Micro-Cap Review Winter 2011

quarter 4 • 2011 microcapreview.com

@StockNewsNow

$5.00

Grizzly Discoveries [60]

Inovio Pharmaceuticals [78]

Investor Targeting Q & A with John Vigliotti PR Newswire [10]

New Merriman Capital [37]

DYNAResource [47]

ICVrx – A Transformative Drug Company [82]

Atossa Genetics [90]

Ask Mr. Wallstreet: “When Did I Become a Contrarian [42]

Chinese Public Companies in the U.S. [32]

Micro-Cap Allstars

SNN Is to Micro-Caps what CNBC is to Large Caps [30]

Anatomy of a Biotech: Advaxis Inc. [7]

Anatomy of a Junior Exploration Company: Cream Minerals [88]

OTCBB: IFIX [17]

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developing the next genera0on of cancer immunotherapies

OTCBB:ADXSwww.advaxis.com

www.stocknewsnow.com•www.snnwire.com•www.microcapreview.com Micro-Cap Review Magazine 3

E D I T o R I A L

This Publication is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Micro-Cap Review Magazine and its employees are not, nor do they claim to be registered investment advisors or broker/dealers. This magazine contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 relating to companies’ future operating results that are subject to certain risks that could cause results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements. This publication undertakes no obligation to update these forward-looking statements. Micro-Cap Review Magazine, its owners, employees, their families and associates may have investments in companies featured within this publication and may elect to sell these investments or purchase additional investments in these companies at any time. However, the policy of our editorial staff is to avoid any pre-publication trading of featured stocks or sales until the release date of the magazine. In order to be in full compliance with the Securi-ties Act of 1933, Section 17(b), where the publisher has received payment for advertisement/advertorial of a security, the amount and type of consideration will be fully disclosed. All information about the Company contained within an advertisement/advertorial has been furnished by the respective Company and the publisher has not made any independent verifi cations of such information and makes no implied or express warranties on the information provided. Readers should perform their own due diligence before investing in any securities mentioned. Investing in securities is speculative and carries a high degree of risk. All MicroCap Review Disclaimers apply http://www.microcapreview.com/disclaimer.php before investing view www.sec.gov/investors

I have this vivid memory from my youth

of watching Star Trek, one of my favor-

ite TV shows and one of the best motion

picture franchises in film history. Captain

Kirk was cool but the best character was

Bones, the doctor, the late, great DeForest

Kelly. I remember Bones had two med-

tech devices, one which first diagnosed an

ailment and another one that could treat

anything from deep space chills to a moon

virus. Although fiction and supernatural in

scope, today’s scientists and biotechnologists

are on the cusp of inventing incredible diag-

nostic, life saving, life extending devices, and

discovering molecules, cures and treatments,

to raise the quality of our lives, the common

message here is that these geniuses need to

be funded to fruition.

At each biotech, medtech, life sciences

and healthcare conference that SNN attends,

I am no longer amazed at what I see and

hear. The global scientific talent community

is tearing down barriers to treatments and

doing so by thinking outside the beaker, and

inside the cell and genes.

When a CEOs passion hits a crescendo

on camera with me during my SNNLive

interview I often capture their eye gleam

talking about their dream becoming a reality

and it’s not about the money! It’s about their

goal. Ask a CEO why they do what they have

chosen to do and you will find a story about

someone in their family or a friend that ill-

ness became their personal inspiration!

Today’s Biotech, Med-Tech, Life Sciences

and Healthcare companies are in a financial

sector of the market that has evolved like

no other sector in the stock market. This

sector is filled with start-ups, companies cre-

ated by grant funding, others from rounds

of friends and family check writers, and

others tied to the University systems and

teaching hospitals. Investing in this sector

requires an investor to have patience for a

long term hold. The investor faces huge risk

as a lab molecule must go through all the

necessary phases of pre-clinical and clinical

trials as the company is faced with funding

the enormous cost of research and develop-

ment without a guarantee of success or of

receiving an FDA approval. Investors need

to become believers in a company’s science

and management and once involved, inves-

tors then become cheerleaders filled with

hope and when the long awaited little break-

throughs and small positives happen they

become gigantic events for investors.

Often times investor hope may not be

enough, add in prayer which can’t hurt, and

of course sprinkle a lot of luck into the mix

and the chances of success are still miniscule.

In the U.S. 80% of start-ups fail and 20%

become success stories. This four to one ratio

stymies the best and causes more broken

hearts than cholesterol. One out of five com-

panies succeed but as investors know success

can take years barring setbacks and the pain

of enduring rounds of financing and stock

dilution, board disputes, failed FDA results

and delisting issues. Investors waiting for

public announcements on biotech compa-

nies resemble a nervous expectant parent

because each announcement is nerve racking

and monumental.

So with all this risk, uncertainty and brain

drain why invest in this sector of biotech,

med-tech, life sciences and healthcare?

Because one day we will all be patients! n

www.stocknewsnow.comFollow us: @StockNewsNow

SNN IncorporatedMicro-Cap Review4766 Admiralty Way #13004Marina del Rey, CA 90295www.snnwire.com

PUBLISHERSheldon [email protected]

Wesley [email protected]

EXECUTIVE EDITORLynda Lou Kane Kraft

WRITERSIan EllisBrent CookTeresa ToueyBobby KraftLance Jon KimmelDr. Gordon ChiuSheldon “Shelly” KraftEleanor VeraJeb HandwergerRichard D. Hastings, CCE

Chris BerryDr. Frank GrossmanLindsay HallJim SchnorfLisa LoweVirginia GrantierRabbi Stephen RobbinsJack LeslieChet Hebert

U.S.-CHINA SNN REPRESENTATIVE TO CHINAHolmes H. Stoner Jr.

SNN COMPLIANCE AND DUE DILIGENCE ADMINISTRATIONJack Leslie

CHAIRMAN OF SNN ADVISORY BOARDGeorge R. Jensen Jr.

ADVERTISINGSheldon [email protected]

COMMUNICATIONS AND SOCIAL NETWORKINGRobert Kraft@[email protected]

[email protected]

GRAPHIC PRODUCTIONTony [email protected]

PRINTERVintage Filings, a division of PR Newswire866-683-5252

CREATIVE IT TECHNOLOGISTBarbara [email protected]

MARKETING CONSULTANTRolv Heggenhougen

Micro-Cap Review Magazine is published Quarterly, Spring, Summer, Fall, Winter POSTMASTER send address Changes to Micro-Cap Review Cor-porate Offi ces. © Copyright 2009 by Micro-Cap Review Inc. All Rights Reserved. Reproduction without permission of the Publisher is prohibited. The publishers and editors are Not responsible for unsolicited materials. Every effort has been made to assure that all Information presented in this issue is accurate and neither Micro-Cap Review Magazine or any of its staff or authors is responsible for omissions or information that is inaccurate or misrepresented to the magazine. Micro-Cap Review is owned and operated

by SNN Inc.

4 Micro-Cap Review Magazine www.stocknewsnow.com•www.snnwire.com•www.microcapreview.com

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C O N T E N T SWWW.MICROCAPREVIEW.COM

QUARTER 4 2011

10 Capital Markets Visibility Program Drives Investors Engagement for Small-Cap and OTC Companies13 Talk to thousands of Active Investors in Real-Time. (in Your pajamas)15 Q & A with Doug Jamison on Venture Capital State of The Market22 Micro Cap Investing is Not a Strategy By Ian Ellis25 The Odds and the Opportunities in Junior Metals Explorers By Brent Cook28 Biotechnology Supermen and Superwomen By Teresa Touey30 SNN is to Micro-Caps what CNBC is to Large Caps By Bobby Kraft32 Chinese Public Companies in the U.S. – Restoring Confi dence By Lance Jon Kimmel34 Is Anything Predictable for 2012 and Beyond By Dr. Gordon Chiu37 The New Merriman Capital By Sheldon “Shelly” Kraft

40 Caregiving: Ready or Not or Tag Your It! By Eleanor Vera44 What’s Really Going On With The Rare Earth Exports? By Jeb Handwerger52 The Top Down Opportunity for Micro- Caps in 2012 By Richard D. Hastings, CCE54 Metal Market Overview 2011 By Chris Berry56 Value Beyond Profi t By Dr. Frank Grossman62 How to Hedge Your Micro-Cap Portfolio by Using Options on Dow Futures By Lindsay Hall72 International Stock Exchange Executives Emeriti to Meet in Orlando By Jim Schnorf74 Do You Wrap?77 Are You DTC Eligible? By Lisa Lowe82 ICVrx – A Transformative Drug Company for the Treatment of Epilepsy and Other Brian Disorders By Virginia Grantier

FEATURED ARTICLES

Finance42 Ask Mr. Wallstreet: When Did I Become a Contrarian? By Sheldon “Shelly” Kraft

Financial Puzzle59 SNN StockWord Puzzle

Financial Books65 Caveat Emptor or Buyer Beware Written by Sheldon “Shelly” Kraft

Opinion67 Beginnings and Endings By Rabbi Stephen Robbins94 Ombudsman By Jack Leslie

Comic Strip92 WallStreet Chicken - Episode 5

Legal, Tax & Accounting85 The Compliance Corner By Chet Hebert

Profi led Companies7 Advaxis - Anatomy of a biotech

17 Internal Fixation Systems – Orthopedic Implants

47 DynaResource – Ready To Shine

60 Grizzly Discoveries – Potash Properties & Diamonds in Alberta & Gold, Copper & Silver in British Columbia

66 Brazil Resources - Brazil’s Next “Big Gold” Story

78 Inovio Pharmaceuticals - An Emerging Revolution in Vaccine Development

86 Marifi l Mines Ltd. – A Junior Mining Company

88 Cream Minerals Ltd. – The Anatomy of a Junior Resource Exploration Company

90 Atossa Genetics – New “Pap Test” for Breast Cancer Launched


in cooperation with

Hosted by the city of Haifa

Where global investors and industry executivesmeet Israel's Medtech and Biopharma companies to talk business

BioInvest Israel 2012

March 5-6, 2012 - Dan Carmel, Haifa, Israel

www.bioinvestisrael.com [email protected]

in cooperation with






in cooperation with







The Anatomy of a Biotech Company It started with a woman who got breast cancer…and she got mad about it.

When Dr. Yvonne Paterson, then a single mother of two, contracted breast cancer, and beat it, she resolved to focus all her scien0fic research on a beDer way to fight cancer-‐ by using the immune system. This was not a new idea. In the 1800s, it was observed that cancer pa0ents who contracted an infec0on during their illness had temporary tumor shrinkage. In fact, the immune system, whether excited by the cancer or by an infec0on, is able to destroy cancer cells and does so several 0mes in our lives. And then some0mes it doesn't. No one knows exactly why, and aDempts to turn on the immune system by injec0ng targets-‐-‐Tumor An0gens-‐-‐had resulted in puzzling failures. The immune system turned on,

Ra=onal Design: The Bug in the Machine Instead of hit or miss tes0ng of new poisons or new an0gens, Dr. Paterson designed a novel system to s0mulate and direct immune aDack. She started with one of the most potent natural immune s0mulators known-‐-‐a bacterium called Listeria monocytogenes. Ea0ng Listeria for centuries —in fruits and vegetables—has given humans a hard wired immune memory against this pathogen-‐ a response developed over thousands of years with over a dozen components more comprehensive than any new or ar0ficial immune s0mula0on. Designing Life to Save Life: Making It Safe to

Man, Deadly to Cancer Dr. Paterson created less virulent strains of Listeria to make it over 10,000 0mes weaker. She also redesigned its protein factories to secrete two kinds of proteins: an0gens that are designed to direct an immune aDack towards the cancer of her choice and a protein called LLO that could help Listeria infect immune cells. LLO is the second key element of ra=onal design. Because LLO can dissolve & kill immune cell walls, there is a separate system inside immune cells to grab LLO and immediately use it for iden0fica0on by killer T-‐cells as targets. Dr. Paterson reasoned that fusing this protein to the an0gen would create an even more urgent and profound immune response—and when studied in mice, it did.

Dr. Yvonne Paterson Professor of Microbiology University of Pennsylvania School of Medicine but the immune aDack had liDle effect. Dr. Paterson believed this could be improved through ra=onal design: beDer using what we know about how the immune system works.

Lm-‐LLO being digested by a cell and escaping

LLO being shown as a target to killer Tcells so they can aDack a specific cancer

PRoFILED ComPAnIEs


To help companies simultaneously address

all those issues, PR Newswire - the global

leader in news and information distribution

services for professional communicators –

has launched Capital Markets Visibility 365

™, their newest service SPECIFICALLY built

for small-cap and micro-cap companies. To

explain the program, Micro-Cap Review sat

down with John M. Viglotti, VP of Investor

Relations and Compliance Services at PR

Newswire.

M-CR: What was the genesis of Capital

Markets Visibility 365?

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

Capital Markets Visibility Program Drives Investor Engagement for Smallcap and OTC CompaniesPR Newswire’s New 12-month Calendared Investor Relations

Strategy Is Easy and Affordable to Implement

M-CR: “Consistent and contiguous man-

ner” – thus the 12-month program?

JMV: Yes. Capital Market Visibility 365 is

a calendared strategic marketing plan. Once

it is set-up, it almost runs on auto-pilot.

M-CR: The program addresses three tar-

geted audiences. Why?

JMV: Without exaggeration, our clients’

shareholder messages will reach a targeted

audience of hundreds of thousands.

Each of the targets delivers different value

to small-cap and OTC companies:

Individual investors for immediate liquid-

ity and (hopefully) “buy & hold” loyalty.

Institutional investors for dramatic vol-

ume activity and Wall Street visibility.

Financial and sector media (and bloggers)

for third-party validation.

M-CR: Will institutional investors have

interest in companies under $100 million

market-cap?

JMV: Smart buy-side and sell-side ana-

lysts keep an eye on all companies within

their sector, even if a specific company is too n By shELDon “shELLy” kRAFT

If you’re reading this Micro-Cap Review, chances are, you are well aware of the

devastating impact the financial environment has had on small and micro-cap com-

panies. Simply: money is harder to raise, investors are hard to indentify and getting

any notice from the financial press and portfolio managers is beyond challenging.

JMV: Most professional investor relations

tools are not created for smaller listed com-

panies. We have identified that, across the

entire capital markets landscape, thousands

of small-cap, OTC and TSX listed companies

are being underserved and ignored by many

investor relations service providers.

M-CR: Why are small companies “under-

served and ignored?”

JMV: In my opinion, most large IR service

providers have placed all their sales focus

exclusively on mid to mega-cap companies

and big-ticket products like stock surveillance.

They have neither the sales bandwidth nor

the support resources to execute a product

specially created for small-cap and OTC listed

companies. This has left an “IR void” that has,

unfortunately been filled by stock promotion.

M-CR: What do small-cap and OTC com-

panies need?

JMV: They need investors and influenc-

ers to hear their story AND they need to

deliver their story in a consistent and con-

tiguous manner.


small today to publish an opinion or take a

position.

Small-cap and OTC companies must build

a consistent and contiguous brand presence

with the institutional investors within their

sector to clearly differentiate and distance

themselves from the inconsistent “pump and

dump” marketing that is pervasive.

M-CR: Will Hedge Funds take a position

in a company under $100 million market-

cap?

JMV: The answer is often yes.

To help with that, our Quantitative

Targeting algorithm will identify portfolio

managers that may prefer smaller-cap firms

– matching their investment style to a spe-

cific client’s exact stock attributes.

M-CR: What are the components in the

program?

JMV: There are 11 “moving parts” to the

program combined from six different ser-

vices and partners including PR Newswire

and RetailInvestorConferences.com.

M-CR: 11 moving parts! It sounds com-

plicated!

JMV: It’s not complicated, it’s calen-

dared. We give clients an entire plan, month-

by-month plan. There’s nothing else like it.

M-CR: What is the cost? Or is that a

secret?

JMV: Like the program itself, we’re very

transparent. Capital Market Visibility 365 is

$3,000 per month. It’s a huge value.

M-CR: Are there variations or options?

JMV: The only Capital Market Visibility

365 variation, for this launch, is clients may

substitute one of the two live virtual con-

ference events (RetailInvestorConferences.

com) with an IR Room - investor rela-

tions website. Companies MUST have an IR

Room… it’s where investors go AFTER they

receive your news.

M-CR: Why aren’t SEC files included in

this program?

JMV: This is a visibility / marketing

package. We are keeping the product focused

on that rather than the compliance aspect of

investor relations.

M-CR: What do companies need to do to

begin their Capital Markets Visibility 365?

Do you have a sample strategic calendar

people can see?

JMV: Yes. Normally, I’d say “click here for

more information,” but as this is a printed

interview, I invite anyone to simply call me

directly at 201-360-6767. My email is john.

[email protected].

M-CR: Thank you, John.

JMV: Thank you. I appreciate the

opportunity to introduce Capital Markets

Visibility 365 to your readers. n

John is responsible for the development of PR Newswire’s products and services to help public com-panies communicate with their key stakeholders.

Viglotti has 25 years experience in the develop-ment, management and marketing of financial con-tent and delivery platforms including Thomson One Investment Banking ™, StreetSight™, BondWatch™, IRtrack™, and Amex IR Online™. These platforms and associated pro-prietary content sets are market leaders serving over 6,000 institutional and corporate clients worldwide.

In 2009, John formed Quantitative Targeting LLC (QT), focused on the creation of algorithms that measure the compatibility between a public company and institutional investors to aid investor relations professionals in their buyside targeting efforts. Prior to QT, John was VP of Content Strategy for Thomson Reuters and Managing Director of Georgeson Shareholder Analytics. At Georgeson, John was responsible for the global stock surveillance and shareholder analysis team as well as building dashboards for investor relations and institutional sales and trading.

Prior to Georgeson, John spent 14 years with financial media companies in content, product and business development roles. John began his career in the financial media industry with a SEC based newswire, Federal Filings, which was acquired by Dow Jones. JohnViglotti VP, Investor Relations Products and Services PR Newswire/MultiVu 350 Hudson Street | 3rd Floor | New York, NY 10014 Phone 201 360 6767 | Mobile 212 729 8350 Fax 201 942 7013 [email protected]

www.prnewswire.com


Investors are able to get the information they

need in order to make an educated decision

about potentially adding our stock to their

investment portfolio,” Roberts finished.

The appeal to attracting retail investors is

not limited to small companies. Large – and

mega-cap companies also present at the

monthly events, bringing their own investor

and media following, eager to hear directly

from companies “RetailInvestorConferences.

com provided a way for me to be able to

reach out to individual investors in a cost effi-

cient manner,” commented Delia H. Moore,

Manager Investor Relations, Aflac. “I was

able to reach a group of investors that I likely

would have normally not been able to do if it

were not in a virtual format.”

Building credibility begins with vis-

ibility. Live virtual events are a highly effi-

cient and affordable media to get your CEO

directly in front of targeted investors without

the burden and stress of travel. n


Talk to Thousands of Active Investors In Real-Time. (In Your Pajamas.)No Travel! Virtual Webcast Conference Series Brings Companies and Investors Together, LIVE, Month After Month

Recognizing a need for consistent

and engaging communications,

three of the world’s leading organi-

zations focused on education and disclosure

to individual investors - BetterInvesting, PR

Newswire and MUNCmedia - have aligned

to create RetailInvestorConferences.com.

Retail investors’ ownership of stock is

decisively vital for many companies that need

to develop new liquidity to raise capital and...

• Have little or no Wall Street interest and

activity

• Need a retail investor base to comple-

ment their institutional presence

• Want to forge deeper relationships with

retail investors in context to Dodd-Frank

reform and ongoing proxy access regulations

• Issue regular dividends

• Can leverage their marketing brand and

generate “Investomers”

Small and micro-cap companies, in partic-

ular, need more accessible, timely and afford-

able opportunities to transparently tell their

story to a potential audience that can buy

their stock. Furthermore, retail investors can

be a solid and loyal ownership base for com-

panies as they are apt to trade less frequently.

Each month, Retail Investor Conferences.

com showcases 10 public companies to pres-

ent their growth vision in an engaging vir-

tual conference environment. We selected

a monthly schedule as the market is too

dynamic and there are too many companies to

limit opportunities on an annual or even

quarterly basis.

RetailInvstorConferences.com surveys the

audience each month, to qualify their invest-

ment style.

Since its launch, RetailInvestorConferences.

com has help thousands of individual inves-

tors find exciting new investment opportu-

nities and, of course, small and micro-cap

companies discover a new audience.“The

depth of quality engagement with prospec-

tive investors during our presentation, the

trade booth and in the days following was

well worth our investment”, said Meghan

O’Sullivan, PR, Regenicin. “We’re building

new relationships with an audience who

would have never heard our story without

RetailInvestorConferences.com. That’s pow-

erful for an OTC company.”

Shawn Roberts, the Director of Investor

Relations at, TSYS offered this viewpoint his

experience with RetailInvestorConferences.

com; “I believe the RetailInvestorConferences.

com allows more people to attend a corporate

presentation. Therefore, I can reach more

interested investors in a cost effective and effi-

cient way. The Q&A in my virtual booth was

very beneficial for both me and the attendees.

14 Micro-Cap Review Magazine www.stocknewsnow.com•www.snnwire.com•www.microcapreview.com14 Micro-Cap Review Magazine www.stocknewsnow.com•www.snnwire.com•www.microcapreview.com

Awesome! Aren’t you glad you followed our gold insight way back in April 2011?


n By shELDon “shELLy” kRAFT

Shelly: “What is the state of affairs in the

Venture Capital Industry? Its 2012 almost,

and things have really changed over the last

decades. Where do you think its headed?”

Doug: “Its been a rough decade for

Venture Capital. You can look at the

returns, the decade returns in Venture

Capital as of 2011 are negative, which

means that money went in and less money

came out of the industry. It has been very

difficult for the Venture Industry for a

couple of reasons. One, the IPO market for

early stage, smaller technology companies

really has not come back since the bubble

years of 2000. Secondly, venture capitalists

have not been able to raise money because

the asset class has not been performing

very well. And what we have seen is a

bifurcation--we’ve seen some of the most

successful funds being able to raise more

money, and what we see in the industry

is potentially 2/3rds of the venture firms

that existed in 2000, either are not with us

anymore or will not be with us as soon as

their funds run out”

Shelly: “One of the captivating situations

that venture capital funds also run into is

that they’ve put initial capital into the ideas

they wanted to invest in. Over the course

of time, the companies that they invested

in needed more capital. They had to keep

money set aside to put into what they’ve

already invested in, which prevented them


Micro-Cap Nanotechnology & Venture Capital State of the MarketQ & A with Doug Jamison, CEO of Harris & Harris Group

Harris & Harris Group, Inc.® (NasdaqGM:

TINY) is a publicly traded venture capi-

tal firm exclusively focused on investing in

companies enabled by nanotechnology and

micro-systems. With over 30 nanotechnol-

ogy companies in its portfolio, Harris &

Harris Group, Inc., is one of the most active

nanotechnology investors in the world. Doug

Jamison is the CEO and Chairman of Harris

& Harris Group, Inc. since January 2009, and

has held an executive position in the com-

pany since 2002. In addition to his respon-

sibilities, he is a Co-Editor-in-Chief of the

Journal of Nanotechnology Law & Business

and Co-Chair of the Advisory Board,

Converging Technology Bar Association and

a member of the University of Pennsylvania

Nano-Bio Interface Ethics Advisory Board.

The following interview is a transcription

of an SNNLive Video Interview we did with

Doug Jamison.

Shelly: “I want to get your opinion on

the state of the Venture Capital industry.

But first, talk about your firm and give your

credentials”

Doug: “I am CEO of Harris & Harris

Group. We are one of the few publicly traded

Venture Capital Firms. So by being pub-

licly traded, we actually raise our money from

shareholders. Our shareholders own the firm.

That gives us permanent capital. We have

been in the Venture Capital industry since

1983, for over 25 years investing in the space”

On date, SNNLive host, Shelly Kraft, interviewed Doug Jamison. The interview

was so compelling Micro-Cap Review magazine management transcribed the

video interview to be shared with its readers. To watch the video interview go to: link

Doug Jamison


from investing into new ideas. Did you see

that as well?”

Doug: “Certainly. I think the valuations

for early stage companies are very low right

now because there’s not a lot of investors

investing in those companies. I think you

are correct. The reason why is because we

still have portfolio companies from 7-8 years

ago that, historically, would now be public

or would have been sold that are still in the

portfolio, we still need to support. So ven-

ture capital funds are only 10 years. When

the time from investment to exit has gotten

pushed from 3-4 years to 8-10 years that

does not bode well for the LPGP structure in

venture capital.”

Shelly: “When should, in your opinion, a

venture capital firm cut bait or just move on?

Why put good money after bad?”

Doug: “In the trade, there’s a saying, ‘if

you’re going to be a good venture capitalist,

you have to understand that the lemons will

ripen before the plums.’ The question in ven-

ture capital is if you have a good company, if

its able to attract money, if you can build it

into a large company, you should stay with

it. But I think that the discipline needs to be

there that you haven’t put more capital into

these companies than you will be able to

get out in the market. I think there are two

reasons for that. One, sometimes the venture

industry has an unrealistic expectation of

what the value of these companies will be

in the public markets. That’s changed, the

valuations have come down, and they think

there is greater value than there will be. The

other reason is that sometimes it takes too

much money and too much time to build

these companies to hurt returns. I think in

the venture capital industry, you are already

starting to see it switching. They are look-

ing for opportunities where they can build

their businesses faster, and they can get the

returns they need sooner. But, look, if you

are going to be successful in venture capital

today, you have to be more disciplined than

you ever have been historically. And under-

stand what the valuation you can get is at the

end of the day, otherwise you are going to

lose all your money.”

Shelly: “I want you tell me back in order of

their importance: the management team, the

technology, and cash flow.”

Doug: “I would probably say that man-

agement team, the management team, the

management team, and then in this day in

age, early access to cash flow. And finally, the

technology. We are technology investors.”

Shelly: “What would you advise a com-

pany that’s looking to come to your firm to

have you adopt them as your client?”

Doug: “For our firm, you have to know

what size firm or investor you are visiting.

We are a small firm. Think of us as a $200

million venture fund. We put $5-7 mil-

lion into a company over the lifetime. We

are not looking for an opportunity that’s

going to take $100 million because we will

be too small an investor. We’re looking for

an opportunity that’s going to raise over its

lifetime until exit or being cash flow posi-

tive that’s going to raise somewhere between

$15-30 million. We are looking for a strong

management team, a management team

that’s done it before, and we’re looking for

an opportunity in the market that we think

is early, but will be a growing multibillion

dollar industry. We need the upside. We lose

money in over 60% of the deals we do, and

thats good by venture standards. So, the ones

that win have to be in fast-growing, large,

emerging market opportunities that garner

the excitement of the public markets.”

Shelly: “Is the words ‘start up’ a turn on

or turn off?”

Doug: “I think one of the reasons that we

have been successful, historically, is that you

have a contrarian attitude. I think a lot of

people have gotten out of the start-up busi-

ness, and the ‘start up’ financing investment.

That means that valuations are low. The sur-

est way to make money, over time, is to buy

low and sell high. So, we think there is a great

opportunity, right now, in start up compa-

nies, but they have to be very disciplined.

A lot of the venture industry has moved to

funding later stage deals, and we think there

is some interesting opportunities now, but

when I look forward over the next 5-7 years,

I think the start up space is going to be a very

good space, but we are going to have to build

far more disciplined companies as a venture

industry than we ever have historically.”

Shelly: “How do you feel about investment

in companies outside of North America?”

Doug: “We are an early stage venture

capital firm, so we tend to believe that you

need a local sheriff on the grounds. Most of

what we do is in the US. We think there are

great opportunities outside the US in nano-

technology, where we focus. We certainly

think from a venture capital perspective that

you want to be in growing markets, so there

you are looking to Asia. Look, we also have

another saying, which is ‘the pioneers often

get shot in the back’, and you don’t want

to be a pioneer not knowing what you are

getting into. That is often a sure way to fail,

but you want to be in emerging growing

markets. We still like North America, but we

think the growth markets of the future are

probably going to move overseas and to Asia

from a venture capital perspective because

they are going to be the fast growth markets

of the future.”

Shelly: “What is your website?”

Doug: “www.hhvc.com”

Shelly: “Thank you”

Doug: “Thank you” n

1 For a complete list of recognized international exchanges, see: http://www.otcqx.com/qx/iQualifiedForeignExchange.


C ov E R s To Ry

Orthopedic ImplantsFDA requires the company to file a 510(k)

to demonstrate that the device is at least as

safe and effective, or substantially equivalent

to an existing marketed device. This allows

modifications without having to follow a

lengthy Premarket Approval (PMA) process.

IFS products are based on existing func-

tional equivalents, therefore the company

can obtain FDA approvals without incurring

exorbitant costs.

moDuLar surgicaL set

Design

IFS designs its surgical sets, to maximize

flexibility and reduce overall inventory. This

is accomplished by designing sets with mod-

ules that can be used together or indepen-

dently. Surgeons are supplied with the

implants and instruments they require for

their procedures but do not tie up inventory.

