Micro-Cap Review Magazine Quarter 1 - 2013

TSX: SEQ

Shoreline Energy Corp.LD MICRO CONFERENCE

LOS ANGELES CALIFORNIA, DECEMBER 5TH, 2012.

TSX: SEQ



TSX: SEQ



Exploration, Development and Productionof Petroleum and Natural Gas

www.ShorelineEnergy.ca n Ticker: SEQ.TO

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Cover Story: Shoreline Energy (6)

StockNewsNow Radio Gary McKenzie (8)

A Rational, Practical and Logical Approach to General Solicitation (9)

Organic Alliance (14)

Ask Mr. WallStreet (15)

Micro-Cap Insurance Corner (86)

Matmown (92)

Quarter 1 • 2013 microcapreview.com

$5.00

Raptor Ranch (16)

TheraKine Limited (25)

AccuHealth (28)

Investing in Micro-Caps by Chris Lahiji (30)

Kesselrun Resources (58)

Graphite One Resources (66)

Targeted Market Awareness by Robert “Bobby” Kraft (68)

Marksmen Energy (70)

AL International (72)

Now available for Biologics

realtunable

injectableresorbable

sustained release

Formulation technologies for the Real World

Read the full story inside this issue

www.TheraKine.com

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

E D I T O R I A L

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

As I sat down to write this editorial for our

year-end issue of the Micro-Cap Review,

I realized and reflected that I have personally

been through some tough years, as many of

you have, but 2012 for me and my family on

a personal level, was the worst of the worst.

Markets go up and down and some even go

sideways, but at the end of the day, win or lose,

it’s still only money. Money is replaceable.

On October 9, our precious 20 year old

daughter, Sammi Kane Kraft, tragically passed

away as a passenger in a horrific fatal car crash

in Los Angeles, California. She walked out

our door and never came home. We got that

dreaded call from the California Highway

Patrol. Sammi’s organs were donated which

give hope and extended the lives of many oth-

ers. To all of our readers, subscribers, friends,

and colleagues, The Kraft Family would like

to extend a warm thank you for all of your

best wishes and compassionate sympathies

expressed to our family. Your loving words of

kindness and your caring provided us with

comfort and continue to help us in our griev-

ing period. We created a website www.sammi-

girlproductions.com, produced by the Kraft

family as we plan to keep her music alive.

One reason, I brought up my personal life

is that our personal lives relate to our busi-

ness careers. As “Micro-Cappers” and finan-

cial media, we attend conferences and meet

many Biotech, Medtech and Life Sciences

companies devoted to developing new drugs,

devices, treatments and techniques, which

bring so much hope to others. The research,

amazing discoveries, and clinical trials that

these companies provide embody the true

essence of the emerging growth micro-cap

market and set an example of meaningful

capital raising for the benefit of humankind.

We desperately need these companies to exist,

discover breakthroughs, create new molecules

and treatments and continue to be funded.

Our mission at SNN Inc. is to bring as many

of these emerging growth companies to your

attention as possible.

Sammi would have wanted us to get on

with our lives and our business so here we are.

To the Kraft family, getting back to business

meant, among other things, putting together

this issue, the year-end/first quarter issue of

the Micro-Cap Review magazine.

SNN Incorporated will continue to provide

public and private micro-cap and emerging

growth company CEOs with a platform for

their voice, and media to tell our audience

their unique story and to increase market

awareness and investor visibility.

Shortly after Sammi’s passing, Hurricane

Sandy hit and smashed the east coast taking

out many of our friends and families’ homes

and businesses, impacting their lives forever.

This past year had so many tragedies on so

many levels for so many of our friends and

associates that we apologize for not including

them all but we are thinking of you. Micro-

cap companies, across a wide spectrum of

sectors, dependent on reaching or exceeding

revenue projections and still others hoping to

complete a funding in the fourth quarter of

the year we hope 2013 brings prosperity.

As 2013 begins, President Barak Obama is

in the White House for another four years.

Thank you, Mr. President, for signing the

Jump Start for Jobs Act into Law during your

first administration. I believe this law will have

a positive effect on micro-cap companies for

years to come.

To our friends out there in the global junior

resource sector we support you and we are

here for you!

Let me thank you, our readers, for your

continuing support on behalf of the SNN

family and the many emerging growth micro-

cap companies depending on your support.

Sheldon “Shelly” KraftPublisher n

In Loving Memory of Our Precious Daughter

and Sister Sammi Kane Kraft

www.snnincorporated.comwww.stocknewsnow.comFollow us: @StockNewsNow

SNN Incorporated and theMicro-Cap Review4766 Admiralty Way #13004Marina del Rey, CA 90295www.snnincorporated.com

PUBLISHERSheldon “Shelly” Kraft, SNN Founder, Chairman, [email protected]

Wesley Ramjeet, SNN [email protected]

EXECUTIVE EDITORLynda Lou Kane Kraft, SNN President

ASIAN PACIFIC CORRESPONDENTLeslie Richardson

SNN COMPLIANCE AND DUE DILIgENCE ADMINISTRATIONJack Leslie

ChAIRMAN OF SNN ADVISORy BOARDGeorge R. Jensen Jr.

ADVERTISINgSheldon [email protected]

SNN VP OF COMMUNICATIONS AND SOCIAL NETWORKINgRobert “Bobby” Kraft@[email protected]

EXECUTIVE VP OF MARKETINgShane Hackett

STOCKNEWSNOW RADIOGary McKenzie

SNN VP OF SALESPeter Orthos

SNN CORPORATE COMMUNICATIONSTrudy M. Self

[email protected]

gRAPhIC PRODUCTIONTony [email protected]

VIDEO EDITOR-PRODUCTION ASSISTANTSammi K. Kraft

Micro-Cap Review Magazine is published Quarterly, Spring, Summer,

Fall, Winter POSTMASTER send address Changes to Micro-Cap Review

Corporate Offices. ©Copyright 2013 by Micro-Cap Review Inc. All Rights

Reserved. Reproduction without permission of the Publisher is prohibited.

The publishers and editors are Not responsible for unsolicited materials.

Every effort has been made to assure that all Information presented in this

issue is accurate and neither Micro-Cap Review Magazine or any of its staff

or authors is responsible for omissions or information that is inaccurate or

misrepresented to the magazine. Micro-Cap Review is owned and operated

by SNN Inc.

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

QUARTER 1 2013

9 A Rational, Practical and Logical Approach to general Solicitation By Nancy Cass, Esq., Mitchell D. Goldsmith, Esq., Camilla Merrick, Esq.19 Biotech: Outlook 2013 By Seth and Stan Yakatan22 A New Price Paradigm for Platinum and Palladium By Michael S. (Mickey) Fulp30 What to Look for When Investing in Micro-Cap Companies By Chris Lahiji32 A Different Way to Invest By Leonard Rosen34 Restructuring a Micro-Cap Company By Erik Nelson38 The year (2013) of Social Media Integration & Empowering of the Users By Dr. Gordon Chiu40 Attention Wall Street Shoppers By Fred Johnson42 Why IR? By Keith Lippert45 Silver Past and Silver Future By David Morgan52 Bright Outlook for Southeast Asian Countries in 2013 By Leslie Richardson

56 One on One with David Drake on the Jump Start for Jobs Act 62 growth Equity Investors Dominate 2012 PIPE Market By Brett Goetschius64 Introduction of the Commodity Markets By Mark Shore68 Targeted Market Awareness & Pinpoint Investor Visibility By Robert “Bobby” Kraft74 New BD Formations & BD Withdrawal Summary By David Alsup77 Trouble is Opportunity By Jonathan Hornik, Esq.80 What I Learned About graphite By Greg Bowes82 The Evolving Direct Public Offering Market Shows Promise for Early Stage Companies By Thomas Carter86 Micro-Cap Insurance Corner By Eugene B. Podokshik88 “Closure” By Rabbi Stephen Robbins

Financial Books31 Caveat Emptor or Buyer Beware Written by Sheldon “Shelly” Kraft

Legal, Tax & Accounting60 The Compliance Corner By Russell C. Weigel, III

Financial Puzzle61 SNN StockWord Puzzle

Comic Strip79 WallStreet Chicken - Episode 7

Opinion94 Ombudsman By Jack Leslie

Profiled Companies 6 Shoreline Energy

16 grand Canyon Raptor Ranch

25 TheraKine Limited

28 Accuhealth Technologies

54 OrphanBiotec

58 Kesselrun Resources Ltd.

66 graphite One Resources

70 Marksmen Energy

72 AL International, Inc.

92 Matmown, Inc.

76 Classifieds

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

Superior Execution & Growth

C OV E R S TO RY

When we last looked in on

Shoreline Energy Corp.,

TSX:SEQ (“Shoreline”) in the

summer of 2012, the company was pro-

ducing 1,550 barrels or equivalent per day

(“Boe/d”), having doubled production since

their IPO in May 2011. This has catapulted

quarterly revenues and funds from opera-

tions up 181% and 170% through the first

nine months of 2012, respectively, allowing

the Company to reward shareholders with

$0.56 per share in cash dividends in 2012,

representing an effective yield of between

10% and 14%. Shoreline was thrilled with the

results of their first quarter oil drilling pro-

gram and was busy planning the remainder

of their 2012 capital expenditure program.

Having experienced a pullback in commod-

ity prices and challenging capital markets in the

second quarter, Trevor Folk, CEO and the exec-

utive team at Shoreline decided to take decisive

and immediate action. Mr. Folk set several

aggressive goals and strategic priorities for he

and his team to plan and execute immediately:

• Accelerate the Company’s light oil drill-

ing program in the Peace River Arch of

northwest Alberta by drilling an additional 6

wells in 2012, and

• Execute a strategic and accretive acqui-

sition that would increase oil production

and revenues thereby improving dividend

sustainability.

• Implement strategic gas hedges to pro-

tect cash flow and dividend payments.

Put SimPly “Growth by

DrillinG anD acQuiSition”

Mr. Folk firmly believed that now was right

time to redeploy the Company’s capital

into projects and assets that would further

enhance Shoreline’s long-term cash flows.

By doing so while maintaining a disciplined

framework around returns on invested capi-

tal, Mr. Folk set out to differentiate Shoreline

from many of its peers.

uS exPanSion

Beginning in July, Shoreline took advantage

of rising commodity prices and began to

hedge production for the remainder of 2012

and 2013 at prices above the internal budget

requirements. Coupled with Shoreline’s abil-

ity to maintain a low cost of production, the

Company has generated record revenue each

month since June on the company’s base

production of 1,550 Boe/d.

In August, Shoreline raised $17.0 million

in the form of an unsecured convertible

debenture with 100% of proceeds to be used

for drilling development type oil wells in the

Peace River Arch. On the first of September,

Shoreline began drilling the first of a six

oil well drilling program in the Peace River

Arch, and completed the drilling program

in late December 2012, achieving an overall

success rate of 86%. Shoreline added a total

of approximately 800 Boe/d to its account

through this investment and will begin to

receive income in the next month as pipeline

crews complete their tasks in the field.

Shoreline achieved a significant step for-

ward in accelerating its long-term growth on

November 20th, 2012 when it announced

its entry into the prolific Denver-Julesberg

Basin (“DJ Basin”) by acquiring a non-

operating working and royalty interest in the

Wattenberg Colorado Project for approxi-

mately $12.5 million. The Wattenberg Project

is currently an area of a large scale, low risk

horizontal development well program, using

multi-stage frac technology, led by Anadarko

Petroleum Corp. and Noble Energy Inc.,

with participation of a number of other

senior oil and gas producers. The acquisition

gave Shoreline a variety of royalty interests


ranging up to 1.45% on over 150 land tracts

spanning over 22,000 gross acres, with an

estimated 400 - 700 potential drilling loca-

tions on the acquired acreage.

The vast majority of the wells in the

Wattenberg Project are producing light sweet

crude oil. Netbacks from Shoreline’s roy-

alty position is forecast to average between

$75.00 and $80.00 per Boe for 2013 based

on current forward strip commodity pric-

ing, which would translate into an IRR

of over 35% for Shoreline. In addition to

moving the Company closer to its goal of a

balanced portfolio of 50% liquids and 50%

natural gas, the acquisition could poten-

tially increase Shoreline’s cash flow by USD

$500,000 per month by December 2013.

To further increase it’s footprint in

this world class project, on December 21

Shoreline announced the purchase of a non-

operated working interest in the DJ Basin.

This working interest property is operated

by Anadarko and Noble Energy, the most

active and experienced drillers on this play.

With between 100 and 150 potential drilling

locations on the working interest lands, the

future looks bright for Shoreline.

In February 2013, Shoreline closed it’s

third and fourth acquisitions in the DJ Basin,

where the Company acquired a pre pooled

non-operated working interest of an aver-

age of 14% over 4,500 gross acres. The new

acquisitions currently generate $400,000 to

$500,000 per month in net income and are

being actively developed with horizontal

Niobrara and Codell wells.

As of data available in November 2012,

the initial 21 wells were on production on

Shoreline’s royalty lands, with an additional

24 wells drilling or planned. When one

considers the 8 new horizontal wells already

on production on the Company’s working

interest lands, as well as a 6 to 8 year drilling

inventory on its’ entire land base the company

now owns, the potential cash flow growth

from these assets could be as much as ten fold.

StrateGy iS ForminG

This management team continues to make

opportunistic, prudent decisions when

deploying its precious cash resource among

many drilling and acquisition opportunities.

Both the Canadian and U.S. assets fit the

Company’s historical and future mandate

of drilling horizontal wells between produc-

ing vertical wells, thereby exploiting know

oil pools. While expanding production and

cash flows from its existing wells in the Peace

River Arch and the working and royalty

interests in the Wattenberg Project remain

its top priorities, Management continues to

evaluate other bolt-on acquisition opportu-

nities that could further diversify Shoreline’s

asset base and increase its long term growth.

outlook For 2013

Management is currently finalizing its 2013

capital expenditure program, which will be

based on recent success of its Peace River

Arch drilling program, and harvesting the

highly profitable potential in Wattenberg . The

Company is confident that a combination of

rising production, firm commodity prices and

its ability to operate as a low cost producer,

will sufficiently fund its drilling programs and

still pay a recurring cash dividend.

To further increase the capital flexibility

the Company announced in mid February

a private placement of common shares in

Canada, with the assistance of Macquarie

Private Wealth. The Company has been pre-

sented with several proposals to increase it’s

presence in the United States, and is current-

ly evaluating all options, which may include

a U.S. national exchange listing..Investors

looking for an undervalued stock with a

unique blend of growth and income should

give Shoreline Energy a look. n

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

A Rational, Practical and Logical Approach to General SolicitationA Dramatic Shift from Exempt Private Offering to Exempt Public Offering

n BY NANCY CASS, ESq. MITChELL D. GOLDSMITh, ESq.

CAMILLA MERRICk, ESq.

investors seeking a practical and rational

approach to comply with the new frame-

work for public advertising may find this

article of benefit to their companies.

The Jumpstart Our Business Startup Act

(the JOBS Act) requires the most sweeping

change to the Private Placement Offering

Exemption since the adoption of Rule 506

promulgated under Regulation D. Under

the current version of Rule 506, public com-

ment about an ongoing 506 offering could

jeopardize an issuer’s ability to rely on the

safe harbor in Rule 506. The new, proposed

For years the markets and regulators

have debated the pros and cons of the

prohibition of public advertising for

the sale of securities in private offerings. The

debate is not over, but the decision has been

made that general solicitation for certain 506

private placement offerings will be a reality.

While much remains the same, rules issued

by the Securities and Exchange Commission

(SEC) will place additional requirements

and compliance demands on companies that

plan to publicly promote their private place-

ments. Management, board members and


version of Rule 506(c) does away with this

limitation altogether. Under proposed Rule

506(c), a company will be free to make

public comment and advertise, as long as

the company sells its securities to accredited

investors only and takes reasonable steps to

verify that purchasers are accredited, mak-

ing it easier to reach potential investors. As

the Ohio Division of Securities notes, the

JOBS Act creates “a new and unprecedented

exempt form of public offering….”

The JOBS Act directed the SEC to amend

Rule 506 by July 4, 2012 to permit general

solicitation and advertisements in certain

Rule 506 offerings. The SEC has taken lon-

ger than anticipated to finalize and adopt

the proposed Rule 506(c), and companies

cannot generally solicit and advertise their

private offerings yet. The choice of Mary Jo

White as chairman of the SEC may further

delay the adoption of the proposed Rule

506(c). While timing is difficult to predict,

Ms. White has a reputation for making tough

decisions and getting things done. Now is

the time to educate your Board and consider

how it can take advantage of the proposed

Rule 506(c) and if it should be part of your

company’s capital raising strategy for 2013.

know the (ProPoSeD) rule

506(c)

On April 5, 2012, the JOBS Act was signed

into law, and provides that once effective,

under the proposed new Rule 506(c), general

solicitation and general advertising is per-

missible so long as all purchasers are “accred-

ited investors” and the company takes “rea-

sonable steps to verify that purchasers …

are accredited investors, using such methods

as determined by the Commission.” The

Commission has preserved the existing Rule

506 in proposed Rule 506(b) for companies

who will not engage in general solicitation,

and thus are not required to verify purchas-

ers’ accredited investor status.

Importantly, under proposed Rule 506(c),

companies taking advantage of the general

solicitation option will be required to prove

that the exemption applies and that they

have the documentation to establish com-

pliance. Accordingly, companies working

with their bankers and legal counsel must be

cautious and mindful of the requirements of

Regulation D and prepare and retain docu-

mentation establishing the availability and

compliance of the Rule 506(c) exemption.

reaSonable StePS to VeriFy

inVeStor’S accreDiteD

StatuS – what DoeS thiS

mean?

Proposed Rule 506(c) requires companies “to

take reasonable steps to verify that purchas-

ers of the securities are accredited investors.”

The company is not required to have actual

knowledge that a purchaser is an accredited

investor; rather, the company, after taking

reasonable steps to verify accredited investor

status, must have a reasonable belief that the

purchaser is accredited.

Most likely companies will no longer be

able to rely on investors’ self-certification

alone to satisfy their obligation to verify

accredited investor status under Rule 506(c).

Rather, the determination of whether the

steps taken are “reasonable” will require

an “objective determination based on the

particular facts and circumstances of each

transaction.”

The Commission has provided some guid-

ance on the factors that bear upon whether

the company has taken reasonable steps to

verify accredited investor status, including

the nature of the documentation reviewed

by the company. For example, federal tax

returns are inherently more reliable than

other types of documentation and therefore

the company may rely upon W-2 forms,

verifiable net worth statements and similar

documentation. The difficulty is that indi-

vidual investors may not want to provide the

private and personal information necessary

to establish accredited investor status, and

the company will be tempted nonetheless to

accept the investment because of its overall

belief they are accredited, even if objective

proof is lacking. If it is a fund that maintains

accredited status by virtue of all investors in

the fund being accredited a self-certification

from the fund may not suffice. The specifics

are yet to be outlined and a careful reading

of the rules by legal counsel and bankers will

be ongoing as these concepts evolve.

