MicroCap Review Winter/Spring 2015

ter
$5.00
WINTER/SPRING 2015
Matinas BioPharma Holdings, Inc.

Page
12
microcapreview.com
OTCQB: MTNB
CEO, Roelof Rongen
www.matinasbiopharma.com
Fission Uranium
Corp.
Retweet
Page
62
TSX: FCU OTCQX: FCUUF

CEO, Dev Randhawa
www.fissionuranium.com
F E A T U RDigg
ED ARTICLES
mbleUpon
pe
Tube
16 Why Gold Is Edging Higher, and Oil and

Copper Remain Cheap By Rick Rule
Invest By Charles Payne

28 Why You Must
Technorati
Cesca Therapeutics Inc.

Page
54
36 Finding the Next Great MicroCap

By Neil Cataldi
25 Non-Cash Costs Can Sink the Ship

By Corey Fischer
52 What Millennials Need to Know
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Newtek Business Services Corp.

Page
About Investing in MicroCaps

By Robert Kraft
NASDAQ: NEWT
CEO, Barry Sloane
www.thesba.com
NASDAQ: KOOL
President, Kenneth Harris
www.cescatherapeutics.com
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CONTENTS
WWW.MICROCAPREVIEW.COM
Winter/Spring 2015
10 Investing in Marijuana MicroCap Stocks

By Todd Davis and Alain Soutenet
16 Why Gold Is Edging Higher, and Oil and
Copper Remain Cheap
By Rick Rule
19 What Led You to be Called the Father of
the JOBS Act?
By David Weild
28 Why You Must Invest
By Charles Payne
32 Going Public Through a Reverse Merger
By John Lowy
34 The Stem Cell Revolution
By Michael D. West, PH.D.
36 Finding the Next Great MicroCap
By Neil Cataldi
38 Biotech: Year in Review 2014
By Seth Yakatan
40 Is it Worth Investing in Russian Securities?
By Stan Grafski
52 What Millennials Need to Know About

Investing in MicroCaps
By Robert Kraft
58 Finding the Value in Pitch Events
By John Dmohowski
66 New Formations
By David Alsup
67 Activist Investing Offers an Exit Strategy
for Struggling MicroCap Stocks
By Elizabeth Kopple
68 Exploration Insights: Turning Rocks Into
Money
By Brent Cook
70 Who Discovered Africa?
By Anthony Desir
74 Hong Kong IPO Market Outlook 2015
By Leslie Richardson
80 Reasons for the Coming Palladium Bull
By Nick Hodge
44 Silver and Gold Investor

By David Morgan
88 Emerging Growth Capital Investors Seek

to Manage Volatility in 2015
By Brett Goetschius
50 Unbiased Equity Research for Microcap

Companies
By Ajay Tandon
93 EB-5: An Alternative Method to Raise

Capital
By Benjamin Tan
Accounting Corner
25 Non-Cash Costs Can Sink the Ship By Corey Fischer
Compliance Corner
86 Accredited Investor Changes Could Threaten
Capital Formation By Lance Jon Kimmel
Commodity Corner
76 2014 Commodities in Review By Mark Shore
Viewpoints
90 Ombudsman By Jack Leslie
Comic Strip
84 WallStreet Chicken - Episode 11
Proled Companies
6 Newtek Business Services Corp.
NASDAQ: NEWT
12 Matinas BioPharma Holdings, Inc.
OTCQB: MTNB
54 Cesca Therapeutics Inc.
NASDAQ: KOOL
62 Fission Uranium Corp.
OTCQX: FCUUF TSX: FCU
PROFILED cOMPaNIES
Newtek Business
services Corp.
Nasdaq: Newt
ewteks roots were established 17

years ago in 1998 with the vision
of one of the founders and present
CEO, Barry Sloane, to create a business that
would offer essential products and services to
support an underserved market and yet the
backbone of American economy; the smalland medium-sized business (SMB) market.
Since that initial vision, Newtek has successfully grown and been rightfully awarded
the title The Small Business Authority on all
small business needs with its comprehensive
suite of product and service offerings including Business Lending, Electronic Payment
Processing, Managed Cloud Computing,
eCommerce,
Accounts
Receivable
Financing, The Newtek Advantage, The
Secure Gateway, Insurance Services,
Web Services, Data Backup, Storage and
Retrieval and Payroll. The Company has
been publicly traded for over 14 years since
2000, and boasts of over 100,000 business
accounts across all 50 states.
CoNversioN to a BusiNess
deveLoPMeNt CoMPaNy
(BdC): a growth aNd
iNCoMe ProPositioN
To foster the continued growth of the business and the brand, Newtek embarked on a
new journey on November 12, 2014 when it
successfully converted to a business development company (BDC). As a BDC, Newtek
intends to elect to be treated as a regulated
investment company (RIC). As a RIC, the

Company generally will not have to pay corporate-level U.S. federal income taxes on any
income that is distributed to Newtek stockholders in the form of a dividend. To qualify
for RIC tax treatment, Newtek is required
to distribute at least 90% of its investment
company taxable income to its stockholders.
In a recent release, the Company announced
it currently expects to pay an annual cash
dividend of approximately $1.80 per share
in 2015, which equates to an attractive double-digit annual yield of 12.3%(1). With
this conversion to a BDC there are a few
notable points that lend Newtek a competitive advantage in this space. In short,
the Newtek BDC model is different than
the typical BDC structure making it attractively distinct amongst its peers. Primarily,
Newteks portfolio companies are operating
companies and it holds controlling interests
in certain of these companies. Specifically,
either directly or through wholly-owned
subsidiaries, Newtek holds controlling
interests in Newtek Technology Solutions,
Small Business Lending, Inc., CDS Business
Services, Inc., Newtek Merchant Solutions,
Newtek Insurance Agency, LLC and Newtek
Payroll Services. Additionally, contrary
to the externally managed BDC structure,
Newtek is an internally managed BDC, with
no base or incentive fees paid to external
managers.
The Company is looking forward to the
many opportunities expected to be available
within their new structure, led by a seasoned

senior management team with long tenure at
Newtek, with interests closely aligned with
those of its shareholders. The CEO owns
approximately 10%(2) of outstanding shares,
and combined with management and the
Board that percentage exceeds 14%(2).
Newtek, The Small Business Authority
Building a Lasting Brand
At the core of Newteks success is the
culmination of hard work and perseverance in building a brand that has garnered
industry-wide recognition as a premier provider of a comprehensive suite of products
and services to the small business owner.
All of these products are customizable and
can be tailored to meet the individual needs
of each independent business owner, truly
helping them increase their sales, lower their
costs and, as a result, harness success in the
ever-changing competitive landscape. The
question has been raised time and time again
- how has Newtek been able to navigate the
economic cycles over the years, and emerge

as the authoritative presence providing such
premier service and cutting-edge customizable products? The answer lies in Newteks
ability to keep their finger on the pulse of a
constantly changing market, expanding and
enhancing their product and service offerings to meet the needs and demands of the
independent business owner. It is that market acumen, combined with technological
capabilities that have molded the foundation
of their business model.
Specifically, at the heart of Newteks technological capabilities lies its patented proprietary state-of-the-art web-based technology,
NewTracker, which enables the Company
to board the vast majority of its customers
in a cost-effective manner through referrals
from industry-recognized alliance partners
who drive customers to Newtek through
These partners entrust
NewTracker.
Newtek to offer their independent business
clientele the products and services they can-
not or do not provide. Currently, Newtek

has an impressive list of well-recognized
firms as partners and continues to forge
these strategic relationships building their
customer base across their product lines.
The Company currently maintains strategic partnerships with well-known firms
and organizations such as Morgan Stanley
Smith Barney, UBS, American International
Group (AIG), Credit Union National
Association (CUNA), Navy Federal Credit
Union, The Hartford, IBERIABANK,
New York Community Bank, Community
Transportation Association of America
(CTAA), Pershing, Paragon Financial
Group, and Amalgamated Bank to name a
few.
Newtek - The Largest NonBank SBA 7(a) Lender

Newtek has been assisting their customers
with their financing needs for over 11 years,
providing them with SBA 7(a) loans, lines

of credit and inventory financing, to name a
few examples. Since 2004, Newtek has been
providing financing directly to its customers, never using brokers and, to date, has
approved over $1.0 billion in loans. Over the
years, the Company has prided itself on taking great care to maintain its strict adherence
to underwriting guidelines, never sacrificing
credit quality for the sake of growth. It is
this discipline that has enabled Newtek to
withstand multiple lending cycles, including the credit crunch of 2008-2009, and to
achieve the title of the largest non-bank SBA
7(a) lender(3) and hold a position in the topten most active SBA 7(a) lenders among all
banks and non-banks(3).
Newtek establishes liquidity for the
unguaranteed loan portions of the SBA 7(a)
loans it originates through securitizations.
The Company has issued five Standard
and Poors rated AA and A securitizations
since 2010, closing its largest securitization
with the most favorable terms to date in
December 2014. The Companys ability to
secure more attractive advance rates and
lower cost of funds in the most recent securitization is testament to the high quality and
consistent strong performance of Newteks
loans. With historic returns on investment
in excess of 30% in the Companys SBA
7(a) lending program, Newtek will focus on
continuing to grow this business in 2015 and
beyond.
business owners to simultaneously control

their IT costs and grow their businesses.
Newteks cloud infrastructure and unique
provision of 24/7/365 U.S.-based live customer service to assist independent business
owners and IT professionals with all of their
needs, has given small- to mid-sized organizations the unique opportunity to gain
access to computing power and software
that was only previously available to large
corporations.
Newtek is also known for introducing the
first true all-in-one ecommerce offering,
where Newtek is the webhost, the merchant
and shopping cart provider with its own
secure proprietary gateway that handles all
credit card transactions. Everything the
business needs is all in one place, therefore
reducing costs and once again is supported
by around-the-clock customer service. In
fact, it was Newteks success and notoriety in the payments space that recently
attracted SEQR by Seamless (OMX: SEAM),
one of the worlds largest suppliers of payment systems for mobile phones to partner
with Newtek. This partnership allows for
Newtek to gain an edge in the ever-changing
U.S. payments landscape and enables them
to offer small- and medium-sized business
merchants a seamless and secure payments
platform and solution, eliminating interchange fees charged by traditional credit
card companies.
The Best is Yet to Come

Cutting Edge Products
and Services Capturing
Market Opportunity
Newteks success and expertise extend well
beyond its lending capabilities. Newtek is at
the forefront of solutions in the cloud computing and eCommerce arenas. Specifically,
Newtek has met the rapid adoption of cloud
computing over the past few years with its
highly functional cloud environment that
boasts premium security, dependability with
99.9% uptime, and incredibly fast scalable
performance which allows independent
While The Small Business Authority brand

continues to provide high levels of satisfaction to independent business owners in all
50 states, there is still a tremendous opportunity to continue to penetrate the vast
small- to medium-sized business market of
over 27.5 million businesses. The Company
is looking forward to continuing to grow the
business, capture market opportunity and
expand their customer base, while returning
its profits to the hands of its stakeholders
under its new structure as a BDC.
For more information, please visit www.
thesba.com, or contact Jayne Cavuoto,

Director of Investor Relations, at jcavuoto@
thesba.com, or 212-273-8179, or Simrita
Singh, Director of Marketing, at ssingh@
thesba.com, or 212-356-9566. Also, be sure
to view Newteks Annual Magazine at http://
www.thesba.com/newtek/annual-magazine/, which provides a plethora of information on the cutting-edge products Newtek
provides with detailed information on issues
facing the SMB market and how Newtek can
help.
(1) Based on January 9, 2015 closing price of $14.59
(2) As of December 22, 2014
(3) For the 12-month period ended September
30, 2014. According to the U.S. Small Business
Administration and measured by dollar volume of
approved loans.
The Small Business Authority is a registered trade
mark of Newtek Business Services Corp., and
neither are a part of or endorsed by the U.S. Small
Business Administration.
Note Regarding Forward Looking Statements
Statements in this press release including
statements
regarding
Newteks
beliefs,
expectations, intentions or strategies for the future,
may be forward-looking statements. All forwardlooking statements involve a number of risks
and uncertainties that could cause actual results
to differ materially from the plans, intentions
and expectations reflected in or suggested by
the forward-looking statements. Such risks and
uncertainties include, among others, intensified
competition, operating problems and their impact
on revenues and profit margins, anticipated future
business strategies and financial performance,
anticipated future number of customers, business
prospects, legislative developments and similar
matters. Risk factors, cautionary statements and
other conditions, which could cause Newteks
actual results to differ from managements current
expectations, are contained in Newteks filings
with the Securities and Exchange Commission
and available through http://www.sec.gov. n
The company paid consideration to SNN or its affiliates for this article.
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F E AT U R E D A R T I C L E
Investing in Marijuana
MicroCap Stocks
I
n the nine months leading up to their peak in March 2014, marijuana

stocks rose over 6 fold in value, fueled by the speculative frenzy that
followed marijuanas legalization in Colorado and Washington and the
promises of high returns from a nascent industry that is predicted to
grow by the most conservative estimates to a $10 billion plus market
in the next 4 years and experience an astonishing compounded annual
growth rate of 40%.
Micro-cap companies, undeterred by the stayed on the sidelines and avoided the sec-
n TODD DAVIS
ALAIN SOUTENET
10
ongoing federal ban on cannabis, hurried

into the space to provide growers, processors and dispensaries with the services and
technologies necessary to create a legitimate
infrastructure and the controls necessary
onto which the industry as a whole could
be developed. By March 2014, the marijuana index had listed 45 publicly traded
companies in the marijuana space that were
reaching unprecedented valuations, soaring
briefly beyond $6 billion.
Nine months later, prices had fallen over
80% and by the end of 2014, the dust was
settling as the sector was struggling to find
a solid bottom after the much anticipated
bounce from the November elections results
opening the doors to adult use in Alaska,
Oregon and Washington, DC had failed to
materialize. The year ended in a gloomy
mood for investors in marijuana micro-caps
who had poured an estimated $1 billion in
investment capital.
This unfolding is in many ways reminiscent of the Dot.com bubble when the
technology sector experienced a 78% drop
in stocks valuation between March 2000 and
the fall of 2002. Internet technology stocks
kept reeling for years to come as investors
tor altogether.
While cannabis stocks did experience a
similar boom to bust curve, albeit in a more
condensed time frame, it is important to
recognize the common forces behind the two
bubbles, but also to draw the line and identify how fundamentally different the cannabis industry is from the Internet economy, as
seen from the perspective of their disruptive
impact and adoption patterns.
The premise of Internet technologies was
the creation of a new economy that assumed
a paradigm shift in the way customers
purchase goods and services. The adoption
pattern turned out to be slow and profit
margins so slim that today only a handful
of highly capitalized companies that could
afford to operate at a loss for years to come
have survived and are now firmly in control
of the e-commerce space.
In contrast, the premise of cannabis entrepreneurs is to legitimize under the umbrella
of state-mandated programs, an existing
thriving industry that has been operating in
the grey and black markets for decades. The
size of the marijuana market is not subject to
speculation; it has been well researched and
documented. And the industry operates, at
least for the near term, at very healthy profit

margins. In Colorado where the sale of marijuana has been legal for over a year now, an
estimated 35 to 40% of transactions are still
considered to originate from illegal sources,
underscoring the latent market potential.
Most micro-cap companies are traded in
the largely unregulated OTC Market, inevitably and unfortunately attracting unscrupulous groups and individuals. As early as
August 2013, FINRA started issuing warnings about marijuana stock scams and in
April 2014, reiterating its warnings of fraudulent activities and pump and dump scams,
FINRA and the SEC ordered the suspension
of trading on several marijuana companies
suspected of accounting irregularities, the
issuance of unregistered offerings and the
dissemination of inadequate or potentially
inaccurate information, triggering a wide
spread retreat from investors and the unraveling of the short lived rush of capital into
the sector, leaving behind a taste of distrust
that has been ever since hard to erase.
Investors are questioning the soundness
of investing in marijuana stocks in todays
environment and rightly so. On the surface,
companies appear to be more fairly valued
than they have ever been and we are starting
to see well diversified companies who diligently dedicated their resources to develop
industry specific solutions to bring compliance and standardization to the industry
emerging from the shadows and move from
a development stage to sustainable revenue
generating models.
Concurrently, more companies are
going through an audit process to become
fully reporting and have their listing status upgraded. Through transparency proper capital can be raised more efficiently
through full registration like Reg-A and
S-1 filings, attracting accredited and institutional investors.
The Federal ban on marijuana is by design
preventing public companies from realizing
any revenue from the sale of cannabis and cannabis infused products. Consequently, only
ancillary businesses that provide supporting
technologies and services and are engaged in

the supply chain are able to operate as public
entities, leaving a large piece of the pie to private enterprises who control the products and
realize revenues from direct sales.
The future of the cannabis industry is in
the hands of voters who are increasingly supporting legalizing medical and adult use of
marijuana, keeping them at odds with a federal government that for a variety of reasons,
political or not, is reluctant to revisit the classification of marijuana as an illegal substance.
Yet the momentum is squarely in favor of
the legalization movement and the pendulum is likely to shift towards full legalization
once California, Nevada, Arizona and most
northeastern states legalize adult use by 2017,
unleashing an industry with the potential to
generate over $3 billion in tax revenues alone.
The financial windfall for states is hard to
ignore and will certainly play a role in bridging the divide between state and federal policies. Between January and November 2014,
the state of Colorado took in a total of $67.5
million in tax revenues from the sale of medical and recreational marijuana. NerdWallet,
a personal finance site, estimates that legalization in California would generate for the
state over $519 million per year while New
York would take in $248 million.
Meanwhile, savvy investors like Peter Thiel,
co-founder of Paypal and early Facebook
investor, are quietly investing in marijuana
enterprises, while funders of Tesla and Uber
are taking minority interest in marijuana
tracking and compliance software, a reflection of a series of positive signals from
Washington: Congress last fall instructed
the Department of Justice to refrain from
interfering with states mandated marijuana
programs, the first marijuana credit union
is expected to open soon in Denver, more
banks are opening their doors to marijuana
businesses and the SEC is now allowing the
registration of shares for companies whose
activities are directly linked with and serving
the cannabis industry.
Investors in micro-caps will have to be very
selective. The best way to mitigate risks when
investing in marijuana stocks is to pick companies that are transparent, have built portfolios of tangible assets, are well funded and run
by seasoned professionals who have the track
record to deliver and execute on their plans
and generate significant sustainable revenues.
Once solid foundations are established, those
companies will dominate the market and ride
the wave of legalization when it eventually
takes hold. Strong initiatives for full legalization in states like CA will be the key driver for
eventual adoption at a national scale. In 2015
these initiatives will become the primary catalyst in the next political cycle. 2015 is the year
to establish a long term and sustainable view
on the marijuana industry. Identify winners
and start building a portfolio in this nascent
American opportunity.
Endexx is a Collaboration Corporation that
develops through its subsidiaries cost effective technology solutions for the legal marijuana industry,
Endexxs diversified offerings include an easy to use
Seed to Sale inventory tracking and process management system for growers, processors, dispensaries,
medical patients and users, a high tech commercial
grade inventory control dispensing system, a line of
superior cannabidiol infused edibles and a pioneering New Jersey consulting firm. Endexx is publicly
traded under the symbol EDXC.
Todd Davis Bio:
Education: Northern Arizona University Bachelor
of Science - Administrative Communications.
CEO Endexx Corporation 1993-Present
Investment Banker/Stock Broker 1990-2000
CEO/Consultant for multiple Small Cap companies 2000-Present
Developer/ Analyst Pro17 market and stock forecast model 2008-Present
As a Broker, Consultant and CEO Todd has participated in and managed/structured over 100 IPOs,
private placements and convertible debentures raising in excess of 100 million in the Small and Micro
Cap arena over the last 22 years.
Alain Soutenet Bio:
Education: Nantes Law University, France, 19701974
Government Contractor, Embassy, South Africa,
1995-1997
Business Development Director, construction management software, 1998-2002
Real Estate Developer, renewable energy consultant,
2003-2009
President Global Solaris Group, renewable energy
developer, 2010-Present
General Manager, Endexx Corporation, 2013 to
Present
Strategy driven, experienced entrepreneur with
over 30 years of management positions in multiple
fields of industry for governments, corporations and
private investment groups. n
11
Figure 2. Matinas BioPharma Pip
PROFILED cOMPaNIES
Matinas BioPharma holdings, inc.

otCqB: MtNB Discovery
Matinas BioPharma holdings, inc., is a clinical-stage
IND
Preparation
publicly-traded biopharmaceutical
E
D
company based in New jersey. the company is developing lipid-based prescription therapies,
with a focus on the treatment of fungal and bacterial infections, addressing the acute threat
Anti-Infective Development Programs
of multi-drug-resistant infections, and metabolic/cardiovascular conditions. the management

team and Board of directors have solid track records in developing and commercializing
blockbuster pharmaceutical products.
MAT2203
MatiNas foCus is
addressiNg the sigNifiCaNt
ProBLeM of drug-resistaNt
BaCteria
annually. The development

which are selectively picked
of new anti-infective treatup by certain immune-cells
ments has become a critiand transported to the site
cal mandate governments
of infection [see Figure 1].
all over the world. This
These tiny lipid crystals
has led to the dedication
are referred to as cochleof important resources as
ates.
Cochleates have a
well as incentives to pharmultilayer crystalline, spiral
maceutical companies who
structure with no internal
are able to effectively develaqueous space. The strucop therapies in these areas.
ture is formed when a series
Importantly, Congress has
of solid lipid sheets roll up
Roelof
Rongen,
Matinas
CEO
initiated new legislation that
and engulf drug molecules
and co-founder
increases market exclusivity
in between the sheet, a profor new anti-infective treatments, appropri- prietary process referred to as encochleately rewarding those companies that invest ation. The result is a lipid-crystal encochlein this space. Notably, the United States ated drug formulation made up of nanogovernment recently demonstrated its com- sized particles. Because the medications are
mitment in this area by allocating approxi- locked in the particles, the sensitive-organ
mately $1.2 billion to the development of exposure to these medications is drastically
new anti-infectives, of which $650 million to reduced, as are the toxic side-effects. In
the National Institutes of Health (NIH). The addition, the technology adds the ability to
ability to partner with the government in the delivery is delivering injection-only medicadevelopment of these therapies provides a tions by oral administration, thus significompetitive advantage to those companies cantly reducing the cost of administration
seeking to provide effective medicines for and increasing patient convenience. In sumthe benefit of patients everywhere.
mary, this unique technology offers (1) targeted delivery, (2) sensitive organ protection,
CoChLeate teChNoLogy
and (3) oral administration (even for IV-only
medications).
The disruptive MTNB lipid-based delivery
The cochleate lipid-crystal nano-particle
technology locks these potent but dangerous drug delivery technology was brought into
anti-infective drugs up in tiny lipid-crystals MTNB through its recent acquisition of
Fungal Infections
Matinas BioPharmas (MTNB) core capabilities combine the use of lipids as active
pharmaceutical ingredients (API) and the
use of lipids in cochleate-shaped lipidcrystal nano-particle drug delivery vehicles.
Matinas revolutionary and proprietary lipid
delivery technology is focused on the delivery of several potent and highly efficacious
anti-fungal and anti-bacterial agents which,
unfortunately, are currently still associated
with serious side effects, including irreversible toxic effects on kidney and hearing
function. MTNBs technology allows for the
safe and targeted delivery of these agents,
which position the Company to be at the
forefront of dealing with these very serious
problems. In fact, the need for effective
treatments is drastically increasing with the
rise of drug-resistant fungal and bacterial
strains which are becoming more prevalent
throughout the world. According to the
CDC, approximately 2 million multi-drug
resistant infections occur in the US each
year, leading to approximately 23,000 deaths
MAT2501
Gram-Negative Bacterial Infections
Metabolic/Cardiovascular Development Pr
MAT9001
Severe Hypertriglyceridemia
MAT8800
Fatty Liver Disease
12
Aquarius Biotechnologies, a spin-out of

Rutgers University in New Jersey. The inventor of the cochleate technology, Raphael
Mannino, PhD, is an associate professor at
Rutgers Medical School and is a core member of MTNBs Scientific Advisory Board
(SAB). He and his team patented this technology across 12 issued patent families and 3
more recently filed patent families, claiming
several inventions that significantly improve
the cochleate drug delivery technology platform. Former Aquarius CEO and CMO
Carl Craft, MD (formerly Venture Head
of Abbotts anti-infective R&D group), has
stayed with MTNB as the chair of the antiinfective section of the SAB.
The benefits of the cochleate delivery technology have been recognized and embraced
by the NIH through a range of development collaborations between MTNB and
NIH. Given its profile, this exciting technology allows for a much broader use of these
potent, but toxic, anti-infective therapies
and provides an opportunity for MTNB to
develop a broad and deep product pipeline
in collaboration with the NIH and other
governmental organizations.
Mat2203 a gaMe ChaNgiNg

aNti-fuNgaL forMuLatioN
The lead anti-infective product in the MTNB
pipeline is the lipid-crystal nano-particle
formulation of Amphotericin B (MAT2203),
a potent broad-spectrum fungicidal agent
for which no clinical cases of resistance
have been reported to date. The latter is
vitally important because emerging resistance to the agents in the fungistatic azole
and echinocandin anti-fungal classes is
limiting the clinical utility of these agents.
These limitations and the spread of resistance, combined with MTNBs breakthrough
technology will potentially increase the
use of Amphotericin B (currently ~$700
million/year). Importantly, Amphotericin
B is also the only fungicidal anti-fungal
agent approved for non-topical use and
can actually kill a fungus or yeast inside
Figure 1. Cochleate Lipid-Crystal Nano-Particles

and Targeted Delivery
A platform drug delivery technology**
1.
2.
3.
Reduces toxicity by containing drug

inside particle
Size and surface features facilitate
targeted delivery
Potential for oral administration
that provides targeted delivery

1
High Calcium
Low Calcium
Calcium
PS* Bilayer
Drug
* Phosphatidylserine
50-500 nm
Nanocochleate particles
open up under low
calcium and deliver antiinfective intracellularly
** Cochleate platform delivery technology under exclusive license from Rutgers University
the human body, as opposed to fungistatic

agents which will stop growth, but require
an active immune system to kill the infectious agent, something that is unfortunately
lacking in many patients. This is important because this elevates Amphotericin B
to the most preferred antifungal treatment
in immunocompromised patients, such as
those with chronic viral infections (HIV),
patients undergoing organ or bone-marrow
transplants, or patients with weak immune
systems due to chemotherapy. The ability
to protect sensitive organs from the toxic
side-effects of Amphotericin B positions
MAT2203 well to gain a major market share
within the Amphotericin B class, while
growing this class at the same time.
From a development perspective, several
animal model studies were conducted for
serious fungal infections such as aspergillosis, cryptococcal meningitis and candida,
all in collaboration with the NIH. A Phase
1 study in humans has been completed and
demonstrated a positive safety and tolerability profile with no adverse events reported.
MTNB is currently preparing for a Phase 2a
clinical in patients with refractory mucocutaneous candidiasis to be conducted at the
NIH, under a clinical trial agreement where
the company is only responsible for delivering drug product to the NIH.
Mat2501 a PoteNtiaL
Leader iN the treatMeNt of
graM-Negative BaCteriaL
iNfeCtioNs
The second anti-infective product under
development is the cochleate formulation
of the aminoglycoside antibiotic Amikacin
(MAT2501) for the treatment of gramnegative bacterial infections. Multi-drugresistant (MDR) infections are rapidly rising
and, while the gram-positive segment of
this emerging threat to population health is
being addressed by a blockbuster category
comprising Zyvox (Pfizer), Cubicin (Cubist),
and Vancomycin, the gram-negative MDR
segment is significantly under-served.
Typical infections in this category are lung
infections in Cystic Fibrosis patients and
patients on respiratory ventilators in hospitals or nursing homes, patients with complex hospital acquired urinary tract infections, tuberculosis and atypical mycobacterium infections. Similar to Amphotericin
B, Amikacin is a very potent anti-infective
agent with significant and irreversible side
effects such as toxicity for the kidneys and
hearing organs. The cochleate formulation
of Amikacin (MAT2501) provides a similar
targeted delivery to infected sites while significantly reducing the toxicity profile.
13
grams. Through its own research, Matinas

has demonstrated that these unique omega3 fatty acids are also known to interact
with these receptors, potentially positioning
MTNB well to play a prominent role in the
treatment of these high-need conditions.
Figure 2. Matinas BioPharma Pipeline

Discovery
IND
Preparation
Early Clinical
Development
Phase 3
Development
Anti-Infective Development Programs

MAT2203
Fungal Infections
a history of suCCess
MAT2501
Gram-Negative Bacterial Infections
Metabolic/Cardiovascular Development Programs

MAT9001
Severe Hypertriglyceridemia
MAT8800
Fatty Liver Disease
MAT2501 is currently undergoing formal

animal toxicity studies at the NIH in preparation for filing an IND with the FDA later in
2015 and initiation of human studies shortly
thereafter. Given the prevalence of drugresistant gram-negative bacterial infections
(approximately 500,000/year) and the lack
of effective therapies, MTNBs MAT2501
should be carefully monitored.
oPPortuNities BeyoNd aNtiiNfeCtives

In the category of lipids as active pharmaceutical compounds, MTNB has two ongoing programs - MAT9001 and MAT8800.
MAT9001 is under development for dyslipidemia with severe hypertriglyceridemia
as primary indication (TG500 mg/dL).
The market and clinical need in the cardiovascular/metabolic disease space remains
significant and growing due to the increasing
obesity epidemic and human life-span. In
fact, in the US alone, approximately 65 million adults have above normal triglycerides,
with 4 million adults diagnosed with severe
hypertriglyceridemia (VHTG: TG500 mg/
dL).
MAT9001 is a complex omega-3 fatty acid
composition with DocosaPentaenoic Acid
14
(DPA) as the key differentiating component.

