
question subscribers send our way. Of course we
are prohibited from offering personal investment
advice, but our subscribers almost universally have

told us that our response to them went well beyond
what they had expected, in terms of increasing their
knowledge base, and helping them being able to plan
and act upon the information they have collected.
A Special Offer for Stock News Now/MicroCap
Review Readers.
YOU, as an SNN reader can become an exclusive
website member to one of the most prestigious report
services available - The Morgan Report - at a 25%
DISCOUNT. Instead of the normal price for a one
year subscription, you pay just $375!
We want to help you build and preserve your wealth.
Use this link, or call 480-325-0230 access code SNN.
Offer expires July 31, 2016.TheMorganReport.com
David Morgan, The Silver Guru, is Editor of
The Morgan Report: Money, Metals and Mining. He
presents frequently at conferences in North America,
Europe and Asia, and is a regular on financial talk
shows across the U.S. and Canada. You can learn
about his service at themorganreport.com and follow his perspectives http://www.youtube.com/user/
silverguru David H. Smith is Senior Analyst for The
Morgan Report and a Contributor to moneymetals.com. He investigates on-site, and writes about
precious metals mines and exploration projects in
Argentina, Chile, Mexico, Bolivia, China, Canada,
and the U.S.

PondelWilkinson

Investor Relations  Strategic Public Relations

Helping quality public companies
and long-term investors
connect the dots since 1968.

www.pondel.com
Contact: Evan Pondel
310-279-5980
epondel@pondel.com

66

MicroCap Review Magazine 10 Year Anniversary Issue

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P R O F I L E D C O M PA N Y

Millrock resources, inc.
Buying low in the Downturn
TSX-V: MRO

F

or many explorers, the past few years
of the bear market were a devastating time. But for Greg Beischer, his
partner Phil St. George, and the Millrock
Resources team, it was quite the opposite.
The former Inco Ltd. geologist, CEO Greg
Beischer, has experienced much of what the
cyclical mining business has to offer. After
nearly 3 decades in mineral exploration, he
had learned as tough as the bear markets
are, they present the perfect opportunity for
a generative exploration company, following
the project generator model.
“It took some guts and a lot of patience,
but the downturn presented opportunities
to acquire projects that would have been
impossible to get at any other time” said
Beischer, “so we’ve spent the last three years
focused on just that – acquiring high quality
assets at a very low price.”
While many in the industry were hunkered down, Millrock went on the offensive,
acquiring 27 projects in just over 3 years.
When prompted about the number, Beischer
remarked “we all know that investing success
is simple. Buy things when they are low. Sell
them when they are high. Whether we are
talking stocks or mineral properties, they
just didn’t get much cheaper than at the bottom of that bear market in 2015, so we took
the cash we had and carefully deployed it.”
Recent acquisitions for the project generator include a large group of claims in
B.C.’s Golden Triangle, neighboring Pretivm
Resources and its Brucejack gold project – a
deal that took ten separate agreements with
prospectors and vendors. Beischer knows
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that consolidating this ground would have
been almost impossible to complete under
any other market condition than those that
prevailed in late 2015.
The plan in the Golden Triangle mirrors the successful strategy Millrock has
employed on its other projects. As a project
generator, Millrock diligently seeks partners
to minimize costs to shareholders, while
increasing their odds of taking part in a
major discovery by advancing multiple projects simultaneously.
“Rather than raising large sums of money
and betting it all on a single high-risk drill
program” Beischer said, “Millrock increased
its chances of discovery by advancing multiple projects at once, using funding from
multiple partners to pay for exploration.”
For the company, it provides a sustainable
way to fund operations and gives multiple
opportunities to discover an ore body. For
investors, it means exposure to the upside
of multiple exploration projects while minimizing the risk of any single project failing,
or dilution from multiple financings to fund
exploration. And as the market begins to
heat up, it looks like this strategy is beginning to pay off.
In northern Mexico, Millrock has partnered with Centerra Gold on two projects.
Centerra is funding work on the Los Chinos
and Los Cuarentas gold projects. Drilling is
anticipated to start in September.
Up in Alaska, Millrock has partnered
with Australia’s Newcrest Mining, one of the
world’s largest gold mining companies. The
partners are exploring on a large claim block

situated adjacent to the Sumitomo-owned
Pogo gold mine.
And now Millrock is prepping ground
in the Golden Triangle (British Columbia)
for the right partner. Having yielded spectacular deposits like Pretivm’s Brucejack and
Seabridge’s KSM, this premier exploration
jurisdiction is really heating up. Beischer
seems quite optimistic about the likelihood
of finding partners to fund exploration on
these projects.
“Through the downturn we positioned
ourselves well. Now, as the markets begin
to heat up, we’re seeing partners come back
to fund exploration and drilling. Each hole
we drill presents the opportunity to make
a new mineral deposit discovery that could
send our share price soaring and reward our
shareholders. We will be doing a lot of drilling in the coming years.”
www.millrockresources.com n
The company paid consideration to SNN or its affiliates for this article.

MicroCap Review Magazine 10 Year Anniversary Issue

67

COMMODITIES CORNER

Commodities in Review
A

nalyzing Russell 2000 Options-Based Benchmark Indexes Designed to Provide Enhanced
Yields and Risk-Adjusted Returns (Excerpt)

In 2006 the Chicago Board of Options
Exchange (CBOE) introduced the CBOE
Russell 2000 BuyWrite Index (BXR) optionsbased benchmark based on the Russell 2000®
Index (RUT) options. November 2015, the
CBOE added five more options-based benchmarks based on the Russell 2000 Index. This
article is an excerpt from a 32-page research
paper published in February 2016.
The Russell 2000 Index generally is regarded as the premier benchmark index for U.S.
small-capitalization stocks. In 2015 more
than $460 billion in assets was benchmarked
to the Russell 2000 Index. All indexes in this
paper (except for the RVX) are total return
indexes. Data from Jan 2001 – Dec 2015.
Total return indexes with reinvested dividends (but taxes and transaction costs are
not included).

The six options-based strategies write
options on the Russell 2000®  (RUT) Index,
are as follows:
1) BXR – CBOE Russell 2000 BuyWrite
Index; 2) CLLR - CBOE Russell 2000 ZeroCost Put Spread Collar Index; 3) BXRC CBOE Russell 2000 Conditional BuyWrite
Index; 4) BXRD - CBOE Russell 2000 30-Delta
BuyWrite Index; 5) PUTR - CBOE Russell

2000 PutWrite Index; 6) WPTR - CBOE
Russell 2000 One-Week PutWrite Index.
The following items highlight key
results of the study (all analyses were done
through the end of 2015)
• Growth of Options Volume: The
average daily contract volume of the
Russell 2000® Index options traded
at the CBOE grew more than 2000%

Exhibit 18: Volatility Risk Premium Since 2004

Sources: Bloomberg, CBOE Past performance is not predictive of future returns.

Exhibit 19: Gross Premiums Received for Index Option Writing

n BY MARK SHORE
Sources: Bloomberg, CBOE Past performance is not predictive of future returns.

68

MicroCap Review Magazine 10 Year Anniversary Issue

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Exhibit 19b: Yearly Premiums Received from WPTR & PUTR

to the longer dated options and tend to be
more responsive to the immediate market
volatility
To read the full paper go to www.cboe.
com/benchmarks n

Sources: Bloomberg, CBOE Past performance is not predictive of future returns.

from 2004 to 2015. 
Risk-adjusted Returns:  Since 2001
the PUTR had higher returns, lower
volatility and a higher Sharpe Ratio
than both the Russell 2000 Index
and Citigroup 30-Year Treasury Bond
Index.
Options Premium Income: In
2015 the aggregate gross premium
(as a percentage of the underlying)
was  41.4%  for WPTR,  22.2% for
PUTR, 19.5%  BXR, and  9.2%  for
BXRD.
Lower Volatility: Since 2001  the
PUTR, BXR, CLLR & BXRD indexes had a lower annualized standard
deviation than the Russell 2000
Index. The reduction ranged from
14% to 28% lower. The options-based
indexes also had lower betas (ranging
from 0.59 to 0.82) than the Russell
2000 Index.
Less Maximum Drawdown:  Since
2001 the maximum drawdowns for
the PUTR, BXR, CLLR & BXRD
indexes averaged 21% less than the
Russell 2000 Index.
Faster Average Recovery (in
months): Since 2001 the PUTR Index
average recovery time was 21% faster
from the drawdown troughs than the
Russell 2000 Index.
Richly Priced Index Options:  Since
2004 the implied volatility for the
Russell 2000 has averaged about 2.88
volatility points higher than its realized volatility, and the rich pricing
for index options may have facilitated higher returns for option-selling