This is a good time to gather your team of

legal, banking and management to get every-

ch_cali2013_snn_print_ad_v3_otl.indd 1 12-10-12 2:12 PM


one on board with the specific screening

method established. Deal with the details

on the front end of an offering, to be effi-

cient and avoid providing investors with

conflicting information. Erring on the side

of obtaining greater amounts of informa-

tion will provide greater likelihood that the

Company has obtained appropriate accredi-

tation verification. Going back to investors

to get additional documents signed after an

investment has been received is challenging,

time consuming and undermines the confi-

dence of your investors and their advisors.

A company without a logical and effective

method in place to verify investor accredita-

tion might be required to offer rescission

rights to its accepted investors.

The nature of the offering also may be

relevant to determine the reasonableness of

the steps. A company that solicits investors

over the Internet or in a general publication

is expected to be required to take greater

care to verify accredited investor status than

a company that either is soliciting from

a group of investors with whom it had a

preexisting relationship or that solicits from

a third-party such as a broker-dealer with

a documented know your customer pre-

screened high net worth investors’ database.

Though companies need beware that not all

databases are updated nor compiled with

the information required for compliance.

The amount of the investment also may be

relevant to establishing reasonable belief. If

the potential purchaser is able to fund an

investment approaching $1 million without

financing, that could support the reason-

ableness of the company’s steps.

A company that is receiving its accred-

ited investors from broker-dealers will have

an easier time demonstrating reasonable

belief and compliance. The Commission has

noted that companies may continue to rely

on third-parties, such as broker-dealers, to

verify accredited investor status. This makes

sense in light of the fact that broker-dealers

are subject to liability under the securities

laws, have obligations under “know-your-

customer” and anti-money laundering rules

and regulations, and are subject to inspec-

tions and examinations by the Commission

and other regulators. Thus, companies using

a FINRA Banker reduce their work and risk.

Groups, such as Investor Relations or IR

consultants will typically not have the level

of information about investors as required

by FINRA for customers, therefore it is

recommended your securities attorney and

FINRA banker be part of any decision to

work with consultants that utilize these data-

bases. Compliance is essential, not only for

the current capital raise, but also as it relates

to institutional investment, IPO’s and M&A

transactions, since a critical due diligence

linchpin for each of those transactions will

be the company’s ability to establish that

it complied with Rule 506(c) in its prior

financings.

“tell the truth” –

DiScloSure – what DoeSn’t

chanGe

Companies should be aware that while they

do not have to register the securities when

offering and selling in compliance with Rule

506(c), they are still subject to all anti-

fraud and other federal and state securi-

ties laws. While an issuer’s solicitations or

advertisements may contain forward-look-

ing statements, they may not contain any

misrepresentations of material fact. Further,

companies must furnish any material infor-

mation that may be necessary to make any

information required under Regulation D

not misleading. In order to limit potential

liability, companies should consider full and

fair disclosure of all material terms and risks

and give a “balanced presentation of risks

and rewards.” Proper legends are essential

and no advertising should be placed with-

out review by securities attorney and your

FINRA registered banker. Remember an

error here is not a letter to a couple of inves-

tors; it can potentially affect an entire pool

of investors and is difficult to correct. Ask

yourself: is this the truth, the whole truth,

and is it said in a way people can understand

it? A company is still selling securities and

must not leave disclosure to its marketing

department.

Further, to the extent the offering is made

through a broker-dealer rather than by the

company directly, the advertisements and

solicitations will also be subject to FINRA’s

content standard in NASD Rule 2210. Due

care must continue to be given to making all

necessary state and federal securities filings

to perfect the private offering or exempt

public offering exemption.

crowDFunDinG

DiStinGuiSheD

The JOBS Act introduces the highly publi-

cized crowdfunding exemption. Unlike the

proposed Rule 506(c) permitting general

solicitation, the Commission has yet to pro-

pose a rule implementing the crowdfunding

exemption, however, it has indicated that

one will be issued in 2013. Therefore, a final

Rule 506(c) will likely be adopted prior to a

crowdfunding rule.

Crowdfunding is a separate and distinct

exemption from the Rule 506(c) exemption.

The crowdfunding exemption exempts com-

panies from registration when the companies

offer and sell up to $1 million in securities

during a 12-month period, provided that

individual investments do not exceed certain

thresholds and the company satisfies other

conditions, such as using a broker-dealer or

qualified intermediary registered with the

Commission. The company also must provide

the Commission, the intermediary, and inves-

tors with certain information on an annual

basis. Importantly, under the crowdfunding

exemption, companies can sell securities to

both accredited and non-accredited investors.

The crowdfunding exemption also

expands the integration period from six

to twelve months. Under Rule 502(a), the

Commission may treat sales of securities

within a six-month period as part of the

same offering. However, the crowdfund-

ing exemption provides that crowdfunding

offerings may be integrated with all other


securities offerings occurring in the pre-

vious twelve months. This is significant

because if a company sells securities to

accredited investors under a 506(c) offering

and then later to non-accredited investors

under a separate crowdfunding offering, the

Commission may treat those two offerings as

part of the same offering, potentially result-

ing in the company losing both exemptions.

how Do i make thiS work

For me – Practical StePS

Now that you are bleary eyed with regula-

tion, how do you navigate this opportunity

efficiently and establish a rational plan for

success. Do not go at this alone. While it

is vital that the companies wanting to do

an ‘exempt public offering’ under proposed

Rule 506(c) wait until the final rule is adopt-

ed, this is a great time to tee your company

up. Align yourself with a team of profes-

sionals who truly understand the rules. Any

professionally who takes a laid back or kick

the can approach to compliance with the

rules will not be a good team member.

Investment bankers who work in other areas

such as mezzanine debt or IPO’s might jump

on the new rule, but critical to the process is

to work with licensed professionals acutely

aware of the rules. IR groups in the micro-

cap space will try to make inroads. Contacts

in your company’s industry sector are not

the key factor in successful general solicita-

tion of a private offering. It is implicit in this

opportunity to reach out to an investor pool

beyond your banker’s rolodex.

Disclosures, risk factors and securities law

compliance are part of the process. Not

only is proposed Rule 506(c) not adopted

yet, but other rules or interpretations may

emerge, which could provide pitfalls for

the unwary. Furthermore either an IPO

or registration of the Company under the

Securities Act of 1934, could be adversely

impacted if a prior private offering was

not reviewed by very experienced securi-

ties counsel. Similarly, once a company is

publicly registered, should it seek to avail

itself of a Regulation D exemption in a sub-

sequent securities offering (including a PIPE

offering – a “private investment in public

equity”), it will need to continue to comply

with the applicable disclosure and accredited

investor requirements. Therefore, a quality

securities specialist, rather than a transac-

tional attorney without up-to-date working

knowledge of the rules is a critical member

of your team.

Not every banker and attorney will be in

favor of their clients using the new rule. As

stated above the debate carries on. It will

take team work of your professionals to

efficiently and cost effectively manage issues

that will arise. Media outlets with an exist-

ing publication or portal that has a following

of investors will be in high demand as they

provide exposure to the right group of read-

ers. Media groups that expand with a related

publication to support companies advertis-

ing under Regulation D will be a specialty

to look for. The opportunity for misuse and

abuse by opening up securities sales to pub-

lic media has a strong likelihood of placing

heightened scrutiny on unregistered offer-

ings, and a company needs to work smart

and get the right guidance to be vigilant but

practical in its compliance efforts. At the

same time, public advertising will provide

companies with unprecedented access to

new capital sources, which in today’s envi-

ronment should not be passed over.

Nancy Cass is an experienced investment banker and corporate attorney. She is a co-founder of MerchantCass Advisors, a banking firm headquar-tered in Atlanta. She holds Series her 7, 79, 24 and 63 securities licenses and executes securities transac-tions with StillPoint Capital, Member Firm FINRA/SPIC. Ms. Cass is licensed to practice law in Illinois, Florida and Colorado.

Mitch Goldsmith is a shareholder with the law firm of Shefsky & Froelich Ltd. of Chicago Illinois. Mr. Goldsmith advises numerous issuers domesti-cally and abroad in a broad array of industries with respect to their offerings and general corporate activities.

Camilla Merrick is an associate with Shefsky & Froelich Ltd. and counsels domestic and foreign cli-ents on securities offerings, securities regulation and general corporate matters.

Nancy Cass, Esq.MerchantCass Advisorswww.merchantcass.comTelephone: 561-889-5210E-Mail: [email protected]

Mitchell D. Goldsmith, Esq., ShareholderShefsky & Froelich Ltd.111 East Wacker Drive - Suite 2800Chicago, IL 60601Telephone: 312-836-4006Mobile: 312-320-4657E-Mail: [email protected]

Camilla Rykke Merrick, Esq., AssociateShefsky & Froelich Ltd.Telephone: 312-836-4041E-Mail: [email protected] n

Ticker Symbol: ORGC

Organic Alliance, Inc. is a global

grower, shipper and distributor of

fresh foods focusing on the

development of Organic and Fair

Trade agriculture. Our unique

ability to grow top-quality produce

to specification in our own

greenhouses and through direct

relationships with grower partners,

gives our clients access to new

year-round supplies of Fair Trade

and Organic certified produce that

is competitively priced.

Scan Me Follow us on Facebook

www.facebook.com/OrganicAllianceInc

Offices: Berkeley, Ca., Salinas, Ca.

A company could have the greatest management, money in the bank, disruptive technology, a deep portfolio of IP, hugeresources, sizable orders, a potential cure for a disease, huge potential with high expectations but if investors don’t know about it, they won’t care, and they won’t buy it or invest in the company.

In fact awareness & visibility needs to be in place before the rubber meets the road and should begin early in the process of funding. Achieving funding is the most important job naturally but then the company needs to get its story out there into the market. The Jobs Act and its adjustments to rules & regulations change general solicitation methods and give private & public companies more freedom to advertise and solicit investor interest. Many consider this Act the most crucial securities law change since the 1933 & 1934 Acts.

President Obama said the Jobs Act will “remove barriers for small businesses and will lead to job creation. New businesses account for almost every new job created in America,” thePresident spoke during the signing ceremony in the Rose Garden of the White House and added, “That’s why I pushed for this bill. The JOBS Act (Jumpstart Our Business Startups Act) removes restrictions for small business and startups to receive broader access to capital and investors. It’s for business owners who want to take their company to the next level; it’s a potential game-changer for startups.

The above paragraph was included because our President used terms we are all familiar with like “startups” and “small business” and “access to capital” and “remove barriers”.

SNN is dedicated to provide access to our institutional and investor database and subscribers through our products and services. The Jobs Act provides access for investors to small private and public companies, which I coin as the new “Entrance Strategy”. SNN Market Awareness and Investor Visibility begin with the entrance strategy and provide investors an ultimate “Exit Strategy”.

SNN is the next step financial publishing, media, content, database and infotainment company providing reach and frequency to the exact target market for funding and market awareness.

Subscribe to Ask Mr. WallStreet at [email protected] place AMWS in the subject

o subscribe

Website: www.stocknewsnow.com


PROFILED COMPANIES

Grand canyon raptor ranch

As the name suggests Raptor Ranch is

a birds of prey center that specializes

in breeding native raptors (hawks,

falcons, eagles and owls), but more impor-

tantly it will be an eco-tourism facility that

displays native raptors in high speed, energet-

ic out door flight demonstrations and allows

visitors to become part of the raptors world.

The customer base is a captive audience of 5

million Grand Canyon tourists.

An independent feasibility study for this

project has been conducted by Martori and

Company. After extensive research the report

states that they view Raptor Ranch as having

“potential for excellent success”. The busi-

ness model was also featured on the Fox

Business News program “Your Questions –

Your Money”. The Venture Capital experts on

the program gave Raptor Ranch an enthusias-

tic thumbs up.

The location along the Grand Canyon

Corridor is a key component for success.

This location sees far more passes of National

Park tourists than any other location in the

country. To date, most commercial uses along

the Grand Canyon Corridor have attempted

to serve the traveling public; however prior

to this, none had sought to build and operate

an interactive eco-tourism facility that can be

enjoyed by all visitors young and old and that

blends into the natural setting and enhanc-

es the area’s unique attributes. Coconino

County is a steward of the Grand Canyon

Corridor, and any commercial development

along this corridor is subject to the approval

of the county. County Planning and Zoning

voted unanimously in favor of this project

because they recognize this will add to rather

than detract from the Grand Canyon visitor

experience. With the approval of this unique

facility in this premium location it is unlikely

that they would ever see a need for another.

This creates a very high barrier for future

competition.

The $15.00 Raptor Ranch entry fee will

include a self-guided tour of the falconry and

natural history museum /art gallery, interpre-

tive displays, raptor breeding facilities, incu-

bation room, nursery, live raptor displays, and

the rehabilitation centers video monitoring

station. Additionally, visitors will have the

opportunity to experience the highlight of

Raptor Ranch: the amazing outdoor flying

demonstrations, that will reveal how raptors

actually act and hunt in the wild. These fast

paced exciting flight demonstrations reveal

raptors’ hunting techniques as they vigorous-

ly pursue mechanically simulated quarries.

Such action packed performances can be seen

nowhere else and are sure to be remembered

for a lifetime. In addition to the self-guided

tours, there are numerous visitor participato-

ry activities available for additional fees, such

as wildlife photography shoots, bird watching

excursions, hawk walks, raptor handling, and

falconry courses.

The number of visitors to the south rim of

the Grand Canyon National Park (GCNP) is

exceptionally high; however, the time spent at

the GCNP is remarkably low. While the views

from the South Rim are amazing, the region

offers little else in the way of activities for visi-

tors to spend their time and money, creating a

pent up demand.

The combination of a low cost, proven

attraction, placed within a funnel of enter-

tainment seeking tourist traffic that will find

our product highly appealing. Currently

there is no direct competition. The success

of Raptor Ranch’s will ultimately lead Raptor

Ranch to become the #1 privately owned

tourist attraction in the Grand Canyon area.

The Grand Canyon Raptor Ranch is cur-

rently seeking private funding, in order to

build the premier natural tourist attraction in

the Grand Canyon area. n

No Boring Lawyers

OSWALD & YAPAward Winning Business Lawyers

Specializing in Micro-Cap Companiesfor Over 25 Years

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


SETh YAkATAN & STAN YAkATAN OF kATAN ASSOCIATES


Biotech: Outlook 2013

The field of modern biotechnology is

generally thought of as having been

born in the early 1970’s with Berg’s

experiments in gene splicing or when Boyer

and Cohen transferred genetic material into

a bacterium, such that the imported material

would be reproduced. As we embark into

our fortieth year of this industry, opportu-

nities for the advancement of science and

innovation abound. This article shall exam-

ine the changing business climate in which

commercial efforts for biotechnology and its

derivate products exist, and how that market

is changing for the companies seeking com-

mercial outcomes.

The only sources of cash for a biotech-

nology company are investors, partners or

grants. Since most biotechnology companies

do not yet generate revenues, investment and

partnering deals and the tracking of deals,

both in terms of the volume of deals done

and the aggregate amount of dollars, has

become a barometer for the bell-being of the


industry. With economic pressures on pric-

ing and reimbursement for drugs, the high

failure rate of new therapies in the clinic,

the limited number of new drug approvals

each year, increasing consolidation among

major pharmaceutical and biotechnology

companies, downsizing as a result of such

consolidation, and public equity markets

which allow for few if any new issuers, the

blueprint for how to build a successful com-

pany in the industry is becoming increas-

ingly more difficult to pinpoint. One thing

which is clear is that partnerships are still

the main source of capital for biotech com-

panies. Partnership transaction data for 2012

is still being accumulated, however it looks

like 2012 is on track to meet or exceed 2011

deal levels. While aggregate partnership dol-

lars for biotech in 2011 and 2012 are below

levels of 2005, partnerships still account for

in excess of 40% of the capital available to

biotechnology companies.

In 2012, biotechnology companies which

are listed in the US public equity mar-

kets are enjoying one of the better years in

recent memory. Through October 2012 the

NASDAQ Index was up 12.4%, while Large

Cap Biotech Index and the Small Cap Life

Sciences Index were each up 32.0% and

19.4%, respectively, each well ahead of the

NASDAQ. These numbers are driven by

the significant performance seen in several

subsectors, including the stocks in the areas

of ophthalmology, inflammation, and hema-

tology.

The private markets are still tough. While

aggregate global VC dollars invested in 2012

are projected to be above 2011, US invest-

ment by VC’s into therapeutic companies

still trails 2009 levels as more dollars are

being pumped into potentially lower risk

health care markets such as devices and

diagnostics. VC investment in therapeutics

during 2012 is largely cluster-based. For

example, over the past four quarters close

to a billion dollars in new venture cash has

flowed into Cambridge, MA based compa-

nies through 122 deals. That’s a jump of 5%

in funds and 27% in deals. This year has also

seen an increase in the Corporate VC activity

initiated by, and done in conjunction with,

major pharmaceutical companies. Bruce

Booth, Burrill & Company and Windhover

have done extensive analysis on this sub-

ject. The analysis includes 2907 therapeutics

companies that raised venture capital dollars

between 2000 and 2010 across 5100 rounds

of financing. Corporate VCs were investors

in about 10% of companies, and this pool

of 286 companies had what appears to be

a markedly higher hit rate a ~60% higher

rate of licensing deals, M&As and IPOs. A

recent report published by NVCA/PWC in

their MoneyTree earlier this year suggested

that 18% of all biotech deals had Corporate

VC involvement in 2010 and 2011.

Merger and Acquisition activity for biotech

is still robust, exits for biotech companies are

still occurring and are still occurring at the

early stage. The 2012 merger activity has

been strong as more deals have been com-

pleted for smaller amounts, with Gilead’s

$11 billion Pharmasset buyout leading the

way, followed by Bristol-Myers’ $5.3 billion

buyout of Amylin, Glaxo’s $3 billion deal

for Human Genome Sciences, and Bristol-

Myer’s $2.5 billion purchase of Inhibitex.

Add it all up and Credit Suisse found a $25

billion deal tally through September 2012

compared to $10 billion at the same point

last year in 2011.

Deal values appear consistent in terms

of time to exits, amount of capital invested,

stage of development, multiples and spe-

cific sectors remaining attractive in terms of

buy-side needs. Typically most deals are still

being done for companies with assets that

are pre Phase-II, and have an average time

to exit of approximately4.5 years. Multiples

are steady at approximately4.5x with premi-

ums being paid for technologies and deals

at the early stage. Oncology companies lead

the way in terms of the sheer numbers of

companies which achieve an exit, with the

highest multiples still in the area of meta-

bolic disease.

Transactions continue to be the life blood

of the biotechnology industry and the key

for the survival of companies and investors.

Expect that 2013 will be no different.

Seth yakatan, co-FounDer,

Partner, katan aSSociateS,

inc.

Seth Yakatan brings more 20 years of experience as a corporate finance professional, actively supporting small cap and major companies in achieving cor-porate, financing and asset monetization objectives


through the successful structuring and management of more than several billion in completed strategic transactions and investment.

Over the past eleven years as a co-founder of Katan Associates (KAI), Seth has successfully struc-tured and managed strategic alliances and deals, with unique expertise and insight into the US and Global Life Science sector, including numerous buy-and sell-side M&A transactions. Completed Life Science transactions at KAI include:

Twelve buy and sell-side M&A engagements, gen-erating aggregate transaction value in excess of $345 million.

Numerous early-stage pharmaceutical partner-ing assignments with aggregate value generated for clients of more than $875 million.