MTNB has developed a unique capability to
manufacture and isolate rare omega-3 fatty
acids, such as DPA, and obtain them in a
highly pure form. These rare omega-3 fatty
acids are very hard to isolate from natural
sources at any meaningful commercial scale
there is no known abundant source material
with high levels of DPA. DPA has shown to
have highly differentiating features and demonstrated to be a very potent reducer of triglycerides (see the Our Science page on the
Companys website). Late 2014, MTNB filed
an IND for MAT9001 and started its first
human study with MAT9001, with results
expected during the second quarter of 2015.
The MAT8800 discovery program seeks
to identify promising product candidates
for the treatment of fatty liver disease.
Approximately 30 million US adults suffer
from a form of fatty liver disease such as
Non-Alcoholic Fatty Liver disease (NAFLD)
or Non-Alcoholic Steato-Hepatitis (NASH),
conditions that may lead to cirrhosis and
liver failure and for which no pharmaceutical treatment has been approved to date.
Several treatments under development for
fatty liver disease are focusing on a particular
nuclear receptor called Farnesoid X Receptor
(FXR), including Intercept and Gilead pro-
The founding management team of MTNB

has a significant track record of success in
many pharmaceutical and biotech companies,
highlighted by numerous product approvals and the launch and commercialization
of several products that went on to achieve
blockbuster status. The core team worked
together at Reliant Pharmaceuticals where
they gained broad experience in the dyslipidemia field and received FDA approval for
five product candidates. After they successfully developed and launched and Lovaza
(the first FDA-approved prescription omega3 medication) in 2005, Lovaza saw significant
prescription growth (a blockbuster with peak
sales over$1 billion annually) and in 2007
GlaxoSmithKline acquired Reliant for $1.65
billion. Matinas CEO and co-founder Roelof
Rongen previously led the global team for
Humira at BASF Pharma (now Abbvie).
In addition to Mr. Rongen and the
rest of the Matinas management team,
the Companys Board of Directors brings
decades of drug development and commercialization success to the Company. In
fact, a Board of this repute is not typically
associated with a microcap stock. Notably,
Chairman Herbert Conrad was the President
of Roches North American Pharmaceutical
Division, has been a Director of Celldex
since its inception, and most recently was the
Chairman of Pharmasset at the time it was
sold to Gilead for $11 billion in 2011.
Clearly, MTNBs pipeline (Figure 2) and
experienced team bring the credibility and
wherewithal necessary to build a new company focused on developing novel prescription medications for high-need clinical areas.
Website: www.matinasbiopharma.com n
What Does
It Take to
Change the
World?
YOU.
Think sports arent important? Think again.

All kids deserve the right to grow up playing sports and being active. Sports
teaches them the fundamental values needed to succeed in life. All too often,
kids with physical challenges are left on the sidelines. For 21 years, CAF has
supported over 9,500 athletes worldwide with grants for equipment, competition,
training and mentoring, providing the tools they need to get in the game.
Were changing lives, one athlete at a time.

2014 www.stocknewsnow.com
Challenged Athletes Foundation.
CAF is
a 501(c)(3) non-profit, Tax ID # 33-0739596
www.snnwire.com
www.MicroCapReview.com
Learn how you

can help CAF
change lives, one
athlete at a time:
www.challengedathletes.org
15
Why Gold Is Edging

Higher, and Oil and Copper
May Remain Cheap
he last part of 2014 and the beginning of 2015 have been

interesting and tumultuous, with three separate and dis-
tinct outcomes for natural resources. The first two were the precipitous declines in both oil and copper prices. The third was the
precipitous increase in gold prices.
CoPPer aNd oiL
n BY RIck RULE
16
Lets first talk about the precipitous declines

in the copper and oil prices, and, to a lesser
degree, in other industrial metals. Why did
this happen?
It happened because markets work. Very
high prices for industrial commodities in the
last decade, until the general decline starting
in 2012, did two things. First, high prices
stimulated supply because the industry had
access to more capital thanks to higher
earnings and access to debt. The very strong
copper and oil prices we enjoyed for 10 years
allowed for higher supplies to come online
over time. At the end of the last decade, oil
and copper prices had increased rapidly.
Supply did not increase so quickly that it
stopped the run-up in its tracks. But after
a few years, as high prices ruled the roost,
there was a supply response.
While those high prices stimulated new
capacity, they also constrained demand.
Consumers tend to use less of a commodity

as it becomes more expensive. An increase
in supply and a decrease in demand was
eventually met with the softer prices that we
are now seeing. How does this end?
A run-up in general equities prices suggests that the US has entered into a recovery.
Unless that recovery actually translated into
real economic growth, commodity prices
will continue to be weak. It isnt that there is a
tremendous over-supply of either oil or copper right now. The problem is that demand is
anemic. Absent a real recovery, it could take
two or three more years for these soft prices
to result in lower production and then, perhaps, higher prices.
In my opinion, if a rebound in oil prices in
the near term is to occur, it will be driven by
increased demand, but not decreased supply.
The most important reason for the price
dips in both oil and copper is likely weak
demand, and not over-supply. GDP growth
(reportedly 2.6% annualized in the last quar-
ter of 2014 ) appears to be the result of a

recovery in financial assets such as stocks
and bonds, and less a real economic recovery. Its true that auto sales are edging up, and
I would love to see them go higher as they
would positively impact commodities.
But in a real economic boom, I would not
expect to see weak oil and copper prices.
Weak commodity prices are more symptomatic of flat economic growth. In a real
recovery, commodities should be a primary
beneficiary. In my view, this weakness in
demand could continue for another two or
three years.
On the supply side, I dont expect significant constraints in the near term that would
drive the prices of either copper or oil higher.
Industries like copper mining and oil drilling take a long time to adjust to lower prices.
They are unable to quickly reduce supplies
when demand is weak. Long-term capital
investments in new oil production over the
last decade represent trapped capital in the
sector. This capital cannot be removed from
the sector just because returns are unsatisfactory. Therefore, these assets continue to
produce, even if they never generate a satisfactory return on investment, as long as they
generate enough cash to keep them running.
When projects generate some positive
cash flows, but no significant return on the
investment, then the industry loses capital.
New investors stay away while the excess
investments from prior years continue to
prop up production. This process is called
de-capitalization. Capital available to the
sector for new projects dries up, but production does not drop off right away.
A supply response will be muted while
the industry is still in the de-capitalization
phase. Prior experience, such as the natural
gas crisis in 1982, shows that the industry
can de-capitalize for at least 5 or 6 years.
1
Gold
The move up in gold and silver prices in
January is witness to another phenomenon.
According to many people the trigger for
the move up was the de-pegging of the Swiss

Franc from the Euro. But I dont think thats
true. I see it as really the result of just a tiny
dent in faith in the US dollar.
If youve been reading our blog Sprotts
Thoughts, you will know that of all the reasons why gold might go up, I believe that the
most important is the relationship between
gold and the US dollar. Precious metals compete for shelf space in investors portfolios
with the US dollar as a means of savings.
Precious metals have lost that competition
pretty spectacularly over the last five years.
We are living in a general hegemony of
the US dollar and US Treasuries, and I dont
think that is going to change anytime soon.
But I think that precious metals are beginning to lose less badly against the dollar,
and that there is more shelf space available
right now.
It is my belief that the war between the US
dollar and gold will edge slightly in golds
favor, simply because US Treasuries yield less
than 2% for 10 years2. Thats not an attractive value proposition in my opinion, and I
believe it will give gold a little more room in
investors portfolios.
Sign up to receive exclusive opinion and
commentary from Rick Rule, and the Sprott
organization, for free. Click here.
1
http://www.bea.gov/newsreleases/
national/gdp/gdpnewsrelease.htm
2
http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/
TextView.aspx?data=yield
Mr. Rule and his team have long experience in many

resource sectors including agriculture, alternative
energy, forestry, oil and gas, mining and water. Mr.
Rule is particularly active in private placement markets, having originated and participated in hundreds
of debt and equity transactions with private, prepublic and public companies.
Sprott US Holdings, Inc. is a holding company
made up of three separate and distinct companies:
Sprott Global Resource Investments, Ltd., a FINRA
Registered Broker/Dealer; Sprott Asset Management
USA Inc., an SEC Registered Investment Adviser
offering managed accounts; and Resource Capital
Investment Corporation, an SEC Registered
Investment Adviser managing partnerships. These
three companies make up the US Subsidiaries of
Sprott Inc. and are active in securities brokerage, segregated account money management and investment
partnership management involving both equity and
debt instruments, across the entire spectrum of the
natural resource industry. n
Rick Rule
Chairman, Sprott US Holdings, Inc.
Mr. Rule has dedicated his entire adult life to many
aspects of natural resource securities investing. In
addition to the knowledge and experience gained in
a long and focused career, he has a worldwide network of contacts in the natural resource and finance
worlds. As Director, President, and CEO of Sprott
US Holdings, Inc., Mr. Rule leads a highly skilled
team of earth science and finance professionals who
enjoy a worldwide reputation for resource investment
management.
Mr. Rule is a frequent speaker at industry conferences, and is interviewed for numerous radio,
television, print and online media outlets concerning
natural resource investment and industry topics.
He is frequently quoted and referred by prominent
natural resource oriented newsletters and advisories.
17
award recipients
salutes the 2015
Brain Biosciences
A compact, portable high
performance, cost effective
PET scanner for evaluation
of patients with suspected
Alzheimers or other
neurodegenerative
disorders.
www.brain-bio.com
GraftWorx, LLC
JPLC Associates
Mindoula Health
A smart graft automatically

detecting critical
arterial bypass grafts occlusions
to prevent amputations
that occur due to
undetected graft failure.
www.graftworx.com
The Raven, a device

that integrates optical,
mechanical, and radiation
quality assurance parameters
for radiation therapy
equipment.
www.ravenqa.com
A telehealth platform
supporting virtual and
in-person 24/7 behavioral
health case management
services, enabling coordinated
collaborative care.
www.mindoula.com
RBG: 51, 165, 212

RBG: 66, 186, 229
RBG: 4, 114, 173
Dr. Quinones-Hinojosa
A biodegradable nanoparticle
therapy enabling effective
transfection of brain cancer
patient stem cells.
www.jhmi.edu
Vixiar Medical, Inc.
Usage guideline:
Dont include content within this space
A noninvasive device to
monitor congestive heart
failure using a patients breath.
www.vixiar.com
www.bio.maryland.gov
What Led You to be

Called the Father of
the JOBS Act?
d Kim and I wrote a series of studies that woke Washington

up to how destructive our equity markets had become for
corporations. We documented a shocking decline in small IPOs

starting in 1998 it was hidden because the decline occurred
during the height of the Dot Com Bubble.
n DAVID WEILD
This was four years before the implementation of Sarbanes Oxley (the popular culprit)
and coincides with Reg. ATS (Alternative
Trading Systems) which is really the dawn
of electronic markets. We also identified a
collapse in the number of listed companies
(NASDAQ and NYSE) from 9,000 down
to under 5,000. We showed that China
was growing and the United States was in
decline. Congressmen were shocked. This
collapse cost the US more than 10 million
jobs.
As a result, a number of Congressmen
started drafting legislation and before you
knew it, there was a smattering of bills in
both the U.S. House of Representatives and
the U.S. Senate. I testified in Washington
and our work was cited by the IPO Task
Force Report to the U.S. Treasury and by
the Chairman of the House Oversight
Committee. Then, in early September
2011, President Obama gave a speech to a
Joint Session of Congress in which he said,
Were also planning to cut away the red
tape that prevents too many rapidly growing

startup companies from raising capital and
going public.
While many people were amazed that the
JOBS Act was passed, it was actually heavily
bipartisan and had the Presidents support.
While most of the Act was authored by the
Republican-controlled House, I understand
that the Executive Branch communicated to
the U.S. Senate Democrats that the President
wanted the Bill passed. The rest is history.
On April 5, 2012, I was in the Rose Garden
of the White House for the signing.
For those who want to read the two key
studies that led to the JOBS Act, they can
be found on the IssuWorks website (www.
IssuWorks.com) at:
Market Structure is Causing the IPO Crisis
and more (http://media.wix.com/ugd/
c4bcbd_b3e7b1879ee04914d3e0379239ff68a0.pdf)
A Wake Up Call for America (http://
media.wix.com/ugd/c4bcbd_06fe6672597e8
46d0cc82559624ad5bb.pdf)
19
what tyPes of CoMPaNies

does issuworks work
with?
The good news is that the JOBS Act has really

helped the IPO market: The Confidential
Filings provision gives companies the courage
to go public by eliminating the risk of premature
disclosure or reputation damage in the event of a
failed deal.
how is the joBs aCt iMProviNg the fiNaNCiNg ProsPeCts for MiCroCaP CoMPaNies?
So far, the JOBS Act is doing nothing for
already public companies. This is why we
have pushed two ideas a pilot to increase
tick sizes (the minimum price that a stock
is quoted currently 1 cent) to 5 cents and
10 cents. We have also argued for specialized exchanges for smaller companies
because we believe that the one-size-fits-all
stock markets of today are optimized for
large and liquid stocks and not small and
illiquid companies. We have left a lot of
entrepreneurship, innovation and jobs needlessly on the table by depriving small companies of real aftermarket support.
The good news is that the JOBS Act
has really helped the IPO market: The
Confidential Filings provision gives
companies the courage to go public by
eliminating the risk of premature disclosure or reputation damage in the event of
a failed deal. Testing the Waters allows
companies to pre-market their offerings
to institutional investors, which is critical for complicated investments, high-risk
investments and heavy intellectual-property investments; it is having a particularly
profound impact for biotech companies
looking to go public.
20
We work across all industries. Our clients

include companies in financial services,
technology, media, biotech, and the REIT
industries, which generally range from $100
to $500 million in equity market value. We
are exclusively focused on reaching institutional investors at the moment, but eventually, we may adapt our model to provide
innovative retail distribution capability and
could help even smaller companies.
how is the iPo Market

doiNg?
how does issuworks work?

Well do 280 or so IPOs in 2014, the best
number since 2000, but this number is
pathetic in absolute terms. The U.S. was
churning out over 500 IPOs a year in the
early 1990s before the Dot Com Bubble,
which, weighted for growth in the U.S.
economy, would be over 900 a year today.
Moreover, about 50% of IPOs will be small
IPOs up from 30% last year, but before the
move to electronic markets in 1998 the small
IPO was consistently 80% of all IPOs.
how is issuworks heLPiNg

sMaLL- aNd MiCro-CaP CoMPaNies?
We increase demand for small-, micro-cap
and even larger public companies who are
chronically unable to systematically reach
large numbers of the right investors (because
of the misaligned incentives of Wall Street).
Our unique process uses large amounts of data
to identify more of the right investors; we use
marketing and communications technologies
to reach these investors and we follow-up with
registered sales people. We are the first and
only company-aligned capital markets firm
(we dont take commissions from investors)
and are holistically positioned to serve the
needs of our corporate clients. Early results
(we opened our first office this past May) have
been pretty remarkable. We have more than
doubled demand on offerings.
We are a FINRA-registered investment

bank. Companies engage us directly and
we are also now being White Labeled
and engaged by our first investment banks.
Investment banks quickly realize that our
reach is complementary to theirs and they
see us as a cost-effective capability to bolt
onto their syndicate department during a
transaction. Our revenue model is a combination of retainer fees and deal fees.
The SEC recently announced that it was
moving ahead with a tick-size pilot program with the exchanges and I understand
that you were the Father of this idea as
well. Yes, in the sense that it was an idea
that I proposed at a dinner with the thenvice chairman of the House Subcommittee
on Capital Markets a number of years ago.
Can companies submit their names
for consideration? No, not under the current plan. It is a randomized study that
will include a control group and three test
groups. Each group will have 400 stocks in it
for a total of 1200 stocks not including control stocks (which will be traded as usual).
All stocks will have share prices greater than
$2 per share, market caps below $5 billion
and average daily trading volumes below 1
million shares.
What is the timing of the Pilot? The
SEC is currently in a comment period and
the plan is controversial. As a result, there
For the past decade, Tuesdays Children has been committed

to serving all those directly impacted by the events of
September 11, 2001 and terrorist incidents worldwide.
Tuesdays Children serves children and families who lost loved ones on September 11th, 2001;
the Rescue and Recovery Workers; Families of the Fallen; Wounded Warriors, as well as young
people impacted by terrorist incidents worldwide through our international program, Project
Common Bond. Given its successful model of long-term healing, Tuesdays Children is also
working closely with those assisting families in Newtown, Ct. and Boston.
We need you to provide an internship for a child who lost a parent, make a charitable
donation, become a mentor to a child, fundraise, or simply call us and tell us how youd like
to get involved. Help to Keep the Promise.
For more information, please call 212-332-2980

o r v i s i t w w w . t u e s d a y s c h i l d r e n .MicroCap
o r gReview Magazine
21
in it to win it. We plan to stop at nothing

less than leaving a better legacy for the next
generation. For more information, reach us
at inquiry@issuworks.com.
To have a one-size-fits-all stock market, which is

what we have in the United States, optimized to
trade S&P 500 stocks and apply it to micro-cap
stocks is idiotic.
will be quite a bit of comment and the SEC
will need to respond to that comment and
likely adjust the structure of the Pilot. So,
I suspect that the Pilot wont get underway
until the second quarter of 2015, at the earliest.
How will this program impact microcap companies? The intent is to figure out
how to increase the incentives to support
microcap stocks. We believe that greater
incentives would lead to greater investment
in, and support for, small- and micro-cap
stocks and the small- and micro-cap ecosystem. Combined, this would also lead to
higher numbers of IPOs, economic growth
and millions and millions of jobs over the
next decade but not overnight.
What do you like/not like about the
proposed plan for the Pilot? The Pilot
should be 5 years long, not 1 year long. It
should also test 10 cent tick sizes (not just 5
cents). In one of our studies we found that
you really needed tick sizes larger than 1%
of share price to support the long-term IPO
market. At 5 cent tick sizes, most of the
stocks in the Pilot will have tick sizes that
are materially smaller than 1% of share price.
what aBout veNture

exChaNges?
To have a one-size-fits-all stock market,
which is what we have in the United States,
optimized to trade S&P 500 stocks and apply
it to micro-cap stocks is idiotic. On October
27, 2011, the Wall Street Journal published
my Op-ed entitled, How to Revive SmallCap IPOs1 in which I stated, Whats needed
now is a new, parallel market for public companies under $2 billion in value. Trading rules
in this new market would allow for higher
22
commissions, which would provide adequate

incentives for small investment firms to get
back into the business of underwriting and
supporting small-cap companies. The SEC
could use its authority under securities laws
to exempt this market from rules standing
in the way, or Congress can step in. Since
then, the SEC Advisory Committee on Small
and Emerging Companies has endorsed the
need for Venture Exchanges as has SEC
Commissioner Daniel M. Gallagher, who
has a very solid grasp of the issues.
I believe that 2015 will be a watershed
year for the small- and micro-cap markets. I expect that well see a JOBS Act 2
and hopefully well see a bill for Venture
Exchanges. As weve seen with the original
JOBS Act, it can take years to implement
Congresss wishes. But, as our parents have
taught us, Patience is a virtue.
We have been on a bender undermining
our small- and micro-cap markets for fourteen years (since 1998 and Reg. ATS) and the
JOBS Act was only passed in 2012. Seen in
that light, were making remarkable progress
(I started this fight in 2007) in reviving the
U.S. IPO market to again be the envy of markets throughout the World.
What can your readers do? Write their
Congressman. Write the SEC. Push for
a market that drives capital formation and
economic growth again. At IssuWorks, were
David Weild (http://en.wikipedia.org/wiki/

David_Weild_IV) is the founder, Chairman and
CEO of IssuWorks. He is considered to be one of
the foremost stock market experts in the world and
is known as the Father of the JOBS Act - the most
important piece of pro-capital formation legislation
in the United States in over a generation. He is a former vice chairman of NASDAQ who ran a number
of businesses at a major Wall Street firm where he
oversaw more than 1,000 equity offerings. He is also
Chairman of the Board of Tuesdays Children, the
charity that was founded in the wake of 9/11. He can
be reached at inquiry@issuworks.com. n
1
See http://www.wsj.com/articles/SB100014240529
70203554104577001522344390902
What can your readers do? Write their

Congressman. Write the SEC. Push for a market
that drives capital formation and economic growth
again.
The future is now.
StockNewsNow.com
The Official MicroCap News Source
@StockNewsNow
facebook.com/SnnInc
linkedin.com/company/stock-news-now
youtube.com/SNNWire
rkraft@stocknewsnow.com
23
The Marcum MicroCap Conference is an

invitation-only event dedicated to introducing
investors to the very best, undiscovered companies
under $500 million in market capitalization.
www.marcumllp.com/microcap
May 27 & 28, 2015

The Grand Hyatt Hotel
New York, NY
ac c O U N T I N G c O R N E R
Non-Cash Costs Can

Sink the Ship
ost CEOs and CFOs are very conscious about producing

operating results that will meet investors, analysts and
Wall Street expectations.