Competitors have sales representatives bring

in large amounts of inventory and corre-

spondent instruments covering any of the

surgeons possible needs. The expectation is

that more inventory is better. This method,

while allowing one to respond to almost

any situation, is very costly and requires

competitors to carry large amounts of inven-

tory which are rarely used. IFS’s modular,

flexible strategy is significantly different and

beneficial given recent changes in steriliza-

In an era where sweeping reforms and

cost controls have become the mandate

for the medical industry, the challenge

for survival is to have competitive pricing

while maintaining a high level of quality in

order not to compromise the doctor’s ability

to treat the patient. Congress has proposed

a 20% decrease in payments to facilities and

physicians. Implantable device costs are being

included in payments to Hospitals and ambu-

latory surgery centers, whereas in the past the

cost was reimbursed separately. The entire

medical device field has been effected and for

the first time, the orthopedic sector is feeling

the pressure to transition from a premium

pricing model to a value pricing model.

Seeing this pressing issue as an opportu-

nity, Internal Fixation Systems (IFS) (IFIX:

OTC:BB) sought to build a company that

could effectively compete in the orthopedic

implant sector at 40-50% discounts to its

peer competitors, while delivering a pre-

mium product. Taking this a step further, IFS

also decided to include significant improve-

ments surgeons wanted to see employed, thus

creating a superior device making IFS the

choice product for the medical professional in

today’s environment. Essentially, IFS has cre-

ated a model for the medical implant device

sector that delivers a higher quality product

at a discount, thus separating the notion that

premium pricing is attached to better quality.

Much in the same way that Lexus emerged

to dominate the high end auto industry

and Dell conquered the personal computer

market by delivering a high end product at

affordable prices, IFS intends to overtake the

orthopedic implant device sector and win

over the medical community.

suPerior vaLue

According to CEO Stephen Dresnick, MD

“IFS is always looking for ways to efficiently

design, manufacture, inventory and sell our

products.” IFS’s strategy incorporates several

key elements:

Low r&D costs

IFS focuses on improving market proven

products. These include products used to

treat common fractures that occur every day.

By enhancing existing products, as opposed

to inventing a whole new class of implants,

IFS is able to keep R&D costs below 5% of

revenue. To ensure that IFS’s implants are

the best on the market, each implant device

is taken to one of the company’s National

Advisory Panels. Each panel is composed

of high volume users, nationally recognized

thought leaders in their respective medical

field. They recommend improvements to

existing designs which are then incorporated

into our new products, giving surgeons the

features they desire.

Low FDa aPProvaL costs

Unlike the pharmaceutical market, once

an item is off patent, the generic replace-

ment needs to be exactly like the name

brand, in the world of orthopedic implants,

improvements can be made to a product

before it is re-launched. In such cases, the


tion of surgery sets. In the past, set trays

could be used in one case and then “flash”

autoclaved for a case less than one hour

later. Now most facilities require that sets go

through a complete 4 hour cycle before they

can be used again. This assures that all bac-

teria have been killed during the autoclaving

process. With the small, modular sets, we can

have multiple sets for different types of cases

at the facility providing maximum flexibility

for the same cost as the competition.

stanDarDiZation oF

instruments anD

comPonents

IFS standardizes instruments and compo-

nents across its product lines which allows

the company to order and manufacture in

bulk. In addition, instruments are shared

across product lines resulting in less dupli-

cation. This allows the company to carry

much less inventory.

The IFS installed cost control methods

allows the company to deliver quality U.S.

made products at price points that Hospitals

and ASCs desperately need without sacrific-

ing profit margins.

visionary LeaDershiP—iFs’s

roots

IFS CEO, Stephen Dresnick, MD, has been

in the forefront of other successful medi-

cal businesses with his innovations again

providing the profitable results. Dresnick

led two other publicly traded companies

and is best known for starting and man-

aging Sterling Healthcare (Nasdaq:STER).

Sterling was created to help hospitals save

money while improving the quality of their

emergency medicine programs. Sterling

provided quality, Board Certified physicians

to staff Emergency Departments across the

country. Under Dresnick’s management,

Sterling Healthcare, went public in 1994,

was sold two years later for $220 Million.

During Dresnick’s tenure as CEO, Sterling

rose to Number 6 on the INC Magazine 500

list, was on Business Week’s list of fastest

growing companies, was named on several

list of Florida’s best companies and Dresnick

was named Florida Entrepreneur of the Year

in 1996. At IFS, Dresnick is using the same

formula in the orthopedic implant industry

– higher quality and lower price.

Dresnick joined IFS in 2008 after experi-

encing decreasing insurance reimbursements

and rising prices for surgical implants at his

operating medical facilities. The challenge

for Dresnick: increase margins, reduce costs

and stop the financial bleeding. Dresnick

uncovered IFS as a solution to his dilmma.

Dresnick found a lower cost solution, ortho-

pedic implants that were 1) of acceptable

quality to the surgical staff and 2) provided

a significant cost savings; Internal Fixation

Systems.

IFS, was originally Founded by Ken West,

Chris Endara, Matt Endara and Dr. Jaime

Carbonell. During their careers in orthopedic

sales and medical manufacturing, Ken, Matt

and Chris recognized the cost control chal-

lenges faced by hospitals and Surgery Centers

like Dr. Dresnick’s. This customer-supplier

relationship would soon yield an even bigger

development. Convinced that IFS was onto

something unique, Dr. Dresnick decided not

only to purchase the implants for his surgery

center, but when asked to do so, joined the

company and became the new CEO. He

invested his own capital making a commit-

ment to grow the company. Dr. Dresnick and

his new team quickly realized that the key to

success was not only providing value pricing,

but also delivering a product that was bet-

ter than what was offered by competitors.

The goal of IFS is to sell quality products at

responsible prices.

THE BUSINESS PLAN -- Moving from

small screws to a wide assorted product

portfolio

IFS began by manufacturing and selling

cannulated screws for podiatry applications.

The initial sales were made to restock inven-

tory of competitors screws. The company

began selling to Hospitals and ASCs in South

Florida. As sales grew they proved that they

could produce and deliver a quality alterna-

tive product and demand for the products

at this price point began to grow leading the

team to set out to develop surgical sets and

identify follow-on products.

IFS ‘s redesigned cannulated screw sets

were launched in October 2011 and are

now used at facilities across the country.

To complement the standard mini can-

nulated screws (2.0, 2.4, 3.0 and 4.0MM)

the company added headless screws to the

caddies to address a larger variety of appli-

“I am very excited about my involvement in IFS. This an exciting

time of improving and innovating design of orthopaedic trauma

implants and being able to use them at a responsible price point. It

allows myself, as a practicing orthopaedic traumatologist, to create

exciting new implants and also be fiscally responsible to my hospital

system in this era of ever increasing costs.”

—Patrick B. Leach, MD

Rye Patch Gold.indd 1 2/3/11 3:38:36 PM


cations. The company estimates that once

fully launched, each cannulated screw set

will generate $2,000 per month. IFS plans

to deliver the first 50 sets during the first

quarter of 2012.

Transitioning from elective to trauma

surgery, the company applied for and

recently received FDA 510(k) approval for

a comprehensive line of locking plate and

screw systems. The FDA approval covers

products used to treat 75% of common

fractures. These are the most common

procedures of any orthopedic trauma sur-

geon. The first module of a Locking Small

Fragment System was launched late 2011

enabling revenues to grow significantly by

year end. It is expected that sales for the

fourth Quarter will be the best on record

and more than double those of the third

quarter. Each set should generate $8,000 of

revenue per month and like the cannulated

screw sets, the initial 25 modules should

be launched by the end of the first Quarter

of 2012. With the deployment of the

cannulated screw sets and initial modules

of the Modular Locking Small Fragment

Systems, the company projects a profitable

first quarter of 2012.

IFS ‘s strategy has been to release 25 initial

sets of locking small fragment systems used

primarily by surgeons affiliated with IFS

that sit on the IFS Advisory Panel. IFS plans

to manufacture and distribute 200 of each

module nationwide.

Additional new product modules of the

Modular Locking Small Fragment Systems

are scheduled to be manufactured for deliv-

ery by the end of the second quarter of

2012. The new modules will include calca-

neal plates, distal volar radius plates, and a

proximal humerus (shoulder) plate. All of

the products are FDA approved and in final

stages of production design. Additional

products planned for future launch are a

hip nail system and several spine implant

systems. These products are particularly

attractive to the IFS as they are big ticket

items, billing out from between $3,000 to

$8,000 per surgery.

The company’s strategic plan for 2012 is

to aggressively build, market and sell more

and more product while continuing build the

product line through adding more products.

IFS has established distributors in Florida,

Georgia, New England, Southern California,

Oregon, Washington, Idaho, and Texas.

According to Dr. Dresnick, “2012 will be a

big year for IFS. We are continuing to launch

several new products moving the company

further into trauma orthopedics and spine.

We are particularly excited about our plans

for the Spine Market and believe that we

will make a big impact.” In late 2010, Dr.

Art Steffee agreed to chair company’s spine

panel. Dr. Steffee is considered by many to

be the father of modern spine surgery and

in 1983 he founded AcroMed, innovator of

stainless steel bone screws and plates. He

also introduced new methods to implant

screws and plates in the spine.

“We are in the right place at the right time.

The market is $34 Billion a year and with the

economy like it is, we are a low cost solution,”

says Dresnick.

IFS completed an S-1 SEC Registration

Statement in May of 2011, and the public

stock is traded on the OTCBB: IFIX. For more

information please call 786-268-0995 or visit

the company website at www.ifsusa.net. n

aDDitionaL inFormation

Stephen Dresnick is a well known healthcare entre-preneur. He is best known as Founder and CEO of Sterling Healthcare Group, Inc. (nasdq:STER) a clinical outsourcing company which he led from its founding in 1987 through its sale to FPA in 1996 in a transaction valued at $220 million. Dresnick later bought Sterling back out of bankruptcy from Phyamerica, and at the time of its second sale in 2005 the company had revenues of $350 million. During his tenure as CEO Sterling was number 6 on the INC 500 list, was on Business Week’s list of fastest grow-ing companies, was named on several list of Florida’s best companies and Dresnick was named Florida Entrepreneur of the Year in 1996. Since leaving Sterling, Dresnick has owned hospitals and surgery centers and is a sought after healthcare consultant.

“I recently had the opportunity to evaluate and use the IFS implants

for my patients. It is my conclusion that they provide an excellent

form of fixation, one that I will utilize during my operative cases. It

should be noted that the screws themselves have sharper than normal

cutting teeth, thus allowing easier facilitation during my surgical pro-

cedures. Another advantage in choosing IFS is that their implants are

extremely cost effective.

In fact, they are so cost effective that we standardized our surgery

center on IFS 3.0, 3.5, and 4.0 cannulated screws.

As an owner of a new and cost conscious surgery center, IFS pro-

vides us with the quality and cost effectiveness needed to provide

quality care to our patients as well as the savings necessary to make

our procedures more profitable.”

—Jamie A. Carbonell, DPM, FACFAS Jackson Memorial Hospital

South, Podiatric Residency Program Director


No Boring Lawyers

OSWALD & YAPAward Winning Business Lawyers

Specializing in Micro-Cap Companiesfor Over 25 Years

Contact Lynne Bolduc16148 Sand Canyon AvenueIrvine, CA 92618Telephone: (949) 788-8900Fax: (949) 788-8980E-mail: [email protected]


Micro cap investing is not a strat-

egy – it is simply participating

in a stratum of the stock mar-

ket (that most stock market investors over-

look). Those who find themselves attracted

to micro caps come to them for different

reasons, and therefore have some level of

strategy behind their activity. For many it

is the prospect of spectacular returns to be

gained by being early in finding unheard of

companies before they become hugely suc-

cessful. For others it is a result of a common

frustration – not beating the market with

well-known stocks. Still others are simply

bargain hunters who will tell you, using

many different measures, how cheap their

favorite stock is before they tell you what the

business of its issuer actually is.


Micro-Cap Investing Is Not a Strategy

practically, a useful way to categorize a micro

cap is if its market cap is not high enough for

most small cap managers to consider – let’s

call it their threshold. This is not easy to

gauge, but one can estimate it by inspecting

changes in quarterly 13 F filings. A robust

analysis of such activity would likely show

that thresholds vary by manager, by sector

(with a lower threshold for sectors in favor

versus out of favor) and over time. This last

variation is critical - over a long period of a

trending market, the direction of the average

small cap threshold will correlate with the

market (seen clearly during the 90s). But on

a shorter term basis (over several quarters)

my observations suggest that small cap man-

ager thresholds are inversely correlated with

recent market direction. This short term

inverse correlation can continue for years

in a volatile ranging period such as the last

decade. During a market decline small cap

managers become increasingly concerned

about liquidity. In a rising market they

become more willing to take on risk in order

to outperform benchmarks and peers.

The reason it is important to understand

the difference between micro caps and small

caps is there are many more buyers for small

caps than micro caps. Though there are at

least as many stocks to choose from in the

micro cap stratum as there are in small cap,

it is not economically viable to manage an

appropriately sized portfolio of micro caps

for a typical percentage of assets manage-

ment fee. Those that are large enough to be

economic are necessarily broadly diversified

to the point of mimicking the aggregate of

micro cap stocks or, very illiquid which also n By IAn ELLIs

Write down your (micro cap) strategy

in one sentence. You might use multiple

strategies, but each one should clear. This

exercise might not come easily to you but

persevere - the micro cap stratum of the US

stock market is a jungle with as many stocks

in it as the main market. The risks of getting

off track are typically more expensive, while

the rewards of staying on the right track can

be much higher. Think about why you read

the Micro-Cap Review, where you get stock

ideas from and the characteristics of the ones

you respond to. The important thing is to

find a strategy that plays to your analytical

strengths and your personality. Your strategy

should be as comfortable as an old pair of

boots and then all you have to do is put one

foot in front of the other and stay on track.

My micro cap strategy: identifying micro

cap companies that are likely to grow into

small caps. In order to explain my method-

ology, I must explain the difference between

a micro cap and a small cap, why this differ-

ence is important for micro cap investors,

why stocks graduating from micro cap to

small cap can be an important source of

returns, and finally why deploying this strat-

egy suits me.

Since the MicroCapital Funds were

launched eleven years ago, Standard &

Poor’s has not adjusted its categorization of

micro caps; companies with a market capi-

talization of less than $300 million. Others

find that what is too small to be included in

the Russell 2000 Index is a more useful mea-

sure. I tend to agree with this classification,

since most small cap funds and managers

are benchmarked against this index. More


1ACCESS. INSIGHT. OPPORTUNITY.

AVM12_StockNewsNowAdvFo.indd 1 1/31/12 4:52 PM


inhibits the potential for active management.

The better business model for a micro cap

manager is to manage a smaller portfolio

(my favorite rule of thumb is that the mean

market cap of holdings should exceed the

total value of the portfolio) under a hedge

fund structure (incentive fees). While pro-

viding a workable business model, it unfor-

tunately excludes both smaller (non-accred-

ited) investors as well as large institutional

investors (not enough capacity). As a result

there are very few micro cap managers who

have been able to raise and retain sufficient

assets to be in business at all. With very few

genuinely active micro cap managers, the

impact of small cap managers’ involvement

in micro caps can be dramatic, the higher

the market cap of a micro cap the more

small cap managers will consider the stock,

and other things being equal, the higher the

valuation since stock prices are determined

by competing buyers. This is why we focus

on growth companies that are likely to grow

into small caps and avoid those that are vul-

nerable to material setbacks or are too slow

growing to ever get there.

I do not want to suggest that there are

not good returns available from other micro

cap strategies. But I prefer not to hope or

wait. I prefer to use the skills and reputation

developed over years to analyze the custom-

er value propositions that companies offer

and calibrate their managements’ abilities to

reach the objectives of becoming bigger and

better companies. I have found companies

in this vein consistently become more widely

appreciated in the stock market over a spe-

cifically targeted period of time.

In future columns, I look forward to shar-

ing some of the lessons we have learned and

tactics we have developed to deploy our par-

ticular micro cap strategy. Additionally, we

expect to touch on topical subjects that are

particularly relevant to micro cap investors.

Meantime, happy hunting to you!

Ian Ellis — President & Portfolio Manager

Mr. Ellis founded MicroCapital in

2000 and is responsible for management

of the MicroCapital Funds in all respects.

Previously, he was portfolio manager of the

Genesis Funds at New York-based fund man-

ager Archery Capital. Before joining Archery

in November 1996, Mr. Ellis worked for

GLG Partners, a London-based investment

management firm. Mr. Ellis began his career

in institutional research sales at Goldman,

Sachs in 1985 after graduating in Philosophy,

Politics and Economics from the University

of Oxford. n



The Odds and the Opportunities in Junior Metals Explorers

stages of the discovery. That potential, to

make five, ten to one hundred times your

investment in short order, has attracted

over $10 billion of new speculative capital

(by way of more than 4,000 financings)

over the past two years into the Canadian

junior mining sector alone.

But before jumping head first into this

high-risk venture a word of caution to

By BREnT Cookwww.explorationinsights.com

The discovery of an economic mineral deposit is an extremely rare occurrence

that involves a very difficult, costly and determined effort. For the few people

or companies that do succeed it is an extremely profitable occurrence as well.

Recent success stories include Aurelian

Resources, which was bought by Kinross

for $32 per share (pre-split); AuEx

Ventures, which was bought by Fronteer

for $6.00 per share (Fronteer was in turn

purchased by Newmont for $14 per share);

and, Ventana Gold, which was acquired for

$13 per share. All of these junior explorers

were trading at sub-$1 prices in the early

Fig. 1-Discoveries, spending, and total ounces discovered. Source- Barrick Gold, w/ minor edits by Exploration Insights


the uninitiated: it is exceedingly tough to

stumble across Mother Nature’s buried

treasures before going broke.

How tough is it?

Barrick Gold included some telling

slides as part of their recent Investor Day

presentation. Figure 1, below, illustrates

the increasing difficulty the mining indus-

try is having in finding new gold and

gold/copper deposits. Current global mine

production is in the order of 85 million

ounces per annum; whereas, as the chart

illustrates, the last time the industry found

that many ounces in a year was 1999. For

reference, consider that 85 million ounces is

approximately the total gold produced from

Nevada’s world class Carlin Trend over its

30-year history. For those not keeping track,

that’s one Carlin Trend a year the gold min-

ing industry has to prove up just to stay even!

The dearth of new discoveries noted above

comes despite the significant increase in

exploration spending since 2002. Particularly

disconcerting (to the larger mining com-

panies at least) is the decline in discoveries

since 2006, notwithstanding that explora-

tion spending has more than doubled from

$2.5 billion to over $5 billion. The bottom

line is that more and more money is finding

less and less gold! The upshot of that fact is

that the very few gold discoveries that are

legitimately economic are going to be excep-

tionally valuable. That “gap” in production

versus discovery virtually guarantees that the

few successful junior exploration companies

will command a premium takeout price—

hence our focus here at Exploration Insights

on the junior end of the spectrum

Fortunately for the gold mining industry,

the increase in the gold price has provided

a “grace period” for the mining companies

in which they can forestall the produc-

tion deficit. They have managed this dis-

covery versus production deficit by expand-

ing existing operations at their mines and/

or lowering the cutoff grade (value per

tonne of rock). This is documented by a

recent BMO Research report detailing the

decline in mined grade from 1997 to 2009

(Fig. 2 below). The average mined grade

over that time period decreased about 35%,

which, when combined with the increase in

material, labor, and power costs, resulted in

industry wide gold production costs more

than doubling over that same time frame.

This lowering of the cutoff grade is only

made possible by the higher gold prices that

effectively turn previously uneconomic rock

(waste), into economic rock (ore). There is a

limit to how far mining companies can push

the waste to ore strategy before their opera-

tions turn marginal or begin to lose money.

On a more positive note for the major

mining companies, the steady ten-year rise

in the gold price means the miners are flush

with cash. This excess cash flow situation

can’t go on indefinitely because of the prob-

lems discussed above: declining discoveries

and declining gold grade equal declining

margins. Major gold miners now have a rela-

tively short window of opportunity in which

to act. The share prices of most of the junior

explorers (the good and bad) have seen sub-

stantial declines in share prices over the past

8 months. The share price decline means the

good can be acquired at reasonable prices.

The bad I am afraid are still worthless.

The results is that the opportunity for

speculators in the junior mining sector is the

best I have seen in quite some time. Mining

companies are making good money, and

the confluence of these two macro-themes:

declining discoveries and increasing earn-

ings, bodes well for those of us willing to

speculate intelligently in this sector. All we

have to do is buy the right penny-stock com-

pany and wait for the buyout. Problem is, the

odds of discovery are extremely low.

How low?

There are in the order of 2,000 junior

companies listed on the Canadian exchange

and maybe 1,000 more listed in Australia,

London, and elsewhere. In round numbers

they are exploring 10,000 mineral proper-

ties of which only 1 in 1,000, on an annual

basis, will produce an economic discovery.

Worse, only 1 in 10,000 will result in the

delineation of a gold deposit of greater than

4 million ounces (Stephen Enders, Society of

Economic Geologists Newsletter, July 2011).

The obvious question for reasoned specu-

lators now becomes, “How is it possible that

3,000 publicly listed companies are able to

raise billions of dollars given that the odds of

success are 1 in 1,000 for an OK deposit or 1

in 10,000 for the big deposit?” The simplistic

answer is that Mother Nature has been very

generous to exploration geologists and by

association, the brokers that make their liv-

Fig. 2- Change in average gold grade since 1997 in underground, open pit, and dump leach deposits


ing selling the dreams of buried treasure to

the public by playing to human nature: greed

and the susceptibility to an easy getting rich

quick story.

What is exploration and why are the odds

so low?

The scientific basis of minerals explora-

tion is pursuit and understanding of anoma-

lies (variations) within the Earth. A mineral

deposit is a special type of anomaly in which

enough metal has been concentrated under

the right geologic conditions to make it eco-

nomically feasible to extract. The problem is

that for every economic metallic anomaly (ore

deposit) there are thousands of uneconomic

ones that, for any number of reasons, don’t

cut it. The reasons for failing could include

grade, size, metallurgy, depth, strip ratio,

location, politics, community, environmental

concerns, etc, etc. Referring back to the open-

ing sentence in this paragraph, explorationists

evaluate anomalies and an anomaly is little

more than some variance from background

in the geochemical, geophysical, or geologi-

cal characteristics of a piece of Earth. There

are literally billions of these anomalies that

merely reflect and are a function of the Earth’s

evolution over billions of years.

So what’s an investor to do?

Of the roughly 3,000 junior exploration

companies combing Earth chasing down

anomalies, maybe half can be thrown out

because of incompetent or unfocused man-

agement: management is key in the junior

sector—get to know them.

Of the remaining half, about half again

can be easily screened out based on the type

of mineral target they are exploring. I see

way too many exploration groups raising

and spending money on targets that, even

if successful, are not really valuable—most

are too small and marginal at best. Therefore

in such a high risk investment sector it only

pays to focus on companies that are explor-

ing for game changing discoveries-- ones

that can increase the share price tenfold or

more. Know what type of deposit the com-

pany is looking for and what it sells for in the

open market.

The other major issue investors face in this

sector is shareholder dilution at the company

level. Of what value is a tenfold increase in

market capitalization if it is accompanied by

a tenfold increase is shares issued? In miner-

als exploration, money only goes one way:

out. This is a capital-intensive business-- no

capital means no business. A company must

have a very clear vision of the progress they

need to see and demonstrate in order to raise

money at the next level. Make sure company

management is not only technically compe-

tent but financially literate as well.

Since we know that most exploration proj-

ects are going to eventually fail despite the

early excitement, it is critical to recognize the

fatal flaw ahead of the crowd. Junior compa-

nies thrive on news releases, so an investor’s

job is to interpret the drilling, metallurgical,

and sample results in the context of the tar-

get being explored. When things start going

wrong, get out and get out fast. I have found

hope and unfounded belief to be very poor

investment theses.

Finally, the money you invest in this sec-

tor should be money you can afford to lose;

but the object is not to lose it but to win big.

Take your time and wait for the right pitch.

There are no called strikes in this game and

there is no shortage of new hot stories that

will be touted by the brokerage industry. By

spending the time to research a company,

via talking to management, following results,

and getting sound advice from someone in

the industry, you are way ahead of the crowd.

In the end, that is what seems to work best. n

about brent cook

Brent Cook is a geologist and junior mining analyst with over 30 years of mining industry experience. For 20 years he worked as a consultant to most of the major and many junior mining companies evaluat-ing mineral projects. He was also involved in target generation, grass-roots exploration, drill campaigns, feasibility studies and bank audits involving a variety of metals scattered across five continents and about 50 countries. In 1997 he became the mining analyst for Rick Rule’s Global Resource Investments, advis-ing two funds in which they turned ~$14 million into well over $200 million in a five year period. In 2008 he started the junior resource investment let-ter Exploration Insights. Brent’s letter discusses the mining sector and focuses on what Brent is buying,

selling and avoiding with his own money.

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n By TEREsA ToUEy

Understanding the policy and political

implications of these cuts is required.

Firstly, the actual numbers will have to be

assessed. Secondly, bi-partisan support

is needed for industry growth over the

next decade. Figuring out the politics and

policy is the challenge. Then, the informed

advocacy begins. Each BIO cluster has its

regional group. One example is the Mid-

Atlantic BIO Symposium which meets

annually. Regional models can facilitate

information gathering on best practices

and positions in a unique, specific way for

each region as well as provide key building

blocks to a national response.

Another example is the recent town

hall meeting convened by Philadelphia’s

University City Science Center on Monday,

October 17, 2011. The question posed to

participants was: Is innovation scalable?

Panelist Glen Gaulton, Penn Professor

of Pathology and Laboratory Medicine,

shared a friend’s story. Crizotinib, a new

drug, has extended her life. Pfizer did a

multi-site trial for this drug. Penn was

one of the sites in both lung cancer and

neuroblastoma.. His friend was in the

lung cancer trial. Presently, she is nearly


Where are the Future Biotechnology Supermen and Superwomen?

This result automatically triggers a $1,2

billion in mandatory cuts in government

spending, beginning in 2013, with about

$600 billion cut from military spending

and the balance from entitlement programs.

How can the biotechnology industry prepare

for the impact? Recent history yields relevant

insight.

As Burrill and Company’s Marketwire

reported on October 3rd, 2011, the fight in

the United States over the raising of the debt

ceiling and the debt crisis in Europe have

fueled turmoil in the stock market that has

taken a toll on the performance of biotech

stocks, slamming the brakes on a solid year

of financing for the sector.

The congressional “super committee” was charged with cutting 1.2 trillion

from the federal budget. An agreed consensus between six Republican and

six Democratic members never arrived.

Also from the same report, public

financing in the third quarter fell to just

under $3.1 billion compared to $9.1 bil-

lion in the previous quarter. The amount

raised through IPOs fell 72 percent, fol-

low-ons fell 79.8 percent, and PIPEs fell 53

percent. Five life sciences companies filed

in September to go public in the United

States, but it was the first month this year

that no life sciences IPOs were completed.

“While 2011 remains on track to be

a year of solid performance for biotech,

global financial problems and dysfunction

in Congress have turned investors away

from risk,” says G. Steven Burrill, CEO of

San Francisco-based Burrill & Company,

a diversified global financial services firm

focused on the life sciences industry.

“Despite what has been an upbeat year of

developments for the sector, broader eco-

nomic worries have thwarted access to the

capital companies will need.”

The automatic cuts could affect life

sciences through budgets for the

National Institute of Health, Medicare,

Medicaid, Food and Drug Administration,

Department of Defense, Department of

Agriculture, and Department of Energy.


three years into survival, feels great and is

leading a “normal” life.

Crizotinib works for patients with ALK

kinase protein mutations. Sub-forms of

lung cancer have a mutation in the ALK

protein as part of their cancer mechanism.

Only twelve percent of all lung cancer is

linked to mutations in the ALK protein.

However, average survival prior to this

drug for people at stage four of cancer is

a five year survival rate of less than five

percent, with continuous chemotherapy,

every six weeks, which is eliminated here.

Clearly, industry and universities part-

nering brings results to patients reminding

all attendees of the high stakes of translat-

ing science to commercial success. Stephen

S. Tang, PhD and CEO, University City

Science Center President and CEO, serves

nationally on the 15-member Innovation

Advisory Board. This US Department of

Commerce board has been directed by the

America COMPETES Reauthorization Act

of 2010 to hold a series of innovation town

halls. Participants explore the nation’s

innovative capacity and global economic

competitiveness. A report will be gener-

ated for the President and Congress.

Over the next year, It will become more

clear to the nation’s BIO clusters how

deficit reduction will impact the intersec-

tion of government, science, healthcare,

and bioengineering and its partnerships

between universities and industry. As

attendee Kenny J. Simansky, Vice Dean

for Research at Drexel University’s College

of Medicine, commented, “it will impact

training at all levels – post doctorate, grad

school, undergrad, and high school” for

our future scientists, doctors, engineers

and entrepreneurs.