Facilitation of several royalty monetization trans-actions, with aggregate realized value in excess of $125 million.

Prior to founding Katan Associates in 2001, Seth worked in merchant banking at the Union Bank of California, N.A., in the Specialized Lending Media and Telecommunications Group. During his six years he completed the placement of subordinated debt and private equity investments, totally in exces-sive $3 billion, on behalf of the bank.

Seth began his career as a venture capital analyst with the Ventana Growth Funds and Sureste Venture Management, where he gained significant experience in creating successful venture-backed life science companies.

Seth is a recognized as an expert in the valu-

ation of life sciences companies, stemming from industry experience and academia. He has authored several publications and lectured and guest lec-tured at corporate workshop and universities on valuation theory, real-world practice and case stud-ies and as a consultant several state and provincial governments worldwide on commercialization and capital access initiatives for. He has also served as a speaker and faculty member at multiple industry conferences including the Annual BIO International Convention Executive Workshop Series. Seth serves as an Advisor to Boston Communications, a com-munications consulting firm that supports business leaders in addressing their greatest communications challenges, and to The Brookwood Group, a special-ized real estate and restaurant consulting firm.

Seth holds an MBA in Finance from the University of California, Irvine and a BA in History and Public Affairs from the University of Denver.

Seth enjoys being a Dad to his two children, par-ticipating in triathlons and long-distance cycling.

Stan yakatan, chairman,

katan aSSociateS

After 40 years as a successful CEO, entrepreneur, and operational manager, Stan Yakatan has dedicated the last 15 years of his career to sharing his experiences with management teams interested in building tech-nology based companies. His experience as an execu-

tive is far reaching as he has served in an Executive capacity with:

New England NuclearEI DupontICN PharmaNew Brunswick ScientificBiosearchKatan AssociatesThese experiences have provided him with man-

agement skills and a corporate finance acumen that he enjoys sharing with others.

He has founded or co-founded in excess of 15 companies in the United States, Canada, Israel, France and Germany and in many cases served as the initial CEO, and Chairman of these companies. He currently sits on the board of directors of several public and private companies and has advised several of the world’s leading venture capital firms includ-ing TVM (Germany), Ventana (USA), MSP (USA) and Biocapital (Canada). During the decade of the 1990’s Biocapital was the most successful health care venture capital fund in Canada.

Stan currently served in a business development capacity for the XL TechGroup. XL Tech Group systematically discovers unmet business needs, then creates, selects, and develops new technology busi-nesses, and scales them to liquidity. Stan assisted XL TechGroup in the development of its business model, and advised on the overall capitalization strategy for XL Tech Group. In October 2004, XL TechGroup undertook an Initial Public Offering in .

Stan has also served as s Senior Advisor in Life Sciences to numerous State, Provincial and Federal government agencies These roles have been largely in a effort to assist in the development of govern-ment incentives and initiatives to foster and develop regional Life Science clusters. These efforts include work in Canada from 1993 to 1999, Israel from 1999 to 2001, and Victoria, Australia from 2002 to 2008.

Stan has completed and advised on numerous acquisitions and corporate finance transactions rais-ing in excess of $1.0 billion dollars in the public and private capital financing markets. He is a frequent speaker at financial and biotechnology conferences throughout the world speaking on topics including, “Capital Raising for the Technology-Based Start-Up” and “The Need to be Global in the Quest for Capital and Partners”. Rick Biondi, Editor of Lab Business Magazine stated,” Mr. Yakatan is a venture capital raising Guru and it is part of his genetic make up.”

Stan has been the Chairman of several pub-lic companies. Stan founded and served as the Executive Director and Chairman of Biocomm, in Melbourne, Australia, the first of its kind regional business development agency and early-stage capi-tal pool. Stan currently is Chairman of the Board of Mercury Therapeutics, Inc. which is developing new drugs AMP kinase based drugs for the treat-ment diabetes and cancer and sits on the Board of Directors for Phenomenome Discoveries, Inc., a novel biomarker company. Recently Stan was appointed to the Teaching Faculty at Skolkovo School of Management in Moscow. Stan currently serves as CEO of TheraKine, Ltd.,a privately held company with a novel drug delivery technology for biologics and small molecules that address drug delivery chal-lenges in multiple therapeutic areas n


Russia at 40%, followed by Canada, the

United States, and Zimbabwe.

As with many commodities, the United

States is largely dependent on foreign sup-

plies: 91% of our platinum and 54% of

palladium consumption are imported. We

consume nearly half of the world’s platinum

and 30% of its palladium supplies.

Because of their rarity and physical prop-

erties, platinum and palladium are consid-

ered precious metals and used in jewelry

and investment coinage. However because

demand is dominated by industrial appli-

cations, they are actually hybrid metals.

Industrial use is overwhelmingly for chemi-

cal catalysts and dominated by exhaust sys-

tems for automobiles and trucks.

In 2011, platinum use stood at 38% for

auto-catalysts, 31% for jewelry, and nearly

6% for ETF investments. Other important

demand came from the glass, chemical, elec-

tronics, petroleum, and medical industries.

Palladium use was dominated by auto-

catalysts at 71%. The electronics industry

consumed 16% and dental, chemicals, jew-

elry, and minor uses constituted the remain-

der. There was a significant net outflow from

ETF investments in 2011.


A New Price Paradigm for Platinum and Palladium

As a group, these metals are rare in the

Earth’s crust, silvery-white, malleable, and

dense. They are highly resistant to wear,

oxidation, and corrosion, have stable high-

temperature and electrical characteristics,

and exhibit catalytic properties.

The two metals are produced from prima-

ry mines and as byproducts from nickel and

copper refining. They occur in unusual and

specific geological environments in relatively

few places on Earth. The largest deposits cur-

rently exploited are the Bushveld of South

Africa, Norilsk in Russian Siberia, Great

Dyke of Zimbabwe, Sudbury, Ontario, and

Stillwater, Montana.

According to USGS estimates, 2012 plati-

num mine production was 179 tonnes and

palladium was 200 tonnes, down 8% and 7%

from respective 2011 levels. Recycling con-

stituted about 29% of total supply. However

compared to 2012 gold production of about

2800 tonnes, these are small markets sup-

plied by a few big mines and companies.

South Africa dominated production at

74% with Russia at 13%. Remaining supplies

came mostly from Zimbabwe, Canada, and

the United States. Palladium mine produc-

tion came from South Africa at 41% and n MIChAEL S. (MICkEY) FULP

Platinum (Pt) and palladium (Pd) are the two most commonly used of the six platinum-group metals (aka platinoids), which also

include rhodium, ruthenium, iridium, and osmium.


Because much of the world’s supplies

come from geopolitically unstable, corrupt,

and/or unfriendly countries and are domi-

nated by a few major mines, districts, and

companies, platinum and palladium are sub-

ject to supply and demand imbalances and

price volatility:

Since the price of gold was floated on

world markets in August 1971, the platinum

to gold price ratio

(Pt : Au) has been greater than one (>1.0)

about 85% of the time. Average monthly

price ratios since 1970 are charted below:

Ratio reversals (<1.0) occurred at various

time periods lasting from over two years to

a one month spike in December 1992 when

the historic low was set at 0.78. The most

recent reversal was from November 2011

thru mid-January of this year.

Since 1970 the price ratio of platinum and

palladium has varied generally between 2.0

and 5.0, largely reflecting palladium’s inher-

ent price volatility compared to platinum:

Palladium price was fixed at the nominal

price of gold ($35-36/oz) until mid-1972.

From January 2000 to mid-2001, historic

lows less than one (<1.0) occurred when

rumors spread that Russia would cease stock-

pile sales to the West. Hoarding by American

auto companies caused the price to briefly

soar over $1000/oz. But then Russia’s bal-

ance of payments suffered, palladium was

dumped on the market, and the price went

parabolic. By July 2003, the metal reached a

monthly average low of $162/oz. Ratio dis-

ruptions on the high side (>5.0) occurred in

1983-1984 and when auto industry demand

collapsed during the global economic crisis

in early 2009.

My interest perks whenever an anomalous

Pt : Au ratio (< 1.0) occurs over a significant

time span. This indicates that platinum is

oversold and presents a buying opportunity.

Such was the case beginning in November

2011; only recently has the ratio gone back

over 1.0.

Several factors have caused platinum and

palladium prices to rise substantially since Data Courtesy of Kitco.com


early August:

• In 2012, South African and Zimbabwean

miners engaged in widespread, violent

strikes resulting in severe supply disruptions

and constrained market supplies.

• An estimated 60% of South African

mines currently operate at a loss or at break-

even.

• Economic conditions in the United States

and China continue to improve and that has

stimulated automotive sales and increased

demand for platinoids.

• Increasing environmental regulation of

the auto industry in emerging market coun-

tries has resulted in higher demand, espe-

cially for palladium.

• Although information from Russia oper-

ations is closely guarded and always opaque,

it has been widely reported that historic pal-

ladium stockpiles are depleted and exports

will cease this year.

• Analyst consensus for significant 2013

supply deficits in both metals has led specu-

lators to accumulate net long positions.

In my opinion, there is a new price para-

digm developing for platinum and palla-

dium. The supply-side case is particularly

compelling with the economic viability of

most primary platinum-palladium mines

not economic given current price regimes.

Unless prices rise substantially, South

African supply disruption will evolve into

long-term destruction. The bullish case is

strengthened if Russian palladium exports

are indeed ending.

To my knowledge, there are no new major

mines that can replace these looming reduc-

tions in platinoid supply.

For a myriad of reasons, I maintain an

ebullient view of platinum and palladium

supply and demand fundamentals and pre-

dict that prices will remain robust for the

short- to mid-term.

Michael S. (Mickey [email protected]

Acknowledgement: Michelle Lopez is the editor of MercenaryGeologist.com.

The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years experience as an explo-ration geologist and analyst searching for economic deposits of base and precious metals, industrial min-erals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia.

Mickey worked for junior explorers, major mining companies, private companies, and investors as a con-sulting economic geologist for over 20 years, special-izing in geological mapping, property evaluation, and business development. In addition to Mickey’s profes-sional credentials and experience, he is high-altitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discov-eries in Peru, Nevada, Chile, and British Columbia.

Mickey is well-known and highly respected throughout the mining and exploration community due to his ongoing work as an analyst, writer, and speaker.

Contact: [email protected] www.MercenaryGeologist.comTwitter: @mercenarygeo

Disclaimer: I am not a certified financial analyst, broker, or professional qualified to offer invest-ment advice. Nothing in a report, commentary, this website, interview, and other content constitutes or can be construed as investment advice or an offer or solicitation to buy or sell stock. Information is obtained from research of public documents and content available on the company’s website, regula-tory filings, various stock exchange websites, and stock information services, through discussions with company representatives, agents, other professionals and investors, and field visits. While the information is believed to be accurate and reliable, it is not guar-anteed or implied to be so. The information may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. I accept no responsibility, or assume any liability, whatsoever, for any direct, indi-rect or consequential loss arising from the use of the information. The information contained in a report, commentary, this website, interview, and other con-tent is subject to change without notice, may become outdated, and will not be updated. A report, com-mentary, this website, interview, and other content reflect my personal opinions and views and nothing more. All content of this website is subject to inter-national copyright protection and no part or portion of this website, report, commentary, interview, and other content may be altered, reproduced, copied, emailed, faxed, or distributed in any form without the express written consent of Michael S. (Mickey) Fulp, Mercenary Geologist.com, LLC. n

Data Courtesy of Kitco.com


PROFILED COMPANIES

therakine limited: tunable “toolbox” for Drug Delivery

TheraKine Limited (“TKL”) is a

privately held Irish drug delivery

company with research facilities in

Berlin, Germany. Founded in June, 2006, the

Company has developed a variety of novel

drug delivery technologies for biologics and

small molecules that resolve many challenges

and are applicable in many disease thera-

pies. The Company has multiple patents

approved, pending, and in preparation.

The global market for biologic drugs is

worth over $60 billion a year. The limita-

tion on this is that biologic drugs have to be

injected or infused repeatedly. Depending on

the drug, daily or weekly injections are the

norm; this limits the potential indications,

has safety complication, and is very incon-

venient for the patient while being expensive

for the health care system.

In addition, the biologic pharmaceuticals

industry is facing soaring R&D costs, an

impending onslaught of patent expirations

(over half of the patents expire by 2017), and

increasing demands for improved medica-

tions. Novel drug delivery technologies are

strategically compelling as a product line-

extension or life-extension strategy for many

global pharmaceutical and biotechnology

companies. The utilization of such novel

drug delivery technologies also has a highly

favorable risk-reward profile. Meanwhile,

their competitors see drug delivery as a com-

pelling competitive advantage that moves

them from “bio-similar” to “bio-better” sta-

tus.

These companies are recognizing that drug

delivery technologies are a powerful strategic

marketing tool to differentiate products and

extend product life cycles, thereby over-

coming many marketplace challenges. They

are pursuing stronger alliances with drug

delivery companies, including acquisitions,

to enable them to develop superior drugs

and remain competitive. The market for

advanced drug delivery systems is expected

to mushroom from $42.8 billion in 2010 to

$75.3 billion in 2015.

TheraKine has developed sustained

release delivery technology platforms for the

local delivery of biologic drugs and small

molecules. The lack of injectable long-term

delivery systems has been considered to be

one of the unmet medical needs preventing

progress in biologic therapy. TKL’s tunable

sustained release technology now enables

linear release of drug products with dura-

tions from weeks to many months.

To date the company has been funded

with almost $2.5MM of private investment

and grants. Currently, the technology plat-

form is the subject of on-going commercial

collaborations with major biotechnology

companies and federal government agencies.

For example, anti-VEGF biologics are

used to treat wet Age-Related Macular

Degeneration (AMD), and these require

monthly injection into the Human Eye.

We have demonstrated that we can change

that interval to three or six months, which

is substantial relief for the patients and the

treating physician. Anti-TNFa, used for vari-

ous rheumatological diseases, could, when

formulated, replace months of routine injec-

tions with a single therapy according to Dr.

Andeas Reiff.

There are many advantages to local sus-

tained release in therapies for common dis-

eases. Obviously it is better to give one injec-

tion every six months than one every week,

sparing patients and physicians the other 23

injections needed in that same time. Many

patients currently on biologic drug thera-

pies are receiving long term therapy; think

of rheumatoid arthritis, Crohn’s, AMD, and

similar conditions where the patient will be

treated for life. In these patients, reducing

the injection frequency is a tremendous ben-

efit to quality of care, compliance, and cost.

There are also potential advantages in

terms of safety and efficacy: a sustained

release injection would allow very stable

levels of the drug to be maintained, instead

of the up and down dosing that occurs with

repeated routine injections.

For pharmaceutical companies facing end

of patent life with a high-value drug, refor-

mulation for sustained release provides new

life and new patent protection, preserving

the value of established franchises.

TKL’s tunable Toolbox technology has

been developed to enable sustained release

of such proteins and macro-molecular drugs

through local injectable resorbable depot

formulations. The technology can be applied

in therapeutic areas such as ophthalmology,

oncology, neurology, neuro-oncology and

rheumatology. Expansion into cosmeceuti-

cals, dermatology, and veterinary application

are all being investigated.

All formulations use existing approved

ingredients that are generally regarded as

safe (GRAS). This will minimize regula-

tory overheads, safety concerns, and costs of

development and trials. Demonstrated fea-

sibility with commercially available biolog-

ics is available for review, along with small

molecules, peptides, and generics.

In contrast to conventional chemistry or

nanotechnology methods, TKL’s matrix for-

mulation approach is based on physical

chemistry, primarily physics in the nano-

scale achieved by macroscopic processing.

Biologic drugs are large molecules (pep-


tides) and have molecular properties that are

uniquely suitable to TKL’s approach. Where

previous methods tried for sustained release

have depended on the creation of chemi-

cal bonds or nano-scale containers, TKL

exploits the physics of the peptide molecules

directly to create sustained release matrixes.

Key to the medical utility of TKL’s tech-

nology toolbox is that the active drug is not

modified in any way, and remains chemically

and structurally unchanged. This has signifi-

cant advantages by being compatible with

current pharmaceutical formulation meth-

ods, reduces development time, and may

dramatically reduce the regulatory burden

when used with already approved biologic

drugs.

The graph above shows TKL’s ability to

tune release kinetics using the Toolbox tech-

nologies, in this case for four to seven months

of duration. By exploiting the nanophysics

of the biologic drugs, TKL can achieve most

desired therapeutic dosing requirements.

Shorter durations are also possible.

We are currently delivering the matrix as

a suspension for injection with needles as

small as 27 gauge, but paste and semi-solid

forms are also possible, as well as topical for-

mulations. Used in conjunction with existing

interventional methods (guided injection or

catheters), local delivery to every organ in

the body is feasible, even inside the blood-

brain barrier.

Because we can use a large variety of

ingredients to create matrixes that can be

hydrophilic or hydrophobic, and vary the

processing conditions to adjust the release

kinetics from days to many months, we refer

to this as a Toolbox Technology – a com-

prehensive platform solution that enables

almost any desired therapeutic profile for

biologic drugs.

Routine assessment of release kinetics

is performed using conventional labora-

tory methods. Various Toolbox formula-

tions have been independently tested at the

Charité University in Berlin, the University

of Cork, the University of Potsdam, the

Vardinoyiannion Eye Institute of Crete

(VEIC), and the United States Air Force

(USAF). Parner pharmaceutical firms have

also performed their own tests, and the com-

pany will be entering pivotal trials shortly.

Since TKL’s Toolbox uses GRAS materi-

als, commercial partners can seek the low-

est-risk submission pathway whenever they

have an already approved drug. This path is

defined in 505(b)(2) of the Food, Drug, and

Cosmetic Act, and requires only that the new

functionality be supported by an additional

trial establishing safety and at-least equiva-

lent efficacy. To support this, TKL will be

conducting key studies that will be submit-

ted to the FDA so that commercial partners

An assortment of release kinetics possible using the Toolbox – 4 to 7 months

can reference those results without having to

perform those studies themselves.

in Summary

• TKL has a Toolbox of technologies that

enable sustained local release of biologic

drugs, peptides, and other difficult to for-

mulate drugs.

• These technologies may also be useful

with many classic small-molecule drugs.

• Only GRAS materials are used to for-

mulate the injectable matrix. The properties

of the matrix – dose, release kinetics, tissue

compatibility, and more – are all tuneable.

• The resulting drug delivery matrix sta-

bilizes biologic drugs so that they are still

active even after many months. Test systems

have exceeded one year of linear release

kinetics.

• Release durations from a few days to

over six months have been demonstrated

– and both linear and non-linear kinetics

can be tuned into the matrix using the TKL

Toolbox.

• The regulatory path for the resulting

therapeutic has been reduced as much as

possible, in compliance with FDA and EU

regulations.

• No chemistry is involved. The formula-

tion exploits the properties of the biologic

drugs to achieve long release without any

changes to the drug.

• The Toolbox has been shown effective

with a variety of biologic and conventional

drugs, with data available for review.

• Feasibility testing with new drug candi-

dates can be done quickly.

