Micro-Cap Review Magazine Winter 2011

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Grizzly Discoveries [60]

[17]

Inovio Pharmaceuticals [78] Investor Targeting Q & A with John Vigliotti PR Newswire [10] New Merriman Capital [37] DYNAResource [47]

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

ICVrx – A Transformative Drug Company [82]

Anatomy of a Biotech: Advaxis Inc. [7]

Atossa Genetics [90] Delicious Ask Mr. Wallstreet: “When Flickr Did I Become a Contrarian [42] Facebook Chinese Public CompaniesMySpace in the U.S. [32] Slash Dot

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developing the next genera0on of cancer immunotherapies

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E D I T o R I A L www.stocknewsnow.com Follow us: @StockNewsNow SNN Incorporated Micro-Cap Review 4766 Admiralty Way #13004 Marina del Rey, CA 90295 www.snnwire.com PUBLISHER Sheldon Kraft skraft@snnwire.com Wesley Ramjeet wesley@microcapreview.com EXECUTIVE EDITOR Lynda Lou Kane Kraft WRITERS Chris Berry Ian Ellis Dr. Frank Grossman Brent Cook Lindsay Hall Teresa Touey Jim Schnorf Bobby Kraft Lisa Lowe Lance Jon Kimmel Virginia Grantier Dr. Gordon Chiu Sheldon “Shelly” Kraft Rabbi Stephen Robbins Jack Leslie Eleanor Vera Chet Hebert Jeb Handwerger Richard D. Hastings, CCE U.S.-CHINA SNN REPRESENTATIVE TO CHINA Holmes H. Stoner Jr. SNN COMPLIANCE AND DUE DILIGENCE ADMINISTRATION Jack Leslie CHAIRMAN OF SNN ADVISORY BOARD George R. Jensen Jr. ADVERTISING Sheldon Kraft skraft@snnwire.com 818-730-6000 COMMUNICATIONS AND SOCIAL NETWORKING Robert Kraft @stocknewsnow RKraft@snnwire.com CIRCULATION Info@snnwire.com GRAPHIC PRODUCTION Tony Vibhakar Tony@unitronmedia.com PRINTER Vintage Filings, a division of PR Newswire 866-683-5252 CREATIVE IT TECHNOLOGIST Barbara Duck BDuck@snnwire.com MARKETING CONSULTANT Rolv Heggenhougen Micro-Cap Review Magazine is published Quarterly, Spring, Summer, Fall, Winter POSTMASTER send address Changes to Micro-Cap Review Corporate Offices. © Copyright 2009 by Micro-Cap Review Inc. All Rights Reserved. Reproduction without permission of the Publisher is prohibited.

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Every effort has been made to assure that all Information presented in this issue is accurate and neither Micro-Cap Review Magazine or any of its staff or authors is responsible for omissions or information that is inaccurate or misrepresented to the magazine. Micro-Cap Review is owned and operated

by SNN Inc.

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have this vivid memory from my youth of watching Star Trek, one of my favorite TV shows and one of the best motion picture franchises in film history. Captain Kirk was cool but the best character was Bones, the doctor, the late, great DeForest Kelly. I remember Bones had two medtech devices, one which first diagnosed an ailment and another one that could treat anything from deep space chills to a moon virus. Although fiction and supernatural in scope, today’s scientists and biotechnologists are on the cusp of inventing incredible diagnostic, life saving, life extending devices, and discovering molecules, cures and treatments, to raise the quality of our lives, the common message here is that these geniuses need to be funded to fruition.

At each biotech, medtech, life sciences and healthcare conference that SNN attends, I am no longer amazed at what I see and hear. The global scientific talent community is tearing down barriers to treatments and doing so by thinking outside the beaker, and inside the cell and genes.

When a CEOs passion hits a crescendo on camera with me during my SNNLive interview I often capture their eye gleam talking about their dream becoming a reality and it’s not about the money! It’s about their goal. Ask a CEO why they do what they have chosen to do and you will find a story about someone in their family or a friend that illness became their personal inspiration!

Today’s Biotech, Med-Tech, Life Sciences and Healthcare companies are in a financial sector of the market that has evolved like no other sector in the stock market. This sector is filled with start-ups, companies created by grant funding, others from rounds of friends and family check writers, and others tied to the University systems and teaching hospitals. Investing in this sector

requires an investor to have patience for a long term hold. The investor faces huge risk as a lab molecule must go through all the necessary phases of pre-clinical and clinical trials as the company is faced with funding the enormous cost of research and development without a guarantee of success or of receiving an FDA approval. Investors need to become believers in a company’s science and management and once involved, investors then become cheerleaders filled with hope and when the long awaited little breakthroughs and small positives happen they become gigantic events for investors.

Often times investor hope may not be enough, add in prayer which can’t hurt, and of course sprinkle a lot of luck into the mix and the chances of success are still miniscule.

In the U.S. 80% of start-ups fail and 20% become success stories. This four to one ratio stymies the best and causes more broken hearts than cholesterol. One out of five companies succeed but as investors know success can take years barring setbacks and the pain of enduring rounds of financing and stock dilution, board disputes, failed FDA results and delisting issues. Investors waiting for public announcements on biotech companies resemble a nervous expectant parent because each announcement is nerve racking and monumental.

So with all this risk, uncertainty and brain drain why invest in this sector of biotech, med-tech, life sciences and healthcare?

Because one day we will all be patients! n

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

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CONTENTS WWW.MICROCAPREVIEW.COM QUARTER 4 2011

F E AT URED ARTICLES 10

13 15 22 25 28 30 32

34 37

42

59

65

67 94

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Capital Markets Visibility Program Drives Investors Engagement for Small-Cap and OTC Companies Talk to thousands of Active Investors in Real-Time. (in Your pajamas) Q & A with Doug Jamison on Venture Capital State of The Market Micro Cap Investing is Not a Strategy

By Ian Ellis The Odds and the Opportunities in Junior Metals Explorers By Brent Cook Biotechnology Supermen and Superwomen By Teresa Touey SNN is to Micro-Caps what CNBC is to Large Caps By Bobby Kraft Chinese Public Companies in the U.S. – Restoring Confidence

By Lance Jon Kimmel Is Anything Predictable for 2012 and Beyond By Dr. Gordon Chiu The New Merriman Capital

By Sheldon “Shelly” Kraft

40 44 52 54 56 62

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74 77 82

Finance

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

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Caregiving: Ready or Not or Tag Your It! By Eleanor Vera What’s Really Going On With The Rare Earth Exports? By Jeb Handwerger The Top Down Opportunity for MicroCaps in 2012 By Richard D. Hastings, CCE Metal Market Overview 2011

By Chris Berry Value Beyond Profit

By Dr. Frank Grossman How to Hedge Your Micro-Cap Portfolio by Using Options on Dow Futures By Lindsay Hall International Stock Exchange Executives Emeriti to Meet in Orlando

By Jim Schnorf Do You Wrap?

Are You DTC Eligible? By Lisa Lowe ICVrx – A Transformative Drug Company for the Treatment of Epilepsy and Other Brian Disorders

By Virginia Grantier

Profiled Companies

Advaxis - Anatomy of a biotech

17

Internal Fixation Systems – Orthopedic Implants

SNN StockWord Puzzle

47

DynaResource – Ready To Shine

Financial Books

60

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

66

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

78

Inovio Pharmaceuticals - An Emerging Revolution in Vaccine Development

86

Marifil Mines Ltd. – A Junior Mining Company

88

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

90

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

Financial Puzzle

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

Opinion

Beginnings and Endings By Rabbi Stephen Robbins Ombudsman By Jack Leslie

Comic Strip

WallStreet Chicken - Episode 5

Legal, Tax & Accounting

The Compliance Corner By Chet Hebert

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Hosted by the city of Haifa

in cooperation with

Hosted by the city of Haifa

BioInvest Israel 2012 BioInvest Israel 2012

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

BioInvest Israel 2012 Where global investors and industryHaifa, executives March 5-6, 2012 - Dan Carmel, Israel

meet Israel's Medtech and Biopharma companies to talk business Where global investors and industryHaifa, executives March 5-6, 2012 - Dan Carmel, Israel

meet Israel's Medtech and Biopharma companies to talk business

www.bioinvestisrael.com

info@thetbngroup.com

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

www.bioinvestisrael.com 6

Micro-Cap Review Magazine

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PRoFILED ComPAnIEs

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

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

but the immune aDack had liDle effect. Dr. Paterson believed this could be improved through ra=onal design: beDer using what we know about how the immune system works.

Ra=onal Design: The Bug in the Machine Instead of hit or miss tes0ng of new poisons or new an0gens, Dr. Paterson designed a novel system to s0mulate and direct immune aDack. She started with one of the most potent natural immune s0mulators known-­‐-­‐a bacterium called Listeria monocytogenes.

Ea0ng Listeria for centuries —in fruits and vegetables—has given humans a hard wired immune memory against this pathogen-­‐ a response developed over thousands of years with over a dozen components more comprehensive than any new or ar0ficial Lm-­‐LLO being digested by a cell and escaping immune s0mula0on.

Designing Life to Save Life: Making It Safe to

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

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

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

Capital Markets Visibility Program Drives Investor Engagement for Smallcap and OTC Companies PR Newswire’s New 12-month Calendared Investor Relations Strategy Is Easy and Affordable to Implement

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f you’re reading this Micro-Cap Review, chances are, you are well aware of the devastating impact the financial environment has had on small and micro-cap com-

panies. Simply: money is harder to raise, investors are hard to indentify and getting any notice from the financial press and portfolio managers is beyond challenging.

To help companies simultaneously address all those issues, PR Newswire - the global leader in news and information distribution services for professional communicators – has launched Capital Markets Visibility 365 ™, their newest service SPECIFICALLY built for small-cap and micro-cap companies. To explain the program, Micro-Cap Review sat down with John M. Viglotti, VP of Investor Relations and Compliance Services at PR Newswire.

M-CR: What was the genesis of Capital Markets Visibility 365?

n By shELDon “shELLy” kRAFT

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Micro-Cap Review Magazine

JMV: Most professional investor relations tools are not created for smaller listed companies. We have identified that, across the entire capital markets landscape, thousands of small-cap, OTC and TSX listed companies are being underserved and ignored by many investor relations service providers.

M-CR: Why are small companies “underserved and ignored?”

JMV: In my opinion, most large IR service providers have placed all their sales focus exclusively on mid to mega-cap companies and big-ticket products like stock surveillance.

They have neither the sales bandwidth nor the support resources to execute a product specially created for small-cap and OTC listed companies. This has left an “IR void” that has, unfortunately been filled by stock promotion.

M-CR: What do small-cap and OTC companies need?

JMV: They need investors and influencers to hear their story AND they need to deliver their story in a consistent and contiguous manner.

M-CR: “Consistent and contiguous manner” – thus the 12-month program?

JMV: Yes. Capital Market Visibility 365 is a calendared strategic marketing plan. Once it is set-up, it almost runs on auto-pilot.

M-CR: The program addresses three targeted audiences. Why? JMV: Without exaggeration, our clients’ shareholder messages will reach a targeted audience of hundreds of thousands.

Each of the targets delivers different value to small-cap and OTC companies: Individual investors for immediate liquidity and (hopefully) “buy & hold” loyalty.

Institutional investors for dramatic volume activity and Wall Street visibility.

Financial and sector media (and bloggers) for third-party validation.

M-CR: Will institutional investors have interest in companies under $100 million market-cap?

JMV: Smart buy-side and sell-side analysts keep an eye on all companies within their sector, even if a specific company is too

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Do you have a sample strategic calendar people can see?

JMV: Yes. Normally, I’d say “click here for more information,” but as this is a printed interview, I invite anyone to simply call me directly at 201-360-6767. My email is john. viglotti@prnewswire.com.

M-CR: Thank you, John.

JMV: Thank you. I appreciate the opportunity to introduce Capital Markets Visibility 365 to your readers. n

small today to publish an opinion or take a position.

Small-cap and OTC companies must build a consistent and contiguous brand presence with the institutional investors within their sector to clearly differentiate and distance themselves from the inconsistent “pump and dump” marketing that is pervasive.

M-CR: Will Hedge Funds take a position in a company under $100 million marketcap?

JMV: The answer is often yes.

To help with that, our Quantitative Targeting algorithm will identify portfolio managers that may prefer smaller-cap firms – matching their investment style to a specific client’s exact stock attributes.

M-CR: What are the components in the program?

JMV: There are 11 “moving parts” to the program combined from six different services and partners including PR Newswire and RetailInvestorConferences.com.

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

JMV: It’s not complicated, it’s calendared. We give clients an entire plan, monthby-month plan. There’s nothing else like it.

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

JMV: Like the program itself, we’re very transparent. Capital Market Visibility 365 is $3,000 per month. It’s a huge value.

M-CR: Are there variations or options?

JMV: The only Capital Market Visibility 365 variation, for this launch, is clients may substitute one of the two live virtual conference events (RetailInvestorConferences. com) with an IR Room - investor relations website. Companies MUST have an IR Room… it’s where investors go AFTER they receive your news.

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

JMV: This is a visibility / marketing package. We are keeping the product focused on that rather than the compliance aspect of investor relations.

M-CR: What do companies need to do to begin their Capital Markets Visibility 365?

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

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

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

Prior to Georgeson, John spent 14 years with financial media companies in content, product and business development roles. John began his career in the financial media industry with a SEC based newswire, Federal Filings, which was acquired by Dow Jones.

JohnViglotti VP, Investor Relations Products and Services PR Newswire/MultiVu 350 Hudson Street | 3rd Floor | New York, NY 10014 Phone 201 360 6767 | Mobile 212 729 8350 Fax 201 942 7013 john.viglotti@prnewswire.com www.prnewswire.com

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

Talk to Thousands of Active Investors In Real-Time. (In Your Pajamas.)

No Travel! Virtual Webcast Conference Series Brings Companies and Investors Together, LIVE, Month After Month

R

ecognizing a need for consistent and engaging communications, three of the world’s leading organizations focused on education and disclosure to individual investors - BetterInvesting, PR Newswire and MUNCmedia - have aligned to create RetailInvestorConferences.com.

Retail investors’ ownership of stock is decisively vital for many companies that need to develop new liquidity to raise capital and...

• Have little or no Wall Street interest and activity • Need a retail investor base to complement their institutional presence • Want to forge deeper relationships with retail investors in context to Dodd-Frank reform and ongoing proxy access regulations • Issue regular dividends • Can leverage their marketing brand and generate “Investomers” Small and micro-cap companies, in particular, need more accessible, timely and affordable opportunities to transparently tell their story to a potential audience that can buy their stock. Furthermore, retail investors can be a solid and loyal ownership base for companies as they are apt to trade less frequently.

Each month, Retail Investor Conferences. com showcases 10 public companies to present their growth vision in an engaging virtual conference environment. We selected a monthly schedule as the market is too dynamic and there are too many companies to limit opportunities on an annual or even quarterly basis.

RetailInvstorConferences.com surveys the audience each month, to qualify their investment style.

Since its launch, RetailInvestorConferences. com has help thousands of individual investors find exciting new investment opportunities and, of course, small and micro-cap companies discover a new audience.“The depth of quality engagement with prospective investors during our presentation, the trade booth and in the days following was well worth our investment”, said Meghan O’Sullivan, PR, Regenicin. “We’re building new relationships with an audience who would have never heard our story without RetailInvestorConferences.com. That’s powerful for an OTC company.”

Shawn Roberts, the Director of Investor Relations at, TSYS offered this viewpoint his experience with RetailInvestorConferences. com; “I believe the RetailInvestorConferences. com allows more people to attend a corporate presentation. Therefore, I can reach more interested investors in a cost effective and efficient way. The Q&A in my virtual booth was very beneficial for both me and the attendees.

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Investors are able to get the information they need in order to make an educated decision about potentially adding our stock to their investment portfolio,” Roberts finished.

The appeal to attracting retail investors is not limited to small companies. Large – and mega-cap companies also present at the monthly events, bringing their own investor and media following, eager to hear directly from companies “RetailInvestorConferences. com provided a way for me to be able to reach out to individual investors in a cost efficient manner,” commented Delia H. Moore, Manager Investor Relations, Aflac. “I was able to reach a group of investors that I likely would have normally not been able to do if it were not in a virtual format.”

Building credibility begins with visibility. Live virtual events are a highly efficient and affordable media to get your CEO directly in front of targeted investors without the burden and stress of travel. n

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

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

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

O

n date, SNNLive host, Shelly Kraft, interviewed Doug Jamison. The interview was so compelling Micro-Cap Review magazine management transcribed the

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

Doug Jamison

n By shELDon “shELLy” kRAFT

Harris & Harris Group, Inc.® (NasdaqGM: TINY) is a publicly traded venture capital firm exclusively focused on investing in companies enabled by nanotechnology and micro-systems. With over 30 nanotechnology companies in its portfolio, Harris & Harris Group, Inc., is one of the most active nanotechnology investors in the world. Doug Jamison is the CEO and Chairman of Harris & Harris Group, Inc. since January 2009, and has held an executive position in the company since 2002. In addition to his responsibilities, he is a Co-Editor-in-Chief of the Journal of Nanotechnology Law & Business and Co-Chair of the Advisory Board, Converging Technology Bar Association and a member of the University of Pennsylvania Nano-Bio Interface Ethics Advisory Board.

The following interview is a transcription of an SNNLive Video Interview we did with Doug Jamison.

Shelly: “I want to get your opinion on the state of the Venture Capital industry.

But first, talk about your firm and give your credentials” Doug: “I am CEO of Harris & Harris Group. We are one of the few publicly traded Venture Capital Firms. So by being publicly traded, we actually raise our money from shareholders. Our shareholders own the firm.

That gives us permanent capital. We have been in the Venture Capital industry since 1983, for over 25 years investing in the space”

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Shelly: “What is the state of affairs in the Venture Capital Industry? Its 2012 almost, and things have really changed over the last decades. Where do you think its headed?”

Doug: “Its been a rough decade for Venture Capital. You can look at the returns, the decade returns in Venture Capital as of 2011 are negative, which means that money went in and less money came out of the industry. It has been very difficult for the Venture Industry for a couple of reasons. One, the IPO market for early stage, smaller technology companies really has not come back since the bubble years of 2000. Secondly, venture capitalists have not been able to raise money because the asset class has not been performing very well. And what we have seen is a bifurcation--we’ve seen some of the most successful funds being able to raise more money, and what we see in the industry is potentially 2/3rds of the venture firms that existed in 2000, either are not with us anymore or will not be with us as soon as their funds run out” Shelly: “One of the captivating situations that venture capital funds also run into is that they’ve put initial capital into the ideas they wanted to invest in. Over the course of time, the companies that they invested in needed more capital. They had to keep money set aside to put into what they’ve already invested in, which prevented them Micro-Cap Review Magazine

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from investing into new ideas. Did you see that as well?”

Doug: “Certainly. I think the valuations for early stage companies are very low right now because there’s not a lot of investors investing in those companies. I think you are correct. The reason why is because we still have portfolio companies from 7-8 years ago that, historically, would now be public or would have been sold that are still in the portfolio, we still need to support. So venture capital funds are only 10 years. When the time from investment to exit has gotten pushed from 3-4 years to 8-10 years that does not bode well for the LPGP structure in venture capital.”

Shelly: “When should, in your opinion, a venture capital firm cut bait or just move on?

Why put good money after bad?”

Doug: “In the trade, there’s a saying, ‘if you’re going to be a good venture capitalist, you have to understand that the lemons will ripen before the plums.’ The question in venture capital is if you have a good company, if its able to attract money, if you can build it into a large company, you should stay with it. But I think that the discipline needs to be there that you haven’t put more capital into these companies than you will be able to get out in the market. I think there are two reasons for that. One, sometimes the venture industry has an unrealistic expectation of what the value of these companies will be in the public markets. That’s changed, the valuations have come down, and they think there is greater value than there will be. The other reason is that sometimes it takes too much money and too much time to build these companies to hurt returns. I think in the venture capital industry, you are already starting to see it switching. They are looking for opportunities where they can build their businesses faster, and they can get the returns they need sooner. But, look, if you are going to be successful in venture capital today, you have to be more disciplined than you ever have been historically. And under1

stand what the valuation you can get is at the end of the day, otherwise you are going to lose all your money.”

Shelly: “I want you tell me back in order of their importance: the management team, the technology, and cash flow.”

Doug: “I would probably say that management team, the management team, the management team, and then in this day in age, early access to cash flow. And finally, the technology. We are technology investors.”

Shelly: “What would you advise a company that’s looking to come to your firm to have you adopt them as your client?”

Doug: “For our firm, you have to know what size firm or investor you are visiting.

We are a small firm. Think of us as a $200 million venture fund. We put $5-7 million into a company over the lifetime. We are not looking for an opportunity that’s going to take $100 million because we will be too small an investor. We’re looking for an opportunity that’s going to raise over its lifetime until exit or being cash flow positive that’s going to raise somewhere between $15-30 million. We are looking for a strong management team, a management team that’s done it before, and we’re looking for an opportunity in the market that we think is early, but will be a growing multibillion dollar industry. We need the upside. We lose money in over 60% of the deals we do, and thats good by venture standards. So, the ones that win have to be in fast-growing, large, emerging market opportunities that garner the excitement of the public markets.”

Shelly: “Is the words ‘start up’ a turn on or turn off?”

Doug: “I think one of the reasons that we have been successful, historically, is that you have a contrarian attitude. I think a lot of people have gotten out of the start-up business, and the ‘start up’ financing investment.

That means that valuations are low. The surest way to make money, over time, is to buy low and sell high. So, we think there is a great opportunity, right now, in start up compa-

nies, but they have to be very disciplined.

A lot of the venture industry has moved to funding later stage deals, and we think there is some interesting opportunities now, but when I look forward over the next 5-7 years, I think the start up space is going to be a very good space, but we are going to have to build far more disciplined companies as a venture industry than we ever have historically.”

Shelly: “How do you feel about investment in companies outside of North America?”

Doug: “We are an early stage venture capital firm, so we tend to believe that you need a local sheriff on the grounds. Most of what we do is in the US. We think there are great opportunities outside the US in nanotechnology, where we focus. We certainly think from a venture capital perspective that you want to be in growing markets, so there you are looking to Asia. Look, we also have another saying, which is ‘the pioneers often get shot in the back’, and you don’t want to be a pioneer not knowing what you are getting into. That is often a sure way to fail, but you want to be in emerging growing markets. We still like North America, but we think the growth markets of the future are probably going to move overseas and to Asia from a venture capital perspective because they are going to be the fast growth markets of the future.”

Shelly: “What is your website?”

Doug: “www.hhvc.com” Shelly: “Thank you” Doug: “Thank you” n

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

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C o v E R s T o Ry

Orthopedic Implants I

n an era where sweeping reforms and cost controls have become the mandate for the medical industry, the challenge for survival is to have competitive pricing while maintaining a high level of quality in order not to compromise the doctor’s ability to treat the patient. Congress has proposed a 20% decrease in payments to facilities and physicians. Implantable device costs are being included in payments to Hospitals and ambulatory surgery centers, whereas in the past the cost was reimbursed separately. The entire medical device field has been effected and for the first time, the orthopedic sector is feeling the pressure to transition from a premium pricing model to a value pricing model.

Seeing this pressing issue as an opportunity, Internal Fixation Systems (IFS) (IFIX: OTC:BB) sought to build a company that could effectively compete in the orthopedic implant sector at 40-50% discounts to its peer competitors, while delivering a premium product. Taking this a step further, IFS also decided to include significant improvements surgeons wanted to see employed, thus creating a superior device making IFS the choice product for the medical professional in today’s environment. Essentially, IFS has created a model for the medical implant device sector that delivers a higher quality product at a discount, thus separating the notion that premium pricing is attached to better quality.

Much in the same way that Lexus emerged to dominate the high end auto industry and Dell conquered the personal computer market by delivering a high end product at affordable prices, IFS intends to overtake the orthopedic implant device sector and win over the medical community.

“IFS is always looking for ways to efficiently design, manufacture, inventory and sell our products.” IFS’s strategy incorporates several key elements:

Low r&D costs IFS focuses on improving market proven products. These include products used to treat common fractures that occur every day.

By enhancing existing products, as opposed to inventing a whole new class of implants, IFS is able to keep R&D costs below 5% of revenue. To ensure that IFS’s implants are the best on the market, each implant device is taken to one of the company’s National Advisory Panels. Each panel is composed of high volume users, nationally recognized thought leaders in their respective medical field. They recommend improvements to existing designs which are then incorporated into our new products, giving surgeons the features they desire.

Low FDa aPProvaL costs Unlike the pharmaceutical market, once an item is off patent, the generic replacement needs to be exactly like the name brand, in the world of orthopedic implants, improvements can be made to a product before it is re-launched. In such cases, the

FDA requires the company to file a 510(k) to demonstrate that the device is at least as safe and effective, or substantially equivalent to an existing marketed device. This allows modifications without having to follow a lengthy Premarket Approval (PMA) process.

IFS products are based on existing functional equivalents, therefore the company can obtain FDA approvals without incurring exorbitant costs.

moDuLar surgicaL set Design IFS designs its surgical sets, to maximize flexibility and reduce overall inventory. This is accomplished by designing sets with modules that can be used together or independently. Surgeons are supplied with the implants and instruments they require for their procedures but do not tie up inventory.