Lastly, some history, past and present, was

included as Tang introduced US Senator

Bob Casey, D-PA, sponsor of S4018, the

Life Sciences Jobs and Investment Act of

2010, in its intial legislative stage along

with its House counterpoint, HR6165

sponsored by U.S. Representatives Allyson

Schwartz (D-PA), Bill Pascrell (D-NJ),

Devin Nunes (R-CA) and Kevin Brady

(R-TX). Our nation, founded by anti-

monarchist colonialists in Philadelphia,

like Ben Franklin, and strengthened by

waves of immigrants from Europe and

Asia, is competing globally in the twenty-

first century. The impact on patients with

cancer and all other major diseases will

hang in the balance as well as our ability

to heal, feed and fuel the world. n

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n By BoBBy kRAFT

the big boys. Silicon Valley created social

media networks and applications making it

possible for a breakthrough Micro-Cap to be

only a click away from being viral.

As CEO of a Micro-Cap company there is

a need to get your story seen & heard. Going

to financial conferences and doing road

shows is an important spoke in the overall

exposure wheel but will fall flat without

social networking today. Having a presence

on the Internet is crucial, not only for your

tech-savvy baby boomer, but for the next

generation of investors, Generation Y, who,

like me, grew up with a palm pilot in the crib

and are now the new “Microcappers ™.”As a

CEO, you don’t want to hear, “I’ve never or

heard of you” or “I haven’t heard much at

all from your company”. There is no excuse

for this anymore. Your company’s media

page should be loaded with video interviews

and filled with content for viewers to get

to you and the story of your business. It’s

perplexing for me to hear that a Micro-Cap

company doesn’t have a Twitter account or

a “Media Page” on their website. I am cap-

tivated by the stories I hear, such as: a com-

pany finding a new molecule to cure cancer,

a mining company finding a new vein with

more grams per ton than ever seen before,

or a green consumer product that I wish I

invented. For me, it doesn’t make sense that

a CEO is not actively telling the story. If a

company is as exciting as you make it sound,


SNN is to Micro-Caps what CNBC is to Large Caps

Major TV networks like CNBC, CNN and

Bloomberg will produce segments, nightly

specials, or breaking news story bulletins

to announce Apple’s latest iPad or iPhone

product launch or update. Apple, once a

micro-cap company is a major success story

and has now been around for long time.

Apple created disruptive technology and

revolutionizing products and notoriety, a

large shareholder base, and now is part of

everyday Americana and certainly entitled

to all the coverage they receive. Mainstream

media networks are about ratings, attaining

viewers, and advertising revenues. Not only

do people care about the next great gadget

Apple launches but as a public company its

financial information too is highly sought

News stories about large cap companies flood the market place from a

multitude of news sources and re-publishers. When Apple posts a press

release, it spreads virally through social media faster than an election result.

after which is directly tied to its prod-

ucts or management statements. Traders,

stockbrokers, analysts, institutions and retail

investors, in today’s digital age, pay close

attention to news; they analyze and make

decisions based on the coverage a company

gets from each and every news source it is

coming from, like the old clipping services

of yesteryear. Yahoo Finance has thumbnails

for “financial blogs” and “message boards” in

the left hand column for viewers to see ref-

erencing information about each company.

Bloggers allowed Joe the plumber to turn his

fascination with the recycling industry, into a

sought after forum of sector expertise about

his industry. Although large cap companies

flood the newswires and occupy the tape,

stories about exciting Micro-Cap companies

have to claw their way into the mix of data

available on the web. Bloggers and tweeters

understand that striking it big with a Micro-

Cap company will translate into traffic, traf-

fic translates into viewers, viewership trans-

lates into interest, interest inspires action

and ultimately actions can turn into dollars.

This vast pool of investors is widespread,

preoccupied, overloaded with tweets, blogs

and information and very difficult to target.

CNN and CNBC aren’t calling a Micro-Cap

any time soon for its story, thus a Micro-Cap

CEO needs to figure out how to put “the

company” in the spotlight; stand out from

all the others in order to share lunch with


tell others! Lack of media coverage for a

Micro-Cap company only signals one thing,

the company is underachieving market rec-

ognition. Social Media is the answer. To get

your story known without the major news

companies doing it for you; your best chance

to be seen is to do it yourself.

I’m the social media and communications

director for SNN Inc. SNN is a financial pub-

lishing, media and entertainment company

located in Los Angeles and New York City.

SNN has websites stocknewsnow.com and

snnwire.com and ventures out to over 50

financial conferences annually. SNN publish-

es the Micro Cap Review Magazine (micro-

capreview.com) and records SNNLive video

interviews with CEOs and C-suite executives

of global Micro-Cap companies for dis-

semination. CNBC is to large cap companies

what SNN is to Micro-Cap companies as

SNN’s main focus is Micro-Cap companies.

I personally write blogs, tweets and copy

about Micro-Cap companies. I oversee the

writing of a blog for each video interview

SNN records and the writing of coverage of

the interview with a brief overview of what

the company does. I’ll be the first to admit

my blogs aren’t Pulitzer Prize worthy, but the

CEO is capable of telling the company’s story

better than anyone. SNN’s focus is to tell

each company’s story and it is not about ana-

lyzing the financials; but rather retelling the

story through our social networks, broadcast

components, websites, and targeted audienc-

es. CEOs of Micro-Cap companies can have

more passion than Shakespeare’s Romeo and

Juliet or less excitement than listening to a

boring history lesson. In today’s competi-

tive marketplace SNN distributes through

various Social Networks, such as: Twitter

and LinkedIn. Much to my surprise only a

handful of companies SNN Interviews have

accounts on these social networks, which

doesn’t necessarily make my job more dif-

ficult but rather the company is at a disad-

vantage because they can’t redistribute their

content to a ready audience. The more your

content is distributed, the more chances,

media, a blogger, another tweeter, an indus-

try expert, newsletter writer, potential inves-

tor will pick up the story. News travels faster

than the speed of light in the viral universe,

trends are changing all the time—yesterday’s

loser is tomorrow’s winner or vice versa in

this world. It’s not what you know, but when

you know it. Content is king, no matter who

you are. Companies like SNN Inc. are here to

help CEOs generate more of their content,

and create the media presence necessary to

survive in the information age. Social media

is not a spectator sport; it’s time to become

an interactive participant. When you see

SNN at the next road show, come over to our

booth, we’ll be happy to interview any and

all CEOs and/or C-suite executives of Micro-

Cap companies even Large Cap. Cheers! We

are here to help. n

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n By LAnCE Jon kImmEL

already in the U.S. to do to make sure that

their reporting has been correct and, if it

has not been, to restate and get ahead of the

problem?

A big part of the answer can be found

in Sarbanes-Oxley, now on the verge of its

10-year anniversary. A decade on, parts of

SOX provide a road map toward corporate

responsibility. It begins with the tone at the

top. Management of Chinese companies

must accept that by voluntarily accessing

the U.S. public markets, they agreed to the

complexities and rigors of U.S. regulation,

not just a ride on the market wave. Entering

the U.S. public space means that the CEO

is no longer the one and only voice of the

company, to be supported and not ques-

tioned by his management, his board and his

advisors. This in turn requires management

to be willing to work with their indepen-

dent directors and/or Audit Committees to

undertake forensic accounting and confirm

the integrity of their internal controls and

the entire disclosure controls and procedures

process. Management must be willing to

accept negative information and to improve

the entire process of gathering financial and

non-financial information, and reporting it.

The fact is that going public in the U.S.


Chinese Public Companies in the U.S.Restoring Confidence

It has been about 18 months since the SEC first signaled that its attention was focused on smaller Chinese companies that had gone public in the

U.S., primarily through a reverse merger or similar transaction short of a full-blown IPO.It has been at least a year since a wave of

SEC enforcement actions began. There had

been speculation in some quarters that the

problem – such as it was – was limited to a

few dozen companies, which still represents

a fair percentage of Chinese companies that

have gone public in the U.S. However, a

recent second wave of enforcement activity

with impressive breadth suggests that this

story is nowhere near running its course.

As not only Chinese public companies,

but audit firms, investment banking firms,

investor relations firms and ubiquitous “con-

nectors”, “liaisons”, “consultants” and “find-

ers” find themselves drawn deeper into regu-

latory scrutiny, it is not hyperbole to talk of

a full-blown “China crisis” in the U.S. public

markets. Investors now approach smaller

Chinese public companies with a general

assumption that their numbers may not be

reliable; investment banks that once clam-

ored for this business have retreated to the

sidelines; auditors and law firms now pass

on transactions for which they competed

aggressively.

However, as with all things, the China

crisis will eventually pass. Companies who

have not complied with securities laws and

SEC regulations will delist, go private and

leave the U.S. public markets. Bad actors

will enter into consent decrees. Professionals

who should have been doing their due dili-

gence will be sanctioned. And some will

inevitably go back into the woodwork, wait

for things to die down and re-emerge when

the next big thing or new market emerges.

That has happened through Rule 504 offer-

ings, Reg S abuses and the reverse merger

craze. Unfortunately, it will happen again.

In the meantime, China will remain a

dynamic economy for decades to come,

with hundreds of companies who do and

will still want to access the capital markets

in the West, including the U.S. What are

these companies to do to position them-

selves for market acceptance? And what are

smaller Chinese public companies who are


done correctly is expensive and maintenance

(periodic reporting) is also expensive. For a

profitable company – in the U.S. or China –

this should not be a problem. But it is tempt-

ing – perhaps too tempting – to read on the

Internet that a company can go public from

soup to nuts for $25,000 or so and not be

willing to hire the right accountants, audi-

tors and attorneys to do the job correctly at

the beginning, help educate management on

how to set the tone at the top and then carry

it through year in and year out.

Here then is a primer on how all involved

parties can take control of the regulatory

side of public corporate life, whether the

company is already public or is thinking

about going public. It may not take a village,

but it definitely takes a lot of people:

Management must set the tone at the top

– As mentioned, Chinese management must

not only support but fully embrace corpo-

rate accountability, and send an unequivo-

cal message that his CFO, the rest of the

financial department, accountants (who very

often are local and young, and therefore

unwilling to do anything that could be con-

strued as a challenge to authority or their

elders), auditors and attorneys are free to

speak up and point out areas that can be

improved. And they must be prepared with

a sizeable budget to hire not only the whole

team, but the right team. Without the right

tone at the top, everything recommended

here is at risk of failing.

Hire a knowledgeable legal team in China

– Chinese counsel not only has to know how

to set up an onshore/offshore structure that

complies with SAFE regulations, but it must

be able to issue an opinion acceptable to the

U.S. investors. That narrows down the pool

of Chinese attorneys to a healthy, but rela-

tively small number.

Get really competent U.S. securities coun-

sel - Similarly, U.S. securities counsel has

to have substantial experience with public

companies, preferably smaller public com-

panies because of the particular problems

such companies seem to face again and

again. U.S. counsel must patiently counsel

Chinese management of their new responsi-

bilities once the company goes public and be

prepared to reinforce that message. For the

most part, the expectations of U.S. public

life are profoundly different and largely not

understood by Chinese management.

Bring on board the best accountants pos-

sible – The single biggest current problem

with Chinese companies is a lack of reli-

ability in financial reporting. If the problem

is dishonesty, no amount of advice will fix

that. But if the problem is management’s

just not knowing how to do an inventory

rollback, U.S. GAAP reconciliation, calcula-

tion of perks, etc. then the smaller Chinese

company must hire accountant consultants

to help them prepare the financial package

for audit or review. Having said that, the

bumper crop of young, enthusiastic ex-big

CPA firm accountants in China and Hong

Kong do not necessarily bring the experi-

ence and the cultural ability to respectfully

but diligently question management, rather

than just rubberstamp what the CEO would

like to present. The accountants must have

significant experience preparing financial

statements for U.S. public companies or the

process will either drift literally for months

or years or bad numbers will work their way

into the financial statements.

The auditor must be beyond reproach

– Not every company needs a Final Four

auditor and the fifth one had enough prob-

lems of its own, so being one of the biggest

does not necessarily mean you are one of

the best. However, the auditor of a Chinese

public company must be able to commit the

resources and directly supervise local con-

tractors in the audit process (assuming they

are used) to make sure not a single corner

is cut. If the accountant is the first line of

defense in financial reporting with integrity,

the auditor is the last line of defense.

As a result of the current crisis with

Chinese public companies in the U.S., the

cost of going public will probably rise and

time to go public the right way will cer-

tainly lengthen, as more steps, players, and

checks and balances will be factored into

the process. But those companies whose

management is both patient and amenable

to a not inexpensive process and who take

the long view, will do what it takes to edu-

cate themselves, be flexible in adopting new

management techniques in internal controls

and disclosure procedures, and incorporate

the best elements of corporate governance.

Right now, it seems that the regulators and

investment community will accept nothing

less. Whether remedial or preparatory, the

work needs to start at once. In the Year of the

Dragon, it is possible to restore confidence. n

Lance Jon Kimmel is the founding and managing partner of SEC Law Firm, which represents growth companies around the globe and the regulated profes-sionals who serve them. Mr. Kimmel’s practice focuses on public and private securities offerings, SEC report-ing, corporate governance, mergers and acquisitions, representation of companies before the SEC and stock exchanges, and SRO compliance for investment bank-ers and other service providers. He handles capital raising at every level, from seed capital to initial public offerings, from reverse mergers to PIPEs, from equity credit lines to bank credit facilities.

Mr. Kimmel is actively involved in alternative public offering strategies, including reverse mergers for domestic and Chinese companies in the United States, and working with private and public com-panies going public or dual listing internationally on the AIM in the U.K., the TSX in Canada and the Frankfurt Stock Exchange.

His clients reflect the spectrum of 21st century business, from manufacturing to medical devices, from biotechnology to green technology, from finan-cial services to the entertainment industry, from real estate to consumer goods.

As one of the most frequently quoted securities attorneys in America, Mr. Kimmel has contributed his insights to NPR Marketplace, Dow Jones, Sky Radio, the Los Angeles Times and Bloomberg Forum, among other mainstream and financial broadcast and print media around the world. Mr. Kimmel has written numerous articles and speaks often on current legal issues in the corporate finance and corporate governance arenas in the U.S., the U.K. and China. He co-chairs the Growth Capital Conference in Los Angeles, serves on the Securities Regulation Committee of the American Bar Association, served as a national coordinator of the SEC’s Small Business Forum and has given testimony to the SEC’s Advisory Committee on Smaller Public Companies on reform proposals to ease the burdens of the Sarbanes-Oxley Act for smaller reporting companies.

SEC Law Firm 11693 San Vicente Boulevard, Suite 357 Los Angeles, California 90049 Tel: (310) 557-3059 Fax: (310) 388-1320www.seclawfirm.comemail: [email protected]


n By DR. goRDon ChIU

is shrinking. If a company does not innovate,

it will not evolve and therefore may risk

extinction.

Generally speaking, 2012 will mark the

end for certain business models due to

permanent changes in demand that work

against such established business models. On

the other hand, it will be an accommodat-

ing year for four important breakthrough

technologies that are only possible because

innovation began years ago and will never

cease to stop.

#1. Lighter, tougher, Lower

cost materiaLs

Smarter companies like Dow Chemical

(NYSE: DOW) began encouraging their

employees to innovate processes and to


Is Anything Predictable for 2012 and Beyond?“Never make predictions, especially about the future.”

—Casey Stengel

Looking back on 2011, we have expe-

rienced more turmoil in the mar-

ket than usual, to say the least. Large cap

household names have struggled including

Sears Holdings (Nasdaq: SHLD), American

Airlines (NYSE: AMR), Nokia (NYSE: NOK)

while major financial names have been dis-

counted well over 50% below 2011 highs. On

top of global protests (Occupy Wall Street)

and the world population nearing 7 billion

people (6,984,444,409 as of 29th December

2011; http://www.census.gov/main/www/

popclock.html), and exponentially deceler-

ating global demand, the question we are all

asking is, “Will demand ever return?”

After a decade of rising commodity prices,

companies are trying to push these rising

costs downstream onto the customer. One

lesson learned in 2011 is that global demand


research new materials. By starting as early as

2008, Dr. Mary Anne Leugers and her team

of scientists developed the following chem-

istry process called “HIGHLY EFFICIENT

PROCESS FOR MANUFACTURE OF

EXFOLIATED GRAPHENE”, patent appli-

cation #: 12/667808.

Graphene would become known as a

super strong material derived from graphite.

It won the Nobel Prize in Physics (2010)

being awarded to Drs. Andre Giem and

Konstantin Novoselov (Reference:http://

www.nobelprize.org/nobel_prizes/physics/

laureates/2010/press.html).

Disclosure: I personally have been

announced in 2011 as the Chief Scientist

with the Canadian graphite mining com-

pany Focus Metals (OTCQX: FCSMF).

#2. smarter Diagnostics

The word “smart skin” has been floating

around in many journals referencing the

research work of John Rogers at University

of Illinois. It is supposedly an ultra-thin

electronic platform that can stick onto the

human body as a temporary tattoo. This

work was funded by the National Science

Foundation and US Air Force. It contains

flexible transistors, sensors, bendable trans-

mitters, and receivers all packed inside and

capable of stretching with your skin with-

out ever damaging the microcircuits. While

applications are still being developed, the

advantages are significant in avoiding con-

ducting gels and adhesive tapes when col-

lecting data from the skin, muscle or brain.

#3 next generation Paints:

soLar Paints

Certain well known companies in the solar

industry have gotten decimated and some

may even file for bankruptcy in 2012. The

reason for failure is commoditization follow-

ing the slowing of innovation in the polysili-

con wafer and solar panel industry. However,

for those who are thinking innovation, you’ll

want to watch which company focuses on

an area called solar paints (Reference: http://

www.ncbi.nlm.nih.gov/pubmed/22147684).

Through recent advances in semiconduc-

tor nanocrystal research, one group out of

Notre Dame University has developed a

one-coat solar paint for designing quantum

dot solar cells. The above reference sum-

marizes that a binder-free paste consisting

of CdS, CdSe, and TiO(2) semiconductor

nanoparticles was prepared and applied to

a conducting glass surface and annealed at

temperatures of 473 Kelvin. The power con-

version efficiency was remarkable and solar

paint technology offers advantages of simple

design and economically viable next genera-

tion solar cells.

Another interesting example of a com-

pany focusing on next generation paints

is Dow Chemical (NYSE: DOW). The

Dow Chemical product EVOQUE™ Pre-

Composite Polymer Technology is revolu-

tionary for the paint industry (http://www.

dow.com/coating/hiding/20111005a.htm).

The product is receiving significant posi-

tive reviews and is another sign that certain

smart companies are dedicating research

funds to innovate new materials for growth.

#4 security, mobiLe, Privacy

anD you:

Once upon a time, Microsoft launched the

operating system called Windows and it

caught a computer virus. That began decades

of nightmares for the blue chip company:

Microsoft (NasdaqGS:MSFT). Gone are days

of the standalone personal computer and

in its replacement will be mobile products.

Everything from mobile anti-virus software

applications to other mobile related com-

merce will pave the way for the 2012 mobile

growth year. It could be mobile cloud com-

puting, mobile data analytics, mobile games,

mobile security, or mobile social media but

the common theme will be mobile “some-

thing”. Even televisions have become smarter

by being able to interact with your portable

mobile devices.

concLusions:

Innovation is bustling. If anything, the down-

turns have created even greater demand for

breakthrough technologies. Like any com-

pany, it must be managed correctly in order

to grow properly. The United States will

always be a leader in innovation cycles and

this recovery will prove no different.

about the author

Dr. Gordon Chiu is an execution-driven business-man with nearly two decades of combined domestic and international experience in biomedical, chemi-cal, cosmetic, medical, and technology industries. He has been invited to serve on the board of public and private companies and to provide vital advice to the board while increasing overall shareholder value.

His solid background and broad experience has allowed him to accomplish and advise in areas of Alzheimer research, breast cancer research, derma-tology, drug addictions research, green technology, and antimicrobial research. He started his career as a research scientist at Pfizer Inc. and Merck & Co., Inc. and has healthcare and marketing experience with strong links to Wall Street and Asia.

His educational background began with a B.S. degree in chemistry from Rensselaer Polytechnic Institute, graduating summa cum laude. He gradu-ated with an M.S. degree in chemistry from Seton Hall University with high honors. Additionally, Dr. Chiu was globally distinguished as an M.D./Ph.D. candidate under the National Institutes of Health’s Medical Scientist Training Program for four years at the Mount Sinai School of Medicine where he also researched, developed, consulted, and advised Dr. Huachen Wei in the department of dermatology in skin cancer research. Seeing the opportunity to impact foreign policies in healthcare, he transferred his credentials to the fully accredited University of Bridgeport School of Naturopathic Medicine to receive his doctorate in naturopathic medicine.

With this translational background, he has inves-tigated the validity of foreign treatments and their success level for public health. He has also been chosen to serve as an advisory role in the iden-tification of low cost solutions (i.e. non-invasive diagnostic equipment) for emerging countries that cannot afford to maintain armies of physicians across numerous sub-specialties. His years of experience and continuous involvement have created deep rela-tionships within the scientific, business, and medical communities. Dr. Chiu has developed and owns methodologies called directed combinatorial algo-rithmic libraries (D.C.A.L.) that are used in various commercial applications, composition development

and research. n

Disclosure: Dr. Chiu has been appointed as an inde-pendent adviser to SNN.

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The story of Merriman Capital is a story

of rebirth, evolution, and determination.

Merriman Holdings, Inc. (OTCQX: MERR)

and its broker dealer subsidiary, Merriman

Capital, Inc. (formerly Merriman Curhan

Ford & Co.) was formed from the ashes of

a public company called RateXchange. The

previous business was a software matching

engine for Internet bandwidth which Jon

Merriman and MCF’s founders turned into

a successful San Francisco investment bank.

birth From the internet

meLtDown

In September of 2001, just days before 9/11,

the board of directors approved a plan to

enter the investment banking industry as the

marketplace around RateXchange’s technol-

ogy had disappeared when the technology

bubble burst. As CEO, Jon Merriman then

raised $3.5 million, hired two of his friends

from Dartmouth College – Greg Curhan and


The New Merriman Capital

retail broker at the firm caused Merriman

Capital to face its most difficult test.

The retail broker, Scott Cacchione, helped

Silicon Valley based venture capitalist

William Del Biaggio III to fraudulently apply

for loans from several banks and private

individuals. Cacchione emailed Del Biaggio

account statements of unknowing Merriman

customers, then Del Biaggio doctored the

statements so the assets would appear to

be his own. With fake statements and his

credibility as a Silicon Valley success story

in hand, Del Biaggio borrowed over $40

million.

After a thorough investigation by the SEC,

it was determined that Merriman Capital

and Jon Merriman had no involvement in

the Cacchione/Del Biaggio fraud. Still, the

legal fees and the global financial crisis near-

ly destroyed MCF. The firm was forced to cut

over half its staff and legal claims continued

to pile up. For many, Merriman Capital was

going to be yet another victim of the global

financial crisis and bad luck.

Then, in August of 2009, the firm unveiled

a dramatic rescue plan. It agreed to settle

$43.5 million in private legal claims for less

than ten cents on the dollar. At the same time,

led by Chicago investor Ron Chez, the firm n By shELDon “shELLy” kRAFT

“We started the firm in a difficult period. Then in 2008, people took us

for dead. Quite honestly, probably a more rational course of action would

have been to just fold the tent and go home – but my name is on the door,

and I am proud of what we have built” – Jon Merriman.

Robert Ford – and Merriman Curhan Ford

was born.

Headquartered in San Francisco, and

started during dark days for the invest-

ment banking industry, MCF was founded

to research, trade, advise and finance inno-

vative and fast-growing companies with less

than a billion dollar market capitalization.

The founders of MCF believed – and still

do – that these smaller, faster-growing com-

panies have a major role in driving global

growth and job creation and are misunder-

stood by mainstream investors.

It took roughly a year and a half for the

firm to post its first profitable quarter in

September of 2003. The momentum con-

tinued into the first quarter of 2004, with

the firm posting revenues up 500% from

the previous year. The market cap ultimately

peaked at over $200 million, with annual

revenues of $90 million and profits of $12

million in 2007.

a rogue retaiL broker anD

the gLobaL FinanciaL crisis

The firm continued to grow and attract new

talent; however, in 2008 and 2009 – in the

depths of the global financial crisis – a rogue


brought in new investors who invested $10.2

million to re-capitalize the company. One of

the investors who had been defrauded by Del

Biaggio and sued MCF was subsequently so

impressed with MCF’s perseverance that he

decided to invest.

In a period of time where the world saw its

financial system brought to its knees, when

Bear Stearns, Lehman Brothers and a host

of smaller firms shut their doors, and a time

when wealth destruction rivaled any event in

the last 60 years, Merriman Capital survived.

“In every battle there comes a time when

both sides consider themselves beaten. Those

who continue to attack win” Ulysses S. Grant.

With the lawsuits settled, and capital mar-

kets righting themselves, Merriman forged

on; however, the firm had difficulty deliver-

ing consistent profits. This was not because

of a lack of will or talent, but because of

a failing business model. In the age of the

Internet, electronic trading of stocks, and the

shrinkage of the buy-side commission pool,

the traditional brokerage business model

had finally been broken. Equity research that

was once an important differentiating tool

became a commodity. The fact that so many

boutique and middle-market investment

banks have gone out of business testifies to

the brutal nature of the brokerage business

today.

a new moDeL in a

changing caPitaL markets

environment

Understanding the evolution of the mar-

ketplace, and realizing the need for a much

lower cost structure, Merriman Capital

evolved yet again. Guided by the leader-

ship of Co-Chairmen Ron Chez and Jon

Merriman, the firm has developed an

updated strategy that will enable significant

cost savings, generate recurring revenues,

and drive profitable growth; however, the

mission of helping small companies will

remain the same. The new model can be

broken down into four business segments:

1) Capital Markets Advisory, 2) Institutional

Trading Execution, 3) Investment Banking,

and 4) Financial Entrepreneur Platform.

The Capital Markets Advisory group’s

mission is to close the gap between where

undervalued public companies currently

trade and where they should trade. The

small-cap segment of the market has been

“orphaned” for many years – now more so

than ever. Closing this valuation and vis-

ibility gap assists entrepreneurial wealth cre-

ation, and helps generate the capital needed

to help small firms grow. The market to

service small, innovative public companies

is significant and speaks to a critical need in

our global economy. These small, but grow-

ing, companies have the potential to employ

millions, and yet the capital markets ignore

them. The advisory business also provides

Merriman Capital a stable base of predict-

able, recurring revenues.

Within the Capital Markets Advisory

group is Merriman Capital’s success-

ful OTCQX Advisory practice. Merriman

was the first investment bank that held

the title of DAD/PAL – Designated Advisor

for Disclosure/Principal American Liaison

– and sponsored the first company on the

OTCQX. There are now over 300 companies

on the QX, and the number is growing rap-

idly. Merriman Capital is by far the leader in

investment bank DAD/PALs and advises over

10% of the marketplace. Merriman’s success

can be attributed to the fact that it not only

puts companies in the QX marketplace, but

also actively services them. The firm writes

research on the companies it works with,

introduces them to investors, facilitates trad-

ing and liquidity for the companies’ stock,

and raises capital for them.

The second business segment at Merriman

is Institutional Execution Services. Merriman

Capital’s trading business specializes in low-

friction equity and option execution services

for institutions and ultra high net worth

individuals. The firm hires and nurtures

the best sell-side execution traders on the

Street. Merriman’s lead execution trader, Ken

Werner, is widely regarded as one of the best

in the business and has been working with

Jon Merriman for over twenty years.

Third, Merriman Capital engages in cre-

ative investment banking services for smaller

companies. Since the firm was founded, it

has raised over $9 billion for fast growing

and innovative public businesses. Merriman

Capital is focused on public companies

that have the potential to generate venture

capital-like returns. These companies are

overlooked by bulge-bracket banks because

of their size – yet they have the ability to

grow rapidly, generate shareholder value,

and facilitate job creation.

Merriman Capital’s fourth revenue driver

is its Platform for Financial Entrepreneurs.

The firm looks to help groups of bankers,

researchers, or execution traders to grow

their businesses by providing them with a

flexible platform with high-touch compli-

ance, legal, and operational assistance. The

best example of this is Merriman’s incu-

bation of Institutional Cash Distributors

or ICD (www.icdfunds.com). Merriman

Capital enabled the entrepreneurial and tal-

ented executives of ICD to rapidly grow

their business from zero to over $20 million

in revenue and become a brand name in the

money market business.

The story of Merriman Capital is indeed

a story of rebirth, evolution and determina-

tion. It is the story of a boutique investment

bank that has reinvented itself, so that small,

high-growth companies will still have the

ability to change the world by accessing the

capital they need to do so.