In conclusion, the novel and tuneable, site

specific drug delivery technology developed

by Therakine offers an excellent investment

opportunity for a pre IPO company in the

biotech space. For more information: www.

therakine.com n

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Cardiologist, Founder and CEO of

AccuHealth Technologies, Dr Elizabeth

Ofili, describes the mobile technology inno-

vation which uses persuasive self moti-

vation to empower people with chronic

health conditions to tackle the intractable

problem of non adherence to treatment and

behavior change. According to Dr Ofili, who

has practiced cardiology for over twenty

years “ I share the deep frustration that my

patients experience, because they are not

able to overcome the challenges of multiple

co-occurring chronic health conditions like

heart disease, diabetes, high blood pres-

sure and high cholesterol. Many patients

fall short in their attempts to sustain the

increasingly complex regimen of medica-

tions and behavior change that these condi-

tions demand”

Dr Ofili’s experience underscores the enor-

mous challenge of managing chronic health

conditions. Over 184 million Americans

are affected by one or more of the fol-

lowing chronic diseases: heart disease, can-

cer, mental disorders, chronic lung disease,

chronic kidney disease, hypertension, diabe-

tes, arthritis and stroke. Each year, chronic

diseases cost the nation a staggering $264

billion, due to health complications and lost

efits, behavior change and medication adher-

ence. We have been particularly impressed

with the superior clinical outcomes of com-

munity based participants, compared with

their counterparts in primary care practices.

e-Healthsystrides© has enabled a disrup-

tive innovation by showing the power of

social networks; consumers are motivated

to monitor and manage their health outside

the doctor’s office”

Greg Ofili leads the design team for

e-Healthystrides’ mobile solution: “our focus

remains on the consumer experience; we

have mirrored the data rich component of

the web application, and have integrated

additional features on cell phones and tablet

mobile platforms . For example, physical

activity automatically connects to Google

maps and calorie calculators as new decision

support tools on the mobile platform”

The technologies developed by AccuHealth

will drive innovations of person centered

chronic illness care. The Affordable Care Act

is accelerating incentives for a value based

health care delivery model. Technologies

like e-Healthystrides© will emerge as market

leaders by aligning incentives that moti-

vate consumers to sustain healthy behav-

iors and medication adherence. AccuHealth

Technologies Inc. has the team, business

model, competitive advantage and expertise

to drive innovation in personalized e-Health

applications. For more information, please

visit www.accuhealthtech.com. n

productivity. Since patients with chronic

diseases spend the majority of their time

outside the healthcare system, mobile tech-

nologies should sustain cost effective person

centered prevention and intervention.

AccuHealth Technologies Inc. has assem-

bled an impressive team of talented software

engineers, physicians and communications

specialists, to design e-Healthystrides© for

the ultimate consumer experience. According

to Bethany Saint Clair, Chief Technology

Officer at AccuHealth Technologies, “ I have

been developing health technology soft-

ware for over fifteen years. This IP pro-

tected innovation shows Dr Ofili’s vision and

commitment to commercialize personalized

technologies that improve health and well-

ness.” e-Healthystrides© allows consumers

to connect with multiple devices such as

blood pressure monitors, glucometers and

pedometers. Color coded decision support

tools, enable consumers to manage their

health. An important feature is a graphic

trend of multiple health indicators which

facilitate communication with health coach-

es and physicians.

Dr Priscilla Pemu, Chief Medical Officer

at AccuHealth Technologies has successfully

tested the application in over 300 patients,

in community settings as well as in primary

care practice settings. A significant improve-

ment in health outcomes was found as a

result of this clinical study. “Patients worked

with health coaches to sustain clinical ben-

PROFILED COMPANIES

accuhealth technologies:empowering Person centered health and wellness

You could feel the palpable excitement in Atlanta during the 2013 Southeastern Medical Device Association conference on

February 19-20, 2013.

www.accuhealthtech.com

eHealthyStrides©: Color coded feedback decision support

www.accuhealthtech.com


What to Look for When Investing in Micro-Cap Companies


I have always wondered why Vegas does

not excite me when it comes to gam-

bling.

That’s because I “gamble” every day in

the stock market.

I know “gamble” is a bad word when it

comes to investments, but let›s face it.

Most micro-cap companies fail.

You lose all your money.

We can get in to all the reasons why most

small public companies do not accomplish

their goals or “execute” on their strategies,

but that is for a later time.

What I will discuss are things that we

look for in companies before making

investments in them.

options, preferred convertible notes, and

debts, anything that is a mechanism of

dilution.

Over the past ten years of investing, our

share counts in positions of size have been

getting smaller and smaller and smaller.

inSiDerS buyinG

The greatest “investor relations” one can

do is to buy their own stock. Even more

points if the CFO buys (because he is

running the books), and super points if

several members of management and the

Board buy shares.

As an investor, you can fully devote

yourself to learning about the intricacies

about a specific company for years and still

not have the same insight some of these

insiders do.

Actions speak louder than words. When

wallets open, pay attention.

caSh Flow breakeVen /

ProFitability

The chances of survival greatly increase

when a company gets to breakeven or

makes money.

Those that don›t, continually need to

raise, dilute, and hope for the best.

A lot of this is common sense, patience,

and some luck.

The trick is to be in the game, work

hard, and hope that your name ultimately

gets discovered. n

n BY ChRIS LAhIjI www.ldmicro.com

PeoPle

Management is the most important part

of the equation. Hands down.

The guys at the top of the totem pole set

the tone for everyone else.

A wise man once said that he would take

an “A” team with a “C” product any day

over an “A” product and a “C” team.

You have to ultimately invest in people

that you think can get the job done with-

out using excuses, hyperbole, and disre-

gard for the shareholders best interest.

The micro-cap world is littered with

undervalued companies with inept man-

agement teams that do nothing but “milk”

their company year-in and year-out.

Whether its exorbitant salaries, cheap

stock option bonuses, or hiring members

of the family to positions of power, it

stinks and you probably won›t make any

money.

The qualities I›m looking for in a person

are “drive”, contacts, previous background,

solid boards, and an intense focus on what

needs to be done to get the company (and

its share price) to the next level.

Why the hell do you think we host a

couple of events every year? It›s for guys

(including ourselves) to meet with the

management teams.

Share Structure

The less shares, the better.

Common stock should be more valu-

able than gold.

We try to stay away from companies

who have big share counts, huge warrants,


A Different Way to Invest


Needless to say, investing in the capital mar-

kets, equity markets or hard assets such as

gold or silver have their potential for upside

and certainly come with some challenges.

Gone are the days of buying a mutual fund

and holding it for years with the hopes of

retiring with your nest egg. The markets are

dynamic and move fast, and only the savvy

investor survives.

declined him for various reasons. The prop-

erty is conservatively valued at $500,000,

the property is free and clear of all encum-

brances and the borrower needs $250,000.

This particular scenario has a 50% loan to

value. You are lending on the property at

half its value. Both you and the borrower

have a vested interest in the property, but

you have only lent on 50% of its current

value. The borrower pays a interest rate of

between 10 to 13%, secured by a first deed

of trust. In order for you to lose money, the

property would have to lose 50% of its value

and the borrower would also have to stop

paying. This type of investment is called a

hard money investment, because you have

control of the hard asset. Unlike the equity

markets, you have much more control of

your investment.

Obviously, this type of strategy for invest-

ing is not for everyone, but once you under-

stand the concept, its a fairly easy business

model to understand. There are also real

estate funds that can be invested in that do

all the work for you, but use a methodology

that is consistent with the model we have

discussed.

For more information on hard money

lending, our website is an excellent

resource www.pitbullconference.com

Leonard Rosen is nationally known as the expert in hard money lending and provides national confer-ences for the industry.

Always consult with your financial advisor before you invest. This article is not a solicitation or offer to sell securities. n

n BY LEONARD ROSEN, cEo Pitbull confErEncE inc.

So what are the interesting and unique

investments for the next generation? Hard

money lending for real estate is an option

that many investors have found to be attrac-

tive. This is not your traditional real estate

investing as you may have come to know, but

its a niche way of investing with a conserva-

tive return with much less exposure than

the equity markets. Its a simple concept that

most people can wrap their heads around.

Here’s how it works.... Because of tighten-

ing credit markets and difficult underwrit-

ing guidelines, most banks are reluctant to

deploy capital in the real estate market. This

is due in part to the 2007 real estate implo-

sion and reckless lending practices by several

large mortgage underwriters. These factors

coupled with a recession in the U.S economy,

forced real estate valuations to recede signifi-

cantly in many major markets.

Here’s the rub.... You are probably think-

ing, why would I want to invest in a market

that was hit by recession and properties

values have decreased? The answer is simple,

where there are challenges in a market, there

are opportunities. Because banks are not

lending on commercial property or non

owner occupied houses as they were in the

past, a private investor has the opportunity

to lend to the borrower at the new valuations

and receive a reasonable dividend yield.

How it works.... Lets assume a borrower

comes to you with a small commercial build-

ing that needs financing. The borrower has

already approached the bank and the bank

With 2013 upon us, many investors take a second look at their portfolios. Some scratch their heads wondering what hap-

pened to their money and others think they can do better.


potential investment. Our focus is going to

be on those micro-cap companies that are

generating revenue.

Micro-cap companies are generally

defined as those with market capitalizations

less than $300 million in value. Most micro-

cap companies have either a limited amount

of revenue or no revenue at all, and many

are essentially start ups where the value of

the company really lies in the products and

services being developed. Many of these

companies have very small management

teams that usually own a significant por-

tion of the company’s common stock; and

as a result wholesale management changes

as typically seen in large companies are not

an option for micro-cap companies going


Restructuring a Micro-Cap Company

It is not uncommon to come across a com-

pany with what seams to be very promising

products or technology that is trading at a

deep discount to what its perceived valua-

tion should be. For sharp investors, selecting

the right company to invest in can be very

rewarding. However it is very important to

know what type of company you are looking

at. Is this a growth company, where new

products and services could lead to a signifi-

cant increase in sales and profitability? Or is

it a turnaround/restructuring situation? It

is important to know the difference between

the two types as they require a different

form of analysis. In this article we will take

a look at evaluating a micro-cap company as

a turnaround or restructuring situation as a

n ERIk NELSON

Many sharp investors have learned the benefits of reading through a company’s annual

and quarterly reports, as well as other public filings.

through turnarounds or restructurings. The

majority of companies that are in need of a

turnaround or restructuring find themselves

in a distressed situation; primarily due to

either cash flow issues or the market for

its products and services has evolved and

the company has not managed to keep up

with the changes in the market. Therefore

when evaluating a potential turnaround or

restructuring situation, it is important to

ask three (3) primary questions regarding

a company’s ability to restructure and turn

itself around: Can the company reduce

its expenses and deploy capital where it is

needed? Can the company increase its sales

and cash flow? Can the company obtain

additional financing on terms favorable to

existing shareholders? If yes can be answered

to these three (3) questions, then a company

has the potential for a successful turnaround

or restructuring. If of the answer is no to any

of these questions, then it is best to move on

and look at something else.

For those companies that have revenue

and are in need of a corporate turnaround,

the most important thing is to reduce the

company’s expenses and get the company

cash flow positive as quickly as possible in

order to stop the drain on the company’s

financial reserves. This is very important as

it will buy the management of the company

time to deal with the other problems facing

the company. The quest to get a company

cash flow positive can involve several differ-

ent tasks from restructuring debt, cutting

expenses, and increasing sales; with the solu-

tion usually involving some combination of

all three.

For many companies involved in a turn-

around or restructuring situation, restruc-

turing the company’s debt is a key part of the

part of the process. I have worked on several

debt restructuring projects, and they have

all involved having serious discussions with

the holders of the debt about the future of

the company. The success or failure of these

discussions will depend a lot on the relation-

ship the company has with its debt holders

and if they see greater value in the company

continuing in operation. If the debt hold-

ers can be convinced there is value to the

company as an ongoing entity and they have

a good relationship with the management of

the company, then there is a good chance

that they will agree to some form a debt

restructuring. Usually these debt restructur-

ings involve converting the debt to equity,

or some portion of the debt to equity and

a reduction in the interest rate, resulting

in a reduction in the interest payments on

the remaining debt. However, if the debt

holders believe they have a better chance of

recovering their investment by either seizing

collateral or by liquidating the company, it

may be nearly impossible to get a deal done

to restructure the debt.

Reducing the overall expenses of the com-

pany and eliminating unnecessary expense

items is a key component of any turnaround

and restructuring. Sometimes this will

involve a reduction in the staff or number of

employees, other times it will involve elimi-

nating unnecessary items that the company

can really do without. The key component

of the process is to successfully determine

what is an essential item and what a com-

pany can live without.

Often overlooked or ignored in a turn-

around is how can a company increase the

sales of its existing products or develop new

revenue streams. This is a three pronged

approach. It is very obvious that the high

profit margin products and services need to

be expanded or given additional resources

so sales can be increased. The lower margin

or unprofitable products and services need

to have a full review with the goal of deter-

mining how sales and profit margins can be

increased. If these goals cannot be accom-

plished then a company needs to seriously

look at either selling these product lines or


discontinuing them. The next thing a com-

pany needs to do is to determine how and

where it can add new products and services

to create new revenue streams. This can be

one of the hardest parts of the entire restruc-

turing, determining where new opportuni-

ties are and how to take advantage of them,

but it is ultimately key to the long term

survival of the business. For most of these

companies they got into trouble because

their product mix was not where it needed

to be, and reconfiguring their product mix is

key to their future.

It is also important to understand if the

company will need to obtain additional

financing in order to complete its turnaround

and restructuring. The potential financial

sources for a company going through a

restructuring is primarily limited to strate-

gic investors, shareholders, and investment

companies that specialize in investing in

turnarounds and restructurings. A strategic

investor is usually thought of as a business

partner to the company who sees significant

value in the company’s product and services

and decides to make an investment in order

to secure access to those products and servic-

es. Since strategic investors usually seek to

maintain good relations with the company

and its management, which typically owns a

significant portion of the common stock in

a company, the strategic investors will usu-

ally invest in a manner that avoids massive

potential dilution to existing common stock

shareholders. A good example of this is

many years ago when Apple, Inc. ‘AAPL’ was

in not doing well financially, and Microsoft

Corp. ‘MSFT’ invested in Apple through a

special class of preferred stock.

Investment firms that specialize in invest-

ing in distressed companies often do so with

an eye towards potentially taking over the

Reducing the overall expenses of the company and

eliminating unnecessary expense items is a key compo-

nent of any turnaround and restructuring.


companies they invest in. They are gener-

ally going to structure their investments in

a manner that places a lot of restrictions on

the management of the company, and its

common stock holders. They will almost

always structure their investments in a man-

ner that allows them to take over the com-

pany if things do not work out as planned;

and when this happens the common stock

holders are usually wiped out. Obviously, if a

company you are looking at is in the process

of obtaining financing from one of these

types of investment firms you will want to

remove them from consideration as a poten-

tial investment.

It is usually a good sign when a com-

pany has deep pocketed shareholders who

are willing to step up to the plate and

increase their investment in the company.

When done properly, these shareholders will

work to assist the company’s management

in gaining the resources needed to complete

the turnaround, as well as structure their

investment so that existing common stock

shareholders will be able to participate in

the upside potential of the company as well.

As a potential investor in a micro-cap

company that is in need of a turnaround

or restructuring there is an opportunity for

very outsized gains to be realized. However

it requires a substantial amount of work

in determining if a company has the abil-

ity to effectively execute a turnaround or

restructuring. When doing your homework

on these companies, do not be afraid to pick

up the telephone and call the management

at the company to see what they have to say.

Be a little skeptical when talking to them and

do not take everything they say at face value.

However with some hard work you should

quickly be able to figure out who is being

straight forward and honest with you and

who is not. Only invest in those companies

where you believe what the management

is saying, and you believe the company can

answer yes to the three questions at the

beginning of this article.

about coral caPital

PartnerS anD erik nelSon

Erik Nelson is the President of Coral Capital Partners, an independent consulting and advisory firm focused on companies and participants in the lower and middle markets. Coral Capital Partners provides cost effective solutions to real world issues and situations. Coral Capital Partners, Inc. provides services to Investment Banks, Private Equity Funds, investors, and both privately held and publicly traded companies, as well as various stakeholders in those organizations. This has included international public companies with operations on three (3) continents to smaller privately held domestic companies. Our experience in the areas of corporate advisory, due diligence reviews, and regulatory compliance allows for a cost effective and efficient solution to the issues at hand. Please feel free to visit our web site at: www.coralcapital.com or call our offices via. telephone # (404)-816-9220 to see how we may be of assistance. n

leading auditor of small and mid-cap SEC-regulated companies

Market

of nine independent registered public accounting firms in the world that is annually inspected by the PCAOB

One

Offering peace of mind by deliveringsmall public company audit efficiencies with the GAAP expertise our clients require and expect

Jay Norris, CPAAudit Partner

[email protected] Office

713.343.3419 Fax713.444.2571 Mobile

www.malonebailey.comwww.malonebailey.com

Contact

Baltimore401 east Pratt Street 7th FloorBaltimore, mD 21202410-767-0505

roCKVille9700 Great Seneca Highwayrockville, mD 20850301-762-9214

www.biomaryland.org

MICRO-CAP

CrispTek, LLC Columbia, MD

Developer of patented blend of rice flours and gluten free, allergen free,

low-oil absorption products received $99,300 to develop three new certified gluten free/allergen free/kosher baking mixes including testing, packaging and

initial store placement. www.crisptek.com

Adlyfe, Inc. Rockville, MD

Developer of unique technology that allows the “mapping” of protein

surfaces received $200,000 to advance the development of a proprietary

minimally invasive ocular imaging test for the early detection of Alzheimer’s.

www.adlyfe.com

Bamvet Laboratories, Inc. Baltimore, MD

Developer of the first FDA authorized pain medication for laboratory rats and

mice received $200,000 to build out marketing infrastructure, and manufacture first commercial

batch of product.

Cardiosolv, LLC Baltimore, MD

Developer of system providing patient-specific cardiac modeling to the

bedside received $200,000 to undertake prospective human validation study predicting non-invasively the optimal

ablation targets for ventricular tachycardia patients.

http://cardiosolv.com

Remedium Technologies College Park, MD

Developer of proprietary lifesaving technology to stop traumatic

bleeding rapidly received $199,100 to validate a novel sprayable

foam hemostat, HemogripTM, in a study of on non-compressible bleeds

in large animals. www.remediumtechnologies.com

salutes the award recipients



The Year (2013) of Social Media Integration & Empowering of the Users

ogy, mathematics and computer science.

Additionally, 2013 will create a great number

of advanced jobs in this rapidly developing

sector which will drive the economies of the

United States and other developed coun-

tries embracing this social media integration

space.

Here are four examples of existing and

future products/properties to pay attention

to when it comes to combining inspiration

with food in the world of social media.

Foodgawker “Feed Your Eyes” – This is an

active product. It is where users submit their

most awe inspiring perfect plate setting, per-

fect moment, perfect lighting photos of their

collections of foods.

Pinterest – This is an active product. Users

are able to “pin” appetizing-looking meals

such as breakfasts, lunches, desserts during

your daily browsing experience. Then, when

you are hungry or looking for an idea, you

can inspire your mind on what to have on

that next meal which could be hours away or

plan for a night out the following week with

your family, date, friends. Some users even

use it to inspire the creation of meals and

what to make tomorrow night.