Competitors have sales representatives bring in large amounts of inventory and correspondent instruments covering any of the surgeons possible needs. The expectation is that more inventory is better. This method, while allowing one to respond to almost any situation, is very costly and requires competitors to carry large amounts of inventory which are rarely used. IFS’s modular, flexible strategy is significantly different and beneficial given recent changes in steriliza-

suPerior vaLue According to CEO Stephen Dresnick, MD www.stocknewsnow.com • www.snnwire.com • www.microcapreview.com

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tion of surgery sets. In the past, set trays could be used in one case and then “flash” autoclaved for a case less than one hour later. Now most facilities require that sets go through a complete 4 hour cycle before they can be used again. This assures that all bacteria have been killed during the autoclaving process. With the small, modular sets, we can have multiple sets for different types of cases at the facility providing maximum flexibility for the same cost as the competition.

stanDarDiZation oF instruments anD comPonents IFS standardizes instruments and components across its product lines which allows the company to order and manufacture in bulk. In addition, instruments are shared across product lines resulting in less duplication. This allows the company to carry much less inventory.

The IFS installed cost control methods allows the company to deliver quality U.S. made products at price points that Hospitals and ASCs desperately need without sacrificing profit margins.

visionary LeaDershiP—iFs’s roots IFS CEO, Stephen Dresnick, MD, has been in the forefront of other successful medical businesses with his innovations again providing the profitable results. Dresnick led two other publicly traded companies and is best known for starting and man-

aging Sterling Healthcare (Nasdaq:STER).

Sterling was created to help hospitals save money while improving the quality of their emergency medicine programs. Sterling provided quality, Board Certified physicians to staff Emergency Departments across the country. Under Dresnick’s management, Sterling Healthcare, went public in 1994, was sold two years later for $220 Million.

During Dresnick’s tenure as CEO, Sterling rose to Number 6 on the INC Magazine 500 list, was on Business Week’s list of fastest growing companies, was named on several list of Florida’s best companies and Dresnick was named Florida Entrepreneur of the Year in 1996. At IFS, Dresnick is using the same formula in the orthopedic implant industry – higher quality and lower price.

Dresnick joined IFS in 2008 after experiencing decreasing insurance reimbursements and rising prices for surgical implants at his operating medical facilities. The challenge for Dresnick: increase margins, reduce costs

“I am very excited about my involvement in IFS. This an exciting time of improving and innovating design of orthopaedic trauma implants and being able to use them at a responsible price point. It allows myself, as a practicing orthopaedic traumatologist, to create exciting new implants and also be fiscally responsible to my hospital system in this era of ever increasing costs.”

—Patrick B. Leach, MD 18

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and stop the financial bleeding. Dresnick uncovered IFS as a solution to his dilmma.

Dresnick found a lower cost solution, orthopedic implants that were 1) of acceptable quality to the surgical staff and 2) provided a significant cost savings; Internal Fixation Systems.

IFS, was originally Founded by Ken West, Chris Endara, Matt Endara and Dr. Jaime Carbonell. During their careers in orthopedic sales and medical manufacturing, Ken, Matt and Chris recognized the cost control challenges faced by hospitals and Surgery Centers like Dr. Dresnick’s. This customer-supplier relationship would soon yield an even bigger development. Convinced that IFS was onto something unique, Dr. Dresnick decided not only to purchase the implants for his surgery center, but when asked to do so, joined the company and became the new CEO. He invested his own capital making a commitment to grow the company. Dr. Dresnick and his new team quickly realized that the key to success was not only providing value pricing, but also delivering a product that was better than what was offered by competitors.

The goal of IFS is to sell quality products at responsible prices.

THE BUSINESS PLAN -- Moving from small screws to a wide assorted product portfolio IFS began by manufacturing and selling cannulated screws for podiatry applications.

The initial sales were made to restock inventory of competitors screws. The company began selling to Hospitals and ASCs in South Florida. As sales grew they proved that they could produce and deliver a quality alternative product and demand for the products at this price point began to grow leading the team to set out to develop surgical sets and identify follow-on products.

IFS ‘s redesigned cannulated screw sets were launched in October 2011 and are now used at facilities across the country.

To complement the standard mini cannulated screws (2.0, 2.4, 3.0 and 4.0MM) the company added headless screws to the caddies to address a larger variety of appli-

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cations. The company estimates that once fully launched, each cannulated screw set will generate $2,000 per month. IFS plans to deliver the first 50 sets during the first quarter of 2012.

Transitioning from elective to trauma surgery, the company applied for and recently received FDA 510(k) approval for a comprehensive line of locking plate and screw systems. The FDA approval covers products used to treat 75% of common fractures. These are the most common procedures of any orthopedic trauma surgeon. The first module of a Locking Small Fragment System was launched late 2011 enabling revenues to grow significantly by year end. It is expected that sales for the fourth Quarter will be the best on record and more than double those of the third quarter. Each set should generate $8,000 of revenue per month and like the cannulated screw sets, the initial 25 modules should be launched by the end of the first Quarter of 2012. With the deployment of the cannulated screw sets and initial modules of the Modular Locking Small Fragment Systems, the company projects a profitable first quarter of 2012.

IFS ‘s strategy has been to release 25 initial sets of locking small fragment systems used primarily by surgeons affiliated with IFS that sit on the IFS Advisory Panel. IFS plans to manufacture and distribute 200 of each module nationwide.

Additional new product modules of the Modular Locking Small Fragment Systems are scheduled to be manufactured for delivery by the end of the second quarter of 2012. The new modules will include calcaneal plates, distal volar radius plates, and a proximal humerus (shoulder) plate. All of the products are FDA approved and in final stages of production design. Additional products planned for future launch are a hip nail system and several spine implant systems. These products are particularly

“I recently had the opportunity to evaluate and use the IFS implants for my patients. It is my conclusion that they provide an excellent form of fixation, one that I will utilize during my operative cases. It should be noted that the screws themselves have sharper than normal cutting teeth, thus allowing easier facilitation during my surgical procedures. Another advantage in choosing IFS is that their implants are extremely cost effective.

In fact, they are so cost effective that we standardized our surgery center on IFS 3.0, 3.5, and 4.0 cannulated screws.

As an owner of a new and cost conscious surgery center, IFS provides us with the quality and cost effectiveness needed to provide quality care to our patients as well as the savings necessary to make our procedures more profitable.”

—Jamie A. Carbonell, DPM, FACFAS Jackson Memorial Hospital South, Podiatric Residency Program Director 20

Micro-Cap Review Magazine

attractive to the IFS as they are big ticket items, billing out from between $3,000 to $8,000 per surgery.

The company’s strategic plan for 2012 is to aggressively build, market and sell more and more product while continuing build the product line through adding more products.

IFS has established distributors in Florida, Georgia, New England, Southern California, Oregon, Washington, Idaho, and Texas.

According to Dr. Dresnick, “2012 will be a big year for IFS. We are continuing to launch several new products moving the company further into trauma orthopedics and spine.

We are particularly excited about our plans for the Spine Market and believe that we will make a big impact.” In late 2010, Dr. Art Steffee agreed to chair company’s spine panel. Dr. Steffee is considered by many to be the father of modern spine surgery and in 1983 he founded AcroMed, innovator of stainless steel bone screws and plates. He also introduced new methods to implant screws and plates in the spine.

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

The market is $34 Billion a year and with the economy like it is, we are a low cost solution,” says Dresnick.

IFS completed an S-1 SEC Registration Statement in May of 2011, and the public stock is traded on the OTCBB: IFIX. For more information please call 786-268-0995 or visit the company website at www.ifsusa.net. n

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

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

Micro-Cap Investing Is Not a Strategy M

icro cap investing is not a strategy – it is simply participating in a stratum of the stock market (that most stock market investors overlook). Those who find themselves attracted to micro caps come to them for different reasons, and therefore have some level of strategy behind their activity. For many it is the prospect of spectacular returns to be gained by being early in finding unheard of companies before they become hugely successful. For others it is a result of a common frustration – not beating the market with well-known stocks. Still others are simply bargain hunters who will tell you, using many different measures, how cheap their favorite stock is before they tell you what the business of its issuer actually is.

n By IAn ELLIs

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Write down your (micro cap) strategy in one sentence. You might use multiple strategies, but each one should clear. This exercise might not come easily to you but persevere - the micro cap stratum of the US stock market is a jungle with as many stocks in it as the main market. The risks of getting off track are typically more expensive, while the rewards of staying on the right track can be much higher. Think about why you read the Micro-Cap Review, where you get stock ideas from and the characteristics of the ones you respond to. The important thing is to find a strategy that plays to your analytical strengths and your personality. Your strategy should be as comfortable as an old pair of boots and then all you have to do is put one foot in front of the other and stay on track.

My micro cap strategy: identifying micro cap companies that are likely to grow into small caps. In order to explain my methodology, I must explain the difference between a micro cap and a small cap, why this difference is important for micro cap investors, why stocks graduating from micro cap to small cap can be an important source of returns, and finally why deploying this strategy suits me.

Since the MicroCapital Funds were launched eleven years ago, Standard & Poor’s has not adjusted its categorization of micro caps; companies with a market capitalization of less than $300 million. Others find that what is too small to be included in the Russell 2000 Index is a more useful measure. I tend to agree with this classification, since most small cap funds and managers are benchmarked against this index. More

practically, a useful way to categorize a micro cap is if its market cap is not high enough for most small cap managers to consider – let’s call it their threshold. This is not easy to gauge, but one can estimate it by inspecting changes in quarterly 13 F filings. A robust analysis of such activity would likely show that thresholds vary by manager, by sector (with a lower threshold for sectors in favor versus out of favor) and over time. This last variation is critical - over a long period of a trending market, the direction of the average small cap threshold will correlate with the market (seen clearly during the 90s). But on a shorter term basis (over several quarters) my observations suggest that small cap manager thresholds are inversely correlated with recent market direction. This short term inverse correlation can continue for years in a volatile ranging period such as the last decade. During a market decline small cap managers become increasingly concerned about liquidity. In a rising market they become more willing to take on risk in order to outperform benchmarks and peers.

The reason it is important to understand the difference between micro caps and small caps is there are many more buyers for small caps than micro caps. Though there are at least as many stocks to choose from in the micro cap stratum as there are in small cap, it is not economically viable to manage an appropriately sized portfolio of micro caps for a typical percentage of assets management fee. Those that are large enough to be economic are necessarily broadly diversified to the point of mimicking the aggregate of micro cap stocks or, very illiquid which also

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inhibits the potential for active management.

The better business model for a micro cap manager is to manage a smaller portfolio (my favorite rule of thumb is that the mean market cap of holdings should exceed the total value of the portfolio) under a hedge fund structure (incentive fees). While providing a workable business model, it unfortunately excludes both smaller (non-accredited) investors as well as large institutional investors (not enough capacity). As a result there are very few micro cap managers who have been able to raise and retain sufficient assets to be in business at all. With very few genuinely active micro cap managers, the impact of small cap managers’ involvement in micro caps can be dramatic, the higher the market cap of a micro cap the more small cap managers will consider the stock, and other things being equal, the higher the valuation since stock prices are determined by competing buyers. This is why we focus on growth companies that are likely to grow

into small caps and avoid those that are vulnerable to material setbacks or are too slow growing to ever get there.

I do not want to suggest that there are not good returns available from other micro cap strategies. But I prefer not to hope or wait. I prefer to use the skills and reputation developed over years to analyze the customer value propositions that companies offer and calibrate their managements’ abilities to reach the objectives of becoming bigger and better companies. I have found companies in this vein consistently become more widely appreciated in the stock market over a specifically targeted period of time.

In future columns, I look forward to sharing some of the lessons we have learned and tactics we have developed to deploy our particular micro cap strategy. Additionally, we expect to touch on topical subjects that are particularly relevant to micro cap investors.

Meantime, happy hunting to you!

Ian Ellis — President & Portfolio Manager

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Mr. Ellis founded MicroCapital in 2000 and is responsible for management of the MicroCapital Funds in all respects.

Previously, he was portfolio manager of the Genesis Funds at New York-based fund manager Archery Capital. Before joining Archery in November 1996, Mr. Ellis worked for GLG Partners, a London-based investment management firm. Mr. Ellis began his career in institutional research sales at Goldman, Sachs in 1985 after graduating in Philosophy, Politics and Economics from the University of Oxford. n

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

The Odds and the Opportunities in Junior Metals Explorers T

he discovery of an economic mineral deposit is an extremely rare occurrence that involves a very difficult, costly and determined effort. For the few people

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

Recent success stories include Aurelian Resources, which was bought by Kinross for $32 per share (pre-split); AuEx Ventures, which was bought by Fronteer for $6.00 per share (Fronteer was in turn purchased by Newmont for $14 per share); and, Ventana Gold, which was acquired for $13 per share. All of these junior explorers were trading at sub-$1 prices in the early

By BREnT Cook

www.explorationinsights.com

stages of the discovery. That potential, to make five, ten to one hundred times your investment in short order, has attracted over $10 billion of new speculative capital (by way of more than 4,000 financings) over the past two years into the Canadian junior mining sector alone.

But before jumping head first into this high-risk venture a word of caution to

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

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the uninitiated: it is exceedingly tough to stumble across Mother Nature’s buried treasures before going broke.

How tough is it?

Barrick Gold included some telling slides as part of their recent Investor Day presentation. Figure 1, below, illustrates the increasing difficulty the mining industry is having in finding new gold and gold/copper deposits. Current global mine production is in the order of 85 million ounces per annum; whereas, as the chart illustrates, the last time the industry found that many ounces in a year was 1999. For reference, consider that 85 million ounces is approximately the total gold produced from Nevada’s world class Carlin Trend over its 30-year history. For those not keeping track, that’s one Carlin Trend a year the gold mining industry has to prove up just to stay even!

The dearth of new discoveries noted above comes despite the significant increase in exploration spending since 2002. Particularly disconcerting (to the larger mining companies at least) is the decline in discoveries since 2006, notwithstanding that exploration spending has more than doubled from $2.5 billion to over $5 billion. The bottom line is that more and more money is finding less and less gold! The upshot of that fact is that the very few gold discoveries that are legitimately economic are going to be exceptionally valuable. That “gap” in production versus discovery virtually guarantees that the few successful junior exploration companies will command a premium takeout price— hence our focus here at Exploration Insights on the junior end of the spectrum Fortunately for the gold mining industry, the increase in the gold price has provided a “grace period” for the mining companies in which they can forestall the production deficit. They have managed this discovery versus production deficit by expanding existing operations at their mines and/ or lowering the cutoff grade (value per tonne of rock). This is documented by a recent BMO Research report detailing the decline in mined grade from 1997 to 2009

(Fig. 2 below). The average mined grade over that time period decreased about 35%, which, when combined with the increase in material, labor, and power costs, resulted in industry wide gold production costs more than doubling over that same time frame.

This lowering of the cutoff grade is only made possible by the higher gold prices that effectively turn previously uneconomic rock (waste), into economic rock (ore). There is a limit to how far mining companies can push the waste to ore strategy before their operations turn marginal or begin to lose money.

On a more positive note for the major mining companies, the steady ten-year rise in the gold price means the miners are flush with cash. This excess cash flow situation can’t go on indefinitely because of the problems discussed above: declining discoveries and declining gold grade equal declining margins. Major gold miners now have a relatively short window of opportunity in which to act. The share prices of most of the junior explorers (the good and bad) have seen substantial declines in share prices over the past 8 months. The share price decline means the good can be acquired at reasonable prices.

The bad I am afraid are still worthless.

The results is that the opportunity for speculators in the junior mining sector is the

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

best I have seen in quite some time. Mining companies are making good money, and the confluence of these two macro-themes: declining discoveries and increasing earnings, bodes well for those of us willing to speculate intelligently in this sector. All we have to do is buy the right penny-stock company and wait for the buyout. Problem is, the odds of discovery are extremely low.

How low?

There are in the order of 2,000 junior companies listed on the Canadian exchange and maybe 1,000 more listed in Australia, London, and elsewhere. In round numbers they are exploring 10,000 mineral properties of which only 1 in 1,000, on an annual basis, will produce an economic discovery.

Worse, only 1 in 10,000 will result in the delineation of a gold deposit of greater than 4 million ounces (Stephen Enders, Society of Economic Geologists Newsletter, July 2011).

The obvious question for reasoned speculators now becomes, “How is it possible that 3,000 publicly listed companies are able to raise billions of dollars given that the odds of success are 1 in 1,000 for an OK deposit or 1 in 10,000 for the big deposit?” The simplistic answer is that Mother Nature has been very generous to exploration geologists and by association, the brokers that make their liv-

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The other major issue investors face in this sector is shareholder dilution at the company level. Of what value is a tenfold increase in market capitalization if it is accompanied by a tenfold increase is shares issued? In minerals exploration, money only goes one way: out. This is a capital-intensive business-- no capital means no business. A company must have a very clear vision of the progress they need to see and demonstrate in order to raise money at the next level. Make sure company management is not only technically competent but financially literate as well.

Since we know that most exploration projects are going to eventually fail despite the early excitement, it is critical to recognize the fatal flaw ahead of the crowd. Junior companies thrive on news releases, so an investor’s job is to interpret the drilling, metallurgical, and sample results in the context of the target being explored. When things start going wrong, get out and get out fast. I have found hope and unfounded belief to be very poor investment theses.

Finally, the money you invest in this sector should be money you can afford to lose; but the object is not to lose it but to win big.

Take your time and wait for the right pitch.

There are no called strikes in this game and there is no shortage of new hot stories that will be touted by the brokerage industry. By spending the time to research a company, via talking to management, following results, and getting sound advice from someone in the industry, you are way ahead of the crowd.

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

about brent cook Brent Cook is a geologist and junior mining analyst with over 30 years of mining industry experience.

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

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ing selling the dreams of buried treasure to the public by playing to human nature: greed and the susceptibility to an easy getting rich quick story.

What is exploration and why are the odds so low?

The scientific basis of minerals exploration is pursuit and understanding of anomalies (variations) within the Earth. A mineral deposit is a special type of anomaly in which enough metal has been concentrated under the right geologic conditions to make it economically feasible to extract. The problem is that for every economic metallic anomaly (ore deposit) there are thousands of uneconomic ones that, for any number of reasons, don’t cut it. The reasons for failing could include grade, size, metallurgy, depth, strip ratio, location, politics, community, environmental concerns, etc, etc. Referring back to the opening sentence in this paragraph, explorationists evaluate anomalies and an anomaly is little more than some variance from background in the geochemical, geophysical, or geological characteristics of a piece of Earth. There are literally billions of these anomalies that merely reflect and are a function of the Earth’s evolution over billions of years.

So what’s an investor to do?

Of the roughly 3,000 junior exploration companies combing Earth chasing down anomalies, maybe half can be thrown out because of incompetent or unfocused management: management is key in the junior sector—get to know them.

Of the remaining half, about half again can be easily screened out based on the type of mineral target they are exploring. I see way too many exploration groups raising and spending money on targets that, even if successful, are not really valuable—most are too small and marginal at best. Therefore in such a high risk investment sector it only pays to focus on companies that are exploring for game changing discoveries-- ones that can increase the share price tenfold or more. Know what type of deposit the company is looking for and what it sells for in the open market.

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

Where are the Future Biotechnology Supermen and Superwomen?

T

he congressional “super committee” was charged with cutting 1.2 trillion from the federal budget. An agreed consensus between six Republican and

six Democratic members never arrived.

This result automatically triggers a $1,2 billion in mandatory cuts in government spending, beginning in 2013, with about $600 billion cut from military spending and the balance from entitlement programs.

How can the biotechnology industry prepare for the impact? Recent history yields relevant insight.

As Burrill and Company’s Marketwire reported on October 3rd, 2011, the fight in the United States over the raising of the debt ceiling and the debt crisis in Europe have fueled turmoil in the stock market that has taken a toll on the performance of biotech stocks, slamming the brakes on a solid year of financing for the sector.

n By teresa touey

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Micro-Cap Review Magazine

Also from the same report, public financing in the third quarter fell to just under $3.1 billion compared to $9.1 billion in the previous quarter. The amount raised through IPOs fell 72 percent, follow-ons fell 79.8 percent, and PIPEs fell 53 percent. Five life sciences companies filed in September to go public in the United States, but it was the first month this year that no life sciences IPOs were completed.

“While 2011 remains on track to be a year of solid performance for biotech, global financial problems and dysfunction in Congress have turned investors away from risk,” says G. Steven Burrill, CEO of San Francisco-based Burrill & Company, a diversified global financial services firm focused on the life sciences industry.

“Despite what has been an upbeat year of developments for the sector, broader economic worries have thwarted access to the capital companies will need.”

The automatic cuts could affect life sciences through budgets for the National Institute of Health, Medicare, Medicaid, Food and Drug Administration, Department of Defense, Department of Agriculture, and Department of Energy.

Understanding the policy and political implications of these cuts is required.

Firstly, the actual numbers will have to be assessed. Secondly, bi-partisan support is needed for industry growth over the next decade. Figuring out the politics and policy is the challenge. Then, the informed advocacy begins. Each BIO cluster has its regional group. One example is the MidAtlantic BIO Symposium which meets annually. Regional models can facilitate information gathering on best practices and positions in a unique, specific way for each region as well as provide key building blocks to a national response.

Another example is the recent town hall meeting convened by Philadelphia’s University City Science Center on Monday, October 17, 2011. The question posed to participants was: Is innovation scalable?

Panelist Glen Gaulton, Penn Professor of Pathology and Laboratory Medicine, shared a friend’s story. Crizotinib, a new drug, has extended her life. Pfizer did a multi-site trial for this drug. Penn was one of the sites in both lung cancer and neuroblastoma.. His friend was in the lung cancer trial. Presently, she is nearly

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three years into survival, feels great and is leading a “normal” life.

Crizotinib works for patients with ALK kinase protein mutations. Sub-forms of lung cancer have a mutation in the ALK protein as part of their cancer mechanism.

Only twelve percent of all lung cancer is linked to mutations in the ALK protein.

However, average survival prior to this drug for people at stage four of cancer is a five year survival rate of less than five percent, with continuous chemotherapy, every six weeks, which is eliminated here.

Clearly, industry and universities partnering brings results to patients reminding all attendees of the high stakes of translating science to commercial success. Stephen S. Tang, PhD and CEO, University City Science Center President and CEO, serves nationally on the 15-member Innovation Advisory Board. This US Department of Commerce board has been directed by the America COMPETES Reauthorization Act of 2010 to hold a series of innovation town halls. Participants explore the nation’s innovative capacity and global economic competitiveness. A report will be generated for the President and Congress.

Over the next year, It will become more clear to the nation’s BIO clusters how deficit reduction will impact the intersection of government, science, healthcare, and bioengineering and its partnerships between universities and industry. As attendee Kenny J. Simansky, Vice Dean for Research at Drexel University’s College of Medicine, commented, “it will impact training at all levels – post doctorate, grad school, undergrad, and high school” for our future scientists, doctors, engineers and entrepreneurs.

Lastly, some history, past and present, was included as Tang introduced US Senator Bob Casey, D-PA, sponsor of S4018, the Life Sciences Jobs and Investment Act of 2010, in its intial legislative stage along with its House counterpoint, HR6165 sponsored by U.S. Representatives Allyson Schwartz (D-PA), Bill Pascrell (D-NJ),

Devin Nunes (R-CA) and Kevin Brady (R-TX). Our nation, founded by antimonarchist colonialists in Philadelphia, like Ben Franklin, and strengthened by waves of immigrants from Europe and Asia, is competing globally in the twentyfirst century. The impact on patients with

cancer and all other major diseases will hang in the balance as well as our ability to heal, feed and fuel the world. n E. Teresa Touey Lumena Consulting--Founder and Suburban Philadelphia 610-733-0014

Principal

PERU AND ARGENTINA GOLD COPPER NEXT GENERATION SOUTH AMERICAN EXPLORER Darwin formed as part of reorganisation of Mawson Resources Ltd via spin-out of Peruvian assets Subject to shareholder approval on March 30, 2012, Mawson shareholders to receive one common share of Darwin for each three common shares of Mawson Darwin to list on TSXv Exchange Canadian Office Suite 1305 - 1090 West Georgia St Vancouver, BC, V6E 3V7, Canada

For Information: Nick L Nicolaas Tel: +1 (604) 657 4058 Email: nick@mininginteractive.com

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ROMPAS PROJECT BONANZA TSX: MAW; Frankfurt: MRY; Pinksheets: MWSN Issued Capital: 51,670,753 Fully Diluted: 62,014,265 Canadian Office For Information: Nick L Nicolaas Suite 1305 - 1090 West Georgia St Tel: +1 (604) 657 4058 Vancouver, BC, V6E 3V7,Canada Email: nick@mininginteractive.com

www.stocknewsnow.com • www.snnwire.com • www.microcapreview.com

www.mawsonresources.com

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

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

N

ews stories about large cap companies flood the market place from a multitude of news sources and re-publishers. When Apple posts a press

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

Major TV networks like CNBC, CNN and Bloomberg will produce segments, nightly specials, or breaking news story bulletins to announce Apple’s latest iPad or iPhone product launch or update. Apple, once a micro-cap company is a major success story and has now been around for long time.

Apple created disruptive technology and revolutionizing products and notoriety, a large shareholder base, and now is part of everyday Americana and certainly entitled to all the coverage they receive. Mainstream media networks are about ratings, attaining viewers, and advertising revenues. Not only do people care about the next great gadget Apple launches but as a public company its financial information too is highly sought

n By bobby kraft

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Micro-Cap Review Magazine

after which is directly tied to its products or management statements. Traders, stockbrokers, analysts, institutions and retail investors, in today’s digital age, pay close attention to news; they analyze and make decisions based on the coverage a company gets from each and every news source it is coming from, like the old clipping services of yesteryear. Yahoo Finance has thumbnails for “financial blogs” and “message boards” in the left hand column for viewers to see referencing information about each company.

Bloggers allowed Joe the plumber to turn his fascination with the recycling industry, into a sought after forum of sector expertise about his industry. Although large cap companies flood the newswires and occupy the tape, stories about exciting Micro-Cap companies have to claw their way into the mix of data available on the web. Bloggers and tweeters understand that striking it big with a MicroCap company will translate into traffic, traffic translates into viewers, viewership translates into interest, interest inspires action and ultimately actions can turn into dollars.