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indexes such as PUTR and BXRD
(when compared with CLLR).
• Tail Risk: During the five years when
the Russell 2000 return was negative,
the PUTR and CLLR indexes had
higher returns than the Russell 2000
Index.
Since 2004 the estimated average difference between RVX Index implied volatility
vs. Russell 2000 realized volatility of daily
close-to-close was 2.88 volatility points. This
means the expected volatility over the next
30 days usually has been higher than the
realized volatility. This may cause options
to frequently be richly priced and may offer
ongoing opportunities to reward sellers of
option premiums. The maximum & minimum difference is 17 and -40.89 volatility
points respectively. Discounting the major
events 2008 thru 2011, the risk premium
tends to be higher than the long term average.
Regarding Exhibit 19, with many at-themoney (A-T-M) option writing strategies,
investors can receive more gross premiums
(but also forgo stock upside in times of bull
markets) when compared to certain
out-of-the-money (O-T-M) option writing strategies.
SM

Regarding Exhibit 19b, The Weeklys
options offer potential for greater premium
received on an annualized basis due to rolling four times a month vs. a monthly option
rolling only once a month. The premium
for Weeklys options average about 2X more
in gross income vs. monthly options. The
greater premium may also be due to Weeklys
options having a short time decay opposed

Mark Shore (info@shorecapmgmt.com) has more
than 25 years of experience in alternative investments, publishes research / consults on the capital
markets and conducts educational workshops at
Shore Capital Research LLC. www.shorecapmgmt.
com
Mr. Shore is also an Adjunct Professor at DePaul
University’s Kellstadt Graduate School of Business
and a frequent speaker at alternative investment events. He is a contributing writer for the
Eurex Exchange, CBOE, MicroCap Review, Swiss
Derivatives Review and Seeking Alpha.
Prior to Shore Capital Research LLC, Mr. Shore
was Head of Risk for Octane Research Inc ($1.1
billion AUM) 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 Octane, he was the Chief Operating Officer
of VK Capital Inc, a wholly owned Commodity
Trading Advisor unit ($300 million AUM) of Morgan
Stanley. Mr. Shore provided research and risk management expertise on portfolio construction, product development and business strategy. Mr. Shore
received his MBA from the University of Chicago.
Options involve risk and are not suitable for all
investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks
of Standardized Options. Copies are available from
your broker, by calling 1-888-OPTIONS, or from
The Options Clearing Corporation at  www.theocc.
com. The information in this paper is provided for
general education and information purposes only.
No statement within this paper should be construed
as a recommendation to buy or sell a security or to
provide investment advice. The BXR, BXRC, BXRD,
CLLR, PUTR, and WPTR indices (the “Indexes”)
are designed to represent proposed hypothetical
options-based strategies.  The actual performance of
investment vehicles such as mutual funds or managed accounts can have significant differences from
the performance of the Indexes. Investors attempting
to replicate the Indexes should discuss with their
advisors possible timing and liquidity issues.  Like
many passive benchmarks, the Indexes do not take
into account significant factors such as transaction
costs and taxes. Transaction costs and taxes for
strategies such as the Indexes could be significantly
higher than transaction costs for a passive strategy of
buying-and-holding stocks. Investors should consult
their tax advisor as to how taxes affect the outcome
of contemplated options transactions.
By Mark Shore
Adjunct Professor, DePaul University; Chief Research
Officer, Shore Capital Research LLC
www.shorecapmgmt.com

MicroCap Review Magazine 10 Year Anniversary Issue

69

ASIA CORNER

Global Risks Weighing
on Hong Kong Stocks
Investors Await Shenzhen-Hong Kong Connect

H

ong Kong stock market kicked off the year in negative territory amid
increased concerns of global risk, but by mid-February sentiment

began to turn as China’s economy appeared to show signs of stabilizing.
Yet, by April investors began to question
whether China’s better-than-expected manufacturing data in March  would prove to
be sustainable as confidence once again
began to fall.
The bullish momentum
quickly dissipated with the market giving
up seven percent of its 16 percent gain
from the February 12th bottom to its peak
on April 21. Additionally, concerns about
Hong Kong’s exposure to global risks beyond
China such as a potential hike in the U.S.
interest rate, Britain’s referendum on leaving the European Union as well as outflow
of capital from the emerging markets is also
putting pressure on the market. Underlying
confidence in market is expected to remain
fragile until investors find a catalyst for a
turn around.
Despite the market’s struggles in the first

quarter, Hong Kong maintained its number
one ranking globally for IPOs in terms of
the amount of funds raised, according to
Deloitte China.   The exchange completed
19 new share launches to raise about HK$28
billion (US$3.61 billion). Mainland Chinese
companies remained the major sources of
IPOs in Hong Kong, accounting for 92.4 percent of the funds raised in the city, with the
rest coming from local companies. While
the total number of floats in the quarter was

down from 25 IPOs over the same quarter
last year, proceeds were up from HK$19
billion. For the full year, Deloitte China
expects Hong Kong to have 115 to 125
IPOs, raising approximately HK$260 billion.
In March the China Securities Regulatory
Commission (CRSC) reassured investors
that it is still moving towards deepening
capital markets reform, although the CRSC
stated it will be a lengthy process and will
be launched only when market conditions

n LESLIE RICHARDSON

70

MicroCap Review Magazine 10 Year Anniversary Issue

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and the legal environment “are appropriate”. Thus, even though the CRSC already
approved the A-share IPO system to be
change from the current approval-based
IPO system to a registration-based one last
November, with China continuing to delay
the transition, Hong Kong will remain the
top choice for Chinese companies to go public. Subsequently, Hong Kong is expected to
maintain its place as one of the world’s largest IPO market for 2016.
With the overall market sentiment cautious, the majority of IPOs this year have
been predominately small and medium
sized. One of the best performing new listing this this year is local property developer
Wang On Properties (HK:1243) which spun
off from Wang On Group (HK:1222 ) in an
IPO on April 13th and is up 392 percent from
its debut. The company has successfully
established its residential property brand
“The Met” in Hong Kong and is developing
boutique residential as well as commercial
projects in the SARs. Mid-tier banks China
Zheshang Bank Co Ltd. (HK:2016)  and
Bank of Tianjin (HK:1578) are among the
largest IPO’s globally in the first quarter,
raising US$1.7 billion and US$950 million,
respectively. Of the fourteen newly listed Hong Kong GEM companies this year,
Ching Lee Holdings(HKG:8318) has been
the top performer. Ching Lee Holdings, a
civil engineering company providing substructure building works and superstructure
building works, is up 132 percent since it
started trading on March 30.
Upcoming IPO, BOC Aviation Ltd., is
receiving overwhelming investor interest as
it raises $1.1 billion with a June 1st target
date to begin trading. The Singapore-based
company is Asia’s biggest aircraft-leasing
company by asset value. Asian leasing companies have been rapidly expanding fleets as
the region is projected to overtake the U.S. as
the world’s largest market for aircraft. BOC
Aviation currently has agreements with 62
operators in 30 countries and last January
it placed an order for 30 Airbus A320  aircraft to expand its fleet and meet customer
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demand. It has also committed to acquiring
more than 240 more aircraft in the coming years to be serviced by its Singapore,
Dublin, London, Seattle and Tianjin offices.
The company posted a record net income
of US$343 million (S$470 million) in 2015
for an 11 per cent increase over the previous
year, as revenue rose 10 per cent to US$1.09
billion.    As of May 24th, the public offering
was over-subscribed by 37 times.
Shenzhen-Hong Kong Stock Connect
Following the launch of the ShanghaiHong Kong Connect in November, 2014,
the Shenzhen-Hong Kong Stock Connect is
expected to be launched later this year. As
one more step in China opening its capital
markets, the link will enhance the connectivity of the mainland and Hong Kong
stock markets and allow offshore investors
access to many of China’s technology and
high-growth companies. The new connect
scheme is highly anticipated among Hong
Kong and international investors as many
see Shenzhen as China’s economic future.
Often referred to as China’s Silicon Valley,
Shenzhen  is home to some of China’s most
successful tech companies, such as smartphone makers Huawei, ZTE, BYD, social
media group, Tencent, and the world’s No. 1
supplier of civilian drones, DJI Technology
Co. Once the stock connect is launched, offshore investors will have new opportunities
to diversify Chinese equity holdings away
from financial and manufacturing firms
listed on the Shanghai exchange to information technology, consumer discretionary and
healthcare companies listed in Shenzhen.
In less than 30 years Shenzhen has grown
from a fishing village to a digital hub
and home to almost 1,800 companies. Most
of the stocks listed on the Shenzhen Stock
Exchange have a market capitalization less
than 2 billion dollars, but faster earnings
growth than their large-cap peers listed in
Shanghai. Even though Shenzhen free float
market capitalization is smaller than that
in Shanghai, trading has been much more
active as domestic investors prefer small-cap
stocks. Companies listed on the Shenzhen