In their daily oversight, such results are
dependent upon revenue generation, profitable margins and cost control. These are
key metrics that drive company analysis,
assessment of management performance and
overall stock performance.
While focusing on these performance
metrics, many CEOs, CFOs and investors
have learned the harsh reality that operations are not the only factors that come
into play when determining earnings or
liquidity of a public company. Complicated,
and often times highly misunderstood, noncash charges resulting from accounting rules
are frequently arising that distort the companys true operating performance. These
non-cash charges are particularly severe to

microcap companies, whose limited scale of
operations often times becomes insignificant
to the large values assigned to these non-cash
charges. Almost all of these non-cash charges
relate to issuance of company equity or debt
securities.
Probably the harshest pill for the preparers and readers of the microcap financial
statements to swallow is the creation of
large derivative liabilities that occur when
companies issue equity and debt agreements
(principally convertible notes) that contain
reset provisions to the exercise or conver-
n BY cOREY FIScHER
25
sion price of these instruments based on

future sales of equity. The creation of this
liability directly reduces stockholders equity
on the balance sheet, and causes a sizable
hit to earnings when recorded. And it
just doesnt end there. According to the
accounting rules, these liabilities must then
be measured to fair value each reporting
period, and the changes to the fair value are
recorded on the statement of earnings. The
amounts recorded for these liabilities, and
the corresponding adjustments to market,
are hard to predict. Furthermore, as the
creation of these liabilities directly reflects
net equity, this could unexpectedly create
violations of debt covenants, or worse, result
in problems with the trading exchanges that
have minimum equity requirements. What
is even harder to swallow for management, is
that these non-cash derivative liabilities will
almost never be settled for cash, and distorts
the companys true liquidity.
Other culprits that can cause significant
unwanted non-cash charges to earnings
would be the issuance of convertible debt
instruments whose conversion terms into
common stock are below market price of
the common stock on date of issuance. This
beneficial conversion feature will result
in an additional charge to future earnings.
Also, issuance of warrants as a kicker in conjunction with debt financing will result in
additional future non-cash interest charges
based upon the value assigned to the warrants. These non-cash amounts created by
the warrants and /or beneficial conversion
feature often times can equal the face value
of the financing instruments issued (ouch!).
Most preparers and readers of financial
statements of public companies now understand that a grant of option awards also
will create a non-cash charge to earnings.
However, what many do not realize is that
modifications to any stock award, including a change in the life of the award, vesting
dates, and exercise price or termination provisions can generate an unwanted additional
charge to earnings. Furthermore, options or
warrants issued to non-employees contain
26
Probably the harshest pill for the preparers and

readers of the microcap financial statements
to swallow is the creation of large derivative
liabilities that occur when companies issue
equity and debt agreements (principally
convertible notes) that contain reset provisions
to the exercise or conversion price of these
instruments based on future sales of equity.
other pitfalls, making earnings hard to manage or predict. That is because, as opposed
to awards granted to employees whose award
value is fixed at the time of the grant, these
types of awards given to non-employees have
to be remeasured at fair value at the end
of each reporting period. This can cause
wild or unpredictable swings in a companys
earnings depending on the volatility of the
companys stock price.
Whats a company to do? First thing
would be for company CEOs and CFOs to
do everything they can to avoid these types
of agreements. Though easy to say, circumstances may dictate otherwise. If such
transactions do arise, companies should
seek out solid accounting advice from their
financial advisors who are experienced with
these transactions before it gets to the
auditors. If you find yourself stuck with
these non-cash issues, you still have one last
way to communicate to your investor base.
Public companies are increasingly including
a reconciliation of earnings per the financial
statements to an adjusted earnings amount
that eliminates these non-cash charges within the Management Discussion and Analysis,
and in press releases. The Securities and
Exchange Commission allows this type of
reconciliation. Management of many companies have found this the best way to bridge
the gap between the earnings as reported per
financial statements, and a more meaningful

earnings number for investors and financial
statement users to monitor operating performance.
You would think the goal of the accounting rules would be to create a useful
understandable earnings number in the
first place.
Corey Fischer, CPA, is Firm Managing
Partner of Weinberg & Company, a multioffice, PCAOB-Registered firm specializing
in the audit, assurance and tax needs of
micro and small cap companies. He has
more than 25 years of experience, having
worked with the Big 4 accounting firms and
as an SEC reporting officer for a number
of NASDAQ-listed companies. He is based
in Los Angeles, and is an expert in financial reporting, SEC compliance, raising debt
and equity, mergers and acquisitions, and
structuring accounting operations. Email:
coreyf@weinbergla.com or 310-601-2200. n
A Unique Perspective
Imagine corporate and securities lawyers who are as interested in your business as you are. Who
understand and value it and who are prepared to work with you to create it, grow it, protect
it and ultimately maximize your return on it. Who will help you to nance it, or bring it to the
public markets, or eventually sell it. Imagine lawyers with passion, creativity and, most importantly,
dedication. This is the essence of Lucosky Brookman.
Public Offerings
General Corporate Matters & Governance
Private Placements / PIPEs
Term and Revolving Lending transactions
Equity Lines of Credit
Asset-based Lending transactions
Recapitalizations (Reverse / Forward Splits)
Revolving Lines of Credit
Rule 144 Matters
Letter of Credit transactions
Mergers and Acquisitions
Bridge Loans
Joint Ventures
Registration Statements (S-1, S-3, S-8, Form 10)
NYSE, NASDAQ and NYSE Amex Listings
Commercial Litigation and Arbitration
SEC Compliance Matters
Regulatory Investigations (SEC / FINRA)
NEW YORK OFFICE

45 Rockefeller Plaza, Suite 2000, New York, NY 10111
Tel: (212) 332-8160, Fax: (212) 332-8161
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101 Wood Avenue South, 5th Floor, Woodbridge, NJ 08830
Tel: (732) 395-4400, Fax: (732) 395-4401
info@lucbro.com | www. lucbro.com
Why You
Must Invest
A
mericans have largely written off the stock market after

enduring two devastating market crashes in less than a
decade. The result is since the Great Recession fewer and fewer
households have money invested in an individual stock, mutual
funds of retirement accounts like 401K or IRA.
Even after the carnage of 2000 household
investment in the stock market hovered
around 61%- it came into 2013 at just 52%.
Now, cynics and skeptics, many would-be
investors vowed never to return.
This is a natural reaction in the aftermath
of stock market crashes exacerbated this
time by a never-ending multitude of noise
from market bears, book-sellers and curmudgeons whose investment decisions are
based on personal feelings about people in

power or entities.
While theres no doubt the recovery has
been hampered by poor fiscal policy and at
some point there will be a day of recognizing from monetary policy the true nature of
investing is to focus on owning great companies with values unrecognized by the market.
In fact I spend much of my days explaining
that Wall Street the physical place where
n CHARLES PAYNE
28
While theres no doubt the

recovery has been hampered
by poor fiscal policy and
at some point there will
be a day of recognizing
from monetary policy the
true nature of investing is
to focus on owning great
companies with values
unrecognized by the market.
those hedge fund masters of the universe
count their cash shouldnt be confused with
owning shares in great companies.
Expensive Train to Miss

As a percentage of total financial assets this
is the second highest level ever for stocks.
Most of that has to do with the rally if people
simply kept some exposure to the market
it would be a big chunk of their net worth.
And some has to do with the value of other
assets like housing and gold taking big hits.
But, for those that held on through the down
drafts its been a worthwhile ride.
Even armed with all of these facts fence-
sitters continue to reject the notion of investing. So, let me take a different approach
because there are a few things most people
acknowledge as facts and share as fears.
You probably arent going to earn enough
money during your working years to live the
life desired in the golden years. The solution is your money must work for you and
in order for that to occur, you must own
something. It can be a business, it could be
a stamp collection but something needs to
generate profits or have value that outruns
inflation.
The other thing we mostly agree on is
that heart and soul of Americas capitalistic
system is the small business owner.
Headlines tout the recovery thats gaining

steam and theres no doubt things are better
but what regular folks understand is this
isnt a recovery that has coattails. One of the
reasons is the attention and taxpayer money
coupled with phantom fiat money given to
big banks and businesses to make it through
the difficult times. Im no fan of the Federal
Reserve but think the focus on its impact on
the stock market misses bigger issues.
Enabling Big Government borrowing
and spending that crowds out private sector
Promoting behavior at banks that continue to put entire nation at risk
So, against all odds including the reluctance of banks to provide working capital,
small businesses have carried the day. The
giant check processing company ADP issues
a job report each month dividing business by
large, medium and small. By far the small
category generates more jobs than the others and in November 2014 created 49% of
all net jobs.
Combing through the data further its the
very small businesses that often pump out
the most jobs.
Eventually a lot of these small companies
become larger companies and their shares
are offered to the general public. The companies that are hot out of the gate, however,
are detoured into a path that sees a lot of
29
In fact 2015 will see a lot of hot initial public offerings of

companies that are already household names or well-known
in the tech world instantly making insiders millionaires and
billionaires.
upside value sucked out of them before the
general public gets a chance at ownership.
In fact 2015 will see a lot of hot initial public offerings of companies that are already
household names or well-known in the tech
world instantly making insiders millionaires
and billionaires.
At the top of the list is Uber the ride-share
company thats as famous for its businesses
as it is for running afoul of the law. By the
time this company becomes publicly traded
everyone will know what it is (my son told
me about the company two years ago when
he was 16 years old) and think of it as a hot
company and probably a hot stock worth
owning at any price.
Take a look at the levels of funding for
Uber.
uber
fundraising
history
dec 2011
amount
valuation
$37.5M
$330M
$258M
$3.5B
$1.4B
$18.4B
$1.0B
$40.0B
Jeff Bezos
aug 2013
Google
june 2014
Fidelity
dec 2014
T Rowe
Price
Im not picking on Uber or hating on billionaires making easy money but making the
point that getting in early and at the bottom
can be very lucrative although not necessarily as quickly as the hot Silicon Valley deals.
At the end of the day everyone must have
some exposure to the stock market with a
30
portfolio mixed of old blue chip names and

a few small names that could become future
blue chips. Any excuse not to be an investor falls on deaf ears and results in empty
wallets.
Happy New Year
roots events and educational gatherings worldwide.

Charles is author of Act Fast, Be Smart and Get
Rich debuted in April 2007.
Charles was awarded the Congress of Racial
Equality (CORE) Man of the Year Award in 2009.
Charles attended Minot State College and Central
Texas College during his time in the Air Force and
Majored in Criminal Justice.
Hobbies include drawing and painting along with
reading non-fiction books.
WALL STREET STRATEGIES, Inc., 61 Broadway,
Suite 1425 NY, NY 10006 TEL: 212-514-9500
FAX: 212-514-9582 WWW.WSTREET.COM n
Charles Payne
Wall Street Strategies, Inc.
CEO and Principal Analyst
Charles V. Payne is the Chief Executive Officer
and Principal Analyst of Wall Street Strategies, Inc.
(WSSI), which he founded in 1991. With less than
$10,000.00 in start up capital and working from his
apartment, he launched WSSI to provide a unique
brand of stock market advice. Through this service,
subscribers (money managers and individual investors) began to reap sizeable profits and the firm
developed a national reputation as provider of timely
and effective equity analysis. Today, WSSI provides
information to over 120,000 registered subscribers,
in more than 60 countries as well as several of the
largest bank/brokerage firms. Charles oversees a
team of stock analysts that cover specific industry
groups, in addition to monitoring the entire market
and individual sectors on his own.
Charles passion for the stock market began when
he was 14 years old. He told his mother then that one
day, he would work on Wall Street.
Charles got his start in the industry in research
at EF Hutton in 1985. After two years, he switched
gears and accepted a position with boutique brokerage firm, Greentree Securities. It was there that
he first saw a niche for independent and timely
equity advice, which led to the creation of Wall Street
Strategies. Due to the success of his guidance and
stock selections, Charles has become well sought
after by many highly respected finance-oriented
radio, web and television programs. He is widely recognized in the media as a leader among the analyst
community, and is routinely contacted for his market
opinions by several prestigious news organizations.
On June 2, 2014, Fox Business Network launched
Charles new show Making Money with Charles
Payne which is featured daily at 6pm EST. He is a
member and occasional host of Varney & Co and in
addition, he is a guest-host on several shows including Cavuto on Business and Your World.
Over the years, opinions and articles on Charles
Payne have been featured in prestigious news organizations such as Reuters, the Wall Street Journal,
and the New York Times. He has been the keynote
speaker at numerous investment conferences, grass
31
Studies show
overexposure to blue light to
cause oxidative damage to the
back of the eye.
BLEP Eyewear offers you the first computer glasses without

prescription and Over-the-counter readers with a clear blue
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Going Public Through a

Reverse Merger
f your company is interested in becoming publicly traded,

with very few exceptions there are only two options:
File a registration statement with the SEC
for an Initial Public Offering (IPO) on Form
S-1, either as a self-underwriting or through
a FINRA broker-dealer which will act as the
underwriter, to raise the capital your company seeks. Sounds good, but this approach
is filled with pitfalls: recent history of S-1
public offerings shows that self-underwritings do not raise significant amounts of
capital, often less than the legal, accounting
and other costs involved in the offerings.
Underwritten public offerings are few and
far betweenunderwriters see hundreds of
private company business plans, but choose
only a few to go public. Even if a company is
chosen, it must then endure an arduous due
diligence review by the underwriter, which
can take many months and divert valuable

time and capital from the company. And, at
any time, even on the day that the offering
is to be declared effective by the SEC, the
underwriter may withdraw from the offering
for any of a multitude of reasons: adverse
market conditions, the companys most
recent financials showed slower growth than
projected, the underwriter has more promising deals that it prefers, etc. An underwriter
withdrawing effectively ends the companys
goal of raising capital. Moreover, recent SEC
filings show that the market for smaller IPOs
is almost non-existent; for example, in the
week ended December 19, 2014, there were
17 public offerings filed with the SEC, but
only one IPO was for less than $40,000,000,
n JOHN LOWY
32
Perhaps the most significant disadvantage to reverse

merging vs. an IPO is that an IPO raises capital for
the company, and a reverse merger does not.
and that was for $10,000,000. So, unless your
company qualifies for a substantial capital raise, there is no reasonable likelihood
of going public and raising capital via an
underwritten IPO.
The other way for private companies to
become publicly tradedand I submit the
best wayto reap the considerable benefits of being a public company, is via a
reverse merger with a pre-existing public
company. There are four distinct advantages
of a reverse merger vs. an IPO: first, it is
much quickerin a typical reverse merger,
the private company will become publicly
traded in less than 60 days. Second, a
reverse merger is considerably less expensive
than an IPO (in most reverse mergers, the
private company pays cash to buy out the
public companys principals; but the cost
to buy out the principals is far less than
the legal, accounting, due diligence, underwriters upfront fees and other costs required
for an IPO). Third, the reverse merger route
is far more certain to be completed than an
IPOas noted above, the underwriter may
withdraw the IPO at any time, as opposed
to a reverse merger, in which (assuming the
public company is clean and the cash is paid)
the reverse merger is certain to be completed. And fourth, also noted above, given
the dearth of underwriters that do IPOs for
less than $40,000,000, the reverse merger
route is often the only way to go public! All
of these factors explain why reverse mergers
are becoming increasingly popular.
Are there potential disadvantage to a
reverse merger? As in any other financial
transaction, there are, of course, some issues
to consider: First, for a long time, there has
been a stigma attached to reverse mergers
years ago, and before the now-defunct OTC
Bulletin Board required public companies to

have audited financial statements, there were
many unproven companies that went public with unaudited, spotty financials, which
resulted in a plethora of pump-and-dump
schemes. However, OTC Markets--the most
popular site to find price quotes of companies which reverse merged--requires companies on its OTCQB site to be SEC-reporting
companies and current in their filings, thus
providing more credibility for smaller public companies and eliminating most of the
past uncertainty and lack of transparency.
Moreover, almost all of the major accounting firms and law firms are now actively
involved in reverse mergers, thus providing
more confidence in the legitimacy of reverse
merged companies.
Another potential drawback is the possible
lack of liquidity, once the private company
becomes publicly-owned. There are thousands of public companies which compete
for investor dollars; and therefore, I strongly
recommend that newly-public companies
retain a reputable Investor Relations company, to help these companies get noticed in
the marketplace. Almost every large public
company uses IR; smaller companies should
do the same.
Perhaps the most significant disadvantage
to reverse merging vs. an IPO is that an IPO
raises capital for the company, and a reverse
merger does not. However, this drawback
is irrelevant for private companies which do
not need to raise capital, either immediately
or in the near future. Moreover, this apparent disadvantage can not only be overcome,
it can turn into a plus: in many IPOs (assuming that your private company can somehow
get one done), the underwriter will negotiate
as low a pre-offering valuation as possible,
so that it and its customers will enjoy more

of the upside. A hot aftermarket often
meansas the expression is usedthat the
company left a lot of money on the table. In
contrast, when a private company reverse
merges, it can raise capital in a PIPE (Private
Investment in Public Equity) either simultaneously with the reverse merger, or at any
time thereafter. Either waywhether at the
same time as the reverse merger, or after
the costs of a PIPE are significantly less than
an IPO, it can be completed in much less
time (no pre-filings with the SEC or SEC
comments, etc.), and, when combined with
an effective post-reverse merger IR program,
the newly-public company can raise the
capital it needs with far less dilution than in
an IPO.
In conclusion, going public is a major
step in a companys corporate history, and
private companies should carefully weigh all
options on the table. Looking at the broader,
long term picture, and in the light of the
many advantages--and less disadvantages
of a reverse merger vs. an IPOI strongly
recommend that private companies consider
reverse merging as a viable way to enter the
public arena.
John B. Lowy is the founder (in 1993) and CEO
of Olympic Capital Group, Inc. (www.ocgfinance.
com), and is the principal of his law firm John B.
Lowy PC, both based in New York City. John is a
highly-respected and acknowledged expert in reverse
mergers, capital formation, financial consulting and
initial public listings.
As an attorney, an advisor or as a principal, John
has led or participated in more than 200 such transactions, creating market value in excess of $4 billion.
He has been instrumental in leading the process by
which many companies have reverse merged and
achieved listings on the NASDAQ or the AMEX.
John has completed transactions for clients
based in Australia, Brazil, Canada, the Caribbean,
China, Hong Kong, India, Korea, Philippines, South
Africa, Turkey, UK, United States, Vietnam and
other nations. The sectors in which theses clients
are engaged range from high tech to low tech, real
estate, pharmaceuticals, medical devices, oil and gas,
mining, solar power and other renewable energy,
entertainment, food, forestry, agriculture, education
and retail, among others.
He received his B.A. from Tufts University and
began practicing law after receiving his law degree
from the University of Pennsylvania Law School. n
33
The Stem Cell

Revolution
Implications for Age-Related
Degenerative Disease
arely, we have the privilege of viewing a revolution in the

making. In my lifetime, I have seen this in the miniaturization and widespread use of computer technology.
n MICHAEL D. WEST, PH.D.,

CEO, BIOTIME, INC . (NYSE MKT: BTX)
34
In a few short decades, computers have

changed everything, from the way we conduct commerce, the way we navigate the
highways, to the way we choose and listen to
music. In biotechnology (a field in which I
spend my time), we saw a similar revolution
in the late 1970s that changed medicine in
a very profound manner. It was the birth of
what is called, recombinant DNA technology. This discovery allowed researchers for
the first time to manufacture previously rare
and valuable proteins on an industrial scale.
Now life-saving proteins such as insulin and
growth hormone could be scaled up for millions of patients simply and at an affordable
cost. It is frankly hard to imagine current
medical research without recombinant DNA.
In the mid 1990s, I had the privilege of
participating in another revolution, one that
I think has the potential to be more impactful than even recombinant DNA. In the
course of human aging, numerous tissues
in the body wear out and are lost or become
dysfunctional. As a result, late in life we all
face the prospect of long-lasting (chronic)
age-related degenerative diseases that rob

us of quality of life. The list of such diseases
is, of course, long, but common examples
are Parkinsons disease where the loss of
certain brain cells lead to years of disability;
osteoarthritis, where the loss of cartilage in
the joints can cause a great deal of pain and
disability; heart failure, where the loss of
heart muscle after a heart attack can reduce
activity and lead to early death; macular
degeneration a leading cause of blindness,
and so on. These chronic conditions account
for some 80% of health care costs largely
because current medicines are not capable
of simply making new replacement cells for
these tissues in the body. That is where the
stem cell revolution comes in.
The isolation of a special type of cells
called pluripotent (all-powerful) stem cells
in the late 1990s made it feasible for the first
time in the history of medicine to manufacture on an industrial scale all of the cells
types of the human body, similar to the way
recombinant DNA allowed the manufacture
of all proteins. Therefore, it is now possible,
and products are now in clinical trials, where

valuable cells can be manufactured to replace
and repair tissues afflicted with degenerative
disease, such as those I mentioned above,
and of course, many others.
What does the revolution mean? There
has certainly been a lot of hype circulated
relating to the stem cell revolution. But, the
transplantation of cells and tissues to treat
disease is a well-established paradigm. The
limitation in the past has largely been one of
a lack of supply. With such an abundant new
source of cellular building blocks, I and many
other researchers in the field believe that the
future is bright for regenerative medicine.
Will we eventually be able to replace cells
in our bodies with fresh young cells to keep
us living longer and healthier? Probably. But
when that happens entirely depends on how
many scientists can be marshaled into the

cause. So far, the federal government in the
U.S. has assumed that new technologies will
merely add to the burgeoning health care
budget. I find that shortsighted. Chronic
degenerative diseases are expensive because
they are chronic. If tissues can be repaired,
the cost of treatment would, in my opinion,
dwarf that of the current ineffective therapies. If government funding is not coming
to the rescue, dont worry. Biotechnology
companies will come to the rescue. Where
there is human need, business will flourish.
Dr. West is the Chief Executive Officer of
BioTime, Inc.(NYSE-MKT: BTX)and its subsidiaries OrthoCyte Corporation and ReCyte Therapeutics.
BioTimes subsidiaries are focused on developing an
array of research and therapeutic products using
human embryonic stem cell technology. He received
his Ph.D. from Baylor College of Medicine in 1989
concentrating on the biology of cellular aging. He

has focused his academic and business career on
the application of developmental biology to the agerelated degenerative disease. He was the Founder
of Geron Corporation of Menlo Park, California
(Nasdaq: GERN) and from 1990 to 1998 he was
a Director, and Vice President, where he initiated
and managed programs in telomerase diagnostics,
oligonucleotide-based telomerase inhibition as antitumor therapy, and the cloning and use of telomerase
in telomerase-mediated therapy wherein telomerase
is utilized to immortalize human cells. From 1995
to 1998 he organized and managed the research
collaboration between Geron and its academic collaborators James Thomson and John Gearhart that
led to the first isolation of human embryonic stem
and human embryonic germ cells. From 1998 to
2005 he was Chief Executive Officer and from
2005-2007 President and Chief Scientific Officer at
Advanced Cell Technology, Inc. (OTC: ACTC) where
he managed programs in animal cloning, human
somatic cell nuclear transfer, retinal pigment epithelial cell differentiation and product development, and
PureStem, a technology for the multiplex derivation
and characterization of clonal human embryonic
progenitor cell lines. n
35
Finding the Next Great

MicroCap
lueprint Capital Management launched in October of 2012.

Together, with my partner Jason Revland, we have over 30
years of experience across the capital markets spectrum in trading, research, derivatives, portfolio management and client serOur mutual investment passion led us to do you find new companies? The answer is
vice.
n NEIL CATALDI
36
form Blueprint Capital as a way to exploit the

many inefficiencies, advantages, and asymmetric risk/reward common to MicroCaps.
Following years of collaboration and personal success in the space, we launched a formal vehicle so we could devote 100% of our
time delivering our strategy to clients, who
are mainly individuals and family offices.
Managing a concentrated, 12-15 position,
long-only portfolio is the best way we can
deliver meaningful, stock-specific returns
that reward our disciplined due diligence
efforts. We focus most of our attention on
Technology and Consumer related companies, and avoid themes where our research
edge would be compromised or negated
by forces outside our control, such as commodity prices and regulatory or political
decisions. We manage a small pool of capital,
and intend to stay small (sub $50M AUM),
as our size is a distinct competitive advantage, which allows us to operate where other
pools of smart capital are unable. In fact, we
are typically selling our winners to our larger
sized competitors.
This article focuses on the ways we find
these winners, and reinforces our namesake,
that one must have a plan and a well-defined
process, or a blueprint in order to expect
repeatable success. We are often asked how
a blend of art and science.