This vast pool of investors is widespread, preoccupied, overloaded with tweets, blogs and information and very difficult to target.

CNN and CNBC aren’t calling a Micro-Cap any time soon for its story, thus a Micro-Cap CEO needs to figure out how to put “the company” in the spotlight; stand out from all the others in order to share lunch with

the big boys. Silicon Valley created social media networks and applications making it possible for a breakthrough Micro-Cap to be only a click away from being viral.

As CEO of a Micro-Cap company there is a need to get your story seen & heard. Going to financial conferences and doing road shows is an important spoke in the overall exposure wheel but will fall flat without social networking today. Having a presence on the Internet is crucial, not only for your tech-savvy baby boomer, but for the next generation of investors, Generation Y, who, like me, grew up with a palm pilot in the crib and are now the new “Microcappers ™.”As a CEO, you don’t want to hear, “I’ve never or heard of you” or “I haven’t heard much at all from your company”. There is no excuse for this anymore. Your company’s media page should be loaded with video interviews and filled with content for viewers to get to you and the story of your business. It’s perplexing for me to hear that a Micro-Cap company doesn’t have a Twitter account or a “Media Page” on their website. I am captivated by the stories I hear, such as: a company finding a new molecule to cure cancer, a mining company finding a new vein with more grams per ton than ever seen before, or a green consumer product that I wish I invented. For me, it doesn’t make sense that a CEO is not actively telling the story. If a company is as exciting as you make it sound,

www.stocknewsnow.com • www.snnwire.com • www.microcapreview.com

tell others! Lack of media coverage for a Micro-Cap company only signals one thing, the company is underachieving market recognition. Social Media is the answer. To get your story known without the major news companies doing it for you; your best chance to be seen is to do it yourself.

I’m the social media and communications director for SNN Inc. SNN is a financial publishing, media and entertainment company located in Los Angeles and New York City.

SNN has websites stocknewsnow.com and snnwire.com and ventures out to over 50 financial conferences annually. SNN publishes the Micro Cap Review Magazine (microcapreview.com) and records SNNLive video interviews with CEOs and C-suite executives of global Micro-Cap companies for dissemination. CNBC is to large cap companies what SNN is to Micro-Cap companies as SNN’s main focus is Micro-Cap companies.

I personally write blogs, tweets and copy about Micro-Cap companies. I oversee the writing of a blog for each video interview SNN records and the writing of coverage of the interview with a brief overview of what the company does. I’ll be the first to admit my blogs aren’t Pulitzer Prize worthy, but the CEO is capable of telling the company’s story better than anyone. SNN’s focus is to tell each company’s story and it is not about analyzing the financials; but rather retelling the story through our social networks, broadcast components, websites, and targeted audiences. CEOs of Micro-Cap companies can have more passion than Shakespeare’s Romeo and Juliet or less excitement than listening to a boring history lesson. In today’s competitive marketplace SNN distributes through various Social Networks, such as: Twitter and LinkedIn. Much to my surprise only a handful of companies SNN Interviews have accounts on these social networks, which doesn’t necessarily make my job more difficult but rather the company is at a disadvantage because they can’t redistribute their content to a ready audience. The more your content is distributed, the more chances, media, a blogger, another tweeter, an indus-

try expert, newsletter writer, potential investor will pick up the story. News travels faster than the speed of light in the viral universe, trends are changing all the time—yesterday’s loser is tomorrow’s winner or vice versa in this world. It’s not what you know, but when you know it. Content is king, no matter who you are. Companies like SNN Inc. are here to help CEOs generate more of their content,

and create the media presence necessary to survive in the information age. Social media is not a spectator sport; it’s time to become an interactive participant. When you see SNN at the next road show, come over to our booth, we’ll be happy to interview any and all CEOs and/or C-suite executives of MicroCap companies even Large Cap. Cheers! We are here to help. n

MEXICO’S NEXT SIGNIFICANT PRIMARY SILVER DEPOSIT

add a shine to your portfolio

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

Chinese Public Companies in the U.S. Restoring Confidence

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t has been about 18 months since the SEC first signaled that its attention was focused on smaller Chinese companies that had gone public in the U.S., primarily through a reverse merger or similar transaction short of a full-blown IPO. It has been at least a year since a wave of SEC enforcement actions began. There had been speculation in some quarters that the problem – such as it was – was limited to a few dozen companies, which still represents a fair percentage of Chinese companies that have gone public in the U.S. However, a recent second wave of enforcement activity with impressive breadth suggests that this story is nowhere near running its course.

As not only Chinese public companies, but audit firms, investment banking firms, investor relations firms and ubiquitous “connectors”, “liaisons”, “consultants” and “finders” find themselves drawn deeper into regulatory scrutiny, it is not hyperbole to talk of a full-blown “China crisis” in the U.S. public markets. Investors now approach smaller

n By Lance Jon Kimmel

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Micro-Cap Review Magazine

Chinese public companies with a general assumption that their numbers may not be reliable; investment banks that once clamored for this business have retreated to the sidelines; auditors and law firms now pass on transactions for which they competed aggressively.

However, as with all things, the China crisis will eventually pass. Companies who have not complied with securities laws and SEC regulations will delist, go private and leave the U.S. public markets. Bad actors will enter into consent decrees. Professionals who should have been doing their due diligence will be sanctioned. And some will inevitably go back into the woodwork, wait for things to die down and re-emerge when the next big thing or new market emerges.

That has happened through Rule 504 offerings, Reg S abuses and the reverse merger craze. Unfortunately, it will happen again.

In the meantime, China will remain a dynamic economy for decades to come, with hundreds of companies who do and will still want to access the capital markets in the West, including the U.S. What are these companies to do to position themselves for market acceptance? And what are smaller Chinese public companies who are

already in the U.S. to do to make sure that their reporting has been correct and, if it has not been, to restate and get ahead of the problem?

A big part of the answer can be found in Sarbanes-Oxley, now on the verge of its 10-year anniversary. A decade on, parts of SOX provide a road map toward corporate responsibility. It begins with the tone at the top. Management of Chinese companies must accept that by voluntarily accessing the U.S. public markets, they agreed to the complexities and rigors of U.S. regulation, not just a ride on the market wave. Entering the U.S. public space means that the CEO is no longer the one and only voice of the company, to be supported and not questioned by his management, his board and his advisors. This in turn requires management to be willing to work with their independent directors and/or Audit Committees to undertake forensic accounting and confirm the integrity of their internal controls and the entire disclosure controls and procedures process. Management must be willing to accept negative information and to improve the entire process of gathering financial and non-financial information, and reporting it.

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

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done correctly is expensive and maintenance (periodic reporting) is also expensive. For a profitable company – in the U.S. or China – this should not be a problem. But it is tempting – perhaps too tempting – to read on the Internet that a company can go public from soup to nuts for $25,000 or so and not be willing to hire the right accountants, auditors and attorneys to do the job correctly at the beginning, help educate management on how to set the tone at the top and then carry it through year in and year out.

Here then is a primer on how all involved parties can take control of the regulatory side of public corporate life, whether the company is already public or is thinking about going public. It may not take a village, but it definitely takes a lot of people: Management must set the tone at the top – As mentioned, Chinese management must not only support but fully embrace corporate accountability, and send an unequivocal message that his CFO, the rest of the financial department, accountants (who very often are local and young, and therefore unwilling to do anything that could be construed as a challenge to authority or their elders), auditors and attorneys are free to speak up and point out areas that can be improved. And they must be prepared with a sizeable budget to hire not only the whole team, but the right team. Without the right tone at the top, everything recommended here is at risk of failing.

Hire a knowledgeable legal team in China – Chinese counsel not only has to know how to set up an onshore/offshore structure that complies with SAFE regulations, but it must be able to issue an opinion acceptable to the U.S. investors. That narrows down the pool of Chinese attorneys to a healthy, but relatively small number.

Get really competent U.S. securities counsel - Similarly, U.S. securities counsel has to have substantial experience with public companies, preferably smaller public companies because of the particular problems such companies seem to face again and again. U.S. counsel must patiently counsel

Chinese management of their new responsibilities once the company goes public and be prepared to reinforce that message. For the most part, the expectations of U.S. public life are profoundly different and largely not understood by Chinese management.

Bring on board the best accountants possible – The single biggest current problem with Chinese companies is a lack of reliability in financial reporting. If the problem is dishonesty, no amount of advice will fix that. But if the problem is management’s just not knowing how to do an inventory rollback, U.S. GAAP reconciliation, calculation of perks, etc. then the smaller Chinese company must hire accountant consultants to help them prepare the financial package for audit or review. Having said that, the bumper crop of young, enthusiastic ex-big CPA firm accountants in China and Hong Kong do not necessarily bring the experience and the cultural ability to respectfully but diligently question management, rather than just rubberstamp what the CEO would like to present. The accountants must have significant experience preparing financial statements for U.S. public companies or the process will either drift literally for months or years or bad numbers will work their way into the financial statements.

The auditor must be beyond reproach – Not every company needs a Final Four auditor and the fifth one had enough problems of its own, so being one of the biggest does not necessarily mean you are one of the best. However, the auditor of a Chinese public company must be able to commit the resources and directly supervise local contractors in the audit process (assuming they are used) to make sure not a single corner is cut. If the accountant is the first line of defense in financial reporting with integrity, the auditor is the last line of defense.

As a result of the current crisis with Chinese public companies in the U.S., the cost of going public will probably rise and time to go public the right way will certainly lengthen, as more steps, players, and checks and balances will be factored into

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the process. But those companies whose management is both patient and amenable to a not inexpensive process and who take the long view, will do what it takes to educate themselves, be flexible in adopting new management techniques in internal controls and disclosure procedures, and incorporate the best elements of corporate governance.

Right now, it seems that the regulators and investment community will accept nothing less. Whether remedial or preparatory, the work needs to start at once. In the Year of the Dragon, it is possible to restore confidence. n Lance Jon Kimmel is the founding and managing partner of SEC Law Firm, which represents growth companies around the globe and the regulated professionals who serve them. Mr. Kimmel’s practice focuses on public and private securities offerings, SEC reporting, corporate governance, mergers and acquisitions, representation of companies before the SEC and stock exchanges, and SRO compliance for investment bankers 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 on the AIM in the U.K., the TSX in Canada and the Frankfurt Stock Exchange.

His clients reflect the spectrum of 21st century business, from manufacturing to medical devices, from biotechnology to green technology, from 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 and Bloomberg Forum, among other mainstream and financial broadcast and print media around the world. Mr. Kimmel has written numerous articles and speaks often on current legal issues in the corporate finance and corporate governance arenas in the U.S., the U.K. and China. He co-chairs the Growth Capital Conference in Los Angeles, serves on the Securities Regulation Committee of the American Bar Association, served as a national coordinator of the SEC’s Small Business Forum and has given testimony to the SEC’s Advisory Committee on Smaller Public Companies on reform proposals to ease the burdens of the Sarbanes-Oxley Act for smaller reporting companies.

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

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

Is Anything Predictable for 2012 and Beyond?

“Never make predictions, especially about the future.”

—Casey Stengel

L

ooking back on 2011, we have experienced more turmoil in the market than usual, to say the least. Large cap household names have struggled including Sears Holdings (Nasdaq: SHLD), American Airlines (NYSE: AMR), Nokia (NYSE: NOK) while major financial names have been discounted well over 50% below 2011 highs. On top of global protests (Occupy Wall Street) and the world population nearing 7 billion people (6,984,444,409 as of 29th December 2011; http://www.census.gov/main/www/ popclock.html), and exponentially decelerating global demand, the question we are all asking is, “Will demand ever return?”

After a decade of rising commodity prices, companies are trying to push these rising costs downstream onto the customer. One lesson learned in 2011 is that global demand

is shrinking. If a company does not innovate, it will not evolve and therefore may risk extinction.

Generally speaking, 2012 will mark the end for certain business models due to permanent changes in demand that work against such established business models. On the other hand, it will be an accommodating year for four important breakthrough technologies that are only possible because innovation began years ago and will never cease to stop.

#1. Lighter, tougher, lower cost materials Smarter companies like Dow Chemical (NYSE: DOW) began encouraging their employees to innovate processes and to

n By Dr. gordon chiu

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Micro-Cap Review Magazine

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research new materials. By starting as early as 2008, Dr. Mary Anne Leugers and her team of scientists developed the following chemistry process called “HIGHLY EFFICIENT PROCESS FOR MANUFACTURE OF EXFOLIATED GRAPHENE”, patent application #: 12/667808.

Graphene would become known as a super strong material derived from graphite.

It won the Nobel Prize in Physics (2010) being awarded to Drs. Andre Giem and Konstantin Novoselov (Reference:http:// www.nobelprize.org/nobel_prizes/physics/ laureates/2010/press.html).

Disclosure: I personally have been announced in 2011 as the Chief Scientist with the Canadian graphite mining company Focus Metals (OTCQX: FCSMF).

#2. Smarter Diagnostics The word “smart skin” has been floating around in many journals referencing the research work of John Rogers at University of Illinois. It is supposedly an ultra-thin electronic platform that can stick onto the human body as a temporary tattoo. This work was funded by the National Science Foundation and US Air Force. It contains flexible transistors, sensors, bendable transmitters, and receivers all packed inside and capable of stretching with your skin without ever damaging the microcircuits. While applications are still being developed, the advantages are significant in avoiding conducting gels and adhesive tapes when collecting data from the skin, muscle or brain.

#3 Next Generation Paints: Solar Paints Certain well known companies in the solar industry have gotten decimated and some may even file for bankruptcy in 2012. The reason for failure is commoditization following the slowing of innovation in the polysilicon wafer and solar panel industry. However, for those who are thinking innovation, you’ll want to watch which company focuses on

an area called solar paints (Reference: http:// www.ncbi.nlm.nih.gov/pubmed/22147684).

Through recent advances in semiconductor nanocrystal research, one group out of Notre Dame University has developed a one-coat solar paint for designing quantum dot solar cells. The above reference summarizes that a binder-free paste consisting of CdS, CdSe, and TiO(2) semiconductor nanoparticles was prepared and applied to a conducting glass surface and annealed at temperatures of 473 Kelvin. The power conversion efficiency was remarkable and solar paint technology offers advantages of simple design and economically viable next generation solar cells.

Another interesting example of a company focusing on next generation paints is Dow Chemical (NYSE: DOW). The Dow Chemical product EVOQUE™ PreComposite Polymer Technology is revolutionary for the paint industry (http://www. dow.com/coating/hiding/20111005a.htm).

The product is receiving significant positive reviews and is another sign that certain smart companies are dedicating research funds to innovate new materials for growth.

#4 Security, Mobile, Privacy and You: Once upon a time, Microsoft launched the operating system called Windows and it caught a computer virus. That began decades of nightmares for the blue chip company: Microsoft (NasdaqGS:MSFT). Gone are days of the standalone personal computer and in its replacement will be mobile products.

Everything from mobile anti-virus software applications to other mobile related commerce will pave the way for the 2012 mobile growth year. It could be mobile cloud computing, mobile data analytics, mobile games, mobile security, or mobile social media but the common theme will be mobile “something”. Even televisions have become smarter by being able to interact with your portable mobile devices.

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Conclusions: Innovation is bustling. If anything, the downturns have created even greater demand for breakthrough technologies. Like any company, it must be managed correctly in order to grow properly. The United States will always be a leader in innovation cycles and this recovery will prove no different.

About the Author Dr. Gordon Chiu is an execution-driven businessman with nearly two decades of combined domestic and international experience in biomedical, chemical, cosmetic, medical, and technology industries.

He has been invited to serve on the board of public and private companies and to provide vital advice to the board while increasing overall shareholder value.

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

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

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

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We Make Legends Disappear

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

The New Merriman Capital “We started the firm in a difficult period. Then in 2008, people took us for dead. Quite honestly, probably a more rational course of action would have been to just fold the tent and go home – but my name is on the door, and I am proud of what we have built” – Jon Merriman.

The story of Merriman Capital is a story of rebirth, evolution, and determination.

Merriman Holdings, Inc. (OTCQX: MERR) and its broker dealer subsidiary, Merriman Capital, Inc. (formerly Merriman Curhan Ford & Co.) was formed from the ashes of a public company called RateXchange. The previous business was a software matching engine for Internet bandwidth which Jon Merriman and MCF’s founders turned into a successful San Francisco investment bank.

birth From the internet meLtDown In September of 2001, just days before 9/11, the board of directors approved a plan to enter the investment banking industry as the marketplace around RateXchange’s technology had disappeared when the technology bubble burst. As CEO, Jon Merriman then raised $3.5 million, hired two of his friends from Dartmouth College – Greg Curhan and

Robert Ford – and Merriman Curhan Ford was born.

Headquartered in San Francisco, and started during dark days for the investment banking industry, MCF was founded to research, trade, advise and finance innovative and fast-growing companies with less than a billion dollar market capitalization.

The founders of MCF believed – and still do – that these smaller, faster-growing companies have a major role in driving global growth and job creation and are misunderstood by mainstream investors.

It took roughly a year and a half for the firm to post its first profitable quarter in September of 2003. The momentum continued into the first quarter of 2004, with the firm posting revenues up 500% from the previous year. The market cap ultimately peaked at over $200 million, with annual revenues of $90 million and profits of $12 million in 2007.

a rogue retaiL broker anD the gLobaL FinanciaL crisis

n By shELDon “shELLy” kRAFT

The firm continued to grow and attract new talent; however, in 2008 and 2009 – in the depths of the global financial crisis – a rogue

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retail broker at the firm caused Merriman Capital to face its most difficult test.

The retail broker, Scott Cacchione, helped Silicon Valley based venture capitalist William Del Biaggio III to fraudulently apply for loans from several banks and private individuals. Cacchione emailed Del Biaggio account statements of unknowing Merriman customers, then Del Biaggio doctored the statements so the assets would appear to be his own. With fake statements and his credibility as a Silicon Valley success story in hand, Del Biaggio borrowed over $40 million.

After a thorough investigation by the SEC, it was determined that Merriman Capital and Jon Merriman had no involvement in the Cacchione/Del Biaggio fraud. Still, the legal fees and the global financial crisis nearly destroyed MCF. The firm was forced to cut over half its staff and legal claims continued to pile up. For many, Merriman Capital was going to be yet another victim of the global financial crisis and bad luck.

Then, in August of 2009, the firm unveiled a dramatic rescue plan. It agreed to settle $43.5 million in private legal claims for less than ten cents on the dollar. At the same time, led by Chicago investor Ron Chez, the firm Micro-Cap Review Magazine

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brought in new investors who invested $10.2 million to re-capitalize the company. One of the investors who had been defrauded by Del Biaggio and sued MCF was subsequently so impressed with MCF’s perseverance that he decided to invest.

In a period of time where the world saw its financial system brought to its knees, when Bear Stearns, Lehman Brothers and a host of smaller firms shut their doors, and a time when wealth destruction rivaled any event in the last 60 years, Merriman Capital survived.

“In every battle there comes a time when both sides consider themselves beaten. Those who continue to attack win” Ulysses S. Grant.

With the lawsuits settled, and capital markets righting themselves, Merriman forged on; however, the firm had difficulty delivering consistent profits. This was not because of a lack of will or talent, but because of a failing business model. In the age of the Internet, electronic trading of stocks, and the shrinkage of the buy-side commission pool, the traditional brokerage business model had finally been broken. Equity research that was once an important differentiating tool became a commodity. The fact that so many boutique and middle-market investment banks have gone out of business testifies to the brutal nature of the brokerage business today.

Understanding the evolution of the marketplace, and realizing the need for a much lower cost structure, Merriman Capital evolved yet again. Guided by the leadership of Co-Chairmen Ron Chez and Jon Merriman, the firm has developed an updated strategy that will enable significant cost savings, generate recurring revenues, and drive profitable growth; however, the mission of helping small companies will remain the same. The new model can be broken down into four business segments: 1) Capital Markets Advisory, 2) Institutional

Trading Execution, 3) Investment Banking, and 4) Financial Entrepreneur Platform.

The Capital Markets Advisory group’s mission is to close the gap between where undervalued public companies currently trade and where they should trade. The small-cap segment of the market has been “orphaned” for many years – now more so than ever. Closing this valuation and visibility gap assists entrepreneurial wealth creation, and helps generate the capital needed to help small firms grow. The market to service small, innovative public companies is significant and speaks to a critical need in our global economy. These small, but growing, companies have the potential to employ millions, and yet the capital markets ignore them. The advisory business also provides Merriman Capital a stable base of predictable, recurring revenues.

Within the Capital Markets Advisory group is Merriman Capital’s successful OTCQX Advisory practice. Merriman was the first investment bank that held the title of DAD/PAL – Designated Advisor for Disclosure/Principal American Liaison – and sponsored the first company on the OTCQX. There are now over 300 companies on the QX, and the number is growing rapidly. Merriman Capital is by far the leader in investment bank DAD/PALs and advises over 10% of the marketplace. Merriman’s success can be attributed to the fact that it not only puts companies in the QX marketplace, but also actively services them. The firm writes research on the companies it works with, introduces them to investors, facilitates trading and liquidity for the companies’ stock, and raises capital for them.

The second business segment at Merriman is Institutional Execution Services. Merriman Capital’s trading business specializes in lowfriction equity and option execution services for institutions and ultra high net worth individuals. The firm hires and nurtures the best sell-side execution traders on the Street. Merriman’s lead execution trader, Ken Werner, is widely regarded as one of the best in the business and has been working with

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a new moDeL in a changing caPitaL markets environment

Micro-Cap Review Magazine

Jon Merriman for over twenty years.

Third, Merriman Capital engages in creative investment banking services for smaller companies. Since the firm was founded, it has raised over $9 billion for fast growing and innovative public businesses. Merriman Capital is focused on public companies that have the potential to generate venture capital-like returns. These companies are overlooked by bulge-bracket banks because of their size – yet they have the ability to grow rapidly, generate shareholder value, and facilitate job creation.

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Micro-Cap Review Magazine

39

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

Caregiving: Ready or Not or Tag Your It!

A

s a young girl of 5 hiding behind a tree I was surprised when my best friend, Alice, tagged me. Our favorite childhood game of ‘Hide & Seek’ would play out again many years later. At 50 years old I would suddenly be tagged again, but this time it was no game.

n By eleanor vera

40

Micro-Cap Review Magazine

I was living in Rome, Italy working in the film industry when I got the call that ended my life as I knew it. My father had collapsed with congestive heart failure and pneumonia in his home in Beverly Hills, Florida. Yes Dorothy, there is a place called Beverly Hills, Florida.

A few years earlier he had collapsed in the middle of a parking lot and since he was alone because my mother had died 4 years earlier, I put all sorts of safe guards in his home, including a ‘Help I’ve Fallen & Can’t Get Up’ system. Unfortunately, when my father blacked out in his home, he was so sick and disoriented he never pushed the button. Luckily his visiting nurse came that day and found him unconscious but alive, sprawled on his bathroom floor.

As soon as I found out, I dropped everything and ran to be with him. It was only then I found out how sick he really was.

When I called him every Sunday, he constantly insisted he was fine and he certainly sounded all right. But, as so often happens, he was not ‘fine.’

The doctors told me my father had 4, maybe 8 months, to live. It was obvious he could no longer live on his own. He was very frightened and sure he was dying. He begged me to promise I would not put him in a nursing home as all his friends had died in nursing homes. I promised him I wouldn’t.

My relatives wanted to put him in a nursing home in Florida. They wanted to drain his accounts, put him on Medicaid and split up my mothers’ jewelry. When it became evident I wasn’t about to do any of that, they insisted on taking him. Based on their prior behavior, I was not comfortable with that arrangement either, so I had yard sales, gave a ton of stuff away to shelters and non-profits, packed up what he needed and moved him to California with me.

I will never forget my father saying that he still wasn’t sure who he was going to live with as we boarded the plane to California.

At that moment it became clear to me how important it is for a responsible adult to take control of a situation concerning an aging parent who doesn’t have a clear understanding of what is going on.

Non-professional caregivers, as I was, face countless difficulties. There is an endless list that seems to grow by the day. Making sure medication doses and times are properly adhered to, noting down blood sugar levels, diets and moods plus keeping track of urine and bowel movements are daily necessities. Then there are the legal and financial aspects, not to mention food and living expenses along with insurance issues plus Medicare and Medicaid. All the work that goes into keeping one’s own life together is more than doubled, in most cases tripled,

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and if there are siblings or other beneficiaries involved it gets even more complicated.

Add the emotional strains and you’ve got a perfect recipe for trouble.

Most people don’t understand. Many siblings who are not involved just assume their sister or brother (the family caregiver) is living scott-free and taking advantage of the situation. They have no clue about the realities of their caregiving sibling. I wish I had a dollar for every time I’ve heard ‘Well, my sister or brother knows I’m here for them. If they need any help with mom or dad all they have to do is ask.’ ‘But, whenever we speak they never say anything, so obviously everything is fine.’ These people don’t understand that their caregiving sibling will rarely admit that they are overwhelmed and depressed.

They too believe they should be able to take care of the situation without help, until they have a breakdown.

In actuality non-professional caregivers for the elderly are not prepared for, and in many cases are not equipped to handle the enormous array of responsibilities and pressures placed upon them. Most are depressed, isolated and become emotionally as well as financially depleted.

Just like having a child, the duties and needs are endless. The difference is a child is beginning life and a parent or loved one is ending life. To sacrifice for a child is to do so for the future. Sacrificing for a parent is the ‘ultimate’ giving back. It’s a solemn tribute to the person who sacrificed for us when we were weak and vulnerable.