Zuse – This is a future product that

empowers the user to be able to browse, see,

Many analysts thought that the top was

already reached. As 2012 progressed, the

situation stabilized and if you look at thing

with a deeper note, you will find that much

has been happening on the integration side

in a very bullish way.

Stock valuations aside, publicly traded

companies such as Facebook (Nasdaq GS)

and LinkedIn (NYSE: LNKD) have just

begun to touch the surface of social media.

In 2013, this is the year that integration and

inspiration take lead roles by allowing users

to do more with their existing social media

accounts. 2013 is the year of social media

integration and empowerment. Companies

that create applications that drive integra-

tion from desktop to mobile computing to

social media will do well. Consumers will

love these application that empower them

n BY DR. GORDON ChIU

Many look back on 2012 as the year of social media companies becom-ing main stream. It was greeted with euphoria that turned negative

once they were measured according to Wall Street earning standards.

by inspiring, simplifying and make their

lives easier.

One area that is being “eaten up” by users

is the topics around food. Food sharing

isn’t just over the physical food but instead

over the virtual experience and the nostal-

gic effects that this brings. It is the art and

science of eating virtual displays of food

coupled with your real time experience after

the viewing. This is a very big area of devel-

opment.

Recently, within many universities, this

has become a subject of great interest

between student, faculty and companies in

the departments of mathematics, computer

science and psychology. The interest goes

beyond the application but to look into

what makes that application enjoyable and

even details such as whether the photos or

descriptions (long or short) play a bigger

role in causing unknown users to “add” or

“friend” you.

The food example is one of many that

spawned multiple replicas in travel, shop-

ping, restaurants, news and information.

The contents around each of these topics

and how they are shared is a notewor-

thy study. 2013 will create new disciplines

which hybridize disciplines within psychol-


view and interact with more than one web-

site in real time. This product will be released

on the Apple iPad while allowing the user

to functionalize and create their personal

real time multi-dimensional browser. It will

be interesting to see how users will use this

new empowerment to look at information,

news, food, restaurants, shopping to achieve

greater inspiration and idea generation. This

multi-browser has many unique features

allow seamless integration with social media

populars like Facebook, Twitter, etc.

Foodily – This is an active product. It can

be linked with your Facebook application

that allows you to “search, discover” and

become inspired by sharing, recommending

and saving recipes that are created so that

you can further recommend these to your

friends. Foodily has over 500,000 recipes by

what’s on user refrigerators, diet types or

ingredients from top websites, popular blogs,

cookbooks and famous culinary artist.

about the author

Dr. Gordon Chiu is an execution-driven business-man with more than 15 years of combined domestic and international experience in biomedical, chemi-cal, cosmetic, medical, and technology industries. He has been invited to serve on the board of public and private companies and to provide vital advice to the board while increasing overall shareholder value.

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

His educational background began with a B.S. degree in chemistry from Rensselaer Polytechnic Institute, graduating summa cum laude. He gradu-ated with an M.S. degree in chemistry from Seton Hall University with high honors. Additionally, Dr. Chiu was accepted 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, devel-oped, 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 unique 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 equip-ment) 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 librar-ies (D.C.A.L.) that are used in various commercial applications, composition development and research.

Disclosure: Dr. Chiu is a co-founder of Zuse

since 2011 and is an independent adviser to SNN. n



Attention Wall Street Shoppers

choose their investment banking partners is

often very different than how they SHOULD

make a selection. Companies may gravitate

toward a “brand name” or bulge bracket

firm (what board would criticize manage-

ment wanting to partner with an 800-lb

gorilla on Wall Street?). The firm’s size may

be beneficial if they use their large balance

sheet to invest directly in your company

or lend to you. However, size can instead

mean slow committees with the chance to be

turned down or put at the back of the offer-

n BY FRED jOhNSON

Bankers seeking to differentiate themselves

ironically fall prey to convention; dark suits,

bright ties, over-starched shirts and pitch

books filled with deals, league tables, and

analyst rankings, etc. A lot about them, little

about you, and less still as to the fit. So how

can a management team see through this

veneer and discern who will do the best job

for the Company?

Typical criteria used by management

include the banks experience (“tombstones”

in banker parlance), sector knowledge, the

Executives and Boards often consider a number of investment banks in making their selection of the ideal advisor or underwriter. These Bake-offs, Dog and

Pony Shows, Beauty pageants in the Street Vernacular are the arenas of competi-tion for the swashbuckling gladiators of Wall Street to impress the CEO, CFO and Directors and win the lucrative banking assignment.

bank’s market segment (bulge bracket, mid-

market, boutique orientation). If the assign-

ment involves a public company raising

equity, an important metric is research cov-

erage. Management teams are keen to prove

to their boards and their shareholders that

their strategy is worthy of interest and sup-

port from the sell-side. Woe is the CEO or

CFO who routinely admits to their board

that they are not followed by the analyst

community.

How public companies ACTUALLY


ing queue. Bigger firms also carry conflicts

of interest, distractions and have greater

concerns as to their own liability. Those

factors may impede their ability to take on

transactions and may limit what process or

audience they can bring to bear.

Are you Important? Instead, ask yourself

if your deal is important to the investment

bank’s platform. Will the senior bankers

give your transaction ample attention, care,

time and thought? Ways to get a feel for

this might be whether the firm’s CEO makes

himself available to management to empha-

size the importance of the client to the firm.

Experience. What about the all impor-

tant experience factor? Experience is great,

unless it isn’t. What if deal experience means

the bank feels compelled to reward its repeat

investors with deal terms that benefit them

instead of you, the issuing client? Experience

can also lead to a thoughtless “auto pilot”

process that is mechanized and not tailored.

Are you a notch in the league table or a val-

ued long-term client? Keep in mind, the firm

may have a deep reservoir of relevant deal

experience, but your banker may have had

a limited role, if any in many of the deals.

Ask the banker pitching you the deal what

role he or she might have in marketing and

structuring the deal. If the process is turned

over to anonymous Equity Capital Markets

personnel, you might be getting an overly

rosy or optimistic view of the firm’s com-

mitment or ability to deliver. Many bankers

are great at selling what someone else in their

firm actually has to deliver which leads to

overpromising and poor results.

Support Beyond the Deal. Firms that offer

support in ways that don’t pay corporate

finance fees (non-deal investor introduc-

tions and road shows, conference sponsor-

ship) show genuine interest and demon-

strate longer-term perspective, support and

conviction in the business strategy. These

banks are seeking affiliation rather than an

immediate pay day (ok, fees at some point

are still the end goal). Non-deal investor

introductions and conference sponsorship

are excellent previews of the banks distribu-

tion network and work ethic and banker

personalities (for those possessing such).

Regional vs. National firms. While bulge

bracket or nationally-known investment

banks may be better known with more

resources and heft, a regional bank may

be uniquely able to offer different investor

exposure. Most banks know plenty of pock-

ets of capital in New York and California

for reasons similar to those offered by infa-

mous bank robber Willie Sutton when asked

why he robbed banks (“that’s where the

money is”). As such companies tend to get

plenty of exposure there sooner or later. An

investment bank located in the Midwest or

Southeast may offer better and incremental

exposure to fund managers located in their

region. Portfolio managers in cities like

St. Louis, Milwaukee and Minneapolis and

Atlanta are too often overlooked or skipped

for New York and San Francisco.

Diligence. Another proxy for a bank’s

quality is diligence. Banks that perform little

or no due diligence should serve as a major

warning. Risks here include a) the deal is

going to hedge funds/flippers, b) the banker

is essentially a sub-contractor unlikely to

remain at the bank too long and therefore

indifferent to his employer’s underwriting

liability and c) your bankers and sales team

be poorly positioned to handle questions

and objections from the investors.

Commitment. You might also prefer to

know the firm’s commitment to you and the

sector. Banks that chase fads (Spacs, Reverse

Mergers, Chinese companies listing in the

US with no presence here) may view you and

your sector as such and offer fleeting sup-

port. Your banker and research analyst (per-

haps even the firm) may be here today and

gone tomorrow. Aftermarket support could

suffer and key people such as your research

analyst could leave or drop coverage.

Back to research. How much influence and

integrity does the research department of the

firm have? The fact that a report is written

does not mean it is read, or valued by the

institutional investor universe. If a tree falls

in the forest……Is the research department

known to be a shill for banking or could it

stand on its own due to the value of its ana-

lysts and stock picks?

Cult of Personality. As with any service

business, personalities are important. Would

you put these bankers in front of your board

to walk through process, pricing, etc? Would

you be proud to have the particular bankers

represent you in the market? Will the senior

bankers be accessible to you and your board

before, during and after the deal and on

short notice?

The take away here is that size and stature

are not everything. A bigger bank by defini-

tion has more capital and more resources and

more recognition. Is that capital and are those

resources available to your company and

in your deal or are they reserved for bigger

or more important clients? Smaller invest-

ment bank may be more flexible, more agile

and more attentive. There is likely greater

accountability by the bankers pitching you to

select them if they are also the people that will

execute the deal. Remember too that many

assignments have multiple banks involved.

Smaller banks may be better complements to

a team if they are not viewed as competing

in the same segment of the market routinely

with the other bank(s) involved.

Investment bankers, even today, command

big fees from their clients. Make sure you

are getting the best Bang….err um Bank…

for your buck.

Fred Johnson joined Barrington Research in 2012 as Managing Director in the Investment Banking group. Previously, he was with William Blair & Company from 2009 to 2012 as Managing Director and Head of Confidential Equity Offerings (includ-ing PIPEs and Registered Directs). Prior to joining William Blair, he spent 10 years with A.G. Edwards in the Investment Banking department (and one year with its successor, Wachovia) as a Managing Director in the Equity Private Placement group. Mr. Johnson has over 15 years of experience structuring private equity transactions for small-cap public companies (PIPEs), as well as closely held private companies, across many industries. Prior to A.G. Edwards, his experience included merger and acquisition advisory with Arthur Andersen’s Corporate Finance group, and commercial credit analysis with Dun & Bradstreet. Mr. Johnson holds an MBA in Finance from New York University, where he was a Stern Scholar, and dual BA degrees in Economics and Philosophy from the University of Wisconsin-Madison. n



Why IR?

discover the stock. There is no doubt that

a company’s performance is essential to

the IR program’s success. However, I can

name many instances in which a company

reported outstanding financial results or

announced a major breakthrough, only to be

largely ignored by the Street.

I’ve also seen many companies opt for

a haphazard, “IR-lite” approach in which

they engage in any number of IR activities

without a fully developed plan, overarching

strategy or consistent approach. As such,

n BY kEITh LIPPERT

The challenge is developing and executing

an IR program that is accountable both for

process and results. This is particularly rel-

evant for a micro-cap company, which most

likely lacks visibility, has a limited operating

history, and competes in a crowded market-

place with nearly 10,000 OTC companies

for the attention of a small universe of risk-

tolerant investors.

In my experience it is not enough for

management to execute on its business plan

and hold out hope that an audience will

The answer is simple: An effective investor relations program can maximize your company’s valuation as currency for capi-

tal markets activities and establish an educated base of investors and analysts for support during difficult times.

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they miss opportunities to build long-term

relationships with investors and maximize

the impact of positive developments.

One of the best ways to think about IR is

to liken a stock to a product that represents

the investment opportunity in a company.

Like any product, the stock needs to be mar-

keted, and marketing in a complex, regulated

environment such as Wall Street benefits

from a plan developed and led by an expe-

rienced team.

A well-conceived IR program is tailored

to support each company’s specific busi-

ness needs and objectives, and is focused

on results-oriented actions to accomplish

those objectives. Every interaction with the

Street is an opportunity to present the firm’s

investment thesis, which encompasses the

key reasons investors should buy and hold a

stock. Developing this investment rationale

requires in-depth knowledge about the com-

pany’s strategy, competitive advantages and

the market environment, as well as a keen

understanding of how the Street processes

information and makes decisions.

Management also needs to provide an

ongoing narrative that enables investors to

gauge its progress. By presenting meaning-

ful metrics and milestones – both financial

and operational – the IR program establishes

the framework by which to evaluate the

company’s performance. Importantly, when

milestones are reached, credibility is created.

The highlights of the investment thesis

should be intertwined through all investor

communications. Thus, consistent messag-

es, milestones and reasons to invest can be

reinforced each time the company speaks to

the Street, whether in an investor call, press

release, company presentation, conference

call, corporate fact sheet, stockholder letter

or IR website.

To have a significant impact, these mes-

sages need to be marketed to a targeted audi-

ence, including high-net-worth individu-

als, retail investors, micro-cap institutional

investors, sell-side analysts and investment

bankers. Knowing who these audiences are

and how to reach them is critical to the pro-

gram’s success.

Management and its IR representa-

tives should develop a reputation as being

investor-friendly by being accessible and

forthcoming within the confines of securi-

ties laws and in light of business competi-

tion. However, accessibility is not enough.

Many IR programs miss the opportunity for

ongoing dialog with investors, which can

provide feedback into market sentiment.

Management can leverage these valuable

insights to uncover and correct mispercep-

tions about the company, or affirm strategy

and positioning.

How does management implement a

timely, well-conceived program and keep

focused on its long-term IR goals? One

way is to develop a formal quarterly recap

of activities, and develop the IR strategy

and plan for the coming period. Even if the

timing of some activities shifts and the strat-

egy remains unchanged, a planned program

enables you to leverage what you know now

and to capitalize on additional opportunities

as they present themselves.

How do you choose IR representation?

Experience is important, including work

in your sector with companies at a similar

point of development and with comparable

market capitalizations. Look for a prov-

en track record in establishing messaging

that resonates with micro-cap investors and

strong ties with the micro-cap investment

community. Ask about results in creating

awareness, gaining sell-side analyst coverage,

generating invitations to present at invest-

ment conferences, building or changing a

shareholder base and providing assistance in

raising capital.

Experience also is essential in provid-

ing value-added strategic counsel in any

IR situation that may present itself. This

encompasses a wide-range of topics, such as

exchange up-listing, management changes,

shareholder activism, capital market activi-

ties, M&A transactions and crisis manage-

ment.

So how do you evaluate your IR program?

There are too many variables such as com-

pany performance and macroeconomic con-

ditions for stock price to be an appropriate

measuring stick. The following checklist can

be more useful in assessing the program’s

effectiveness:

Was a customized investor relations pro-

gram efficiently implemented?

Was management’s time used well?

Did the program successfully expand your

investment audience?

Has your company’s perception on Wall

Street improved?

Was the strategic counsel valuable and

actionable?

Were the collateral materials high quality?

Were opportunities created and challenges

managed?

In summary, effective IR works to build

awareness of your company as an investment

opportunity. It enhances and preserves

management’s credibility. Importantly, it

supports the achievement and maintenance

of maximum valuation, enhancing share-

holder value and providing greater acces-

sibility to capital markets.

keith l. liPPert

FounDinG Partner, lha

Since founding LHA (formerly Lippert/Heilshorn & Associates) in 1984, Keith Lippert has built a reputa-tion as a respected advisor to emerging-growth com-panies. Along with his partner, John Heilshorn, he has established LHA as a pioneer and a premier pro-vider of financial communications services, and has provided strategic counsel to more than 1,000 public and private companies. Keith plays a leadership role in working with account teams to enhance the mar-ket’s understanding of LHA’s clients by integrating all of the investor outreach tools available. He is able to leverage his extensive relationships with institutional investors, securities analysts, retail stockbrokers and investment bankers as well as his capital markets knowledge on behalf of LHA’s clients. n



Silver Past and Silver Future

Silver posted an annual average price near

$30.00 in 2012, down from the average price

of $35.12 in 2011. However, it is important

to remember that the average price in 2009

was $14.67, so we are up more than double

what the price was three years earlier. If this

n BY DAVID MORGAN foundEr: www.SilvEr-invEStor.com

“I am very bullish for both the near–term outlook for silver as well

as for its prospects over the next few years. The silver price will be

increasingly driven by monetary demand.”

–James Turk, founder of GoldMoney

The above quote echoes exactly my senti-

ments about silver as this missive is written

in late 2012. First, it is important to review

silver’s performance so far in 2012 and what

is expected from the indispensible metal

going into 2013 and beyond.


trend continues then one might project sil-

ver to be above $60 three years hence.

Silver investing is truly worldwide at this

point and the trend continues to grow.

Coin sales by government-produced coins

continue to be in high demand, with some

hitting record sales. In fact in a few instances,

coin demand has outpaced the ability of

the mints to produce! Again, this is a trend

that will continue, in my strong opinion, as

people globally increase their purchases of

precious metals due to certainty of govern-

ment’s inability to address the debt problems

facing us all.

The amount of silver in the exchange-

traded funds is near record off takes, which

means more commercial bars are now held

for investment purposes than as inventory

for industrial consumption. This offers fur-

ther testament to investors’ enthusiasm for

silver as an investment rather than a base

metal or consumption metal only. Physical

silver bar investment grew by a massive 67

percent in 2011 to 95.7 million troy ounces.

The growth in 2012 cannot be determined

yet, as we still have one month to go as this

is being written.

While global coins and medals fabrica-

tion rose by almost 19 percent to an all-time

high of 118.2 Moz., Western Europe and the

United States, which bested 2010’s record

performance in terms of American Silver

Eagle Bullion Coin sales, led this category to

its record high. Elsewhere, strong demand in

China accounted for a near 60 percent rise in

its bullion coin output last year.

Quoting the Silver Institute from

September 2012, “Investors are continuing to

be bullish on silver in 2012, increasing their

holdings of the precious metal that are at

near record levels.” Investors have so far pur-

chased more than 32 million ounces of the

white metal through silver-backed exchange-

traded products this year. Exchange-traded

fund holdings now total more than 608

million ounces with a value of $20.5 billion

through mid September.

The silver price has risen more than 20

percent since the beginning of this year.

Significantly, from January 2009 through

September 15, 2012, the silver price has

increased an astounding 211 percent. It

seems important to take a longer-term look

at the price movement as new investors

usually are focused on too narrow a time

span. From this point on, investors would be

best served to focus on a three- to five-year

timeframe.

Silver also enjoys a wide range of impor-

tant uses in industry. Industrial applications

accounted for over half of world fabrication

demand in 2011 and 2012. Unlike gold fab-

rication, which is heavily reliant on jewelry,

silver can call on a more diverse range of

applications. Furthermore, in the short term,

many of these uses are relatively price inelas-

tic, helping to create strong price support.

Morgan Stanley has a 2013 average price

of $2175 per ounce for gold. This is very

close to my estimate, and knowing silver has

outperformed gold during this bull market,

expects the ratio to drop from the current

53 to 1 (gold to silver) ratio to something

around 40 to 1. This implies a price for silver

of about $55 per ounce!

However, knowing how markets move and

especially markets that are as highly geared

and emotional as silver once the nominal

high of $50 is taken out to the upside, expect

silver to establish a “new” high, ranging $60

to $75 in 2013. Why?

In commodities especially, there is noth-

ing more bullish than a new all-time high.

Once silver overcomes decades-long resis-

tance at the $50 level, many momentum

players will jump on the silver bandwagon

for a short and profitable run.

It is important to recall that when silver

approached this level in April of 2011 the

Commodity Mercantile Exchange (CME)

increased margin requirements for silver

four times before the market quieted down

and sold off sharply. In fairness, my view

was that the silver market had become over-

heated on a temporary basis and if anyone

was buying silver at or above the $35 level

they should be very cautious.