The science part is easy to understand.
Almost anyone can access free or cheap
quant screening tools that help sort through
databases containing financial data on thousands of companies. Anyone can apply logic
to these databases to sort and filter their
idiosyncratic preferences. Free online tools
have become pretty robust. We almost never
use quant screens to find new names however, on the belief that by the time promising
companies screen well, they have already
appreciated in value, and we have missed the
opportunity for outsized returns. Financial
statements are backward looking, and as
such, quant screens are looking into the past.
These statements are critical to analyze, but
even more importantly, we try and identify
how a company will look in the future.
The art is more nuanced. We want to
buy companies that will screen more favorably in 12-18 months, and show an acceleration in revenue, EBITDA, earnings, cash,
or other objective measures. We find that
quant screens rarely reveal the fundamental
growth catalyst, which is a subjective and
less obvious variable that must be identified,
or discovered, through direct interaction
with a companys management team. Growth
catalysts can be quite varied: New prod-
uct launch, strategic acquisition, strategy

pivot, change in management or Board of
Directors, asset sale, recapitalization or debt
refinance, balance sheet infusion, exchange
uplist, etc. This discovery process is handson, dynamic and multi-faceted, and cannot
be easily collated and condensed with a
computer alone. This is how we derive our
primary investment edge, which is identifying new, un-digested market information by
interacting with management. Our primary
methods of sourcing are further discussed
below.
Leveraging our extensive

peer (buyside) network
We have built many valuable relationships
over the years with other buyside investors, both big and small, institutional and
individual alike. The interesting thing about
MicroCaps is that literally anyone has a shot
at finding the next multi-bagger. There are
many exceptional people making their living
in MicroCaps, and we seek out those who
compliment our philosophy and process. We
also enjoy the camaraderie of sharing ideas
with other investors, and we get to leverage their diverse backgrounds, rolodexes
and geography. We are very transparent
about what we own, because we are open
to peer scrutiny and constructive criticism,
and often learn new things by sharing our
positions and our rationale for owning them.
This is much more than talking your book,
although getting other people to buy in size
after you are fully positioned can certainly
help.
Attending MicroCap conferences

We try and attend several major MicroCap
events throughout the year, and there are
3-4 in particular that are really worth the
effort and expense to attend. Some are independent, and others are sell-side sponsored.
They are a highly productive and cost-effective method for sourcing new companies.
Nothing can replace meeting management

face to face, and we try to achieve this with
every investment we make. There are certain red flags that we look for, which have
been learned through experience and losing money. There are many great ideas, but
fewer great management teams. It is the
intersection of the two where the probability
of winning increases. We are especially alert
for companies that have never presented at
conferences before, as this may signal an
emerging story.
Communicating frequently
with investor relations
(IR) firms
There are dozens of such firms, some good,
some bad. In having relationships with as
many of the good ones out there, we see
steady information flow on their new clients,
and introductions to management teams.
Also, good IR firms will be proactive in setting expectations, and communicating frequently. They will also offer valuable insight
into share price dynamics, as they are in a
position to take a more frequent investor
base pulse. These are valuable partnerships
that we cultivate and respect, as these firms
often work very hard for their clients, and
have strong alignment of interests in making sure their clients stories are properly
told. We have also introduced new clients
to them, a valuable source of referrals that
reinforces loyalty and respect that we are in
fact partners.
Leveraging our sellside/banking network The sellside/banking relationships
we maintain are well versed in their client stories, whether a research analyst or
a banker is involved. These firms are a
wealth of information, and can offer insights
on both fundamentals and trading dynamics. Facilitating management introductions,
whether via phone or non-deal road-shows,
has become a way for sellside firms to get
paid, and we are eager to take meetings,
and very much appreciate such offers. Our
sellside contacts often ask us what we like, as
a source of future research coverage and possible investment banking deals, as they know
that we are on the front lines of sourcing and
screening hundreds of companies each year.
Many of our companies are under-followed
and lack research coverage, which is often
the source of valuable inefficiency for us.
When a very small, undiscovered company
gains formal research coverage, it is often
a pathway to greater market efficiency, and
a higher institutional shareholder base. We
very much enjoy seeing a respectable sellside firm launch positive research coverage
on one of our holdings, as it is a win for all
parties.
Blueprint Capital Management, LLC is a privately
owned investment management firm focused on
global Small and Micro Cap equities. The firm offers
risk controlled active equity portfolio management
across style and sector segments of the sub $500
million market capitalization universe. Blueprint
offers real-time performance, position transparency
and balance information through a relationship with
Interactive Brokers. For more information, please
visit www.blueprintcm.com.
Neil has 14+ years of relevant Wall Street industry experience across equities, options, alternatives,
and Family Office wealth management. He began
his career on the floor of the Philadelphia Stock
Exchange where he worked for both TFM Investment
Group and Goldman Sachs. He then worked as a
derivatives strategist at Susquehanna International
Group, generating stock and option trading ideas,
mainly within the Consumer sector. Just prior to
Blueprint, Neil worked for a private Family Office,
whose assets under management exceeded $250
million. Neil managed a range of investments for
the family, including actively managed equity and
fixed income portfolios, as well as the oversight and
management of a large portfolio of hedge funds. n
37
F EAT U R E D ARTICLE
Biotech: Year in
Review 2014
L
ast year I wrote that it was clear that 2013 was one of the
best years ever enjoyed by the Biotechnology industry, in
the financial markets, ever. Well, I was wrong - it was 2014. I

hope to be wrong too in 2015.
Life sCieNCes iN the equity
Markets
n SETH YAKATAN
38
In 2014, large cap biotech outperformed the

market, with many of these companies being
the best performers in the entire market as
per Geoffrey Porges of Bernstein in their
The Biotech Year in Review.
In 2014 we also experienced a record
biopharma M&A market, as aggregate transaction values exceeded over US$200 billion, twice the historic average. This trend
was fueled by increasing equity valuations
and historically low interest rates. http://bit.
ly/1AmHbdE
There were 79 Life Science IPOs in 2014
making it far and away the best year the
sector has ever seen. Potential returns, (as
calculated by Silicon Valley Bank), reached
$18.5 billion in 2014, by far the best performing year since Silicon Valley started
tracking this data in 2005, as per Jonathan
Norris, a managing director at Silicon Valley
Bank.
Norris also stated that early-stage biotechs
accounted for 41% (26 preclinical and Phase
I companies) of the 63 biopharma IPOs that

dominated the scene, up sharply from the
24% average for the two previous years, as
the IPO window opened wide. With IPOs
running stronger, Series A venture rounds
for biotech companies have swelled as competition for new technology sharpened.
Corporate venture arms helped support private venture groups in driving a big increase
in the amount of Series A cash flowing
to early-stage ventures, many of which are
planning earlier than ever on going public or
executing an M&A deal.
We expect that the IPO window will stay
open but the pace will slow down to 2013
levels. High-profile biotech failures could
still send a chill through the markets, Norris
adds, but the underlying strength in biotech
looks solid--for now. Overall, its just a
fantastic exit environment for private equitybacked backed companies, he sums up.
http://bit.ly/1DFfDRO
Mergers aNd aCquisitioNs

The rising stock market has created a surplus
of cash for large pharmaceutical and medical device companies. This has led them to
look carefully at their existing portfolios and
fueled the acquisition of new companies,
technologies and drugs.
Tax incentives have also driven M&A
activity, as companies look overseas to take
advantage of lower tax rates. This also allows
acquirers to penetrate international markets
that they may not have necessarily benefited
from previously.
This spree of consolidation will continue
to squeeze out players who are unable to
compete and other potential acquirers. It
will be interesting to see pricing for venturebacked companies in 2015 as the number
of buyers has diminished. For the past several years R&D dollars have decreased in
an effort to increase the bottom line. Many
companies have relied on purchased growth
from the acquisitions of early stage companies.
PRIVATE FINANCINGS/VENTURE
CAPITAL
What will this mean for VC investment in
life sciences?
Biotechnology companies ended 2014
with $6.0 billion new venture capital in their
pockets, which was the biggest annual total
since 2007, including $2.0 billion in the
fourth quarter alone. The total for q4 2104
was the biggest single-quarter total in at least
19 years.
The Money Tree Report from
PricewaterhouseCoopers (PwC) and
the National Venture Capital Association
(NVCA) with data from Thomson Reuters,
which goes back to 1995, shows no other
quarter in which biotech companies have
exceeded the $2.0 billion mark. And 2007s
$5.99 billion full-year total was the only
other year to exceed or come close to 2014s
$5.97 billion total, and we all know what
happened in 2008.
The course set for 2015 remains to be
seen, however the pace of VC in 2015 is not
slowing down. First quarter biotech com-
pany fundraising announcements neared

$800.0 million halfway through January,
including $715.0 million in VC for the first
full week of the year (scripintelligence.com,
10 January 2015).
NANO MARKETPLACE
With the larger biotech companies now
migrating to the more commercial efforts
and no longer investing in research and
development, there is a void that is just being
recognized by VCs and angles. Nano investing is like old time venture investments with
angels and selected VCs. These nano investors look at start-up enterprises, whose core
is a research and development project based
on a seed investment. This investment
should lead up to a prototype designation,
proof of concept or roll out.
From this nano marketplace will come
the next opportunities for investors to invest
in Series A & B rounds and in IPOs. It is
also where many new drugs are going to be
produced.
Its not a market for the faint of heart.
As Jonathan Norris of SVB stated earlier in
this piece, Series A venture rounds are now
where new technology is being sharpened
and that is where the money is flowing, with
the promise of earlier IPOs or M&A deals.
tional pressure on the many big pharmas

with growth gaps to do deals in 2015.
Higher premiums are likely to persist:
Greater competition for high quality growth
assets due to the strong buying power of
both specialty pharma companies and big
biotechs means high valuations for target
companies will continue into 2015.
More focused deal-making likely: Given
the high premiums expected for attractive
assets in 2015, transformational M&A will
be an option only for a select few. As a
result, big pharma companies may continue
pruning portfolios, while pursuing bolt-on
acquisitions, to develop or maintain critical mass in key areas.
Shareholder activism on the rise: Shareholder
activism is increasing at a time when several companies that announced divestitures in
2013-14, generated superior returns for investors.http://bit.ly/1AmHbdE
Seth Yakatan is currently serving as Vice-President of
Business Development for Invion, Ltd. (ASX:IVX). Seth
has been professionally involved in the biotechnology
industry for over 15 years through his work with Katan
Associates.
Invion is a clinical-stage drug development company
focused on the development of treatments for major
market opportunities in inflammatory diseases including asthma, chronic bronchitis and lupus. n
OUTLOOK FOR 2015

2015 should be a very good year for investors in the life science/biopharma industry.
However, it will be challenging for big pharm
firms to find acquisitions to meet market
growth expectations.
As M&A competition across the sector
continues, big biotechs and specialty pharmas now have the capacity to do the kinds of
major acquisitions that were mostly within
the grasp of only big pharma just a few years
ago.
Growth still matters: Continued stronger
shareholder returns from biotech and specialty pharma, combined with overall market
growth projections, are expected to put addi-
39
Is it Worth Investing
in Russian Securities?
russiaN eCoNoMy at a
gLaNCe
Russia remains Terra Incognita to many
international investors. Political tensions
with the West over Ukraine and the Crimea
peninsula1 cast world opinion about Russia
in a mostly political light. Meanwhile, the
naked facts indicate that:
Russia was No 3 in the world by FDI

(Foreign Direct Investments) at $94 billion, behind only the U.S. ($159bn) and
China ($129bn) as of 20132.
It is the largest market in Europe, with
some 145 million people. Taking into
account free trade regulations within
1 - read: over confirmed yet undeveloped oil

resources south of Crimea, access to 43 million
consumer market of Ukraine and, in particular,
industrially advanced and minerals rich Eastern
Ukraine.
2 - no consolidated benchmarking data for 2014
FDI results is available as of the moment this
paper is being written.
the Eurasian Union (Russia, Belarus,

Kazakhstan, Armenia, and Kyrgyzstan)
we can talk about a 170 million+ consumer base for businesses operating in
and trading with Russia.
It is the 4th largest consumer market in
the world. On the average, Russian consumers are in a stronger financial position than those of Western and Eastern
Europe, and the U.S., due to less mortgage
payments, credit card and student loans,
less pressure from rising pension costs,
relatively high real wages, and the lowest
in Europe individual income tax at flat
13%.
It has a number of unsaturated sectors
and unfilled business niches.
Russia is the worlds largest market for
Danone, the second most important one
for PepsiCo, and the largest mobile phone
market in Europe.
World Bank ranks Russia a Top BRIC
n STAN GRAFSKI
40
country in Ease of Doing Business 2015

Index (position 62 out of 189).
Putins government tries hard to attract
international investors and businesses into
domestic-oriented economic sectors, infrastructural projects, innovations, new technologies, and the regions nationwide.
Widely known facts about the Russian
economy normally include its territory
(worlds largest) and rich natural resources.
The inherited Soviet tradition of general free
education and superb science development
paved the grounds for 99% literacy rate and
excellent human capital with plethora of
versatile workers.
Major investment risks

Both risks and rewards in Russia are high.
Plentiful natural resources represent the biggest bait and commodity volatility risk to
many investors.
Russian politics is also a widely articulated
risk with the YUKOS/ Mr Khodorkovsky
case as its striking illustration. My simpleminded advice to neutralize this threat is to
stay away from companies controlled/ influenced by Putins political opponents. And
be cautious with strategic industries and
resources, e.g., some geopolitics-sensitive
national projects, defence, space exploration, et al. There are plenty of other even
more lucrative investment opportunities
out there.
Corruption and weak corporate transparency are other major risks. The antidote here
is to invest in businesses that are known for
their ethical business practices and with easy
to understand performance indicators.
Access to Russian securities

The Moscow Exchange is the largest
exchange group in Russia operating trading
markets in equities, bonds, derivatives, the
foreign exchange market, money markets
and precious metals. It also operates Russias
central securities depository and the largest
clearing service provider. Similar to London

AIM, the Innovation and Investment Market
(IIM) is the Moscow Exchanges dedicated
division that deals with innovative and hightech companies with high growth potential.
To be listed here, required minimal capitalization is RUB 50 mln (under $800K) and
profits must be derived from innovative and
high technologies. The Moscow Exchange
was established in 2011 by merging Moscow
Interbank Currency Exchange (MICEX) and
Russian Trading System (RTS).
According to Lipper Research (2014), only
$30 billion is in Russian securities out of
$8 trillion invested in U.S. equity funds.
Russias stocks are incredibly inexpensive.
The MICEX is trading at five times earnings
much cheaper than other emerging markets. So, the value-oriented investor might
opt for the Russian stocks. Many attribute
the low price range to the unpredictable
nature of Putins government. On the other
hand, if you can digest high volatility and
you understand the fundamental trends on
the Russian market, it could be your entry
point.
Some 140 ETFs and mutual funds deal
with Russian stocks. Individual investors
could approach a number of U.S. brokers
who trade on the Moscow Exchange. Over
the turbulent 2014, foreign investors share
in Moscow equity trade increased from 40 to
46 per cent in stocks and from 38 to 44 per
cent in derivatives.
Since mid-2014, at the press of a button
you could buy Moscow listed stocks and
bonds using the two biggest international settlement systems, Euroclear Bank and
Clearstream Banking. Basically, those two
gave international investors direct access
to the Russian equity market. That represents a huge change in the way the Russian
stock market operates these days. Using
Euroclear negates the need to keep an expensive Moscow brokerage account and enables
traders to react faster to price-changing
news.
The direct access to locally traded shares
will soon squeeze the spread over widely
used DRs. For instance, the spread on the

leading mobile operator MTS pair the one
that trades in Moscow and London (as a DR)
is at some 15%.
Recent economic developments

2014 turned to be a difficult, yet rich one for
Russia. The economy was affected by an oil
price plunge, Western sanctions, devalued
ruble, and increased inflation. The states
expenditure being dependent on the
export of natural resources has shrunk,
thus pushing it towards further market supportive measures. A few of those measures
were:
free float of the ruble
new business registration simplification
2-year tax holidays for new small businesses in science, manufacturing and
social spheres
direct access to the Russian bond and
stock market for major Western depositories
easy access to Government-supported
investment projects across the country
online tax reporting
special economic zones and industrial
parks legal framework further development.
As a counter measure to Western sanctions,
Russia banned Western made food imports
in August 2014. Hence, the few last months
witnessed a clear growing trend in investments into domestic food processing/ production enterprises.
Industries for taking a

closer look
Russian assets are cheap sometimes,
ridiculously cheap. That normally generates
interest for investors. Despite current economic downturn and market volatility, a few
industries might be worth extra attention:
1. E-commerce. Russia has the highest
41
www.grafski.com/publications/trends-factsopinions/tips-for-entering-the-market-ofrussia/
Stanislav Grafski is a Managing Partner with
Grafski Consulting, a Moscow-based consulting boutique that helps international businesses to enter and
expand on the Russian market. Mr Grafski has over
25 years of hands-on expertise in assisting international players to capitalize on Russias opportunities
and guiding Russian clients to expand internationally. He is well presented on international social
media (some 20 platforms). His MARKET ENTRY
& BUSINESS IN RUSSIA Group is one of the most
active communities on LinkedIn that focuses on
business in Russia topics. He is the most connected
LinkedIn member in Russia.
Education:
Masters in Law (1990), Voronezh State University,
Russia
MBA (2004), Nottingham University Business
School, UK
Links:
yet growing number of internet users in

Europe. More importantly, this industry has
huge growth potential (see the chart below).
2. Hi-tech, telecom and innovation/ science
driven companies, in particular, with export
sales. It is well-known that Russians are
traditionally great in science and inventions,
but relatively weak in profiting from it. So,
check your investment targets sales performance. Good starting points for checking
potential targets are IIM, business and science incubators, and specialized advisors on
the market.
3. Agro industry. It is likely to become even
more lucrative ROI-wise very soon due to
increased demand for domestic foodstuffs
and government subsidies to support industry players.
4. Infrastructure projects across the country
with government support check government priority list for details.
5. Medical drug manufacturing and distribution. Many such projects are to be
financed by the Federal or regional governments with longer contract terms and guaranteed sales.
42
Resume
Grafski Consulting http://www.grafski.com
Russias securities market has many attractions for thoughtful investors. As everywhere
in the world, high risks are balanced with
high returns. Manage your risks wisely and
enjoy the returns. Find your local advisor(s)
to guide you on the Russian market.
For practical hints on expanding your
brick and mortar business in Russia, feel
free to check our respective publication on
our site.
most connected LinkedIn member https://www.

linkedin.com/in/StanislavGrafski
MARKET ENTRY & BUSINESS IN RUSSIA
https://www.linkedin.com/groups/MARKETENTRY-BUSINESS-IN-RUSSIA-6685310 n
Links:
Doing Business 2015 for Russia, World
Bank http://www.doingbusiness.org/data/
exploreeconomies/russia/
The Moscow Exchange http://moex.com/
en/
Innovation and Investment Market (IIM)
http://moex.com/a1599
special economic zones http://www.grafski.com/russian-opportunity/special-economic-zones/
check our respective publication http://
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43
Silver and Gold Investor

2015 Bull Market Takeaways
t is highly probable that silver made its cyclical bear market low Sunday night November 30, 2014, when it touched
$14.15. The next day it traded higher throughout the session,
ending at $16.69, up over a dollar from the previous close.
Futures volume was a heavy 150,000 contracts. In technical analysis, a key reversal
with the price on a given day trading both
below and above the previous days session,
and ending above that days closing price
was achieved.
Gold put in a similar performance,
except that the $1,130 low was established
a few weeks earlier, holding $10 higher on
November 30 also closing sharply higher
the next day.
A base-building attempt at $26 silver two

years ago failed, but it feels like it is different this time. Assuming our analysis is
correct, the cyclical bear for gold and silver,
which began May 1, 2011 has ended, with
backing-filling action, and a resumption of
the larger ongoing secular bull market is now
underway. This three year, seven month process ran deeper and lasted longer than just
about anyone, present company included,
expected.
n DAVID MORGAN
44
The mining stock sector decline echoed

the 2008 near-collapse but felt a lot worse,
since the drop took so much longer. Even
the best producers saw their share price drop
70%, with exploration stocks giving up 2011
values of 90%.
Long time readers of The Morgan Report
know we have often said that this kind of
market action will either scare you out or
wear you out. Boy was that an understatement! Nevertheless, solid evidence is mounting that better days lie ahead.
Late last spring, I (David Morgan) commented: I have long stated that the day of
reckoning is when the physical market begins
to seize up were not quite there yet, but the
signs are becoming more pronounced. Mark
my words, before the end of this year 2014
- the crowd of disbelievers is going to be a lot
smaller than it is right now.
The volume of physical buying around
the globe sharply increased into the fall,
even as prices moved lower. For the year,
China alone imported the majority of the
worlds gold production. Fully 28% of newlymined silver disappeared into India, which
also bought enough gold to overtake China
again, rising to number one.
Most silver tonnage buying is taking place
in the Far East, but sales of American Silver
Eagles exceeded 44 million, setting an annual record. When the Royal Mint reports their
2014 sales, Canadian Silver Maple Leafs will
surpass the 2013 total of 28 million. During
the first two reporting days of this year, 3.5
million American Silver Eagles were sold.
As the battle of fiat paper versus physical
precious metals continues unabated, consider stacking more physical metal into price
weakness, rather than trying to guess the
exact timing of Crunch Day. Look at royalty
companies and best of breed miners who
can outlast current low prices while adding
reserves for better days ahead.
Gold and Silver supply pipelines have
suffered systemic damage. The post-2011
price decline weakened the entire resource
sector financially and psychologically. Even
the biggest producers cut back sharply on
exploration budgets, sold off properties, and

deferred expansion plans. Many operators
are high grading - working their most
valuable deposits, rather than monetizing
lower grade properties that are uneconomic
at todays depressed prices. They are depleting high-grade ore bodies, trading dollars
just to keep the lights on.
Every ounce a miner digs up must be
replaced if it is to remain in long term
production. Since a mine is a wasting asset,
whats going to happen when increasing
demand for gold and silver intersects with
a depleted supply line? Hint - much higher
precious metals prices.
Chinas newly-mined global gold domination strategy how they game it. First,
buy physical gold in world markets, fabricating where necessary into Good Delivery bars
in Switzerland or the Middle East then ship
the bullion - transparently through Hong
Kong or Shanghai; more opaquely through
Beijing and other ports of entry.
Second, keep virtually all domestically
- mined gold in house. Third, partner
with or buy outright, high grade, in-situ
gold (and silver) projects around the globe.
Chinas largest gold producer, Zinjin Mining
Group, recently made a strategic investment
in Pretium Resources high-grade Brucejack
gold Project in northwestern British

Columbia to the tune of C$81 million, an
investment facilitating eventual construction
of a 2,700tpd underground mine.
Though opaque and difficult to quantify,
China is almost certainly buying gold off
the books from artisanal (illegal) miners in
Africa and South America just one more
tributary feeding the river of gold flowing
inexorably into the Central Kingdoms coffers.
leading to a gold-backed Yuan, challenging U.S. dollar reserve currency status.
To get a visual sense of how China conducts
its Go for the Gold acquisition plan, consider the Japanese board match, Go a
game of strategy originating in China almost
three millennia ago. Two players using black
and white stones on a grid, seek to outmaneuver each other by capturing most of the
boards playing area, or hemming in the
opponent so that they can no longer move.
Simple rules, with the number of possible
games which can be played being several
times larger than chess!
The match can take a long time similar to the manner over many years or even
decades by which China has traditionally
pursued its big goals. Unlike the West, it
doesnt judge success or failure by an annual
45
ing the thermometer. The thermometers not

to blame; its just telling you whats going on.
Likewise, the price of gold is not an economic object or aim in itself; its a price signal.
It tells you whats going on in the economy.
What temperature will the golden thermometer register before you decide to take
action?
resourCesYouTube Silverguru
Twitter-@silverguru22
Free e-letter available
TheMorganReport30day Free Trial go to
TheMorganReport.com/free
E-Mail: support@silver-investor.com Phone 480325-0230
The Morgan Report focuses on Money, Metals,
and Mining. We concentrate on the resource sector,
with primary emphasis on the precious metals, but
have invested in moly, copper, uranium, lithium, base
metals, drillers and other companies. We provide a
unique service by filming many of the mining trips,
report. Dont think that China acting in

concert with other BRIC countries needs
to topple the petrodollar in order to achieve
its long term goals. Simply reducing the dollars status to first among equals would be
a serious blow to the Federal Reserves ability
to continue financing U.S. debt with unlimited fiat paper.
The Collapse in Crude oil: Ask yourself. Have the systemic issues which a few
years ago drove gold over $1,900 and silver
close to $50 been seriously addressed? How
about deficit spending, trillions in leveraged
derivatives and artificially low interest rates?
The ongoing crude oil collapse from $105/
bbl to below $50, could lead to default of
hundreds of billions of dollars in shale oil
debt twice as much as the subprime mortgage fiasco which almost brought down the
global system in 2008. Concomitant with
this, the Russian ruble has lost half its value
over the last few months. The 1998 financial
crisis was caused by a Russian debt default. A
replay could initiate a global meltdown, with
46
a stampede out of asset classes like stocks

and bondsand into the precious metals.
In The Death of Money, Jim Rickards
lays out the implications if things begin to
unravel:
If some scenarios play out, you are going
to see the price of gold go up a lot. And
it may go up a lot in a very short period of
time...not 10% per year for seven years and
the price doubles... It will have a kind of a
slow grind upward - and then a spike - and
then another spike - and then a super-spike.
The whole thing could happen in a matter of
90 days -- six months at the most.
When that happens, youre going to
have two Americas. Youre going to have
an America that was not prepared. Paper
savings will be wiped out; 401(k)s will be
devalued; pensions, insurance and annuities will be devalued through inflation
Because remember, its not just the price of
gold going up.
Its like putting a thermometer in a patient,
getting a 104-degree temperature and blam-
providing them to our members. At our second level of

service, you can email questions directly to us and we
guarantee they will be answered. Further description is
available on the website.
David Morgan (Silver-Investor.com) is a widely
recognized analyst in the precious metals industry
and consults for hedge funds, high-net-worth investors, mining companies, depositories and bullion
dealers. He is the publisher of The Morgan Report on
precious metals, author of Get the Skinny on Silver
Investing (Morgan James Publishing, 2009), and a
featured speaker at investment conferences in North
America, Europe and Asia.
David H. Smith is Senior Analyst for The Morgan
Report at http://www.Silver-Investor.com and a regular contributor at https://www.moneymetals.com/ He
investigates precious metals mines and exploration
sites in the Americas and China, sharing his perspectives with media listeners and audiences at North
American investment conferences. n
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49
Unbiased Equity
Research for
Microcap Companies
Is This Even Possible?
defiNitioN of a MiCroCaP
aNd the MiCroCaP equity
LaNdsCaPe
In a market dominated by high frequency
trading and high correlation within and
across the various asset classes, microcap
stocks present a differentiated value add to
an investors portfolio. We generally define
microcap stocks as those having market
capitalizations equal to or less than $300 million. Based upon our internal research, there
are approximately 6,100 stocks with market
caps less than $300 million. The investment
community generally accepts the proposition that microcaps have outperformed the
overall market historically, and that microcaps as an equity class present an attractive
value proposition if approached correctly.
But the key, of course, for investors is to be
able to efficiently identify and analyze the
correct opportunities in the right stocks in
the microcap universe.
why iNvest iN MiCroCaPs?
n AJAY TANDON
50
What sort of an edge can an investor truly

gain focusing on a stock such as Apple
Inc. (NASDAQ: AAPL) or Google Inc.
(NASDAQ: GOOG)? These are widely covered stocks, held by the largest of institutional players. Pulling a data point on
these names that can enhance a portfolio
is quite difficult. The reality could not be
more different in the microcap space. As
discussed above, most microcap companies
have no sell side research coverage, and
very little publicly available information is
broadcast between quarters. An analyst willing to do the research on these names can
gain significant insight into their businesses
and operational results. Additionally, the
managements of these growing companies
are extremely accessible to investors, unlike
management teams at mid and large cap
companies.
Aiding solid investment work with high
quality research can lead to outperformance,
and ultimately alpha generation for a portfolio. Microcap stocks offer investors attractive upside potential. Anecdotally, It is not
uncommon for the right microcap stock to
offer 200-500% return potential around a
major company catalyst. In fact, we believe
that microcap investing is more analogous to
venture capital and private equity investing,
and as such, good information and equity
research becomes critical.
The Importance of Equity Research.