After 12 years of caregiving various family members and friends I understand what goes into caregiving as well as what the non-professional caregiver faces. It is why I have created two new, interactive websites for family and friend caregivers, called Active Caregiving (ACG) and its sister site, in Spanish, Ayuda A Los Que Ayudan (AALQA.) This special group of caregivers has distinctive needs of their own. ACG and AALQA are dedicated to supporting them from the beginning of their journey to the

end. We provide access to late breaking news and information on an extensive variety of senior topics and issues. A safe place to discuss true feelings and interface with others is another service we provide through a Face Book type meeting place and interactive support groups. Each group session incorporates apx. 6 - 8 active caregivers along with a licensed professional leading the group.

A large Shopping Cart with a wide variety of products and services geared toward the needs of our caregivers helps relieve stress while saving time and money. It’s a OneStop-Shop with items that have been tested and reviewed by actual caregivers. ‘Lighten Up’ has funny clips of Senior Moments.

The ‘ Senior Pets’ blog along with ‘Seniors and Their Pets’ addresses problems that many families face. ‘The Intrepid Traveler’ helps families enjoy travel with their seniors.

‘Ellie’s Tips’ area is filled with helpful advice and suggestions. We are Green and encourage our caregivers to recycle their excess supplies by listing them in our ‘Pay It Forward – Recycle’ section.

Every area in ActiveCaregiving.com and AyudaALosQueAyudan.com directly addresses a need and openly encourages caregiver participation thereby increasing content exponentially. We strive to meet the needs of all our caregivers.

Eleanor Vera - Active Caregiving, Inc. Founder and Chief Executive Officer Active Caregiving, Inc. was conceived and is owned by Eleanor Vera, a bilingual former television creative director, advertising executive, and film industry special effects associate who has 12 years of personal nonprofessional caregiving experience. In the course of caring full-time for her father, who was ill with Parkinson’s disease, amyotrophic lateral sclerosis (ALS), Lou Gehrig’s disease, diabetes and dementia, she was a Talkline Volunteer Counselor and Co-Chair for Women Helping Women Services at the National Council for Jewish Women, as well as serving on the organization’s board of directors. Additional years of primary caregiving for two elderly cousins and two elder-

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ly friends led Eleanor to reach out to other caregivers through discussion and market research studies, during which she learned that most people providing these services informally were feeling overwhelmed, burned out and isolated, and in some cases were possibly suffering from post-traumatic stress.

While serving as marketing director for St. Liz Hospice in Los Angeles, Eleanor was introduced to various professional senior product and service organizations based in Southern California—organizations she did not know even existed when she needed them most. She identified two major problems: 1.) these organizations were having difficulty reaching their target audience, and 2.) non-professional caregivers desperately needed the information, products and services these organizations offered.

Further inspired by the personal stories of other caregivers, Eleanor conceived a “bridge”—a full-service online community for family and friend caregivers that is a conduit for promoting local business, public education and a better understanding of this increasingly critical topic. Eleanor has created in ActiveCaregiving.com an online business model that generates revenue while assisting and empowering nonprofessional caregivers through their caregiving journey.

This model connects caregiving industry service providers and product distributors directly to their target market—the nonprofessional, decision-making caregiver.

For more information go to: www.

ActiveCaregiving.com n

Micro-Cap Review Magazine

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F I N A N C E

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

When Did I Become a Contrarian?

Over the course of history the street loses its sense of financial values resulting in pumped up ballooning stock price valuations which eventually get filled with too much hot air and then burst. It happened to the dot coms, it happened in derivatives and it occurred in bundled and bungled mortgage baskets leading to the fall of Lehman and the cheap price for the Bear. Recently investment bankers, desperate for fee income, after seemingly running out of US companies to hand over bags of money to, abandoned America for the looming riches of China. US investment bankers threw caution to the wind racing to boost their frequent flier miles chasing Chinese companies in places they couldn’t pronounce.

I have been a fan of China and admire how it virtually jumped from feudalism to imperialism in record time. Even more impressive is the level of temptation and attraction for investment bankers to see for themselves whether or not China is as advertised.

Ultimately like moths being drawn to light, doing business in the new land of opportunity due to population, sheer size and market need was just too tempting for them to resist.

As the Tiger began to grow from baby cub to adolescent, I also watched Chinese com-

n by sheldon “Shelly” Kraft

42

Micro-Cap Review Magazine

pany values take off to unrealistic numbers as troves of cash left the US and landed in the hands of first generation entrepreneurial capitalists in China, from Beijing to Xinchen, from Shanghai to Nimbo. The competitive and comparative advantage of China over the U.S. began with cheap labor and ran all the way to modern science leadership, market share dominance in smokestack industries and rare earth element market control. Over the last decade China soared economically fueled by foreign investment capital. China became the wild wild far east to bankers, transactional attorney’s, CPAs, investor relations firms, financial experts and ultimately a major cottage industry was formed: taking Chinese companies public in the U.S. through recycled shells and freshly created financial vehicles. Eventually China attracted money carpetbaggers as well as the professionals who were competing with one another as they stumbled all over each other to grab deals and investment banking market share. Most notable as in other bubbles, dependence on upside potential and the disregard of downside risk, many investment bankers forget to stick to their knitting neglecting their conducting prudent due diligence. Instead of using tried and true forensic accounting methods, Chinese accounting or multiple books accounting, left a huge “GAAP” as the American bankers received numbers they wanted to see, and in reality who can blame the Chinese for giving them what they asked for? Why not? Loaded with cash and hunting for bear, American investment banks began funneling billion$ into Chinese company equity, chas

ing every deal similar to multiple offers on residential homes in the California boom of the 2,000’s. So let me summarize, U.S. investor cash going into China for paper (equity) and even more cash going to China from selling Chinese products into the US market.

I will cut to the chase, we all know the Chinese bubble burst. Headlines of accounting fraud are rampant as both investment banks and holders of Chinese paper count their billion$ lost. Law firms are closing their Chinese practices as fast as they can get to the airport and catch a plane. Accounting firms are dropping like flies joining lawyers in hunkering down with their insurance carriers to review their mal-practice and D&O policies. Board room decisions cried abandon ship! Leave town!

Run for the hills. Let’s get out of Dodge with our boots on! The SEC investigations exploded as China imploded. With all the excitement and expectation of riches gone, hate replaced love of China deals. Abandonment of China caused investors to trample each other at the exit. As usual in these matters, Chasing Chinese IPOs, reverse mergers, PIPES and Registered Directs was replaced by joining class action lawsuits and searching for deep pockets for recovery. The bad Chinese deals infected all the deals done in China or on the calendar to be completed. With the luster lifted like the cash from US investor’s pockets, China got real ugly, real quick to the masses.

I have heard that China is dead in the US and no Chinese deal will get financed in the U.S. for at least three years and all the former China practices are scratching to find business elsewhere to keep their doors open and insurance payment premiums

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paid up to date. In many ways I agree that the ax has not fully fallen yet for sure.

As Lance Kimmel has stated in a previous issue of Micro-Cap Review magazine, “Around June 2010, the SEC and PCAOB started sending out informal inquiry letters to accounting firms, asking for voluntary cooperation with a fact-finding process about their practices involving Chinese public company clients.”

Now here is the shock of it all, China is still China! I have visited China many times but my foothold never reached more than beachhead proportions unlike the many before and after me who are now licking their wounds.

So why I am now a contrarian? Because today I like China more than ever; although in damage control mode, all the great promise of China, the multitudes of made and lost money from the corporate deluge replete with forthcoming regulatory intervention and horror stories. The over reaction will cause the pendulum to swing China further out of regulatory and financial favor as the last of the Mohicans end their wild forays in

China and run with their tiger tail between their legs back to their origins, to start over.

This abandonment is new opportunity for the new Chinese boom to get started. China’s economy didn’t collapse but rather it continues to flourish. Lost opportunity will give way to new opportunities for a new cadre of entrepreneurs who like the Chinese entrepreneurs witnessed a ton of butt kicking creating scars that are healing as I write this article.

I for one am heading back to China, my reputation intact, hope to find a welcome mat at my feet. The carpetbaggers have come and gone, and big lessons have been learned by the Chinese. Today the business mood is positive and retrenching. I have no grandiose ideas just simple desire to develop partnerships for marketing and sales. Concepts of reverse mergers and PIPE financings are now ancient history like the Ming dynasty and what will now rise in China is relationship building based on mutual trust and prudent guidance. The incredible market of China has grown in so many ways from les-

sons learned, that the next wave of business must be slower, more orderly, and based on cooperation and organic methodologies.

So as all the bearishness in the marketplace toward China prevails I have never been more bullish on China in my entire career in finance. This contrarian opinion of mine sets me apart from the losers who left China in a hurry who will not be welcomed back too soon. Their breach of trust as well as their breach of good conduct will make it extremely difficult for those wanting to newly enter China today but it is also potentially filled with amazing rewards. So this contrarian believer will tidy this sentiment up with mention of an old adage: “it is not the money you make but rather the money you keep.” I am ready to participate in the maturation process of a nation, and the process of a new China in history which will pride itself on mutually cooperative relationships with solid underfootings and long-term wisdom as its guide. n

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

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

I

t is possible that China is playing political chess with its rare earth strategies.

They assert that they can’t provide the world and at the same time themselves with this precious material. In a world of geopolitics, what is stated may be subterfuge for hidden agendas.

China claims that domestic, environmental concerns underlie their decision. They are on record that they are withholding licensing from Baotou, their largest producer based on environmental considerations. However, they have given the green light to approximately eleven other companies. It remains to be seen whether this particular play is in fact a diversionary tactic to control world supplies.

Instead, they are actually luring foreign

companies to relocate their plants to China.

They have recently announced that they will be unable to follow through on their stated plans announced at the beginning of the year of forecasting approximately 30K tons of rare earth exports. Instead, they exported only half that amount claiming that there has been a dearth of world demand.

However, this apologia does not correlate with reality. It is interesting that they are actively luring sovereign foreign industries to build factories in mainland China. They are using the enticements of cheap prices of labor, materials and plant construction.

These inducements may come at a deceptive cost, reminding one of the ancient story of The Spider and The Fly, as the trade-off may

indeed be at the expense of co-opting foreign intellectual properties.

Beijing has a long history of copying trade secrets. We need to look no further than expropriating missile secrets during the Clinton Administration or exporting our rare earth industries thirty years ago.

After all China possesses many American dollars to attract hungry foreign entities which are in a battle for industrial survival.

It would not be remiss for them to look over the shoulders of their invitees, which may explain partly the Chinese largesse. This may be the hidden motivation as to why the Chinese are allegedly unable to meet their stated quotas.

Additionally, industrial end users from

n By JEB hAnDWERgER

44

Micro-Cap Review Magazine

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Micro-Cap Review Magazine

45

The West are rejecting the Chinese seduction and are beginning to look for friendly jurisdictions, in which they can participate as stock holders, rather than supplicants paying inflated export prices. This precedence is already beginning to take place. For example, The Koreans have partnered with Frontier Rare Earths (FRO:TSX) in South Africa, and the Japanese have allied with Matamec (MAT:TSXV) in Quebec, Canada.

Importantly, the United States Department Of Energy recently released a report which highlights the risks of supply shortages in specific rare earths particularly dysprosium, terbium, europium, neodymium and yttrium. The report recommends that, “...taking steps to facilitate extraction, processing and manufacturing here in the United States, as well as encouraging other nations to expedite alternative supplies.”

Likewise, the recent decision by the Chinese to differentiate between light and heavy rare earths in its export quotas demonstrates that the Chinese are on record that they themselves recognize the vital importance of the heavies. The world is realizing that not all rare earths have the same supplydemand characteristics. It is in fact the rare earths outlined by the Department of Energy

which are most at risk of a supply shortage.

Gold Stock Trades has been constantly reminding its subscribers that such action on part of the U.S. government is imperative and overdue. We have been emphasizing the importance of dysprosium and neodymium which are used in the permanent magnets in wind turbines and hybrid/electric cars.

This relates to another vital development in the rare earth saga concerning the entry of General Electric into building what they term as “transformational” offshore wind turbines. This requires a large amount of neodymium and dysprosium, which are unique and inimitable. The question arises, where will GE get these rare earths from? It is hoped that they will approach friendly and indigenous sources of heavy rare earths.

Two of our current buy recommendations could provide abundant, close at hand sources of heavy rare earth supply with less international wheeling-dealing with Beijing.

Our chosen equities are Ucore (UCU:TSXV) and Tasman (TAS:NYSE), which could go a long way freeing the West from the game of Chinese checkers.

Ucore has already defined the largest heavy rare earth 43-101 compliant resource on U.S. soil. Similarly, Tasman is the only heavy rare

46

Micro-Cap Review Magazine

asset on the European land mass.

The purported kingpin Molycorp (MCP:NYSE) has yet to define a heavy rare earth asset. We await their developments in this area. They just have begun exploring and the process may take years, while in the case of Ucore and Tasman, the 43-101 resource is a fait accompli and are contiguous to advanced infrastructure with ready access to transportation.

Both Ucore and Tasman are scheduled to release a Preliminary Economic Assessment by the end of the first quarter 2012 outlining some of the specific mine development plans and placing a value on the resource. Gold Stock Trades will publish updated reports on these two companies in early January.

In conclusion, important factors in the ongoing development of the rare earths are continuing to take shape. Certainly, the U.S. green-lighting this sector is significant, which we believe will help Ucore. We hope something similar is occurring in Europe.

It is beginning to enter Western consciousness that emancipation from the Chinese hegemony is vital for industrial and military survival. We look forward to the year 2012 and the continuing maturation of the rare earth industry. Major industrial companies may well seize the bit in increasing merger and acquisition activity with our promising rare earth candidates. n Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst and writer syndicated internationally and known throughout the financial industry for his accurate, in depth and timely analysis of the general markets, particularly as they relate to the precious metals, nuclear and rare earth sector.

Jeb utilizes both fundamental and technical analysis, especially daily and weekly price volume action to understand the long term macroeconomic trends. A true renaissance man Jeb has a strong background in religion, politics, mathematics, education, engineering, mining, theater, film and science. Subscribe to his FREE Newsletter at http://goldstocktrades.com.

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PROFILED COMPANIES

DynaResource (OTC BB: DYNR) - Ready to Shine

U

nlike many other junior exploration and mining companies that seem to spend more time promoting their stock than finding and extracting minerals, DynaResource, Inc. has spent 11 years quietly laying the groundwork necessary to become a successful gold producer.

DynaResource is based in Irving, Texas and it’s 50% owned subsidiary, DynaResource de Mexico (“DynaMexico”), possesses mining concessions covering high grade gold properties in the San Jose de Gracia (“SJG”) District in northern Sinaloa State, Mexico and recently completed $18 million in drilling / exploration programs. The drilling programs have defined over 1 million Oz. gold resource that will be aggressively pushed towards production.

Drilling programs at SJG through March 2011 have defined an NI 43-101 compliant resource estimate of 402,092 Oz. Au Indicated and 740,911 Oz. Au Inferred using an underground mining cut-off grade of 2 grams/ton with an average gold grade of 5.68 g/t for the Indicated and 5.83 g/t for the Inferred. With DynaMexico having defined over 1 million Oz. gold resource, DynaResource is eager to raise its profile with the investment community as DynaMexico moves towards production, while expecting to expand overall resources through future drilling and development.

DynaResource, Inc. (OTCBB:DYNR)

The resource estimate also represents an approximate 100% increase in gold resources from a previous NI 43-101 released in late 2009, which reported 618,000 Oz. Au Inferred and reflects the successful completion of drilling programs the past 4 years.

To date, these drilling results cover only 25% of the most promising mineralized areas of the property with 75% still yet to be drilled.

Senior technical personnel believe the potential exists for SJG to host in excess of 3 million Oz. gold.

DRILLING PROGRAMS AT SJG THROUGH MARCH 2011 HAVE DEFINED AN NI 43-101 RESOURCE ESTIMATE OF 402,092 OZ. AU INDICATED AND 740,911 OZ AU INFERRED USING AN UNDERGROUND MINING CUT-OFF GRADE OF 2 GRAMS/TON. NET PRESENT VALUE DYNR’s 50% share of DynaMexico has a net present value of $133 million, based on projected production of 100,000 Oz. Au per year, an 8% discount rate, $1,350/ Oz. Au, $450/Oz. operating cost, and 10 year mine life. With approximately 10.5 As of Jan 12, 2012

Stock Price

$4.15

52 Week Range

$4.95 / $3.25

Shares Outstanding

10.6 million

Market Capitalization

43.9 million

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Micro-Cap Review Magazine

47

The SJG District is comprised of 33 mining concessions covering 69,121 hectares (171,802 acres) and is located within the Sierra Madre gold-silver belt where the

majority of hydrothermal deposits in Mexico are located (See Map below).

The SJG District has reported historical production of over 1 million oz. gold since its discovery in 1828, from numerous underground workings; 471,000 Oz. were reported produced at La Purisima, at an average grade of 67 g/t; and 215,000 Oz. were reported produced from the La Prieta area, at an average grade of 28 g/t.

The main mining period at SJG occurred from 1890 - 1910, and prior to the Mexican Revolution.

Since its incorporation in 2000, DynaMexico focused on acquiring and consolidating fragmented mining concessions comprising SJG, and at year end 2003 DynaMexico had completed the acquisition and consolidation of the SJG District. In mid 2002, DynaMexico refurbished old mill facilities and installed additional milling and

48

million shares outstanding, that equates to over $12.50 per share. Prior to the recent release of the updated 43-101 resource estimate, DYNR’s market capitalization was approximately $43 million ($4.15 per share), with the market implicitly valuing DYNR’s gold resource at less than $60/Oz. of gold in the ground. Competitors of the Company trade at an average of over $300/ Oz. As investors become more familiar with the company’s assets, it’s likely that DYNR’s market capitalization will reflect its resource being valued more in line with its competitors.

The Property

Micro-Cap Review Magazine

mining equipment in order to commence pilot production operations.

DynaMexico operated a pilot mining – production activity at SJG from 2003 - 2006 which confirmed metallurgy at the San Pablo area, and produced excellent recoveries of up to 95% of contained precious metals, in a basic gravity and flotation circuit.

During that time, DynaMexico produced 18,250 Oz. Au from 42,000 tons milled ore, at an average feed grade of 15 to 20 g/t and believes the startup of major mining – production activities at SJG would simply be a “scaling up” of the recent pilot production activities.

DYNAMEXICO – SJG NI 43-101 Resource Estimate Mr. Ramon Luna of Servicios y Proyectos Mineros de Mexico in Hermosillo, Mexico

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San Jose de Gracia Major Target Areas and Resources

was commissioned by DynaMexico as the Qualified Person to compile the NI 43-101 compliant Technical Report for SJG, and Mr. Robert Sandefur, a reserve

FROM 2003 TO 2006, DYNAMEXICO PRODUCED 18,250 OZ. AU FROM 42,000 TONS MILLED ORE, AT AN AVERAGE GRADE OF 15-20 G/T AU.

analyst at Chlumsky, Armbrust & Meyer LLC. (“CAM”), was commissioned by DynaMexico as the Qualified Person to compile the Resource Estimate for SJG. Mr. Luna is also the QP for the O’Campo Project in Chihuahua State, Mexico, - a multi-million ounce gold and silver property owned by AuRico Gold (“NYSE:AUQ”). Mr. Luna was commissioned because of his prior experience at O’Campo, and because of similari-

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ties observed between the O’Campo and SJG Properties. CAM and Mr. Sandefur were commissioned as respected industry professionals to confirm the resources defined by recent drilling/exploration programs at SJG. Mr. Sandefur calculated resources at SJG considering an underground mining cut-off grade of 2 g/t Au, and reported - Indicated Resources of 402,092 Oz. Au at an average grade of 5.68 g/t Au, and Inferred Resources of 740,911 Oz. Micro-Cap Review Magazine

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Au at an average grade of 5.83 g/t Au. The gold resource estimate at SJG is approximately 88% of the total Au equivalent resource (which includes silver, copper, lead, zinc).

mineraLiZation DynaMexico’s recent drilling programs at SJG consisted of 298 core holes for a total of 68,428 meters with total drilling and related exploration costs of $18 million. The majority of the drilling was conducted at San Pablo and Tres Amigos, and also La Union and La Purisima.

All major targets remain open for extensions along strike and down dip. Highlights of drilling at major target areas are shown below: San Pablo: SJG ‘07-031 - 8.3 M @ 48.24 g/t Au; ‘08-051 - 14.2 M @ 14.79 g/t Au; ‘09-139 - 5.5 M @ 20.51 g/t Au; ‘10-203 - 5.5 M @ 332.86 g/t Au; ‘10-217 - 1.42 M @ 89.95 g/t Au; Tres Amigos: SJG ‘97-013 - 27.5 M @ 9.94 g/t Au; ‘10-151 - 11.95 M @ 14.66 g/t Au; ‘10-179 - 1.72 M @ 105.51 g/t Au; ‘10226 - 8.04 M @ 18.47 g/t Au; ‘10-230 - 4.54 M @ 18.09 g/t Au; La Union: SJG ‘08-76 - 4.8 M. @ 16.02 g/t Au; ’10-216 - 2.96 M. @ 12.36 g/t Au; ’10-223 - 3.52 M. @ 10.24 g/t; ’11-256 1.24 M. @ 144.08 g/t Au; ‘11-298 - .70 Meters @ 49.39 g/t Au; La Purisima: SJG ‘07-021 - 8.0 M @ 20.67 g/t Au; ‘07-039 - 4.2 M @ 8.55 g/t Au; ‘10-161 - 7.6 M. @ 4.64 g/t Au.

best goLD ProJect in sinaLoa DynaMexico’s SJG property was recognized as the best Gold Project for the year 2010 by the State of Sinaloa, at the June 2010 mining conference in Mazatlan, Sinaloa. At the same conference, US Gold was recognized as the best Silver project for year 2010 for its “El Gallo” Project.

the Future

DynaMexico sees the potential of defining new resource areas throughout the vast SJG District.

Structure / Management DynaMexico owns 100% of SJG, with 50% of the outstanding shares of DynaMexico held by DYNR and 50% held by Goldgroup Mining, Inc. DynaMexico has entered into an agreement with Mineras de DynaResource SA de CV. wherein Mineras has been named the exclusive operating entity at SJG. DYNR owns 100% of Mineras and the Chairman/ CEO and CFO of DYNR are the President and Treasurer of Mineras and DynaMexico.

Preliminary economic assessment DynaMexico expects to commission Preliminary Economic Assessment (“PEA”) reports in the first quarter of 2012, which are expected to confirm the positive economic analysis for commencing production activities at SJG. The PEA(s) could describe two production options, one for high grade underground mining and milling (using a cut off grade of 2 g/t) and another for open pit mining and heap leach production (using a lower cut off grade). DynaMexico projects the start of production at SJG within 12 months after receipt of the completed PEA’s.

Once fully operational, DynaMexico should be producing 100,000 oz gold per year at a projected average cost of less than $450 per Oz. DynaMexico estimates a total capital cost for start up of the underground mining and milling operation of approximately $50 million, which is expected to be confirmed in the upcoming PEA(s). exploration - expansion of resources DynaMexico expects to expand and increase resources at SJG through continued drilling programs, as all major deposit areas are open along strike and down dip. DynaMexico estimates that it has explored only 25% of the primary mineralized areas of SJG, and,

Potential Project value DynaMexico has established company goals of producing 100,000 Oz. Au annually and expanding total resources to over 2 million Oz. Au within the next 36 months. DYNR, through its ownership of 50% of the common shares of DynaMexico and 100% of the operator Mineras, believes the upside potential for its shareholders could be substantial.

Unique Opportunity DynaResource is currently unknown and evolving from exploration to production while its 50% subsidiary DynaMexico continues to develop and explore its existing property with experienced personnel and infrastructure in place as well as maintaining strategic alliances and relationships with local and state officials.

Once in production, DYNR’s 50% common share ownership of DynaMexico and its 43-101 compliant resource estimate (402,092 Indicated Oz. gold and 740,911 Inferred Oz. gold, using an underground mining cut-off grade of 2 grams/ton) should produce significant, steady cash flow and profits. Importantly, DYNR management is focused on minimizing dilution to its loyal shareholder base and intends to implement a high dividend payout ratio. With a resource of over 1 million Oz. Au, with average gold grade of over 5.68 grams/ton and with 75% of the SJG project still unexplored, DYNR offers shareholders and investors the opportunity for near term production of a substantial mineral resource and the opportunity for future expansion, exploration and discovery. n

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

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Pacific Rim chambeR of commeRce and business council January, 2012 The PRCC and American International Business Council has been in business since 1996 helping SME’s (Small and Medium Sized Enterprises) around the world relocate and/or expand their interests through a process of legal, accounting and networking services.

During this period of time we have associated with over 15,000 SME’s and affiliates in 14 countries! www.aibc.us.com Obviously with the present focus on the relations between the USA and China, we have been extraordinarily busy helping companies on both sides grow exponentially with the help of our relationship with the CCPIT (China Council For the Promotion of International Trade) www.ccpit.org China Council for the Promotion of International Trade (CCPIT) is also called China Chamber of International Commerce. China Council for the Promotion of International Trade (CCPIT) comprises VIPS, enterprises and organizations representing the economic and trade circles in China. The aims of the CCPIT are to operate and promote foreign trade, to utilize foreign investment, to conduct activities of Sino-foreign economic and technological cooperation, to promote the mutual understanding and friendship of economic and trade relations between China and other countries and regions around the world, in line with laws, regulations and government policies of the People’s Republic of China and with the reference of international practice. Presently there are over 300,000 businesses in China under the direction of the CCPIT! 2012, the Year of the Dragon, represents a tremendous growth year for us and the CCPIT and now SNN Inc. who has become part of our worldwide network giving us reach and depth into the world of Finance we could have never enjoyed before! The Year of the Dragon will be a great one for all of us and we look forward to a year of prosperity for all our members and those around the world who participate with us.