index are projected to grow sales by 37 percent in 2016.
This year China is expected to be in the top
three markets in technology IPO, according
to  PwC. Already the Shenzhen Exchange
has started off year with three technology
companies successfully raising funds during the first quarter. Chengdu Eoptolink
Technology Inc (SHE:300502) raised US$64
million and is up 178 percent since its March
3rd debut. The company is one of the market
leaders in optical transceiver and communication industries. Tongyu Communication
Inc (SHE:002792) is up 124 percent since
its March 28th IPO while Changsha Jingjia
Micro Co Ltd (SHE:300474) is up 524 percent since its March 29th debut.
Anticipated IPOs on the Shenzhen
Exchange include the world’s biggest gene
researcher, BGI, which filed in December to
list two of its units, BGI Dx and BGI Tech, on
the Shenzhen ChiNext exchange. The IPO is
targeted to be completed by the end of 2016
and is expected to offer a 20 percent stake
(US$600 million) of the merged entity, placing a $3 billion valuation on the combined
subsidiaries. BGI Tech provides contract
sequencing to life science companies while
BGI Dx offers clinical screening tests, especially non-invasive prenatal tests in China.
*Performance is based from IPO date to
May 26 close n
Ms. Leslie Richardson has over 20 years of investment management and equity research experience.
She operates a boutique investor relations firm in
Hong Kong for Asian companies listed in the U.S.
and Hong Kong. She also assists private companies
develop investment material and build an investor following in preparation for a public listing.
Additionally, she is the Asian Correspondent for
Micro-Cap Review, www.microcapreview.com, a
financial magazine focused on mirco-cap companies. Previously, she worked for CCG Elite in assisting Asian-based, U.S. listed clients formulate key
communication strategies. Ms. Richardson began
her investment career at U.S. Trust Company then
went on to join Odyssey Advisors as a portfolio
manager and Director of Research. Ms. Richardson
specialized in high growth sectors such as bio-tech,
alternative energy, IT and telecommunications. She
earned her M.B.A. from the University of Southern
California. Ms. Richardson is based in Hong Kong.
www.elite-ir.com.

MicroCap Review Magazine 10 Year Anniversary Issue

71

F E AT U R E D A R T I C L E

When to Buy and Sell
MicroCap Stocks
I

nvesting in microcap companies is very different compared to larger and
more liquid stocks. Timing as to when to buy a stock is more difficult
in microcaps as one large buyer or seller can quickly move the stock price.
The key is to have a strong and repeatable
investment process in place that includes
when to buy and sell. My investment life
cycle has the following 5 phases: Finding
quality companies, performing extensive due
diligence, paying the right price, monitoring
results, and strict sell discipline.
Finding quality companies is key to
microcap investing because no one wants to
invest in a business model that doesn’t work.
Some of the key attributes that I look for are
recurring revenue either contractually or by
nature of the product, high barriers to entry,
low competition and pricing power. This is
in addition to strong management teams and
businesses that are not highly levered.
After finding a company that fits the bill as
a quality business, I follow-up with intense
research into the organization. I read all of
the company’s and its competitors filings,

n BY SAM NAMIRI

72

industry publications and scour the internet
for more information. I initially talk to management, competitors, customers and suppliers on the phone. Eventually I will attend
industry trade shows and conferences as well
as visit the company. The main reason for
the visit is to make sure that the company
has the systems and culture in place to run
the organization well that allows both the
employees and management of the company
to effectively perform their jobs and monitor
the business. Many microcap companies
do not have effective processes and culture
in place which is a risk not typically found
in large cap companies. Throughout this
process I am building my position over time
as research is done and the investment still
looks positive.
While doing research I am also building a
financial model. The key to the model is to
make sure that the financial results work out
so that the stock can at least double within
2 years. If I don’t think that it can meet or
surpass that hurdle, I’m not interested. I
generally use cash flow or earnings multiples
and look at comparable company valuations
that are either publicly traded or have been
acquired. If I think that a company’s stock is
worth $5 per share in 2 years, I don’t really
worry if I pay $1 or $1.50 per share, although
cheaper is always better!
I continue to monitor the results of the
business and industry as time goes on and

MicroCap Review Magazine 10 Year Anniversary Issue

update my model and valuation. At any
point if price targets are met, fundamentals
break down, or performance milestones are
not reached, it is time to sell the stock.
Depending on the liquidity of the stock and/
or how quickly things have turned determines the price that I am willing to sell the
stock at. It is important to never place market orders for stock and to always have a limit
price set when buying and selling microcaps.
You risk buying or selling the stock at irrational prices due to lack of volume. On the
other hand, you can occasionally take advantage of these irrational buyers and sellers as
well in the microcap universe which is nearly
impossible to do with large caps.
In general, as a value investor in microcaps
I look for quality companies that at reasonable market driven valuations can at least
double within 24 months and once it does or
if I do not think that it can, I sell. n
Sam Namiri is Vice President at Grand Slam Asset
Management, a registered investment adviser specializing in small and micro-cap value investing.
Prior to Grand Slam, Mr. Namiri was the Founder
and President of International Strategic Investment
Group, Inc., a jewelry company involved in television,
media, manufacturing, distribution and e-commerce.
He led the company in producing a reverse-auction
show selling jewelry which aired on DirectTV and
also started a plant to manufacture semi-precious
gemstone jewelry in Pakistan.
Mr. Namiri has a BS in Industrial Engineering
and Operations Research from the University of
California, Berkeley and an MBA from Columbia
Business School.

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MicroCap Review Magazine 10 Year Anniversary Issue

73

ACC O UN T I N G COR N ER

MicroCaps in SEC Cross Hairs of
Non GAAP Measurement Debate

M

icrocap companies are once again
in the cross hairs of the Securities
& Exchange Commission (SEC),
as that regulatory body prepares to clamp
down on public company use of non-GAAP
(Generally Accepted Accounting Principles)
metrics in financial reporting.
As the SEC moves to rein in use of nonGAAP metrics by public companies, it may
prove to be another example of how financial
accounting standards, as well as SEC rules, are
written for the big companies, but cause oversized implications for microcap companies.
Non-GAAP financial measures are customized methodologies used by management to reflect earnings. These measures
give companies the flexibility to present the
results that best reflect their performance.
Non-GAAP measures adjust a company’s
historical or future performance, financial position or cash flows by excluding or
including amounts from the GAAP measure
of net income (or loss).
Many large cap companies use non-GAAP
measures in an effort to smooth earnings to
eliminate such items as restructuring charges,
stock compensation costs, impairments and
other non-cash or non-recurring charges.
Some companies have gone so far as adjusting
and accelerating revenue recognition.
Approximately two-thirds of companies
that make up the Dow Jones Industrial
Average utilized non-GAAP metrics in
reporting earnings per share, according to a

n BY COREY FISCHER, CPA

74

recent study, and the SEC is wondering if the
trend has gone too far. The SEC is seeking to
ensure that non-GAAP use is not misleading
and that it does not undermine disclosure
effectiveness and investors’ ability to assess
financial results. It fears that companies may
be touting the non-GAAP measures in their
press releases to make financial performance
appear more favorable than it would be
under current accounting guidelines.
Of the listed companies on the DJIA index
that reported non-GAAP earnings per share
in 2015, the adjusted metric was on average
30% above earnings reported under GAAP,
according to data from FactSet. It was even
more pronounced for companies in the S&P
500, where fourth quarter pro forma earnings were 59% higher than under GAAP.
While the analyst or sophisticated investor
is presumably better equipped to discern the
difference between GAAP and non-GAAP, the
SEC is concerned that these higher numbers
may be most misleading to the less sophisticated investor, who may not be able to distinguish
between the adjusted numbers and GAAP
results, especially when reported on websites
or other venues not covered by SEC rules.
But, any proposed regulations aimed at
curtailing large cap companies may be overkill for microcap companies that live in a very
different financial and capital raising environment. For microcap companies, non-GAAP
reporting may actually provide a clearer picture of a company’s financial situation than
GAAP because it allows management of these
growth companies to tell their story beyond
the basic numbers; providing a broader overview of the company and its future prospects.
Many microcap companies, for example, are burdened with significant non-cash
charges that, for practical purposes, are of
little use to the readers of their financial
statements. Most often, these non-cash