2013 will be the year that the next leg up

in this once-in-a-lifetime bull market will

establish itself. As difficult as it may be for

investors/speculators to believe, the best is

yet to come. Markets move in erratic ways

every time they approach their final tops.

The precious metals are no exception and in

fact have a propensity to have huge moves

during the manic/panic buying that lies

ahead.

It has been stated that 90 percent of the

move comes in the last 10 percent of the

time. Looking back to the final year of the

previous silver bull market, silver started

January 1979 in the $6.00 range and a year

later topped out at $50. Will history repeat?

No one can say, which means we need to be

open to all possibilities. We may see a run in

silver that makes the 1979 move look tame

because there is less silver now than then, it

is a global market now, the Internet encour-

ages easy information and purchases, plus

the three bullish factors below will continue

to bolster precious metals investing.

bulliSh FactorS

Increased Uncertainty

Volatility is a function of uncertainty.

Because the world is becoming unstable as

a result of inability of sovereign nations to

keep their promises to the people, we are

witnessing demonstrations in the Middle

East, Europe, and elsewhere. This is a major

Silver also enjoys a wide range of important uses in indus-

try. Industrial applications accounted for over half of world

fabrication demand in 2011 and 2012.


trend that will continue and many investors

and even average people will seek protec-

tion. Gold is considered a “safe haven” and

certainly we agree to some extent, yet going

back well over a decade when asked to write

the “Ten Rules of Silver Investing,” this was

Rule #1!

Rule #1 – When all else fails, there is silver.

No one likes to be a prophet of doom, but

the simple truth is that silver is the world’s

money of last resort. Should a severe eco-

nomic collapse occur, leaving paper assets

worthless, silver will be primary currency for

purchase of goods and services. (Gold will

be a store of major wealth, but will be priced

too high for day-to-day use.) Thus, every

investor should own some physical silver and

store a portion of it where it’s accessible in an

emergency.

After submitting this to the publisher, he

called me to express the fact that he had

been thinking gold, but in a true crisis, silver

would be the metal in use.

Money Debasement

We need look no further than a recent press

release from Thomson Reuters:

A Rebound In Investment Demand

Stemming From Continuing Loose Monetary

Policies Expected To Drive Silver Prices

Towards And Possibly Over $50 during 2013.

We are in agreement with the GFMS

report and yet think silver could do even

better depending upon how policy decisions

unfold in 2013.

It is no secret to thinking people every-

where that the total destruction of a financial

system that can be trusted is taking place.

Although many want to delude themselves

into pretending the obvious cannot really

be taking place, those with power and con-

viction are moving to safe alternatives with

zero counterparty risk. This means physical

gold and silver, the top of all commodities,

because they are MONEY!

Silver Trading Platform in Asia

The Chinese Gold & Silver Exchange Society,

or CGSE, a leading physical gold market-

place in Asia, plans to launch a silver trading

platform in Hong Kong in the first quarter

of 2013.

The new Silver Contract will be denomi-

nated in Hong Kong dollars, and the con-

tract size will be at least 10 kilograms. The

minimum delivery unit will be 30 kilograms.

An airport-based precious metals vault at

the Hong Kong International Airport will be

the accredited depository that would facili-

tate the physical delivery of silver.

The CGSE said that it would consider

launching yuan-denominated silver trading

later under this new platform. This of course

would open up the China market even fur-

ther and puts even more pressure on the

silver market.

Initially this new exchange expects around

2 million to 3 million ounces per day in the

first six months. It is our thinking that this

is only the beginning and increased silver

awareness in Asia will bolster demand in a

significant way.

David Morgan is a widely recognized analyst in the precious metals industry and consults for hedge funds, high net worth investors, mining companies, depositories, and bullion dealers. He is the publisher of The Morgan Report (www.TheMorganReport.com) on money, metals, and mining. Additionally he provides a precious metals savings program through www.Silver123.net. Mr. Morgan is also the author of Get the Skinny on Silver Investing and a featured speaker at investment conferences in North America,

Europe, and Asia. n

MEXICO’S NEXT SIGNIFICANT PRIMARY SILVER DEPOSIT

add a shine to your portfolio

No one likes to be a prophet of doom, but the simple truth

is that silver is the world’s money of last resort. Should a

severe economic collapse occur, leaving paper assets worth-

less, silver will be primary currency for purchase of goods

and services

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 144 Opinionsq About Graphite, Greg Bowes - NGC.Vq AL International - JCOF q A Rational, Practical and Logical Approach to General Solicitationq Ask Mr. Wallstreet Newsletterq Attention Wall St. Shoppers, Fred Johnsonq Bank of Internet - BOFIq Bio Marylandq Bright Outlook for Asia, Leslie Richardsonq Cambridge House International Conferencesq Caveat Emptor or Buyer Beware Bookq Closure, Rabbi Stephen Robbinsq Compliance Corner, Russell C. Weigel lll Esq.q Conmodities Corner, Mark Shoreq Direct Public Offerings, Thomas Carterq Editorialq Eservco - ENSVq Graphite One Resources - GPH.V, GPHOFq Growth Equity, Brett Goetobiusq Insurance Corner, Eugene B. Podokshikq Investing in Micro-Caps, Chris Lahijiq Investor Consultantsq ISEEE, Don Calvinq Katan Associates, Seth & Stan Yakatanq Kesselrun Resources - KES.Vq MaloneBailey LLPq Marksman Energy - MAH.Vq Matmown, Inc. - MTMWq Metals & Minerals Investment Conferencesq Micro-Cap Restructuring, Erik Nelson

q Micro-Cap Review Magazine q Miller Energy Resources - MILLq MZ Groupq New BD Formations & BD Withdrawl Summary, David Alsup q New Engine Mediaq No Boring Lawyers - Oswald & Yap, Oswald-Yap.comq Ombudsman, Jack Leslieq One on One, with David Drakeq Organic Alliance - ORGCq Orphanbiotec, Dr. Frank Grossmanq Pitbull Conference, Leonard Rosenq Platinum & Paladium, Mickey Fulpq Primabiomed - PBMDq Profit Planners Management, Inc. - PPMT q Raptor Ranchq Russell C. Weigel, III, Lawyerq SEMDAConferenceq Shoreline Energy Corp. - SEQ.TO q Silver Past and Silver Future, David Morganq SNN Distributionq Social Media Migration, Dr. Gordon Chiuq Soltoro Ltd. - SOL.Vq Stellar Pharmaceuticals - KLH.V, SLXCFq StockNewsNow Radio, Gary McKenzieq Targeted Market Awareness, Robert “Bobby” Kraftq Therakine Tunable Toolboxq Trouble is Opportunity, Jonathan Hornik, Esq.q WallStreet Chicken Cartoonq Why IR?, Keith Lippertq World Wide Stock Transferq www.black-nose.org

1. would you invest in a private company? q Only knowing it was going public q Yes, under new Jump Start for Jobs Act q No, I only invest in public companies q Yes, I am an accredited investor

3. do you understand the Jump Start for Jobs Act? q Yes q Never heard of it q Send me information q I am skeptical 5. what is you biggest worry about the micro-cap stock market? q Lack of Liquidity to sell shares q Hard to find a broker who/buy/sell them for me q Over-regulation by regulators q A Reverse stock split of shares

2. would you donate money to a company on a crowd funding website? q Yes q No q Yes, less than $1,000 q Yes, less than $100

4. will you invest more money in micro-cap companies in 2013 than you did in 2012? q Yes q No q Will just hold what I have now q Looking for good ideas

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

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

6. what sector of the market seems most attractive to you for investment in the coming year? q Technology q Biotech & Life Sciences q Manufacturing q Media q Mining & Exploration q Software q Other_______________________________ 8. which stock market(s) do you buy stocks? q United States q Canada q Australia q India

12. I would like to read more information about? q Micro-Cap companies q Real Estate q Market commentary q Hard money lending q Private placement investing q Commodities

13. when you read Micro-cap review, do you read the print or web version? q Print q Web

7. How did your portfolio do in 2012? q Winner q Loser q Broke even q No comment

9. How many financial conferences will you attend in 2013? q 1-10 q Under 3 q None q More than 10

11. what was your favorite article(s) in this issue? please list.___________________________________________________________________________________________________________________________________________________

_________________________________________________

13. which company in this issue would you invest in?____________________________________________________________________________________________________________________________________________________________________________________________________

All participants in surveys receive a Free lifetime subscription to Micro-cap review Magazine.

Name: ____________________________________________________________________ Address: __________________________________________________________________ email: _______________________________ phone: ______________________________ q Add me to Ask Mr. wallStreet Free Newsletter

q Aerospaceq Accountingq Alternative Energyq Ask Mr. WallStreet Newsletterq Autoq Bankingq Basic Mineralsq Beveragesq Biotech q Bullionq Business Services q Chemicals q China q Clean Energyq Communication q Constructionq Consulting q Consumer Products q Consumer Servicesq Crowd Funding

q Currenciesq Defense q Diamond Miningq Digital News q Digital Platforms q Direct Marketingq Diversified Investments q Drilling q Education q Electronicsq Electronic Medical Records q Energy q Energy Products q Entertainment q Finance q Financial Trade Shows q Food q Franchisor q Gaming q Gold q Gold Producer

q Graphite q Green Technologyq Healthcare q Indiaq Industrial Goods q Industrial Metals & Mineralsq Information Technology q Insurance q Junior Gold Developerq Junior Gold Producer q Legal q Life Sciencesq Manufacturingq Marketing q Media q Medical Devices q Medical Diagnostics q Medical Fundq Medical Practice Factoringq Metal Explorationq Oil Drilling & Equipment

q Oil & Gas q Oil & Gas Explorationq Organics q Pharmaceuticals q Publishing q Rare Earth Elements q Real Estateq Resource Exploration q Retail q Security q Silver q Social Mediaq Social Network q Transport q Travel q Uraniumq Veterinary Products and Services q Web Software q Wellness q Wireless Communications

check off areas of interest:

q Brazil q China q United Kingdom


n BY DON CALVIN

market experts. ISEEE lists as member’s

former global stock exchange Chairpersons,

CEOs and other experts from Austria,

Australia, Brazil, Canada, Egypt, France,

Germany, Hong Kong, Hungary, Italy, Israel,

Kazakhstan, Luxembourg, Malaysia, Netherl

ands, New Zealand, Peru, Russia, Slovenia, S

weden, Switzerland, Turkey, United Kingdom

and the United States.

Since the first ISEEE Meeting in Orlando,


What is the International Stock Exchange Executives Emeriti?

The International Stock Exchange Executives Emeriti, Inc. (ISEEE) is a col-

legial not-for-profit educational corporation of former and current securi-

ties exchange officials and other global market experts and professionals.

The ISEEE meets to discuss and ana-

lyze issues affecting the global community

of securities exchanges, the state of SMEs

(Small and Medium Sized Enterprises), make

recommendations and address the issues and

provide proposed actions to be taken.

The ISEEE currently has more than forty

Members and Special Guests participating in

the Discussion Sessions which include for-

mer and current exchange officials and


Florida in March 2008 , the ISEEE has

issued an “Orlando Declaration” follow-

ing the meeting which has been distributed

to the press, regulatory authorities, legisla-

tors and other interested groups.

The “Orlando Declaration 2012” includes

a Summary of Eleven Actions for Balanced

Global Reform and is available on the

ISEEE website: www.capitalmarketexperts.

com.

At the ISEEE meeting in Orlando in 2010,

a Small Business Financing Crisis Task

Force was created to formulate and recom-

mend practical and positive steps to

improve access of small and medium

sized enterprises (SMEs) to equity financ-

ing. The Task Force has made recom-

mendations and a draft report to the ISEEE

Members which was presented at their meet-

ing in Madeira, in September 2012, and a

final report is soon to be issued. The Report

titled:

“Opening the World’s Equity Markets to

Small and Medium Sized Companies” will point

out changes needed as SMEs produce a

greater portion of gross domestic prod-

uct and more jobs than the large-cap “Blue

Chip” companies.

The Report proposes a recommended

general “carve out” of a regulatory frame-

work tailored more for SMEs than is cur-

rently available. The purpose of which is to

allow them to raise needed equity capital in

a more practical and cost effective way while

maintaining the basic needs of investor pro-

tection and regulatory oversight.

At the ISEEE meeting held in Madeira

two other Discussion Sessions were held

in addition to the Discussion of the pro-

posed Report.

Discussion Sessions focused on relat-

ed topics; “Regulatory and Related

Market Developments” and a “Capital

Formation Roundtable”, Luncheon

and Dinner Session included presenta-

tions on: “Competitive Developments at

European Exchanges”; “Outlook

and Opportunities -The Case for Asia-Pacific”

; “Investment Opportunities in Madeira”;

“Developments in the Exchange Traded

Funds(ETFs) Market Worldwide” and

“The Global Economies and Markets-

Finding Order in Chaos” The text of

all these presentations are available on the

ISEEE web site. www.capitalmarketexperts.

com.

At the upcoming ISEEE Meeting to be

held in Orlando, Florida in April, 2013,

among the topics to be discussed are the

“Changes and Challenges to the Trad

itional Exchanges Worldwide - and new

Opportunities” including such issues as

“Crowdfunding”, as an example for small

and medium alternative issuer financ-

ing and how it can be utilized by exchang-

es to build up the small cap issuer markets.

Other topics for the panel are projected to

be: 1. regional exchange market linkups 2.

Benefits and problems and 3. Benefits and

problems of public ownership of exchanges.

An additional panel will discuss:

“The Regulatory Landscape- Recent

Regulatory Actions and Proposals Affecting

the Exchanges and the Capital Markets,

and the new Issues Raised.” This includes

such issues as the regulation of hedge

funds, dark pools and high frequency trad-

ing and possible regulatory proposals.

Other panels are expected to review

“Issues Facing EuropeanExchanges” su

ch as: the “Legal Entity Identifier” issue

and a concluding session will be a

“Capital Formation Roundtable – Factors

Influencing Capital Formation around

the Global Markets.”

Each panel will consist of former

exchange officials and other public and pri-

vate markets seasoned experts

Presentations of the ISEEE Meetings will

be made available at the full discretion of

the ISEEE and found on the ISEEE website

www.capitalmarketexperts.com.

The next meeting, after Orlando in

April, is planned to be held in Monaco

in September and possibly in Istanbul in

2014.Participation is by invitation only,

and discussion sessions are open only to

ISEEE Members and Special Guests, all of

whom are expected to participate and make

a presentation or presentations at the vari-

ous sessions.

about Don calVin:

Donald Calvin is the Chairman and Founder of the International Stock Exchange Executives Emeriti, Inc (ISEEE) and the Chairman of International Business Enterprises, Inc and as such has been the Adviser to more than twenty securities exchange Chairmen worldwide. He also was the Chairman of the National Stock Exchange for six years during which time it was the second largest US exchange. Previously was the Executive Vice President of the New York Stock Exchange and served with eight NYSE Chairmen, prior to which he was the Syndicate Manager for a Chicago based investment firm. Previously he was the Illinois Securities Commissioner and is a graduate of the University of Illinois Law School. n

The “Orlando Declaration 2012” includes a Summary

of Eleven Actions for Balanced Global Reform and is

available on the ISEEE website: www.capitalmarketex-

perts.com.


n BY LESLIE RIChARDSON

by infrastructure spending and private invest-

ment. Siam Makro (MAKRO:TB) a discount

food and consumer products store chain )

is up 109.1% YTD as the company plans to

expand throughout the Indochinese market,

starting with Vietnam in 2013.

While the Jakarta Stock Exchange

Composite Index is up only 13.0% YTD, there

are some excellent opportunities for growth

to be found. PT Ace Hardware Indonesia

(ACES:IJ) is up 91.8% YTD as the company

has been rapidly expanding adding 18 stores

in 7 cities for a total of 71 outlets in 23 cities

and also has 14 toy stores under the name

Toy Kingdom. Additional, two pharmaceu-

tical companies that are expanding access

to healthcare in Indonesia are Kimia Farma

Persero Tbk PT (KAEF:IJ) a pharmaceutical

producer and distributor is up 153.3% YTD

and Kalbe Farma Tbk PT (KLBF:IJ) which is

up 49.3% YTD.

If investing in individual stocks is not

appealing, investors can add some exposure

to their portfolios by investing in Southeast

Asian funds. A few funds that have per-

formed well this year include W&W Global

Strategies Fund - South East Asian Equity

Fund and PineBridge Southeast Asia Small

Cap Equity Fund which have one year perfor-

mance of 14.53% and 20.78%, respectively.

Two Asian small cap funds that have also

performed well this year are Aberdeen Asia-

Pacific Smaller Coms InSvc and Fullerton Lux

Funds Asian Small Cap Equities which have

one year performance of 23.12% and 34.27%,

respectively. Small caps are doing particu-

larly well as they tend to be more exposed to

domestic consumption with less exposure to

changing global demand. However, smaller

cap Asian funds also tend to be less researched

and exhibit a greater likelihood of price inef-

ficiencies.

*YTD=November 21, 2012 n


Bright Outlook for Southeast Asian Countries in 2013

Despite continued uncertainties

and anemic growth facing many

global economies, Southeast Asian

economies are poised to experience strong

growth in 2013. An increase in invest-

ment and domestic consumption is projected

to fuel the region’s growth for the coming

years as the region is showing resiliency from

the global turmoil. The Organization for

Economic Cooperation and Development

projects Indonesia’s growth will average 6.4

percent, the Philippines will expand about

5.5 percent a year and Malaysia and Thailand

will see gains of around 5.1 percent from 2013

to 2017.

Companies in Southeast Asia are benefit-

ing from strong domestic demand as the

region’s middle class continues to expand,

as well as an increase in foreign investment

and public spending by governments offset-

ting weakness from the export markets. As

economic growth remains robust for the

region, two countries in particular have stock

exchanges are performing exceptionally well

this year. The Philippines (PSE Index) and

Thailand Exchanges (SET), are up 26.6%

and 24.5% from the beginning of the year

through November 21, 2012, respectively, are

the best performing equities markets in the

region. In the Philippines, the acceleration of

government infrastructure spending has con-

tributed to the strong growth performance

while Thailand’s financials and consumer

related stocks are performing extremely well

driven by domestic growth from urbanization

and increased domestic consumption.

Even after a strong performance this year,

there are many good companies that are

still considered an excellent value. First

Philippines Holding Corp (FPH:PH), an

energy play which is up 70.8% year-to-

date and offers a dividend yield of 2.2%.

The company is committed to maintain its

growth momentum as it enhances its power

assets over the next three year. LT Group Inc.

(LTG:PH) is up 191.3% YTD. LT Group was

previously named Tanduay Holdings Inc, and

focused on the beverage industry; however

the company’s CEO, Lucio Tan, Philippines

second riches man, is in the process of con-

solidating all his business in one listing. The

companies to be consolidated are LT Group

Asia Brewery Inc., Fortune Tobacco Corp.,

Eton Properties Philippines, Philippine

Airlines Inc., Air Philippines Corp. (PAL),

Philippine National Bank (PNB), and Allied

Banking Corp. Ayala Corp (AC:PM) which

is up 66.3% YTD is one of the largest and

oldest conglomerates in the country with

operations in banking, telecoms, property

development, utilities, electronics and auto-

mobile sales. Recently, the Ayala-controlled

Bank of the Philippine Islands (BPI) and

Lucio Tan’s Philippine National Bank (PNB)

entered negotiations for a possible merger

that would create the country’s biggest lender.