Undoubtedly, equity research remains an
important component of the sophisticated
investors toolkit. According to Greenwich
Associates, a leading consulting firm servicing the financial services industry, buyside institutions spent approximately $6
billion on equity research in a recent
year. A detailed analysis of the value of
equity research in the investment process
is beyond the scope of this article, so we
will leave it at that. Sophisticated investors spend a lot of money buying good
research.
Equity Research for

MicrocapsWhat are the
Options?
The problem for microcap companies
is twofold: 1) the availability of equity
research is very limited in terms of firms
that provide it because most equity research
in the market is focused on largecap and
midcap names and, related to that, 2) paid
for equity research is uneconomical and not
very useful. Certain investment banking
firms still maintain high quality research
departments focused on providing research
to companies, which they believe, fit their
parameters for coverage and investment
banking services. But this unfortunately
does not even begin to address the needs
of the 6000+ companies out there in the
microcap sector. The other option is socalled independent research firms that cater
to microcap companies. The problem here
is that these firms charge hefty sums to produce an equity research report, often way
beyond the limited budgets of cash strapped
but growing microcap companies that are
conserving every dollar possible to fund
their growth. More importantly, paid for
research is not very attractive to investors;
we believe, based upon our experience that
most investors dont pay any attention to
paid for research as they view it as promotional and completely unreliable as a result.
SEETHRUEQUITY Research
We here at SeeThruEquity are a research
team focused on the microcap market, and
currently have 118 companies on which
we have initiated research coverage. Our
research reports have the look and feel of
sell-side equity research with well-written,
thoughtful 15-20 page initiation reports on
microcap companies across industry sectors.
Most importantly, we do not charge a fee for
our research and are not an investment bank.
We invite companies to present at our quarterly investor conferences, and write unbiased and not paid for research on all invited
companies. As a result of maintaining an
unbiased research model, we are approved
to contribute our research to Thomson One
Analytics (First Call), Capital IQ, FactSet,
Zacks and distribute our research to our
database of opt-in investors. We also contribute our estimates to Thomson Estimates, the
leading estimates platform on Wall Street.
For more information visit www.
seethruequity.com.
tions, and raising capital for smallcap public

and private enterprises with respect to equity
and equity linked transactions prior to his
role at SeeThruEquity.
Ajay co-founded Emissary Capital, LLC,
a private investment firm focused on microcap investment banking. Prior to serving as
Director of Research of SeeThruEquity, LLC
and President of Emissary Capital, LLC,
Ajay served as Vice President of Equity
Capital Markets at Maxim Group, LLC, a
New York City based, full service investment
banking firm. In his role at Maxim, Ajay led
the firms equity syndicate and origination
efforts with respect to PIPEs, registered IPOs
and follow-on offerings. Prior to his role at
Maxim Group, Ajay served as an executive
for Dealogic plc, an analytics platform used
by global and regional investment banks
worldwide to help optimize their performance and improve competitiveness.
Ajay began his career in financial services as a management consultant with IBM
Global Services and earned his Bachelor of
Arts degree from Cornell University. n
About SeeThruEquity
SeeThruEquity is an equity research and
corporate access firm focused on companies with less than $1 billion in market
capitalization. The research is not paid for
and is unbiased. We do not conduct any
investment banking or commission based
business. We are approved to contribute our
research to Thomson One Analytics (First
Call), Capital IQ, FactSet, Zacks, and distribute our research to our database of opt-in
investors. We also contribute our estimates
to Thomson Estimates, the leading estimates
platform on Wall Street. For more information visit www.seethruequity.com
Ajay Tandon - Chief

Executive Officer
Ajay brings over 12 years of experience in the
financial service industry and considerable
experience advising, structuring transac-
51
What Millennials
Need to Know
About Investing in
MicroCaps
s a millennial investor myself, and Editor-in-Chief

of StockNewsNow.com, the Official News Source on
MicroCap stocks, there are many things one needs to consider
and understand when entering the world of MicroCap investing.
Its not our parents generation anymore,
where the Internet reigns supreme with SO
MUCH information at our fingertips that
even considering investing in MicroCaps has
become less risky. But lets keep it simple for
this list. Here are my suggestions to getting

started.
1. How much money can you afford
to lose? You want to invest, but you dont
know where to start. Firstly, its important to
n ROBERT KRAFT
52
understand youre investment goals. If youre

trying to open an account with a broker
dealer, or your own account online, you need
to consider what you are trying to accomplish, its not as simple as, I want make as
much money as possible, for as little investment as possible. More often than not, as a
millennial, youre probably interested building your wealth because investing wont be
your primary source of income. Ask yourself
the following questions: How much personal
time do you want to devote to investing? Are
you a value investor (long term) or a trader
(short term)?
2. Determine how you can convert your
interests into investment opportunities.
If youre looking into investing in the Stock
Market, and dont know what companies
to start looking at first, start with what you
know, i.e., hobbies, what do you wear everyday, where you eat, what electronics do you
use, etc See if any of the companies producing goods that you use on a daily basis
are public on websites like Yahoo Finance.
Make a list of companies that are interesting to you. Look at a huge companys competitors that are 8th or 9th on the list of ten,
typically they may be more affordable than a
Fortune 100 company. As an example, I love
to surf and I use my GoPro all the time, so
starting out, I might make a list of companies that have to do with surfing: Quiksilver
(ZQK), GoPro (GPRO), even Nike (NKE
owners of Hurley) - and then make a list
of all their competitors. Converting interests
into investments also includes affordability
and diversification. Ask yourself should I
buy 10 shares of a $100 stock or buy 1,000
shares of a $1 stock, and how to spread the
different stocks into building a portfolio.
3. Utilize the resources available to you.
As I said at the beginning, there are SO
MANY information sources about stocks
and finance that to sift through all of them
would be a nightmare. Here are a few
resources that I use on a daily basis to get my
information:
a. Investopedia.com Great source
if youre not sure what certain financial

terms mean. They have definitions, tutorials, videos, commentary that Ive used
quite regularly.
b. YahooFinance.com and MarketWatch.
com these two websites are far and away
the biggest news and information sources
about stocks that are out there. Both websites are probably the most recognizable
in the industry for all stock market information.
c. StockNewsNow.com not to be selfserving, but our website is a great source
for information about MicroCap companies. Our parents generation, where there
wasnt as much information available,
especially about MicroCap stocks had a
much harder time finding information
and transparency. Although MicroCap
stocks are riskier investments, the returns
can yield greater rewards. And, with the
majority of MicroCaps costing less than
$5 per share (initial entry cost thus being
cheaper than blue chips), higher growth
potential, and the plethora of information (and companies) now available,
StockNewsNow.com is a tremendous outlet to find the next great MicroCap idea.
4. Create a portfolio and start following
companies that peak your interest
Again, not to be self-serving, but on
StockNewsNow.com, for example, you have
the ability to register for an account, My
Portfolio, for free, and start following all the
MicroCap companies you want (laying the
groundwork for your own portfolio before
you invest a dime). Any time one of the
companies you follow has any news, you get
an update sent to your email address. Follow
the news, read the press releases, watch
the videos not only see how the stock is
performing, but listen to what the CEO is
saying, and if the CEO executed his business
plan. By becoming more familiar with the
company, the more comfortable youll feel
when deciding how to invest (or not). This
is called DOING YOUR DUE DILIGENCE!
5. Determine whether you want to open
an online account or use a full service bro-
ker. Read the fine print before opening an

account, and make sure you understand all
the charges and minimums etc. Compare the
details, services and fees of an online broker
with a full service brokerage firm. One quick
note on the difference in experience if you
are more the DIY-type, than you might want
to consider the online broker route; if you
dont have as much time to do research or
look for new ideas, full service brokerage
firms provide more personal attention. Even
if youre a DIY-type, or more inclined to
open an account at a brokerage firm, always
remember Buyer Beware.
As I said in Point #4, I cant stress enough
the importance of doing your diligence,
reading the research, listening to professionals all the tools to be a successful investor
are at your fingertips. Its a lot of work, but
once you see that first return, trust me
youll be hooked.
Robert Kraft is Chief Operating Officer of SNN
Incorporated, publishers of StockNewsNow.com and
the MicroCap Review Magazine. Mr. Kraft also
serves as Editor-in-Chief of StockNewsNow.com,
The Official MicroCap News Source. Previously,
Robert was a Junior Research Analyst at Southridge
Investment Group in New York City doing research
and compiling information about MicroCap companies. He is also the Co-Founder and CEO of Sammi
Girl Productions,a multimedia production company,
focused on creating quality content in the areas of
film, music, theatre, web and merchandise.
Robert is also working on a series of educational
articles teaching Millennials about the investing
opportunities in MicroCap stocks. He was recently
featured in the Huffington Post sharing his thoughts
in the article,4 Things I Wish I Knew About Money
in my 20s.
Robert Kraft graduated with a B.A. in
Communications from the University of California,
San Diego. n
53
PROFILED cOMPaNIES
Cesca therapeutics
Nasdaq: kooL
Cesca therapeutics is developing treatments for Critical Limb
ischemia and acute Myocardial infarction
esca Therapeutics Inc. (Nasdaq: KOOL) is a leader in the

development and manufacture of automated blood and
bone marrow processing systems that enable the separation,
processing and preservation of cell and tissue therapy products
and generates revenues of over $16 million from the sale of
these products each year.
Early last year, the Company reported
exceptional early clinical trial results for
treating critical limb ischemia (CLI). The
company is also developing a pipeline of
treatments for acute myocardial infarction
(AMI), ischemic stroke, bone marrow transplant, avascular necrosis, and non-union
fractures.
Over 20,000 patients have been treated
using cell therapies derived from the use
of Cescas proprietary devices and approximately 650 patients have been treated using
experimental cellular therapeutics in clinical trials being developed by the Company
across 8 clinical indications.
Cesca Therapeutics is the exclusive
Regenerative Medicine provider to Fortis
Healthcare, the largest private healthcare
company in Asia with more than 10,000
inpatient beds and clinics seeing upwards
of 15,000 outpatients daily. The partnership
with Fortis has allowed the company to build
an embedded clinical research organization
with lower operating cost and global capa-
54
Kenneth Harris - President of Cesca

Therapeutics, Inc.
bility and expertise inside the new flagship

Fortis Memorial Research Institute. Cesca
also provides advanced personalized cellular
medicine to Fortis vast network of more
than 1,200 clinicians.
Cesca CLI Trial Results

Armed with very strong results from Cescas
CLI Phase Ib trial, the company recently submitted an Investigational Device Exemption
(IDE) pivotal trial (Phase III) application to
the FDA for treating no-option lower limb
critical limb ischemia. No option, typically
assigned to late-stage disease, means the
CLI patient has no further surgical options
other than amputation to overcome ischemic
wounds. The IDE pathway, which the U.S.
Food and Drug Adminstration has determined is applicable to Cesca, in contrast to
the Investigational New Drug (IND) pathway, can save significant time and money
in the clinical trial process. Cescas current
approach in advancing to a late stage development therapy is the result of not only two
promising prior studies but also helpful feedback from the FDA both during a pre-IDE
guidance meeting and subsequent decisions
and in their IDE application response letter.
The CLI Problem

The Sage Group, a leading research and consulting think tank firm focused on Peripheral
Arterial Disease and Critical Limb Ischemia,
reports:
http://www.businesswire.com/news/
home/20140815005003/en/CORRECTINGREPLACING-SAGE-GROUP-EstimatesEconomic-Cost#.VHpO8ii159k
In the U.S. the direct cost of Critical Limb
Ischemia amputations is $25 billion per
year
In 2010between2.8 and3.5million U.S.
citizens suffered from critical limb ischemia http://thesagegroup.us/pages/news/
cli-us-10.php
Within 5 years of diagnosis, approximately 70% of CLI patients die. This mortality
rate exceeds that of coronary artery disease, breast cancer and colorectal cancer.
70,000 major amputations (above the
ankle) and 134,000 minor amputations
(toes and feet) are completed on CLI
patients each year in the U.S.
Amputation is frequently and unfortunately the only treatment that many

CLI patients undergo. Recent research
has shown that 60%-71% of the major
amputations are performed without any
attempt at revascularization.
Between 1.1 and 2.0 million CLI patients
are currently classified as No option.
Average inpatient charges for CLI are
$55,000twice as high as those for stroke
and almost $1,000 more than for heart
attack.
Mary Yost, President of the Sage Group
says, These patients might be candidates for
stem cell therapies or other new biotechnology
products.
CLI Trial Results

The company has sponsored two CLI clinical trials to date in India and in Europe. In
the most recent study, Cesca Therapeutics
announced in January 2014 the results from
its Phase Ib Clinical Trial for CLI using its

Critical Limb Ischemia Rapid Stem Cell
Therapy (CLIRST) treatment. Seventeen
no option CLI patients were enrolled in
the open label study with all 17 patients
recommended for amputation. After 12
months the following results were reported:
http://cescatherapeutics.com/wp-content/
uploads/2014/01/012114-CLI-PhIb-PRMPFinal.pdf
Limb and Life Salvage: Major limb
Amputation free survival rates were
82.4% analyzed per the protocol and
greater than 70% in the Intent-to-Treat
analysis
Pain Reduction: On a scale of 0 to 10,
pain was reduced from 7.8 to 0.9
Walking Improvement: Six minute walking distance increased from 14.5 meters
to 157 meters
Wound Healing: 11 patients had gangrene with or without ulceration pretreatment, and all of this sub-population
55
Cesca Files IDE Application

With FDA For CLI Treatment
Cescas CLIRST treatment harvests bone marrow

from the patients hip bone and then uses
proprietary devices to both separate therapeutic
cells from the bone marrow and deliver them into
the afflicted limb muscles.
of patients had neither gangrene nor

ulceration at 12 month follow-up
Revascularization:
Advanced imaging confirmed statistically significant
Vasculogenesis occurred in certain
regions of the leg as a result of the treatment compared to pre-treatment levels.
Blood vessels in the afflicted leg created
new vessels, supporting reperfusion.
Safety: No serious adverse side effects
directly related to the treatment were
reported
The open label 17-patient study was conducted at the Fortis Escorts Heart Institute in
New Delhi, voted best Indian cardiac facility
in 2014 by Frost & Sullivan. Fortis Escorts,
a leading clinical research institute, typically
has over 20 international cardiovascular trials underway at any one period of time.
Dr. Suhail Bukari, Senior Consultant and
Department Head of Vascular Surgery served
as the primary investigator. Dr. Bukari previously served as a clinical investigator for the
Juventas Therapeutics critical limb ischemia
trial. Dr. Bukari noted This is a significant
breakthrough for medicine as all the patients
enrolled were scheduled for amputation of
their afflicted limb prior to consenting to the
stem cell intervention. He further noted, the
simple kit process will enable any surgeon
treating peripheral vascular disease to have a
readily available safe and autologous therapeutic to reverse this debilitating disease.
Dr. Richard Powell, M.D., Chief for
Vascular Surgery at Dartmouth-Hitchcock
Medical Center, Professor of Surgery and
Radiology at Dartmouth Medical School
56
in New Hampshire and the chair/national

principal investigator of Cescas upcoming
pivotal CLIRST III study, commented that
No-option CLI patients will now have a
potential treatment to salvage their limb and
positively impact their quality of life
http://f inance.ya ho o.com/ne ws/
cesca-therapeutics-announces-filingu-110000261.html
Cescas CLIRST treatment harvests bone
marrow from the patients hip bone and then
uses proprietary devices to both separate
therapeutic cells from the bone marrow and
deliver them into the afflicted limb muscles.
The devices are designed to minimize damage to the therapeutic cells which normally
undergo high velocities and pressures as they
pass through centrifugation devices, needles
and catheters. The anticipated advantages of
Cescas approach over the competition is that
it (a) delivers a greater number of healthier
therapeutic cells to the damaged tissue, and
(b) does it at the point-of-care in less than 90
minutes - both shown to improve efficacy as
preliminarily evidenced by the early Phase
Ib CLI trial. The unique combination of
multiple bone marrow derived cells and factors has multiple modes of action including
engraftment and subsequent mobilization of
the stem cell niche, and indirectly through
the beneficial effects of the implanted factors
and new factors secreted by the implanted
cells to create revascularization in local collaterals in the afflicted limb. This entire
process can be done quickly in a single short
visit to the operating room.
Cescas pivotal trial application milestone for

the treatment of CLI is the culmination of
nearly six years of focus on cardiovascular
clinical trials and device engineering specifically designed to verify that a patients
own bone marrow stem cells can positively
impact a debilitating and potentially fatal
disease. The CLIRST III study, as proposed
in the IDE application, is a double blinded randomized placebo controlled trial to
evaluate the safety and efficacy of Cescas
SURGWERKS-CLI and VXP System in CLI
patients having non-healing foot ulcers who
with no further surgical options, and will be
compared against a placebo control of the
same population. The primary endpoint is
major amputation free survival at 12 months
following enrollment. The study will be conducted in approximately 60 sites including
up to 3 sites in India.
Competitive Cost
Advantage and
Reimbursement
Cescas CLIRST has a strong competitive
cost advantage. Management estimates the
CLIRST kit will cost less than $15,000 versus
the significantly higher average CLI treatment cost today. The procedure is rapid,
performed in the operating room in approximately 90 minutes and requires a patient
hospital stay of only 24 hours.
Upon FDA pre-market approval (PMA)
for the treatment, management expects
the procedure will be reimbursable under
Medicare Part A. Additionally, the company will be seeking reimbursement from
Medicare for costs of the patient treatment
during the trial and prior to the final marketing clearance by the FDA.
The Acute Myocardial Infarction Problem
AMI remains the leading cause of death
and occurs when blood flow to the heart is
interrupted leaving a portion of the heart
damaged. The damaged part of the heart
is unable to contribute to the demand for

pumping action resulting in other parts
of the heart overcompensating by working
harder and consequently growing larger.
This imbalance can lead to an enlarged heart
(remodeling) and thereafter less effective
pumping action in the left ventricle, leading to a significantly lower than normal (in
the 35-40% range) Left Ventricle Ejection
Fraction (LVEF). A normal LVEF is considered to be between 50% and 75%. Such a
dramatic loss in pumping function leads to
chronic heart failure.
Cesca has demonstrated in an early-stage
clinical trial that Stem Cell Therapy has the
potential to restore healthy blood flow to the
heart and to regenerate the damaged tissue
so that the heart can resume normal balance
and pumping.
Promising AMI Trial Results

Cesca reported AMI Pilot study results in
October 2013. In this open label single
arm study, a single no-option ST Elevated
Myocardial Infarction (STEMI) patient
was enrolled with a very low and pharmaceutically unresponsive LVEF of 35%
three days after emergency room admission
and implantation of a coronary stent. The
patient was treated using Cescas SurgWerksAMI process on the 6th day after stent placement. Twenty-four months after treatment with Acute Myocardial Infarction
Rapid Stem Cell Therapy (AMIRST) the
patient ended the study having experienced
no Major Adverse Cardiovascular Events
(Safety) and with an LVEF of 60.3%. There
was also no further infarct scarring and
undesirable remodeling. Low LVEF and
heart remodeling are two key contributors
in AMI patients advancing to heart failure.
Dr. Ashok Seth, Chairman - Cardiac
Sciences team, Dr. Upendra Kaul, Dean of
Academics Cardiac Sciencies, and Dr.
Vinay Sanghi, all of Fortis Escorts, conducted the clinical case study which shows
the AMIRST treatment safely delivered to
a single male patient an effective dose of
Cesca has demonstrated in an early-stage clinical

trial that Stem Cell Therapy has the potential
to restore healthy blood flow to the heart and to
regenerate the damaged tissue so that the heart can
resume normal balance and pumping.
autologous selected stem cells in a single

intracoronary heart catheterization procedure. The Company believes this is the first
cell therapy that integrates both devices and
autologous biologicsin a single procedure
that is administered at the point-of-care in
90 minutes.
Dr. Vinay Sanghi, Clinical Investigator
and treating physician on this case, said
Conducting a fully-integrated point-ofcare treatment on a patient with an acute
ST-elevated myocardial infarction using the
AMIRST protocol was straightforward and
very exciting as a practicing interventional
cardiologist.The safety and positive clinical
benefits demonstrated in this single patient
case study are very encouraging as we begin
planning for a larger AMIRST Phase II (feasibility) study treating patients who have suffered this type of heart attack.
The Company believes that this pilot case
study affirmed that our cell therapy treating
STEMI patients has appropriately considered the essential devices, diagnostics, cell
formulation, and directions for use ensuring
the AMIRST treatment meets the objectives
of providing a safe, effective, rapid, bedside
therapy for treating low ejection fraction
after a primary myocardial infarction. Cesca
is enthusiastically looking forward to conducting a randomized placebo controlled
Phase Ib study in India in 2015.
CLIRST and AMIRST

Commercialization
are comparable to prior trial results, Cesca

anticipates filing a PMA Application for
marketing clearance in 2017 and could be
delivering SurgWerks-CLI kits and VXP
Systems for CLI patients before the end
of 2017. An AMI Phase II Trial, discussed
above, is also being planned for 2015 making for a very exciting year. The use of a
patients own bone marrow cells within the
operating room contribute to the safety and
cost-effectiveness of Cescas model.
These types of clinical results give the
Company confidence that our system and
protocol for delivering personalized stem
cell-based medicine can make a meaningful impact on the lives of our patients, and
that seeking Pre-Market Approval from the
FDA upon completion of our pivotal Phase
three trials will be the most effective way of
achieving broad adoption of our cell therapies in the marketplace.
Conclusion
Cell Therapy, also known as Regenerative
Medicine, has been heralded as the future of
medicine for decades. Treatments and cures
have taken far longer than thought, but now
armed with exciting clinical trial results,
Cesca Therapeutics is positioning to being
able to deliver desperately needed personalized and cost-effective treatments for CLI
and AMI as well as a host of other common
illnesses. n
If the Phase III pivotal CLI trial results
57
Finding the Value in Pitch Events

A conversation with John Dmohowski, Director of Client Services for
PortTech, a clean technology incubator and commercialization center
based in Southern California.
he proliferation of incubators, accelerators, boot camps and professional

services dedicated to helping startup teams
prepare to impress investors has fueled the
growth of pitch events and competitions.
But are these events worth the time and
effort expended by participating founding
teams? Do mentors and coaches who freely
donate their time and expertise make a
difference? Do investors really find companies or business models that they wouldnt
otherwise discover?
PitCh eveNts aNd

CoMPetitioNs
We think pitch events are worthwhile

for founders; greatly improved by matching
mentors and coaches to the specific needs
of entrepreneurs; and present a pre-screened
group of candidates worthy of investor consideration.
Since 2010, PortTech has put on an annual
EXPO showcasing maritime-oriented startups
and emerging growth companies. The EXPO
included a session featuring product or company pitches by entrepreneurs seeking exposure and feedback to their plans and progress.
In 2012, we held the Pitch as the lead event the
evening prior to the day-long EXPO to create
a more focused event for a select audience of
investors, service professionals and industry
executives. In 2014, the PortTech Pitch evolved
into a program focused on identifying and
coaching investment ready startups by actively
dedicating resources toward preparing participants for their fundraising efforts.
We think that pitch events are useful, but

often fall short of their potential. Events
can be entertaining and provide exposure,
networking and even money, but to truly
provide value to founding teams they need
to go beyond the show.
PortTechs method takes the concept of
a pitch event and turns it into a monthslong program to provide maximum learning through coaching and practice. The
event incorporates comprehensive outreach,
education and coaching sessions that identifies the most promising emerging companies with clean technologies. The program
involves recruiting, selecting and evaluating
startups by staff; multiple coaching sessions
with industry experts and relevant service
providers; and intense preparation by founding teams. The finals are an opportunity for
selected firms to demonstrate that they are
capable, scalable and suitable for investment.
Quite a few pitch events offer the winning team money, in-kind prizes or even
an investment by venture capitalists and
angels. Its a great way for all participants
to network in a productive atmosphere.
It gives everyone the ability to show their
stuff, said Jim Winett, Partner of Level 11
LLC. But does that provide enough value
for the amount of time and effort required?
the ProCess
n JOHN DMOHOWSKI
58
A lot of events talk about innovation but

PortTech walks the walk. Their pitch con-
test addresses real life issues and provides

actual solutions for big important problems, said Chris Wadden, Pasadena Angel
and business consultant.
To create a pitch event that provides realistic context and goes beyond the show,
we suggest incubators look to their core
programs and incorporate those services in
a highly concentrated way. This is how we
developed the PortTech Pitch into an effective months-long coaching and mentoring
program geared towards preparing startups
for investment.
Outreach
Participant recruitment starts in mid-spring
and runs through early summer. Recruitment
includes active participation and promotion
at relevant conferences including other pitch
competitions. We leverage relationships and
affiliations with other organizers and sponsors who host events for technology startups (e.g. the Cleantech Open, Department
of Energys FLoW and Green LAVA the
Cleantech Strategic Interest Group of the Los
Angeles Venture Association). Messages and
information about the program are broadcast through social media and submitted
to technology calendars (i.e. socalTECH,
LAEDC, Startup Digest and Sustainable
Business). Flyers are sent to colleges and
universities with departments and disciplines focused on energy, transportation and
security. Information is forwarded to Small
Business Development Corporation offices,
local community and economic development
agencies, NGOs, technology incubators and
accelerators. And special announcements are
Photos (top row): PortTech Pitch finals at the Port of Los Angeles boardroom; Brad Lurie, CEO of Bright Light Systems, won the
2013 Best Business Model Award; (bottom row): Entrepreneur coaching session; PortTech Pitch Grand Prize Winner Dan Singleton,
Transient Plasma Systems (center) with Stan Tomsic, PortTech Executive Director (left) and Jeff Malin, California Governors Office
of Business and Economic Development (right).
targeted to local venture capital and angel

groups investing in clean technology.
Screening
Clean technology companies with products
or services that meet port industrial and
maritime-related consumer needs contact
the office during the recruitment period and
the evaluation process begins almost immediately. Applicants receive informational
materials on pitching, preparing presentation decks and general guidelines. Founding
teams schedule briefings with staff to present
their 60 to 90 second elevator pitch (without decks or demos) and respond to a brief
Q&A.
Approximately 20 30 percent of applicants successfully pass this initial screening process. Preferred startups have clean
technology based product(s) or service(s),
an understanding of their primary market

space, some validation (preferably sales),
some traction (repeat sales, customer retention or expanding customer base), a mostly
intact team, industry advisors, properly protected intellectual property and plans for
growing the business.
Vetting
The 20 - 30 semifinalists selected to continue
in the program schedule coaching sessions
that are conducted in person or via videoconference with a group of mentors and
coaches selected to work with each startups
strengths and weaknesses as revealed during
the screening process. Southern California
is among the leading regions in the U.S. for
clean technology development and commercialization. PortTech is fortunate to have
a large network of local industry experts,
service providers, academics, investors and

serial entrepreneurs who generously donate
their time and expertise. Coaches focus on
making sure that each applicants business
model, strategies and resources are credible,
reliable and dedicated. In particular, mentors
intensely probe any assumptions that are
made, but not yet validated.
Each applicant is thoroughly vetted during
these coaching sessions. Business models,
founding teams, value propositions, product/market solutions, branding, operational
readiness and financial models are scrutinized. Launch strategies, sales cycles, customer acquisition costs, lifetime customer
values are challenged. Experts review and
critique pitch decks, presentation styles and
narratives. Emphasis is placed on the market, team, opportunity and the likelihood
of attracting investment. These sessions are
59
SaveSorb to the rescue the team

cleans up 10,000 gallons of crude oil
spilled near Glendale, CA.
savesorb: a
success story
SaveSorb, a recent addition to PortTechs
portfolio of companies, learned firsthand
the value of the PortTech Pitch.
SaveSorb manufactures and sells a variety of oil spill control products made of
specially formulated peat, an all-natural
renewable material. PortTech staff recognized SaveSorbs potential and invited the
startup team to participate in the Pitch.
SaveSorb went on to win the 2014 Best
Business Model Award. As a result of
the Pitch, SaveSorb received direct funding from a coach and connected with
several new customers. Since becoming
a PortTech client in September 2014,
SaveSorb accompanied City of Los
Angeles Mayor Eric Garcetti on a trade
trip to Asia and opened a new China
headquarters.
PortTech staff continuously went
above and beyond to help my company
get its name into the markets we needed
to breach. And thanks to the Pitch program, I was able to connect with an investor who has become a strategic partner,
said Chase Ahders, CEO of SaveSorb. n
staff to identify eight to ten companies for the