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

The Top Down Opportunity for Micro-Caps in 2012

T

he micro-cap stock universe walks into 2012 asking what should their stocks start doing to crank up the volume.

window in favor of stability in the market’s stocks which would be the last assets to be bid-ask equilibrium. And in the micro-cap dumped when everything seemed so bad. universe, price equilibrium plummets close Interestingly, when things were this bad, the to the ground during major downturns, like a volatility in micro-cap stocks was washed hawk zeroing in on its tiny ground-level prey out of the system, leaving very small price at about 120 miles per hour. points quite attractive from a risk perspec2012 is not going to forget the August – tive – the call option idea in action.

October 2011 downturn. And this is what Historical reference tells us another story micro-caps do: they reflect the outer vola- alongside the 2002 example. Firstly, we tility bands of the market much stronger notice that the Russell Microcap® Index than mid-caps, and especially stronger than bounced right back in 2003 with a powerful defensive big-caps.

66.36% return compared to the weakest relaWe have to put this theme into focus in tive performance form the Russell Top 200® order to determine the historical relative Index which generated a 26.68% return. If performance of micro-cap stocks compared this doesn’t make 2011 sound painful, then to other stock market capitalization catego- we don’t know what’s worse. ries. Data obtained at the Russell Investments When cycles turned in 2004, and all stocks website indicated a rather strong cyclical were lifted by a full-blown recovery, smallertrend, with significant sector reactions to cap stocks were left more vulnerable to the interest rate changes and to total market vol- interest rate upward revisions which are atility. During 2001, 2002 and 2003, micro- very typical during the stronger years of a cap stocks enjoyed the best relative perfor- recovery cycle. Looking again at the Russell mance each year – and this included 2002 data, micro-cap stocks instantly fell to the during which most market capitalization worst relative performance among all of categories generated very poor year-over- their categories in 2005, drifting lower on year performances. The Russell Microcap® higher interest rates which turned the corner Index was the best relative performer in in 2004. The Federal Reserve nudged the fed 2001, cranking out a 17.58% year-over-year funds rate from an average monthly target New Orleans New York increase compared to the worst RussellChicago index rate of 1.00% in Newport Q4 2003, to a monthly averBeach Fort Worth San Francisco performance, the Russell Top 200® Houston Index age of 1.43% one year later, a whopping 43% which generated a -14.57% return over the increase in the underlying cost of capital to www.ghsecurities.com prior year’s close. the entire banking system, before jumping From this historical episode we learned to a 2.47% monthly average in Q1 2005, or GHS’thatRecent Transactions n By RIChARD D. hAsTIngs, CCE micro-cap could outperform on a very a 250% jump in the fed funds rate. Simply MaCro aND CoNSuMer StrategiSt relative basis, when the conditions were put, there was no way micro-caps were not gLoBaL huNter SeCuritieS $115,000,000 $142,312,500 $20,000,000 just downright wrong for big cap, defensive going$126,500,000 to feel this.

The biggest pivot point in the micro-cap stock story continues to be the battle over trading volume in an anti-volatility, liquidity-fixated trading environment.

Thinner volume stocks seem to invite investor obsessions with single event catalysts, looking for nuggets of news and developments that make it safe to swim in thin trading waters. The cost of hedging lower prices stocks often makes little sense when the next major market downturn has the power to make a large number of lower priced microcap stocks into call option equivalents, inviting speculation and risk-taking with a potentially lowered demand for critical company information – the lifeblood of the future price direction of most stocks at any time, in any industry, and during nearly any market cycle.

On the other hand, major downturns such as the severe slump during August to October 2011 turn distressed micro-cap assets into serious trading liquidity tests, sending lower priced assets into a dangerous price tailspin, throwing future operating prospects out the

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Micro-Cap Review Magazine Follow-on

Units

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Follow-On

Meanwhile, fuel prices sloped much higher during 2004 and 2005 before spiking in late 2005 at Hurricane Katrina, signaling a big jump in fuel surcharges for FedEx and UPS ground and jet freight, in addition to increased costs for longer-range refrigerated ground shipments. The effect on operating income – due to higher interest rates and transportation fuel costs – signaled a change in the foundations underneath micro-caps, thus going far to explain why micro-caps could have underperformed other market cap categories in the middle of a recovery cycle.

This is instructive to our view about micro-caps during 2012 and 2013. We do not expect interest rates to budge during 2012.

Global demand for easy access to central bank credit has been engraved into the sides of the policy pyramids, indicating everybody on the planet with the power to make it happen (The Fed, Bank of Japan, Bank of England, European Central Bank, Swiss National Bank and the Bank of Canada) will force rates as low as possible throughout 2012. The alternative is political upheaval, social unrest and loss of power. The interest rate story takes one piece of downside volatility for micro-caps off the table, in our strategy view for 2012. Interestingly, monetary policy actions have contributed to higher monetary inflation especially since 2003. Simply put, if you crank out enough paper money year after year, then it inevitably exceeds to the number of transactions in commodities and forces commodity prices higher. Margins then come into focus as a major area of concerns for the micro-cap universe.

The prospects for margin damage from inflation is however a serious problem for the micro-cap universe. Higher cost of goods means smaller companies must cover this with a greater increase in sales growth, and they must sometimes have to figure out how to muscle market share away from much bigger, existing companies without hurting earnings growth trends. In some cases, micro-caps come to the game with

strong innovation and strong differentiation.

Others may come to the growth game with higher-than-peer debt-to-equity ratios and/ or higher debt-per-share metrics. This puts the latter stocks onto a higher volatility ramp when recovery cycles hit the interest rate bump, and investors have to worry about trading liquidity when and if this happens.

Within the typical micro-cap universe, there are a few instructive sectors to talk about which seem to describe an inter-sector ecosystem. Looking at the iShares Russell Microcap® Index Fund (an ETF which tracks the Russell Microcap® Index), financials represented 26.79% of all holdings as of Dec. 31, 2011, followed by healthcare at 18.01%, Technology at 13.71% and Consumer Discretionary at 12.69% of all fund holdings. During recovery cycles, assuming there is no major interest rate bump, then some of these financials could improve, but only if they have the ability to create more loan growth. If retail sales grow at about 5% in 2012, then technology could grow by about 4% in 2012 since it is very sensitive to the retail sector. Tech firms often are major borrowers from financials, offset by somewhat weak household loan demand (yet showing hopeful signs of growth in 2012).

Therefore, some of the overall microcap’s performance in 2012 could depend on the financials-household-tech ecosystem.

If the household sector can demand loans and make them perform, then things look brighter in this large portion of the microcap world. If the consumer does not hold up, then we would be concerned that sales growth at micro-cap consumer names might not cover inflationary input costs. Some of these risk themes are non-cyclical, impacting these sectors along any spot on any type of peak-to-recovery curve. All of this points to competitive advantage, innovation, strong financial management and a clear vision by management to navigate short-term cyclical fluctuations in interest rates and costs; and for management to explain to analysts and investors the most important story of all: how their firms will get through a cycle and

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get to the end zone of the next cycle three to five years into the future, long after some of these riskier passages have been successfully overcome.

Despite many hopeful signs, great ideas and cyclical timing, the buyside will remain obsessed in 2012 with trading volume right along with curiosity about longer-term growth prospects, seeking evidence from the market that it’s safe to jump in – and especially safe if they want to get out. n This material has been prepared by Global Hunter Securities, LLC a registered broker-dealer, employing appropriate expertise, and in the belief that it is fair and not misleading. Information, opinions or recommendations contained in the reports and updates are submitted solely for advisory and information purposes. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, we cannot guarantee its accuracy.

Additional and supporting information is available upon request. This is not an offer or solicitation of an offer to buy or sell any security or investment. Any opinions or estimates constitute our best judgment as of this date, and are subject to change without notice. Global Hunter Securities, LLC and our affiliates and their respective directors, officers and employees may buy or sell securities mentioned herein as agent or principal for their own account.

Not all products and services are available outside of the US or in all US states. Copyright 2012.

For Canadian Investors: Global Hunter Securities, LLC is not registered in Canada, but has filed for the International Dealer Exemption in each province.

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

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

Metal Market Overview 2011 W

ords like Fukushima, fracking, carbon tax, or resource nationalism don’t elicit good feelings. Unfortunately these are some of the themes that came to the fore in the commodities markets in 2011. What follows is a brief overview of the metals markets in 2011 and our thoughts on what direction these markets will take in 2012.

n By Chris Berry

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Despite my highlighting some of the “negatives” in the market place, it wasn’t all bad news in 2011. Gold’s secular bull run continued in 2011 with the yellow metal posting another year of gains despite a marked increase in volatility due no doubt to increased paper trading. Silver’s run to nearly $50 per ounce in April excited the market and has many silver investors believing that that top can be broken in 2012 if industrial demand in the developed world recovers and some clarity emerges between the physical and paper markets.

A number of factors pushed gold and silver higher in 2011 including flat supply (annual gold supply has been flat globally since the early part of the last decade), increased interest in buying bullion in the Emerging World (China and India are notable examples), and central bank buying.

This last factor is of particular significance since until recently, central banks were net sellers of gold bullion. In the third quarter alone, global central banks purchased a net 148.4 tonnes of gold. These are forecast to push the total amount of gold purchased by central banks in 2011 to 500 tonnes. When Central Banks, known for printing paper currencies, are using this “fiat money” to

acquire hard assets that retain their value, it tells us something about the precarious state of global financial imbalances and what the future may hold for governments beset by an overwhelming and insurmountable debt burden. As 2012 approaches, we believe answers to these questions as well as what the future of the Euro Zone will look like, are positive for the price of gold and silver as well.

Other metals didn’t fare quite as well.

The rare earth elements appear to have peaked and are now reverting to a new mean level that may reflect realization of future supply – as is the case in any bubble scenario. We made the case earlier this year for what we call “the great reset” in this industry which will be characterized by a rapidly shrinking number of rare earth companies exploring for these elements, substitution (some of these elements are not “critical” after all), and price mean reversion, amongst other factors. Looking forward, we envision only a handful of companies outside China who are successful in raising sufficient capital to further their exploration plans and solving the complex and unique metallurgical issues associated with each deposit.

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Other industrial specialty metals like lithium, vanadium and uranium had a rough year for various reasons (Fukushima, lower than expected adoption of electric vehicles), but we expect this to reverse in 2012 and beyond as the demand for affordable and reliable electricity mounts faster than many think it will based on several billion individuals joining the new global middle class.

The recent takeover of Hathor by Rio Tinto is a hopeful sign of life in a beaten down uranium sector.

Questions around copper, the metal with the “PhD in Economics”, remained as the mounting uncertainties surrounding the global economy, industrial production, and growth increased. The fortunes of copper are tied to the fortunes of China – plain and simple. We note a recent study that reported the copper “intensity” per person in various countries. This is how much copper used in a given country per person in kilograms. It was interesting to see that per capita copper intensity was almost the same in China and the United States (5 kg per person in China versus 6 kg per person in the US). However, with US GDP per capita roughly 10 times as large as that of China (in 2009), one can infer that the copper intensity in China must increase by an order of magnitude (10 times) if China aspires to the same quality of life in the United States (again on a GDP per capita basis). This is clearly bullish for copper prices in 2012 and beyond.

Turning briefly to geopolitics, it was a bad year for dictators as Hosni Mubarak, Kim Jong-Il, and Muammar Gaddafi all saw their reigns come to untimely ends. On balance we think the Arab Spring and similar events are net positives for resource investing over the long run, but what emerges to fill the leadership voids in these countries will add to uncertainty in the near term. Politics and labor strife also remained prevalent in the resource investing world. Two notable examples were Freeport McMoRan who declared force majeure on its Grasberg mine in Indonesia (one of the largest copper/ gold mines in the world) and the Malaysian

government who bowed to domestic pressure over Australian-based Lynas’ plans to construct and operate a rare earth element separation plant on its soil. Many other examples could be cited. One thing is certain – these types of incidents generated by resource nationalism are sure to continue in the face of escalating demand.

On the political front, the US Presidential election in 2012 promises to divert our elected leaders’ attention. This may actually be a good catalyst for resource investing going forward as gridlocked politicians are forced to focus on the election and not on crafting legislation that kills jobs and puts the United States further behind the rest of the world with no domestic natural resource policy (think about the ban on uranium mining on the Arizona strip).

A change of leadership in China in 2012 also has implications. The country must maintain its breakneck pace of growth for the sake of internal stability while encouraging domestic demand. This is necessary to lessen the reliance on internal investment in sectors such as real estate. The calls for this rebalancing from inside and outside of China are growing louder and have deep seated implications for investing in natural resource exploration and production companies into 2012 and beyond.

China is the linchpin of global demand for commodities. Having just returned from a two week trip to southern China for meetings with investors and fund managers, the key worry there isn’t a real estate bubble (which is what the Western press would have you believe). It is inflation. China’s growth to date has depended upon an export-led boom where jobs are created manufacturing low cost goods for export to other countries. As wage pressures build, manufacturers are in search of the lowest cost place to do business. If jobs aren’t plentiful in the Middle Kingdom for those citizens aspiring to a higher quality of life, social upheaval is a possibility as China has not made the switch to an economy fueled by domestic demand.

The good news is that despite the volatility

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we have seen this year, many junior mining stocks are so cheap that this may be the second great buying opportunity for shares in recent years (late 2008 being the other opportunity). We look for experienced management, the highest-quality assets, strong balance sheets with ample cash, and the capability to manage dilution - so often the death knell for junior mining companies.

Resource nationalism is another theme that promises to stay front and center so finding juniors with deposits in reliable jurisdictions is a must. We think a focus on these factors can help insulate against what is sure to be another turbulent year in 2012 rife with both risks and opportunities. n With a life-long interest in geopolitics and the financial issues that emerge from these relationships, Chris founded House Mountain Partners in 2010.

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

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

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

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

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Value Beyond Profit at a gLance There are over 7000 different types of Rare Diseases many of which are not considered so uncommon. Together Rare Diseases are not rare, because more than 23 million people suffering in the US and over 30 million in Europe all of who will tax and challenge our future social society. These individuals with a Rare Disease constitute a neglected group of patients living with major health problems and social discrimination in modern developed countries. That 75% of these individuals are children, makes it even more imperative that we act for them and their families. Despite Orphan Drug Laws through the last decade nothing major has been accomplished for the majority of these individuals. They have to live with a strong social disadvantage due to their lack of networks, unreliable knowledge about their disease and limited highly expensive treatment options.

obesity, diabetes, cardiovascular disease and cancer. Many patients in the US have been excluded form health care due to the therapy costs associated with their Rare Disease. All entities of the ‘service providers’ such as Hospitals, Pharmaceutical Companies and Health Care Payers are part of the system and the question arises as to what happens when 7000 Rare Diseases are also entered into this equation. Will a solution to this crisis be in sight?

traDition versus change The tranditional approach historically based economic activity and medical innovation

on incentives solely associated with competition and maximum profit generation. This strategy has now been sidelined for some time due to the absence of large investments in the biotech sector and should have been better evaluated in the first place. The selfishness cause by this approach and increasing expenditures in the healthcare system became highly visible and evident with our latest economic crisis. Perhaps denial or ignorance was key in many offices along with managers hoping to weather through this crisis easily; however, the impact and the resulting lay-offs in the pharmaceutical industry is now upon them.

cutting costs Health care costs rose incessantly in the last decade despite, or perhaps, because of the innovations that allowed us to develop a greater range of therapies. Nevertheless, 10 of the top innovations created in this pharmaceutical pallet - for example in Germany - have never successfully hit the market due to the fact that the benefit to the patient is too low and the price is to expensive for health systems to cover. Numerous attempts have been made by the US and European authorities to stabilize costs and so far with little effect. This has mainly been in relation to ‘home-made’ disease such as n By DR. FRAnk gRossmAnn

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UPCOMING CONFERENCE February 22-24, 2012 Le Pavillion Hotel New Orleans, LA More info at www.nibanet.org

Since 1982

The National Investment Banking Association thanks our 2011 Las Vegas Presenting Companies

The Percipience Real Estate Opportunity Fund

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

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the goLDen caLF Despite the US Orphan Drug Act in 1983 and similar EU Legislation in 2002, Switzerland’s political and economic community seems to have ignored Orphan Disease longer than its neighbouring Countries. Everything seemed to be perfect at best. Meanwhile the reality is that 450‘000 patients can no longer be ignored and isolated from the rest of the healthcare cake. Switzerland’s executives have now heed the establishment and creation of ideas and programs with historical and traditional gusto to recognise Orphan Disease. This land with the highest standards in healthcare service and therapy received a wake-up call by the National Courts decision in September 2011, whereby the vested interests of the pharmaceutical industry must be subordinate to the overall interests of the health and social system.

measuring success The cost-benefit ratio is an important measurement of our over-inflated healthcare sector. Creating new and costly innovations only exacerbates this problem. An aligned and short-term profit micro-economic approach no longer appears to be timely especially since macro-economic correlations and dependencies are better known and identified. A marginal attempt at creating or aligning with Corporate Social Responsibility for the leading firms is only part of the approach.

Complex problems need creative, innovative and well thought through solutions. Success measurements need to be redifined.

Patient as Partner Patients were not previously consulted or considered in the actual therapy processes.

The patient was a ‘good patient’ as long as he was passive and faithfully consumed his medications as instructed. Rare Diseases are missing these therapies and networks. Thus from out of this crisis, and a lack of organisation, affected people have begun to organize themselves and change the status quo from

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that of passive to active engagement and action. Because patients can do much more that just follow doctors orders; they can and must be actively involved. All are mobilized, committed and interested stakeholders in understanding their own health situation in addition helping to improve cost savings.

The patient’s passive approach to receiving is transformed into a proactive self engagement.

sharing or creating vaLue? If we succeed in generating economic activity with social needs and connecting the needs of the customer, we create a successful symbiosis within the principle of “Creating Shared Value”. «Shared Value is the enhancement of competitiveness of a company while simultaneously advancing the economy and social conditions in the communities in which it operates. Companies can create economic value while creating societal value by redefining productivity in the value chain, reconsieving markets and products by building and supporting business clusters.«1 The needs of the Society have to be considered as the roots of global business. Value creation and short term performance should and can be turned into sharing created value in a long term approach. Companies should take the lead by bridging business and society back together. Only a stable and healthy society will be able to survive on a long term basis and bring back value on a true basis of company productivity. Shared value is much more than philanthropy, sustainabiltiy and social responsibility. It is a cutting- edge way to achieve economic success. The practice of this model by international companies such as Nestle, IBM and Johnson & Johnson testifies to the foresight and pioneering spirit. These principles should therefore be contrary to the general understanding of economic activity as they contribute enormous economic and social potential.

beyonD sociaL anD ProFit A whole new generation of social entrepre

neurs with innovative business models are set up to pioneer social needs and their products.

By eliminating old habits and trends completely, many social entrepreneurs are ahead of established business by using new aproaches and opportunities. Doing so they are much more flexible with creating key products and shared value on a quick and solid basis, beyond profit and purely social programms.

As does Orphanbiotec, a modern Hybrid, consisting of a tax deductible and charitable foundation and a for profit company.

The hybrid bridges the vested interest of stakeholders and society to innovate their projects and products. People affected with a Rare Disease are included as well are Research, Pharma, Healthcare, Insurance and Government. Orphanbiotec is forstering partners, business and civil society while cutting across the traditional ways of business.

Broad fundraising, donations and grants for the Foundation ensure the kick-off for new research and development. Impact investment with a low return allows to cut costs for clinical development of new drugs in order to keep the price affordable for payers.

All stakeholders and organisations within the Competence Network agree that a percentage of the profit is used as a Social Benefit for the society in terms of the Foundation. All partners and the civil society profit, while this hybrid succesfully progresses. from Harvard Business Review, Jan.-Feb. 2011.

Prof. M. E. Porter 1

www.orphanbiotec.com www.orphanbiotec-foundation.com Research Foundation Orphanbiotec Winner of the Social Entrepreneurship Startup Award 2011 Dr. Frank Grossmann Founder & CEO post: Hochstrasse 49 8044 Zurich office: Einsiedlerstr. 31a 8820 Wadenswil Switzerland phone: +41 44 586 82 27 mobile: +41 79 246 50 69 www.orphanbiotec-foundation.com Tax deductible and charitable foundation under Swiss Law.

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StockWord Puzzle

TM

Across

36 - biology meets technology 42 - vertical 2 - NIBA 43 - Cambridge 10 - Writer of Caregiving 44 - cerium,erbium, and dysprosium are a few 13 - diagnostic risk assessment products for 45 - rare______elements breast cancer 48 - Stock Exchange in Asia 14 - markets 50 - Q&A with_______ 15 - Teresa Touey 52 - private investement into a public equity 16 - @stocknewsnow 53 - micro-cap stock _________ 18 - currency trading 54 - Barbara Duck author of ________ 19 - wall street chicken 55 - FACE______ 22 - tunnels in underground mines 56 - dowjonesindustrial 23 - I can buy NASDAQ stocks for cash or_______ 59 - buying calls I pay a ________ 24 - gold 60 - Jeb Handwerger 25 - micro-cap 365 for micro-cap companies 61 - unset price of stock sale 28 - Brent 62 - star of the Wall Street Chicken 29 - Micro-Cap_______Magazine 64 - merger 30 - 28.35 grams equals one 65 - the rim of uppermost portion of a volcano 31 - Dodd ______ Law 66 - contributing writer Ian_____ 33 - video press release 67 - newest form of wrapping email 34 - a localized area of several calderas www.stocknewsnow.com • www.snnwire.com • www.microcapreview.com

Down 1 - .062 miles equals 3 - Mr. Wallstreet 4 - gold is calculated in 5 - Rye Patch 6 - Shelly Kraft book 7 - low sulpher content 8 - anatomy of a junior resource company 9 - whats your favorite website for micro-cap financial news 11 - anatomy of a biotech company 12 - Firemans Brew 14 - internal fixation systems products 17 - N1 43-101 Canadian National Instrument 20 - Book written by Shelly Kraft 21 - orthopedic implants 26 - a zone that forms a boundary between two or more geological structures 27 - Mr. Wallstreet china article

32 - social 35 - Writer of How to headge your Micro-Cap portfolio 37 - new name for old Vancouver Exchange 38 - Other Canadian exchange 39 - MCR survey is a __________ 40 - Frank Grossman Article 41 - stock spread 46 - this equals 2.47 acres 47 - Indicated, Measured, Probable, Proven 49 - popular SNN Blog and newsletter 51 - V Stock Transfer 53 - you sell stock by writing ______ options 57 - borrowed funds 58 - other yellow metal 61 - shapiro 63 - buy, sell _______ 65 - you buy stock by writing ______ options

Micro-CapAnswers Review Magazine on page 8759

PRoFILED ComPAnIEs

grizzly Discoveries, inc.

G

rizzly acquired roughly 2,450,000 acres of Permits prospective for Potash. A number of Grizzly’s permits exist in close proximity to a reported (and confirmed) occurrence of potash minerals in a deep well in the Vermilion area of east-central Alberta. Potash beds have been confirmed to be present in a number of cores within and adjacent to Grizzly’s lands.

Historic wells were drilled by oil companies between 1940 and 1980 which indicated potash showings of up to 21.6% K20 on Grizzly lands and up to 25% K20 on nearby lands.

On December 12, the first test well was completed on Grizzly’s 100% owned potash project near Medicine Hat, Alberta. Coring commenced at 1,642 metres below surface and visible potash minerals were observed in the drill core for the interval between 1,650.1 m and 1,655.7 m below surface.

Split core samples will be forwarded to SRC for full geochemical analysis and results are expected in late January 2012.

In September 2011, Grizzly signed a LOI with Pacific Potash Corporation (“Pacific”) to commence a multiple potash test well exploration program on the Grizzly-Pacific 50:50 owned Provost Property, near Provost, Alberta. The first well on the 50:50 owned Provost Permits was completed in midNovember with split core samples sent to the SRC for geochemical analysis and results are expected in January 2012.

Grizzly holds four gold-silver-copper properties totaling over 225,000 acres in the productive Republic-Greenwood Gold District along the British Columbia-US border. This area which has produced more than 6 million ounces of gold. Kinross’s 1.2 million oz Buckhorn gold mine (1.2 m oz gold with average grade of 16 g/t gold) is 7 km to the south of Grizzly’s property .

In 2011, over $2.5 million has been spent

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Micro-Cap Review Magazine

Potash Properties, Eastern Alberta

“We are extremely excited about intersecting visible potash minerals in our first potash test well on our 100% owned Alberta Potash Project and are eagerly anticipating laboratory assay results expected in January to confirm this.” states Brian Testo, President of Grizzly. in exploration and drilling which included up to 4,000 m and 13 drill holes. The first two holes on the DAYTON target area resulted in the discovery of new low grade bulk tonnage style gold-copper mineralization in the area.

Past drilling in 2010 on the KET 28 prospect resulted in 8.91 g/t Gold over 6.1 m and 52.18 g/t Gold over 3.35 m. Gold sulphide hornfels/skarn similar in style and geology to Kinross’s Buckhorn. In 2010, at the COPPER MOUNTAIN prospect a new gold discovery at the Prince of Wales target yielded an intersection of 1.0 g/t gold over 30 m. The zone is open in all directions.

Numerous other anomalous targets have been identified and drilling of these targets will be ongoing in January 2012. Drill results from the 2011 drill program are expected throughout January 2012.

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

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

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Potash in Alberta

TSXV: GZD

OTCQX: GZDIF

FWB: G6H

Gold/Copper/Silver in British Columbia

Diamonds in Alberta

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

Potash Properties, Eastern Alberta: Grizzly acquired roughly 2,450,000 acres of Permits prospective for Potash.

A number of Grizzly’s permits exist in close proximity to a reported (and confirmed) occurrence of potash minerals in a deep well in the Vermilion area of east-central Alberta. Potash beds have been confirmed to be present in a number of cores within and adjacent to Grizzly’s lands. Historic wells were drilled by oil companies between 1940 and 1980 which indicated potash showings of up to 21.6% K20 on Grizzly lands and up to 25% K20 on nearby lands.