In Thailand, beverage firm Oishi Group

Pcl (OISHI:TB) is up 130.0% YTD. Oishi

sells Japanese-style food at several restaurants

and bakeries including Osihi Grand, Osihi

Japanese Buffet, Shabushi, Oishi Ramen and

Nikuya as well as manufacturers and distrib-

utes green tea. Siam City Cement (SCCC:TB)

is up 81.47% YTD, the company is projected

to benefit from the forecasted double digit

growth in Thailand’s cement industry driven

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orphanbiotec-a talented bridgebuilder for rare Diseases

Despite modern medicine, Rare

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US are affected. Their suffering makes joint

action a requirement. How can society help

and modern companies position themselves

by being committed to those affected? A

review of the last year activities of the Swiss

Foundation Orphanbiotec provides some

answers.

The Zurich based international focused,

Foundation Orphanbiotec, has devel-

oped innovative solutions and alternatives

for treating Rare Diseases. Specific and

unique to the winner of the Swiss Social

Entrepreneurship Award 2011 is the business

model, targeting the needs of people and

integration into its patient empowerment

program Little Orphan Elfe. This program

started in 2012 under the patronat of the

Ministery of Health and support of the

Children‘s Zoo of the Swiss National Circus

KNIE.

This unique program offers therefore a

direct exchange of people affected and will

be integrating its own innovative patient

coaching in the near future. For this pur-

pose it maintains direct contact with those

affected, patient organizations, researchers,

doctors, government agencies and partners.

In addition to the Foundation‘s Online

Forum for the first primary exchange, it

promoted information and motivation to

thousends affected. The complete patient

empowerment program not only benefits

children and their families, and people suf-

fering from rare conditions, but also all CSR-

Supporters of the Foundation. They turn

into much more than just being our spon-

sors, the founder Dr. Frank Grossmann says.

„Creating Shared Value“ is providing all

partners the opportunity to take responsibil-

ity for social priorities, while strengthening

their own performance. Our partners from

various fields are committed through their

social engagement at the forefront.

Short-term market interests are no lon-

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where it‘s at. Therefore, it is important to

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During the last year‘s activities it has

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eral society is committed to the challenges

that the state alone is not able to solve. This

is especially true in the area of health care.

Orphanbiotec is the 2012 charity of choice

for diverse partners, ministries of health,

sports clubs and society working together for

health promotion and for our international

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mark with a Black Nose in support for Rare

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Companies can tailor their success for

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Those affected by a rare disease today will

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www.orphanbiotec-foundation.com

www.black-nose.org

Foundation Orphanbiotec

Dr. Frank Grossmann / Founder, CEO

Einsiedlerstrasse 31A

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Switzerland

SNN Inc. is a supporter of Foundation

Orphanbiotec and applauds the work of

its Founder and CEO, Dr. Frank Grossman.n


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received aggressive lobbyist letters that were

leaked from SEC - these letters and ensuing

emails from last August got the chairwoman

worried about her anti-consumer legacy and

consequently delayed it. By resigning Dec.

14, it comes to SEC Chair Elisse Walters to

bring a proposal by no later than February

for the Commissioners to vote on it. When

this is voted and passed, then the law will

stipulate how advertising can be done.

My prediction is that companies reading

this should be turning to you now to put into

place an advertising strategy with Micro-Cap

and lock into rates now as these rates are

going to rise quickly. Our investment The

Soho Loft as the leading financial innovation

media company focuses on online advertis-

ing and advertising through the 200+ annual

conferences we handle globally. We see this

as a strong media compliment to Micro-Cap

Review especially since we focus on interna-

tional funds, law firms and investors.

4. Can a private or public company place an

ad to raise money legally in SNN products

such as our Ask Mr. WallStreet Newsletter,

SNNLive Videos, or StockNewsNow Radio?

Private companies under the law cannot

advertise offerings while public companies

can advertise no different as in the past. The

law has to pass first which we expect to occur

by end of Q1 2013.


One on One with David Drake on the Jump Start for Jobs Act1. When will the SEC give guidance regard-

ing the Jump Start for Jobs Act? Why the

long delay?

SEC will come up with a proposal by no

later than February 2013 with the new SEC

Chairwoman Walters in place. The initial

delay (deadline just passed Jan .1 2013)

was prompted by former Chairwoman

Mary Schapiro and her consequent res-

ignation Dec. 14, 2012. The new inter-

im Chairwoman Walters will pick up the

process in by February and the article we

wrote Obama’s 10 Steps with SEC & FINRA

to Legalize US Equity crowdfunding

2. How did the change from stocks trading

in fractions to decimals affect the SME’s? Is it

probable that a return to fractions will occur

anytime soon?

The 1998 Regulation ATS allowed for deci-

mal trading via computers. At the same time

along with Glass-Steagall Act repeal 1999

we saw a decimation of new IPOs. SEC was

happy to see boiler rooms disappearing. My

friend former Vice Chair of Nasdaq David

Weild is a staunch lobbyist for fractions to

return. I don’t see it as a part of upcoming

topics but it is such a simple solution that

make sense. Let the issuers pick the fraction.

3. How can a company use Micro-Cap

Review magazine for market awareness or

general solicitation without recourse?

First of all, Title 2 of the JOBS Act that intro-

duces the removal of the solicitation ban has

yet to pass. It was mandated by Congress

and President Obama to be implemented

as a law by July 4, 2012. Mary Schapiro


5. Explain what an issuer can and cannot

advertise to raise money from investors?

I’m not a lawyer so I would refrain from

answering this question. All issuers should

always have legal advise on what they adver-

tise.

6. Is there differing requirements soliciting

to accredited investors or non-accredited

investors?

Certainly, the general solicitation under this

exemption Reg D, 506 c only applies to

accredited investors. That’s for investors

earning $200k per year the last 2 years

($300k for married couples) or have $1 mil-

lion net worth excluding your main home

7. Why would an issuer raise money crowd

funding if they require the same approxi-

mate financial reporting expense as going

public?

They wouldn’t most likely. The argument

with crowd funding for equity (delayed even

longer - to Jan. 2014 according to us) is

that is would be inexpensive. However, if

it ends up costing $10,000-$20,000 then

cost is prohibitive. Also, Crowd funding for

stock / equity has a $1 million per 12 month

period limit. It would fit a small business

growing to open up a second store or bakery.

However, to raise capital over $1 million

would require other exemption or to go pub-

lic. Cost is always the concern with going

public. Crowd funding for equity will be a

useless law just like Regulation A+ currently

is. Reg A+ was part of the JOBS Act ad also

acts like a crowd funding raise but you need

merit based state approval and the states are

nuts. They scramble law students to review

reg A applications - it is a joke. They don’t

know what they are doing and as such Reg

A is maybe used only 5-7 per year nation-

wide. There must be an expediency and

economics of scale / low cost.

8. If a company funds itself via crowd fund-

ing what are the investors exit strategies?

Investors can go public or sell the firm. We

would advise companies and investors

to make sure there are drag along claus-

es. Thus, when the owner wants to sell, the

potential of 1000s of investors are dragged

along to sell. Investors can also insist on

annual private offerings and access to the

books - maybe even insist on that share

holders annually will partake in a road show

where each owner and employee have the

right to sell 10% of their holdings. :This

creates a liquidity event and expected reset-

ting of the company value every year. This

latter is of course more applicable for larger

firms. For smaller investors, the exit would

be to sell the shares back to the owners of

the company, have an outside investor or

VC fund buy the shares when an investment

large enough comes along or alternatively

investors can have the investment being a

convertible note - debt option that gives an

investor an exit.

9. What is the aftermarket for private crowd

funded companies?

Currently SecondMarket and SharesPost will

be the market place for crowd funded com-

panies as crowd funding for equity becomes

legalized end of 2013.

10. Does crowd funding fit most companies

and what are the deciding factors?

Not at all a fit for all companies. It is

a financial tool among many investment

tools we have available - several from the

JOBS Act. Our media firm is the leader

in information on these SEC exemptions

but also other non-traditional funding. Too

many firms turn to lawyers and accountants

for advise. Their advise will be exclusively

within their knowledge and no law firm

knows it all just like now accountant knows

all of the tax code. We however know all

the experts that have conducted successful

transactions in all the financial innovation

deals available for SMEs. For instance, we

have partners and experts that for the last

30 years write Regulation D for a fixed flat

fee under $10,000 including legal, PPM and

filing. This firm even ghost writes for the

large law firms that usually add a zero to the

final bill.

This information takes years to develop

and we have found some of the leading

minds of the world thanks to the 200 entre-

preneur and financial conferences we handle

globally but also because our media com-

pany have interviewed 100s of speakers and

leading minds in all continents. We find this

information between lobbying Congress on

the JOBS Act, having former SEC Chair Cox

speak at our conference last fall or attending

the Transatlantic Economic Council in Rome

as a US Commerce delegate July 2012. This

media access gives us information globally

and this is the knowledge behind our eco

system. Our new year resolution 2013 is

to inspire entrepreneurs and SMEs globally

via removal of red tape and ease to capital

formation and capital creation.

10A. What will be your focus in 2013?

The Soho Loft as the leading financial inno-

vation media company and fortunately com-

plementing all your existing services. We are

managing 200+ financial conferences glob-

ally and increasing our writing. We recently

started writing for Forbes and Thomson

Reuters as a weekly contributor.

David Drake is the founder and Chairman of LDJ Capital, a Private Equity firm in New York City, and of its subsidiary The Soho Loft Capital Creation Event Series (“TSL”), a global events and media company covering education and creation of financial innovation programs for the Private

Company Marketplace. n


PROFILED COMPANIES

kesselrun resources ltD.Pursuing ontario’s next large tonnage Granite hosted Gold Deposit

Kesselrun Resources Ltd. (KES.V)

is a newly formed, well capital-

ized Thunder Bay, Ontario-based

mineral exploration company focused on

growth through property acquisitions and

discoveries. Kesselrun’s management team,

led by professional geoscientist CEO Michael

Thompson possesses strong geological

and exploration experience with particu-

lar expertise in Northwestern Ontario.

Kesselrun Resources technical team is

backed by Fladgate Exploration Consulting

Corporation, the largest, full-service mineral

exploration consulting firm in Northwestern

Ontario. Fladgate has unparalleled resources

and extensive geological experience in the

area. Significant gold projects in the region

worked by the Fladgate team in past years

include both the Hammond Reef and Rainy

River deposits.

Kesselrun Resources’ flagship Bluffpoint

Project consists of 103 mining claims covering

22,512 hectares (55,628 acres) in Northwest

Ontario’s Wabigoon Subprovince, host to

several recent large tonnage gold discover-

ies such as Osisko’s (TSX: OSK) Hammond

Reef Project and Rainy River’s (TSX: RR)

Rainy River Project. Accessible year round by

a network of well-maintained logging roads,

Bluffpoint offers low cost exploration in an

emerging prolific gold district.

Kesselrun has recently launched an inau-

magnitude of gold along the property’s main

zone. While the company only debuted

gural drilling program at Bluffpoint with

the aim of further defining the grade and


on the TSX Venture Exchange in late July

of 2012, they have achieved an impressive

number of milestones despite the difficult

market for junior resource companies over

this period.

keSSelrun reSourceS – key

FactS anD FiGureS

• Kesselrun announced its Qualifying

Transaction and TSX Venture listing on July

24, 2012.

• Kesselrun has a clean structure with only

22.8 million shares issued & outstanding.

• Kesselrun completing two equity financ-

ings in Nov. 2012 for gross proceeds of

C$3.23 million with KES directors investing

$.26 million.

• The Bluffpoint project, staked in late

2010, is located in one of the leading, most

stable mining jurisdictions globally.

• Previous work by Homestake Canada

Ltd. (now Barrick Gold Corporation) in the

early 1990s recognized the potential for the

Bluffpoint Project to host a large tonnage

granite hosted gold deposit. Primarily due to

the lack of road access to the project and the

low price of gold at that time, the Bluffpoint

was not drilled.

• On Oct. 18, 2012, Kesselrun reported

results from an extensive trenching program

at Bluffpoint which confirms the presence

of broad, disseminated gold mineralization

extending along strike on surface 500-700

meters in length, 100-150 meters in width

and open in all directions.

• On Oct. 29, 2012, Kesselrun report-

ed grab sample assay results from an area

approximately 2300 meters north along

strike from the northern extent of the Island

(Homestake) Zone included 101.80 g/t Gold

and 66.82 g/t Gold and extended the known

mineralization on surface to approximately

3000 meters.

• On Nov. 22, 2012, Kesselrun commenced

an initial diamond drilling program on

Bluffpoint along the historic Homestake

zone designed to test targets identified dur-

ing the 2012 surface exploration program;

initial results from the first 9 holes were

encouraging and showed widespread altera-

tion and gold mineralization - confirmation

of the “big system”

• Drilling at Bluffpoint is ongoing, based

on a new 3D model with continuous, fresh

rock sampling that KES can correlate to

alteration and gold mineralization.

Kesselrun Resources CEO, Michael

Thompson, is clearly no stranger to gold

exploration and mining in Northwest

Ontario. He worked with Placer Dome at

the Musselwhite mine and then ran their

regional generative office before Placer was

acquired by Barrick and Goldcorp.

The same can be said for the technical

team that is now supporting his endeavours

at Kesselrun. “Our team brings a wealth of

experience to the Bluffpoint project,” states

Mr. Thompson. “One thing we all agree on

is that a big mineralizing event has hap-

pened here. Strong alteration can be found

through the whole property, and we can see

from our trenching work, there was a lot of

gold in that event.”

Michael Thompson, P. Geo., President & CEO of Kesselrun, is the Qualified Person responsible for the Bluffpoint project as defined by National Instrument 43-101 and has approved the technical information in this article. n


n BY RUSSELL C. WEIGEL, III

pertaining to liquidity, capital resources, and

results of operations. Disclosure of informa-

tion that can affect revenues can and should

include knowledge of product failures and

limitations, where applicable.

ScheDulinG oF auDit, Form

10-k PreParation, anD

eDGarization

8. Consult your EDGAR filing service as to

its anticipated workload for the 10-K season.

Calendar the date that it believes is its cutoff

for your filing to be filed timely. Mid-March

2013 could be the latest time that some fil-

ing services are able to accept Form 10-K

filing commitments in light of the additional

time required for revisions to drafts and for

completion of XBRL tagging.

9. Make sure that the audit can be complet-

ed and the Form 10-K drafted and reviewed

by the auditors within the time required.

Pick a target date for completion and request

calendar commitments from the company’s

legal counsel and auditors to ensure timely

Form 10-K filing.

Getting an early jump on all of these

items, plus any other items recommended by

the reporting company’s experienced legal,

accounting, and auditing team, is recom-

mended to ensure the timely filing of the

company’s Form 10-K. File the Form 10-K as

soon after year end as possible.

The law firm of Russell C. Weigel, III, P.A. practices securities law nationwide and specializes in taking companies public, helping public companies prepare SEC filings and stay compliant with federal and state securities laws, preparing transaction and disclosure documents for private capital raises, and defending issuers and other securities industry participants from SEC and FINRA enforcement actions and from cus-tomer arbitrations.

Russell C. Weigel, III, was a branch chief and special counsel at the U.S. Securities and Exchange Commission and served during the years 1990-2001. n

C O M P L I A N C E C O R N E R

Annual Report Planning –or–Avoiding SEC March Madness

Achievement of a timely filed annual

report became more difficult and

riskier in 2013 due to the SEC’s

XBRL protocol implementation (the coding

of financial statements). Greater filing diffi-

culty is anticipated due to the additional time

(perhaps double time) required to format

financial statements according to the SEC’s

XBRL protocol, while at the same time the

SEC eliminated the grace period previously

available for filing a delinquent XBRL report.

This double threat, a potential March 2013

EDGAR filing bottleneck for which the SEC

promises no relief, I have named, “SEC March

Madness.”

However, the risk of delinquent filing can

be minimized if management takes appropri-

ate steps at an early stage of the planning of

its annual report. This Compliance Corner

identifies certain planning matters that, if

addressed early in the assembly of the annu-

al reports’ components, may facilitate the

reporting company’s avoidance of SEC March

Madness. This list is not exhaustive, and all

companies should seek competent legal and

accounting advice as to their individual cir-

cumstances.

tax PlanninG

1. Need a tax opinion? Consult your auditor

whether it will require a tax opinion on any

new matters that may have income tax impact

before it will issue its audit opinion. Engage

a tax expert well in advance of the year-end

audit.

auDit PlanninG

2. Have a pre-audit planning meeting with

the auditor. Arrive at decisions on timing and

what the auditor will need to see in the way of

supporting documentation. If the audit firm

has changed during the fiscal year, make sure

that the new auditor has access to all needed

prior audit work files. If the audit engage-

ment partner has changed, meet with the new

engagement partner to insure proper conti-

nuity and expectations. Inform the auditor of

the names of firms providing tax opinions or

asset impairment appraisals.

3. Have inventory? Start the planning of

the physical year-end inventory count and

coordinate the timing and procedures with

the audit firm.

4. Review the auditor’s prior year comment

letter issued to management and determine

if all items addressed in the letter have been

remedied. Prepare appropriate documenta-

tion to support reasons why any items have

not been corrected.

5. Is an independent appraisal needed?

Examine the transactions that have added

intangible assets to the financial statements.

Determine if they are to be written off or

whether an independent appraisal will be

obtained. Have that appraisal done prior to

the commencement of audit fieldwork.