Pitch finals. In preparation, a panel of judges
is assembled representing the local ports
(Los Angeles and Long Beach) environmental divisions, service professionals and investors who are active in the clean technology
entrepreneurial community.Judges are given
access to information and fact sheets, financials and other collateral about each of the
final teams prior to the event.
The final Pitch event is conducted in
front of 75 - 80 invited guests, sponsors,
investors, port executives and stakeholders from the entrepreneurial community.
Participants have eight minutes to present
and then an equivalent time for Q&A from
the judges. The presenters, preferably the
CEO or Founding Executive, are allowed to
use models, decks, demos, videos and other
collateral materials that help explain and
promote their business. Each entrepreneur
must defend aspects of the presentation
including models, markets and products
during the Q&A. Judges rate entrepreneurs
on their ability to articulate the opportunity,
proposed solution, business model, product/
market fit, IP/barriers to entry, team, status
and milestones, use of funds and exit potential. From these evaluations, the startups are
ranked and awardees identified.
Finalists are given exhibition space for the
following days EXPO and have the chance
to demonstrate their technologies, products
and services to 600 attendees representing a
broad cross section of port, transportation
and maritime industry leaders; government
and regulatory agencies; investors, business executives and service providers; and
multinational corporations. Award winners
are announced and introduced during the
EXPO luncheon.
the BottoM LiNe

challenging for both coaches and entrepreneurs as they tend to be unscripted, uncensored and intense.
Finals
Coaching sessions are the filter used by the
60
Dan Singleton, President and CEO of

Transient Plasma Systems. PortTech put
our team in front of the right people at
the right time and allowed us to leverage
the event to meet critical investors and
strategic partners to help grow our business. The insights gained from mentors
while preparing for the pitch competition
have made our presentations stronger and
more exciting, and the presentation itself
has made our company more recognized.
We appreciate Dans comments and validation that our approach works. It takes a
lot of effort from staff and volunteers to put
on these events and our processes and methods help us meet our objectives with the
pitch event. Our experience demonstrates
that entrepreneurs are well served when
they actively participate in events where the
coaching and advice offered is specific and
actionable. Coaches and mentors play a significant role in improving a startups chance
at fundraising when coaching is tailored to
address a startups deficiencies. Investors
benefit from having access to teams that
have been through a rigorous evaluation,
focused mentoring and competitive selection process. And the greater entrepreneurial
community sees the results of these efforts
in new companies, fresh financings and job
creation.
aBout PortteCh
PortTech is a commercialization center and incubation
program dedicated to creating sustainable technologies
that enable ports and maritime-related businesses to
meet their environmental, energy, safety/security and
transportation goals. As a non-profit, PortTech identifies new clean technology applications for ports and
prepares startups for success in maritime industries.
PortTech employs a market centric approach that connects founding teams to potential customers, partners,
service providers and investors. n
The PortTech Pitch was tremendously

valuable to our young company. All networking is not equal, and access to experienced entrepreneurs, investors, and business teams is not easy to come by, said
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PROFILED cOMPaNIES
fission uranium Corp.

otCqx: fCuuf / tsx: fCu
the Largest Maiden resource estimate in the worlds
Leading high-grade uranium district
This One is Special. (Peter Koven, National Post)

Truly Phenomenal (David Talbot, Dundee Capital Markets)
For the uranium sector, the last months of
2014 saw the beginning of an upturn. The
spot price surged up from its four year low
of just $28 per lb up to the mid $40s; utilities
started purchasing uranium in substantial
quantities and Japans nuclear regulator, the
NRA, announced that the first two reactors
had passed their final safety checks . At time
of writing, prices have seen a modest pullback into the high $30s but it seems clear
to most observers that the market has most
likely found its bottom and is on the way up.
Fortuitous timing then, for Canadas
62
award-winning uranium exploration company to release the largest pre-development

uranium resource estimate in Canadas
Athabasca Basin (Saskatchewan) the top
mining district for high-grade uranium.
79.6m lbs Indicated and 25.9m lbs Inferred.
Welcome to Fission Uraniums Triple R
Deposit at Patterson Lake South (PLS).
If youve been investing in mining for
a while, you may recall the battle in 2011
between Cameco and Rio Tinto to takeover
Hathor Exploration. Rio Tinto won out and,
for $654 million, secured a major league,
high-grade deposit in the Athabasca Basin.

That battle, which started as a hostile
takeover bid by Cameco, took place after
Fukushima had already occurred but such
is the value of discoveries in the Basin. Now
for a fun fact: Fissions maiden resource
estimate, follows CIM Definition Standards
and not only dwarfs Hathors initial resource
estimate, its far bigger than the resource
estimate Hathor released two years and multiple drill programs later when they were
taken out by Rio. Another fun fact? Fissions
resource is bigger than the maiden resource
estimate that Denison released for their
Phoenix deposit, also in the Basin.
The National Posts Peter Koven referred
to the Triple R as a Monster Resource
and Dundee analyst, David Talbot, called
the numbers truly phenomenal. If youve
read any other expert reports youll understand why Fissions management team was
so happy when we spoke to them.
Okay, so were impressed with the size of
the deposit. You, on the other hand, might be
inclined to respond with something like: size
isnt everything! Well youre quite right and
thats why the Triple R is so exciting. This is
not just a giant resource. Were talking about
remarkable quantities of high-grade uranium: 44.3M lbs Indicated @ 18.21% U3O8
and 13.9M lbs Inferred @ 26.35% U3O8
(indicated and inferred mineral resources
are stated using a cut-off grade of 0.1%
U3O8) and very shallow depths (most of the
mineralization is between 60m and 200m.
High-grade, shallow and big the definition of world-class. Just as good, this deposit
is sitting in basement rock which, when it
comes to the Athabasca Basin, tends to be
the geology that mining engineers prefer to
work with.
With such a monster of a deposit entering the world stage, it seemed only right
that we meet up with the Management and
Technical team experts behind it all, to get
their perspective on the news and whats in
store for the company.
If youre not familiar with Fissions team, I
can tell you now that they do not disappoint.
63
Dev Randhawa, CEO and Chairman, and

Ross McElroy, President, COO and Chief
Geologist, have made a name for themselves
in the uranium sector for making discoveries and growing shareholder wealth. In 2013,
they were both named Mining Person of the
Year by The Northern Miner magazine and
in 2014, became EY Entrepreneur of the
Year finalists.
Mr. McElroy went on to win the most
prestigious award in the mining sector
PDACs Bill Dennis award for exploration
success. He has over 30 years as a professional geologist under his belt and has worked
for uranium majors such as Cameco, Areva
and BHP. While Randhawa used his expertise as a CEO in the public markets to the
company was always well-funded, McElroy
put together one of the most successful uranium exploration teams in the industry and
lead that team to not just one but two major
discoveries in three years.
To be honest, were thrilled. Randhawa
says. We knew this was going to be big and
now we have the numbers to prove it. Whats
more, the timing is ideal. It seems clear that
Japan will begin restarting reactors this year,
which means more and more utilities will
come back into the market to secure their long
term supply of reactor fuel. Over time that will
place even more upwards pressure on the price
of uranium. Were already seeing it. Demand
is strong and growing and ultimately thats
good for a company with an asset like ours.
PLS really is unique. McElroy explains.
In two years of drilling, two years of the most
aggressive exploration the Basin has seen since
the 1970s, and we barely missed a drill hole.
Almost every hole has been mineralized and a
big percentage of those holes were high-grade.
So, we knew we had something remarkable
on our hands and thats why we chose one of
the most respected technical companies in the
industry, Roscoe Postle Associates, to analyze
and corroborate our results and provide a
43-101 compliant resource estimate and technical report.
McElroy continues, It has size, grade,
shallow depth, favourable geology and its still
64
open in several directions. In 30 years this

ranks up there with some of the best deposits I
have been involved with. Even more incredible
is that the potential at PLS isnt just with the
Triple R deposit. We have over 100 EM conductors at PLS. EM conductors are generally
associated with high-grade uranium. Not all
EM conductors have uranium associated with
them, but they are a vital part of the story.
Most projects are lucky if they have a few
prospective conductors and we have several
We asked McElroy if any work has been
done to explore other areas of the property
and he nods. Yes. During the last drill program we drilled tested a few of our highest
priority regional targets and hit anomalous
radioactivity at shallow depth on three other
conductors, one of which is near the PLS
claim border with Fission 3.0s Clearwater
West project.
So, whats next for Fission Uranium?
Were exploration specialists. Randhawa
explains. Our business model is to use our
technical expertise to make discoveries, grow
them, de-risk them and finally monetize them
for our shareholders by selling the project to a
mid-tier or major mining company. Our team
has been doing this successfully for years and
well continue to do so.
This year youll see more drilling. McElroy
adds. In fact, we recently started a 63 hole
program to grow the resource and to explore
other areas of PLS. At some point later this
year we plan to commission a Preliminary
Economic Assessment.
Randhawa wraps up the conversation,
When the time is right and the right offer
comes in well look to sell the project. Weve
already had a variety of companies visit the
property but you cant choose when someone
will try to buy you. What you can choose is
how you increase the asset value for shareholders and thats what our focus is.
Fission Uranium is listed on the TSX
under the symbol FCU and on the OTCQX
under the symbol FCUUF. Further information on the company can be found at www.
fissionuranium.com. n
CEO Dev Randhawa
65
2014 Year End adds & subtracts of FINRA Member Firms

Jan 2015, as of 31 Dec
compiled by
DAVID ALSUP
Financial Industry Broker Dealer Data Aggregator
Oct-Nov-Dec: 29 New Formations... and 54 Withdrawals.
2014 Jan-Dec Stats: 148 New firms and 214 Withdrawals Replacement Ratio now:73%
(The three-year average is 10.6 New Formations and 21.6Closures per month)
29 New Firms were admitted (Oct-Dec)
54 Firms Withdrew (Oct-Dec)
8 Firms admitted were equities oriented

14 firms admitted were Private Placement firms
5 Firms admitted were classified as Other
2 Firms admitted were Mutual Fund firms

21 were equities trading firms.
20 were Private Placement firms

3 firm was classified as Mutual Funds
10 firms were classified as Other
44 of these firms had less than TEN reps
Quarterly chart showing the number & types of firms admitted
60
50
40
30
20
10
0
Pvt
Mut F,
Other
EquiAes
57
37
34
35
46
27
23
33
31
27
31
17
41
43
32
29
1q11 2q11 3q11 4q11 1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14
Quarterly BDW Chart showing the number & types of firms that are closing
140
120
100
80
60
40
20
0
Pvt
Mut F,
Other
EquiAes
137 60
65
65
96
66
62
87
79
46
63
63
77
42
41
54
1q11 2q11 3q11 4q11 1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14

2014 148 New firms vs: 214 Withdrawals Net Loss: 66 firms (36 month net 383 vs. 779, net loss: 396 firms)
2013 106 New firms vs: 254 Withdrawals Net Loss: 148 firms (36 month net 398 vs. 892, net loss: 504 firms)
==================================================================================================
As of Dec 31, 2014, there are 4154 FINRA Member firm CRD Numbers.
===========================================================================
The above data has been sourced from regulatory agencies publications' and statistics, along with some independent third parties.
While it is believed to be
reliable there can be no guarantee of the accuracy of the data. The numbers have been cross-checked for accuracy, and they should
be within plus/minus two
percent. For example, there may be as many as 8 firms NOT included in these statistics and NOT reported that filed for a BDW
prior to Dec, 2014.
Activist Investing Offers an

Exit Strategy for Struggling
MicroCap Stocks
icroCap investors know that their exit strategies are limited when they make a sizable investment. Trading volume
is usually low so it is difficult to sell without driving down the
price.
Volume is often too low to allow hedging
through an options market. When management fails to create value for shareholders,
investors should consider an activist campaign. Activist campaigns can improve the
stock price in the short-term but also attract
an acquirer, facilitating an exit.
The activist campaign at NTS Inc. offers
a strong example. NTS, headquartered in
n ELIZABETH KOPPLE
Lubbock Texas, provides high-speed broadband services to residential and business

customers in Texas and Louisiana. The stock
failed to thrive. Shareholders felt the problem was the Board of Directors. They had
limited industry expertise and a long tenure
with NTS. Activists supported the continued leadership of the CEO who was doing
an excellent job. He needed a better team of
advisors to support his efforts.
In October 2012, an activist group called
Concerned NTS Shareholders (CNS)
announced a proxy contest and requested
representation on the Board. They also filed
a 13D. After a meeting with management
in November, the groups were able to come
to an agreement. NTS expanded its Board
from six to nine members. The new slate
included four incumbent directors and five
new nominees who represented the investors. The new slate was elected at the 2012
annual meeting.
The new Board immediately got to work.
The team focused on improving capital allocation, monitoring cash flow and standardizing board reporting. They worked together
to refine strategic decisions and ensure a
proper growth plan was in place.
This work ultimately helped NTS to find
an acquirer. On October 18, 2013, NTS

agreed to be acquired for $2/share in cash
by Tower Three Partners, an operationallyoriented private equity firm that invests in
U.S.-based middle market companies.
The purchase price represented a premium of 27% over NTS closing share price
that day and a premium of 24% over NTS
average closing share price for the 30 trading
days ending on October 18, 2013.
The acquisition was good for the investors but also for NTS as a company. NTS
could now lower its cost of capital enabling
a more aggressive growth strategy. The CEO
remained at the helm and served for another
year. The Company has continued to expand
and has recently brought in additional management expertise. The former CEO is still a
valued Board Member.
NTS is a great example of successful shareholder activism. It is an especially important
tool for micro-cap investors.
Elizabeth Kopple is a Director with IDWR MultiFamily Office, an organization that invests its own
capital in micro cap proxy contests. Ms. Kopple is
Co-Director of The Activists Association: www.activistsassociation.com. She can be reached at ekopple@
idwr-office.com. n
67
F E aT U R E D a R T I c L E
Exploration Insights:
Turning Rocks Into Money
Fact: We Are Producing More Gold Than We Are Finding
he mining industry is producing 89

million ounces of gold per year but
only finding about a third of that
amount each year. Mining companies have
passed the point of peak new gold discoveries, and only manage to stay in business
by exploiting deposits discovered tens of
years ago. Major gold miners now face an
imminent and very real deficit of economic
depositsdeposits needed to replace the
gold being produced from mines that are
long in the tooth and running dry.
The upside for investors in the minerals
exploration sector is that mining companies will become increasingly desperate for
new economic discoveries and will pay a
premium for the deposits that will actually
make money. We need only to identify those
deposits early on and hold them. The key, of
68
course, is to single out the very few legitimate deposits from the hundreds of marginal or uneconomic ones being touted by
the hundreds of junior mining companies.
The preceding chart titled Peak Gold
follows from comments Goldcorp CEO
Chuck Jeannes has made during presentations and as reported by the Wall Street
Journal. Jeannes points out that miners have
reached peak production. His explanation:
easy to mine deposits are being depleted
while also becoming harder to find. The
chart does not factor in additional declines
in production that will occur if the gold price
stays low for any extended period of time.
Most of those easy to mine deposits were
found in the mid-90s and have taken 10 to
20 years to come into full production. The
increase in discoveries 20 years ago was
largely the result of previously off-limits

countries opening up to modern exploration;
basically, low hanging fruit became available.
The decline in ounces discovered started
about 1995 because the number of obvious,
outcropping, ore bodies was finite. However,
as the discovery chart points out, and even
if we include new ounces not yet defined
or reported, the exploration industry has
not kept up with production. Significantly,
new ounces discovered have declined despite
increased exploration expenditures, a feature
that supports my contention that we have in
fact reached peak economic discovery.
The problem is not really that Earth is
running out of goldthere are 20 million
tons of gold in seawater and 20 million
ounces at Livengood in Alaska, alone. The
problem lies in recovering those ounces
n BY BRENT cOOk
Three-year running average of ounces in new gold discoveries 1990-2013. [Note,

recent discoveries should add to the last few years]. Right: Gold production 2003 estimated out to 2022. Source credit: SNL Metals Economic Group and CPM Group, GFMS
and Metals Focus)
profitably. Seawater grades 13 parts per trillion and Livengood grades about 0.6 parts
per million. Without a very substantial real
increase in the gold price (an increase that
is not accompanied by a similar rise in mining and capital costs) most of the currently
defined resources will remain uneconomic
or marginal.
Further, as companies cut all-in operating
costs by increasing the mined grade (high
grading), curtailing development, postponing maintenance, and slashing exploration,
production will inevitably decline. These
near term cost saving exercises often gut the
economic reserves thereby rendering previously defined ore uneconomichence Peak
Gold Production.
You know where I am going with this. . .
Mining is a depleting business. For every
ounce or pound produced, a mining companys assets (reserves) decline. We all know
this. The big dilemma for most mining companies is that they are facing a new type of
shareholder, one that expects a profit now.
Therefore, nearly every activity (cost) that is
associated with building its future business
is being curtailed, both to satisfy the market
and in an attempt to ensure survival during
current low metal prices.
Exploration is always the easiest expenditure to cut, as in the eyes of the accountants
it is purely a cost center populated by a
bunch of unruly and unkempt geologists
throwing money down holes. A fair enough
assessment, given the very poor odds of success and the fact that, over time, successful
exploration has become increasingly more
difficult and expensive. MinEx Consulting
estimates that the industry as a whole spends
about ~$150 million per gold discovery.
As pointed out above, the near surface,
easily mineable deposits have been exploited
for decades now, and the discovery of a new,
near surface deposit is a very rare event
indeed. Additionally, the hurdles to exploiting any new deposit have increased almost
exponentially due to the social, political, environmental, and permitting realties across the
globe. Consequently, even the successful dis-
Depth of discoveries over time. Source: MinEx Consulting)
covery of easily mineable deposits will cost

more than ever and take substantial time to
develop. For example, the Pebble copper/gold
deposit in Alaska was first identified in 1988
and explored by various companies until 2005
when the Deep Pebble East deposit was discovered. The project is still battling through
the permitting process after spending $730
million, and it may still never get built.
Because of the limited number of outcropping deposits left, large new discoveries are
being increasingly made at depth, under
significant and usually barren cover, as illustrated in figure 3 below. By having to look
deeper, basic exploration costs are much
higher, and the odds of making an economic
deposit much lower. What could previously
be mapped and sampled in detail by a geologist with a rock pick at surface now takes
obscure geophysical techniques and drilling:
drilling that only provides information for a
3-inch diameter string of core.
One also has to face the geological facts
and recognize that for every 2 gram per
tonne gold occurrence, there are roughly
ten 1 gram per tonne occurrences (thats
just how Earth works). Therefore, you are
more likely to find low-grade uneconomic
deposits at depth than high-grade ones; yet
the economic hurdles associated with deeper
deposits require discovery of the highergrade deposits. The odds of economic suc-
cess are destined to get worse no matter how

much is spent looking.
The only logical conclusion I can draw
from the predicted decline in production
and documented decrease in new economic
discoveries is that some day in the future,
permitable and profitable deposits will be
very valuablemore so than they are today.
Buy intelligently and buy early.
Thats the way I see it.
Brent Cook
Economic Geologist and Author
Exploration Insights.
Brent Cook, a renowned exploration analyst and geologist, is the author of Exploration
Insights, (www.explorationinsights.com). He
has over thirty years of experience providing economic and geologic evaluations to
major mining companies, resource funds
and investors. He was principal Mining and
Exploration Analyst to Global Resource
Investments from 1997 through 2003 where
he provided analysis to retail brokers and
two in-house funds managed by Rick Rule.
He has worked in over 60 countries on
grassroots through mine feasibility projects
evaluating virtually every mineral deposit
type. Exploration Insights is an independent
newsletter that discusses what Brent is buying, selling and avoiding in the junior mining and exploration investment sector. n
69
Who Discovered Africa?
f you know the answer to the question who discovered

Africa? then there is no need to read further. You already
know where your money is going, and no need to look for hidden gems.
If you are smart enough to realise that this
must be a trick question keep reading and
youll know where the trick lies and how to
answer next time someone asks.
The fastest way to understand investing
in Africa is to try to get your head around
some simple but incredible facts about the
continent that would astound even a cynical
investor like myself. I like to use bellwether
concepts and the continents mobile phone
market is a great place to start. Believe
it or not, Africas 750 million subscribers
total more than the US, Europe and Latin
America combined!
If that seem too incredible to make sense,
remember that the continents 54 countries
lagged the rest of the world in copper wire
land line telephone penetration and still
does even now. Mobile service has been a
simple solution for getting a large mass of
urban and rural users connected to com-
n ANTHONY DESIR
70
munications and the internet once a local

broadcast tower is set up. Running wire lines
can take years in acquisitions, planning, and
execution and it is expensive. Setting up
broadcast towers has been quick, simple, and
inexpensive with broad coverage footprints.
People on the ground responded in ways no
one could imagine.
The big surprise for everyone yes
including me was how quickly paid subscribers filled competing networks. In many
instances users have been signing up on multiple networks to take advantage of closed
network marketing promotions that allow
them to save on intra-network services. So
what was once a problem no reliable
landline service has turned into an opportunity where an entire continent bypassed a
fading technology to leapfrog past developed
economies in one particular business sector.
This was no accident and it will continue to
repeat itself.
Go back 10 years and ask if the hidden
gem was Microsoft (marketcap @$260b) or
Apple (marketcap @$45b)? Come back to
the present and ask yourself if you want the
opportunity that everyone thinks they know,
or the one that has yet to be discovered?
Frontier markets and emerging economies
really are the undiscovered lands, especially
when we look at technology convergence
and transfers.
If I have your attention, then please come
on this quick tour of Africa with me. Some
of you may think you know the continent

from repeated news reports with snapshots
of appalling misery, the place I am taking
you to is different, so get ready for another
surprise.
Africa is not a country it is one huge
continent that can at the same time fit the US,
Eastern & Western Europe, Japan, China,
India, Mexico, and the Iberian Peninsula.
Once you get your head around the geography we can begin to visit its 54 countries that
is home to 1.1 billion people. And, it is the
people who fascinate and excite most.
Africans speak almost 3,000 different languages with 15 of the common tongues spoken by 85% of the population. Nigeria alone
boasts 500 languages, and in most countries
even in undeveloped places with limited formal education multilingualism is normal.
It is not unusual to meet a person from the
continent who has had no higher education,
but who can communicate, trade, and negotiate in more languages than graduates of top
American and European universities.
Before I discovered Africa, I too was
warned about a dark continent that was an
investment black hole. No one mentioned
that it held 86% of the worlds chrome ore,
or that fork that fed me my breakfast was
the taste of Africa with each bite of chrome
covered metal that I put in my mouth. Other
African mineral reserves rank first or second
for bauxite, cobalt, diamonds, phosphate
rocks, platinum-group metals (PGM), ver-
miculite, and zirconium, with plentiful ore

deposits throughout the continent. Have you
ever considered that you cannot eat a meal,
turn on your mobile, start your car, or even
read the rest of this article without a product
from Africa helping to make that happen?
If the continent is so important to us,
why is it that we have been in dark about
its importance? Why all the bad news? A
very simple way to answer these questions
is remember that hype sells. Whether we
are hyping hot stocks or hyping a press
clip, alarming statistics gets your attention.
Blood diamonds stays in your mind more
than hearing that the diamond cartel has
willingly funded that yarn to help kill competitive supplies not under their control.
The Ebola threat is a better headline than
the regular flu epidemic that killed more
people in the US each week during the peak
of African Virus.
Speculation is easy to refute so where
are our hard numbers that prove the case?
The International Monetary Fund estimates
that the real GDP of sub-Saharan Africa as
a whole will grew by 5.1% and 5.8% in 2014
and 2015, respectively. Compare that to the
U.S. economy expanding by 3.1% in 2015,
and the Eurozone growth of only around
1.3%.
So if the fruit is ripe, who is picking it?
Africas largest single investor, by country of
origin, is China. More than that, of Chinas
overall FDI, Africa is has been its single
largest investment destination. Sino-African
cross trade totals more than US$300 billion,
with China holding more than $220 billion
in Africa equity, according to the Heritage
Foundation. If you have heard about China
money flooding other investment opportunities in domestic property or equity markets, then this is a small knock compared to
noise they have raised on the continent.
Dont be fooled Chinas investments
even private money is always backed by
State Owned participation when you drill
behind the Cayman and Hong Kong holding companies. This is as true of Chinas
purchase of the Waldorf Astoria, as it is of
Before I discovered Africa, I too was warned about a