MicroCap Review Magazine 10 Year Anniversary Issue

charges result from financing transactions or
issuance of a company’s equity instruments
that are common among microcaps, who frequently go to market for additional capital.
The accounting for these rules is overly complicated and creates huge swings in earnings
that have nothing to do with the company’s
operating performance. Furthermore, these
accounting rules can create large non-cash
liabilities such as derivatives that often overwhelm cash, payables and the other liabilities
on a balance sheet. In these instances the
ability to use non-GAAP measurements is
the only way to explain the true picture to
investors and other financial report readers.
The increased popularity of companies using
non-GAAP measures has certainly caught the
attention of the SEC. Though there may be an
appropriate regulatory path that reels in the
more outlandish reporting techniques utilized
by Big Board companies, we hope that the SEC
appreciates that microcap companies live, and
struggle, in a very different world. The same
regulation that might necessitate an adjustment in practice for a large cap company, can
have serious punitive impact for its microcap
brethren and their investors.
For now, non-GAAP earnings are permissible if done correctly. Microcap companies
always should strive for transparency, for consistency in how measures are calculated, provide appropriate disclosure, and a thoughtful
discussion of why non-GAAP use is valuable
in their particular reporting process. n
Corey Fischer, CPA, is Firm Managing Partner of
Weinberg & Company, a multi-office, PCAOB and
CPAB-Registered firm specializing in the audit, assurance and tax needs of micro and small cap companies.
He has more than 25 years of experience, having
worked with the Big 4 accounting firms, and as an
SEC reporting officer for a number of NASDAQ-listed
companies. He is based in Los Angeles and is an expert
in financial reporting, SEC compliance, raising debt
and equity, mergers and acquisitions and structuring
accounting operations. E-mail: coreyf@weinbergla.
com or 310-601-2200.
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For the past 15 years, Tuesday’s Children has been committed to serving
all those directly impacted by the events of September 11, 2001.
We’ve made a promise to never forget. We are still here.
Forged in the aftermath of Tuesday, September 11, 2001, Tuesday’s Children serves those
impacted by terrorism and traumatic loss, including: families of 9/11 victims, responders;
military service members and wounded veterans; international youth and global victims of
terrorism. Tuesday’s Children’s programs strengthen resilience and build common bonds.
Help find an internship for a child who lost a parent to terrorism, make a charitable
donation, become a mentor to a child, fundraise, or simply call us and tell us how
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Review Magazine 10 Year Anniversary Issue
For more
information, please call 212-332-2980 or visit our website
at www.tuesdayschildren.org.

75

CYBER SECURITY CORNER

Cyber Security
C

orporations of all sizes are investing in protecting their digital assets from
both internal and external threats. Despite these efforts, the volume and
complexity of cyber-attacks is increasing.
Many of the more sophisticated attacks evade
detection for weeks even months. While
there are undoubtedly a growing number of
defensive technologies, there is a shortage of
skilled personnel for the consulting, deployment and maintenance.
In the last couple of years’ cyber security
has escalated to the top of the agenda for
most boards. The questions remain, “How
secure are we?” and “How do we know?”
These should be repeated to the Chief
Information Security Officer (CISO) on a
quarterly basis as they deliver their “state of
security” address.
The “2015 PwC US State of Cybercrime
Survey” asked whether organizations have
the expertise to address cyber-risks associated with implementation of new technologies and only 26 percent said they have the
capability to do so with their current staff.
The good news for the consulting industry is
that the rest rely on a combination of internal and external expertise to address cyberrisks of new solutions. According to a global
nonprofit association ISACA (Information

n BY YORAM GOLANDSKY,

CEO OF CYBERISK

76

Systems Audit and Control Association), 83
percent of enterprises currently lack the
right skills and human resources to protect their IT assets, leading many to turn to
professional services to fill the gap. Given
these market statistic, the long-term market
potential for CybeRisk remains quite vast.
When dealing with shortage of talents,
tight budget and lack of expertise few pointed questions the CISO/CIO should be asked:
1. Should we be investing in this work and
how much?
2. Can someone else do it more effectively
at a better value?
3. Is there work we can outsource to create capacity to focus on something more
critical?
By holding advisory services firm accountable to answering those questions, and by
creating mechanisms for using outsourced
service delivery partners, companies can
optimize and leverage its security spend and
operations.
Outsourcing this work often proves to
be the best choice both economically and
technologically and choosing the right cyber
security services partner is important. It’s
wise to find a partner with deep expertise in
your vertical with broad experience to fill in
whatever gaps exist in your security capabilities and know-how.
Finjan Holdings, Inc. is a cybersecurity
technology company with a rich 20 year
history in behavior-based threat detection.
The company has had success operating as
both a hardware and software business and
today licenses its innovative patented technology worldwide. Finjan is always exploring

MicroCap Review Magazine 10 Year Anniversary Issue

new avenues to drive growth and, as such,
recently launched its cybersecurity consulting business, CybeRisk Security SolutionsTM
(“CybeRisk”), to offer risk advisory services
to customers from the server to the board
room.
Finjan Holdings Offers Cyber Risk and
Security Advisory Services Through its
Subsidiary, CybeRisk.
Finjan Holdings Ticker: FNJN
NasdaqCM. To learn more about CybeRisk
and the company’s expertise please visit
www.cyberisk.biz. n
Yoram was named CEO of CybeRisk in 2015. In this
role, he is responsible for overall strategic vision and
initiating a strong customer base. Prior to CybeRisk
he was General Manager of Cisco’s Cyber Security
Center of Excellence where he also led the Red
Team and War Gaming global practice. Prior to
Cisco, Mr. Golandsky was the founder and CEO of
Security Art Ltd. providing worldwide cybersecurity
and information risk management services. In this
role he oversaw R&D and built upon his operational
and business management skills. Yoram has also
held senior roles at EMC where he was Head of
Information Security for RSA consumer division
and PricewaterhouseCoopers where he served as
Chief Information Security Manager. Mr. Golandsky
began his career in the Israeli defense forces and until
recently continued his service as a reserve Major.
Yoram has been named to the  National Law
Journal’s inaugural list of Trailblazers in Cybersecurity
and Data Protection. The list honors 50 trailblazers
who have made an impact in the fight against
criminal cyber activity by adding layers of security
to protect data as the world becomes increasingly
digital. The honorees were featured in the December
14th issue of the legal journal.

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July, 2016 adds & subtracts of FINRA Member Firms
compiled by DAVID ALSUP

Financial Industry Broker Dealer Data Aggregator

June: 15 New formations & 19 Withdrawals
Also see the RIA formations chart.

(New Formations:Three-year average is 10.2↓ per mo. BDW three year average is 20.5↓Closures per mo)

15 New Firms were admitted

19 Firms Withdrew

1 Firm admitted are Equities oriented
11 firms admitted are Private Placement firms
1 firms admitted is Crowdfunding
2 firms admitted are classified as Mutual Fund

• 9 were equities firms.

• 8 were Private Placement firms
• 2 were Mutual Fund firms
• 3 firms kept their RIA

Monthly New Formations chart showing the number & types of firms admitted

20
15
10
5

Pvt

Mut F,

Other

Equities

0
12

8

17

7

6

13

8

8

14

6

6

3

8

12

14

9

10

15

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June

RIA Net New Formations Monthly
160
140
120
100
80
60
40
20
0
-20 11649
-40

RIA Formations Monthly

11702

11820

11947

12013

11957

11988

12025

12092

Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June

As of J une 30, 2016, there are 4001 FINRA Member firm CRD Numbers. (Note: There are some
bankrupt firms still carried in CRD, such as Lehman Bros, & Stanford.) Subtract another 28 or so firms that
have filed BDW, not yet posted.
===========================================================================

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 28 firms NOT included in these statistics and NOT
reported that filed for a BDW prior to May, 2016.
David Alsup 949468-0111
david@fishbowlstrategies.com
www.stocknewsnow.com

MicroCap Review Magazine 10 Year Anniversary Issue

77

PROFILED COMPANY

nano Dimension ltd.
transforming the world of 3D Printed electronics
The manufacturing world is poised for a big
change and Nano Dimension is printing the
path – literally. Nano Dimension’s proven
success printing PCBs – the circuits that make
electronics work – coupled with its nanotechnology-based conductive and dielectric inks
– uniquely positions the company to usher in a
bold new era for 3D printing, bringing a range
of products to market faster.
Nano Dimension’s disruptive technology
shortens the printed circuit board (PCB) prototyping process from weeks to hours and allows
companies to prototype proprietary designs
in-house at reduced costs rather than relying
on third-party manufacturers.
Significant product development and r&d
cost reductions plus an increased competitive
edge are just some of benefits that have attracted
more than 2,000 entities to Nano Dimension.

tHe neeD For SPeeD: tHe
DraGonFly 2020 3D Printer
DragonFly 2020 brings together an extremely precise inkjet deposition 3D printer,
advanced nanoparticle inks, and sophisticated software to enable ultra-rapid prototyping
of complex, high-performance multilayer
PCB prototypes.
Allows designers and engineers to significantly reduce the time and complexity of
developing electronics-enabled devices.