Merriman Capital hosts a well known

annual investor conference for these innova-

tive and rapidly growing companies. This

year, the conference will be on February 1st in

New York City at the Intercontinental Hotel

in Time Square. The firm welcomes you to

meet the public company entrepreneurs that

will drive investor returns and create tomor-

row’s jobs. n


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My relatives wanted to put him in a

nursing home in Florida. They wanted to

drain his accounts, put him on Medicaid

and split up my mothers’ jewelry. When it

became evident I wasn’t about to do any of

that, they insisted on taking him. Based on

their prior behavior, I was not comfortable

with that arrangement either, so I had yard

sales, gave a ton of stuff away to shelters and

non-profits, packed up what he needed and

moved him to California with me.

I will never forget my father saying that

he still wasn’t sure who he was going to live

with as we boarded the plane to California.

At that moment it became clear to me how

important it is for a responsible adult to take

control of a situation concerning an aging

parent who doesn’t have a clear understand-

ing of what is going on.

Non-professional caregivers, as I was, face

countless difficulties. There is an endless list

that seems to grow by the day. Making sure

medication doses and times are properly

adhered to, noting down blood sugar levels,

diets and moods plus keeping track of urine

and bowel movements are daily necessi-

ties. Then there are the legal and financial

aspects, not to mention food and living

expenses along with insurance issues plus

Medicare and Medicaid. All the work that

goes into keeping one’s own life together is

more than doubled, in most cases tripled,


Caregiving: Ready or Not or Tag Your It!

I was living in Rome, Italy working in the

film industry when I got the call that ended

my life as I knew it. My father had collapsed

with congestive heart failure and pneumonia

in his home in Beverly Hills, Florida. Yes

Dorothy, there is a place called Beverly Hills,

Florida.

A few years earlier he had collapsed in

the middle of a parking lot and since he was

alone because my mother had died 4 years

earlier, I put all sorts of safe guards in his

home, including a ‘Help I’ve Fallen & Can’t

Get Up’ system. Unfortunately, when my

father blacked out in his home, he was so

sick and disoriented he never pushed the

button. Luckily his visiting nurse came that

day and found him unconscious but alive,

sprawled on his bathroom floor.

As soon as I found out, I dropped every-

thing and ran to be with him. It was only

then I found out how sick he really was.

When I called him every Sunday, he con-

stantly insisted he was fine and he certainly

sounded all right. But, as so often happens,

he was not ‘fine.’

The doctors told me my father had 4,

maybe 8 months, to live. It was obvious he

could no longer live on his own. He was very

frightened and sure he was dying. He begged

me to promise I would not put him in a

nursing home as all his friends had died in

nursing homes. I promised him I wouldn’t. n By ELEAnoR vERA

As a young girl of 5 hiding behind a tree I was surprised when my best friend, Alice, tagged me. Our favorite childhood game of ‘Hide &

Seek’ would play out again many years later. At 50 years old I would sud-denly be tagged again, but this time it was no game.


and if there are siblings or other beneficia-

ries involved it gets even more complicated.

Add the emotional strains and you’ve got a

perfect recipe for trouble.

Most people don’t understand. Many sib-

lings who are not involved just assume their

sister or brother (the family caregiver) is

living scott-free and taking advantage of the

situation. They have no clue about the reali-

ties of their caregiving sibling. I wish I had

a dollar for every time I’ve heard ‘Well, my

sister or brother knows I’m here for them. If

they need any help with mom or dad all they

have to do is ask.’ ‘But, whenever we speak

they never say anything, so obviously every-

thing is fine.’ These people don’t understand

that their caregiving sibling will rarely admit

that they are overwhelmed and depressed.

They too believe they should be able to take

care of the situation without help, until they

have a breakdown.

In actuality non-professional caregivers

for the elderly are not prepared for, and in

many cases are not equipped to handle the

enormous array of responsibilities and pres-

sures placed upon them. Most are depressed,

isolated and become emotionally as well as

financially depleted.

Just like having a child, the duties and

needs are endless. The difference is a child

is beginning life and a parent or loved one is

ending life. To sacrifice for a child is to do so

for the future. Sacrificing for a parent is the

‘ultimate’ giving back. It’s a solemn tribute

to the person who sacrificed for us when we

were weak and vulnerable.

After 12 years of caregiving various fam-

ily members and friends I understand what

goes into caregiving as well as what the

non-professional caregiver faces. It is why

I have created two new, interactive web-

sites for family and friend caregivers, called

Active Caregiving (ACG) and its sister

site, in Spanish, Ayuda A Los Que Ayudan

(AALQA.)

This special group of caregivers has

distinctive needs of their own. ACG and

AALQA are dedicated to supporting them

from the beginning of their journey to the

end. We provide access to late breaking news

and information on an extensive variety of

senior topics and issues. A safe place to dis-

cuss true feelings and interface with others

is another service we provide through a Face

Book type meeting place and interactive

support groups. Each group session incorpo-

rates apx. 6 - 8 active caregivers along with a

licensed professional leading the group.

A large Shopping Cart with a wide variety

of products and services geared toward the

needs of our caregivers helps relieve stress

while saving time and money. It’s a One-

Stop-Shop with items that have been tested

and reviewed by actual caregivers. ‘Lighten

Up’ has funny clips of Senior Moments.

The ‘ Senior Pets’ blog along with ‘Seniors

and Their Pets’ addresses problems that

many families face. ‘The Intrepid Traveler’

helps families enjoy travel with their seniors.

‘Ellie’s Tips’ area is filled with helpful advice

and suggestions. We are Green and encour-

age our caregivers to recycle their excess sup-

plies by listing them in our ‘Pay It Forward

– Recycle’ section.

Every area in ActiveCaregiving.com

and AyudaALosQueAyudan.com directly

addresses a need and openly encourages

caregiver participation thereby increasing

content exponentially. We strive to meet the

needs of all our caregivers.

Eleanor Vera - Active Caregiving, Inc.

Founder and Chief Executive Officer

Active Caregiving, Inc. was conceived and

is owned by Eleanor Vera, a bilingual for-

mer television creative director, advertising

executive, and film industry special effects

associate who has 12 years of personal non-

professional caregiving experience. In the

course of caring full-time for her father,

who was ill with Parkinson’s disease, amyo-

trophic lateral sclerosis (ALS), Lou Gehrig’s

disease, diabetes and dementia, she was a

Talkline Volunteer Counselor and Co-Chair

for Women Helping Women Services at the

National Council for Jewish Women, as well

as serving on the organization’s board of

directors. Additional years of primary care-

giving for two elderly cousins and two elder-

ly friends led Eleanor to reach out to other

caregivers through discussion and market

research studies, during which she learned

that most people providing these servic-

es informally were feeling overwhelmed,

burned out and isolated, and in some cases

were possibly suffering from post-traumatic

stress.

While serving as marketing director for

St. Liz Hospice in Los Angeles, Eleanor was

introduced to various professional senior

product and service organizations based

in Southern California—organizations she

did not know even existed when she needed

them most. She identified two major prob-

lems: 1.) these organizations were having

difficulty reaching their target audience, and

2.) non-professional caregivers desperately

needed the information, products and ser-

vices these organizations offered.

Further inspired by the personal stories

of other caregivers, Eleanor conceived a

“bridge”—a full-service online community

for family and friend caregivers that is a

conduit for promoting local business, public

education and a better understanding of

this increasingly critical topic. Eleanor has

created in ActiveCaregiving.com an online

business model that generates revenue while

assisting and empowering nonprofessional

caregivers through their caregiving journey.

This model connects caregiving industry

service providers and product distributors

directly to their target market—the nonpro-

fessional, decision-making caregiver.

For more information go to: www.

ActiveCaregiving.com n


ing every deal similar to multiple offers on

residential homes in the California boom of

the 2,000’s. So let me summarize, U.S. inves-

tor cash going into China for paper (equity)

and even more cash going to China from

selling Chinese products into the US market.

I will cut to the chase, we all know the Chinese

bubble burst. Headlines of accounting fraud

are rampant as both investment banks and

holders of Chinese paper count their billion$

lost. Law firms are closing their Chinese prac-

tices as fast as they can get to the airport and

catch a plane. Accounting firms are dropping

like flies joining lawyers in hunkering down

with their insurance carriers to review their

mal-practice and D&O policies. Board room

decisions cried abandon ship! Leave town!

Run for the hills. Let’s get out of Dodge with

our boots on! The SEC investigations explod-

ed as China imploded. With all the excitement

and expectation of riches gone, hate replaced

love of China deals. Abandonment of China

caused investors to trample each other at

the exit. As usual in these matters, Chasing

Chinese IPOs, reverse mergers, PIPES and

Registered Directs was replaced by joining

class action lawsuits and searching for deep

pockets for recovery. The bad Chinese deals

infected all the deals done in China or on

the calendar to be completed. With the luster

lifted like the cash from US investor’s pockets,

China got real ugly, real quick to the masses.

I have heard that China is dead in the US

and no Chinese deal will get financed in

the U.S. for at least three years and all

the former China practices are scratching to

find business elsewhere to keep their doors

open and insurance payment premiums

F I n A n C E

A S K M R . W A L L S T R E E T

When Did I Become a Contrarian?

n By shELDon “shELLy” kRAFT

Over the course of history the street loses its

sense of financial values resulting in pumped

up ballooning stock price valuations which

eventually get filled with too much hot air

and then burst. It happened to the dot coms,

it happened in derivatives and it occurred

in bundled and bungled mortgage baskets

leading to the fall of Lehman and the cheap

price for the Bear. Recently investment bank-

ers, desperate for fee income, after seemingly

running out of US companies to hand over

bags of money to, abandoned America for the

looming riches of China. US investment bank-

ers threw caution to the wind racing to boost

their frequent flier miles chasing Chinese

companies in places they couldn’t pronounce.

I have been a fan of China and admire how

it virtually jumped from feudalism to impe-

rialism in record time. Even more impres-

sive is the level of temptation and attrac-

tion for investment bankers to see for them-

selves whether or not China is as advertised.

Ultimately like moths being drawn to light,

doing business in the new land of opportu-

nity due to population, sheer size and market

need was just too tempting for them to resist.

As the Tiger began to grow from baby cub

to adolescent, I also watched Chinese com-

pany values take off to unrealistic numbers

as troves of cash left the US and landed

in the hands of first generation entrepre-

neurial capitalists in China, from Beijing

to Xinchen, from Shanghai to Nimbo. The

competitive and comparative advantage of

China over the U.S. began with cheap labor

and ran all the way to modern science leader-

ship, market share dominance in smokestack

industries and rare earth element market

control. Over the last decade China soared

economically fueled by foreign investment

capital. China became the wild wild far east

to bankers, transactional attorney’s, CPAs,

investor relations firms, financial experts

and ultimately a major cottage industry was

formed: taking Chinese companies public in

the U.S. through recycled shells and freshly

created financial vehicles. Eventually China

attracted money carpetbaggers as well as

the professionals who were competing with

one another as they stumbled all over each

other to grab deals and investment bank-

ing market share. Most notable as in other

bubbles, dependence on upside potential

and the disregard of downside risk, many

investment bankers forget to stick to their

knitting neglecting their conducting prudent

due diligence. Instead of using tried and

true forensic accounting methods, Chinese

accounting or multiple books accounting,

left a huge “GAAP” as the American bank-

ers received numbers they wanted to see,

and in reality who can blame the Chinese

for giving them what they asked for? Why

not? Loaded with cash and hunting for bear,

American investment banks began funneling

billion$ into Chinese company equity, chas-

paid up to date. In many ways I agree

that the ax has not fully fallen yet for sure.

As Lance Kimmel has stated in a previous issue

of Micro-Cap Review magazine, “Around

June 2010, the SEC and PCAOB started send-

ing out informal inquiry letters to accounting

firms, asking for voluntary cooperation with

a fact-finding process about their practices

involving Chinese public company clients.”

Now here is the shock of it all, China is still

China! I have visited China many times but

my foothold never reached more than beach-

head proportions unlike the many before and

after me who are now licking their wounds.

So why I am now a contrarian? Because

today I like China more than ever; although

in damage control mode, all the great promise

of China, the multitudes of made and lost

money from the corporate deluge replete

with forthcoming regulatory intervention

and horror stories. The over reaction will

cause the pendulum to swing China further

out of regulatory and financial favor as the

last of the Mohicans end their wild forays in

China and run with their tiger tail between

their legs back to their origins, to start over.

This abandonment is new opportunity for

the new Chinese boom to get started. China’s

economy didn’t collapse but rather it con-

tinues to flourish. Lost opportunity will give

way to new opportunities for a new cadre of

entrepreneurs who like the Chinese entrepre-

neurs witnessed a ton of butt kicking creating

scars that are healing as I write this article.

I for one am heading back to China, my

reputation intact, hope to find a welcome

mat at my feet. The carpetbaggers have come

and gone, and big lessons have been learned

by the Chinese. Today the business mood is

positive and retrenching. I have no grandi-

ose ideas just simple desire to develop part-

nerships for marketing and sales. Concepts

of reverse mergers and PIPE financings are

now ancient history like the Ming dynasty

and what will now rise in China is relation-

ship building based on mutual trust and

prudent guidance. The incredible market of

China has grown in so many ways from les-

sons learned, that the next wave of business

must be slower, more orderly, and based

on cooperation and organic methodologies.

So as all the bearishness in the marketplace

toward China prevails I have never been

more bullish on China in my entire career in

finance. This contrarian opinion of mine sets

me apart from the losers who left China in

a hurry who will not be welcomed back too

soon. Their breach of trust as well as their

breach of good conduct will make it extreme-

ly difficult for those wanting to newly enter

China today but it is also potentially filled

with amazing rewards. So this contrarian

believer will tidy this sentiment up with men-

tion of an old adage: “it is not the money you

make but rather the money you keep.” I am

ready to participate in the maturation process

of a nation, and the process of a new China

in history which will pride itself on mutually

cooperative relationships with solid under-

footings and long-term wisdom as its guide. n

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indeed be at the expense of co-opting foreign

intellectual properties.

Beijing has a long history of copying

trade secrets. We need to look no further

than expropriating missile secrets during

the Clinton Administration or exporting

our rare earth industries thirty years ago.

After all China possesses many American

dollars to attract hungry foreign entities

which are in a battle for industrial survival.

It would not be remiss for them to look over

the shoulders of their invitees, which may

explain partly the Chinese largesse. This

may be the hidden motivation as to why the

Chinese are allegedly unable to meet their

stated quotas.

Additionally, industrial end users from


What’s Really Going On With The Rare Earth Exports?

It is possible that China is playing politi-

cal chess with its rare earth strategies.

They assert that they can’t provide the

world and at the same time themselves with

this precious material. In a world of geo-

politics, what is stated may be subterfuge

for hidden agendas. China claims that

domestic, environmental concerns underlie

their decision. They are on record that they

are withholding licensing from Baotou, their

largest producer based on environmental

considerations. However, they have given

the green light to approximately eleven other

companies. It remains to be seen whether

this particular play is in fact a diversionary

tactic to control world supplies.

Instead, they are actually luring foreign

companies to relocate their plants to China.

They have recently announced that they will

be unable to follow through on their stated

plans announced at the beginning of the

year of forecasting approximately 30K tons

of rare earth exports. Instead, they exported

only half that amount claiming that there

has been a dearth of world demand.

However, this apologia does not correlate

with reality. It is interesting that they are

actively luring sovereign foreign industries

to build factories in mainland China. They

are using the enticements of cheap prices

of labor, materials and plant construction.

These inducements may come at a deceptive

cost, reminding one of the ancient story of

The Spider and The Fly, as the trade-off may


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The West are rejecting the Chinese seduc-

tion and are beginning to look for friendly

jurisdictions, in which they can participate

as stock holders, rather than supplicants

paying inflated export prices. This prece-

dence is already beginning to take place. For

example, The Koreans have partnered with

Frontier Rare Earths (FRO:TSX) in South

Africa, and the Japanese have allied with

Matamec (MAT:TSXV) in Quebec, Canada.

Importantly, the United States Department

Of Energy recently released a report which

highlights the risks of supply shortages in

specific rare earths particularly dysprosium,

terbium, europium, neodymium and yttri-

um. The report recommends that, “...taking

steps to facilitate extraction, processing and

manufacturing here in the United States, as

well as encouraging other nations to expe-

dite alternative supplies.”

Likewise, the recent decision by the

Chinese to differentiate between light and

heavy rare earths in its export quotas dem-

onstrates that the Chinese are on record that

they themselves recognize the vital impor-

tance of the heavies. The world is realizing

that not all rare earths have the same supply-

demand characteristics. It is in fact the rare

earths outlined by the Department of Energy

which are most at risk of a supply shortage.

Gold Stock Trades has been constantly

reminding its subscribers that such action

on part of the U.S. government is imperative

and overdue. We have been emphasizing the

importance of dysprosium and neodymium

which are used in the permanent magnets in

wind turbines and hybrid/electric cars.

This relates to another vital development

in the rare earth saga concerning the entry

of General Electric into building what they

term as “transformational” offshore wind

turbines. This requires a large amount

of neodymium and dysprosium, which are

unique and inimitable. The question arises,

where will GE get these rare earths from? It

is hoped that they will approach friendly and

indigenous sources of heavy rare earths.

Two of our current buy recommenda-

tions could provide abundant, close at hand

sources of heavy rare earth supply with less

international wheeling-dealing with Beijing.

Our chosen equities are Ucore (UCU:TSXV)

and Tasman (TAS:NYSE), which could go a

long way freeing the West from the game of

Chinese checkers.

Ucore has already defined the largest heavy

rare earth 43-101 compliant resource on U.S.

soil. Similarly, Tasman is the only heavy rare

asset on the European land mass.

The purported kingpin Molycorp

(MCP:NYSE) has yet to define a heavy rare

earth asset. We await their developments

in this area. They just have begun explor-

ing and the process may take years, while in

the case of Ucore and Tasman, the 43-101

resource is a fait accompli and are contigu-

ous to advanced infrastructure with ready

access to transportation.

Both Ucore and Tasman are scheduled to

release a Preliminary Economic Assessment

by the end of the first quarter 2012 outlining

some of the specific mine development plans

and placing a value on the resource. Gold

Stock Trades will publish updated reports on

these two companies in early January.

In conclusion, important factors in the

ongoing development of the rare earths are

continuing to take shape. Certainly, the

U.S. green-lighting this sector is significant,

which we believe will help Ucore. We hope

something similar is occurring in Europe.

It is beginning to enter Western conscious-

ness that emancipation from the Chinese

hegemony is vital for industrial and military

survival. We look forward to the year 2012

and the continuing maturation of the rare

earth industry. Major industrial companies

may well seize the bit in increasing merger

and acquisition activity with our promising

rare earth candidates. n

Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst and writer syndicated internationally and known throughout the financial industry for his accurate, in depth and timely analysis of the general markets, particularly as they relate to the precious metals, nuclear and rare earth sector. Jeb utilizes both fundamental and technical analysis, especially daily and weekly price volume action to understand the long term macroeconomic trends. A true renaissance man Jeb has a strong background in religion, politics, mathematics, education, engineer-ing, mining, theater, film and science. Subscribe to his FREE Newsletter at http://goldstocktrades.com.


The resource estimate also represents an

approximate 100% increase in gold resourc-

es from a previous NI 43-101 released in

late 2009, which reported 618,000 Oz. Au

Inferred and reflects the successful comple-

tion of drilling programs the past 4 years.

To date, these drilling results cover only 25%

of the most promising mineralized areas of

the property with 75% still yet to be drilled.

Senior technical personnel believe the poten-

tial exists for SJG to host in excess of 3 mil-

lion Oz. gold.

net Present vaLue

DYNR’s 50% share of DynaMexico has a

net present value of $133 million, based

on projected production of 100,000 Oz.

Au per year, an 8% discount rate, $1,350/

Oz. Au, $450/Oz. operating cost, and 10

year mine life. With approximately 10.5

DynaResource (OTC BB: DYNR) - Ready to Shine

Unlike many other junior explora-

tion and mining companies that

seem to spend more time promot-

ing their stock than finding and extracting

minerals, DynaResource, Inc. has spent 11

years quietly laying the groundwork neces-

sary to become a successful gold producer.

DynaResource is based in Irving, Texas and

it’s 50% owned subsidiary, DynaResource

de Mexico (“DynaMexico”), possesses min-

ing concessions covering high grade gold

properties in the San Jose de Gracia (“SJG”)

District in northern Sinaloa State, Mexico

and recently completed $18 million in drill-

ing / exploration programs. The drilling pro-

grams have defined over 1 million Oz. gold

resource that will be aggressively pushed

towards production.

Drilling programs at SJG through March

2011 have defined an NI 43-101 compli-

ant resource estimate of 402,092 Oz. Au

Indicated and 740,911 Oz. Au Inferred using

an underground mining cut-off grade of

2 grams/ton with an average gold grade

of 5.68 g/t for the Indicated and 5.83 g/t

for the Inferred. With DynaMexico having

defined over 1 million Oz. gold resource,

DynaResource is eager to raise its profile with

the investment community as DynaMexico

moves towards production, while expecting

to expand overall resources through future

drilling and development.

PRoFILED ComPAnIEs

DynaResource, Inc. (OTCBB:DYNR) As of Jan 12, 2012

Stock Price $4.15

52 Week Range $4.95 / $3.25

Shares Outstanding 10.6 million

Market Capitalization 43.9 million

DRILLING PROGRAMS AT SJG

THROUGH MARCH 2011 HAVE

DEFINED AN NI 43-101 RESOURCE

ESTIMATE OF 402,092 OZ.

AU INDICATED AND 740,911

OZ AU INFERRED USING AN

UNDERGROUND MINING CUT-OFF

GRADE OF 2 GRAMS/TON.


mining equipment in order to commence

pilot production operations.

DynaMexico operated a pilot mining –

production activity at SJG from 2003 - 2006

which confirmed metallurgy at the San

Pablo area, and produced excellent recover-

ies of up to 95% of contained precious met-

als, in a basic gravity and flotation circuit.

During that time, DynaMexico produced

18,250 Oz. Au from 42,000 tons milled ore,

at an average feed grade of 15 to 20 g/t and

believes the startup of major mining – pro-

duction activities at SJG would simply be a

“scaling up” of the recent pilot production

activities.

Dynamexico – sJg ni 43-101

resource estimate

Mr. Ramon Luna of Servicios y Proyectos

Mineros de Mexico in Hermosillo, Mexico

million shares outstanding, that equates to

over $12.50 per share. Prior to the recent

release of the updated 43-101 resource

estimate, DYNR’s market capitalization

was approximately $43 million ($4.15 per

share), with the market implicitly valuing

DYNR’s gold resource at less than $60/Oz.

of gold in the ground. Competitors of the

Company trade at an average of over $300/

Oz. As investors become more familiar

with the company’s assets, it’s likely that

DYNR’s market capitalization will reflect its

resource being valued more in line with its

competitors.

the ProPerty

The SJG District is comprised of 33 min-

ing concessions covering 69,121 hectares

(171,802 acres) and is located within the

Sierra Madre gold-silver belt where the

majority of hydrothermal deposits in

Mexico are located (See Map below).

The SJG District has reported histori-

cal production of over 1 million oz. gold

since its discovery in 1828, from numer-

ous underground workings; 471,000 Oz.

were reported produced at La Purisima,

at an average grade of 67 g/t; and 215,000

Oz. were reported produced from the La

Prieta area, at an average grade of 28 g/t.

The main mining period at SJG occurred

from 1890 - 1910, and prior to the Mexican

Revolution.

Since its incorporation in 2000,

DynaMexico focused on acquiring and

consolidating fragmented mining conces-

sions comprising SJG, and at year end 2003

DynaMexico had completed the acquisition

and consolidation of the SJG District. In

mid 2002, DynaMexico refurbished old mill

facilities and installed additional milling and


was commissioned by DynaMexico as

the Qualified Person to compile the NI

43-101 compliant Technical Report for

SJG, and Mr. Robert Sandefur, a reserve

analyst at Chlumsky, Armbrust & Meyer

LLC. (“CAM”), was commissioned by

DynaMexico as the Qualified Person to com-

pile the Resource Estimate for SJG. Mr. Luna

is also the QP for the O’Campo Project in

Chihuahua State, Mexico, - a multi-million

ounce gold and silver property owned by

AuRico Gold (“NYSE:AUQ”). Mr. Luna was

commissioned because of his prior experi-

ence at O’Campo, and because of similari-

ties observed between the O’Campo and SJG

Properties. CAM and Mr. Sandefur were com-

missioned as respected industry professionals

to confirm the resources defined by recent

drilling/exploration programs at SJG. Mr.

Sandefur calculated resources at SJG consider-

ing an underground mining cut-off grade of

2 g/t Au, and reported - Indicated Resources

of 402,092 Oz. Au at an average grade of 5.68

g/t Au, and Inferred Resources of 740,911 Oz.

FROM 2003 TO 2006,

DYNAMEXICO PRODUCED 18,250

OZ. AU FROM 42,000 TONS

MILLED ORE, AT AN AVERAGE

GRADE OF 15-20 G/T AU.

San Jose de Gracia Major Target Areas and Resources


Au at an average grade of 5.83 g/t Au. The

gold resource estimate at SJG is approximately

88% of the total Au equivalent resource (which

includes silver, copper, lead, zinc).

mineraLiZation

DynaMexico’s recent drilling programs at SJG

consisted of 298 core holes for a total of 68,428

meters with total drilling and related explora-

tion costs of $18 million. The majority of the

drilling was conducted at San Pablo and Tres

Amigos, and also La Union and La Purisima.

All major targets remain open for extensions

along strike and down dip. Highlights of

drilling at major target areas are shown below:

San Pablo: SJG ‘07-031 - 8.3 M @

48.24 g/t Au; ‘08-051 - 14.2 M @ 14.79 g/t

Au; ‘09-139 - 5.5 M @ 20.51 g/t Au; ‘10-203

- 5.5 M @ 332.86 g/t Au; ‘10-217 - 1.42 M @

89.95 g/t Au;

Tres Amigos: SJG ‘97-013 - 27.5 M @

9.94 g/t Au; ‘10-151 - 11.95 M @ 14.66 g/t

Au; ‘10-179 - 1.72 M @ 105.51 g/t Au; ‘10-

226 - 8.04 M @ 18.47 g/t Au; ‘10-230 - 4.54

M @ 18.09 g/t Au;

La Union: SJG ‘08-76 - 4.8 M. @

16.02 g/t Au; ’10-216 - 2.96 M. @ 12.36 g/t

Au; ’10-223 - 3.52 M. @ 10.24 g/t; ’11-256 -

1.24 M. @ 144.08 g/t Au; ‘11-298 - .70 Meters

@ 49.39 g/t Au;

La Purisima: SJG ‘07-021 - 8.0 M @

20.67 g/t Au; ‘07-039 - 4.2 M @ 8.55 g/t Au;

‘10-161 - 7.6 M. @ 4.64 g/t Au.

best goLD ProJect in

sinaLoa

DynaMexico’s SJG property was recognized

as the best Gold Project for the year 2010 by

the State of Sinaloa, at the June 2010 mining

conference in Mazatlan, Sinaloa. At the same

conference, US Gold was recognized as the

best Silver project for year 2010 for its “El

Gallo” Project.

the Future

Structure / Management

DynaMexico owns 100% of SJG, with 50%

of the outstanding shares of DynaMexico

held by DYNR and 50% held by Goldgroup

Mining, Inc. DynaMexico has entered into

an agreement with Mineras de DynaResource

SA de CV. wherein Mineras has been named

the exclusive operating entity at SJG. DYNR

owns 100% of Mineras and the Chairman/

CEO and CFO of DYNR are the President

and Treasurer of Mineras and DynaMexico.

Preliminary economic assessment

DynaMexico expects to commission

Preliminary Economic Assessment (“PEA”)

reports in the first quarter of 2012, which

are expected to confirm the positive eco-

nomic analysis for commencing production

activities at SJG. The PEA(s) could describe

two production options, one for high grade

underground mining and milling (using a

cut off grade of 2 g/t) and another for open

pit mining and heap leach production (using

a lower cut off grade). DynaMexico projects

the start of production at SJG within 12

months after receipt of the completed PEA’s.

Once fully operational, DynaMexico should

be producing 100,000 oz gold per year at a

projected average cost of less than $450 per

Oz. DynaMexico estimates a total capital cost

for start up of the underground mining and

milling operation of approximately $50 mil-

lion, which is expected to be confirmed in the

upcoming PEA(s).

exploration - expansion of

resources

DynaMexico expects to expand and increase

resources at SJG through continued drill-

ing programs, as all major deposit areas are

open along strike and down dip. DynaMexico

estimates that it has explored only 25% of

the primary mineralized areas of SJG, and,

DynaMexico sees the potential of defining new

resource areas throughout the vast SJG District.