On December 12, the first test well was completed on Grizzly’s 100% owned potash project near Medicine Hat, Alberta. Coring commenced at 1,642 metres below surface and visible potash minerals were observed in the drill core for the interval between 1,650.1 m and 1,655.7 m below surface. Split core samples will be forwarded to SRC for full geochemical analysis and results are expected in late January 2012.

In September 2011, Grizzly signed a LOI with Pacific Potash Corporation ("Pacific") to commence a multiple potash test well exploration program on the Grizzly-Pacific 50:50 owned Provost Property, near Provost, Alberta. The first well on the 50:50 owned Provost Permits was completed in mid-November with split core samples sent to the SRC for geochemical analysis and results are expected in January 2012.

Grizzly holds four gold-silver-copper properties totaling over 225,000 acres in the productive RepublicGreenwood Gold District along the British Columbia-US border. This area which has produced more than 6 million ounces of gold. Kinross's 1.2 million oz Buckhorn gold mine (1.2 m oz gold with average grade of 16 g/t gold) is 7 km to the south of Grizzly's property .

In 2011, over $2.5 million has been spent in exploration and drilling which included up to 4,000 m and 13 drill holes. The first two holes on the DAYTON target area resulted in the discovery of new low grade bulk tonnage style gold-copper mineralization in the area.

Past drilling in 2010 on the KET 28 prospect resulted in 8.91 g/t Gold over 6.1 m and 52.18 g/t Gold over 3.35 m.

Gold sulphide hornfels/skarn similar in style and geology to Kinross's Buckhorn. In 2010, at the COPPER MOUNTAIN prospect a new gold discovery at the Prince of Wales target yielded an intersection of 1.0 g/t gold over 30 m. The zone is open in all directions.

Numerous other anomalous targets have been identified and drilling of these targets will be ongoing in January 2012. Drill results from the 2011 drill program are expected throughout January 2012.

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

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

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Micro-Cap Review Magazine

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

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

A

s a micro-cap investor you probably pay quite a bit of attention to growth potential and you may even list one of your goals as “beating

the street”. While micro-cap issues can be a great avenue to achieve these aims, they may also be hard hit when Wall Street takes a tumble.

While they might not stumble as heavily as some of their large-cap brethren, once the market has decided upon a direction they do still tend to follow. Let’s think back over the last few years and evaluate where things have “gone wrong” and steps that you might consider taking to aid in such events should they occur in the future.

In the last few years there are two standout timeframes in my mind: 2008-A year not easily forgotten, let’s take

a quick glance back at the performance of the S&P Smallcap 600 Monthly chart per Barchart.com. (It’s not micro-cap, but it gets you near that ballpark.)

The market decline erased almost 5 years of growth in less than 12 months. I am certain that most traders do not want to be caught in a situation like this without some type of asset that can gain from this type of move.

Here is what 2008 looked like for the

n by Lindsay Hall, Chief Market Strategist, RMB Group

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Micro-Cap Review Magazine

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Dow Jones Industrial Average Futures per Barchart.com: The decline on the DJIA and the smallcap side of the house was equally punishing.

Keep in mind that this was an election year

and the Bulls still didn’t show. (Election years typically attract the bulls but they were nowhere to be found in 2008.)

May 6, 2010- The “Flash Crash”: a completely unexpected and massive sell-off. This

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one had me floored. I was actually broadcasting live when it occurred, commenting on the FX market. I was astounded at the flat out speed with which the currencies were traveling. When I saw what was happening on the stock side, the forceful volatility in currency at that time of day and with such measure made sense. I had never witnessed anything as massive or as fast as these market movements. This event showed us all just how quickly worlds can change.

The Barchart.com chart above shows the Dow on May 6, 2010 illustrating its fall into a 9% loss territory in just minutes, while the chart below illustrates an overview of the small-caps.

The two events that I have highlighted here are just a glimpse of the potential that exists today in our markets for deterioration of wealth, earnings, value, and growth.

While we have been fortunate to have recovered from both of these recent examples, there is no guarantee that the next rounds will be forgiving when/if they occur.

Here are a few things to think about as we get ready to move into 2012: Micro-cap investing will still be part of your portfolio.

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

You don’t favor the “big guys” anyhow, so why not be prepared to take advantage of a big step down or market failures should they occur?

While we are moving into an election year (and typically they tend to be more bullish than not), remember that 2008 did not keep to the typical cycle and this year upcoming could have a lot of surprises in store for everyone. Prepare yourself by introducing Options on Dow Futures to your aggregate portfolio.

These limited risk, leveraged option plays to offer some peace of mind and potential for gains should the markets head south.

Here’s your trade: Consider buying March 11000 Mini Dow puts while simultaneously selling an equal number of March 10000 Mini Dow puts for a net cost of 180 points or less. Each point Micro-Cap Review Magazine

63

This trade is a professional trading strategy called a “bear put spread.” It is designed to pay off should the Dow drop 4.6% to 16% from current levels (11850 at the time of this writing). Experienced money managers use strategies like this to hedge their underlying stock portfolios all the time. You can do the same thing. in the Mini Dow options is worth $5 so the total cost of this trade is $900. This plus transaction costs is all we can lose if the Dow fails to drop.

How much can we make?

What we are doing is buying the right but not the obligation to be short the mini Dow futures from 11000 and partially paying for it by receiving money for an offsetting obligation to buy back the mini Dow futures at 10000. We can make the 1,000 points between our right to sell the Dow at 11000 and our obligation to buy it back at 10000.

Multiply 1,000 times the $5 multiplier and we get a gross potential gain $5,000 for each of this positions we enter.

This trade is a professional trading strategy called a “bear put spread.” It is designed to pay off should the Dow drop 4.6% to 16% from current levels (11850 at the time of this writing). Experienced money managers use strategies like this to hedge their underlying stock portfolios all the time. You can do the same thing. *** You may also consider similar limited risk trades using S&P Futures Options.

Timelines, contract sizes, and specific options can all be tailored to suit your needs best. (Remember that contracts further out in time, June 2012 for instance, may have lesser participation, i.e. thin markets.)

Please feel free to contact me via e-mail at: Lindsay@rmbgroup.com for assistance with any of your futures options needs.

Wishing you a prosperous New Year! n

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Micro-Cap Review Magazine

LINDSAY HALL, Chief Market Strategist, Rutsen Meier Belmont (RMB) Group Address: 222 S. Riverside Plaza, Suite 900, Chicago IL 60606 Telephone: 312-373-5482 E-mail: lindsay@rmbgroup.com Lindsay is Chief Market Strategist with the Rutsen Meier Belmont (RMB) Group. She has been an active foreign currency trader and financial markets analyst for over 10 years. She is a popular internet/ television moderator, logging over 2500 hours of live television dedicated to both markets and investors.

If that weren�t enough, she has published thousands of pages on the currency markets via tutorials, international newsletters, articles, and blogs. Her information-packed seminars set industry standards for excellence. She has taught valuable currency trading skills not only to her broadcast audiences, but also to conference classes with audiences numbering up to 4,000 in one room.

The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

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PROFILED COMPANIES

Brazil’s Next ‘Big Gold’ Story—Targeting Major Resource Expansion This Year Brazil Resources Inc. (OTCQX: BRIZF; TSXV: BRI) is a newly-listed company led by an unusually strong management team with an impressive track record. Prior to joining forces, the team had already discovered and developed more than 10 million ounces of gold directly in the high-growth gold districts of Brazil.

With a demonstrated ability to raise substantial capital -- and strategic relations with exclusive access to prime gold projects to rapidly advance gold acquisition and exploration activities -- BRI is working to build a multimillion-ounce gold resource in the near-term. Importantly, major institutional investors support this team, and already control 35% of the Company.

It All Starts with the Right Team BRI founder and chairman Amir Adnani is also the CEO and co-founder of Uranium Energy Corp. (NYSE-AMEX: UEC), the newest US-based uranium producer.

Adnani has drawn together an impressive team for rapid growth: BRI director Mario Garnero heads one of Brazil’s largest private merchant banks which controls 10% of the Company. His firm, Brasilinvest Group is a strategic partner in identifying large qualified projects.

CEO Stephen Swatton most recently served as head of BHP Billiton’s Global Business Development and Technical Divisions for the Exploration Department. BHP is the world’s largest mining company. Director Enzio Garayp was the former exploration manager for Kinross in Brazil and directly oversaw the 8 M oz. expansion of the 18 M oz. Paracatu Mine, Brazil’s largest gold mine.

BRI went public in May, 2011 at $0.65/ share, and has never traded below $1/share despite the depressed market for junior resource stocks.

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Now Eight Months After the IPO – Resource Expansion Commencing BRI initially focused on the Gurupi Gold Belt in northeastern Brazil. This prolific and underexplored region currently hosts more than 8 M oz. of gold with multiple advanced projects. The Gurupi Belt was initially developed by Kinross when BRI director Enzio Garayp was exploration manager.

With Enzio’s oversight, Kinross developed a +3 M oz. gold deposit known as the Gurupi Project – now in development as an openpit mine.

With in-depth knowledge of the district, BRI initiated exploration last year on its Montes Áureos Project, located 20 km on-strike from the Gurupi Project. The Company’s technical team has now discovered a 2-km-long gold trend at surface and subsequently acquired more than +50,000 acres in the Gurupi Belt. Exploration programs are currently underway to delineate mineralization at surface.

Consistent with its acquisition-focused strategy, BRI has also acquired two more projects totaling 260,000-acres centered on two 11-km-long gold trends in Goias State with superb potential for a major discovery. BHP Billiton, Anglo Ashanti and Yamana Gold are major gold producers in Goias State.

As a result of these early advances, the Company’s stock has remained in positive ter-

ritory while its Brazilian peers lost an average of 30% in market cap in the recent downturn.

Major Acquisition In the Works?

BRI is commencing drilling on its Montes Áureos Project and anticipates releasing results in the first half of 2012. Aggressive exploration programs on other projects are already well underway with potentially three projects to be drilled in 2012 in search of major discoveries.

BRI is also ideally positioned to deliver on acquisitions with a recently completed $4.7 M financing to institutional investors at $1.10 and with no warrants. The Company has now established a ‘war chest’ of more than $10 M in cash and only 39 M shares o/s to further development.

Expect Brazil Resources to build on its early successes with major gold resource expansion this year from acquisitions and exploration drilling programs. This is the time to start to track with the growth of this Company.

Brazil Resources trades on the OTCQX under the symbol BRIZF and on the TSX Venture under the symbol BRI. For more information, please visit www.brazilresources.com and call the Company toll free at 1-855-630-1001. n

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vIEWPoInTs

Beginnings and Endings “The end is engraved in the beginning.” – The Book of Creation, circa 200 B.C.E. There is nothing more difficult for humans than either beginning or ending. Since humans tend to be unsure of both the future and its outcome, the anxiety of beginning something or finishing it leaves most people with a sense of profound disquiet about what’s next. Humans use the artificial device of calendar holiday and ceremonies to help us through transitions of meaning in our lives. This is very much the essence of what the ceremonial life of religions are about, and if we are not formally religious, we are familiar with using secular calendars to help us acknowledge, celebrate or mourn the beginning or the ending of phases in our lives.

The reason I say that these are artificial is that there is a natural flow of existence in which what humans call “time” is really only a description of the ongoing process of living. Whether it’s a new year or an old one, a birth or a death, a birthday or a wedding, or so many other examples that you could name, we need to find a way to mark the passage of our lives so that we become aware of the phases of our development. We acknowledge the ending of one phase and the beginning of another to give us a sense of

n By RABBI sTEPhEn RoBBIns,

pSY.D., D.D.

direction and purpose, of flow and development so that we are assured that the passage of our days, months and years have not been meaningless.

These transitions in our lives generally are marked in our families, and we make an artificial distinction between business and family life as if they are somehow different from each other. I think that we do this because the world of the marketplace feels so uncertain. In families, at least there is the emotional tie that binds us together and therefore provides a sense of meaning all by itself. In the world of business and finance, we note the passage of time in much more impersonal, or seemingly impersonal, ways.

We do so as a means of providing a different sense of emotional and moral values to business than we do to family. We even codify this process by the phrase, “Nothing personal, it’s just business.”

The truth is that everything is personal, and everything is family. While we seem to want to create the illusion that what goes on in business is driven by a series of impersonal decisions that are done for the sake of the business, none of that is accurate.

We feel intensely personal about everything that happens to us in our work, because the events in the workplace define the quality of our family lives in so many deeply personal and emotional dimensions. It is time for us to begin to understand the nature of the dynamics of our workplace and the conditions under which we both live and work.

The collapse of the economy in the United States and the attendant rise in unemployment consistently demonstrates how what goes on at work impacts on our families,

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because we all bring our work home with us so that our families—spouses, children and extended family members—help us metabolize what we’ve had to ingest emotionally in our jobs and, most specifically, in the ending of them and in the search for new ones.

My own family has been affected just as so many of yours has, with the loss of employment, the need for career reassessment, and the change in direction and focus of our labors. The trauma of these losses are more profound than we have been willing to understand and acknowledge since the Great Depression of the 1920s. The avoidance is natural, since we tend to metabolize these losses of jobs as some kind of failure on our part, when in fact it may have nothing to do with us, in any way at all, but is simply the fact of economics that necessitate our positions being replaced. So, while the business decision seems to be personally dispassionate, the impact is more passionately intense than anybody has been willing to admit.

Pain, shame, anger, humiliation, confusion, trauma, the loss of security and trust, and the failure of belief and hope, despair, and the profound frustration with all politics and political figures has led to a cynicism about the “American Dream” than has ever been part of us since the 1920s.

A historical perspective is important, here.

One of the views is that all of the varieties of theoretical programs and financial structures which were created in the politics of the Depression ultimately failed to accomplish their goal of restarting the American economy. It was the Second World War in Europe and the Pacific that generated the rebirth of American industry. When WWII Micro-Cap Review Magazine

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ended and the modern atomic age began, the United States entered it at the top of the economic power chain, with the Soviet Union running a distant second. American business and finance had been the world engine of economy until the collapse in 2008. That almost-sixty-year history of constant economic growth and development, with an occasional recession here and there to readjust for inflation, created an economy built on an illusion—a fantasy, as I’ve described in earlier articles. As the private housing market boom occurred and wealth increased for the middle class through the post-War years, we did not see (or were willing to acknowledge) that we were heading towards a financial structure in which the illusion of wealth would finally collapse, as it did, plunging the world in to deep recession if not another Great Depression.

In the incredible expansion of business and finance, Americans began to believe that the illusion was true. The events of 2008 left the country divided between the rich and the incredibly shrunken middle class, and the unemployed or underemployed working class of American society. As a country, we now look much more like the other economies of the world, which are divided between the rich and the poor without a significant middle class. It is our middle class that has always been the key to the development of our country. This analysis is only the background to the impact of the loss of income and employment for the American economy of post-2008. The challenge we face is how to begin again, to rebuild our individual lives and private fortunes so that we avoid building towards collapse in the beginning.

There has been a great amount of study regarding the success of the German postwar industrial boom and the Japanese industrial recovery, along with that of the United States, all beginning at approximately the same time. Among them, one common thread in both German and Japanese industries is the unique understanding that in their culture, the business or industry is

like a large extended family, and so there is mutual responsibility for both labor and management to work together in order to create a productive, economic environment.

Their economies were an extension of the cultural development begun in the Middle Ages in which all industry was seen as a support for family, and all family was seen as a support for industry. The modern replication of that, both in Germany and Japan, extended to a shared concern for the well-being of the worker and the investor as family members of the business or industry in which they were involved. In America, the tradition being much more individualistic and based on the capitalistic premise of individual competition to secure one’s position, led to the fundamental belief in this country that you succeeded and were successful based on your own merits, so that management and labor were usually seen as contending factions in which the managers had no concern for the laborer and vice versa, so that we ended up in the kind of conflictual relationship between unions and industry that is so prevalent today. The problem with this divide is that conflict is the basis of business relations and employee relations, and the cooperative values which really serve both groups are not found. Whether the subject is health care, pension, retention of labor, or definition of merit, most discussions are begun in an atmosphere of conflict rather than in an atmosphere of true cooperation.

Since the housing disaster of ’08, it has become clear that the admonition “caveat emptor” (buyer beware) was not only in full force but was fundamentally inoperable because individual familial decisions were not provided with adequate information to understand the risks they faced. This has only added to the feelings of anger and of betrayal and mistrust that pervade so much of American society toward the business and government.

We are just at the beginning of a recovery, and now must question how to begin it. If we look back at the way we began in the 1930s and 1940s, we can understand

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where we went wrong and how it led, sixty years later, to the collapse that we now lived through. All of us who are within are own employment and work settings need to be conscious of how we begin to rebuild ourselves based on the kind of model that would lead us to be the kind of people that we would like to be. There’s nothing wrong with aiming towards financial well-being, but we now should know not to do it at the expense of either individual or business ethics which will, in fact, only lead us back in to the same trap. This means that each of us must first look to our own houses—the businesses of our family, and how in them, we lost sight of the very values that would have kept us from being trapped, while at the same time looking at the industries in which we work and asking the same kinds of questions. We can tell that any return to “business as usual” will, in fact, quickly lead us back in to the same cul-de-sac that we are in now.

There are several ways that we can begin this reassessment process. One is to ask the question, “What are we working for?” What are the values and goals that make up our ambitions in work? We need to find out where they have been out of balance and have not served the best interests of the family as a whole and the individual members of our family. There is frequently a large divide between the values we say we espouse and the way we behave. Usually, our behavior is a better indicator of the values that we hold rather than the words we say. It is not an easy task to find the divide between the words and actions, especially when we would like to think of ourselves as people of ideals. This is where it is important to sit with members of the family who both can and will talk these issues out, to arrive at a deeper consensus of the role of work and the way it is enacted; the role of money, how it is acquired and spent, says a lot about what you really hold to be of greatest value. Reviewing family time and how it is created and spent will also tell you a great deal about the way you value family/personal time versus work

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A SNN INcorporAted ANd MIcro-cAp revIew MAgAzINe Survey on behalf of you, our subscribers and readers, additional information about companies in this issue will be forwarded to you by checking the box and submitting your request. Information will be forwarded to you by mail or email. q AdvaMed q Advaxis q Are You DTC Eligible? q Ask Mr. Wallstreet - When did I Become a contrarian q Atossa Genetics q Beginings & Endings - Rabbi Stephen Robins q BioInvest Israel q Biotech Supermen & Superwomen - Teresa Touey q Brazil Resources q Cambridge House International q Capital Markets Visibility Program q Cardium q Caregiving - Elenor Vera q Caveat Emptor q Chinese Public Companies - Lance Jon Kimmel q Cream Minerals q Darwin Resources q Do You Wrap q DynaResources q eCheck q Firemans Brew q Global Minerals q Grizzly Discoveries q Hard Assets q Harris & Harris Group q How to Hedge - Lindsay Hall q Inovio q Internal Fixation Systems - Cover Story q International Stock Exchange Executives

q Investor Uprising q Is Anything Predictable - Dr. Grodon Chiu q Marfil Mines Ltd. q Mawson Gold Finland q Mergent q Metal Market Overview 2011 - Chris Berry q Micro-Cap Investing - Ian Ellis q New Merriman Capital q NIBA q Oak Street Securities q Ombudsman q Omega P3 q Oppportunites in Junior Explorers - Brent Cook q Oswald & Yap Lawyers q Pacific Rim Chamber of Commerce q PR Newswire q Profit Planners Management, Inc. q Rye Patch Gold q SNN is to Micro-Caps - Bobby Kraft q SNN Micro-Cap Visibility 365 q Soltoro Ltd. q Streetwise Reports q Tasman Metals Ltd. q The Compliance Corner q Value Beyond Profit q Virtual Retail Investor Conference q Wallstreet Chicken q What’s Really Going on with Rare Elements - Jeb Handwerger

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

1. did you sell your equity positions in stock and buy physical gold or silver in 2011? q Yes q No q Bought more equities 3. Are you an accredited investor? q Yes q No 5. which of these choices contributed to your biggest win in 2011? q Gold hit new high q Silver hit new high q Copper traded higher q Rare earth elements traded higher www.stocknewsnow.com • www.snnwire.com • www.microcapreview.com

2. did you sell equities in your portfolio to buy gold or silver common stocks? q Yes q No 4. did you participate in any private placements, registered direct investments or pIpe’S in 2011? q Yes q No 6. What was the heaviest weighted sector in your portfolio at the end of 2011? (can be more than one) q Biotech q Med-Tech, Devices or Diagnostics q Resources q Oil & Gas q Alternative Energy or Green Tech q Technology

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8. do you participate in the ForeX markets? q Yes q No q Not familiar with FOREX markets q I am interested and would like to know more

7. Now that 2011 is over what would you have done differently? q Bought more micro-cap stocks q Bought less micro-cap stocks q Bought more precious metals (not the stocks) q Sold everyhting

10. do you subscribe to paid for research or newsletters? q Yes q No

9. How many Free newsletters do you subscribe to? q 1-5 q 6-10 q Too many to count q None 11. Have you subscribed to the online Micro-cap review magazine? q Yes at www.stocknewsnow.com q Yes at microcapreview.com q No not yet q I like to read the hard copy

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

check off areas of interest: q Diamond Mining q Aerospace q Digital News q Accounting q Digital Platforms q Alternative Energy q Direct Marketing q Auto q Diversified Investments q Banking q Drilling q Basic Minerals q Education q Beverages q Electronics q Biotech q Energy q Bullion q Energy Products q Business Services q Entertainment q Chemicals q Finance q China q Financial Trade Shows q Clean Energy q Food q Communication q Franchisor q Construction q Gaming q Consulting q Consumer Products q Gold q Gold Producer q Consumer Services q Green Technology q Currencies q Healthcare q Defense

q Industrial Goods q Industrial Metals & Minerals q Information Technology q Insurance q Junior Gold De veloper q Junior Gold Producer q Legal q Life Sciences q Manufacturing q Marketing q Media q Medical Devices q Medical Diagnostics q Medical Fund q Medical Practice Factoring q Metal Exploration q Oil Drilling q Oil and Gas q Oil and Gas Fund

q Online Social Network q Organic q Pharmaceuticals q Publishing q Rare Earth Elements q Real Estate q Resource Exploration q Retail q Security q Silver q Social Network q Transport q Travel q Uranium q Veterinary Products

and Services

q Web Software q Wellness q Wireless Communications

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time. Frequently, all family events are sacrificed for the needs of work. This becomes a fundamental value that leads to a habitual treating of family needs as a distant second, third or forth to work. Looking at what gives you a sense of value in your life—family versus work—leads to an honest appraisal of the balance between them and is usually very enlightening, though difficult to face at times.

These are a few simple suggestions of how to begin the process of assessment before you even begin to plan for the beginning, leaving behind what is truly in the past and not carrying it over with you in to the present and the future.

In the business setting, a similar process can be applied by anonymous questionnaire given to the employees, which can help you assess the way they see the company and its operations. Such questionnaires are now professionally done and handled by the internet in such a way that anonymity is assured. This can give you a very detailed view of the psychosocial climate in your business. It is important in the beginning of every new project to forecast what it will take to accomplish the stated goals. New enterprises are expected to be handled as

part of the regular flow of business, which then adds enormous stress to the employees.

Preparing for this in advance will obviate the kind of traumatic impact that new work usually brings with it.

There are many other ways in which one can assess the climate of your business and work setting so that you are able to be a positive agent for change rather than being seen as a complainer and resister to the work of the company. Ultimately, we all must learn that the productiveness is based not in the product which is manufactured, but in the workers which produce and sell it. They are the most important asset in any business, and therefore need to be treated as such in a reasonable fashion. That will take care of both the business as well as the family of workers. Employees and colleagues have complex social and emotional relationships, filled with the greatest of friendship and the bitterest of resentment. Employees who gossip about other co-workers create a profoundly unsafe environment for everyone and engender counter-gossip that sets up an ongoing atmosphere of conflict and mistrust. Ending gossip in the business setting is so beneficial because it creates an environment in which people feel safe to do their

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work, without exposing all of themselves in order to be accepted by their co-workers.

Last of all, many employees have no personal investment in the work they do, other than the paycheck they receive. That attitude demoralizes even the committed workers and creates a careless environment in which the primary and formal relationship is one of perceived danger. If you have a business environment in which everybody pulls on the same end of the rope because they feel safe, included and cared for, then you begin the rebuilding of your enterprise with this perspective. I wish you all healthy, prosperous and productive beginnings. n

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

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

International Stock Exchange Executives Emeriti to Meet in Orlando

T

he International Stock Exchange Executives Emeriti (ISEEE) will hold their fifth annual meeting March 25-28, 2012 at the Royal Plaza

Hotel in Orlando, Florida according to Jim Schnorf, President of Wall Street Strategic Capital, Inc. Jim Schnorf, who has served as the host of the forum since its inception in 2008, indicated there will be a record turnout of current and former senior stock and derivative exchange executives in attendance. “Don Calvin, a former top NYSE officer and Advisor to more than 25 Chairmen and CEO’s of exchanges around the world, has been the impetus behind starting the organization and growing the event each year, and has arranged for a significant number of new countries and to be represented this year in Orlando.

Wall Street Strategic Capital (www.wsscapital.com) is thrilled to have the privilege of not only welcoming back a large number of distinguished current and former exchange officials who have attended in the past, but also to welcome a large contingent of new current and former senior exchange executives from multiple continents”, said Schnorf.