SoPHiStiCateD nano-ink
teCHnoloGy
The DragonFly 2020 printer uses proprietary
nano ink technology produced at the company’s two fully-equipped ink laboratories, one
of which produces highly conductive silver
nano-particle inks and the other insulating
dielectric inks.
The company’s one-part, nano-epoxy

78

Amit Dror,
CEO and Co-Founder
of Nano Dimension

nasdaq CM: nnDM
ers purchase a printer then additional nano
inks over time.

reDeFininG tHe 3D Market
anD Future GrowtH

insulating dielectric inks are well-suited
to meet the needs of advanced electronics
manufacturers who require both rigid and
flexible circuits.

StronG ManaGeMent
eXPerienCe
More than 40 employees and the management team consists of four co-founders (CEO, CTO, COO, and CBO) whose
strengths include years of 3D printer production, print technology, consumer goods and
business development.

SaleS anD ContinuouS
reVenue MoDel
Nano Dimension’s strategic objective is to
develop and commercialize the DragonFly
2020 printer for multi-layer PCBs and related ink products. Nano Dimension intends
to establish long-term, recurring sales with a
razor and razor blade model where custom-

MicroCap Review Magazine 10 Year Anniversary Issue

Nano Dimension plans to market the products and services worldwide to manufacturers and companies that develop sophisticated products with electronic components,
including consumer electronics, IoT, telecom, semiconductor, defense, aerospace,
automotive, medical/biotech and transportation industries.
• Approval to the NASDAQ market in
March 2016 was a major milestone for the
company, and for the development of advanced
3D printed electronics in the market.
• Signed agreement with Flextronics
International Ltd. And FATHOM, industryleading advanced manufacturers and distributors
• PCB market is forecast to reach $93 billion market size by 2017 [BPA Consulting
Lucintel and EDAcafe]
• The global PCB manufacturing market
is expected to increase its market size from
approx. $62.3 billion to $74.3 billion in 2018,
growing at a compound annual growth rate
(CAGR) of 3.6%. [Research and Markets]
The significant growth projections for the
3D printer market serves as an indicator that
there are significant market drivers facilitating
growth. Nano Dimension helps enable prototypes in all shapes and sizes and is already
having a disruptive influence beyond consumer
electronics. In collaboration with Accellta, Ltd.,
Nano Dimension successfully lab-tested a proof
of concept 3D Bio Printer for stem cells. n
www.nano-di.com
@nanodimensiontech on Facebook
Nano Dimension on Twitter: @3Dpcb
on LinkedIn:
The company paid consideration to SNN or its affiliates for this article.

www.stocknewsnow.com

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MicroCap Review Magazine 10 Year Anniversary Issue

79

80

MicroCap Review Magazine 10 Year Anniversary Issue

www.stocknewsnow.com

OPINION

What Am I Buying?
What’s LOV Got to Do With (Spark Networks)

T

he Beatles so eloquently said “All
you need is love.”
Well, the Beatles were right, but it
may have been an oversimplification.
All I need is good health, some money,
and for my damn investments to go up.
My selection today is Spark Networks
(LOV), and it is not without controversy. 

Essentially, I believe the sum of the parts
are worth much more than its current market cap of $40 million.
The company owns multiple web-sites in
the “dating” space, most notably JDate.com
and Christianmingle.com 
Spark has no debt, and around $4 million
in cash. It has not been profitable for the past
year, and it is being streamlined.
Long story, short. The people on the management side have a history of successes. The
Executive Chairman, Michael McConnell
was brought in to Collectors Universe
(CLCT) back in 2009, and took the role as
CEO. Collectors was never very profitable,
until he became the CEO. CLCT quadrupled
during his tenure. 
Another thing that is interesting is that
you have deep value investors involved, most

notably John Lewis from Osmium.
John has had one of the best track records
for overall returns this decade, and I know he
is busy on the board trying to unlock value.
My belief is simple. If they cannot streamline the operations fast enough, I think that
the company will be acquired for considerable more than what the stock is trading.
JDate.com alone is not only sticky, it
is globally known and respected. Even I
browsed the site in search of a beautiful
Jewish woman, and did not leave disappointed.
Until reality set in and I realized that I am
already married and have a child.
Let’s see what happens.
For full disclosure, I do not own any shares
at the moment. n

n CHRIS LAHIJI
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MicroCap Review Magazine 10 Year Anniversary Issue

81

F E AT U R E D A R T I C L E

MicroCaps - First Mover Advantage

M

y dad had a big influence on my choice
to make a living by investing in stocks.
As a teenager, I remember spending week nights
with my Dad watching the Nightly Business
Report on PBS, building my love affair with
the stock market. I became attracted to the idea
of looking for management teams to invest in,
sitting back making money by letting them do
what they do best. My introduction to microcaps began when my Dad would occasionally
emerge from his “stock cave” in the basement
telling me about a great company he found
that I never heard of that would end up quickly
doubling. When I finished reading “One Up On
Wall Street” by Peter Lynch, given to me by my
Dad, I knew I wanted to invest for a living one
day. I eventually learned that my Dad gained a
competitive advantage, whether he knew it or
not, by investing in Microcap stocks because it
gave him a “first mover advantage” (FMA).

FirSt MoVer aDVantaGe
You don’t have to be a genius to gain an
FMA. You simply have to be aware of following three things:
• Know what pieces of information move prices
like earnings, contracts and changes in risk profiles
• Know where to find information in
places that most retail investors are probably
not looking such as SEC filings, conference
call transcripts & fee based research avenues.
• Learn how to interview management teams
Your goal is find an information arbitrage:
An arbitrage exists when a disconnect
between stock prices and available public
information on a company is noticeable, and

n BY MAJ SOUEIDAN

82

monetarily worth pursuing. Sometimes, the
mispricing of micro-caps can be substantial.

reSearCH, reSearCH, reSearCH!
The microcap universe is a great place to exploit
information inefficiencies. You are in a playground where over 50% of stocks are microcaps.
That means you are avoiding competition from
institutional investors who are performing their
research in larger capitalized stocks. Your primary opponents are individual investors who may
not have the time, resources or expertise to give
you a run for your money. Simply stated, you will
be handsomely rewarded for hard research by
getting into stocks before the crowd finds them.
Sorry, but if you thought great research ends
at reading press releases and watching the
talking heads on CNBC then you are probably
going to be a fool, rather than a great investor.
Peter Lynch is quoted as saying:
“I work about 70 hours a week, and my
average competitor works probably 50
hours.” “So if I’m working 40% more a week
than my competitor, I figure I ought to be
able to beat him by 10%.”

quiCk tiPS to SeCure your FMa
The “FMA” reveals itself in the nooks and
crannies of the microcap and even small cap
space. When you invest, try to approach the
research process in the microcap space like
an institutional investor would.
Sources of information- Many investors
will just rely on press releases to perform
their research. Looking in other not so obvious places will give you a leg up. Live conference calls and related transcripts offer an
endless source of information that management omits from press releases. Also, don’t
be stingy. Spend a little money on fee based
sources that retail investors normally won’t
shell out the cash for. This is one of the best
moves I ever made to give me access to loads
of great info and make my research process

MicroCap Review Magazine 10 Year Anniversary Issue

more efficient. (Reuters and Valueline)
Reliability of information- Places like Yahoo
Finance and many stock screeners often don’t
possess the most reliable information on
microcaps. Furthermore, microcaps do not
disclose non-GAAP financial data as much as
larger caps do. Taking the time to do your own
math to determine the true earning power of a
company will be your advantage.
Interview Process- Many retail investors
are simply afraid to call management teams.
But it’s one of the most important steps in
the research process. Being prepared and following a planned protocol is key for me. The
more I know about a company the better I am
received by management. Go through SEC
filings to understand the business. I typically
ask questions I know the answers to, to see if
management knows their own business.
Majed (Maj) Soueidan received his dual major
degrees in 1992 in Finance and Risk Management
from Temple University and has been an investor
since 1989. He co-founded GeoInvesting in 2007
to bring institutional quality long-biased investment research to the average investor and help
broaden the awareness of the opportunities that
exist in the inefficient micro-cap and small-cap
equity universe and U.S Listed China stocks, all the
while combining the tenets of growth plus value.
Maj works with and manages the “GeoTeam”
on a daily basis to increase its investment opportunity pipeline and heighten GeoInvesting’s
awareness in the financial markets to intensify
its market influence. Maj stresses the concept
of “information arbitrage” in an era where info
overload has actually made it more difficult for
investors to locate profitable information. n
Majed (Maj) Soueidan received his dual major
degrees in 1992 in Finance and Risk Management from
Temple University and has been an investor since 1989.
He co-founded GeoInvesting in 2007 to bring institutional quality long-biased investment research to the
average investor and help broaden the awareness of the
opportunities that exist in the inefficient micro-cap and
small-cap equity universe and U.S Listed China stocks,
all the while combining the tenets of growth plus value.
Maj works with and manages the “GeoTeam” on
a daily basis to increase its investment opportunity
pipeline and heighten GeoInvesting’s awareness in the
financial markets to intensify its market influence. Maj
stresses the concept of “information arbitrage” in an era
where info overload has actually made it more difficult
for investors to locate profitable information.
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commerce.maryland.gov