dark continent that was an investment black hole. No one
mentioned that it held 86% of the worlds chrome ore, or
that fork that fed me my breakfast was the taste of Africa
with each bite of chrome covered metal that I put in my
mouth.
the big listing for Alibaba, with major stakes
allocated to privileged members of the communist party years before the listing.
The IMF, The World Bank, and IFC are
NGOs (look past the alphabet soup please,
we are after the meat!) that have all been
left behind as China stormed into Africa in
the last 8 years and managed to buy almost
anything of value for sale, including bulk
commodities and African politicians. Before,
we scold the Africans keep in mind that here
in the US PACs, think thanks, lobby groups,
and rich donors do exactly the same thing,
albeit with just a bit more transparency.
The climate is better understood if we
imagine one giant PAC (China) coming to
every one of the 51 US states (54 in the case
Africa) and funding every governor and every
local legislature and they getting first call on
any industrial output. Well off course Africa
has no President, no congress, and no federal
body to help manage its continental agenda
so you can easily understand how China has
become an economic force on the continent.
Where is the US presence? David Snowball,
publisher of the Mutual Fund Observer newsletter, estimates that only about 0.3% of the
average portfolio in the U.S. just $3 out of
every $1,000 is invested in Africa. While
we are reading the bad news, and distracted
by doomsday headlines African growth is
about double the US in most places, and
waiting for origination capital so that local
entrepreneurs can finally muscle out even the
Chinese State Owned Companies (SOES) that
have their leaders in pocket.
Perhaps we might comfort ourselves with
the idea that maybe Africa is a hot market,

but too remote to understand and quite
ready for prime time? So what does the
smart money think? We believe that Africa
could be the emerging market story of the
next decade, said Mark Mobius, executive
chairman of Templeton Emerging Markets
Group and manager of the Templeton Africa
Fund. Bingo!
So here is where we begin to close our
thesis; the gem isnt a blood diamond and
it wont be hidden much longer, and if you
happen to own a part of it before the other
investors turn up your risk profile is much
lower than their and your margins are much
higher it is that succinct.
In June of 2013 President Obama got
on the bandwagon in a rediscovery of the
continent. He pledged US$7 billion for a
Power Africa initiative that would fund clean
energy. Six months later the Chinese government announced that they would spend $83
billion a year for the next 12 years on competing programs. Since then the Obama plan
has already drawn in US$20 billion more
from corporate USA that is committed to his
energy programs.
Corporate cash and Chinese dollars
already committed to Africa development
but not yet spent is not inflationary it is
the seeds of irreversible growth and development. But that money is still not stroking
African entrepreneurs and small businesses
who originate the simple ideas that will
turn home grown enterprises into elephants,
much of it is committed to grand projects
involving large institutions.
71
Consider America and the Wild West? The

investment pioneers didnt start out funding
the railroads, or ports. They were local, and
they grew as the country around them grew.
And that is where you come into this picture.
Africa is open for business, and while the government players are being wined and dined
by the Chinese and by corporate money the
small players who know the local landscape
are hungrier than ever for capital partners
who want to grow with them.
So who discovered Africa? Why not you?
The fact is that Africa is not undiscovered
country; it is not even a country. Here is a
newly funded land, rich with opportunity
and ripe with promise, but still a dark spot
on the investment map. Here there are
knowledgeable local entrepreneurs hungry
for partners who can share the bounty; that
could easily be you. It is a different place,
and it is a place where different strategies are
needed every single time, but the numbers
already tell us of this is real.
Shelly is pointing at his watch so I have to
sign off now. So next time, lets go from where
and why, to what you should be looking for.
Anthony is SAMIs head of Corporate Finance
and the funds lead partner in Asia, where he has
developed a representation relationship with one of
Chinas leading SOE investment banking groups. He
has headed the China-Africa investment consultancy
practice since 2007, and is recognized as one of the
regions experts on China-Africa resource capitalization solutions. He is an experienced professional
who has been a featured presenter at a number of
industry forums, and an author and columnist who
has been profiled and interviewed in resource publications which promote independent market analysis.
He is an active University guest lecturer at Hong
Kong University Business School, Perking University
(Shenzhen), City University (Hong Kong), and a
regional TV commentator.
His focus is on originating innovative corporate
finance programs and solutions for institutional clients. His active client base includes unlisted resource
companies, global and regional banks, listed entities,
and China State Owned Enterprises. He has lived and
worked in Hong Kong since 1990. His career began
in New York, where he worked as a banker and a
management consultant to US based money centre banks and multinational insurance companies.
Anthony graduated from Dartmouth College, with
honours, in 1981.
Direct contact:
Anthony Desir, Director
anthonyd@samifunds.com
+852-9265-1228. n
72
73
Hong Kong IPO Market

Outlook 2015
he Hong Kong market, well-known for its opportunities to

invest in leading Chinese players, continues to be the platform for mega deals with six companies raising over a billion US
dollars in 2014.
Total funds raised in Hong Kong were $29.3 firm is targeting to initiate the share sale in
n LESLIE RICHARDSON
74
billion, 80% of which came from mainland

companies; ranking the exchange as the
second highest IPO funds raised behind
New York which raised $73.4 billion, according to Dow Jones. Furthermore, the Hong
Kong Stock Exchange (HKEx) ended the
year with several record highs including 96
main board listings up from the benchmark
of 94 set in 2010 and fundraising in postIPO shares reached $91 billion, surpassing
the 2010 record of $52 billion. Despite
concerns about the global economy, the
momentum for mega deals is not showing
any signs of slowing as a number of billion
dollar deals have already been announced
for 2015. PwC expects 120 new companies to
list in Hong Kong this year raising up to $26
billion - 100 on the main board and 20 on
the GEM board. While PwC forecasts that
small-and-medium-sized companies will
dominate Hong Kongs IPO markets in 2015,
the company expects several jumbo IPOs to
fuel another strong year. Similarly, KPMG
forecasts an estimated 110 IPOs raising over
UD $25 billion in 2015.
Mega listings expected for the year include:
GF Securities, one of Chinas largest security firms, currently listed in Shenzhen,
China, with a market cap of $22 billion,
ranks third in terms of net assets and fourth
in terms of total assets is looking to raise
more than $1 billion in Hong Kong. The
March of 2015. GF Capital (Hong Kong) and

Goldman Sachs Group have acted as joint
sponsors for the sale.
SOE China Railway Signal &
Communication Corp. (CRSC), Chinas biggest provider of rail traffic control systems,
is planning to raise about $2 billion from an
initial public offering in Hong Kong. The
company is expected to benefit from the
Chinese governments move to accelerate
300 infrastructure projects valued at a combined seven trillion yuan ($1.12 trillion) this
year and the central governments support
of an overseas expansion of Chinas railway
companies.
China Huarong Asset Management Co.,
Chinas biggest bad-loan manager, is planning to raise up to $3 billion in Hong Kong
by the third quarter. Citigroup, Goldman
Sachs, HSBC and ICBC International were
named initial sponsors of the proposed IPO.
China Huarong is going public at a time bad
debts are rising amid an economic slowdown in China. In 2014, Chinas GDP was
7.4%, the slowest in 24 years. Many investors
believe that the slowdown will benefit the
company as non-performing assets increase
over the next few years.
Beijing-based insurer Taikang Life
Insurance Co., is expected to seek more than
$2 billion from a Hong Kong initial public
offering. Taikang Life Insurance, backed by
Goldman Sachs Group Inc., is the nations

fifth-biggest life insurer and is known for
its investment performance and product
innovation.
State-owned oil giant, Sinopec, is looking
to raise more than $5 billion by spinning
out its 30,000 gas stations and 23,000 convenience stores spread throughout China in an
IPO which could be one of Asias biggest in
2015. The Hong Kong IPO will be a big step
in the companys mixed-ownership reform
encouraged by the central government to
reinvigorate the State-owned sector.
Legend Holdings Corp (IPO-LEGH.HK),
the parent of the worlds biggest maker
of personal computers, Lenovo Group Ltd,
plans to raise up to $3 billion in an IPO in
Hong Kong in the second half of 2015.
Red Star Macalline Group, the largest
national furniture retail chain in China, is
looking to raise up to $1 billion in Hong
Kong as early as the end of the second quarter.
Hangzhou Hikvision Digital Technology,
one of the worlds largest suppliers of video
surveillance equipment and manufacturer
of closed-circuit TVs for banks, schools and
courts, is planning a share offering of up to
$1.5 billion as soon as the second quarter of
2015.
Smaller IPOs planned in Hong Kong
include Chinese trade and logistics company Nanxiang Holding which is targeting
raising up to $300 million and Zhou Hei Ya
Food which is planning to raise $500 million in the first half of the year. Zhou Hei
Ya, based in Wuhan, produces cooked and
marinated duck and goose meat products
and operates snack food chain stores. Bank
of Jinzhou Co., a lender in northeast China,
is planning to raise about $600 million from
an initial public offering in Hong Kong.
Bank of Jinzhou was founded in 1998, has
branches in 12 cities across northern and
northeastern China and 246.7 billion yuan
($39.7 billion) of assets. Guolian Securities
Co., the joint venture partner of Royal Bank
of Scotland Group PLC in China, is planning
to raise around $200 million in an initial
Despite concerns about the global economy, the

momentum for mega deals is not showing any signs
of slowing as a number of billion dollar deals have
already been announced for 2015.
public offering in Hong Kong. Guolian,
was founded in 1992 and has more than 50
branches in major Chinese cities such as
Shanghai, Beijing and Guangdong. It posted
revenue of 1.02 billion yuan ($164 million)
in 2013, up 24% from a year ago, while its
net profit surged 181% to 264 million yuan
($42.3 million).
As of January 30th, thirteen companies
completed their IPO with seven of the newly
listed companies trading above their IPO
price as of the end of the month. Top
IPO performers include: Yat Sing Holdings
(HK:3708) a building maintenance and
renovation service provider in Hong Kong
with a market cap of $230 million is trading up over 140% from its IPO on January
15th, Hubei-based marble mining company,
Future Bright Mining (HK:2212) has a market cap of $55 million and is up over 45%
from its IPO on January 12th and Target
Insurance Holdings (HK:6161) with a market cap of $140 million is up 65% from
its January 16 debut. Deson Construction
International Holdings (HK:8268), a spinoff of Deson Development International
Holdings (HK:0262) has a market cap of
$35.6 million and is up 30% from its IPO on
January 9th while SIS Mobile (HK:1362) with
a market cap of $47.4 million is up 31% from
its IPO on January 16th.
Regarding the newly debuted ShanghaiHong Kong Stock Connect which allows
foreign investors to directly trade Shanghai
shares via the Hong Kong exchange for
the first time, investor demand has been
tepid with northbound capital significantly
greater than the southbound stream. The
average daily turnover for Northbound and
Southbound trading under the ShanghaiHong Kong Stock Connect program reached
Rmb5.6 billion ($900 million) and HK$929
million ($120 million), respectively, between
the programs launch on Nov 17 and Dec 31,
2014. Subsequently, officials from China
Security Regulatory Commission (CSRC)
are looking into ways to boost trading on
the equity link as international investors are
not yet familiar with Chinas securities rules.
Despite the initial lackluster investor reception, the scheme is looked upon as a big step
forward for the internationalization of the
Renminbi as well as reinforcing Hong Kongs
position as a gateway to investment in China.
Additional integration between China and
Hong Kong is expected with the launched
of a Shenzhen-Hong Kong Connect as early
as the second half of 2015. The Shenzhen
Stock Exchange which ranks in the top 10
exchanges globally by market capitalization
is seen as an equivalent to NASDAQ with
many next generation Chinese companies,
including software, high-tech, and biotechnology stocks. n
75
cOMMODITY cORNER
2014 Commodities in Review
014 had its share of commodity headlines. With the year

now completed, this is a good opportunity to review the
previous year of the commodity markets.
There was something for everyone as some

commodity markets rallied, but many commodity markets declined in 2014. Several of
the markets experienced price lows not seen
in several years.
The last several months of 2014 will definitely be known for falling oil prices as the
topic found itself constantly in the headlines
and in the conversation of the business, economic and political news. Besides energy,
the metals and grain sectors made significant
lows. One of the largest commodity moves
in 2014 occurred in the rally of the coffee
market. The meats sector was making new
highs last year.
As noted in the S&P GSCI index the overall move in the commodity index has gradually trended lower since 2011. In 2014 the
n BY MaRk SHORE
76
S&P GSCI fell off the cliff as many commodities were reaching new lows as noted in
Table 1 below.
It may not be intuitive to connect commodity prices to currency prices, but they
do correlate. Many commodity prices are
quoted in U.S. dollars. If the USD falls commodity prices may rise, as commodities
appear cheaper outside the U.S. If the USD
increases, commodity prices may fall as they
become more expensive for other countries
as they convert their local currency to USD.
2014 experienced a continuation of the USD
index rally from bottom in May 2011. The
USD index reached highs not seen since
2006. (Learn more about currencies click
here).
eNergy:
2014 experienced falling oil prices, falling
heating oil prices and falling natural gas.
Movements in the commodities markets
may have wide ranging consequences on various markets and entities around the world.
For example, Russia was already under pressure from events with Ukraine earlier in the
year. One could say the drop in crude oil was
similar to throwing gasoline on a fire.
According to the EIA (U.S. Energy
Information Administration), oil and gas
equated to 52% of the Russian governments
revenue and more than 70% of Russias
exports in 2012. They are the third largest producer of oil after Saudi Arabia and
the U.S. and the second largest producer of
Chart 1: S&P GSCI Monthly Chart Jan 1993 to Dec 2014. Source: www.barchart.com
Table 1: Commodity Markets by Sector with Highs / Lows since previous years
Sector
New Highs Since
Coffee
Softs
2012
Feeder Cattle
Meats
New High
New Lows Since
Live Cattle
Meats
New High
Palladium
Metals
2001
Cocoa
Softs
2011
Orange Juice
Softs
2012
Gold
Metals
Wheat
Grains
Lean Hogs
Meats
Corn
Grains
2009
Lumber
Softs
2013
Sugar
Softs
2010
Platinum
Metals
2009
Oats
Grains
2012
Soybean Meal
Grains
2012
Copper
Metals
2009
Soybean Oil
Grains
2009
Silver
Metals
2010
Soybeans
Grains
2010
Rough Rice
Grains
2010
Natural Gas
Energy
2012
Cotton
Softs
2009
Heating Oil
Energy
2009
Crude Oil
Energy
2009
2013
2010
2010
New High
2013
Source: barchart.com, finviz.com
natural gas after the U.S.1 Russias loss of

energy revenue helped to sustain the devaluation of the ruble. This in turn influenced
the recently reported 11.37% Russian CPI
rate of inflation2 and an increase of the
Russian interest rates to 17% from 10.5% in
December and then Russia cut rates to 15%
on Jan 30th 2016.3
Some OPEC countries are willing to accept
a short-term decline in Oil prices, if it will
damage the U.S. shale oil industry. June 2006
U.S. crude oil imports peaked at 10.8 million
barrels per day on a four week average. The
four week average as of December 26, 2014
was 7.5 million barrels per day equating to
a 31% reduction of imports.4 The U.S. four
week average of production bottomed at 3.9

million barrels per day in Oct 2005. As of
December 26, 2014, the four week average
crude oil production in the U.S. was 9.1 million barrels per day. This is an increase of
33% U.S. oil production since 2005.5
As the number one consumer of oil, the
U.S. increased production and decreased
imports in recent years, leaving a potential
glut of the world oil supply. Plus the rallying
dollar has made crude oil more expensive
around the world. Falling oil prices are good
for consumers of petroleum based products,
but may hurt producers of the product. Can
the reduction of oil prices be both good and
bad for the U.S.?
Softs (Coffee, Cocoa,

Cotton, Orange Juice,
Sugar, Lumber):
Rallying markets included coffee, cocoa,
orange juice. Declining markets include:
Lumber, sugar and cotton. These markets
originate from different parts of the world
and may have various reasons for moving
higher or lower.
Coffee: An important factor for coffee to
rally in 2014 to highs not seen since 2012 was
due to Brazils low amount of rain. Brazil is
the largest producer of coffee and the largest
producer of Arabica beans, thus the low rain
factored heavily into coffee prices. (Click
here for more information on coffee).
Cocoa: Demand for cocoa has outstripped
the supply for the last few years. Increased
weather concerns have also played into the
greater uncertainty of the market. Many
cocoa producing countries are the same
countries with the highest ebola outbreak in
2014, thus causing production scares, uncertainty and increased pricing. Both production and consumption have increased, but
production has increased and decreased over
the past decade while consumption has been
on a steady upward climb. According to the
International Cocoa Organization (ICCO),
the estimated ratio of stocks to consumption for the 2013/2014 year has decreased to
38.9, the second lowest since the 2004/2005
crop year.6
Meats
Feeder cattle, live cattle and lean hogs all
made new highs in 2014. The cost for a good
steak was climbing in 2014. There were a few
factors for the higher cattle prices in 2014.
1) U.S. cattle inventory reached new lows.
According to the USDA, the inventory is the
lowest since they began mid-year inventory
reporting in 1973.7 2) Yields of feed grain
increased and prices fell, allowing cattle producers to hold onto cattle for a longer period
of time. 3) As prices are increasing producers
are increasing the weight of cattle.8
77
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78
Grains:
The entire grain sector moved lower in 2014
and reached the lowest prices from two to
five years prior. The most interesting was
the soybean market (click here to read more
about soybeans). Since breaking above the
resistance price of $10 per bushel in 2010,
soybeans found continued support in the $10
to $12 price range and eventually surpassed
$17 in Sept 2012. In the fall of 2014 the price
of soybeans finally broke the support level of
$10 and declined to just above $9.
2013 and 2014 were back to back years
of large production for corn and soybeans
assisted by a near perfect 2014 summer
growing season causing a sustained price
decline. In 2012 drought conditions during
the growing season caused the rally in the
grain markets.9
Metals
ting into the milk industry with a premium

brand called Fairlife as a joint venture with
the dairy co-op Select Milk Producers. 12
According to the USDA, dairy prices were
5.3% higher in December 2014 relative to
December 2013.13 Class III milk used for
various cheeses is traded at the CME Group.
As this article points out, various factors
will influence specific commodity markets,
but the results of that market may spill-over
into other markets and parts of a domestic
as well as the global economy. Time will
tell if the various commodity markets will
continue their current moves. (Learn more
about commodity markets click here).
(Endnotes)
1 http://www.eia.gov/countries/cab.cfm?fips=RS
2 http://www.global-rates.com/economicindicators/inflation/consumer-prices/cpi/russia.
aspx
3 http://www.bbc.com/news/business-31057283
2014 was not a glittering year for precious

or industrial metals. Prices were falling to
lows not seen since 2009 or 2010 (respective
of the market viewed). Factors impacting
the precious metals market included the
continued rally of the U.S. dollar and a larger
focus on the Fed unwinding QE and possible
rate increases. Increased global economic
slowdown and uncertainty as experienced
in Europe impacted the base metals sector.
Dairy:
A market that many consumers use every
day, but did not make the headlines was
milk. Rising prices and falling prices (end
of the year), high profit margins due to
increased prices and low feed grain prices as
mentioned above. However, U.S. consumption of fluid milk and cream has declined.
In 1970 the U.S. consumption per capita was
273.8 pounds per year. In 2012 consumption
fell to198.8 pounds.10 Milk is a global market
and the demand is growing quickly in China
and other parts of Asia.11
In 2014 Coca-Cola reported they are get-
4 http://www.eia.gov/dnav/pet/hist/LeafHandler.
ashx?n=pet&s=wcrimus2&f=4
5 http://www.eia.gov/dnav/pet/hist/LeafHandler.
ashx?n=pet&s=wcrfpus2&f=4
6 http://www.icco.org/about-us/internationalcocoa-agreements/cat_view/30-relateddocuments/47-statistics-supply-demand.html
7 http://igrow.org/livestock/profit-tips/cattleinventory-declines/
8 http://www.ers.usda.gov/data-products/foodprice-outlook/summary-findings.aspx
9 http://www.wsj.com/articles/grain-soybeanfutures-fall-as-usda-ramps-up-cropprojections-1410454858
10 http://www.ers.usda.gov/amber-waves/2014june/trends-in-us-per-capita-consumption-ofdairy-products,-1970-2012.aspx#.VM7GO9LF-So
11 http://money.cnn.com/2014/06/09/investing/
milk-money/
12 http://www.bloomberg.com/bw/
articles/2014-12-01/coca-cola-prepares-to-builda-milk-brand-called-fairlife
13 http://www.ers.usda.gov/data-products/foodprice-outlook/summary-findings.aspx
Copyright 2015 Mark Shore. Contact

the author for permission for republication
at info@shorecapmgmt.com Mark Shore
has more than 25 years of experience in

the futures markets and managed futures,
publishes research, consults on alternative
investments and conducts educational workshops. His research is found at www.shorecapmgmt.com
Mr. Shore is also an Adjunct Professor
at DePaul Universitys Kellstadt Graduate
School of Business where he teaches
a graduate level managed futures/ global macro course. He is a board member
of DePaul Universitys Arditti Center for
Risk Management and a frequent speaker
at alternative investment events. He is a
contributing writer for the Eurex Exchange,
CBOE Futures Exchange, Examiner.com and
Micro-Cap Review.
Mr. Shore hosts the popular internet talk
show on alternative investments Skewing
Your Diversification.
Prior to founding Shore Capital, Mr. Shore
was Head of Risk for Octane Research Inc
($1.1 billion AUM) in NYC, where he was
responsible for quantitative risk management analysis and due diligence of Fund of
Funds. He chaired the Risk Management
Committee and was a voting member of the
Investment Committee.
Prior to joining Octane, he was the Chief
Operating Officer of VK Capital Inc, a wholly owned Commodity Trading Advisor unit
($250 million AUM) of Morgan Stanley. Mr.
Shore provided research and risk management expertise on portfolio construction,
product development and business strategy.
Mr. Shore graduated from DePaul University
with a degree in Finance. He received his
MBA from the University of Chicago.
Past performance is not necessarily indicative of future results. There is
risk of loss when investing in futures and
options. Futures can be a volatile and risky
investment; only use appropriate risk capital;
this investment is not for everyone. The
opinions expressed are solely those of the
author and are only for educational purposes. Please talk to your financial advisor
before making any investment decisions. n
79
Reasons for
the Coming
Palladium Bull
P
alladium is poised for a sustained bull run. Platinum and

palladium are both used as catalysts in vehicle emissions
control devices catalytic converters.
They create a reaction that oxidizes or
reduces toxic pollutants in exhaust, namely
poisonous gases nitrogen oxide and carbon monoxide. Theyre interchangeable with
each other as the main catalyst in the converters.
There is no substitute for these two metals.
Automakers MUST use either platinum or
palladium as catalysts.
So when one metal gets too expensive, the
auto industry simply replaces one metal with

the other.
Its a cycle that repeats every couple of
years, creating a platinum/palladium seesaw.
Between 1990 and 2001, the global automobile industry favored palladium over platinum as the main catalyst.
As a result, palladium prices skyrocketed
from just $80 to $1,090 an ounce a gain of
1,263%.
n NICK HODGE
80
During the same period, platinum prices

fell 27% from $444 to $326 an ounce.
Take a look for yourself.
Then, with palladium prices over three times

higher than platinum, global automakers retooled
their catalytic converters with platinum.
And again after only seven years of

strong demand from the auto industry
platinum prices were driven 597% higher to
$2,273 an ounce.
As expected, palladium prices crashed
85% to $164 an ounce.
Check it out.
You get the point...
When the price of one metal becomes
too high, automakers send it crashing down
by switching to the other. After switching,
prices of the other metal begin to rise with
demand from the auto industry.
That means the very best time to be
invested in platinum or palladium is when
global automakers are retooling their catalytic converters to use one or the other.
And thats happening now...
In 2009, the demand for platinum usage in
auto catalytic converters dropped 39%.
With average platinum prices of over
$2,200 an ounce and palladium under
$200/oz the switch was inevitable.
Since 2009, palladium prices have risen
283%.
As expected, platinum prices are on their
way down.
Palladiums outperformance has been
driven by the strong rebound in the global
auto industry, particularly in the U.S. and
China.
And while palladiums rally over the last
few years has been impressive, we aint seen
nothin yet...
Stricter emissions control in China to
drive palladium prices higher ~ South
China Morning Post (July 2014)
Palladium bulls are getting ready for a
run ~ CNBC (April 2014)
Platinum price muted but palladium
could soar ~ Mineweb.com (May 2014)
More than half of annual worldwide palladium supplies go into the production of
autocatalysts.
As such, palladium demand is correlated
to the health of the global auto industry,
which has come roaring back since 2009.
In 2013, sales in the U.S. topped 15 million
vehicles, the highest the industry has seen
81
since 2007. China became the first nation

in the world to sell 20 million vehicles in a
single year.
And despite the fact that China achieved
world-record breaking car sales in 2013, its
car ownership rate is still just 1/8 the rest of
the developed world.
Overall, global light vehicle production
is expected to increase 25% through 2021,
according to the Financial Times. China will
account for 30% of that growth.
As the auto industry continues its rebound,
the demand for palladium will increase with
the growing demand for catalytic converters.
And with the global auto industrys switch
well underway, the demand for palladium
will scream higher over the next several
years.
Here in America, weve had catalytic converters standard in every car since the 1970s.
But in the worlds largest auto market,
China, theyve only recently made them
mandatory.
And that means more and more palladium
will be used up.
According to Rick Rule, chairman
and founder of Sprott Global Resource
Investments, The Chinese government has
proposed air quality standards over five years
that would quintuple the loadings of palladium in gasoline engines in China.
Quintuple.
But the worlds palladium resources are
extremely limited... and getting scarcer by
82
the day.
Russia is the number one source of
Palladium.
It accounts for more than 40% of the
worlds supply. But geologically, the ore
grades of Russian mines have been in steady
decline.
As a result, theyve been dipping into
stockpiles to fill orders.
Huge above-ground stockpiles of Russian
Palladium often fill the gap between strong
palladium demand and stagnant mining
supply.
And some analysts believe Russia has sold
off almost all inventory.
We believe Russian palladium stocks
built up during the cold war are greatly
diminished and may be nearing exhaustion,
says James Steel, precious metals analyst for
HSBC.
Not to mention that with its recent invasions of Ukraine, Russia is a complete wild
card. Geopolitically, it can cut off exports
any time.
If Russia stops shipping, youre talking
about a supply-side disaster, says Philip
Gotthelf, president of commodities investment firm, Equidex.
South Africa is the only other major
source of Palladium.
But it has been riddled by mining strife,
and recently endured the longest mining
strike in its history.All mines operating there
were shut down for five months.
And although the strike just ended, its not

like flipping a switch...
As the Wall Street Journal says, The end
of the strike doesnt mean an automatic
restart of mining. Full production could take
around three months. And theres a risk that
South African labor tensions may flare up
again.
In a Merrill Lynch Global Research report,
analysts wrote, We expect further shortfalls,
as miners will increase production slowly after
the five-month strike.
These supply disruptions and shortages
are all occurring at a time when demand for
Palladium couldnt be higher, which is why
I believe higher prices are coming for palladium prices and related equities. n
DENNIS CABANTING,
WOUNDED WARRIOR
HE LEFT TO DEFEND FREEDOM.