Potential Project value

DynaMexico has established company goals

of producing 100,000 Oz. Au annually and

expanding total resources to over 2 million

Oz. Au within the next 36 months. DYNR,

through its ownership of 50% of the com-

mon shares of DynaMexico and 100% of the

operator Mineras, believes the upside poten-

tial for its shareholders could be substantial.

Unique Opportunity

DynaResource is currently unknown and

evolving from exploration to production while

its 50% subsidiary DynaMexico continues to

develop and explore its existing property with

experienced personnel and infrastructure in

place as well as maintaining strategic alliances

and relationships with local and state officials.

Once in production, DYNR’s 50% com-

mon share ownership of DynaMexico and

its 43-101 compliant resource estimate

(402,092 Indicated Oz. gold and 740,911

Inferred Oz. gold, using an underground

mining cut-off grade of 2 grams/ton) should

produce significant, steady cash flow and

profits. Importantly, DYNR management is

focused on minimizing dilution to its loyal

shareholder base and intends to implement a

high dividend payout ratio. With a resource

of over 1 million Oz. Au, with average gold

grade of over 5.68 grams/ton and with

75% of the SJG project still unexplored,

DYNR offers shareholders and investors the

opportunity for near term production of a

substantial mineral resource and the oppor-

tunity for future expansion, exploration and

discovery. n

DynaResource (OTC BB: DYNR)Undiscovered, undervalued, and emerging as a shining gold star.


Pacific Rim chambeR of commeRce and business council January, 2012

The PRCC and American International Business Council has beenin business since 1996 helping SME’s (Small and Medium Sized Enterprises) around the world relocate and/or expand their interests through a process of legal, accounting and networking services.During this period of time we have associated with over 15,000

SME’s and affiliates in 14 countries! www.aibc.us.com

Obviously with the present focus on the relations between the USA and China, we have been extraordinarily busy helping companies on both sides grow exponentially with the help of our relationship with the CCPIT (China Council For the Promotion of International Trade) www.ccpit.org

China Council for the Promotion of International Trade (CCPIT) is also called China Chamber of International Commerce. China Council for the Promotion of InternationalTrade (CCPIT) comprises VIPS, enterprises and organizations representing the economic and trade circles in China. The aims of the CCPIT are to operate and promote foreign trade, to utilize foreign investment, to conduct activities of Sino-foreign economic and technological cooperation, to promote the mutual understanding and friendship of economic and trade relations between China and other countries and regions around the world, in line with laws, regulations and government policies of the People’s Republic of China and with the reference of international practice. Presently there are over 300,000 businesses in China under the direc-tion of the CCPIT!

2012, the Year of the Dragon, represents a tremendous growth year for us and the CCPIT and now SNN Inc. who has become part of our worldwide network giving us reach and depth into the world of Finance we could have never enjoyed before! The Year of the Dragon will be a great one for all of us and we look forward to a year of prosperity for all our members and those around the world who partici-pate with us.

for information: [email protected]


stocks which would be the last assets to be

dumped when everything seemed so bad.

Interestingly, when things were this bad, the

volatility in micro-cap stocks was washed

out of the system, leaving very small price

points quite attractive from a risk perspec-

tive – the call option idea in action.

Historical reference tells us another story

alongside the 2002 example. Firstly, we

notice that the Russell Microcap® Index

bounced right back in 2003 with a powerful

66.36% return compared to the weakest rela-

tive performance form the Russell Top 200®

Index which generated a 26.68% return. If

this doesn’t make 2011 sound painful, then

we don’t know what’s worse.

When cycles turned in 2004, and all stocks

were lifted by a full-blown recovery, smaller-

cap stocks were left more vulnerable to the

interest rate upward revisions which are

very typical during the stronger years of a

recovery cycle. Looking again at the Russell

data, micro-cap stocks instantly fell to the

worst relative performance among all of

their categories in 2005, drifting lower on

higher interest rates which turned the corner

in 2004. The Federal Reserve nudged the fed

funds rate from an average monthly target

rate of 1.00% in Q4 2003, to a monthly aver-

age of 1.43% one year later, a whopping 43%

increase in the underlying cost of capital to

the entire banking system, before jumping

to a 2.47% monthly average in Q1 2005, or

a 250% jump in the fed funds rate. Simply

put, there was no way micro-caps were not

going to feel this.

The biggest pivot point in the micro-cap

stock story continues to be the battle over

trading volume in an anti-volatility, liquidi-

ty-fixated trading environment.

Thinner volume stocks seem to invite inves-

tor obsessions with single event catalysts,

looking for nuggets of news and develop-

ments that make it safe to swim in thin trad-

ing waters. The cost of hedging lower prices

stocks often makes little sense when the next

major market downturn has the power to

make a large number of lower priced micro-

cap stocks into call option equivalents, invit-

ing speculation and risk-taking with a poten-

tially lowered demand for critical company

information – the lifeblood of the future price

direction of most stocks at any time, in any

industry, and during nearly any market cycle.

On the other hand, major downturns such as

the severe slump during August to October

2011 turn distressed micro-cap assets into

serious trading liquidity tests, sending lower

priced assets into a dangerous price tailspin,

throwing future operating prospects out the

n By RIChARD D. hAsTIngs, CCEMaCro aND CoNSuMer StrategiSt

gLoBaL huNter SeCuritieS


The Top Down Opportunity for Micro-Caps in 2012The micro-cap stock universe walks into 2012 asking what should their stocks

start doing to crank up the volume.

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window in favor of stability in the market’s

bid-ask equilibrium. And in the micro-cap

universe, price equilibrium plummets close

to the ground during major downturns, like a

hawk zeroing in on its tiny ground-level prey

at about 120 miles per hour.

2012 is not going to forget the August –

October 2011 downturn. And this is what

micro-caps do: they reflect the outer vola-

tility bands of the market much stronger

than mid-caps, and especially stronger than

defensive big-caps.

We have to put this theme into focus in

order to determine the historical relative

performance of micro-cap stocks compared

to other stock market capitalization catego-

ries. Data obtained at the Russell Investments

website indicated a rather strong cyclical

trend, with significant sector reactions to

interest rate changes and to total market vol-

atility. During 2001, 2002 and 2003, micro-

cap stocks enjoyed the best relative perfor-

mance each year – and this included 2002

during which most market capitalization

categories generated very poor year-over-

year performances. The Russell Microcap®

Index was the best relative performer in

2001, cranking out a 17.58% year-over-year

increase compared to the worst Russell index

performance, the Russell Top 200® Index

which generated a -14.57% return over the

prior year’s close.

From this historical episode we learned

that micro-cap could outperform on a very

relative basis, when the conditions were

just downright wrong for big cap, defensive


Meanwhile, fuel prices sloped much high-

er during 2004 and 2005 before spiking in

late 2005 at Hurricane Katrina, signaling a

big jump in fuel surcharges for FedEx and

UPS ground and jet freight, in addition to

increased costs for longer-range refrigerated

ground shipments. The effect on operating

income – due to higher interest rates and

transportation fuel costs – signaled a change

in the foundations underneath micro-caps,

thus going far to explain why micro-caps

could have underperformed other market

cap categories in the middle of a recovery

cycle.

This is instructive to our view about

micro-caps during 2012 and 2013. We do not

expect interest rates to budge during 2012.

Global demand for easy access to central

bank credit has been engraved into the sides

of the policy pyramids, indicating every-

body on the planet with the power to make

it happen (The Fed, Bank of Japan, Bank

of England, European Central Bank, Swiss

National Bank and the Bank of Canada) will

force rates as low as possible throughout

2012. The alternative is political upheaval,

social unrest and loss of power. The inter-

est rate story takes one piece of downside

volatility for micro-caps off the table, in

our strategy view for 2012. Interestingly,

monetary policy actions have contributed

to higher monetary inflation especially since

2003. Simply put, if you crank out enough

paper money year after year, then it inevita-

bly exceeds to the number of transactions in

commodities and forces commodity prices

higher. Margins then come into focus as a

major area of concerns for the micro-cap

universe.

The prospects for margin damage from

inflation is however a serious problem for

the micro-cap universe. Higher cost of goods

means smaller companies must cover this

with a greater increase in sales growth, and

they must sometimes have to figure out

how to muscle market share away from

much bigger, existing companies without

hurting earnings growth trends. In some

cases, micro-caps come to the game with

strong innovation and strong differentiation.

Others may come to the growth game with

higher-than-peer debt-to-equity ratios and/

or higher debt-per-share metrics. This puts

the latter stocks onto a higher volatility ramp

when recovery cycles hit the interest rate

bump, and investors have to worry about

trading liquidity when and if this happens.

Within the typical micro-cap universe,

there are a few instructive sectors to talk

about which seem to describe an inter-sector

ecosystem. Looking at the iShares Russell

Microcap® Index Fund (an ETF which tracks

the Russell Microcap® Index), financials rep-

resented 26.79% of all holdings as of Dec.

31, 2011, followed by healthcare at 18.01%,

Technology at 13.71% and Consumer

Discretionary at 12.69% of all fund hold-

ings. During recovery cycles, assuming there

is no major interest rate bump, then some

of these financials could improve, but only

if they have the ability to create more loan

growth. If retail sales grow at about 5% in

2012, then technology could grow by about

4% in 2012 since it is very sensitive to the

retail sector. Tech firms often are major bor-

rowers from financials, offset by somewhat

weak household loan demand (yet showing

hopeful signs of growth in 2012).

Therefore, some of the overall micro-

cap’s performance in 2012 could depend

on the financials-household-tech ecosystem.

If the household sector can demand loans

and make them perform, then things look

brighter in this large portion of the micro-

cap world. If the consumer does not hold

up, then we would be concerned that sales

growth at micro-cap consumer names might

not cover inflationary input costs. Some of

these risk themes are non-cyclical, impact-

ing these sectors along any spot on any type

of peak-to-recovery curve. All of this points

to competitive advantage, innovation, strong

financial management and a clear vision by

management to navigate short-term cyclical

fluctuations in interest rates and costs; and

for management to explain to analysts and

investors the most important story of all:

how their firms will get through a cycle and

get to the end zone of the next cycle three to

five years into the future, long after some of

these riskier passages have been successfully

overcome.

Despite many hopeful signs, great ideas

and cyclical timing, the buyside will remain

obsessed in 2012 with trading volume right

along with curiosity about longer-term

growth prospects, seeking evidence from the

market that it’s safe to jump in – and espe-

cially safe if they want to get out. n

This material has been prepared by Global Hunter Securities, LLC a registered broker-dealer, employ-ing appropriate expertise, and in the belief that it is fair and not misleading. Information, opinions or recommendations contained in the reports and updates are submitted solely for advisory and infor-mation purposes. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently veri-fied. Therefore, we cannot guarantee its accuracy. Additional and supporting information is available upon request. This is not an offer or solicitation of an offer to buy or sell any security or invest-ment. Any opinions or estimates constitute our best judgment as of this date, and are subject to change without notice. Global Hunter Securities, LLC and our affiliates and their respective directors, officers and employees may buy or sell securities mentioned herein as agent or principal for their own account. Not all products and services are available outside of the US or in all US states. Copyright 2012.

For Canadian Investors: Global Hunter Securities, LLC is not registered in Canada, but has filed for the International Dealer Exemption in each province. The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securi-ties regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pur-suant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. Under no circumstances is the information contained herein to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commis-sion or similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information contained herein or the merits of the securities described herein and any representation to the contrary is an offence.


n By ChRIs BERRy


Metal Market Overview 2011Words like Fukushima, fracking, carbon tax, or resource national-

ism don’t elicit good feelings. Unfortunately these are some of the themes that came to the fore in the commodities markets in 2011. What follows is a brief overview of the metals markets in 2011 and our thoughts on what direction these markets will take in 2012.

Despite my highlighting some of the “neg-

atives” in the market place, it wasn’t all

bad news in 2011. Gold’s secular bull run

continued in 2011 with the yellow metal

posting another year of gains despite a

marked increase in volatility due no doubt

to increased paper trading. Silver’s run to

nearly $50 per ounce in April excited the

market and has many silver investors believ-

ing that that top can be broken in 2012 if

industrial demand in the developed world

recovers and some clarity emerges between

the physical and paper markets.

A number of factors pushed gold and

silver higher in 2011 including flat supply

(annual gold supply has been flat glob-

ally since the early part of the last decade),

increased interest in buying bullion in the

Emerging World (China and India are nota-

ble examples), and central bank buying.

This last factor is of particular significance

since until recently, central banks were net

sellers of gold bullion. In the third quarter

alone, global central banks purchased a net

148.4 tonnes of gold. These are forecast to

push the total amount of gold purchased by

central banks in 2011 to 500 tonnes. When

Central Banks, known for printing paper

currencies, are using this “fiat money” to

acquire hard assets that retain their value,

it tells us something about the precarious

state of global financial imbalances and what

the future may hold for governments beset

by an overwhelming and insurmountable

debt burden. As 2012 approaches, we believe

answers to these questions as well as what

the future of the Euro Zone will look like,

are positive for the price of gold and silver

as well.

Other metals didn’t fare quite as well.

The rare earth elements appear to have

peaked and are now reverting to a new

mean level that may reflect realization of

future supply – as is the case in any bubble

scenario. We made the case earlier this year

for what we call “the great reset” in this

industry which will be characterized by

a rapidly shrinking number of rare earth

companies exploring for these elements,

substitution (some of these elements are

not “critical” after all), and price mean

reversion, amongst other factors. Looking

forward, we envision only a handful of

companies outside China who are success-

ful in raising sufficient capital to further

their exploration plans and solving the

complex and unique metallurgical issues

associated with each deposit.


Other industrial specialty metals like lith-

ium, vanadium and uranium had a rough

year for various reasons (Fukushima, lower

than expected adoption of electric vehicles),

but we expect this to reverse in 2012 and

beyond as the demand for affordable and

reliable electricity mounts faster than many

think it will based on several billion indi-

viduals joining the new global middle class.

The recent takeover of Hathor by Rio Tinto

is a hopeful sign of life in a beaten down

uranium sector.

Questions around copper, the metal with

the “PhD in Economics”, remained as the

mounting uncertainties surrounding the

global economy, industrial production, and

growth increased. The fortunes of copper

are tied to the fortunes of China – plain and

simple. We note a recent study that reported

the copper “intensity” per person in various

countries. This is how much copper used in

a given country per person in kilograms. It

was interesting to see that per capita copper

intensity was almost the same in China and

the United States (5 kg per person in China

versus 6 kg per person in the US). However,

with US GDP per capita roughly 10 times

as large as that of China (in 2009), one can

infer that the copper intensity in China must

increase by an order of magnitude (10 times)

if China aspires to the same quality of life

in the United States (again on a GDP per

capita basis). This is clearly bullish for cop-

per prices in 2012 and beyond.

Turning briefly to geopolitics, it was a bad

year for dictators as Hosni Mubarak, Kim

Jong-Il, and Muammar Gaddafi all saw their

reigns come to untimely ends. On balance

we think the Arab Spring and similar events

are net positives for resource investing over

the long run, but what emerges to fill the

leadership voids in these countries will add

to uncertainty in the near term. Politics

and labor strife also remained prevalent in

the resource investing world. Two notable

examples were Freeport McMoRan who

declared force majeure on its Grasberg mine

in Indonesia (one of the largest copper/

gold mines in the world) and the Malaysian

government who bowed to domestic pres-

sure over Australian-based Lynas’ plans to

construct and operate a rare earth element

separation plant on its soil. Many other

examples could be cited. One thing is cer-

tain – these types of incidents generated by

resource nationalism are sure to continue in

the face of escalating demand.

On the political front, the US Presidential

election in 2012 promises to divert our elect-

ed leaders’ attention. This may actually be

a good catalyst for resource investing going

forward as gridlocked politicians are forced

to focus on the election and not on crafting

legislation that kills jobs and puts the United

States further behind the rest of the world

with no domestic natural resource policy

(think about the ban on uranium mining on

the Arizona strip).

A change of leadership in China in 2012

also has implications. The country must

maintain its breakneck pace of growth for

the sake of internal stability while encourag-

ing domestic demand. This is necessary to

lessen the reliance on internal investment

in sectors such as real estate. The calls for

this rebalancing from inside and outside of

China are growing louder and have deep

seated implications for investing in natural

resource exploration and production com-

panies into 2012 and beyond.

China is the linchpin of global demand

for commodities. Having just returned from

a two week trip to southern China for meet-

ings with investors and fund managers, the

key worry there isn’t a real estate bubble

(which is what the Western press would have

you believe). It is inflation. China’s growth

to date has depended upon an export-led

boom where jobs are created manufacturing

low cost goods for export to other coun-

tries. As wage pressures build, manufactur-

ers are in search of the lowest cost place to

do business. If jobs aren’t plentiful in the

Middle Kingdom for those citizens aspiring

to a higher quality of life, social upheaval is a

possibility as China has not made the switch

to an economy fueled by domestic demand.

The good news is that despite the volatility

we have seen this year, many junior min-

ing stocks are so cheap that this may be the

second great buying opportunity for shares

in recent years (late 2008 being the other

opportunity). We look for experienced man-

agement, the highest-quality assets, strong

balance sheets with ample cash, and the

capability to manage dilution - so often the

death knell for junior mining companies.

Resource nationalism is another theme that

promises to stay front and center so finding

juniors with deposits in reliable jurisdictions

is a must. We think a focus on these factors

can help insulate against what is sure to be

another turbulent year in 2012 rife with both

risks and opportunities. n

With a life-long interest in geopolitics and the financial issues that emerge from these relationships, Chris founded House Mountain Partners in 2010. House Mountain firmly believes that the emerging Quality of Life Cycle emanating from Asia is a “game changer” which will affect every one of us through-out the world for decades. With that in mind, the firm focuses on the intersection of three topics: the evolving geopolitical relationship between emerging and developed economies, the commodity space, and junior mining and resource stocks positioned to benefit from this phenomenon. Chris spent 15 years working across various roles in sales and brokerage on Wall Street before founding House Mountain Partners.

Chris is widely quoted in the press and is a fre-quent speaker at conferences in Canada, the United States, Europe, and Asia.

Chris co-authors Morning Notes by Dr. Michael Berry - a complimentary newsletter focusing to the topics mentioned above.

He holds an MBA in Finance with an interna-tional focus from Fordham University, and a BA in International Studies from The Virginia Military Institute.



Value Beyond Profiton incentives solely associated with competi-

tion and maximum profit generation. This

strategy has now been sidelined for some

time due to the absence of large investments

in the biotech sector and should have been

better evaluated in the first place. The self-

ishness cause by this approach and increas-

ing expenditures in the healthcare system

became highly visible and evident with our

latest economic crisis. Perhaps denial or

ignorance was key in many offices along

with managers hoping to weather through

this crisis easily; however, the impact and

the resulting lay-offs in the pharmaceutical

industry is now upon them.

at a gLance

There are over 7000 different types of Rare

Diseases many of which are not considered

so uncommon. Together Rare Diseases are

not rare, because more than 23 million

people suffering in the US and over 30

million in Europe all of who will tax and

challenge our future social society. These

individuals with a Rare Disease constitute

a neglected group of patients living with

major health problems and social discrimi-

nation in modern developed countries. That

75% of these individuals are children, makes

it even more imperative that we act for them

and their families. Despite Orphan Drug

Laws through the last decade nothing major

has been accomplished for the majority of

these individuals. They have to live with a

strong social disadvantage due to their lack

of networks, unreliable knowledge about

their disease and limited highly expensive

treatment options.

cutting costs

Health care costs rose incessantly in the last

decade despite, or perhaps, because of the

innovations that allowed us to develop a

greater range of therapies. Nevertheless, 10

of the top innovations created in this phar-

maceutical pallet - for example in Germany

- have never successfully hit the market due

to the fact that the benefit to the patient

is too low and the price is to expensive

for health systems to cover. Numerous

attempts have been made by the US and

European authorities to stabilize costs and

so far with little effect. This has mainly been

in relation to ‘home-made’ disease such as

obesity, diabetes, cardiovascular disease and

cancer. Many patients in the US have been

excluded form health care due to the therapy

costs associated with their Rare Disease. All

entities of the ‘service providers’ such as

Hospitals, Pharmaceutical Companies and

Health Care Payers are part of the system

and the question arises as to what happens

when 7000 Rare Diseases are also entered

into this equation. Will a solution to this

crisis be in sight?

traDition versus change

The tranditional approach historically based

economic activity and medical innovation

n By DR. FRAnk gRossmAnn


NIBA is a national not-for-profit trade association serving and offering membership to regional and independent FINRA Member investment banking firms, boutique corporate finance outfits and specialized investment brokerages, along with providing valuableservices to its Associate Members, which includes institutional investors, hedge fund managers, securities attorneys, CPAs, regulatory consultants and other domestic and international Industry professionals.

Since 1982

UPCOMING CONFERENCE

February 22-24, 2012Le Pavillion HotelNew Orleans, LA

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the goLDen caLF

Despite the US Orphan Drug Act in 1983 and

similar EU Legislation in 2002, Switzerland’s

political and economic community seems to

have ignored Orphan Disease longer than its

neighbouring Countries. Everything seemed

to be perfect at best. Meanwhile the reality is

that 450‘000 patients can no longer be ignored

and isolated from the rest of the healthcare

cake. Switzerland’s executives have now heed

the establishment and creation of ideas and

programs with historical and traditional gusto

to recognise Orphan Disease. This land with

the highest standards in healthcare service

and therapy received a wake-up call by the

National Courts decision in September 2011,

whereby the vested interests of the pharma-

ceutical industry must be subordinate to the

overall interests of the health and social system.

measuring success

The cost-benefit ratio is an important meas-

urement of our over-inflated healthcare sec-

tor. Creating new and costly innovations

only exacerbates this problem. An aligned and

short-term profit micro-economic approach

no longer appears to be timely especially since

macro-economic correlations and depend-

encies are better known and identified. A

marginal attempt at creating or aligning

with Corporate Social Responsibility for the

leading firms is only part of the approach.

Complex problems need creative, innovative

and well thought through solutions. Success

measurements need to be redifined.

Patient as Partner

Patients were not previously consulted or

considered in the actual therapy processes.

The patient was a ‘good patient’ as long as

he was passive and faithfully consumed his

medications as instructed. Rare Diseases are

missing these therapies and networks. Thus

from out of this crisis, and a lack of organisa-

tion, affected people have begun to organize

themselves and change the status quo from

that of passive to active engagement and

action. Because patients can do much more

that just follow doctors orders; they can and

must be actively involved. All are mobilized,

committed and interested stakeholders in

understanding their own health situation in

addition helping to improve cost savings.

The patient’s passive approach to receiving is

transformed into a proactive self engagement.

sharing or creating vaLue?

If we succeed in generating economic activ-

ity with social needs and connecting the

needs of the customer, we create a successful

symbiosis within the principle of “Creating

Shared Value”. «Shared Value is the enhance-

ment of competitiveness of a company while

simultaneously advancing the economy and

social conditions in the communities in

which it operates. Companies can create

economic value while creating societal value

by redefining productivity in the value chain,

reconsieving markets and products by build-

ing and supporting business clusters.«1

The needs of the Society have to be con-

sidered as the roots of global business. Value

creation and short term performance should

and can be turned into sharing created value

in a long term approach. Companies should

take the lead by bridging business and soci-

ety back together. Only a stable and healthy

society will be able to survive on a long term

basis and bring back value on a true basis of

company productivity. Shared value is much

more than philanthropy, sustainabiltiy and

social responsibility. It is a cutting- edge way

to achieve economic success. The practice

of this model by international companies

such as Nestle, IBM and Johnson & Johnson

testifies to the foresight and pioneering spir-

it. These principles should therefore be

contrary to the general understanding of

economic activity as they contribute enor-

mous economic and social potential.

beyonD sociaL anD ProFit

A whole new generation of social entrepre-

neurs with innovative business models are set

up to pioneer social needs and their products.

By eliminating old habits and trends com-

pletely, many social entrepreneurs are ahead of

established business by using new aproaches

and opportunities. Doing so they are much

more flexible with creating key products and

shared value on a quick and solid basis, beyond

profit and purely social programms.

As does Orphanbiotec, a modern Hybrid,

consisting of a tax deductible and chari-

table foundation and a for profit company.

The hybrid bridges the vested interest of

stakeholders and society to innovate their

projects and products. People affected

with a Rare Disease are included as well

are Research, Pharma, Healthcare, Insurance

and Government. Orphanbiotec is forstering

partners, business and civil society while cut-

ting across the traditional ways of business.

Broad fundraising, donations and grants

for the Foundation ensure the kick-off for

new research and development. Impact

investment with a low return allows to cut

costs for clinical development of new drugs in

order to keep the price affordable for payers.

All stakeholders and organisations within the

Competence Network agree that a percentage

of the profit is used as a Social Benefit for

the society in terms of the Foundation. All

partners and the civil society profit, while this

hybrid succesfully progresses.

1 from Harvard Business Review, Jan.-Feb. 2011. Prof. M. E. Porter

www.orphanbiotec.comwww.orphanbiotec-foundation.comResearch Foundation Orphanbiotec Winner of the Social Entrepreneurship Startup

Award 2011Dr. Frank GrossmannFounder & CEOpost:Hochstrasse 498044 Zurichoffice: Einsiedlerstr. 31a8820 WadenswilSwitzerlandphone: +41 44 586 82 27mobile: +41 79 246 50 69www.orphanbiotec-foundation.com

Tax deductible and charitable foundation under

Swiss Law.


StockWord PuzzleTM

Across 2 - NIBA10 - Writer of Caregiving13 - diagnostic risk assessment products for breast cancer14 - markets15 - Teresa Touey16 - @stocknewsnow18 - currency trading19 - wall street chicken22 - tunnels in underground mines23 - I can buy NASDAQ stocks for cash or_______ 24 - gold25 - micro-cap 365 for micro-cap companies28 - Brent29 - Micro-Cap_______Magazine30 - 28.35 grams equals one31 - Dodd ______ Law33 - video press release34 - a localized area of several calderas

36 - biology meets technology42 - vertical43 - Cambridge44 - cerium,erbium, and dysprosium are a few45 - rare______elements48 - Stock Exchange in Asia50 - Q&A with_______52 - private investement into a public equity53 - micro-cap stock _________54 - Barbara Duck author of ________55 - FACE______56 - dowjonesindustrial59 - buying calls I pay a ________60 - Jeb Handwerger61 - unset price of stock sale62 - star of the Wall Street Chicken64 - merger65 - the rim of uppermost portion of a volcano66 - contributing writer Ian_____67 - newest form of wrapping email

Down1 - .062 miles equals 3 - Mr. Wallstreet 4 - gold is calculated in 5 - Rye Patch 6 - Shelly Kraft book 7 - low sulpher content 8 - anatomy of a junior resource company 9 - whats your favorite website for micro-cap financial news11 - anatomy of a biotech company12 - Firemans Brew14 - internal fixation systems products17 - N1 43-101 Canadian National Instrument20 - Book written by Shelly Kraft21 - orthopedic implants26 - a zone that forms a boundary between two or more geological structures27 - Mr. Wallstreet china article

32 - social35 - Writer of How to headge your Micro-Cap portfolio37 - new name for old Vancouver Exchange38 - Other Canadian exchange39 - MCR survey is a __________40 - Frank Grossman Article41 - stock spread46 - this equals 2.47 acres47 - Indicated, Measured, Probable, Proven49 - popular SNN Blog and newsletter51 - V Stock Transfer53 - you sell stock by writing ______ options57 - borrowed funds58 - other yellow metal61 - shapiro63 - buy, sell _______65 - you buy stock by writing ______ options

Answers on page 87

StockWord Puzzle


PRoFILED ComPAnIEs

grizzly Discoveries, inc.

Grizzly acquired roughly 2,450,000

acres of Permits prospective for

Potash. A number of Grizzly’s

permits exist in close proximity to a reported

(and confirmed) occurrence of potash min-

erals in a deep well in the Vermilion area of

east-central Alberta. Potash beds have been

confirmed to be present in a number of

cores within and adjacent to Grizzly’s lands.

Historic wells were drilled by oil companies

between 1940 and 1980 which indicated pot-

ash showings of up to 21.6% K20 on Grizzly

lands and up to 25% K20 on nearby lands.

On December 12, the first test well was

completed on Grizzly’s 100% owned potash

project near Medicine Hat, Alberta. Coring

commenced at 1,642 metres below surface

and visible potash minerals were observed

in the drill core for the interval between

1,650.1 m and 1,655.7 m below surface.

Split core samples will be forwarded to SRC

for full geochemical analysis and results are

expected in late January 2012.

In September 2011, Grizzly signed a LOI

with Pacific Potash Corporation (“Pacific”)

to commence a multiple potash test well

exploration program on the Grizzly-Pacific

50:50 owned Provost Property, near Provost,

Alberta. The first well on the 50:50 owned

Provost Permits was completed in mid-

November with split core samples sent to the

SRC for geochemical analysis and results are

expected in January 2012.