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MicroCap Review Magazine 10 Year Anniversary Issue

83

OPINION

The ABCs of Sustainable Investing

T

he “do good” investing space offers a myriad of acronyms. A common one is SRI
(Socially Responsible Investing) or all encompassing ones such as ESG (Environmental,
Social & Governance) or EHS (Environmental Health and Safety).
No matter how it’s defined, the opportunities
to profit from an investment while also doing
good (referred to as a double- or sometimes
triple-bottom line initiatives) are increasing exponentially, namely because investors
want product and institutional investors are
delivering.

tHe eVolution oF Do-GooD
inVeStinG
Well over a decade ago, investment managers
seeking double bottom lines, structured their
portfolios to eliminate the ‘bad-boys’, namely
tobacco companies, gun manufacturers and
gaming industry names.
As concerns in the environment grew
resulting from climate change and rising
CO2 emissions, portfolio managers sold
positions in fossil fuel producers. Thus,
E&Ps, coal and even nuclear power companies joined the ranks in the ‘cleansing
process’ pressured by university and college
students calling for their endowments to pull
out of these investments.
Today, the focus has changed course, in
part because energy prices are recovering,
gun sales are booming while tobacco pro-

n BY SHELLEY GOLDBERG

84

ducers eagerly market other popular consumer products.
Now, practically every corporation and
even small business has either a CSO (Chief
Sustainability Officer) or CRO (Chief
Responsibility Officer) to address best practices in everything from the environment, to
the health and well being of its employees,
and its effects on the communities in which
its business operates.
Firstly, businesses are taking responsibility as their customer base is asking them to
do, while social media has affectively spread
the word about business practices globally.
Secondly, investors are seeking out sustainable
companies, and encouraging portfolio managers in the SRI space to perform robust due
diligence in order to ensure that these businesses are worthy of being in their portfolios.

wHere to Start
A simple approach with no- to low-fees is an
ETF or index. The Dow Jones Sustainability
Indexes have a geographic focus either covering the world, or narrowing the focus to
Emerging Markets or even a specific country,
like Chile. These long only equity portfolios
screen names based on a host of requirements involving corporate practices, operation and actions.
Or, an investor can focus on an issue, such
as the S&P 1200 Fossil Fuel Free Carbon
Efficient Select Indexes, designed to measure
the performance of a subset of companies
with relatively low carbon emissions. In the
fixed income space there are the Barclays Fix
Income Green Bond Fund indices.

MicroCap Review Magazine 10 Year Anniversary Issue

For more actively managed accounts that
typically carry a fee, there may be greater
investment turnover, and the application of
hedges or overlays.
For the more hands on investor, private
equity and venture capital provide opportunities to invest in businesses whose sole
focus is sustainability - recyclers, clean-tech,
or disruptive businesses that aim to change
the way current manufacturing, industry,
and retailers are operating while resolving a
problem or concern.
Finally there is a small but growing number of investment advisors who can steer the
investor in the right direction. n
Shelley Goldberg is an investment advisor, consultant and board member to businesses focusing on
environmental sustainability with an emphasis on
double-bottom line initiatives. Previously she served
in the capital markets on both the sell- and buy-side
with a sector expertise in global resources and commodities. She has been a macroeconomic strategist,
trader, and investment advisor for multi-asset, topdown portfolio managers. She managed her own
energy fund, G3 Capital Partners, LLC, and ran the
largest fund-of funds devoted to natural resources
with Union Bancaire Priveé, a Swiss private bank.
She has also served as a trading and investments
strategist for Brevan Howard Asset Management
LLP, a multi-billion- dollar hedge fund manager, and
for Roubini Global Economics. Shelley is a frequent
writer, speaker, and panelist at industry conferences,
and is regularly featured as an expert commentator
on television and online segments.
For information: info@invest-with-focus.com

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MicroCap Review Magazine 10 Year Anniversary Issue

85

OPINION

The Zika Virus Epidemic . . .
Risks to Americans

T

he Zika virus was first discovered in 1947 in rhesus monkeys in Uganda. The virus
quickly jumped to humans, with the first cases in people recorded in 1952 in Uganda

and Tanzania.

Outbreaks were reported in Yap in 2007;
French Polynesia in 2013; and Brazil,
Colombia, and Cape Verde in 2015. In
addition, cases have been reported in the
Continental United States. It is now estimated that the vast majority of Puerto Ricans
will become infected within the next 2 years.
This is thought to occur because of large
mosquito populations, crowed urban conditions associated with lack of window screens
and air conditioning.

n BY DR. EUGENE SEYMOUR

86

In the Americas, Brazil has been hardest
hit with over 1 million cases reported thus
far. As of July 1st, 2016 there have been
approximately 600 cases in the continental
US, mostly from people who returned from
Zika zones in Central and South America.
The CDC is currently following over 300
pregnant women who were infected by the
virus in their first trimester of pregnancy.
The virus is spread by two species of
mosquitos, Aedes egypti in urban areas and
Aedes albopictus in the southern states along
the Gulf Coast. It is thought that the US population will largely be spared from the mosquito-borne aspect of this disease. However,
approximately 40M Americans travel each
year to zones where Zika has been found.
The more disconcerting aspect of transmission is through sexual intercourse, either
vaginal or oral. The CDC recommends that
men use condoms for 8 weeks after visiting
a country where both the Zika virus and
mosquitos are found in abundance. The
problem with this advice is that the virus is
known to persist in the semen for months,
even possibly years. In addition, most people
are unaware that they have been infected so
they may inadvertently pass the virus along
to their spouse. This could be a serious
problem since up to 15% of women infected
with the virus during their 1st trimester
will give birth to a child with microcephaly.
This condition develops when brain cells are
destroyed early in the pregnancy. There are a

MicroCap Review Magazine 10 Year Anniversary Issue

number of other neurologic and ophthalmologic conditions found in these newborns.
This is reminiscent of the neurologic and
ophthalmologic abnormalities that we found
in the children of women who had been
infected with the Rubella virus (German
measles) during their first trimester. It is
estimated that each of these Zika damaged
children could cost society up to $10M during the course of their lifetimes. In addition
to the damaged children, Zika infection has
also been associated with the Guillain-Barre
Syndrome (GBS), a situation in which a person’s own immune system attacks and damages their peripheral nervous system, sometimes causing life-threatening or permanent
muscle weakness or paralysis.
So with all of this grim news, what are the
risks to Americans? Unless you have traveled
to a Zika zone or have had unprotected sex
with someone who has, the risks range from
minimal to nonexistent. That being said, it’s
important to eliminate any free-standing
water where mosquitos could breed and to
use mosquito repellent when outside in areas
where mosquito populations are high. The
Centers for Disease Control website (cdc.
gov) is an excellent source of current information. n
Dr. Seymour is the CEO of NanoViricides, Inc, a biotech company currently developing treatments for various infectious diseases caused by viruses such as herpes,
shingles, influenza etc.