The ISEEE (www.capitalmarketexperts. net) is a New York 501(c)3 not for profit educational organization that was established to provide current and former stock exchange chairmen and CEO’s from around the world an opportunity to collaborate on matters including issues and challenges facing the various exchanges, discuss best practices, review trends and concerns in the

respective countries and economies, and make recommendations that are passed along to relevant regulatory and legislative bodies. According to Schnorf, the ISEEE has not only issued insightful recommendations on matters such as urgent capital market reforms that are needed, but also launched the “Small Business Task Force” which is headed by David Weild, former Vice Chairman of NASDAQ. Both Calvin and Schnorf are members of the Task Force, along with a small group of other ISEEE participants. “Don Calvin once again was the inspiration behind starting the task force, an idea that was immediately embraced by the entire ISEEE membership. David Weild made a compelling presentation to the group that stressed the decline of the small cap IPO market in the U.S., as well as the alarming reduction in the number of small cap listed companies. Don felt that the ISEEE would be the perfect group to tackle this issue and the task force was put in place with Dave agreeing to serve as Chairman.

Substantive progress has been made including not only providing specific recommendations to regulatory authorities, but also creating awareness among key U.S. Senators and Representatives about the alarming situ-

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ation with the small cap market in this country”, Schnorf indicated. The ISEEE website includes the “Orlando Declaration” and a summary of the most recent meeting held in March, 2011 as well as a list and short biographies on the members of the ISEEE. This March there will be current and former executives from the NYSE, AMEX, NASDAQ, National Stock Exchange, and the Chicago Board Options Exchange from the U.S., as well as the Toronto Exchange from Canada. From South America there will be attendees that have served in executive level exchange and securities capacities from Brazil (Bovespa Exchange) and Peru. From Africa there will be officials that have served on behalf of the Cairo and Alexandria Exchanges in Egypt, as well as the Johannesburg Exchange. From Europe there will be senior exchange officials that have served on behalf of the London Exchange, Istanbul Exchange, Dubai and Abu Dhabi markets, the Zurich Exchange, the Dutch Boerse, the Stockholm Exchange, the German markets, Malta Stock Exchange, the Luxembourg Exchange, Vienna Stock Exchange, the Prague Stock Exchange, and the Borsa Italiana. In regards to Asian exchanges there will be attendees that have

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“Given Shelly Kraft’s passion for the micro-cap and small cap markets, as well as his knowledge of both U.S. and foreign markets and his relationships with thousands of public company executives over the years, we felt SNN was the perfect choice for our event.” served as executives for the Hong Kong Exchange, the Moscow and Kazakhstan markets, and from Malaysia/Kuala Lumpur. In addition, executives that have served the Australia and New Zealand exchanges will also be in attendance. Two Vice Chairmen, Robert Aber (former General Counsel for NASDAQ) and William Foster (former CEO of the New Zealand Exchange and Chief Operating Officer of the Abu Dhabi Securities markets) who is currently an Advisor to the new Cambodian Exchange will also be attending. Special guests will include among others Stanley Sporkin, the legendary Director of Enforcement at the Securities & Exchange Commission and former Federal Judge and General Counsel to the Central Intelligence Agency. Schnorf indicated that since the size of the group has grown to such a significant number of attendees, it is now impossible to schedule dates even a year in advance that will accommodate all members’ schedules that want to attend. For this upcoming conference the former CEO of Eurex and the Berlin Stock Exchange, as well as the former CEO of the European Options Exchange, have conflicts and will not be able to participate, he said.

The ISEEE has chosen SNN Inc. to be the official media sponsor for the event.

In addition to covering the forum, Shelly Kraft, SNN founder and CEO, will also be conducting SNNLive interviews of many of the ISEEE officials which will be aired on www.stocknewsnow.com , and SNNLive TV. Micro-Cap Review magazine www.microcapreview.com will be at the conference and will carry coverage of the event in a magazine article in its quarterly issue. Schnorf

said, “We are very pleased to have SNN as the media sponsor for this prestigious event.

Given Shelly Kraft’s passion for the microcap and small cap markets, as well as his knowledge of both U.S. and foreign markets and his relationships with thousands of public company executives over the years, we felt SNN was the perfect choice for our event. I know I speak on behalf of all of the ISEEE attendees in expressing our excitement of having SNN serve in this capacity”.

Last year Schnorf arranged for the newly elected Governor of Florida, Rick Scott, to attend the event and meet with the ISEEE participants. Among topics discussed was the prospect of potentially creating an “international financial center” in Florida.

“The Governor was extremely interested in not only meeting this highly distinguished group of international financiers, but in also hearing recommendations as to how Florida could benefit from their experience, relationships, and past successes in their respective geographies. In addition, these are all very influential people in their respective countries, so the opportunity to further establish business relationships and strategic partnerships was clearly part of the agenda.

Governor Scott, with his successful business background, clearly recognizes that two of the major impediments facing business today are lack of capital access, and excessive government regulation. He is clearly committed to resolving both of these issues on behalf of the State of Florida, and the fact that he changed his schedule on short notice to come from Tallahassee to meet with this group is indicative of his commitment to these initiatives. Small business is where

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jobs are going to be created in the future, and these are probably the two largest issues facing job growth. Clearly the lack of capital, especially in Florida where in years past in excess of 95% of venture capital invested in Florida came from outside the state, is an urgent issue that has to be addressed”, Schnorf said.

Although the forum is not open to the public, Schnorf has indicated there is an opportunity for a small number of highly relevant firms to attend one or more of the events as a lunch or dinner sponsor, which would include an opportunity to meet the ISEEE attendees and make a brief presentation about their firms. The forum begins with a welcoming dinner on March 25, with technical meetings, a luncheon and dinner on March 26, technical meetings, a luncheon, and a reception (which will include Orlando area senior business and political attendees) on March 27, and technical meetings and a farewell dinner on March 28. The Small Business Task Force will also meet on March 25. On March 26, the keynote dinner speaker will be Professor Melvin Escudero, the former head of the Peru Pension System who will discuss the rapidly growing Andean Stock Exchange. The March 27 luncheon keynote speaker will be Mohamed Abdel Salam, Chairman and CEO of the Egpytian Securities Exchange and Vice Chair of the Arab Stock Exchange. Firms that have an interest in participating can contact Jim Schnorf, jschnorf@wsscapital.com. n

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

Do you WRAP?

S

ocial media, branding and email are all very current topics in today’s business world. It is believed that the largest internet advertising venue

of all is emails.

Email, however, is largely ignored and NOT being used to advertise/promote! Everybody sends email regularly and just about everybody has a website, Whether corporate or a social networking site. Ordinarily a company does its utmost to build its brand and as an example let’s remember Gateway computer that decorated its shipping boxes with cow skin prints. We all remember that don’t we? As the only computer company that did this “out of the box” or in this case “on the box” advertising, it miraculously differentiated its computers from all of its competitors simply through its packaging!

WRAPmail providing the wrapping of emails is marketing outside the box or in this “inside the box” marketing. WRAPmail is a very unique “cloud” marketing design to wrap average everyday ho hum email, you know, plain vanilla bare bones into a distinctive and unique advertising and marketing venue called WRAPmail. . WRAPmail is a revolutionary email technology platform that seamlessly allows its users to transform their everyday emails into an effective marketing program to promote their brand and recognition, drive traffic, conduct market research and potentially increase sales.

WRAPmail’s patent pending cloud based technology wraps outgoing emails with images and links that are used to promote, sell and advertise the sender’s brand, product or services. The technology authenticates the wrapped emails, maintains design integrity and ensures images are securely delivered to the recipient’s inbox.

Competitive Advantages

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WRAPmail’s user friendly web-based dashboard (screenshot) allows its users to define rules to be set such as: assigning specific wraps for specific senders or assigning specific wraps for specific recipients, wrap rotation, dynamic rotation of images in a wrap and/or live data feeds. Clients can include or exclude senders to wrap and also exclude recipients from being wrapped.

In addition, the email owner is able to easily track and analyze clicks through individual text or image links and generate comprehensive user friendly reports containing data of who is clicking on what and when as well as analyze a particular link’s performance. This data is also available in real time via email or SMS alerts.

such as Outlook, Thunderbird, MAC Mail, Entourage, and Lotus Notes and can be used with Google Business accounts and smart phones, including the iPhone.

Creates powerful new and incremental revenue streams from existing or new sources by simply sending every day, routine email.

Rich functionality that allows users to track and analyse email campaigns Revenue opportunities through third party participation, via sponsored messages, selling advertising space or pay per click campaigns.

Targets one-to-one emails, a new unexploited market Viral service offering, where users beget new users

Growth Opportunities WRAPmail’s competitive advantages are numerous because it is the first to introduce this proprietary technology to market.

These include: Industry pioneer with patent pending technology.

Google solutions provider Well designed, user friendly interface Seamlessly integrates with all major webbased email providers and email clients

According to a Radicati Group study the number of worldwide email users is projected to increase from over 1.4 billion in 2009 to almost 1.9 billion by 2013. In 2009, 74% of all email accounts will belong to consumers, and 24% to corporate users.

Worldwide email traffic will total 247 billion (update numbers and year) messages per day in 2009. By 2013, this figure will

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

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almost double to 507 billion messages per day.

In 2009,(update) about 81% of all email traffic is spam meaning the remaining 96 billion emails sent daily in 2013 will be one-on-one.

For perspective, there are approximately 1 billion search queries on Google per day. In addition, Google generated revenues of $9 billion in the second quarter of 2011 through paid and pay per click advertising, such as AdWords and AdSense.

Revenue Model

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WRAPmail’s goal is to grow revenue through implementing a diverse advertising based revenue model like Google, Twitter, Facebook, LinkedIn and Skype. In addition, WRAPmail intends to offer a revenue share model, similar to Google’s AdSense, for example: plan an affiliate program to motivate students to sign up other students under the slogan “Make money with every email you send anyway”.

WRAPmail projects a 0.1% market share of all daily emails by 2013. Using 2010 data this equates to 470 million emails per day. If 1% of these recipients click on a 3rd party advertisement, this would represent 4.7 million unique clicks and the market rate for clicks revenues could increase dramatically.

Please note that it is common for advertisers to pay in excess of $1 per click using Google’s AdSense and other PPC advertising platforms.

WRAPmail does not focus on mass emails, but rather, WRAPmail targets on one-to-one emails, a market that is practically untouched.

WRAPmail, Inc. is a publicly traded company and the stock symbol: WRAP, and was incorporated in 2005. WRAPmail is a leading provider of dynamic, interactive email branding and marketing solutions.

In summary or to WRAP up, WRAPmail is a viral and user friendly catchy method to brand email communication. CEO Rolv Heggenhougen_developed this product with his own needs in mind.

Once developed, WRAPmail caught on from his own outbound emailing proof positive of his products value. Now it’s all about market awareness and gaining market share and according to Rolv that too is a WRAP. n

(*coming soon)

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Where experts speak and investors prosper.

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

Are You DTC Eligible?

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

WHO CONTROLS DTC ELIGIBILITY? The Depository Trust Company or DTC was established in 1973, as a result of the “Back Office Crisis” or “Paper Crunch” caused by the over 400% increase in daily volume of the New York Stock Exchange from 1960 to 1968. During 1969 the inability for some brokerage firms to settle transactions created enormous backups in deliveries, so that underperformed obligations could range from 70% to over 200% of a firm’s total assets. As the market turned downward in 1970 over 100 brokerage firms went bankrupt or were acquired by stronger competitors due to their inability to maintain sufficient working capital. Basically, brokers could not process the paperwork connected with the settlement of the growing number of exchange transactions. Several memorable changes came out of this era. Most notably are the Securities ACT of 1975 and the SIPC, (Securities Investor Protection Corporation). The most important changes may be the least remembered: the formation of the DTC, the concept of net settlement and the ability for electronic settlement of trades.

DTC ELIGIBILITY FOR MICROCAP & SMALL CAP ISSUERS For some companies listed on the Over the Counter Bulletin Board or the Pinksheets the process of gaining DTC Eligibility can be difficult if not impossible, especially for a company that went public on its own, without an underwriter or DTC Member Clearing Firm. In these situations, management usually relies on the corporate attor-

ney, accountants or transfer agent for advice and help. Perhaps the management team has a relationship with a local brokerage firm, but that is not sufficient. The answer lies in having a relationship, specifically with a DTC Member Clearing firm.. Becoming DTC eligible allows for trades conducted in the company’s stock to be settled continuously and electronically.

Potential investors in small cap companies often require that the shares of common stock of the Issuer be available for electronic transfer via the DWAC system (Deposit/ Withdrawal at Custodian). In order for an OTCBB Issuer’s shares of common stock to be available for DWAC (electronic issuance or electronic transfer), the Issuer must be DTC eligible. In fact, some PIPE investors may inquire about an Issuer’s DTC eligibility status even before they inquire about future revenue projections.

The insistence by shareholders and potential investors on the need for electronic transfer has become even more apparent since a recent announcement by a leading clearing firm with regard to securities that trade under $.10 per share. Due to inherent volatility in low priced securities and the concern of illiquidity in such securities coupled with the fact that regulations are more focused on the deposits of physical certificates of Pink Sheets or OTC Bulletin Board companies have prompted some clearing firms to no longer accepts deposits of equity securities priced below $0.10.

to as “chills” that DTC places on a relatively small number of eligible securities. A chill is a special restriction that can be placed on a given security by the Depository Trust Company. Chill restrictions are intended to limit the potential for problems within the financial marketplace, and can be placed on a security for various reasons. An issuer will often need to engage an attorney or work with various consultants who have significant experience in working with DTC. At times, the solution for having a chill removed may be providing certain documentation and requested items to DTC while at other times the solution may lie in obtaining legal opinions regarding the eligibility of certain shares of common stock.. In conclusion, as a private company with hopes of going public, or as a public company looking to trade on the OTCBB, DTC eligibility will be a critical part of your existence and add value to your company. If you are a company that has just completed the going public process and have obtained a symbol from FINRA, then it is likely that time for you to consider the next steps towards obtaining DTC eligibility. n Lisa Loew is VP of Business Development for Vstock Transfer, a NY based stock transfer firm that offers Issuers online capabilities, cost savings and has assisted numerous public companies (www.dtceligiblity. com). Vstock Transfer (www.vstocktransfer.com) was founded and is managed by securities attorneys who, for the last decade, have also provided SEC EDGAR filing services, XBRL services, financial print and general corporate guidance to public companies and to private companies looking to go public. For more information please email info@vstocktransfer. com or call 212 828-8436.

HELP - I HAVE A DTC CHILL! DTCC has experienced an increase in the number of customer queries regarding transaction restrictions, generally referred

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PRoFILED ComPAnIEs

an emerging revolution in vaccine Development

I

novio Pharmaceuticals’ (INO) “Universal” Vaccines May Dramatically Alter the Prevention and Treatment of Influenza, HIV and Cancers; Novel Approach Now in Three Phase II Clinical Studies Before this decade ends, annual flu shots might become a thing of the past, and threats such as avian and swine flu might disappear with them. That’s just part of the coming revolution in vaccine development according to Inovio Pharmaceuticals, Inc. (NYSE AMEX: INO), which is advancing a whole new technology approach to the centuriesold idea of stimulating the immune system.

Do you use products today that rely on technology that is more than 50 years old?

That is precisely what we are relying on with conventional vaccines. They use weakened or killed viruses or parts of viruses as vaccines, which can cause the disease. Some are still grown in chicken eggs. Inovio is pushing the frontiers with its synthetic vaccine technology, a new approach to vaccine design, formulation, manufacturing, and delivery.

synthetic vaccines Conventional vaccines use a virus or part of a virus in order to expose a unique antigen, or foreign protein, to the body’s immune system so it can create immune memory.

Inovio’s “designer vaccines” just give the body the DNA instructions for the antigen so that its cells can produce the targeted antigen and nothing more.

The powerful benefit of conventional vaccines is that they generate the antibodies that prevent targeted diseases from infecting cells. Inovio’s SynCon® vaccines are also able to generate powerful T-cells to kill already infected cells. T-cells are considered vital to fighting cancers and chronic infectious dis-

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eases such as HIV and hepatitis C. There is another key difference in Inovio’s quest to revolutionize vaccines. Conventional vaccines are essentially “one drug for one bug.” The vaccine must match the virus that it is intended to protect against. Inovio’s SynCon® vaccines, designed using genomic engineering, fight changing, unmatched strains of diseases such as HIV, hepatitis C, HPV, and influenza. They also offer the prospect of breaking the immune system’s tolerance to cancers.

cLinicaL resuLts Inovio has strong data to back up its enthusiasm, showing best-in-class immune responses from recent clinical studies: • Unprecedented T-cell immune responses reported in two separate phase I studies: one for cervical dysplasia and another for HIV. These immune responses were long lasting, being measured for up to two years in the cervical dysplasia study.

• Significant clearance rate (83%) of hepatitis C virus vaccine (in conjunction with standard of care) in partnered phase I clinical study. This compares to a 40%-50% clearance rate for the standard of care alone.

• Avian influenza vaccine generated HAI titers (a measure of potential immune protection) in human subjects against six different, unmatched strains of H5N1 - a distinct new clinical achievement on the global research community’s path to develop universal influenza vaccines.

• Animals vaccinated with an H1N1 influenza vaccine designed in 2007 demonstrated protection against unmatched 1918 pandemic H1N1 and 2009 swine flu strains.

Human data is to be reported in Q2 2012.

• Synthetic vaccines for influenza Type

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The Silver Summit | October 25-26, 2012

The Silver Summit | October 25-26, 2012 The Silver The SilverSummit Summit| |October October25-26, 25-26, 2012 2012

The The Silver Silver Summit Summit || October October 25-26, 25-26, 2012 2012 Here are some of them: absorb dynamic advice from our lineup of more than 50 World-class investment Experts! Here are some of them: absorb dynamic advice from ourour lineup of more than 5050 World-class them: absorb dynamic advice from lineup of more than World-classinvestment investmentExperts!

Experts! Here Here are are some of them:

absorb dynamic advice from our lineup of more than 50 World-class investment Experts!

absorb absorb dynamic dynamic advice advice from from our our lineup lineup of of more more than than 50 50 World-class World-class investment investment Experts!

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Mickey Fulp

Marin Katusa

The Mercenary

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Doug Casey

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International

The Silver Investor

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David Coffin

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worked with big pharmaceutical companies and been instrumental in taking multiple drugs and vaccines through clinic trials to commercialization.

Inovio’s synthetic vaccine pipeline targets multi-billion dollar therapeutic markets with unmet needs such as cancers, HIV, and hepatitis C virus, and offers significant opportunities for new preventive vaccines against infectious diseases that change rapidly or have unmet needs.

Inovio is advancing with a sense of urgency to develop and commercialize synthetic vaccines to prevent and treat cancers and infectious diseases, with key milestones during 2012. The company expects to report influenza data from two human studies in the first half of the year and interim data from two Phase IIs for hepatitis C and leukemia in the second half.

The first reporting of human data over the past two years has met with progressive success. With continuing positive advancement, we may well look back on the current time as the emergence of the “era of synthetic vaccines.” n A H3N2 and Type B achieved protective antibody responses in immunized animals against multiple unmatched strains, further validating the potential for a universal influenza vaccine, which Inovio anticipates testing in a clinical study in 2013.

Industry & Scientific Recognition Just in the past two years Inovio has witnessed growing recognition for its work to develop and commercialize synthetic vaccines, including:

The Philadelphia Business Journal CLARUS Award -- Given annually to publicly traded companies possessing marketchanging intellectual property assets -- from MDB Capital Vaccine Industry Excellence Award: “Best Early Stage Biotech,” presented at the World Vaccine Congress “Future Leader of the Biotech Industry”

by BioCentury Publications MIT’s Emerging Technologies Conference, Keynote Speaker on Synthetic Vaccines

Talent and Promise

National Institutes of Health “Director’s Transformative Research Award” for Inovio’s “universal” influenza vaccine, VGX-3400 -from the Office of the NIH Director Most Promising Therapeutic Vaccine: (VGX-3100, cervical cancer) -- from Fierce Vaccines Life Sciences Company of the Year – from

Inovio’s management and scientists possess decades of experience in cutting edge R&D and clinical development of immunotherapies. Dr. David Weiner, a University of Pennsylvania professor and Chairman of the company’s Scientific Advisory Board, is a pioneer of synthetic vaccines. CEO Dr. J. Joseph Kim is ex-Merck. Management has

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

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

A

desire to help millions of critically ill refractory epileptics –the 30 percent of epileptics whose seizures can’t be controlled by oral medications – has led to the development of a medical technological approach that world-renowned neurosurgeons and neurologists are calling transformative.

The expected worldwide impact of this treatment, developed by Colorado psychiatrist and neurosurgeon, Dan Abrams, founder and chief executive officer of ICVrx, LLC, has the ardent support and guidance of an assemblage of world leaders in the fields of medicine, pharmacology and business.

Abrams explained that some patients with refractory epilepsy may experience 25 seizures daily. “They worry about dying every single day of their life. They can’t work, can’t live predictable lives. It’s not really living,” also, efforts to stem seizures with oral medications cause other problems. The drugs diffuse through the body and, while nontoxic to the brain, often are toxic to other organs. This new medical approach – using programmable pumps implanted under the skin to transport ICVrx reformulations of anti-epileptic drugs directly to the brain – has also resulted in a feel-good business opportunity.

Abrams says the Company is involved in doing “something important for humankind,” for the epilepsy patient population, which is larger than all sufferers of multiple sclerosis, Parkinson’s disease and brain cancers combined. The market share for ICVrx’s epilepsy therapy, along with a future depression therapy, has an estimated $4 billion drug market potential in the underserved initial target markets. ICVrx, a private company founded in 2010, with plans to become n By vIRgInIA gRAnTIER

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a public company, is essentially creating a new treatment category for brain diseases by reformulating available drugs into medicines that are safe for direct-to-brain delivery – and epilepsy is only the first target.

Neurosurgeon Ali R. Rezai, the incoming president of the Congress of Neurological Surgeons, a lead investigator on Medtronic’s Deep Brain Stimulation for depression study and professor and chair of Neurological Surgery Research at Ohio State University College of Medicine, says “for those suffering with common chronic neurological disorders, ICVrx’s innovative targeted therapeutic approach provides a new hope and the potential to live with better quality of life and functioning.”

Rezai also commented that the ICVrx team is “ highly qualified, motivated and innovative”.

ICVrx’s concept “is a game-changer,” said Elad Levy M.D., one of a world-renowned group of New York neurosurgeons responsible for transforming treatment of brain vascular diseases. “ICVrx’s approach uses simple surgical techniques, in combination with available medications, to effectively treat epilepsy that does not respond to standard medical therapy.”

Abrams said that the market has been historically hesitant to invest in medication development because of the time and expense involved in today’s regulatory process. But ICVrx has a different scenario. “ICVrx anticipates revenues beginning in 2014, with a projected budget of less than 10 percent of the cost currently estimated for new drug development.”

There are several reasons for that: ICVrx’s licensed reformulations use currently approved FDA drugs that are compounded by pharmacists under special order from treating physicians. The pharmacy

Dan Abrams, founder and CEO

physician-patient relationship is primarily state-regulated, resulting in significant reductions in expense and time to market. ICVrx already has conducted preclinical work with promising results, and has approval to begin human studies. In addition, pumps, which are used for drug delivery, are available off the shelf, and specialty pharmacies are in place to prepare the drug formulations. The partnering specialty pharmacies will develop relationships with treating physicians using consultative medical professionals.

“I am excited about the ICVrx vision,” said Steve Adler, president and CEO, Medasys, Inc., one of several companies that will manufacture pumps. “The potential growth ICVrx offers to the pump market alone, from the current world-wide implantable pump market of approximately $600 million revenue… expansion into the epilepsy market should grow the pump market to well over $1 billion globally.”

The ICVrx drug reformulation/licensing approach reduces cost and time-to-market, and is a business strategy that distinguishes ICVrx from traditional pharmaceutical companies. The Company has attracted interest from the investment banking community for several reasons: the business model, the significant unmet medical need, the market size and the projected profit margins.

Abrams said that upon adequate funding, the Company targets having epilepsy drugs available for needy patients through pharmacy licensees by Summer 2014. ICVrx is planning to protect its portfolio of intellectual property by patenting its epilepsy therapy, along with future therapies to combat diseases such as depression, diabetes, and schizophrenia, to name a few.

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Warren Lammert, chairman and cofounder of the Virginia-based Epilepsy Therapy Project said recently that, “ICVrx’s team has a remarkable and broad range of expertise and accomplishment in research, therapeutic development and patient care.”

The ICVrx team includes world leaders in medicine and business: 1) ICVrx Advisor Robert Fisher, M.D., professor of neurology and director of Stanford’s Epilepsy Center, lead investigator on Medtronic’s Deep Brain Stimulation Trial for Epilepsy and former president of the American Epilepsy Society; 2) ICVrx Manager Larry Fenster, M.B.A., has 20 years of experience in early stage/startup companies including merger, acquisition and turnaround and 12 years as a Fortune 500 company executive; and 3) ICVrx Advisor/ Board Member Stephen J. Farr, Ph.D., with 15 years of experience in public and private management of pharmaceutical companies, i.e. Zogenix Inc. and Aradigm Inc. and is an expert in central nervous system drug and device development.

“Dr. Abrams, CEO, is the former head of neurosurgery at St. Joseph’s Hospital in Denver and has put together a great team of neurosurgeons, epilepsy physicians and neuropharmacologists to bring this project to fruition,” Fisher said recently. “Dr. Ashwini Sharan is a highly experienced functional neurosurgeon expert in new technologies to treat epilepsy who was a valued collaborator on a new treatment using electrical deep brain stimulation. Dr. Leppik is one of the world’s foremost experts on pharmacology of antiepileptic drugs, as well as a great epilepsy clinician, and the past president of the American Epilepsy Society. Dr. Farr is a Ph.D. pharmacist and drug delivery expert, with unique experiences in founding and holding high-level management positions in pharmaceutical companies with innovative drug and device combination products as its core business.