Grizzly holds four gold-silver-copper

properties totaling over 225,000 acres in

the productive Republic-Greenwood Gold

District along the British Columbia-US bor-

der. This area which has produced more than

6 million ounces of gold. Kinross’s 1.2 mil-

lion oz Buckhorn gold mine (1.2 m oz gold

with average grade of 16 g/t gold) is 7 km to

the south of Grizzly’s property .

In 2011, over $2.5 million has been spent

in exploration and drilling which included

up to 4,000 m and 13 drill holes. The

first two holes on the DAYTON target area

resulted in the discovery of new low grade

bulk tonnage style gold-copper mineraliza-

tion in the area.

Past drilling in 2010 on the KET 28 pros-

pect resulted in 8.91 g/t Gold over 6.1 m and

52.18 g/t Gold over 3.35 m. Gold sulphide

hornfels/skarn similar in style and geol-

ogy to Kinross’s Buckhorn. In 2010, at the

COPPER MOUNTAIN prospect a new

gold discovery at the Prince of Wales target

yielded an intersection of 1.0 g/t gold over 30

m. The zone is open in all directions.

Numerous other anomalous targets have

been identified and drilling of these targets

will be ongoing in January 2012. Drill results

from the 2011 drill program are expected

throughout January 2012.

“We are extremely excited about intersecting visible potash

minerals in our first potash test well on our 100% owned

Alberta Potash Project and are eagerly anticipating labora-

tory assay results expected in January to confirm this.”

states Brian Testo, President of Grizzly.

“We are also very excited about the new discovery of low

grade bulk tonnage style gold-copper mineralization inter-

sected at two targets at the Dayton area and the potential

to expand and improve upon previously identified mineral-

ization.” —Brian Testo

Buffalo Head Hills Diamond Properties,

North Central Alberta—2007-2008

Exploration Highlights: HRAM magnetic

surveys, ground geophysics surveys, sam-

pling and drill testing has led to the discov-

ery of 3 new kimberlites in the Buffalo Head

Hills. Two kimberlite pipes are encouraging

diamond results and both pipes require bulk

sampling. n

Potash Properties, Eastern Alberta


TSXV: GZD OTCQX: GZDIF FWB: G6H

Potash in Alberta

Gold/Copper/Silver in British Columbia Diamonds in Alberta

Potash Properties, Eastern Alberta: Grizzly acquired roughly 2,450,000 acres of Permits prospective for Potash. A number of Grizzly’s permits exist in close proximity to a reported (and confirmed) occurrence of potash minerals in a deep well in the Vermilion area of east-central Alberta. Potash beds have been confirmed to be present in a number of cores within and adjacent to Grizzly’s lands. Historic wells were drilled by oil companies between 1940 and 1980 which indicated potash showings of up to 21.6% K20 on Grizzly lands and up to 25% K20 on nearby lands. On December 12, the first test well was completed on Grizzly’s 100% owned potash project near Medicine Hat, Alberta. Coring commenced at 1,642 metres below surface and visible potash minerals were observed in the drill core for the interval between 1,650.1 m and 1,655.7 m below surface. Split core samples will be forwarded to SRC for full geochemical analysis and results are expected in late January 2012. In September 2011, Grizzly signed a LOI with Pacific Potash Corporation ("Pacific") to commence a multiple potash test well exploration program on the Grizzly-Pacific 50:50 owned Provost Property, near Provost, Alberta. The first well on the 50:50 owned Provost Permits was completed in mid-November with split core samples sent to the SRC for geochemical analysis and results are expected in January 2012.

Grizzly holds four gold-silver-copper properties totaling over 225,000 acres in the productive Republic-Greenwood Gold District along the British Columbia-US border. This area which has produced more than 6 million ounces of gold. Kinross's 1.2 million oz Buckhorn gold mine (1.2 m oz gold with average grade of 16 g/t gold) is 7 km to the south of Grizzly's property . In 2011, over $2.5 million has been spent in exploration and drilling which included up to 4,000 m and 13 drill holes. The first two holes on the DAYTON target area resulted in the discovery of new low grade bulk tonnage style gold-copper mineralization in the area. Past drilling in 2010 on the KET 28 prospect resulted in 8.91 g/t Gold over 6.1 m and 52.18 g/t Gold over 3.35 m. Gold sulphide hornfels/skarn similar in style and geology to Kinross's Buckhorn. In 2010, at the COPPER MOUNTAIN prospect a new gold discovery at the Prince of Wales target yielded an intersection of 1.0 g/t gold over 30 m. The zone is open in all directions. Numerous other anomalous targets have been identified and drilling of these targets will be ongoing in January 2012. Drill results from the 2011 drill program are expected throughout January 2012.

Buffalo Head Hills Diamond Properties, North Central Alberta—2007-2008 Exploration Highlights: HRAM magnetic surveys, ground geophysics surveys, sampling and drill testing has led to the discovery of 3 new kimberlites in the Buffalo Head Hills. Two kimberlite pipes are encouraging diamond results and both pipes require bulk sampling.

“We are extremely excited about intersecting visible potash minerals in our first potash test well on our 100% owned Alberta Potash Project and are eagerly anticipating laboratory assay results expected in January to confirm this. ” states Brian Testo, President of Grizzly.

“We are also very excited about the new discovery of low grade bulk tonnage style gold-copper mineralization intersected at two targets at the Dayton area and the potential to expand and improve upon previously identified mineralization.” Brian Testo


n By LInDsAy hALL, Chief Market StrategiSt, rMB group


How to Hedge Your Micro-Cap Portfolio by Using Options on DOW Futures

a quick glance back at the performance of

the S&P Smallcap 600 Monthly chart per

Barchart.com. (It’s not micro-cap, but it gets

you near that ballpark.)

The market decline erased almost 5 years

of growth in less than 12 months. I am

certain that most traders do not want to be

caught in a situation like this without some

type of asset that can gain from this type of

move.

Here is what 2008 looked like for the

While they might not stumble as heavily as

some of their large-cap brethren, once the

market has decided upon a direction they

do still tend to follow. Let’s think back over

the last few years and evaluate where things

have “gone wrong” and steps that you might

consider taking to aid in such events should

they occur in the future.

In the last few years there are two stand-

out timeframes in my mind:

2008-A year not easily forgotten, let’s take

As a micro-cap investor you probably pay quite a bit of attention to

growth potential and you may even list one of your goals as “beating

the street”. While micro-cap issues can be a great avenue to achieve these

aims, they may also be hard hit when Wall Street takes a tumble.


Dow Jones Industrial Average Futures per

Barchart.com:

The decline on the DJIA and the small-

cap side of the house was equally punishing.

Keep in mind that this was an election year

and the Bulls still didn’t show. (Election

years typically attract the bulls but they were

nowhere to be found in 2008.)

May 6, 2010- The “Flash Crash”: a com-

pletely unexpected and massive sell-off. This

one had me floored. I was actually broad-

casting live when it occurred, commenting

on the FX market. I was astounded at the

flat out speed with which the currencies were

traveling. When I saw what was happening

on the stock side, the forceful volatility in

currency at that time of day and with such

measure made sense. I had never witnessed

anything as massive or as fast as these market

movements. This event showed us all just

how quickly worlds can change.

The Barchart.com chart above shows the

Dow on May 6, 2010 illustrating its fall into

a 9% loss territory in just minutes, while the

chart below illustrates an overview of the

small-caps.

The two events that I have highlighted

here are just a glimpse of the potential that

exists today in our markets for deteriora-

tion of wealth, earnings, value, and growth.

While we have been fortunate to have recov-

ered from both of these recent examples,

there is no guarantee that the next rounds

will be forgiving when/if they occur.

Here are a few things to think about as we

get ready to move into 2012:

Micro-cap investing will still be part of

your portfolio.

“The bigger they are, the harder they fall.”

You don’t favor the “big guys” anyhow, so

why not be prepared to take advantage of

a big step down or market failures should

they occur?

While we are moving into an election year

(and typically they tend to be more bullish

than not), remember that 2008 did not keep

to the typical cycle and this year upcoming

could have a lot of surprises in store for

everyone. Prepare yourself by introducing

Options on Dow Futures to your aggregate

portfolio.

These limited risk, leveraged option plays

to offer some peace of mind and potential

for gains should the markets head south.

Here’s your trade:

Consider buying March 11000 Mini Dow

puts while simultaneously selling an equal

number of March 10000 Mini Dow puts for

a net cost of 180 points or less. Each point


in the Mini Dow options is worth $5 so the

total cost of this trade is $900. This plus

transaction costs is all we can lose if the Dow

fails to drop.

How much can we make?

What we are doing is buying the right but

not the obligation to be short the mini Dow

futures from 11000 and partially paying

for it by receiving money for an offsetting

obligation to buy back the mini Dow futures

at 10000. We can make the 1,000 points

between our right to sell the Dow at 11000

and our obligation to buy it back at 10000.

Multiply 1,000 times the $5 multiplier and

we get a gross potential gain $5,000 for each

of this positions we enter.

This trade is a professional trading strat-

egy called a “bear put spread.” It is designed

to pay off should the Dow drop 4.6% to 16%

from current levels (11850 at the time of this

writing). Experienced money managers use

strategies like this to hedge their underlying

stock portfolios all the time. You can do the

same thing.

*** You may also consider similar lim-

ited risk trades using S&P Futures Options.

Timelines, contract sizes, and specific

options can all be tailored to suit your needs

best. (Remember that contracts further

out in time, June 2012 for instance, may

have lesser participation, i.e. thin markets.)

Please feel free to contact me via e-mail at:

[email protected] for assistance with

any of your futures options needs.

Wishing you a prosperous New Year! n

This trade is a professional trading strategy called a “bear put

spread.” It is designed to pay off should the Dow drop 4.6% to 16%

from current levels (11850 at the time of this writing). Experienced

money managers use strategies like this to hedge their underlying

stock portfolios all the time. You can do the same thing.

LINDSAY HALL, Chief Market Strategist, Rutsen

Meier Belmont (RMB) Group

Address: 222 S. Riverside Plaza, Suite 900,

Chicago IL 60606

Telephone: 312-373-5482

E-mail: [email protected]

Lindsay is Chief Market Strategist with the Rutsen

Meier Belmont (RMB) Group. She has been an

active foreign currency trader and financial markets

analyst for over 10 years. She is a popular internet/

television moderator, logging over 2500 hours of live

television dedicated to both markets and investors.

If that weren�t enough, she has published thousands

of pages on the currency markets via tutorials,

international newsletters, articles, and blogs. Her

information-packed seminars set industry standards

for excellence. She has taught valuable currency trad-

ing skills not only to her broadcast audiences, but

also to conference classes with audiences numbering

up to 4,000 in one room.

The information and opinions contained herein

comes from sources believed to be reliable, but are

not guaranteed as to accuracy or completeness. The

risk of loss in trading futures and/or options is sub-

stantial. Each investor must consider whether this is

a suitable investment. When trading futures and/or

options, it is possible to lose more than the full value

of your account. All funds committed should be risk

capital. Past performance is not necessarily indicative

of future results.


PRoFILED ComPAnIEs

brazil’s next ‘big gold’ story—targeting major resource expansion this yearBrazil Resources Inc. (OTCQX: BRIZF; TSX-

V: BRI) is a newly-listed company led by an

unusually strong management team with an

impressive track record. Prior to joining forces,

the team had already discovered and developed

more than 10 million ounces of gold directly in

the high-growth gold districts of Brazil.

With a demonstrated ability to raise sub-

stantial capital -- and strategic relations with

exclusive access to prime gold projects to

rapidly advance gold acquisition and explo-

ration activities -- BRI is working to build

a multimillion-ounce gold resource in the

near-term. Importantly, major institutional

investors support this team, and already

control 35% of the Company.

it aLL starts with the right

team

BRI founder and chairman Amir Adnani is

also the CEO and co-founder of Uranium

Energy Corp. (NYSE-AMEX: UEC), the

newest US-based uranium producer.

Adnani has drawn together an impressive

team for rapid growth: BRI director Mario

Garnero heads one of Brazil’s largest private

merchant banks which controls 10% of the

Company. His firm, Brasilinvest Group is a

strategic partner in identifying large quali-

fied projects.

CEO Stephen Swatton most recently served

as head of BHP Billiton’s Global Business

Development and Technical Divisions for the

Exploration Department. BHP is the world’s

largest mining company. Director Enzio

Garayp was the former exploration manager

for Kinross in Brazil and directly oversaw the

8 M oz. expansion of the 18 M oz. Paracatu

Mine, Brazil’s largest gold mine.

BRI went public in May, 2011 at $0.65/

share, and has never traded below $1/share

despite the depressed market for junior

resource stocks.

Now Eight Months After the IPO –

Resource Expansion Commencing

BRI initially focused on the Gurupi Gold

Belt in northeastern Brazil. This prolific

and underexplored region currently hosts

more than 8 M oz. of gold with multiple

advanced projects. The Gurupi Belt was ini-

tially developed by Kinross when BRI direc-

tor Enzio Garayp was exploration manager.

With Enzio’s oversight, Kinross developed a

+3 M oz. gold deposit known as the Gurupi

Project – now in development as an open-

pit mine.

With in-depth knowledge of the dis-

trict, BRI initiated exploration last year on

its Montes Áureos Project, located 20 km

on-strike from the Gurupi Project. The

Company’s technical team has now discov-

ered a 2-km-long gold trend at surface and

subsequently acquired more than +50,000

acres in the Gurupi Belt. Exploration pro-

grams are currently underway to delineate

mineralization at surface.

Consistent with its acquisition-focused

strategy, BRI has also acquired two more proj-

ects totaling 260,000-acres centered on two

11-km-long gold trends in Goias State with

superb potential for a major discovery. BHP

Billiton, Anglo Ashanti and Yamana Gold are

major gold producers in Goias State.

As a result of these early advances, the

Company’s stock has remained in positive ter-

ritory while its Brazilian peers lost an average

of 30% in market cap in the recent downturn.

maJor acquisition in the

works?

BRI is commencing drilling on its Montes

Áureos Project and anticipates releasing

results in the first half of 2012. Aggressive

exploration programs on other projects are

already well underway with potentially three

projects to be drilled in 2012 in search of

major discoveries.

BRI is also ideally positioned to deliver

on acquisitions with a recently completed

$4.7 M financing to institutional investors at

$1.10 and with no warrants. The Company

has now established a ‘war chest’ of more

than $10 M in cash and only 39 M shares o/s

to further development.

Expect Brazil Resources to build on its early

successes with major gold resource expansion

this year from acquisitions and exploration

drilling programs. This is the time to start to

track with the growth of this Company.

Brazil Resources trades on the OTCQX

under the symbol BRIZF and on the TSX

Venture under the symbol BRI. For more

information, please visit www.brazilre-

sources.com and call the Company toll free

at 1-855-630-1001. n


v I E W P o I n T s

Beginnings and Endings

because we all bring our work home with us

so that our families—spouses, children and

extended family members—help us metabo-

lize what we’ve had to ingest emotionally in

our jobs and, most specifically, in the end-

ing of them and in the search for new ones.

My own family has been affected just as so

many of yours has, with the loss of employ-

ment, the need for career reassessment, and

the change in direction and focus of our

labors. The trauma of these losses are more

profound than we have been willing to

understand and acknowledge since the Great

Depression of the 1920s. The avoidance is

natural, since we tend to metabolize these

losses of jobs as some kind of failure on our

part, when in fact it may have nothing to do

with us, in any way at all, but is simply the

fact of economics that necessitate our posi-

tions being replaced. So, while the business

decision seems to be personally dispassion-

ate, the impact is more passionately intense

than anybody has been willing to admit.

Pain, shame, anger, humiliation, confusion,

trauma, the loss of security and trust, and

the failure of belief and hope, despair, and

the profound frustration with all politics and

political figures has led to a cynicism about

the “American Dream” than has ever been

part of us since the 1920s.

A historical perspective is important, here.

One of the views is that all of the varieties

of theoretical programs and financial struc-

tures which were created in the politics of

the Depression ultimately failed to accom-

plish their goal of restarting the American

economy. It was the Second World War in

Europe and the Pacific that generated the

rebirth of American industry. When WWII n By RABBI sTEPhEn RoBBIns, pSY.D., D.D.

“The end is engraved in the beginning.” – The Book of Creation, circa 200 B.C.E.

There is nothing more difficult for humans

than either beginning or ending. Since

humans tend to be unsure of both the

future and its outcome, the anxiety of begin-

ning something or finishing it leaves most

people with a sense of profound disquiet

about what’s next. Humans use the artificial

device of calendar holiday and ceremonies

to help us through transitions of meaning

in our lives. This is very much the essence

of what the ceremonial life of religions are

about, and if we are not formally religious,

we are familiar with using secular calendars

to help us acknowledge, celebrate or mourn

the beginning or the ending of phases in

our lives.

The reason I say that these are artificial

is that there is a natural flow of existence

in which what humans call “time” is really

only a description of the ongoing process

of living. Whether it’s a new year or an old

one, a birth or a death, a birthday or a wed-

ding, or so many other examples that you

could name, we need to find a way to mark

the passage of our lives so that we become

aware of the phases of our development. We

acknowledge the ending of one phase and

the beginning of another to give us a sense of

direction and purpose, of flow and develop-

ment so that we are assured that the passage

of our days, months and years have not been

meaningless.

These transitions in our lives generally

are marked in our families, and we make an

artificial distinction between business and

family life as if they are somehow different

from each other. I think that we do this

because the world of the marketplace feels

so uncertain. In families, at least there is

the emotional tie that binds us together and

therefore provides a sense of meaning all by

itself. In the world of business and finance,

we note the passage of time in much more

impersonal, or seemingly impersonal, ways.

We do so as a means of providing a differ-

ent sense of emotional and moral values

to business than we do to family. We even

codify this process by the phrase, “Nothing

personal, it’s just business.”

The truth is that everything is personal,

and everything is family. While we seem

to want to create the illusion that what

goes on in business is driven by a series of

impersonal decisions that are done for the

sake of the business, none of that is accurate.

We feel intensely personal about everything

that happens to us in our work, because the

events in the workplace define the quality of

our family lives in so many deeply personal

and emotional dimensions. It is time for

us to begin to understand the nature of the

dynamics of our workplace and the condi-

tions under which we both live and work.

The collapse of the economy in the United

States and the attendant rise in unemploy-

ment consistently demonstrates how what

goes on at work impacts on our families,


ended and the modern atomic age began, the

United States entered it at the top of the eco-

nomic power chain, with the Soviet Union

running a distant second. American busi-

ness and finance had been the world engine

of economy until the collapse in 2008. That

almost-sixty-year history of constant eco-

nomic growth and development, with an

occasional recession here and there to read-

just for inflation, created an economy built

on an illusion—a fantasy, as I’ve described

in earlier articles. As the private housing

market boom occurred and wealth increased

for the middle class through the post-War

years, we did not see (or were willing to

acknowledge) that we were heading towards

a financial structure in which the illusion

of wealth would finally collapse, as it did,

plunging the world in to deep recession if

not another Great Depression.

In the incredible expansion of business

and finance, Americans began to believe that

the illusion was true. The events of 2008 left

the country divided between the rich and

the incredibly shrunken middle class, and

the unemployed or underemployed work-

ing class of American society. As a country,

we now look much more like the other

economies of the world, which are divided

between the rich and the poor without a sig-

nificant middle class. It is our middle class

that has always been the key to the develop-

ment of our country. This analysis is only

the background to the impact of the loss of

income and employment for the American

economy of post-2008. The challenge we

face is how to begin again, to rebuild our

individual lives and private fortunes so that

we avoid building towards collapse in the

beginning.

There has been a great amount of study

regarding the success of the German post-

war industrial boom and the Japanese indus-

trial recovery, along with that of the United

States, all beginning at approximately the

same time. Among them, one common

thread in both German and Japanese indus-

tries is the unique understanding that in

their culture, the business or industry is

like a large extended family, and so there

is mutual responsibility for both labor and

management to work together in order to

create a productive, economic environment.

Their economies were an extension of the

cultural development begun in the Middle

Ages in which all industry was seen as a

support for family, and all family was seen

as a support for industry. The modern

replication of that, both in Germany and

Japan, extended to a shared concern for the

well-being of the worker and the investor as

family members of the business or industry

in which they were involved. In America, the

tradition being much more individualistic

and based on the capitalistic premise of indi-

vidual competition to secure one’s position,

led to the fundamental belief in this country

that you succeeded and were successful based

on your own merits, so that management

and labor were usually seen as contending

factions in which the managers had no con-

cern for the laborer and vice versa, so that we

ended up in the kind of conflictual relation-

ship between unions and industry that is

so prevalent today. The problem with this

divide is that conflict is the basis of business

relations and employee relations, and the

cooperative values which really serve both

groups are not found. Whether the subject

is health care, pension, retention of labor,

or definition of merit, most discussions are

begun in an atmosphere of conflict rather

than in an atmosphere of true cooperation.

Since the housing disaster of ’08, it has

become clear that the admonition “caveat

emptor” (buyer beware) was not only in

full force but was fundamentally inoperable

because individual familial decisions were

not provided with adequate information to

understand the risks they faced. This has

only added to the feelings of anger and of

betrayal and mistrust that pervade so much

of American society toward the business and

government.

We are just at the beginning of a recov-

ery, and now must question how to begin

it. If we look back at the way we began in

the 1930s and 1940s, we can understand

where we went wrong and how it led, sixty

years later, to the collapse that we now

lived through. All of us who are within are

own employment and work settings need

to be conscious of how we begin to rebuild

ourselves based on the kind of model that

would lead us to be the kind of people that

we would like to be. There’s nothing wrong

with aiming towards financial well-being,

but we now should know not to do it at the

expense of either individual or business eth-

ics which will, in fact, only lead us back in

to the same trap. This means that each of

us must first look to our own houses—the

businesses of our family, and how in them,

we lost sight of the very values that would

have kept us from being trapped, while at

the same time looking at the industries in

which we work and asking the same kinds

of questions. We can tell that any return to

“business as usual” will, in fact, quickly lead

us back in to the same cul-de-sac that we are

in now.

There are several ways that we can begin

this reassessment process. One is to ask the

question, “What are we working for?” What

are the values and goals that make up our

ambitions in work? We need to find out

where they have been out of balance and

have not served the best interests of the fam-

ily as a whole and the individual members of

our family. There is frequently a large divide

between the values we say we espouse and

the way we behave. Usually, our behavior

is a better indicator of the values that we

hold rather than the words we say. It is

not an easy task to find the divide between

the words and actions, especially when we

would like to think of ourselves as people

of ideals. This is where it is important to sit

with members of the family who both can

and will talk these issues out, to arrive at a

deeper consensus of the role of work and the

way it is enacted; the role of money, how it is

acquired and spent, says a lot about what you

really hold to be of greatest value. Reviewing

family time and how it is created and spent

will also tell you a great deal about the way

you value family/personal time versus work


A SNN INcorporAted ANd MIcro-cAp revIew MAgAzINe Survey on behalf of you, our subscribers and readers, additional information about companies in this issue will be forwarded to you by checking the box and submitting your request. Information will be forwarded to you by mail or email.q AdvaMedq Advaxisq Are You DTC Eligible?q Ask Mr. Wallstreet - When did I Become a contrarianq Atossa Geneticsq Beginings & Endings - Rabbi Stephen Robinsq BioInvest Israelq Biotech Supermen & Superwomen - Teresa Touey q Brazil Resourcesq Cambridge House Internationalq Capital Markets Visibility Programq Cardiumq Caregiving - Elenor Veraq Caveat Emptorq Chinese Public Companies - Lance Jon Kimmelq Cream Mineralsq Darwin Resourcesq Do You Wrapq DynaResourcesq eCheckq Firemans Brewq Global Mineralsq Grizzly Discoveries q Hard Assetsq Harris & Harris Group q How to Hedge - Lindsay Hallq Inovioq Internal Fixation Systems - Cover Storyq International Stock Exchange Executives

q Investor Uprisingq Is Anything Predictable - Dr. Grodon Chiuq Marfil Mines Ltd.q Mawson Gold Finlandq Mergentq Metal Market Overview 2011 - Chris Berryq Micro-Cap Investing - Ian Ellisq New Merriman Capitalq NIBA q Oak Street Securitiesq Ombudsmanq Omega P3q Oppportunites in Junior Explorers - Brent Cookq Oswald & Yap Lawyersq Pacific Rim Chamber of Commerceq PR Newswireq Profit Planners Management, Inc.q Rye Patch Goldq SNN is to Micro-Caps - Bobby Kraftq SNN Micro-Cap Visibility 365q Soltoro Ltd.q Streetwise Reportsq Tasman Metals Ltd.q The Compliance Cornerq Value Beyond Profitq Virtual Retail Investor Conferenceq Wallstreet Chickenq What’s Really Going on with Rare Elements - Jeb Handwerger

1. did you sell your equity positions in stock and buy physical gold or silver in 2011? q Yes q No q Bought more equities

3. Are you an accredited investor? q Yes q No 5. which of these choices contributed to your biggest win in 2011? q Gold hit new high q Silver hit new high q Copper traded higher q Rare earth elements traded higher

2. did you sell equities in your portfolio to buy gold or silver common stocks? q Yes q No 4. did you participate in any private placements, registered direct investments or pIpe’S in 2011? q Yes q No

6. What was the heaviest weighted sector in your portfolio at the end of 2011? (can be more than one) q Biotech q Med-Tech, Devices or Diagnostics q Resources q Oil & Gas q Alternative Energy or Green Tech q Technology

please take the time to answer some simple survey questions so that we may provide the most comprehensive information, stories of interest, investment ideas, and industry analysis in future issues of Micro-cap review. we thank you in advance for your participation.


Send completed surveys to: SNN Incorporated or respond to survey online at: microcapreview.com4766 Admiralty Way #13004 • Marina del Rey, Ca. 90295

7. Now that 2011 is over what would you have done differently? q Bought more micro-cap stocks q Bought less micro-cap stocks q Bought more precious metals (not the stocks) q Sold everyhting 9. How many Free newsletters do you subscribe to? q 1-5 q 6-10 q Too many to count q None

11. Have you subscribed to the online Micro-cap review magazine? q Yes at www.stocknewsnow.com q Yes at microcapreview.com q No not yet q I like to read the hard copy

13. would you participate in a virtual conference online? q Yes q No q If it had companies I was interested in

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check off areas of interest:


time. Frequently, all family events are sacri-

ficed for the needs of work. This becomes a

fundamental value that leads to a habitual

treating of family needs as a distant second,

third or forth to work. Looking at what gives

you a sense of value in your life—family

versus work—leads to an honest appraisal

of the balance between them and is usually

very enlightening, though difficult to face

at times.

These are a few simple suggestions of how

to begin the process of assessment before

you even begin to plan for the beginning,

leaving behind what is truly in the past and

not carrying it over with you in to the pres-

ent and the future.

In the business setting, a similar process

can be applied by anonymous question-

naire given to the employees, which can help

you assess the way they see the company

and its operations. Such questionnaires are

now professionally done and handled by

the internet in such a way that anonymity

is assured. This can give you a very detailed

view of the psychosocial climate in your

business. It is important in the beginning

of every new project to forecast what it will

take to accomplish the stated goals. New

enterprises are expected to be handled as

part of the regular flow of business, which

then adds enormous stress to the employees.

Preparing for this in advance will obviate

the kind of traumatic impact that new work

usually brings with it.

There are many other ways in which one

can assess the climate of your business and

work setting so that you are able to be a posi-

tive agent for change rather than being seen

as a complainer and resister to the work of

the company. Ultimately, we all must learn

that the productiveness is based not in the

product which is manufactured, but in the

workers which produce and sell it. They are

the most important asset in any business,

and therefore need to be treated as such in

a reasonable fashion. That will take care of

both the business as well as the family of

workers. Employees and colleagues have

complex social and emotional relationships,

filled with the greatest of friendship and the

bitterest of resentment. Employees who

gossip about other co-workers create a pro-

foundly unsafe environment for everyone

and engender counter-gossip that sets up

an ongoing atmosphere of conflict and mis-

trust. Ending gossip in the business setting

is so beneficial because it creates an environ-

ment in which people feel safe to do their

work, without exposing all of themselves in

order to be accepted by their co-workers.

Last of all, many employees have no per-

sonal investment in the work they do, other

than the paycheck they receive. That attitude

demoralizes even the committed workers

and creates a careless environment in which

the primary and formal relationship is one

of perceived danger. If you have a business

environment in which everybody pulls on

the same end of the rope because they feel

safe, included and cared for, then you begin

the rebuilding of your enterprise with this

perspective. I wish you all healthy, prosper-

ous and productive beginnings. n

biograPhy

Rabbi Stephen M. Robbins, Psy,D. is a psychologist in private practice in Los Angeles. He and his wife Cantor Eva Robbins are the clergy of N’vay Shalom, a Transdenominational community. He is also the co-founder of the Academy for Jewish Religion/California in which he is a professor of mysticism and spiritual psychology. He is a deeply profound spiritual teacher of Jewish mysticism and ancient traditions of healing. He is available for consultation and coaching for individuals and businesses that seek to expand and strengthen the work community and corporations. He is also specialized in family and individual counseling with an eye towards the heal-ing of unresolved traumas and conflicts.