NYSE MKT: NNVC

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MicroCap Review Magazine 10 Year Anniversary Issue
87
Boards
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Stock Trade
S

ummers are usually tough on OTC
stocks, and, by extension, the cannabis
sector, as almost all of the stocks trade
on the OTC, which sees volumes typically
fall during the vacation season. 2016 is likely
to be different for cannabis stocks, though,
as the election season should be a major
draw for speculative traders. We saw minor
rallies in 2015, when Ohio voted on legalization (failed), and in 2014, when Alaska,
Oregon and Washington, D.C. voted on

legalization (all passed) while Florida voted
on medical cannabis legalization (failed). In
both years, the sector experienced positive
returns in October, suggesting that traders
set up in advance of the elections.
Cannabis stocks have finally emerged
from a severe downturn. After a collapse
of 97% from the peak in March 2014 to the
trough in February 2016 as measured by the
420 Investor Cannabis Stock Index, prices
have shown signs of life over the past few

n ALAN BROCHSTEIN

88

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month. Through May, the index is roughly
unchanged in 2016 at 38.09, which is down
3.0%. For some perspective, here is how the
market has performed in 2016, with a very
solid 63% move from the lows in February
to the peak in April:
This election season looks to be the biggest one ever in terms of the populations of
the states involved. While not all of these
are definitive, there are likely to be ballot
initiatives for full legalization in California,
which has more than twice the residents of
legal states Alaska, Colorado, Oregon and
Washington combined, as well as Arizona,
Maine, Massachusetts, and Nevada. Each of
these states already has a medical program
in place. Florida will again be voting on
medical cannabis. It’s a presidential election,
so there is likely to be significant media
attention on these state votes. Additionally,
the legalization movement, which has so far
been limited to the West, could take hold in
the East, where states are more populous and
close together, suggesting a potential tipping
point for the legalization movement. Already
more states have medical cannabis programs
than those that have none.
If one accepts the premise that traders will
focus on the cannabis sector, it’s important
to nail down the timing. At 420 Investor, I
have long been suggesting that the trade will
start much earlier than November, perhaps
in early September. I have noticed a trend
over the past three years that I have been following the cannabis sector that suggests an
interim trough in the market may actually
occur in mid-August, when the companies
on regular calendar year-ends report their
Q2 financials. These reports are typically
met with negative responses, as traders/
investors see the lack of fundamental progress. The important point is that the time to
sell not buy will be in November. Yes, sell the
news, even if it is good.
So, now having established that there will
likely be an event-driven trade in the cannabis sector and that one should likely position
well in advance, the obvious challenge is to
figure out what to buy. There is no cannawww.stocknewsnow.com

Make no mistake about cannabis stocks: They are
extremely speculative. The legal cannabis industry
is performing well, but the stocks, for the most
part, don’t really reflect the underlying industry.
The market seems to be finally figuring this out, so
the liquidity is starting to improve in some of the
higher quality names that have struggled to resonate
with traders.
bis sector fund or ETF, so one will have to
pick stocks. Typically these election trades
work best in the more liquid names, which
have tended to be the same old names with
the cute tickers like “ERBB”, “HEMP” or
“MJNA”, but, fortunately, are a lot broader
these days. In fact, some of the companies
that I think stand out against the sector
in terms of their potential have achieved
greater liquidity than in 2015. I expect that
traders will look for a pattern of good trading volume but also stock prices that aren’t
at their lows but are far from their highs. So,
the inflows are likely to be somewhat broad,
but there are some companies with higher
than average quality that I will be focused
on, as I expect that they will participate in
the trade.
One name in particular that I find interesting is Terra Tech (OTC:TRTC), which has
great positioning for the elections as it operates in California and Nevada, both of which
are likely to not only be on the ballot but to
also get approved by the voters. TRTC certainly has liquidity, but the stock is already
up substantially in 2016, though it has pulled
back from the April highs. This stock is likely
to be very volatile and is one to watch in the
Summer for potential entry.
Make no mistake about cannabis stocks:
They are extremely speculative. The legal
cannabis industry is performing well, but the
stocks, for the most part, don’t really reflect
the underlying industry. The market seems

to be finally figuring this out, so the liquidity
is starting to improve in some of the higher
quality names that have struggled to resonate
with traders. The big trade I envision in the
Fall is likely to benefit some of the same old
scoundrels that have been trading for years
but making no progress but also some of the
names with relatively higher quality.
Editor’s Note:  Alan Brochstein, CFA,
began his career as a bond trader in NYC
in 1986 with Kidder, Peabody and worked
with CS First Boston and Criterion investments until transitioning to equities as a
analyst/portfolio manager in 2000.  In 2007,
he began AB Analytical Services, where he
provided research and consulting to several
investment advisors while also becoming
one of the most popular contributors at
Seeking Alpha.  In 2013, Alan launched 420
Investor, an online community focused on
publicly-traded companies in the cannabis
sector, and, more recently, he began New
Cannabis Ventures, a news & information
platform that highlights the most promising
companies and influential investors in the
cannabis industry. n
www.420investor.com
Alan has no investments in any of the stocks
mentioned in this article.

MicroCap Review Magazine 10 Year Anniversary Issue

89

PROFILED COMPANY

endexx Corp.: the next oil Boom
otC Pink: eDXC

“T

wenty five years of investment
banking in the biotech industry teaches you more about
survival and failure than any other sector in
the investment world. Rarely does a technology, product or molecule, emerge, that can
change an industry and enhance the quality
of life of its intended customer”, stated Todd
Davis, CEO of Endexx. According to the
company founder, Endexx has discovered its
“Higgs-Boson”, its “God-Particle”, its element
that directly benefits their customers and
can systematically change lives for the better.
CBD-rich hemp oil and its extracts, is the
next big “Oil Boom”.
Endexx has developed formulations, technology and distribution platforms to support

Todd Davis, Chairman and CEO

90

a single focused mission: provide the highest
quality and proper dosing of Cannabidiol
(CBD) and Phyto-nutrient extracts from
the whole hemp plant and bring them to
market. Endexx nutraceuticals are helping
individuals with chronic and debilitating
medical conditions live more productive
lives through pain management and inflammation reduction with all natural products.
Endexx has positioned itself to be a leading provider of retail consumer products,
medical and therapeutic products for doctor/patient care, and pet products for pain,
inflammation and anxiety management, and
cosmetics (skin and hair care), and additives
and formulations for products of all kinds
that will benefit from the addition of CBD.
As a go to market strategy, Endexx
has concentrated on two key sectors: the
Platinum group (50+), and people of all ages
that maintain active lifestyles. Pain and discomfort from physical activity, trauma and
life experiences can decrease mobility and
the ability to naturally recover from stress.
Doctors interested in providing better solutions for pain and inflammation management for their patients have been a critical
component in understanding the needs and
desires of our target audience. By conducting voluntary case studies utilizing CBD
(cannabidiol: a naturally occurring molecule), Endexx has been able to gather clinical
information that supports the fact that pain
is being reduced in patients with neuropathy,
migraines, arthritis, bursitis, sciatica, back
pain, plantar fasciitis, and general joint and
muscle pain. These conditions effect and
affect everyone at some time in their lives
and chronically for a high percentage of the
general population. According to statistics

MicroCap Review Magazine 10 Year Anniversary Issue

taken from the American Academy of Pain
Medicine, “pain affects more Americans
than diabetes, heart disease and cancer combined. Pain is a significant public health
problem that costs society at least $560$635 billion annually (an amount equal to
about $2,000.00 for everyone living in the
U.S.).” Data from the 2012 National Health
Interview Survey (NHIS) found that an estimated 25.3 million U.S. adults experience
chronic pain. Endexx’s CBD based formulations are directly benefiting this population.
Since November 2015, the Company has
added over 70 retail stores and numerous
Health Practitioneers and pharmacies nationwide that are providing CBD Unlimited
products over the counter to their customers. “The consensus is universal, the product
works. More importantly, it is natural, safe
and without side effects” added Davis.
In the current year, Endexx is expanding
its sales force and has engaged a food distribution network with the goal of introducing
multiple high-end national chains that are
currently evaluating the company’s products.
As the education of the national market
awareness of the benefits of CBD has begun,
Endexx is preparing a national rollout and
will be an early mover in the market.
Mr. Davis added, “multi-billion dollar
industries don’t grow on trees. However, the
phyto-nutrients produced from this, all-natural plant, can potentially change the world
we live in and Endexx is on the leading edge
of this change. n
For more information: www.endexx.com
Ticker: EDXC
www.cbdunlimited.com
The company paid consideration to SNN or its affiliates for this article.

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OPINION

The Private Side of Cannabis
Weigh your public vs. private opportunities

n BY LESLIE BOCSKOR,

ELECTRUM PARTNERS

www.stocknewsnow.com

By 2020, adult use and medical marijuana
sales are projected to grow to over $22 billion, according to ArcView Market Research
and New Frontier, a research firm focused on
legal cannabis. Historical data and research
such as the RAND Corporation’s estimates
of the total market value of cannabis is in
the $30 billion to $40 billion range. I also
believe people are underestimating the sheer
volume of new products and services emerging in the industry. Like many others, I had
concerns when the industry had a less than
auspicious beginning, especially in regards
to publicly traded businesses.
When the “green rush” first started, many
of the companies that initially reported
extraordinary stock price gains turned out
to be bad investments, with inflated valuations created by bad actors  looking to cash
in on the hype surrounding legalized marijuana. Two examples are Advanced Cannabis
Solutions and CEN Biotech; two companies
that presented in January 2014 at an Investor
Conference in Las Vegas. Both were being
traded on the OTC markets. After their presentations I was asked to share my opinion
on both to the investor membership. Neither
company had a substantive existing business, both had management issues regarding
experience in running public companies,
and both had valuations that were completely inflated beyond any reasonable number.
Coincidentally, they both ended up running into trouble eventually with Advanced
Cannabis Solutions having its trading halted
by the SEC and CEN biotech running into
numerous problems with various regulatory
agencies in Canada.
As the SEC moved the bad actors out and
forced new players to be completely buttoned up, the next phase of cannabis invest-

ing looks drastically different. The foundation for a vibrant ecosystem of legal cannabis
companies and ancillary business growth is
being created right now, and the opportunity
is immense.