NOW HES FIGHTING FOR INDEPENDENCE.
Wounded Warrior Project long-term support programs
provide these brave men and women whatever they need
to continue their fight for independence. At no cost. For life.
Help us help more of these warriors in their new life-long
battle. Find out what you can do at findWWP.org.
83
84
LYNNE BOLDUC ANNOUNCES

OSWALD & YAP COMPLETES MERGER
Lynne Bolduc is pleased to announce that our firm, Oswald & Yap, has merged with two
other law firms to form a new firm, FitzGerald Yap Kreditor LLP. The firm now has 15
attorneys. Lynne continues to be a partner and offers legal advice and services for:
Rule 144 Opinions

Private Offerings
Public Offerings
Public Company Reporting
Mergers
Acquisitions and Sales of Companies
Contracts
Broker/Dealer Compliance
All Other Corporate and Securities Matters
With the merger, the firm is now pleased to offer a suite of litigation services as follows:
Business Litigation, including breach of contract, trademark and copyright infringement,

tortious interference with contract, product recalls and product liability
Securities Litigation, including Wells submissions and FINRA arbitrations
Real Estate Litigation
Probate and Trust Litigation
Administrative Hearings, including professional licensing and disciplinary matters
Shareholder and Partnership Disputes
Insurance Coverage Issues
Unfair Competition, Non Compete and Trade Secrets Litigation
Fraud
The new firm name, FitzGerald Yap Kreditor LLP, reflects the addition of the two senior
partners from the other two firms, Michael FitzGerald and Eoin Kreditor. Our email
addresses have changed, but all other contact information remains the same and appears
below.
Lynne Bolduc, Partner

16148 Sand Canyon Avenue
Irvine, California 92618
Email: lbolduc@fyklaw.com
Telephone: (949) 788-8900
Facsimile: (949) 788-8980
www.fyklaw.com
www.144opinions.com
85
cOMPLIaNcE cORNER
Accredited Investor
Changes Could Threaten
Capital Formation
O
ne of the lesser known provisions of the Dodd-Frank Act requires the SEC
to revisit the definition of accredited investor, a process that is underway.
First defined in 1982 as part of the adoption of Regulation D, the definition has
not been changed substantially in over 30
years, although another provision of DoddFrank eliminated the value of ones primary
residence from the calculation of net worth
under that part of the definition.
As it applies to individual investors, an
accredited investor is currently defined as
a person whose net worth, exclusive of the
primary residence, is at least $1 million, and/
or whose income has been at least $200,000
($300,000 including spouse) for each of the
last two years and who has a reasonable
expectation of achieving the same threshold
in the current year.
To be clear, there is not yet even a concept
release or proposal put out by the SEC regarding the legislatively-mandated revisit of the
definition. However, lots of trial balloons are
being floated and many interest groups are
already weighing in. None of these suggests
n BY LaNcE JON kIMMEL
86
that the definition should be loosened and

few even argue for keeping the definition as is.
It has been lobbied by some, such as the
North American Securities Administrators
Association and AARP, that the economic
thresholds of the 1980s need to be updated
or indexed 30 years on. Indexing seems fair at
first blush. However, put another way, without
any legislative history from 1982 to support
the proposition, there is belief in some quarters
that because the percentage of Americans who
met the definition of accredited investor in
1982 has ballooned in three decades, this needs
to be reined in to prevent fraud. However, no
evidence exists that fraud is more commonplace in Regulation D offerings than in registered offerings or offerings relying on other
exemptions. Additionally, there is no provable
nexus between increasing the accredited investor thresholds and combatting fraud.
Bureau of Labor Statistics data has been
cited that $1 million in 1980 is equal to
approximately $2.4 million today. The implication (and in the case of NASAA, its position) is that this could be the new asset test,
merely adjusting the original standard for
inflation. However, this would take a huge
number of potential investors out of the
pool to fund start-ups and later-stage private
companies, all of which are competing for
capital in an increasingly global economy.
Different sources produce different data,
but, for example, the Spectrum Group in

Chicago reports (using pre-financial crisis
2007 data) that there were approximately
9.2 million Americans (roughly 7% of the
population) who had assets of more than $1
million. Using IRS data from the same year
(the last year such data has been released),
only 1.8 million Americans had assets of
more than $2 million. Whether these specific data points are precise is not the point.
Certainly, more than doubling the asset test
of the accredited investor definition would
take millions of potential investors out of the
pool of people who the SEC has long since
accepted are able to fend for themselves or
seek input from their advisors in assessing
the merits of an investment.
Looking at the income test, the impact is even
more stark. In constant dollar terms, a $200,000
income in 1980 equaled approximately $575,000
in 2014 (and $300,000 in 1980 would be more
than $850,000 today). According to IRS data,
approximately 940,000 people, or 0.5% of the
population, make more than $500,000 per year
(there are no statistics kept for the $850,000
mark but obviously it would be significantly
smaller). Other groups report slightly different
statistics, but the principle is the same. Millions
of people would be moved out of the definition
of accredited investor with a major increase in
the income test.
The SECs Investor Advisory Committee
may be prepared to go even further. Not only

is that influential body looking at the quantitative part of the definition, they are also
looking at the concept of what it should mean
to be accredited in qualitative terms. Barbara
Roper, director of investor protection for
the Consumer Federation of America, who
heads the committees Investor as Purchaser
Subcommittee, declared that her subcommittee went back to basics, summarily
concluding that the current definition does
not serve its purpose and, among other
things, believes that a sophistication aspect
should be added because there will never be
a threshold that will serve as a good proxy
for sophistication. But thats the point the
SEC expressly took sophistication out of the
equation three decades ago when it adopted
the accredited investor safe harbor.
For those old enough to remember, this
sounds like the re-emergence of long-form
suitability questionnaires that asked pages
upon pages of questions spanning everything from education levels to previous
private investment experience to ratios of
investment to assets or income. And when
glazed eyes finished reviewing those questionnaires, one was often no closer to feeling
comfortable whether a potential investor was
sophisticated, often resulting in a requirement that a so-called purchaser representative also evaluate the investment on behalf
of the investor, and filling out his or her own
extensive qualification documents.
An important purpose of the legislative intent expressed by Congress in 1982s
Regulation D, including the introduction
of the accredited investor definition, was to
remove some of the ambiguity and uncertainty in the capital formation process that
had plagued private capital formation up
to that point in time, precisely because
sophistication was a nebulous standard. If
substantially raising quantitative thresholds
will remove millions of potential accredited investors, how many more could be
removed by undoing the safe harbor, regardless of what the new quantitative levels
may become? Would the reintroduction
of uncertainty in the definition of accredited investor chill private capital formation

itself, since it wont be known if an offering
complied until well after the funding, with
a regulatory body or court looking back at
the investment with the benefit of hindsight?
It goes without saying that while some speak
of indexing 1980 economic data points to 2015
levels, to say nothing of re-introducing difficultto-apply and uncertain qualitative criteria, no
one can index our population, which has grown
from 226.5 million in 1980 (U.S. census data) to
an estimated 318.6 million in 2014. How many
of those additional 92 million Americans are
seeking capital for start-ups and growing businesses? The demand for capital has exploded in
the last 30 years, ushering in the greatest deployment of growth capital in the history of the
world; however, the SEC may be on the verge
of choking the supply of capital by dramatically
restricting the definition of accredited investor.
Supply and demand imbalances never end well.
Others will argue that the capital is still
there to be invested, just that many former
accredited investors will no longer be accredited. That is true. However, it is also true, as
every securities attorney and entrepreneur
knows, that the cost of raising capital in
private offerings that have even a single nonaccredited investor is dramatically higher
than an offering with only accredited investors. Under Regulation D, the SEC permits
more flexible disclosure in securities offerings
to accredited investors. Under the National
Securities Market Improvement Act, offerings solely to accredited investors are exempt
from state blue sky laws. Under current best
practices, the process to determine the general suitability of an investment for accredited investors is streamlined, although under
recently-adopted Rule 506(c) (general solicitation of accredited investors) verification of
accredited investor status is required.
It appears that just as the 2012s JOBS Act
is propelling the SEC to adopt rules and
regulations to liberalize private capital formation through such mechanisms as general
solicitation of accredited investors, equity
crowdfunding and IPO reform of Regulation
A, this vestige of 2010s Dodd-Frank threatens to curtail this reform.

If the revamped definition of accredited
investor is implemented substantially as it
is being floated, it may be hard to argue that
the dramatically further increased costs of
capital and the overall chilling effect on raising capital are merely unintended consequences of Dodd-Frank they may be very
much intended.
Lance Jon Kimmel is the founding and managing
partner of SEC Law Firm, which represents growth
companies around the globe and the regulated professionals who serve them. Mr. Kimmels practice focuses
on public and private securities offerings, going public transactions, SEC reporting, corporate governance,
representation of companies before the SEC and stock
exchanges, mergers and acquisitions, and SRO compliance for investment bankers, auditors 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 companies going
public or dual listing internationally in the U.K., Canada
and Germany.
His clients reflect the spectrum of 21st century business, from manufacturing to medical devices, from
biotechnology to green technology, from financial 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, Bloomberg Forum and Financier
Worldwide, 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., Europe 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 SECs Small Business
Forum, has given testimony to the SECs Advisory
Committee on Smaller Public Companies on reform
proposals to ease the burdens of the Sarbanes-Oxley
Act for smaller reporting companies, and has been
keynote speaker at the National Investment Bankers
Association.
SEC Law Firm has been named 2012 International
Securities Law Firm of the Year (U.S.) by Corporate
LiveWire in the UK and is listed in the 2014 Financier
Worldwide Corporate Advisor Handbook.
SEC Law Firm
11693 San Vicente Boulevard, Suite 357
Los Angeles, California 90049
Tel: (310) 557-3059
Fax: (310) 388-1320
www.seclawfirm.com
email: lkimmel@seclawfirm.com n
87
Emerging Growth Capital Investors

Seek to Manage Volatility in 2015
nvestors in emerging growth companies will need to stay nimble

to succeed in 2015, as increased market volatility in high-growth
microcaps focuses their attention on trading and risk mitigation.
That is the collective wisdom of microcap

fund managers and growth equity private
placement advisers who expect to attend the
Growth Capital Expo 2015 on April 12-14
at Caesars Palace in Las Vegas the second
year of this conclave of thought leaders and
active investors in the pre-IPO and emerging
growth microcap market.
For much of 2014, growth equity private
placement (EPP) activity had settled into a
promising deal-making groove that was on
pace to best 2013. But a spike in volatility in
the fourth quarter slowed deal making and
ushered in a ho-hum year-end performance.
Still, investors doled out more capital to
companies than in 2013 as the economy
showed signs of broader improvement
through consistent job creation and robust
second and third quarter GDP growth of
4.6% and 5%, respectively.
Whether continuing signs of improvement
are enough to convince growth capital inves-
tors to increase activity in 2015 could hinge

on how confident they are that the economy
has actually turned a corner, especially with
uncertainty around oils plummet, lackluster retail sales in December and the lowest
employment participation rate since 1978.
It also could depend on how long market
volatility hangs around to distract them, said
John Borer, senior managing editor and head
of investment banking for placement agent
the Benchmark Company, which facilitated
five EPPs to secure $58.7 million in 2014.
From January to December, we may see
what looks like a normal or even good year
from an overall market perspective, he said.
But if the markets up 300 points one day,
down 300 the next and then up 150 the next
day, it gets an awful lot of people focusing on
making money by trading the volatility as
opposed to investing in companies.
Emerging growth equity investment
trends will the subject of two discussion
panels featuring top industry bankers and
investors on the first full day, April 13, of
the Growth Capital Expo. The panels will
explore trends in both registered and unregistered equity private placements. (For a
complete agenda of the Expo program, go to
http://growthcapitalexpo.com/agenda.)
BeLow Par
n BY BRETT GOETSCHIUS
88
As a whole, growth EPP activity and dollar

volume didnt deteriorate materially in 2014
compared with 2013, and growth compa-
nies last year wound up pocketing more

proceeds. (Growth EPPs are registered and
unregistered private placements of a least $1
million of stock or equity-linked debt that
feature fixed purchase, conversion and warrant exercise price terms, and that are sold by
companies that have market capitalizations
from $10 million to $1 billion.)
Issuers in 2014 conducted 723 growth
EPPs that raised $13.2 billion for an average
deal size of more than $18 million, according
to PlacementTracker, a division of Sagient
Research. In 2013, growth companies completed 733 transactions to raise $12.6 billion
for an average transaction size of $17.2 million.
However, deal making began to tail off in
early October as the broad market became
volatile. Up until then, issuers and investors
had closed an average of 163 deals per quarter. But they only completed 127 transactions
in the quarter, valued at nearly $3.5 billion.
Still, that worked out to a generous $27.4
million average per deal.
Growth companies also continued increasing their uptake of at-the-market programs
in 2014, entering into 69 ATM agreements
with a potential to raise $3.3 billion for an
average of $48.7 million per deal. Not only
is that the most agreements executed in a
single year in the EPP market, but it also is
the largest dollar volume commitment ever.
Companies have tapped 26 of the programs
so far this year and have raised $359 million,
or an average of $13.8 million per ATM.
In 2013, companies agreed to 65 ATM programs, committing to raise as much as $2.7

billion, or $41 million per transaction. Issuers
have utilized 48 of the arrangements, selling
$726.7 million worth of shares for average
gross proceeds of $15 million per deal.
Biotech Blowout
Investors in the healthcare sector were far
and away the busiest of any in 2014, and biotech companies were in particular demand,
a theme that also played out in the IPO market. According to the life science-focused
Burrill Report, 106 biotech IPOs in the U.S.
raised nearly $9.3 billion in 2014, and the
companies closed the year up 29.6%.
In the EPP market, biotech companies
completed 122 transactions in 2014 to raise
$2.8 billion for an average raise of $23.2 million. That was up from 105 deals last year
valued at $1.9 billion for an average raise of
$18.5 million.
Edwin Gordon, a managing director with
investment bank Ladenburg Thalmann &
Co., credits the improved science underlying
biotech clinical trials for the dizzying investment activity in the maturing industry.
It was a remarkably active year for both
IPOs and private deals, said Gordon, whose
firm facilitated 10 EPPs to secure $353.6 million in 2014. Investments that were made in
2000 are now paying dividends, so the market has broadened to include not just venture
funds but a significant number of crossover
investors.
While volatility in the markets is a concern, Gordon anticipates that the industry
will enjoy another solid year of capital formation in 2015. Theres been about $200
billion in cash paid out in the form of share
repurchases or M&A in life sciences in 2014,
he said. Wheres that money going to go?
Companies in the healthcare products
industry were also among the most active
issuers, completing 63 EPPs to raise $577.6
million for an average of $9.2 million per
deal. Medical laser maker Biolase (BIOL)
closed one of the years biggest deals in the
industry in November when it raised $33.8

million for working capital in an unregistered common stock EPP priced at market
($2.39 a share). The deal that included 9.2
million three-year warrants exercisable at $4
a share, or a 67% premium.
Camber Capital Management, Oracle
Investment Management, Eagle Growth
Partners, Birchview Capital and Trellus
Partners participated in the transaction.
Biolases shares were recently trading around
$2.55.
Pharmaceutical firms wrapped up the
healthcare sectors stout fundraising effort
for the year, securing $852.5 million in 41
transactions for an average deal size of $20.7
million.
Other sectors displaying notable activity
in 2014 include the various industrial industries, such as aerospace, electronics, environmental controls and transportation. All told,
issuers in the industrial sector completed 71
EPPs to raise $2 billion. But transportation
companies attracted the bulk of the capital
nearly $1.6 billion in 17 transactions.
Companies in the technology and communications sectors combined executed 84
EPPs during the year to raise $1.2 billion.
Issuers focused on telecommunications and
Internet applications and services raised
about half of that amount in 38 of the deals.
Energy sector companies, meanwhile,
gathered nearly $1.7 billion in capital in 57
transactions for an average deal size of $29
million. Firms tied to fossil fuels accounted
for $1 billion of the dollar volume in 30
transactions, while alternative energy issuers
made up the balance.
Notably, however, only two companies in
the oil and gas sector completed deals in the
final four months of the year amid the oil
price slide, which began slowly in August
and accelerated in October. And both of
the companies Pedevco Corp. (PED) and
CHC Group (HELI) were in the services
business rather than explorers and producers.
Moving forward, Borer anticipates a reasonable amount of follow-on activity in
2015, ranging from unregistered common

stock EPPs to fully underwritten and marketed offerings.
The tech area seems to be rather enthusiastically embraced these days, and life sciences and biotech companies always need
money, Borer said. He also expects the IPO
market to remain robust. There are certainly a lot of companies that want to come
out, he added.
The Growth Capital Expo 2015 will
again feature the very popular pre-conference Public Company Boot Camp on April
12, from 2:00-6:00 pm. This workshop is
designed for officers and directors of preIPO and recently public growth companies
seeking to improve their knowledge and
execution of their public markets activities.
This year the boot camp program will be
sponsored by the National Association of
Corporate Directors, the premier organization supporting board development and
good corporate governance.
Coalescing Discounts
Growth companies already trading on public markets that conducted EPPs pursued
unregistered common stock deals more frequently than any other structure in 2014,
issuing 232 deals to raise $3.2 billion for an
average deal size of $13.9 million. Investors
in the transactions received an average discount of 10.9%, and 104 of the EPPs included warrants with average coverage of 75%
and an average exercise premium of 21%.
Roth Capital Partners led all placement
agents in arranging growth EPPs last year,
facilitating 43 deals to secure $919 million.
H.C. Wainwright & Co. secured $848 million in 40 transactions, and Cowen and
Company secured $774.8 million in 27 EPPs.
Based on activity in which dollar volume
was disclosed, Sabby Management led all
investors, taking part in 42 deals and ponying
up a total $82.3 million. Broadfin Capital
participated in 22 deals and invested $18.4
million, and Heights Capital Management
invested $24.3 million in 21 transactions. n
89
V I E W P O I N T S
n BY Jack Leslie
Ombudsman
W
hat is
ahead for
the New Year?
90
As we approach a new year of political football in Washington one must be diligent

in planning for the future. No matter what the financial designation, Broker Dealer,
Registered Rep, RIA, CFP or Institutional fund manager, life is going to change. The
misconceptions of crowd funding and the inconsistent regulatory actions of FINRA has
resulted in a nightmare for the industry. No one that has the interests of investors truly
established under crowd funding better that the State Department of securities. They are
the only ones that can put a halt to the underground market that uses social media to the
extreme crowd funding uses to raise capital.
Change is necessary to have economic growth, but it must be done in concert with
input from the proper professionals. How can someone not licensed offer an investor,
who may or may not be suitable, a security that has not been vetted? Ask yourself how,
as a licensed investment professional, can this help my business grow. What tools can
you use to counter such actions? Where do I begin to alter a business model for the
benefit of my clients?
As a financial professional I would start by having a consultation with my clients
and educate them on the risks. I would learn more about SCOR for someone in need
of capital for an existing entity. One must be proactive in an environment that an
SRO (Self-Regulatory Organization) was originally the NASD (National Association
of Security Dealers) changed to FINRA (Financial Industry Regulatory Authority).
Notice a main difference of the letter A in each entity. One was an association that was
friendly and interested in input from its members, the other uses the word authority.
It implies an entity looking down its nose at its members. This is run by lawyers and
not members of the industry that require a license before performing their business
appropriately & legally. That begs another question, why are unlicensed individuals with
very minimal training allowed to look at sensitive financial and personal information
without accountability? It would be wise to have a CRD on all FINRA employees, not
just registered representatives so we can weed out the unqualified, unfair, uneducated
and biased ones employed there.
The attempt by new legislation to raise capital gains tax , expand government, and
continue to use shadow of crisis as a mantra, the need arises and should be addressed
by industry executives. Investment in small businesses to expand jobs will require banks
to stop gambling at the trading desk and loan needed capital to these potential employers. In summary my suggestions will allow economic growth and offer alternatives to
registered individuals to properly address suitability for their clients best interest reduce
government and change the SRO to a more balanced association not an authoritative
entity without transparency. n
91
TSXV: LMR
FSE: DH8B
OTC: LMRMF
Graphite in Quebec
www.lomiko.com
92
info@lomiko.com
EB-5: An Alternative
Method to Raise Capital
e are all familiar with the traditional ways of raising capital,

namely traditional institutional and private investor financing.
However, there is a third and lesser known form of raising capital from
foreign investors under the EB-5 or Immigrant Investor program.
what is the eB-5 PrograM?
The EB-5 is a government-sponsored
program that was introduced with the
Immigration Act of 1990. The program permits foreign nationals to earn their green
cards by investing either $500,000, if in
a Targeted Employment Area (TEA), or
$1,000,000 in a qualifying business enterprise that will create at least 10 new U.S. jobs
per foreign capital investment. The purpose
of the program is to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot
immigration program first enacted in 1992
and regularly re-authorized annually since,
certain EB-5 visas are also set aside for investors in Regional Centers designated by the
United States Citizenship and Immigration
Services (USCIS) based on proposals for
promoting economic growth.
the eB-5 aPPLiCatioN

ProCess
n BENJAMIN TAN
The initial application requires the foreign

national (applicant) to file an I-526 application with the USCIS which includes information about the investment, a source of
funds report and the application to change

non-immigrant status. After the initial application, the foreign national receives a conditional green card, which will be converted
into a permanent green card if he can prove
the creation and sustenance of new U.S jobs
required by the program after two years.
Why Use It?
The primary advantage of using the
EB-5 program is the low cost of capital as
compared to traditional forms of financing. Because new companies are viewed as
higher risk, traditional forms of financing
often dictate fairly rigorous terms in favor
of the investors. Conversely, as the sole aim
of an EB-5 financing is to obtain a green
card for the foreign national, the return on
investment is of secondary importance. This
often means less time and effort spent on due
diligence and lower cost of capital.
the requireMeNts
The ways to raise capital through the EB-5
program are through a regional center
investment or a direct investment.
A regional center is an investment promotion entity approved by USCIS that is
93
of the entire process as the waiting time

depends on the workload of the USCIS. If
funding is time-sensitive, some companies
have resorted to traditional forms of financing first and then pay these off with cheaper
money from the EB-5 Program when they
come through.
Under the direct investment structure, EB-5

investors invest directly into an investment entity
where they become equity partners and are entitled
to a percentage of the profits and losses.
involved with the promotion of economic
growth, improved regional productivity,
job creation and increased domestic capital
investment in a designated geographic area.
You can either create your own regional
center or submit your project to an existing one for sponsorship. The latter is more
favored as you do not have to go through
the whole I-924 regional center application
process, which can be lengthy and expensive.
Further, the job creation requirement under
the regional center method allows the inclusion of indirect jobs. For example, if you are
building a factory, you are allowed to count
the jobs created through the hiring of the
general contractor and his employees. An
economist will use a formula to calculate
jobs created.
The second way of raising capital through
the EB-5 program is through a direct investment, not unlike a PIPE. The direct investment requires a foreign investor to establish
and directly invest in a business. This method is less attractive since the jobs created
must directly relate to the business and the
foreign investor is required to be materially involved in day to day operations of the
business.
Structuring the Foreign

Investment
The foreign investor can invest directly in
your venture or provide a loan.
Under the direct investment structure,
EB-5 investors invest directly into an investment entity where they become equity partners and are entitled to a percentage of the
profits and losses. This structure is usually
used when you are using capital to fund a
94
business since the EB-5 investors feel more

confident investing directly and controlling
a business.
Another corporate structure and having
particular interest to private equity funds is
the loan method (i.e. regional center). Under
this structure the capital raised through the
EB-5 investors is invested into an intermediary entity (usually an LLC/LP) which then
loans the funds to the investment entity that
invests in the business that qualifies for the
program. This can be achieved by making
the collateralized loan through an intermediary entity and future payback of the loan
through a sale or refinance of the investments assets.
Is the Program Right for

You?
The EB-5 Program is not without its own
complications. Unlike a traditional financing, EB-5 capital involves several players.
First you would need an economist to create the econometric/job impact report that
defines the amount of capital that can be
brought into a project based on the amount
of jobs that are directly created by the new
business. Second, you would need EB-5
compliant business plan writer and finally
you will need a securities and corporate
attorney to ensure that the business and
investment are compliant with both federal
and state securities and corporate laws.
Also, one has to factor in dealing with the
USCIS and the SEC as well as the waiting and
processing times for each step of the green
card application process. Investor funds are
held in escrow until USCIS approval. This
probably the most unpredictable aspect
Sichenzia Ross Friedman

Ference LLP Bio
Description:
Sichenzia Ross Friedman Ference LLP (SRFF) is a
nationally ranked corporate and securities law firm
that provides experienced, professional representation in all matters involving the securities industry, as
well as in all general corporate and litigation matters.
The Firm has been recognized as an industry leader
in representing issuers, investors and placement
agents in PIPE (Private Placement in Public Equity)
transactions for the past ten years. SRFFs clients
range from start-ups to established, listed companies.
They include private and public corporations, partnerships, broker-dealers, bank-affiliated broker-dealers, investment advisors, registered personnel, public
and corporate customers and investors, partnerships
and other entities. SRFF also advises institutional
investors on transactions involving complex securities law considerations. SRFFs practice includes the
representation of clients located in the United States
and throughout the world.
Website: www.srff.com
Twitter: @srffllp
LinkedIn: https://www.linkedin.com/company/sichenzia-ross-friedman-ference-llp
Contact:
Benjamin A. Tan, Esq.
Partner
Sichenzia Ross Friedman Ference LLP
(212) 930 9700 ext. 609
btan@srff.com
Richard A. Friedman, Esq.
Partner
Sichenzia Ross Friedman Ference LLP
(212) 930 9700 ext. 448
rfriedman@srff.com n
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