International Stock Exchange Executives Emeriti to Meet in Orlando

ation with the small cap market in this

country”, Schnorf indicated. The ISEEE

website includes the “Orlando Declaration”

and a summary of the most recent meeting

held in March, 2011 as well as a list and short

biographies on the members of the ISEEE.

This March there will be current and

former executives from the NYSE, AMEX,

NASDAQ, National Stock Exchange, and

the Chicago Board Options Exchange from

the U.S., as well as the Toronto Exchange

from Canada. From South America there

will be attendees that have served in execu-

tive level exchange and securities capaci-

ties from Brazil (Bovespa Exchange) and

Peru. From Africa there will be officials

that have served on behalf of the Cairo

and Alexandria Exchanges in Egypt, as

well as the Johannesburg Exchange. From

Europe there will be senior exchange officials

that have served on behalf of the London

Exchange, Istanbul Exchange, Dubai and

Abu Dhabi markets, the Zurich Exchange,

the Dutch Boerse, the Stockholm Exchange,

the German markets, Malta Stock Exchange,

the Luxembourg Exchange, Vienna Stock

Exchange, the Prague Stock Exchange, and

the Borsa Italiana. In regards to Asian

exchanges there will be attendees that have

Jim Schnorf, who has served as the host of the

forum since its inception in 2008, indicated

there will be a record turnout of current and

former senior stock and derivative exchange

executives in attendance. “Don Calvin, a

former top NYSE officer and Advisor to more

than 25 Chairmen and CEO’s of exchanges

around the world, has been the impetus

behind starting the organization and grow-

ing the event each year, and has arranged

for a significant number of new countries

and to be represented this year in Orlando.

Wall Street Strategic Capital (www.wsscapi-

tal.com) is thrilled to have the privilege of

not only welcoming back a large number of

distinguished current and former exchange

officials who have attended in the past, but

also to welcome a large contingent of new

current and former senior exchange execu-

tives from multiple continents”, said Schnorf.

The ISEEE (www.capitalmarketexperts.

net) is a New York 501(c)3 not for profit

educational organization that was estab-

lished to provide current and former stock

exchange chairmen and CEO’s from around

the world an opportunity to collaborate

on matters including issues and challenges

facing the various exchanges, discuss best

practices, review trends and concerns in the

respective countries and economies, and

make recommendations that are passed

along to relevant regulatory and legislative

bodies. According to Schnorf, the ISEEE

has not only issued insightful recommen-

dations on matters such as urgent capital

market reforms that are needed, but also

launched the “Small Business Task Force”

which is headed by David Weild, former

Vice Chairman of NASDAQ. Both Calvin

and Schnorf are members of the Task Force,

along with a small group of other ISEEE

participants. “Don Calvin once again was

the inspiration behind starting the task force,

an idea that was immediately embraced

by the entire ISEEE membership. David

Weild made a compelling presentation to

the group that stressed the decline of the

small cap IPO market in the U.S., as well

as the alarming reduction in the number of

small cap listed companies. Don felt that the

ISEEE would be the perfect group to tackle

this issue and the task force was put in place

with Dave agreeing to serve as Chairman.

Substantive progress has been made includ-

ing not only providing specific recommen-

dations to regulatory authorities, but also

creating awareness among key U.S. Senators

and Representatives about the alarming situ-

The International Stock Exchange Executives Emeriti (ISEEE) will

hold their fifth annual meeting March 25-28, 2012 at the Royal Plaza

Hotel in Orlando, Florida according to Jim Schnorf, President of Wall

Street Strategic Capital, Inc.


served as executives for the Hong Kong

Exchange, the Moscow and Kazakhstan mar-

kets, and from Malaysia/Kuala Lumpur. In

addition, executives that have served the

Australia and New Zealand exchanges will

also be in attendance. Two Vice Chairmen,

Robert Aber (former General Counsel for

NASDAQ) and William Foster (former

CEO of the New Zealand Exchange and

Chief Operating Officer of the Abu Dhabi

Securities markets) who is currently an

Advisor to the new Cambodian Exchange

will also be attending. Special guests will

include among others Stanley Sporkin, the

legendary Director of Enforcement at the

Securities & Exchange Commission and for-

mer Federal Judge and General Counsel to

the Central Intelligence Agency. Schnorf

indicated that since the size of the group

has grown to such a significant number of

attendees, it is now impossible to schedule

dates even a year in advance that will accom-

modate all members’ schedules that want to

attend. For this upcoming conference the

former CEO of Eurex and the Berlin Stock

Exchange, as well as the former CEO of the

European Options Exchange, have conflicts

and will not be able to participate, he said.

The ISEEE has chosen SNN Inc. to be

the official media sponsor for the event.

In addition to covering the forum, Shelly

Kraft, SNN founder and CEO, will also be

conducting SNNLive interviews of many of

the ISEEE officials which will be aired on

www.stocknewsnow.com , and SNNLive TV.

Micro-Cap Review magazine www.microca-

preview.com will be at the conference and

will carry coverage of the event in a maga-

zine article in its quarterly issue. Schnorf

said, “We are very pleased to have SNN as

the media sponsor for this prestigious event.

Given Shelly Kraft’s passion for the micro-

cap and small cap markets, as well as his

knowledge of both U.S. and foreign markets

and his relationships with thousands of pub-

lic company executives over the years, we felt

SNN was the perfect choice for our event. I

know I speak on behalf of all of the ISEEE

attendees in expressing our excitement of

having SNN serve in this capacity”.

Last year Schnorf arranged for the newly

elected Governor of Florida, Rick Scott, to

attend the event and meet with the ISEEE

participants. Among topics discussed was

the prospect of potentially creating an

“international financial center” in Florida.

“The Governor was extremely interested in

not only meeting this highly distinguished

group of international financiers, but in

also hearing recommendations as to how

Florida could benefit from their experience,

relationships, and past successes in their

respective geographies. In addition, these

are all very influential people in their respec-

tive countries, so the opportunity to further

establish business relationships and strategic

partnerships was clearly part of the agenda.

Governor Scott, with his successful busi-

ness background, clearly recognizes that two

of the major impediments facing business

today are lack of capital access, and excessive

government regulation. He is clearly com-

mitted to resolving both of these issues on

behalf of the State of Florida, and the fact

that he changed his schedule on short notice

to come from Tallahassee to meet with this

group is indicative of his commitment to

these initiatives. Small business is where

jobs are going to be created in the future,

and these are probably the two largest issues

facing job growth. Clearly the lack of capi-

tal, especially in Florida where in years past

in excess of 95% of venture capital invested

in Florida came from outside the state, is

an urgent issue that has to be addressed”,

Schnorf said.

Although the forum is not open to the

public, Schnorf has indicated there is an

opportunity for a small number of highly

relevant firms to attend one or more of the

events as a lunch or dinner sponsor, which

would include an opportunity to meet the

ISEEE attendees and make a brief presenta-

tion about their firms. The forum begins

with a welcoming dinner on March 25, with

technical meetings, a luncheon and dinner

on March 26, technical meetings, a lun-

cheon, and a reception (which will include

Orlando area senior business and political

attendees) on March 27, and technical meet-

ings and a farewell dinner on March 28. The

Small Business Task Force will also meet on

March 25. On March 26, the keynote dinner

speaker will be Professor Melvin Escudero,

the former head of the Peru Pension System

who will discuss the rapidly growing Andean

Stock Exchange. The March 27 luncheon

keynote speaker will be Mohamed Abdel

Salam, Chairman and CEO of the Egpytian

Securities Exchange and Vice Chair of the

Arab Stock Exchange. Firms that have an

interest in participating can contact Jim

Schnorf, [email protected]. n

“Given Shelly Kraft’s passion for the micro-cap and small cap markets, as well as his knowledge of both U.S. and foreign markets and his relationships with thousands of public company executives over the years, we felt SNN was the perfect choice for our event.”



Do you WRAP?

such as Outlook, Thunderbird, MAC Mail,

Entourage, and Lotus Notes and can be used

with Google Business accounts and smart

phones, including the iPhone.

Creates powerful new and incremental

revenue streams from existing or new sourc-

es by simply sending every day, routine

email.

Rich functionality that allows users to

track and analyse email campaigns

Revenue opportunities through third

party participation, via sponsored messages,

selling advertising space or pay per click

campaigns.

Targets one-to-one emails, a new unex-

ploited market

Viral service offering, where users beget

new users

growth oPPortunities

According to a Radicati Group study the

number of worldwide email users is project-

ed to increase from over 1.4 billion in 2009

to almost 1.9 billion by 2013. In 2009, 74%

of all email accounts will belong to consum-

ers, and 24% to corporate users.

Worldwide email traffic will total 247 bil-

lion (update numbers and year) messages

per day in 2009. By 2013, this figure will

Email, however, is largely ignored and NOT

being used to advertise/promote! Everybody

sends email regularly and just about every-

body has a website,

Whether corporate or a social networking

site. Ordinarily a company does its utmost

to build its brand and as an example let’s

remember Gateway computer that decorated

its shipping boxes with cow skin prints. We all

remember that don’t we? As the only comput-

er company that did this “out of the box” or in

this case “on the box” advertising, it miracu-

lously differentiated its computers from all of

its competitors simply through its packaging!

WRAPmail providing the wrapping of

emails is marketing outside the box or in

this “inside the box” marketing. WRAPmail

is a very unique “cloud” marketing design to

wrap average everyday ho hum email, you

know, plain vanilla bare bones into a distinc-

tive and unique advertising and marketing

venue called WRAPmail.

. WRAPmail is a revolutionary email tech-

nology platform that seamlessly allows its

users to transform their everyday emails into

an effective marketing program to promote

their brand and recognition, drive traffic,

conduct market research and potentially

increase sales.

WRAPmail’s patent pending cloud based

technology wraps outgoing emails with

images and links that are used to promote,

sell and advertise the sender’s brand, product

or services. The technology authenticates the

wrapped emails, maintains design integrity

and ensures images are securely delivered to

the recipient’s inbox.

WRAPmail’s user friendly web-based

dashboard (screenshot) allows its users to

define rules to be set such as: assigning spe-

cific wraps for specific senders or assigning

specific wraps for specific recipients, wrap

rotation, dynamic rotation of images in

a wrap and/or live data feeds. Clients can

include or exclude senders to wrap and also

exclude recipients from being wrapped.

In addition, the email owner is able to

easily track and analyze clicks through indi-

vidual text or image links and generate com-

prehensive user friendly reports containing

data of who is clicking on what and when

as well as analyze a particular link’s perfor-

mance. This data is also available in real time

via email or SMS alerts.

comPetitive aDvantages

WRAPmail’s competitive advantages are

numerous because it is the first to intro-

duce this proprietary technology to market.

These include:

Industry pioneer with patent pending

technology.

Google solutions provider

Well designed, user friendly interface

Seamlessly integrates with all major web-

based email providers and email clients

Social media, branding and email are all very current topics in today’s

business world. It is believed that the largest internet advertising venue

of all is emails.

WRAPmail’s goal is to grow revenue through imple-menting a diverse advertising based revenue model like Google, Twitter, Facebook, LinkedIn and Skype.


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almost double to 507 billion messages per day.

In 2009,(update) about 81% of all email traffic is spam meaning

the remaining 96 billion emails sent daily in 2013 will be one-on-one.

For perspective, there are approximately 1 billion search queries on

Google per day. In addition, Google generated revenues of $9 billion

in the second quarter of 2011 through paid and pay per click advertis-

ing, such as AdWords and AdSense.

Revenue Model

WRAPmail’s goal is to grow revenue through implementing a diverse

advertising based revenue model like Google, Twitter, Facebook,

LinkedIn and Skype. In addition, WRAPmail intends to offer a rev-

enue share model, similar to Google’s AdSense, for example: plan

an affiliate program to motivate students to sign up other students

under the slogan “Make money with every email you send anyway”.

WRAPmail projects a 0.1% market share of all daily emails by

2013. Using 2010 data this equates to 470 million emails per day. If

1% of these recipients click on a 3rd party advertisement, this would

represent 4.7 million unique clicks and the market rate for clicks

revenues could increase dramatically.

Please note that it is common for advertisers to pay in excess of

$1 per click using Google’s AdSense and other PPC advertising plat-

forms.

WRAPmail does not focus on mass emails, but rather, WRAPmail

targets on one-to-one emails, a market that is practically untouched.

WRAPmail, Inc. is a publicly traded company and the stock sym-

bol: WRAP, and was incorporated in 2005. WRAPmail is a leading

provider of dynamic, interactive email branding and marketing

solutions.

In summary or to WRAP up, WRAPmail is a viral and user

friendly catchy method to brand email communication. CEO Rolv

Heggenhougen_developed this product with his own needs in mind.

Once developed, WRAPmail caught on from his own outbound

emailing proof positive of his products value. Now it’s all about mar-

ket awareness and gaining market share and according to Rolv that

too is a WRAP. n



Are You DTC Eligible?What does it take to get DTC eligibile and what does DTC eligibility mean?

to as “chills” that DTC places on a relatively

small number of eligible securities. A chill

is a special restriction that can be placed

on a given security by the Depository Trust

Company. Chill restrictions are intended to

limit the potential for problems within the

financial marketplace, and can be placed

on a security for various reasons. An issuer

will often need to engage an attorney or

work with various consultants who have sig-

nificant experience in working with DTC. At

times, the solution for having a chill removed

may be providing certain documentation

and requested items to DTC while at other

times the solution may lie in obtaining legal

opinions regarding the eligibility of certain

shares of common stock.. In conclusion, as a

private company with hopes of going public,

or as a public company looking to trade on

the OTCBB, DTC eligibility will be a critical

part of your existence and add value to your

company. If you are a company that has just

completed the going public process and have

obtained a symbol from FINRA, then it is

likely that time for you to consider the next

steps towards obtaining DTC eligibility. n

Lisa Loew is VP of Business Development for Vstock Transfer, a NY based stock transfer firm that offers Issuers online capabilities, cost savings and has assist-ed numerous public companies (www.dtceligiblity.com). Vstock Transfer (www.vstocktransfer.com) was founded and is managed by securities attorneys who, for the last decade, have also provided SEC EDGAR filing services, XBRL services, financial print and general corporate guidance to public companies and to private companies looking to go public. For more information please email [email protected] or call 212 828-8436.

who controLs Dtc

eLigibiLity?

The Depository Trust Company or DTC was

established in 1973, as a result of the “Back

Office Crisis” or “Paper Crunch” caused by

the over 400% increase in daily volume of

the New York Stock Exchange from 1960 to

1968. During 1969 the inability for some

brokerage firms to settle transactions cre-

ated enormous backups in deliveries, so that

underperformed obligations could range

from 70% to over 200% of a firm’s total

assets. As the market turned downward in

1970 over 100 brokerage firms went bank-

rupt or were acquired by stronger com-

petitors due to their inability to maintain

sufficient working capital. Basically, brokers

could not process the paperwork connected

with the settlement of the growing number

of exchange transactions. Several memo-

rable changes came out of this era. Most

notably are the Securities ACT of 1975 and

the SIPC, (Securities Investor Protection

Corporation). The most important changes

may be the least remembered: the formation

of the DTC, the concept of net settlement

and the ability for electronic settlement of

trades.

Dtc eLigibiLity For micro-

caP & smaLL caP issuers

For some companies listed on the Over the

Counter Bulletin Board or the Pinksheets

the process of gaining DTC Eligibility can

be difficult if not impossible, especially for

a company that went public on its own,

without an underwriter or DTC Member

Clearing Firm. In these situations, manage-

ment usually relies on the corporate attor-

ney, accountants or transfer agent for advice

and help. Perhaps the management team

has a relationship with a local brokerage

firm, but that is not sufficient. The answer

lies in having a relationship, specifically with

a DTC Member Clearing firm.. Becoming

DTC eligible allows for trades conducted in

the company’s stock to be settled continu-

ously and electronically.

Potential investors in small cap companies

often require that the shares of common

stock of the Issuer be available for electronic

transfer via the DWAC system (Deposit/

Withdrawal at Custodian). In order for an

OTCBB Issuer’s shares of common stock to

be available for DWAC (electronic issuance

or electronic transfer), the Issuer must be

DTC eligible. In fact, some PIPE investors

may inquire about an Issuer’s DTC eligibility

status even before they inquire about future

revenue projections.

The insistence by shareholders and poten-

tial investors on the need for electronic

transfer has become even more apparent

since a recent announcement by a leading

clearing firm with regard to securities that

trade under $.10 per share. Due to inherent

volatility in low priced securities and the

concern of illiquidity in such securities cou-

pled with the fact that regulations are more

focused on the deposits of physical certifi-

cates of Pink Sheets or OTC Bulletin Board

companies have prompted some clearing

firms to no longer accepts deposits of equity

securities priced below $0.10.

heLP - i have a Dtc chiLL!

DTCC has experienced an increase in the

number of customer queries regarding

transaction restrictions, generally referred


eases such as HIV and hepatitis C.

There is another key difference in Inovio’s

quest to revolutionize vaccines. Conventional

vaccines are essentially “one drug for one

bug.” The vaccine must match the virus that

it is intended to protect against. Inovio’s

SynCon® vaccines, designed using genom-

ic engineering, fight changing, unmatched

strains of diseases such as HIV, hepatitis

C, HPV, and influenza. They also offer the

prospect of breaking the immune system’s

tolerance to cancers.

cLinicaL resuLts

Inovio has strong data to back up its enthusi-

asm, showing best-in-class immune respons-

es from recent clinical studies:

• Unprecedented T-cell immune responses

reported in two separate phase I studies: one

for cervical dysplasia and another for HIV.

These immune responses were long lasting,

being measured for up to two years in the

cervical dysplasia study.

• Significant clearance rate (83%) of hepa-

titis C virus vaccine (in conjunction with

standard of care) in partnered phase I clini-

cal study. This compares to a 40%-50%

clearance rate for the standard of care alone.

• Avian influenza vaccine generated HAI

titers (a measure of potential immune pro-

tection) in human subjects against six dif-

ferent, unmatched strains of H5N1 - a dis-

tinct new clinical achievement on the global

research community’s path to develop uni-

versal influenza vaccines.

• Animals vaccinated with an H1N1 influ-

enza vaccine designed in 2007 demonstrated

protection against unmatched 1918 pan-

demic H1N1 and 2009 swine flu strains.

Human data is to be reported in Q2 2012.

• Synthetic vaccines for influenza Type

Inovio Pharmaceuticals’ (INO)

“Universal” Vaccines May Dramatically

Alter the Prevention and Treatment of

Influenza, HIV and Cancers; Novel Approach

Now in Three Phase II Clinical Studies

Before this decade ends, annual flu shots

might become a thing of the past, and threats

such as avian and swine flu might disappear

with them. That’s just part of the coming

revolution in vaccine development accord-

ing to Inovio Pharmaceuticals, Inc. (NYSE

AMEX: INO), which is advancing a whole

new technology approach to the centuries-

old idea of stimulating the immune system.

Do you use products today that rely on

technology that is more than 50 years old?

That is precisely what we are relying on with

conventional vaccines. They use weakened

or killed viruses or parts of viruses as vac-

cines, which can cause the disease. Some are

still grown in chicken eggs. Inovio is pushing

the frontiers with its synthetic vaccine tech-

nology, a new approach to vaccine design,

formulation, manufacturing, and delivery.

synthetic vaccines

Conventional vaccines use a virus or part of

a virus in order to expose a unique antigen,

or foreign protein, to the body’s immune

system so it can create immune memory.

Inovio’s “designer vaccines” just give the

body the DNA instructions for the antigen

so that its cells can produce the targeted

antigen and nothing more.

The powerful benefit of conventional vac-

cines is that they generate the antibodies

that prevent targeted diseases from infecting

cells. Inovio’s SynCon® vaccines are also able

to generate powerful T-cells to kill already

infected cells. T-cells are considered vital to

fighting cancers and chronic infectious dis-

PRoFILED ComPAnIEs

an emerging revolution in vaccine Development


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Visit Dynamic Exhibiting CompaniesMeet face-to-face with Mining Executives and their Teams• Exploration UpdatEs • dEvElopmEnt plans • Financing opportUnitiEs

Hear KnowledgeableResource AnalystsSpeaker’s Auditorium plusInter-Active Workshops• markEt trEnds • mEtals oUtlook• stock stratEgiEs

absorb dynamic advice from our lineup of more than 50 World-class investment Experts! Here are some of them:

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Cambridge House Investment Conferences are a production Cambridge House International Inc. All Rights Reserved.

Mickey FulpThe Mercenary

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Publications

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Resource Opportunities

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Michael Berry, PhD

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Equities & Economics

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StockNewsNow

StockNewsNow


A H3N2 and Type B achieved protective

antibody responses in immunized animals

against multiple unmatched strains, fur-

ther validating the potential for a universal

influenza vaccine, which Inovio anticipates

testing in a clinical study in 2013.

inDustry & scientiFic

recognition

Just in the past two years Inovio has wit-

nessed growing recognition for its work to

develop and commercialize synthetic vac-

cines, including:

National Institutes of Health “Director’s

Transformative Research Award” for Inovio’s

“universal” influenza vaccine, VGX-3400 --

from the Office of the NIH Director

Most Promising Therapeutic Vaccine:

(VGX-3100, cervical cancer) -- from Fierce

Vaccines

Life Sciences Company of the Year – from

The Philadelphia Business Journal

CLARUS Award -- Given annually to pub-

licly traded companies possessing market-

changing intellectual property assets -- from

MDB Capital

Vaccine Industry Excellence Award: “Best

Early Stage Biotech,” presented at the World

Vaccine Congress

“Future Leader of the Biotech Industry”

by BioCentury Publications

MIT’s Emerging Technologies Conference,

Keynote Speaker on Synthetic Vaccines

taLent anD Promise

Inovio’s management and scientists pos-

sess decades of experience in cutting edge

R&D and clinical development of immu-

notherapies. Dr. David Weiner, a University

of Pennsylvania professor and Chairman of

the company’s Scientific Advisory Board, is

a pioneer of synthetic vaccines. CEO Dr. J.

Joseph Kim is ex-Merck. Management has

worked with big pharmaceutical companies

and been instrumental in taking multiple

drugs and vaccines through clinic trials to

commercialization.

Inovio’s synthetic vaccine pipeline tar-

gets multi-billion dollar therapeutic markets

with unmet needs such as cancers, HIV,

and hepatitis C virus, and offers significant

opportunities for new preventive vaccines

against infectious diseases that change rap-

idly or have unmet needs.

Inovio is advancing with a sense of urgen-

cy to develop and commercialize synthetic

vaccines to prevent and treat cancers and

infectious diseases, with key milestones dur-

ing 2012. The company expects to report

influenza data from two human studies in

the first half of the year and interim data

from two Phase IIs for hepatitis C and leuke-

mia in the second half.

The first reporting of human data over the

past two years has met with progressive suc-

cess. With continuing positive advancement,

we may well look back on the current time

as the emergence of the “era of synthetic

vaccines.” n


n By vIRgInIA gRAnTIER

physician-patient relationship is primarily

state-regulated, resulting in significant reduc-

tions in expense and time to market. ICVrx

already has conducted preclinical work with

promising results, and has approval to begin

human studies. In addition, pumps, which

are used for drug delivery, are available off

the shelf, and specialty pharmacies are in

place to prepare the drug formulations. The

partnering specialty pharmacies will develop

relationships with treating physicians using

consultative medical professionals.

“I am excited about the ICVrx vision,” said

Steve Adler, president and CEO, Medasys,

Inc., one of several companies that will

manufacture pumps. “The potential growth

ICVrx offers to the pump market alone, from

the current world-wide implantable pump

market of approximately $600 million rev-

enue… expansion into the epilepsy market

should grow the pump market to well over

$1 billion globally.”

The ICVrx drug reformulation/licensing

approach reduces cost and time-to-market,

and is a business strategy that distinguishes

ICVrx from traditional pharmaceutical com-

panies. The Company has attracted interest

from the investment banking community

for several reasons: the business model, the

significant unmet medical need, the mar-

ket size and the projected profit margins.

Abrams said that upon adequate funding,

the Company targets having epilepsy drugs

available for needy patients through phar-

macy licensees by Summer 2014. ICVrx is

planning to protect its portfolio of intel-

lectual property by patenting its epilepsy

therapy, along with future therapies to com-

bat diseases such as depression, diabetes, and

schizophrenia, to name a few.


ICVrx – A Transformative Drug Company for the Treatment of Epilepsy and Other Brain Disorders

A desire to help millions of critically ill

refractory epileptics –the 30 percent

of epileptics whose seizures can’t be

controlled by oral medications – has led to

the development of a medical technological

approach that world-renowned neurosur-

geons and neurologists are calling transfor-

mative. The expected worldwide impact

of this treatment, developed by Colorado

psychiatrist and neurosurgeon, Dan Abrams,

founder and chief executive officer of ICVrx,

LLC, has the ardent support and guidance of

an assemblage of world leaders in the fields of

medicine, pharmacology and business.

Abrams explained that some patients with

refractory epilepsy may experience 25 sei-

zures daily. “They worry about dying every

single day of their life. They can’t work, can’t

live predictable lives. It’s not really living,”

also, efforts to stem seizures with oral medi-

cations cause other problems. The drugs

diffuse through the body and, while non-

toxic to the brain, often are toxic to other

organs. This new medical approach – using

programmable pumps implanted under the

skin to transport ICVrx reformulations of

anti-epileptic drugs directly to the brain

– has also resulted in a feel-good business

opportunity.

Abrams says the Company is involved in

doing “something important for human-

kind,” for the epilepsy patient population,

which is larger than all sufferers of multiple

sclerosis, Parkinson’s disease and brain can-

cers combined. The market share for ICVrx’s

epilepsy therapy, along with a future depres-

sion therapy, has an estimated $4 billion

drug market potential in the underserved

initial target markets. ICVrx, a private com-

pany founded in 2010, with plans to become

a public company, is essentially creating a

new treatment category for brain diseases by

reformulating available drugs into medicines

that are safe for direct-to-brain delivery –

and epilepsy is only the first target.

Neurosurgeon Ali R. Rezai, the incoming

president of the Congress of Neurological

Surgeons, a lead investigator on Medtronic’s

Deep Brain Stimulation for depression study

and professor and chair of Neurological

Surgery Research at Ohio State University

College of Medicine, says “for those suf-

fering with common chronic neurological

disorders, ICVrx’s innovative targeted thera-

peutic approach provides a new hope and

the potential to live with better quality of life

and functioning.”

Rezai also commented that the ICVrx

team is “ highly qualified, motivated and

innovative”.

ICVrx’s concept “is a game-changer,” said

Elad Levy M.D., one of a world-renowned

group of New York neurosurgeons respon-

sible for transforming treatment of brain

vascular diseases. “ICVrx’s approach uses

simple surgical techniques, in combination

with available medications, to effectively

treat epilepsy that does not respond to stan-

dard medical therapy.”

Abrams said that the market has been

historically hesitant to invest in medication

development because of the time and expense

involved in today’s regulatory process. But

ICVrx has a different scenario. “ICVrx antici-

pates revenues beginning in 2014, with a

projected budget of less than 10 percent of

the cost currently estimated for new drug

development.” There are several reasons

for that: ICVrx’s licensed reformulations use

currently approved FDA drugs that are com-

pounded by pharmacists under special order

from treating physicians. The pharmacy-

Dan Abrams,

founder and CEO


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Warren Lammert, chairman and co-

founder of the Virginia-based Epilepsy

Therapy Project said recently that, “ICVrx’s

team has a remarkable and broad range of

expertise and accomplishment in research,

therapeutic development and patient care.”

The ICVrx team includes world leaders in

medicine and business: 1) ICVrx Advisor

Robert Fisher, M.D., professor of neurology

and director of Stanford’s Epilepsy Center,

lead investigator on Medtronic’s Deep Brain

Stimulation Trial for Epilepsy and former

president of the American Epilepsy Society;

2) ICVrx Manager Larry Fenster, M.B.A., has

20 years of experience in early stage/startup

companies including merger, acquisition and

turnaround and 12 years as a Fortune 500

company executive; and 3) ICVrx Advisor/

Board Member Stephen J. Farr, Ph.D., with

15 years of experience in public and private

management of pharmaceutical companies,

i.e. Zogenix Inc. and Aradigm Inc. and is an

expert in central nervous system drug and

device development.

“Dr. Abrams, CEO, is the former head

of neurosurgery at St. Joseph’s Hospital in

Denver and has put together a great team of

neurosurgeons, epilepsy physicians and neu-

ropharmacologists to bring this project to

fruition,” Fisher said recently. “Dr. Ashwini

Sharan is a highly experienced functional

neurosurgeon expert in new technologies to

treat epilepsy who was a valued collaborator

on a new treatment using electrical deep

brain stimulation. Dr. Leppik is one of the

world’s foremost experts on pharmacology

of antiepileptic drugs, as well as a great epi-

lepsy clinician, and the past president of

the American Epilepsy Society. Dr. Farr is a

Ph.D. pharmacist and drug delivery expert,

with unique experiences in founding and

holding high-level management positions in

pharmaceutical companies with innovative

drug and device combination products as its

core business.