PuBliC VS PriVate: wHiCH
inVeStMent PatH Do you
take?
In order to participate it is critical to understand the magnitude of change that is occurring. We are witnessing the birth of a vibrant,
lucrative industry with a massive built in
audience. It goes without saying that the
opportunities for those willing to traverse
uncharted waters is significant. But with new
opportunity, questions begin to arise. What
is your strategy? Are you building a diversified portfolio of businesses in the sector
spread across medical, adult use, life science,
nutraceutical, hemp, ancillary, and veterinary? Can you hold the stock for years? Or
are your investment objectives short term?
Liquidity is obviously a plus for investing in
public cannabis companies. Other benefits
to investing in OTC stocks include access
to public information allowing for in-depth
research on each investment opportunity.

inVeStinG in PriVate CoMPanieS
If you’re considering investing in private
cannabis companies, there are significant
benefits as well. For starters, the volume of
deals and opportunities is much larger than
the number of OTC companies currently
listed. Additionally, private cannabis companies often have lower valuations which may
allow the shrewd investor to build a larger

MicroCap Review Magazine 10 Year Anniversary Issue

91

self. Who refers to the team. Do they have
any previous exits? Have they succeeded
before? I would rather bet on an “A” team
with a “D” project than a “B” team with an
“A” project because a great team can adapt
effectively and win no matter the circumstance. What is the basic value proposition
and how big can it be? Why asks the question, will they win versus the competition?
Where refers to the market position overall,
not just the geographical location. When
has to do with market timing and urgency,
and finally, How refers to strategy. Asking
these basic questions can be extremely useful during your analysis. Going deeper down
the rabbit hole, there are also a myriad of
wHat are SoMe oF tHe
legislative and jurisdictional factors to coniMPortant StePS PeoPle
sider that come into play. Keep in mind, due
MiSS or SkiP wHen inVeStinG diligence is critically important and planning
in leGal CannaBiS?
is essential.
With no analysts for coverage or fund
Who, What, Why, Where, When and How? managers for guidance, how does a pruLITERATURE
PROJECT
NO
PAGE(S)
SIZE
INK(S) on
These
are some
questions
to askNOyourdent
cannabis
investor
stay informed
Continental
Stockbasic
& Trust
equity position with equivalent capital. Just
as a portion of publicly traded companies,
many private companies will emerge into
long term success stories with excellent cash
flow and invaluable intellectual property.
However, private companies carry considerably more risk due to the lack of liquidity.
As a minority shareholder in a private company you will often have little to no rights,
and as such, getting any capital out until the
entrepreneur decides to take the company
in the direction of providing an exit for its
shareholders either through; 1) distributions, 2) getting the company acquired, or 3)
utilizing the public markets for an exit.

2016 Brand Ad

OVER

n/a

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7.375" x 4.75"

Leslie Bocskor is Managing Partner at Electrum
Partners. Named most valued investor member of
the ArcView Investor Group in 2015, and CEO of the
year by The Weed Blog, the most highly-trafficked
industry trade publication and one of the top 100
most influential people in the industry by The
Cannabis Business Executive (CBE).
Electrum Partners is an advisory services firm specializing in medical and adult use cannabis and ancillary businesses. Visit www.electrumpartners.com

CYAN

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YEARS

EXCELLENCE
IN SERVICE

#1 TALON agent for
four consecutive years.

At your side.
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© 2016 Continental Stock Transfer & Trust Company

92

4-color process

their prospective investments?
Until such time as there are ETFs, other
publicly traded companies on the NMS,
NYSE, or AMEX, investing will require
that you find a professional investor who is
focused on the sector or, essentially, become
one yourself. Investors who were dilettantes
find themselves in the company of those
gamblers who went to a casino thinking that
they would somehow be the only one that
ever went in, played the games, and would
leave richer than when they walked in. n

MicroCap Review Magazine 10 Year Anniversary Issue

The relentless pursuit of excellence
and innovative solutions have been
our hallmark for more then 50 years.
We earn the trust of our customers
each and every day. Be confident that
as your partner, our mission is to bring
you brilliant solutions, every time. Our
individualized customer service will ease
your mind while allowing you to build your
business. Corporate actions, IPOs, public
and private company record keeping,
escrows or stock plan administrations —
we are proven leaders in every arena.
Contact Karri Van Dell
212.845.3224
ContinentalStock.com

INDEPENDENT SPIRIT, RELENTLESS DEDICATION.

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93

P R O F I L E D C O M PA N Y

Grow Solutions Holdings, inc.
otCqB: GrSo
“When a Proven Business Model Meets the
Cannabis Industry”

W

hatever opinions you may have
on Cannabis, the one conclusion that every investor and
broker can agree on is that the Cannabis
Industry is the fastest growing industry in
the country ($4 Billion Today). Forbes,
CNBC and MSNBC have estimated the
Cannabis Industry will grow 10 fold by 2020
($40+ Billion).
Grow Solutions Holdings, Inc. is a financial holding company rooted in the cannabis industry. The company’s management applied their collective expertise and
experience to apply their own strategies and
principles to the unsophisticated cannabis
industry. In fifteen months Grow Solutions
has become a publicly traded company, and
shown steady revenue growth.
The Company does NOT grow cannabis or sell cannabis avoiding any violations
of Federal and State Laws. The holding
company is made up of three key divisions
described below:

Grow teCH
This division provides cannabis growers
with nutrients, supplies, equipment, lights
etc. The Company has 3 retail stores in
Colorado and one online store (give website) and has a growth strategy to expand
through acquisition with retail stores located
in Oregon and Florida. The Company plans

94

to introduce a new Greenhouse Division in
the fourth quarter of 2016. The Greenhouse
division will profit from sales without capital
expense. Greenhouses are typically large
expenditures (in excess of $300,000), and
GRSO’s commissionable income will potentially be substantial.

Future teCH
This division creates and manufactures
products and brands for the consumption,
processing and storage of regulated herbal
products including cannabis. The first three
brands to come from Future Tech Products
are Opti Flavor™ Technologies (vaporizers
and quartz accessories), RozTek™ (Rosin
presses) and Terpene Preservation Labs™
(silicone storage solutions). These brands
and products are cutting edge technologies
for smoke shops, tobacco shops and dispensaries. The Company plans to add an
online wholesale distribution platform linking manufacturers to retailers, B2B, streamlining the ordering and fulfillment processes.

com is a partnership with Recruiter.com and
is an employment platform for the regulated
cannabis industry. JobGrow.com provides
a platform for certified cannabis industry
employees and employers to connect qualified applicants with jobs. Through this partnership with Recruiter.com, the Company
has a competitive advantage bringing higher
level professionals to the cannabis industry.
The company has maintained its business
principle since inception - create integrate
new and existing products and build revenue
in the cannabis industry, the fastest growing
industry in the country. The Grow Solutions
business model is to grow its revenues both
organically and through acquisition. Grow
Solutions Holding, Inc. is a fully reporting
company: OTCQB: GRSO. www.growsolutionsinc.com n
The company paid consideration to SNN or its affiliates for this article.

DiGital teCH
This division includes our digital properties
– Sprout.news and JobGrow.com. Sprout.
news is a news and social media site reporting on the confluence of cannabis and politics, sports, health and culture. JobGrow.

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tSX.V: tlt, otC Pink: tltFF

CoMPany ProFile on PaGe 36

THERALASE
T
ECHNOLOGIES INC.
:
.
.
:
WWW THERALASE COM

TLT TSXV TLTFF OTC

THERALASE IS A BIOTECH COMPANY THAT UTILIZES PATENTED
MEDICAL LASER TECHNOLOGY IN TWO DIFFERENT APPLICATIONS:

TREAT NERVE, MUSCLE AND JOINT CONDITIONS
TO ELIMINATE PAIN, REDUCE INFLAMMATION AND
ACCELERATE TISSUE HEALING

ACTIVATE, LIGHT-SENSITIVE COMPOUNDS, KNOWN
AS PHOTO DYNAMIC COMPOUNDS TO LOCALIZE
TO CANCER CELLS AND DESTROY THEM WITHOUT
AFFECTING HEALTHY TISSUE

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