“This is a group of experts in their respective fields that has the enthusiasm, capability and synergy who will make this company a success,” said Dr. Fisher, who has won

numerous research awards. Dr. Fisher is a recipient of the Ambassador Award from the International League Against Epilepsy and has been listed in “Best Doctors in America” annually since 1996. Dr. Fisher is editor in chief of epilepsy.com and his research focuses on new treatment devices for epileptics. Dr. Fisher said he is “very hopeful that the intraventricular approach of ICVrx will provide a high, steady level of drugs where they are needed to stop seizures.”

Dr. Abrams, a clinical assistant professor of psychiatry and neurosurgery at University of Colorado Medical School, stated, “ICVrx’s business plan is unique, in the current market, enabling management the potential to provide a promising answer for many suffering patients in a relatively cost and timeefficient manner.”

To learn more about ICVrx, go to ICVrx. com.

ICVrx technology development began in 2005 at the University of Colorado from the disciplines of neurosurgery pharmacology, medicine, psychiatry and neurology. Since that time the company has refined its business model, licensed the intellectual property from the University of Colorado, and moved from the earliest animal stage studies into clinical studies.

ICVrx has attracted investors such as the Epilepsy Therapy Project, a non-profit organi-

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zation dedicated to accelerating new therapies.

The diagram shows an implantable pump, as it will be used for brain drug administration, with ICVrx patentable formulations. The FDA-approved intrathecal pumps already have 22 years of proven safety and efficacy in spinal drug delivery. Installing the pump, manufactured in the U.S., is a 40-minute procedure that neurosurgeons already are trained to do and is easily reversible. Recuperation time is about one day.

The pump and catheter will be placed under the skin in a brief surgical procedure that is a standard and widely practiced neurosurgical procedure. The pump is filled with medication every three months in a 10-minute office procedure. ICVrx’s brain-drug administration combines use of currently available drugs with available hardware for refractory brain diseases. ICVrx has developed drug reformulations for refractory central nervous system diseases including epilepsy, depression, posttraumatic stress disorder and schizophrenia. n Virginia Grantier is an award-winning journalist based in Colorado who has researched and written about health and medical developments as well as a variety of other areas. She has worked as an editor, but most of her career has been spent as an enterprise reporter covering government, education and public safety for numerous newspapers including The Denver Post.

Disclaimer: This corporate profile is based upon information provided by a company representative.

The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy securities. It is intended for information purposes only, and to increase awareness of the company profiled.

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

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LEgAL • TAX • ACCoUnTIng

The Compliance Corner Regulatory Notice 11-54

R

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

Please note that this notice also includes a “NATIONAL RISK EXAMINATION ALERT”, in Cooperation with the SEC “Office of Compliance Inspections and Examinations” (OCIE). It appears that FINRA is reverting to some of its old tricks of the trade…enforcing notice to members as though they have the impact of rules.

In this case, I believe FINRA is doing the industry a favor. When many of the new rules were drafted, commented and enacted, the idea of principle based regulation was alive and well. With the activities over the last decade, principle based regulation is all but dead and FINRA has seen the need to provide greater guidance on how firms interpret the many and various rules that broker-dealers must decide how to live with.

Regulatory Notice 11-54 is a good example of how this happens.

11-54 prescribes, “Incorporating findings on results of branch office inspections into appropriate management information or risk management systems; and using a

compliance database that enables compliance personnel in various offices to have centralized access to comprehensive information about all of the firm’s Registered Representatives and their business activities.

Such a system appears to be highly useful to the compliance personnel at the OSJ and elsewhere for quickly accessing information and for supervising independent contractor Registered Representatives dispersed across a broad geographic area.” This is an exact description of BDAudit©, our proprietary web-based system for conducting, recording, reporting and archiving branch office audits for offices of any description.

Below is the link to FINRA Notice 11-54: h t t p : / / w w w. f i n r a . o r g / I n d u s t r y / Regulation/Notices/2011/P125205 For a full seven page Report on Notice 11-54 by The Compliance Department, Inc, please contact: chebert@thecompliancedepartment.com.

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85

PROFILED COMPANIES

Marifil Mines Ltd.

(www.marifilmines.com)

San Roque Gold, Silver, and Base Metals, Rio Negro Province: San Roque is one of our flagship properties. San Roque is a very large sulfide system with disseminated and stockwork lead and zinc mineralization spread over an area of more than 12 square kilometers. This mineralization includes important amounts of gold, silver, and indium. Indium is an important component used in the manufacturing of flat screen TVs and in solar panels. The ore target at San Roque is a bulk tonnage deposit grading

perhaps +1% lead plus zinc, 0.3 to 0.7 grams per ton gold, 3 to 20 grams per ton silver, and 10 to 40 grams per ton indium.

Marifil has joint ventured San Roque with NovaGold Resources Inc. (NovaGold).

NovaGold has agreed to spend $9 million on the property to earn a 70% interest. During the earn-in period they will pay Marifil $100,000 per year. In March 2011 NovaGold completed its first drill program. This program hit several important intercepts as follows: DH MSR 0009: 120 meters at 1.16 g/t gold, 10.3g/t silver, 39 g/t indium, 0.43% lead, and 2.04% zinc which equates to 3.1 g/t gold equivalent.

DHMSR 0013: 144.5 meters at 0.20g/t gold, 25.5g/t silver, 5.1g/t indium, 1.25% lead, and 1.73% zinc which equates to 1.7g/t gold equivalent.

These are very significant intercepts that suggests that there is good potential for a large, bulk mineable gold, silver, and base metal deposit.

NovaGold subsequently completed a second round of drilling in October. Assays are expected to be provided in January 2012.

K-2, K-3, AND K-4 are our three potassium properties located in the Neuquen Sedimentary Basin straddling Neuquen and Mendoza Provinces. Potassium is an element that is essential for plant and animal growth. The market for potassium is huge and growing. Current prices are approaching $600 per ton and prices are expected to exceed $600 per ton in 2012. Marifil is very well placed to capitalize on this huge growing market.

Vale, the giant Brazilian mining company is currently spending $6 billion to develop the Rio Colorado potash mine in the Neuquen Basin. This mine has a resource of more than two billion tons of potash (KCl).

Marifil’s properties are in the same basin and are an extension of this giant deposit.

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Marifil is a junior mining company which trades on the Toronto Venture Stock Exchange under the symbol MFM. Marifil operates exclusively in Argentina.

Argentina is a large country with a modern mining law which offers secure tenure for mineral rights, has a transparent legal and accounting system, and is under explored.

Marifil has acquired a large portfolio of important precious metals, base metals, and industrial minerals properties. Our business model is to acquire properties cheaply, spend money on them to improve them, and then bring in larger, better funded companies to develop them through joint ventures, spin outs, or sales. In this manner Marifil is able to develop properties without diluting shareholders with constant equity sales to fund exploration. As a result, Marifil is now developing a significant cash flow from current joint ventures and expects to increase this cash flow in subsequent years.

This year the Company has realized more than $800,000 in property payments. This is unusual because this makes us one of the few junior mining companies in the world which has cash flow. In addition, over the next few years, our joint venture partners will be spending more than $13.8 million on our properties.

Property Highlights

Micro-Cap Review Magazine

K-2 Potash Property, Neuquen Province: Marifil’s K-2 potash property comprises 79,964 hectares and is close to the Vale property. Marifil geologists discovered this property by analizing electric and gamma ray well logs from abandoned oil well holes.

This work identified a large area containing more than 20% KCl at depths of 1,300 to 1,500 meters. This deposit could contain as much as 250 million tons of potash.

K-3 and K-4 Potash Properties, Mendoza Province: Marifils K-3 and K-4 potash properties were also identified by searching oil well logs of abandoned wells. As a result, the Marifil team staked the two properties which cumulatively cover more than 139,000 hectares. We have identified four important potash targets ranging in depth from 220 to about 700 meters. The Company has begun an active marketing program to find a suitable joint venture partner for these properties.

Las Aguilas Nickel and Platinum Project, San Luis Province: Las Aguilas is a nickel, platinum, copper, gold, and cobalt property which has a NI 43-101 compliant indicated and inferred resource of 4.9 million tons grading 0.65% nickel equivalent. The deposit is open-ended in several directions.

Marifil has a joint venture with Prophecy Platinum Corp. whereby Prophecy can earn up to a 70% interest in the property by paying Marifil $300,000 over three years and paying Marifil 300,000 shares over five years.

In addition, Prophesy is required to provide a feasibility study within five years (feasibility studies for this project could easily cost more than $20 million).

Toruel Silver Copper Project, Rio Negro Province: Toruel is a joint venture with Netco Silver Inc. Netco has the right to earn up to a 70% interest by paying Marifil $400,000 in cash, 3.7 million shares, spending $2.8 million in work on the property, and providing Marifil with a feasibility study.

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

Name:________________________ Date:________________________ ried through to production and retain a 25% interest.

The Toruel property contains a large number of epithermal gold, Crossword Puzzle TM silver, copper, and lead veins and vein breccias occurring within a K N A T I O N A L I N V E S T M E N T B A N K I N G A S S O C I A T I O N structural corridor +2 kilometers wide and +8 kilometers long. The S U L O A K N L O L V main Toruel vein is 1,900 meters long and up to 15 meters wide.

C O M C D E S E W E L E N O R V E R A M A T O S S A T S S T E D O T C I T Mineralization occurs as gold-silver bearing tetrahedrite (a comO S U P E R W O M A N V R C E C L R M A T W I T T E R M C K P R X H O P O plex copper, arsenic, antimony sulfide) and silver-bearing galena (a N H E I F O R E X C T M E I S S P C A R T O O N P C I W D O L E V E L S P R L A lead sulfide). Two of the better drill intercepts on this property are N S M A R G I N B U L L I O N D M I V T N T R V I S I B I L I T Y P A C K A G E as follows: E O I C O O K C O C O N A R E V I E W O U N C E E I U F R A N K N T T N N S M N O E T M E DH-24: 5.0 meters at 964 g/t silver and 4.95% copper A V P R D B T R I M C A L D E R A F I E L D L L R R W A N P F B I O T E C H A Y E O R E T DH-32: 6.7 meters at 1998 g/t silver and 5.34% copper I Q N S N V N Z W R I R O X U S D X S H A F T H O U S E K A A R Between Drill Holes 2B and DH-34 we have identified a section of R A R E E A R T H E L E M E N T S V X L S N R I N L T S O A E U E Y N R I T C Y N E A R T H G E the vein 600 meters long with a true width of 3.2 meters grading 490 O I K H T B E M S N O S A U H K E X C I O S N T L R Y T A N U g/t silver equivalent + 1.49% copper. This mineralization is worth Y A R L E D O U G J A M I S O N E R T S I A N R K R C R T R D D E M A E A $560 per ton at current prices.

StockWord Puzzle answers

E M S

OTHER PROPERTIES Marifil tries to maintain a pipeline of properties so that once a property is sold or joint ventured we have one or more new properties to

replace it. Our current pipeline includes:

Lithium Brines in Jujuy and Catamarca Provinces

Cerro Samenta, Salta Province: A porphyry copper and an oxide copper prospect which may contain up to 40 million tons at a grade of 0.5% copper amenable to low cost open pit mining and heap leach copper extraction.

Sulfur and Phosphate in Mendoza and Neuquen Provinces Maquinchao, Dos Lagunas, and Los Menucos epithermal gold silver projects, Rio Negro Province Ferrocarillera and Arroyo Verde epithermal gold silver projects, Chubut Province Maipu epithermal silver zinc project, Santa Cruz Province n

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E

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D L L E R A L G O R I E

L R A R E E A R T H E X P E R T V R I C H A R D B E C K E O R L A D G W R E

P I P E R B O O K F U I A R K E T O R D E A N I C A U A P M A I L L L

T H M

M A R Y A

P O R T U W T A V L L R S T R L D E R E T

F O L C E R A T P R E G O R A I E S

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N S F E M I U M R A G E V E R S E N L L I S T G E

Oak

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PROFILED COMPANIES

Cream Minerals Limited

The Anatomy of a Junior Resource Exploration Company Every great achievement starts with a dream, a vision. A vision of something grand, something truly outstanding and something lasting that will stand as a testament to the visionaries. Such is the stuff of mineral explorationists. These are people who are not afraid to dream big, people who can see what can be.

Mineral explorationists are frontiers man and woman. They embrace substantial risk in the hope of achieving something truly great.

A junior resource exploration company is the embodiment of visionaries. The companies are managed by people from all walks of life who want to develop a world class mineral deposit. Like biotech start-ups they live from milestone events to milestone events, seeking enormous amounts of capital in the hope they can create an asset that will return potentially billions of dollars to their investors.

Cream Minerals Limited, a silver-gold exploration company from Vancouver, Canada, the capital of junior mineral resource exploration companies, is developing what it believes will be a world class silver-gold deposit in Mexico. Cream was formed in the late 1960’s and spent many years exploring a variety of properties none of which returned results of any significance. Then, in 2000 the Company staked and subsequently acquired 100% ownership to Nuevo Milenio, a silver-gold property in Nayarit State, Mexico. Low metal prices that persisted for many years and a lack of significant funding limited exploration work at Nuevo Milenio. Despite these and other obstacles Fred Holcapek, P.Eng, Cream’s head geologist and German Francisco, Geologist, persisted and in December 2008 defined a NI 43-101 Compliant Inferred Mineral Resource of 54.6 million ounces silver equivalent, or 41 million ounces silver and 271,500 ounces gold. The resource estimate assumed a cut-off grade of 131 g/t silver equivalent highlighting average

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grades of 251 g/t silver and 1.66 g/t gold. At the time the resource estimate was completed silver was $USD10.28 per ounce and gold was $USD816.09 per ounce.

Like many areas of Mexico, the Tepic region was explored and mined by the Spaniards up until just over 200 years ago. Nuevo Milenio contains many Spanish workings (old mines) some of which are comprised of shafts up to 30 metres deep with three levels of drifts (tunnels) extending outwards where the Spaniards would have mined very high grade gold and silver.

Nuevo Milenio is a low sulphidation epithermal precious metals deposit containing silver-gold mineralization within quartz veins and quartz stock work zones. The mineralization is set in a collapsed caldera. Regionally the caldera is contained within an early volcanic caldera field of the Sierra Madre Occidental Volcanics, which in turn is traversed by the Tepic-Zacoalco rift zone, a structural zone forming the boundary zone with the Jalisco block. The Tepic area is overlain by the young volcanics of the Trans Mexican Volcanic Belt.

Historical volcanic activity of this magnitude is very important as it suggests the possibility of highly mineralized zones to be discovered.

Nuevo Milenio is comprised of 2,560 Ha’s of which Cream has only explored 600 Ha’s.

The mineralization within the caldera is comprised of three distinct zones that trend SE/NW and are open in both directions and at depth. The current resource is comprised of three higher grade quartz veins that reside within the eastern rim of the caldera. The balance of the resource is contained within a zone on the floor of the caldera. Within the eastern rim of the caldera there is the possibility of two or more additional higher grade veins to be drilled off and on the floor of the caldera there are five known zones that require additional drill testing. Employing the three year average prices for silver and gold the zones on the floor of the caldera represent open pit mining potential while the veins within the eastern caldera rim represent underground mining potential.

Nuevo Milenio is approximately 140 km’s

north east of Puerto Vallarta and only 27 km’s from Tepic, the capital of Nayarit State. Tepic is an important commercial centre with a population in excess of 300,000 people. Access from Tepic is 24 km’s by highway and paved secondary road and 3 km’s by dirt road. Quality infrastructure including the Tepic Airport, water, power and a railway are all within 14 km’s of Nuevo Milenio. This is a very important feature of Nuevo Milenio as it substantially reduces infrastructure investment, an important component of mine development investment.

In the fourth quarter of 2010 Endeavour Silver Corporation launched a hostile takeover bid for Cream. After three months, in early December 2010 Endeavour dropped

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its takeover offer. One effect of the takeover offer was to highlight Cream and in particular Nuevo Milenio to the mining community and junior resource investment community as a desirable asset with significant potential. Such was the perceived potential of Nuevo Milenio that offers of financing on favourable terms were received by Cream.

In 2010 Cream closed a $CDN6 million bought deal financing that resulted in Sprott Asset Management and Pinetree Capital Limited becoming the Company’s largest shareholders at approximately 16% each.

Armed with a new financial war chest Cream spent 2011 conducting a 20,292 metre drill campaign totalling 89 drill holes focused on upgrading a significant portion or the current resource from the inferred category to the indicated category and expanding the current resource. Cream has assay results from 21 (to be confirmed) drill holes pending release in Q1 2012. In addition the Company will be releasing a new Mineral Resource Estimate by the end of Q1 2012. Following that Cream will embark on another significant round of exploration drilling targeted at increasing the size of the silver-gold resource, the next step in building a world class silver and gold deposit. To be continued… n

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PRoFILED ComPAnIEs

atossa genetics New ‘Pap test’ for Breast Cancer Launched ProceDure shows great Promise; is being useD in meDicaL Practices since December 2011 A new, FDA-cleared medical device and procedure that can identify breast cancer issues up to eight years before cancer is diagnosed, is being launched across the U.S. this year, says its developer, Steven C. Quay, M.D. Ph.D., FCAP, who was named one of the Pacific Northwest’s Top Leaders in Health Care at a 2011 Seattle ceremony.

The procedure can be thought of as a “Pap test” for the breast. It comprises a device and method for the collection and laboratory analysis of cells contained in nipple aspirate fluid, or NAF, to identify precancerous cellular changes and other cancer flags, explained Quay, founder of Atossa Genetics, Inc., a privately held health care company based in Seattle, Wash., that is marketing his invention – the Mammary Aspirate Specimen Cytology Test (MASCT) System.

Quay and others involved with Atossa – which is named after ancient Persia’s Queen Atossa, the first woman in recorded history to be diagnosed with, and who later died from, breast cancer – are dedicated to preventing breast cancer by early detection of pre-cancers and then treatment.

“It’s a tragedy that one woman dies from breast cancer every minute in the United States. … We believe we can do something about this,” he said.

Quay explained the MASCT System works on the same principal as the Pap test in that it can identify pre-cancerous cellular abnormalities that can be treated in order to prevent progression to cancer. Widespread

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adoption of the Pap test has led to a 75% reduction in the incidence of cervical cancer and Quay believes that a similar result is possible for breast cancer.

“NAF analysis provides the same opportunity for breast cancer, the most feared malady for women worldwide,” he said.

Quay, 61, a former faculty member of the Department of Pathology at Stanford University School of Medicine, is known for past accomplishments such as the invention of five drugs including Gadolinium, a drug used routinely during MRIs to “brighten” organs so tumors and other abnormalities are more easily spotted.

“Current mammography procedures can detect cancer that is already present,” Quay said. “But in a sample of NAF, a pre-cancerous condition called atypical ductal hyperplasia, or ADH, can be detected up to eight years before cancer is found by mammography.” Quay, who worked as a post- doctoral fellow for Nobel Laureate Gobind Khorana, added, “ADH is a condition in which cells lining the breast’s milk ducts grow abnormally, creating a higher risk of cancer development. Studies have suggested that mammography fails to detect ADH in more than 90 percent of patients, and that ADH can be definitively diagnosed only by NAF analysis or an invasive breast tissue biopsy.”

If precancerous conditions are found in a NAF sample in Atossa’s lab, the current care plan is to make specific lifestyle changes that may reduce the risk of breast cancer, while increasing the schedule for breast imaging, including MRI. But Quay wants to go further, by developing drugs that can be delivered directly into the duct where the precancerous cells are

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located, thereby treating the condition while avoiding the side effects associated with systemic delivery.

With the help of Dr. Susan Love, a renowned breast cancer researcher and a clinical professor of surgery at UCLA’s David Geffen School of Medicine, Atossa is developing drugs for the treatment of precancerous abnormalities, along with technology to deliver the drugs directly into the milk ducts using a device designed by Dr. Love.

“While treating breast cancer when it is found can be daunting, reversing precancerous ADH should be a lot easier,” Quay said.

One of Atossa’s Scientific Advisory Board members is Tim Hunkapiller, Ph.D., a pioneering presence in computational biotechnology for 30 years, and the co-inventor of the biggest selling analytical research instrument in the world: the Perkin Elmer/Applied Biosystems DNA sequencer.

“Atossa Genetics’ ForeCYTE Breast Health Test[sm] is an exciting new breast cancer risk assessment test that I believe will be recognized by physicians and patients as one of the most important new tools in the fight against breast cancer,” said Hunkapiller, who is the founder, president and chief scientific officer of Seattle-based Discovery Biosciences Corporation, which provides technical consulting and commercialization services to both established and upcoming biotech companies.

“Future generations of products and services being developed by Atossa have the potential to change the way we think about and treat ADH in order to prevent breast cancer,” Hunkapiller added.

Also on the Scientific Advisory Board is Edward Sauter, M.D., Ph.D., associate dean for research at the University of North Dakota School of Medicine and Health. He is widely recognized for his research and clinical experience in breast cancer. Among his accomplishments, Dr. Sauter and a team of researchers pioneered noninvasive and minimally invasive techniques to predict breast cancer risk using nipple aspirate fluid.

“Atossa’s MASCT System holds promise to serve as an important adjunct to mammography for the benefit of patients,” he said.

Quay, Atossa’s chairman, president and CEO, has successfully launched six startups and made about one billion dollars in the past for investors. Atossa has attracted about 200 investors and last year raised $6.6 million in funding. Since initially launching the MASCT System in December 2011, selected doctors are now using it in their practices. The plan is to introduce the test more broadly in the U.S. in 2012.

Doctors already using the procedure have been sending samples to Atossa’s wholly owned National Reference Laboratory for Breast Health, located in Seattle. Medicare will reimburse the lab approximately $380 for each test; private insurance is typically charged at a higher rate.

Quay said he anticipates that the MASCT System will be used initially in conjunction with standard mammography or cervical Pap test exams. Atossa’s NAF collection procedure takes about five minutes, is painless, and, importantly, uses no radiation.

In addition to what’s expected to be a large role in the battle against breast cancer, there is the potential for significant revenue. Quay said he hopes that in the future Atossa’s procedure will be routinely performed at the same time as a woman has her annual Pap test. About 55 million pap tests are performed in the U.S. annually.

Atossa believes that its technology is protected by a strong intellectual property estate. Atossa owns the rights to six U.S. patents and fourteen foreign patents covering the manufacture, use and sale of the MASCT System, as well as pending patent applications for improvements, and the FDA marketing authorization for the MASCT System.

Quay said he began to formulate the MASCT System about 10 years ago after he learned more about the work of nowdeceased Dr. Georgios Papanikolaou, developer of the Pap test. Papanikolaou stated in 1954 that the same type of process as the cervical Pap test could be used for breast health.

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Quay said that through the years medical devices have been designed, but were only successful in obtaining nipple aspirate fluid samples from between 39% and 66% of patients because of the pumps’ dependence on applying negative pressure to the nipple to induce fluid expression.

Quay’s MASCT System overcame this by placing a hydrophilic, or water-seeking, membrane in contact with the nipple during the cycles of negative pressure to wick fluid from the orifice of the ducts by capillary action. In a 2003 clinical trial, the MASCT System collected measurable fluid and samples were deemed to be clinically useful in 97 percent of the women tested.

After learning about Quay’s improved device in 2011, renowned cancer researcher Dr. Nicholas L. Petrakis, professor and chairman emeritus of preventive medicine and epidemiology at University of California San Francisco’s School of Medicine, told Quay he thought Quay’s device “solves the nipple aspirate fluid collection problem we have had for over 50 years” and should help save lives from breast cancer.

In a letter Atossa sends to doctors, the success of the Pap test is emphasized. Annual cervical cancer rates have dropped from 150 per 100,000 to 8 per 100,000. Meanwhile, breast cancer rates stubbornly remain at about 350 per 100,000 per year.

“The Pap test is the most successful screening test in the history of medicine,” Quay states.

Now, Atossa and its advisors are working to get the word out about their procedure and its similar potential.

To learn more about Atossa Genetics and its National Reference Laboratory for Breast Health, go to http://www.NRLBH.com. n

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TSXV: MFM

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Micro-Cap Review Magazine

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v I E W P o I n T s n WRITTEn By JACk LEsLIE

ombudsman In the past trust was the basis for a business relationship. Most transactions occurred by and between two parties that understood the risk and its rewards. That has mutated into litigation and distrust. We are at a crossroads in this country trying to do the right things in an immoral milieu. How we proceed is up to everyone being more diligent in how one approaches any transaction. The Brokerage industry has been portrayed in a negative light. Being timorous will only result in more abuse and potential failure in this New Year.

Being involved in the financial industry for more than thirty years has led me to a number of conclusions. Change is inevitable and trying to maintain the current posture operating the Broker Dealer no longer works. Being your own compliance officer takes entirely too much time away from all the other duties. Hiring someone is too costly in many cases. There are firms out there that can provide the proper guidance to perform these services. Out sourcing is the most prudent way to handle these concerns. Make certain you do your proper Due Diligence on these entities and engage the ones that come recommended by at least three references.

Hire a good attorney to assist you in navigating through the maze called FINRA. My suggestion is finding someone that has had success with FINRA in the arbitration arena as well as negotiating the path of internal fines and/or censorship. They exist and are negotiable in fee schedules that can be within your budget. At a conference in August of 2011, a high ranking member of FINRA urged the Broker Dealers present to use the office of the Ombudsman. How ironic, that is how I began my initial article for this magazine. One must make a conscious effort to improve the odds against them in this time of vicissitude. Do not be diffident, instead be proactive examine your weaknesses and find solutions that will rebuild trust that the Banks caused the investors to lose.

The movie “Inside Job” narrated by Matt Damon should be viewed by anyone in the industry. It should give one a better understanding of how and why we are at this juncture and why the distrust is so prevalent.

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n this environment

of regulation and uncertainty one has to be extraordinarily vigilant.

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