“This is a group of experts in their respec-

tive fields that has the enthusiasm, capabil-

ity and synergy who will make this com-

pany a success,” said Dr. Fisher, who has won

numerous research awards. Dr. Fisher is a

recipient of the Ambassador Award from the

International League Against Epilepsy and

has been listed in “Best Doctors in America”

annually since 1996. Dr. Fisher is editor

in chief of epilepsy.com and his research

focuses on new treatment devices for epilep-

tics. Dr. Fisher said he is “very hopeful that

the intraventricular approach of ICVrx will

provide a high, steady level of drugs where

they are needed to stop seizures.”

Dr. Abrams, a clinical assistant professor

of psychiatry and neurosurgery at University

of Colorado Medical School, stated, “ICVrx’s

business plan is unique, in the current mar-

ket, enabling management the potential to

provide a promising answer for many suf-

fering patients in a relatively cost and time-

efficient manner.”

To learn more about ICVrx, go to ICVrx.

com.

ICVrx technology development began in

2005 at the University of Colorado from the

disciplines of neurosurgery pharmacology,

medicine, psychiatry and neurology. Since

that time the company has refined its busi-

ness model, licensed the intellectual property

from the University of Colorado, and moved

from the earliest animal stage studies into

clinical studies.

ICVrx has attracted investors such as the

Epilepsy Therapy Project, a non-profit organi-

zation dedicated to accelerating new therapies.

The diagram shows an implantable pump,

as it will be used for brain drug admin-

istration, with ICVrx patentable formula-

tions. The FDA-approved intrathecal pumps

already have 22 years of proven safety and

efficacy in spinal drug delivery. Installing

the pump, manufactured in the U.S., is a

40-minute procedure that neurosurgeons

already are trained to do and is easily revers-

ible. Recuperation time is about one day.

The pump and catheter will be placed under

the skin in a brief surgical procedure that is a

standard and widely practiced neurosurgical

procedure. The pump is filled with medica-

tion every three months in a 10-minute office

procedure. ICVrx’s brain-drug administra-

tion combines use of currently available drugs

with available hardware for refractory brain

diseases. ICVrx has developed drug reformu-

lations for refractory central nervous system

diseases including epilepsy, depression, post-

traumatic stress disorder and schizophrenia. n

Virginia Grantier is an award-winning journalist based in Colorado who has researched and written about health and medical developments as well as a variety of other areas. She has worked as an editor, but most of her career has been spent as an enter-prise reporter covering government, education and public safety for numerous newspapers including The Denver Post.

Disclaimer: This corporate profile is based upon information provided by a company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy securities. It is intended for informa-tion purposes only, and to increase awareness of the company profiled.

Safe Harbor Statement: The statements in this profile relating to future products, partnerships, tech-nology, and positive direction are forward looking statements with the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking state-ments may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for com-mon stock if it is issued, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at ww.micorcaprivew.co/disclaimer.php. Before invest-ing in any security, you are strong advised to review all public filings of the issuer of such security, which can be found at www.sec.gov as well as warnings published by the SEC at www.sec.gov/investors and to consult

with your investment professional,


Please note that this notice also includes

a “NATIONAL RISK EXAMINATION

ALERT”, in Cooperation with the SEC

“Office of Compliance Inspections and

Examinations” (OCIE). It appears that

FINRA is reverting to some of its old tricks

of the trade…enforcing notice to members

as though they have the impact of rules.

In this case, I believe FINRA is doing the

industry a favor. When many of the new

rules were drafted, commented and enacted,

the idea of principle based regulation was

alive and well. With the activities over the

last decade, principle based regulation is

all but dead and FINRA has seen the need

to provide greater guidance on how firms

interpret the many and various rules that

broker-dealers must decide how to live with.

Regulatory Notice 11-54 is a good example

of how this happens.

11-54 prescribes, “Incorporating find-

ings on results of branch office inspections

into appropriate management information

or risk management systems; and using a

compliance database that enables compli-

ance personnel in various offices to have

centralized access to comprehensive infor-

mation about all of the firm’s Registered

Representatives and their business activities.

Such a system appears to be highly useful

to the compliance personnel at the OSJ and

elsewhere for quickly accessing information

and for supervising independent contractor

Registered Representatives dispersed across

a broad geographic area.” This is an exact

description of BDAudit©, our proprietary

web-based system for conducting, record-

ing, reporting and archiving branch office

audits for offices of any description.

Below is the link to FINRA Notice 11-54:

h t t p : / / w w w. f i n r a . o r g / I n d u s t r y /

Regulation/Notices/2011/P125205

For a full seven page Report on Notice

11-54 by The Compliance Department, Inc,

please contact:

[email protected].

The Compliance CornerRegulatory Notice 11-54

LEgAL • TAX • ACCoUnTIng

n By ChET hEBERT

Regulatory Notice 11-54 was issued by FINRA with very little fanfare; however it packs a wallop!


K-2 Potash Property, Neuquen Province:

Marifil’s K-2 potash property comprises

79,964 hectares and is close to the Vale

property. Marifil geologists discovered this

property by analizing electric and gamma

ray well logs from abandoned oil well holes.

This work identified a large area containing

more than 20% KCl at depths of 1,300 to

1,500 meters. This deposit could contain as

much as 250 million tons of potash.

K-3 and K-4 Potash Properties, Mendoza

Province: Marifils K-3 and K-4 potash

properties were also identified by searching

oil well logs of abandoned wells. As a result,

the Marifil team staked the two properties

which cumulatively cover more than 139,000

hectares. We have identified four important

potash targets ranging in depth from 220

to about 700 meters. The Company has

begun an active marketing program to find

a suitable joint venture partner for these

properties.

Las Aguilas Nickel and Platinum Project,

San Luis Province: Las Aguilas is a nickel,

platinum, copper, gold, and cobalt property

which has a NI 43-101 compliant indicated

and inferred resource of 4.9 million tons

grading 0.65% nickel equivalent. The depos-

it is open-ended in several directions.

Marifil has a joint venture with Prophecy

Platinum Corp. whereby Prophecy can earn

up to a 70% interest in the property by pay-

ing Marifil $300,000 over three years and

paying Marifil 300,000 shares over five years.

In addition, Prophesy is required to provide

a feasibility study within five years (feasibil-

ity studies for this project could easily cost

more than $20 million).

Toruel Silver Copper Project, Rio Negro

Province: Toruel is a joint venture with

Netco Silver Inc. Netco has the right to

earn up to a 70% interest by paying Marifil

$400,000 in cash, 3.7 million shares, spend-

ing $2.8 million in work on the property,

and providing Marifil with a feasibility study.

Marifil is a junior mining company which

trades on the Toronto Venture Stock

Exchange under the symbol MFM.

Marifil operates exclusively in Argentina.

Argentina is a large country with a modern

mining law which offers secure tenure for

mineral rights, has a transparent legal and

accounting system, and is under explored.

Marifil has acquired a large portfolio of

important precious metals, base metals, and

industrial minerals properties. Our business

model is to acquire properties cheaply, spend

money on them to improve them, and then

bring in larger, better funded companies to

develop them through joint ventures, spin

outs, or sales. In this manner Marifil is

able to develop properties without diluting

shareholders with constant equity sales to

fund exploration. As a result, Marifil is now

developing a significant cash flow from cur-

rent joint ventures and expects to increase

this cash flow in subsequent years.

This year the Company has realized more

than $800,000 in property payments. This

is unusual because this makes us one of the

few junior mining companies in the world

which has cash flow. In addition, over the

next few years, our joint venture partners

will be spending more than $13.8 million on

our properties.

ProPerty highLights

San Roque Gold, Silver, and Base Metals,

Rio Negro Province: San Roque is one of

our flagship properties. San Roque is a

very large sulfide system with disseminated

and stockwork lead and zinc mineralization

spread over an area of more than 12 square

kilometers. This mineralization includes

important amounts of gold, silver, and indi-

um. Indium is an important component

used in the manufacturing of flat screen

TVs and in solar panels. The ore target at

San Roque is a bulk tonnage deposit grading

PRoFILED ComPAnIEs

marifil mines Ltd. (www.marifilmines.com)

perhaps +1% lead plus zinc, 0.3 to 0.7 grams

per ton gold, 3 to 20 grams per ton silver, and

10 to 40 grams per ton indium.

Marifil has joint ventured San Roque

with NovaGold Resources Inc. (NovaGold).

NovaGold has agreed to spend $9 million on

the property to earn a 70% interest. During

the earn-in period they will pay Marifil

$100,000 per year. In March 2011 NovaGold

completed its first drill program. This pro-

gram hit several important intercepts as

follows:

DH MSR 0009: 120 meters at 1.16 g/t

gold, 10.3g/t silver, 39 g/t indium, 0.43%

lead, and 2.04% zinc which equates to 3.1 g/t

gold equivalent.

DHMSR 0013: 144.5 meters at 0.20g/t

gold, 25.5g/t silver, 5.1g/t indium, 1.25%

lead, and 1.73% zinc which equates to 1.7g/t

gold equivalent.

These are very significant intercepts that

suggests that there is good potential for a

large, bulk mineable gold, silver, and base

metal deposit.

NovaGold subsequently completed a sec-

ond round of drilling in October. Assays are

expected to be provided in January 2012.

K-2, K-3, AND K-4 are our three potas-

sium properties located in the Neuquen

Sedimentary Basin straddling Neuquen and

Mendoza Provinces. Potassium is an ele-

ment that is essential for plant and animal

growth. The market for potassium is huge

and growing. Current prices are approach-

ing $600 per ton and prices are expected to

exceed $600 per ton in 2012. Marifil is very

well placed to capitalize on this huge grow-

ing market.

Vale, the giant Brazilian mining com-

pany is currently spending $6 billion to

develop the Rio Colorado potash mine in the

Neuquen Basin. This mine has a resource of

more than two billion tons of potash (KCl).

Marifil’s properties are in the same basin and

are an extension of this giant deposit.


Marifil can either then participate at the 70% level or elect to be car-

ried through to production and retain a 25% interest.

The Toruel property contains a large number of epithermal gold,

silver, copper, and lead veins and vein breccias occurring within a

structural corridor +2 kilometers wide and +8 kilometers long. The

main Toruel vein is 1,900 meters long and up to 15 meters wide.

Mineralization occurs as gold-silver bearing tetrahedrite (a com-

plex copper, arsenic, antimony sulfide) and silver-bearing galena (a

lead sulfide). Two of the better drill intercepts on this property are

as follows:

DH-24: 5.0 meters at 964 g/t silver and 4.95% copper

DH-32: 6.7 meters at 1998 g/t silver and 5.34% copper

Between Drill Holes 2B and DH-34 we have identified a section of

the vein 600 meters long with a true width of 3.2 meters grading 490

g/t silver equivalent + 1.49% copper. This mineralization is worth

$560 per ton at current prices.

other ProPerties

Marifil tries to maintain a pipeline of properties so that once a prop-

erty is sold or joint ventured we have one or more new properties to

replace it. Our current pipeline includes:

Lithium Brines in Jujuy and Catamarca Provinces

Cerro Samenta, Salta Province: A porphyry copper and an oxide

copper prospect which may contain up to 40 million tons at a grade

of 0.5% copper amenable to low cost open pit mining and heap leach

copper extraction.

Sulfur and Phosphate in Mendoza and Neuquen Provinces

Maquinchao, Dos Lagunas, and Los Menucos epithermal gold sil-

ver projects, Rio Negro Province

Ferrocarillera and Arroyo Verde epithermal gold silver projects,

Chubut Province

Maipu epithermal silver zinc project, Santa Cruz Province n

Oak Street

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K

N A T I O N A L I N V E S T M E N T B A N K I N G A S S O C I A T I O N S U L O A K N L O L V

C O M C D E S E W E L E N O R V E R A M A T O S S A T S S T E D O T C I T O S U P E R W O M A N V R C E C L R M A T W I T T E R M C K P R X H O P O N H E I F O R E X C T M E I S S P C A R T O O N P C

I W D O L E V E L S P R L A N S M A R G I N B U L L I O N D M I V T N T R V I S I B I L I T Y P A C K A G E E O I C O O K C O C O N A R E V I E W O U N C E E I U F R A N K N T T N N S M N O E T M E A V P R D B T R I M

C A L D E R A F I E L D L L R R W A N P F B I O T E C H A Y E O R E T I Q N S N V N Z W R I R O X U S D X S H A F T H O U S E K A A R

R A R E E A R T H E L E M E N T S V X L S N R I N L T S O A E U E Y N R I T C Y N E A R T H G E O I K H T B E M S N O S A U H K E X C I O S N T L R Y T A N U Y A R L E D O U G J A M I S O N E R T S I A N R K R C R T R D D E M A E A E E D P I P E P O R T F O L I O N M K I L L E R A L G O R I T H M R U W C S S E B O O K T A V E R A G E F

F L T E L U I L P R E M I U M R

R A R E E A R T H E X P E R T M A R K E T O R D E R S G A V A A T O G

R I C H A R D B E C K E R N R R E V E R S E O R Y I C A L D E R A I N L A U A E E L L I S T D G W R A P M A I L L T S

E L


Every great achievement starts with a dream,

a vision. A vision of something grand, some-

thing truly outstanding and something last-

ing that will stand as a testament to the

visionaries. Such is the stuff of mineral explo-

rationists. These are people who are not afraid

to dream big, people who can see what can be.

Mineral explorationists are frontiers man and

woman. They embrace substantial risk in the

hope of achieving something truly great.

A junior resource exploration company is

the embodiment of visionaries. The compa-

nies are managed by people from all walks of

life who want to develop a world class mineral

deposit. Like biotech start-ups they live from

milestone events to milestone events, seeking

enormous amounts of capital in the hope

they can create an asset that will return poten-

tially billions of dollars to their investors.

Cream Minerals Limited, a silver-gold

exploration company from Vancouver,

Canada, the capital of junior mineral resource

exploration companies, is developing what

it believes will be a world class silver-gold

deposit in Mexico. Cream was formed in

the late 1960’s and spent many years explor-

ing a variety of properties none of which

returned results of any significance. Then,

in 2000 the Company staked and subse-

quently acquired 100% ownership to Nuevo

Milenio, a silver-gold property in Nayarit

State, Mexico. Low metal prices that per-

sisted for many years and a lack of significant

funding limited exploration work at Nuevo

Milenio. Despite these and other obstacles

Fred Holcapek, P.Eng, Cream’s head geologist

and German Francisco, Geologist, persisted

and in December 2008 defined a NI 43-101

Compliant Inferred Mineral Resource of 54.6

million ounces silver equivalent, or 41 million

ounces silver and 271,500 ounces gold. The

resource estimate assumed a cut-off grade of

131 g/t silver equivalent highlighting average

PRoFILED ComPAnIEs

cream minerals LimitedThe Anatomy of a Junior Resource Exploration Company


grades of 251 g/t silver and 1.66 g/t gold. At

the time the resource estimate was completed

silver was $USD10.28 per ounce and gold was

$USD816.09 per ounce.

Like many areas of Mexico, the Tepic region

was explored and mined by the Spaniards

up until just over 200 years ago. Nuevo

Milenio contains many Spanish workings

(old mines) some of which are comprised of

shafts up to 30 metres deep with three levels

of drifts (tunnels) extending outwards where

the Spaniards would have mined very high

grade gold and silver.

Nuevo Milenio is a low sulphidation epi-

thermal precious metals deposit containing

silver-gold mineralization within quartz veins

and quartz stock work zones. The mineraliza-

tion is set in a collapsed caldera. Regionally the

caldera is contained within an early volcanic

caldera field of the Sierra Madre Occidental

Volcanics, which in turn is traversed by the

Tepic-Zacoalco rift zone, a structural zone

forming the boundary zone with the Jalisco

block. The Tepic area is overlain by the young

volcanics of the Trans Mexican Volcanic Belt.

Historical volcanic activity of this magnitude

is very important as it suggests the possibility

of highly mineralized zones to be discovered.

Nuevo Milenio is comprised of 2,560 Ha’s of

which Cream has only explored 600 Ha’s.

The mineralization within the caldera is

comprised of three distinct zones that trend

SE/NW and are open in both directions and

at depth. The current resource is comprised

of three higher grade quartz veins that reside

within the eastern rim of the caldera. The

balance of the resource is contained within

a zone on the floor of the caldera. Within

the eastern rim of the caldera there is the

possibility of two or more additional higher

grade veins to be drilled off and on the floor

of the caldera there are five known zones that

require additional drill testing. Employing

the three year average prices for silver and

gold the zones on the floor of the caldera

represent open pit mining potential while the

veins within the eastern caldera rim represent

underground mining potential.

Nuevo Milenio is approximately 140 km’s

north east of Puerto Vallarta and only 27 km’s

from Tepic, the capital of Nayarit State. Tepic is

an important commercial centre with a popu-

lation in excess of 300,000 people. Access from

Tepic is 24 km’s by highway and paved second-

ary road and 3 km’s by dirt road. Quality infra-

structure including the Tepic Airport, water,

power and a railway are all within 14 km’s of

Nuevo Milenio. This is a very important fea-

ture of Nuevo Milenio as it substantially reduc-

es infrastructure investment, an important

component of mine development investment.

In the fourth quarter of 2010 Endeavour

Silver Corporation launched a hostile take-

over bid for Cream. After three months, in

early December 2010 Endeavour dropped

its takeover offer. One effect of the takeover

offer was to highlight Cream and in particular

Nuevo Milenio to the mining community and

junior resource investment community as a

desirable asset with significant potential. Such

was the perceived potential of Nuevo Milenio

that offers of financing on favourable terms

were received by Cream.

In 2010 Cream closed a $CDN6 million

bought deal financing that resulted in Sprott

Asset Management and Pinetree Capital

Limited becoming the Company’s largest

shareholders at approximately 16% each.

Armed with a new financial war chest Cream

spent 2011 conducting a 20,292 metre drill

campaign totalling 89 drill holes focused on

upgrading a significant portion or the current

resource from the inferred category to the

indicated category and expanding the current

resource. Cream has assay results from 21 (to

be confirmed) drill holes pending release in

Q1 2012. In addition the Company will be

releasing a new Mineral Resource Estimate

by the end of Q1 2012. Following that Cream

will embark on another significant round

of exploration drilling targeted at increasing

the size of the silver-gold resource, the next

step in building a world class silver and gold

deposit. To be continued… n


atossa geneticsNew ‘Pap test’ for Breast Cancer Launched

adoption of the Pap test has led to a 75%

reduction in the incidence of cervical cancer

and Quay believes that a similar result is pos-

sible for breast cancer.

“NAF analysis provides the same oppor-

tunity for breast cancer, the most feared

malady for women worldwide,” he said.

Quay, 61, a former faculty member of

the Department of Pathology at Stanford

University School of Medicine, is known for

past accomplishments such as the invention

of five drugs including Gadolinium, a drug

used routinely during MRIs to “brighten”

organs so tumors and other abnormalities

are more easily spotted.

“Current mammography procedures can

detect cancer that is already present,” Quay

said. “But in a sample of NAF, a pre-cancer-

ous condition called atypical ductal hyper-

plasia, or ADH, can be detected up to eight

years before cancer is found by mammogra-

phy.” Quay, who worked as a post- doctoral

fellow for Nobel Laureate Gobind Khorana,

added, “ADH is a condition in which cells

lining the breast’s milk ducts grow abnor-

mally, creating a higher risk of cancer devel-

opment. Studies have suggested that mam-

mography fails to detect ADH in more than

90 percent of patients, and that ADH can be

definitively diagnosed only by NAF analysis

or an invasive breast tissue biopsy.”

If precancerous conditions are found in a

NAF sample in Atossa’s lab, the current care

plan is to make specific lifestyle changes that

may reduce the risk of breast cancer, while

increasing the schedule for breast imaging,

including MRI.

But Quay wants to go further, by develop-

ing drugs that can be delivered directly into

the duct where the precancerous cells are

ProceDure shows great

Promise; is being useD in

meDicaL Practices since

December 2011

A new, FDA-cleared medical device and pro-

cedure that can identify breast cancer issues

up to eight years before cancer is diagnosed,

is being launched across the U.S. this year,

says its developer, Steven C. Quay, M.D.

Ph.D., FCAP, who was named one of the

Pacific Northwest’s Top Leaders in Health

Care at a 2011 Seattle ceremony.

The procedure can be thought of as a “Pap

test” for the breast. It comprises a device and

method for the collection and laboratory

analysis of cells contained in nipple aspirate

fluid, or NAF, to identify precancerous cellu-

lar changes and other cancer flags, explained

Quay, founder of Atossa Genetics, Inc., a

privately held health care company based in

Seattle, Wash., that is marketing his inven-

tion – the Mammary Aspirate Specimen

Cytology Test (MASCT) System.

Quay and others involved with Atossa –

which is named after ancient Persia’s Queen

Atossa, the first woman in recorded history

to be diagnosed with, and who later died

from, breast cancer – are dedicated to pre-

venting breast cancer by early detection of

pre-cancers and then treatment.

“It’s a tragedy that one woman dies from

breast cancer every minute in the United

States. … We believe we can do something

about this,” he said.

Quay explained the MASCT System works

on the same principal as the Pap test in

that it can identify pre-cancerous cellular

abnormalities that can be treated in order to

prevent progression to cancer. Widespread

PRoFILED ComPAnIEs


located, thereby treating the condition while

avoiding the side effects associated with sys-

temic delivery.

With the help of Dr. Susan Love, a

renowned breast cancer researcher and a

clinical professor of surgery at UCLA’s David

Geffen School of Medicine, Atossa is devel-

oping drugs for the treatment of precancer-

ous abnormalities, along with technology to

deliver the drugs directly into the milk ducts

using a device designed by Dr. Love.

“While treating breast cancer when it

is found can be daunting, reversing pre-

cancerous ADH should be a lot easier,” Quay

said.

One of Atossa’s Scientific Advisory Board

members is Tim Hunkapiller, Ph.D., a pio-

neering presence in computational biotech-

nology for 30 years, and the co-inventor of

the biggest selling analytical research instru-

ment in the world: the Perkin Elmer/Applied

Biosystems DNA sequencer.

“Atossa Genetics’ ForeCYTE Breast Health

Test[sm] is an exciting new breast cancer

risk assessment test that I believe will be

recognized by physicians and patients as

one of the most important new tools in the

fight against breast cancer,” said Hunkapiller,

who is the founder, president and chief

scientific officer of Seattle-based Discovery

Biosciences Corporation, which provides

technical consulting and commercialization

services to both established and upcoming

biotech companies.

“Future generations of products and ser-

vices being developed by Atossa have the

potential to change the way we think about

and treat ADH in order to prevent breast

cancer,” Hunkapiller added.

Also on the Scientific Advisory Board

is Edward Sauter, M.D., Ph.D., associate

dean for research at the University of North

Dakota School of Medicine and Health. He

is widely recognized for his research and

clinical experience in breast cancer. Among

his accomplishments, Dr. Sauter and a team

of researchers pioneered noninvasive and

minimally invasive techniques to predict

breast cancer risk using nipple aspirate fluid.

“Atossa’s MASCT System holds promise to

serve as an important adjunct to mammog-

raphy for the benefit of patients,” he said.

Quay, Atossa’s chairman, president and

CEO, has successfully launched six start-

ups and made about one billion dollars in

the past for investors. Atossa has attracted

about 200 investors and last year raised $6.6

million in funding. Since initially launch-

ing the MASCT System in December 2011,

selected doctors are now using it in their

practices. The plan is to introduce the test

more broadly in the U.S. in 2012.

Doctors already using the procedure have

been sending samples to Atossa’s wholly

owned National Reference Laboratory for

Breast Health, located in Seattle. Medicare

will reimburse the lab approximately $380

for each test; private insurance is typically

charged at a higher rate.

Quay said he anticipates that the MASCT

System will be used initially in conjunction

with standard mammography or cervical

Pap test exams. Atossa’s NAF collection pro-

cedure takes about five minutes, is painless,

and, importantly, uses no radiation.

In addition to what’s expected to be a large

role in the battle against breast cancer, there

is the potential for significant revenue. Quay

said he hopes that in the future Atossa’s

procedure will be routinely performed at

the same time as a woman has her annual

Pap test. About 55 million pap tests are per-

formed in the U.S. annually.

Atossa believes that its technology is

protected by a strong intellectual property

estate. Atossa owns the rights to six U.S. pat-

ents and fourteen foreign patents covering

the manufacture, use and sale of the MASCT

System, as well as pending patent applica-

tions for improvements, and the FDA mar-

keting authorization for the MASCT System.

Quay said he began to formulate the

MASCT System about 10 years ago after

he learned more about the work of now-

deceased Dr. Georgios Papanikolaou, devel-

oper of the Pap test. Papanikolaou stated in

1954 that the same type of process as the cer-

vical Pap test could be used for breast health.

Quay said that through the years medical

devices have been designed, but were only

successful in obtaining nipple aspirate fluid

samples from between 39% and 66% of

patients because of the pumps’ dependence

on applying negative pressure to the nipple

to induce fluid expression.

Quay’s MASCT System overcame this

by placing a hydrophilic, or water-seeking,

membrane in contact with the nipple during

the cycles of negative pressure to wick fluid

from the orifice of the ducts by capillary

action. In a 2003 clinical trial, the MASCT

System collected measurable fluid and sam-

ples were deemed to be clinically useful in 97

percent of the women tested.

After learning about Quay’s improved

device in 2011, renowned cancer researcher

Dr. Nicholas L. Petrakis, professor and chair-

man emeritus of preventive medicine and

epidemiology at University of California San

Francisco’s School of Medicine, told Quay

he thought Quay’s device “solves the nipple

aspirate fluid collection problem we have

had for over 50 years” and should help save

lives from breast cancer.

In a letter Atossa sends to doctors, the suc-

cess of the Pap test is emphasized. Annual

cervical cancer rates have dropped from 150

per 100,000 to 8 per 100,000. Meanwhile,

breast cancer rates stubbornly remain at

about 350 per 100,000 per year.

“The Pap test is the most successful

screening test in the history of medicine,”

Quay states.

Now, Atossa and its advisors are working

to get the word out about their procedure

and its similar potential.

To learn more about Atossa Genetics and

its National Reference Laboratory for Breast

Health, go to http://www.NRLBH.com. n


477 4 22

10

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In the past trust was the basis for a business relationship. Most transactions occurred

by and between two parties that understood the risk and its rewards. That has mutat-

ed into litigation and distrust. We are at a crossroads in this country trying to do the

right things in an immoral milieu. How we proceed is up to everyone being more

diligent in how one approaches any transaction. The Broke rage industry has been por-

trayed in a negative light. Being timorous will only result in more abuse and potential

failure in this New Year.

Being involved in the financial industry for more than thirty years has led me to a

number of conclusions. Change is inevitable and trying to maintain the current posture

operating the Broker Dealer no longer works. Being your own compliance officer takes

entirely too much time away from all the other duties. Hiring someone is too costly in

many cases. There are firms out there that can provide the proper guidance to perform

these services. Out sourcing is the most prudent way to handle these concerns. Make

certain you do your proper Due Diligence on these entities and engage the ones that

come recommended by at least three references.

Hire a good attorney to assist you in navigating through the maze called FINRA. My

suggestion is finding someone that has had success with FINRA in the arbitration arena

as well as negotiating the path of internal fines and/or censorship. They exist and are

negotiable in fee schedules that can be within your budget. At a conference in August

of 2011, a high ranking member of FINRA urged the Broker Dealers present to use the

office of the Ombudsman. How ironic, that is how I began my initial article for this

magazine. One must make a conscious effort to improve the odds against them in this

time of vicissitude. Do not be diffident, instead be proactive examine your weaknesses

and find solutions that will rebuild trust that the Banks caused the investors to lose.

The movie “Inside Job” narrated by Matt Damon should be viewed by anyone in the

industry. It should give one a better understanding of how and why we are at this junc-

ture and why the distrust is so prevalent.

ombudsman

v I E W P o I n T s

In this

environment

of regulation

and uncertainty

one has to be

extraordinarily

vigilant.

n WRITTEn By JACk LEsLIE


20% of the women diagnosed this year are younger than 50

*

The ForeCyte Breast Health Test provides a personalized cell-based approach for identifying breast cancer risk by analyzing Nipple Aspirate Fluid (NAF) collected with the FDA-cleared, patented MASCT™ device.

ForeCYTE is to breast health what PAP smears are to cervical health.

Make part of every women’s health care routine.

Make

Learn more at www.atossagenetics.com

* NAF-Wrench et al JNCI 93: 1791, 2001, Mammo-Baines et al Radiol 160: 295, 1986

part of every women’s health care routine.

SNN_ad_FINAL.indd 1 1/30/12 9:37 AM

Micro-Cap Review Winter 2011

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