6. Determine if any unusual or infrequent

transactions exist requiring special disclosure

or special handling on the face of the financial

statements. Review the latest releases of the

FASB and be sure to include any changes in

the footnotes of the financial statements.

mD&a PlanninG

7. Identify and collect documentary support

for the MD&A discussion of known trends

StockWord PuzzleTM

Across2 - APO4 - StockNewsNow Radio hosted by7 - General solictation non-_________ protects private companies8 - If the OTC has market makers, Exchanges have?11 - Coffee and Nutritional Products company12 - Orphanbiotec health campaign symbol15 - Micro-cap company defined maximum revenue dollar value18 - First Fidelity Insurance provides this insurance for micro-caps23 - International Stock Exchange Executives Emerti24 - indicate your market interests in Micro-Cap Review25 - Symbol for Organic Alliance27 - Gordon Chiu wrote on ________?29 - Silver is highly recommended by this contributing author30 - Brett Goetschius32 - Foundation Orphanbiotec fights35 - What does the W in BDW stand for?37 - there are 20 of these in the US Senate38 - Not an IPO, Not an APO this is more direct40 - Marksman

41 - Leslie Richardson is the _______correspondent for SNN42 - New writer in this issue Fred43 - Thomas Carter is an expert in helping companies arrange this type of financing44 - Mary Jo White is next chairperson of this commission45 - GrowthCapitalist.com publisher49 - DPO53 - Exxon-Mobil overtakes this company for highest market cap54 - Most important part of a public company is __________?55 - Shoreline growth is from drilling and __________56 - Exchange Traded Funds58 - Closure Article written by60 - Name stock exchange which sold for $8.2 Billion in the last quarter of 201261 - according to Merriam-Webster a defiition of commodities62 - Moblie63 - to manage risk65 - Favorite financial conference of 2012?66 - Ask Mr.Wallstreet thememe68 - David Morgan nickname69 - gold story70 - Jack Leslie specialty

Down1 - PIPE3 - The ISEEE Orlando _________ Report on SMEs5 - This issue WallStreet Chicken theme6 - CMPO8 - SEMDA9 - Mark Shore Column10 - Ombudsman12 - According to Lahiji, the less shares the ________.13 - Key to Pubco market awareness14 - $300 Million is a ___________market capitalization dollar amount16 - Gregory Bowes article is about this topic17 - Chris Lahiji compares the stock market to________?19 - ROI20 - CME21 - SNN database targeted to22 - Retired SEC head26 - The two most heard words at yearend28 - This Index rose over 16% in 20121

30 - Jump Start for Jobs Act signed into law by31 - Birds of Prey33 - Stan & Seth Yakatan expertise34 - Jonathan Hornik is the Mayor of this place in New Jersey36 - RDO39 - financial advice to broker dealers44 - cover story about oil46 - January 24, 184847 - SNN targeted market awareness article writer48 - Erick Nelson’s article focused on?49 - Leading Crowd Funding Activist50 - Name of Leonard Rosen’s Conference51 - 2012 Hurricane hits Wall Street52 - the world expert on crowd funding57 - financial mountain edge at yearend59 - general solicitation no...64 - Sarbanes67 - Small and medium sized companies acronym

Answers in the classifieds


The average deal size rose 38% to $39.83 mil-

lion, sharply reversing a four-year trend in

falling deal size.

The increasing deal size in 2012 reflects

a surge in convertible debt and convertible

preferred stock by large cap issuers seeking to

literally capitalize on ultra-low interest and

dividend rates. A dozen large cap companies

raised $400 million or more in convertible

debt or equity private placements, including

four which raised more than $1 billion in

convertible offerings: Sony, Sprint Nextel,

ASML Holdings, and Credit Suisse Group.

Selecting out these mega-deals brings the

average size of unregistered PIPEs in 2012

down to $19.3 million, and the total capital

raised in non-mega offerings to $11.7 billion.

The role of registered offerings in the

make-up of the equity private placement

market continued to grow in the fourth year

since their emergence in the liquidity crisis

of 2008. Registered direct offerings (RDOs)

and confidentially-marketed public offerings


Growth Equity Investors Dominate 2012 PIPE MarketFundamental investment-oriented growth equity investors increasingly replaced trad-

ing-oriented funds as leaders in the equity private placement market in 2012, marking a changing of the guard in an area of the capital markets critical to the development of emerging growth companies.

For the first time since the dawn of the

PIPE (private investment in public equi-

ty) market in the mid-1990s, a long-only

mutual fund manager led the market in

total deals and total investment among active

investors, usurping the fast-money hedge

funds that had long dominated the market.

Fidelity Management & Research invested

$190.7 million in 45 growth equity private

placements in 2012, making the mutual fund

behemoth the leading active investor in the

market in both number of deals and total

investment, according to PIPE market moni-

tor PlacementTracker. But Fidelity was not

alone among fundamental-oriented investors

making their way up the PIPE ranking lists

last year. Of the top 25 investors in the mar-

ket, at least 10 are generally regarded as long-

only, fundamental-focused mutual and ven-

ture capital fund managers, including insur-

ance and annuity giant TIAA, Wellington

Management, Columbia Management, T.

Rowe Price, and Orbimed Advisors.

The evolution of the PIPE market away

from the arbitrage and structured invest-

ment funds that long dominated the market

was reflected in last year’s investment bank-

ing and legal counsel leaders as well. Roth

Capital led the agent rankings as long-dom-

inant Rodman & Renshaw imploded, its

hedge fund investment clients continuing

n BY BRETT GOETSChIUS

their now four year-long retreat. Another

top banker in growth equity private place-

ments, Cowen & Co., led dealmaking in the

healthcare sector, closing 28 deals that totaled

$1.5 billion in capital raised.

Among law firms serving the PIPE

market, Cooley, with its deep experience

representing venture and private equity-

backed companies, dislodged long-reign-

ing Sichenzia, Ross, Friedman Ference as

top issuer counsel.

Overall, PIPE deal-making was down over

2011 while total capital raised was up, reflect-

ing a trend toward bigger, higher quality deals

with larger market cap companies, especially

in the area of registered private placements,

which have been a rich source of capital for

small cap emerging growth companies over

the past two years. Almost $32.75 billion of

capital was raised in 822 equity private place-

ments in 2012, compared to $26.6 billion in

924 deals in 2011, a 23% increase in total

investment amid an 11% fall in deals closed.

GRAPHIC #1Rank Investment Advisor Deals Amount Invested1 Fidelity Management & Research Corpora>on 45 $190,685,2922 Heights Capital Management, Inc. 33 $140,566,8413 Millennium Management, LLC 33 N/A4 Hudson Bay Capital Management L.P. 29 $115,356,2425 UBS O'Connor LLC 26 $14,318,7466 Teachers Insurance and Annuity Associa>on 26 N/A7 D.E. Shaw & Co., L.P. 25 N/A8 Baker Brothers Advisors, LLC 24 $139,095,6999 Deerfield Management 24 $49,786,20110 Iroquois Capital L.P. 23 $12,144,508

GRAPHIC #2

GRAPHIC #3(Use SVG file if needed).

Top Ranked Investors in PIPE Deals 2012

Source: PlacementTracker


$0 $5 $10 $15 $20 $25 $30 $35 $40 $45

2009 2010 2011 2012

Millions

Average PIPE Deal Size



(CMPOs) made up a significant segment of

the equity private placement market with

$6.33 billion or 19% of the total capital

raised, a 21% increase over 2011.

But it was the buoyant market for at-the-

market (ATM) offerings that really made

2012 the year of the registered equity offering,

with 122 offerings announced, an increase

of 42% over 2011, raising $3.27 billion of

over $20 billion in best-efforts commitments

made during the year. Of those 65 issuers that

reported capital raised through ATMs by the

end of the year, the average proceeds topped

$50 million per offering.

As the ATM market grew, it expanded from

its typical mid-cap issuer base to include

many more small cap issuers. ATM issuance

by emerging growth companies with market

caps of less than $1 billion increased 43% to

69 deals in 2012.

The 2012 PIPE market was buffeted by

headwinds both figurative and literal. The

end of the fourth quarter, traditionally the

strongest issuance period of the year, was

restrained first by Hurricane Sandy, which

depressed deal making in the New York-

New Jersey region for several weeks as Wall

Street slogged through a crippled New York

City, and then by political intransigence in

Washington over a resolution to the “fis-

cal cliff” crisis that threatened to throw the

country’s economy back into recession just as

signs of resurgence began to appear.

As we entered 2013, Sandy’s floodwaters

had receded and the physical recovery of

the New York tri-state region was underway.

But little had been resolved in the fiscal cliff

stand-off. A short 11th-hour reprieve had

averted immediate economic catastrophe but

much more difficult political decisions were

simply put off a few weeks or months. The

ongoing uncertainty over how and when

they might be resolved cast a pall over the

capital markets that is likely to depress capital

formation by emerging growth companies at

least until the second quarter.

However, presuming a compromise is

reached between the deficit hawks and the

spending doves in Washington that neither

guts the federal budget nor explodes the

national debt, the underpinnings of an eco-

nomic revival are in place to accelerate cor-

porate growth in the second quarter that

should allow high-growth companies to tap

the equity private placement market for low-

cost, high return-on-investment capital. If

that scenario unfolds, 2013 could be a robust

year for PIPE and growth equity capital rais-

ing in particular, as the market’s shift towards

fundamental investment over liquidity arbi-

trage continues to align private placement

investors with shareholder equity growth.

Brett Goetschius is the editor of Growth Capital Investor, the journal of emerging growth company finance. He has covered the emerging growth capital market since 1999 and is the former editor and publisher of The PIPEs Report, The Reverse Merger Report, and The Registered Offerings Report. This article is excerpt-

ed from the January 21 issue of Growth Capital Investor. Interested in the full report with complete data on

activity in the emerging growth capital market? Download a complimentary copy at http://www.

growthcapitalist.com/mcr n

Or scan this with your cell phone’s QR reader:

Annual Deals(All PIPEs and Reg S Deals)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(Est.)

0

500

1,000

1,500

2,000

2,500

3,000

$0M

$25B

$50B

$75B

$100B

$125B

$150BDealsAmount

GRAPHIC #1Rank Investment Advisor Deals Amount Invested1 Fidelity Management & Research Corpora>on 45 $190,685,2922 Heights Capital Management, Inc. 33 $140,566,8413 Millennium Management, LLC 33 N/A4 Hudson Bay Capital Management L.P. 29 $115,356,2425 UBS O'Connor LLC 26 $14,318,7466 Teachers Insurance and Annuity Associa>on 26 N/A7 D.E. Shaw & Co., L.P. 25 N/A8 Baker Brothers Advisors, LLC 24 $139,095,6999 Deerfield Management 24 $49,786,20110 Iroquois Capital L.P. 23 $12,144,508

GRAPHIC #2

GRAPHIC #3(Use SVG file if needed).

Top Ranked Investors in PIPE Deals 2012



$0 $5

$10 $15 $20 $25 $30 $35 $40 $45

2009 2010 2011 2012

Millions

Average PIPE Deal Size




Introduction of the Commodity Markets

C O M M O D I T Y C O R N E R

A mass produced un-specialized product. 1

In today’s global markets both large and

small firms will trade and hedge commodi-

ties as part of their daily business as either

a producer or end-user of the commodity.

For example a chocolate candy producing

firm will need to purchase cocoa, sugar and

of course energy to fuel their factories. If

they do business in foreign countries they

may need to buy and sell foreign curren-

cies for hedging or delivery purposes. (See

“Currencies in Your Future Portfolio?” of the

One could argue commodities have been

around since the beginning of civilization.

People have produced, paid or bartered for

commodities to use for either production

or to consume. Some of the uses of com-

modities include food, energy, construction,

manufacturing, and clothing.

According to the Merriam-Webster dic-

tionary, commodities are defined as: 1) an

economic good. 2) A product of mining

or agriculture. 3) An article of commerce

especially when delivered for shipment. 4)

As the introductory Commodity Corner column I found this to be a good opportunity to introduce commodities

and futures.

n BY MARk ShORE

Spring/Summer 2012 issue).

To manage their price risk, a commodity

producer, such as a farmer may sell a futures

contract to lock-in their selling price. An

end-user, such as a coffee chain may buy a

futures contract to lock-in their purchasing

price. Keep in mind commodity markets

tend to be mean-reverting markets as they

spike or decline from an average price and

then revert back towards that average price

overtime. This is often due to shocks in the

system such as increased demand, reduction

of supply, weather concerns, disruption of

distribution channels or possibly political or

regional events. If a commodity becomes too

expensive, the market participants’ behav-

ioral mechanism will appear as they seek

less expensive substitutes. This is known in

economics as the substitution effect and one

of the differences to note between commod-

ity and equity trading.

Commodities are traded in two com-

mon locations: either the spot/cash market

usually reserved for industry or sometimes

known as “commercials” such as produc-

ers, distributors and end-users as the actual

physical commodity is traded. Or the prod-

ucts trade on an exchange such as one of the

futures exchanges found around the world.

The futures exchanges are often utilized

by both commercials and speculators. An

exchange offers commercials the opportu-

nity for immediate offset of their commodity

risk by speculators offering liquidity to take

on the risk. If a commercial has a loss from

hedging, it often means they profited in the

underlying cash market, because they are

holding the opposite direction in the cash

market. One can think of the loss on the

hedge as a premium on an insurance policy.

The Merriam-Webster dictionary defines

a commodity exchange as an organized mar-

ket where future delivery contracts for a

specified grade of a commodity (such as

grains, cotton, sugar, coffee, or wool) are

bought and sold.2 Many historians point to

the Dojima Rice Exchange in late 17th cen-

tury Japan as the first commodity futures

(forward) exchange. The exchange operated

for over 230 years ending just before World

War II. 3

Commodity exchanges often seek com-

modity products to list on their exchange

that tend to have price volatility and/ or

seasonality. Why list a product that has little

or no volatility? This would imply no or

little risk. Futures are founded on the basic

concepts of price discovery from supply,

demand and the movement of pricing.

A listed contract offers standardization of

grade, size and delivery point as a method

of risk management for both the producers

of the commodity as well as the end-user of

the commodity. As the exchange’s clearing-

house takes the opposite side of each trade,

it reduces the potential for default risk of the

commodity contract.

In America, many commodity exchanges

appeared around the country in the 1800s.

However, one can point to the Chicago

Board of Trade (CBOT) in 1848 as the begin-

ning of commodity exchanges in America as

a method for commodity producers and

end-users to hedge their commodity risk. It

is also considered to be the oldest existing

commodity exchange in the world.

Prior to the CBOT there was a lot of price

volatility in agricultural markets. Farmers

would bring harvested crops to the Chicago

markets. If they couldn’t sell the crops they

were stuck with it and some farmers were

known to dump the unsold crops into Lake

Michigan. It was this price volatility that

prompted the need to hedge agricultural

markets and the introduction of the CBOT.

In 1898 the Chicago Butter and Egg board

was founded and renamed the Chicago

Mercantile Exchange in 1919.4

Some of the commodity markets include:

Energy markets: Natural Gas, WTI (West

Texas Intermediate) Crude Oil, Brent Oil

•Grains: Corn, Wheat, oats and the soy-

bean complex of soybeans, soybean oil and

soybean meal •Softs: Coffee, Cocoa, Sugar,

Orange Juice (as noted in the movie “Trading

Places” they traded: Frozen Concentrated

Orange Juice •Livestock: Live Cattle, Feeder

cattle •Metals: Gold, Silver and copper. By

the early 1970s, futures exchanges began

trading financial futures as they were per-

ceived as commoditized products beginning

with currency futures and later bond futures

and stock index futures.

Moving forward since the recent financial

crisis, commodities have taken on a new

importance as a non-correlated asset class

for an investor’s portfolio. As many emerg-

ing nations gain wealth, the demand for

many commodities continues to gain impor-

tance on the world economic stage.

(Endnotes)1 Shore, M. (2011) DePaul University 798

Managed Futures Lecture notes2 Shore, M. (2011) DePaul University 798

Managed Futures Lecture Notes 3 West, M.,“Private Ordering at the World’s First

Futures Exchange”, Michigan Law Review, Vol. 98, No. 8, Symposium: Empirical Research in Commercial Transactions (Aug., 2000), pp. 2574-2615 Published by The Michigan Law Review Association

4 Shore, M. (2011) “Why Are Congressional Agricultural Committees Given Oversight of the MF Global Hearings?”

Copyright ©2012 Mark Shore. Contact the author for permission for republication at [email protected] Mark Shore has more than 20 years of experience in the futures markets and managed futures, publishes research, consults on alternative investments and conducts educa-tional workshops. www.shorecapmgmt.com Mark Shore is also an Adjunct Professor at DePaul University’s Kellstadt Graduate School of Business in Chicago where he teaches a managed futures / global macro course. Mark is a contributing writer to Reuters HedgeWorld and the CBOE Futures Exchange.

Past performance is not necessarily indicative of future results. There is risk of loss when investing in futures and options. Always review a complete CTA disclosure document before investing in any Managed Futures program. Managed futures can be a volatile and risky investment; only use appropriate risk capital; this investment is not for everyone. The opinions expressed are solely those of the author and are only for educational purposes. Please talk to your financial advisor before making any investment

decisions. n


PROFILED COMPANIES

Graphite one resources:number one Graphite resource in north america and perhaps the world

Micro-Cap Review Magazine recent-

ly met Graphite One Resources at a

regional resource conference in of all places,

sunny Palm Springs, California. Graphite One

Resource, from Nome, Alaska, is indeed a very

interesting emerging growth story. Looking

for gold and finding graphite may turn out to

be one of those stories that legends are made

from.

As the story goes, Mr. Anthony Huston,

President of Graphite One, was in Alaska inves-

tigating a gold prospect, when a local geologist

happened to mention that he had done a study

of Graphite Creek while working for the U.S.

government, and had gotten to know the Tweet

family that held the mining rights.

Mr. Huston recalls the geologist saying:

“There’s this amazing property that I believe

could be world class.”

Mr. Huston and Mr. Charles Chebry,

Chairman and CEO of Graphite One, made

the connection and were instantly impressed.

“The Tweets are great partners” says Huston.

The founder of the clan, Mr. Nicholas

Tweet, of Norwegian heritage, came to Nome

from Minnesota, must have liked the weather,

in 1899 at the age of 23, when the gold-rush

settlement consisted only of tents, a saloon

built of driftwood and a lone log cabin. Mr.

Tweet prospered, successfully exploiting the

rich deposits of gold that were then strewn

along the beaches of Cape Nome.

Joined a year later by his wife, Evinda, and

their two sons, the family went on to found

N.B. Tweet and Sons, a company still in busi-

ness today and which has operated placer

gold mines on the Seward Peninsula for over

110 years.

As they all got to know each other while

visiting, the deal was settled the old-fashioned

way, with a friendly handshake in Nome,

Alaska.

The parties to the deal were a group of

Canadian entrepreneurs and the descendants

of one of Alaska’s foremost pioneer families.

Now, around two years later, the ground-

work has been laid for what has the potential

to become the world’s largest, richest graphite

mine. Calgary-based Graphite One Resources

released an NI43-101 compliant resource esti-

mate that is reverberating through the mining

industry. The full Technical Report describing

the resource was filed on SEDAR January 18,

2013 and can also be found on the Company’s

website: www.GraphiteOneResources.com.

It’s still dawning on people that the poten-

tial production at Graphite Creek on the

Seward Peninsula could dwarf the combined

output of the rest of the world’s leading

graphite producers.

“Based on the size of the resource, flake

content and potential, we believe this to be

the largest reported flake graphite deposit

in the world. We will look to take an aggres-

sive approach in 2013 to advance the project

towards production in the near future,” says

Mr. Anthony Huston, President of Graphite

One.

Gold has always been the Tweet family’s

major preoccupation. But in 1914, the outbreak

of World War I triggered a surge in demand for

graphite. The existence of high-grade graphite

deposits in the Kigluaik Mountains 65 km

north of Nome had been known since 1900,

and Mr. Nick Tweet had staked claims there.

During the war years, the claims produced

some 500 tons of graphite, which was hauled

three kilometers down to a barge in the bay by

one of the first gasoline-powered tractors seen

in the territory. That same HoltTM tractor is

now on display in Taylor, Alaska.

Writing in 1919, geologist G.L. Harrington

described the Kigluaik deposits as “very high

grade (up to 98 percent carbon), and compa-

rable to high quality flake graphite deposits

produced elsewhere; even the poorest mate-

rial is regarded as good ore as compared to

many commercial locations.”

When the war ended, the market for graph-

ite shrank and the Tweet family claims went

largely un-worked for decades. The claims

were still in good standing when Mr. Huston

and Mr. Chebry approached the family in

2011.

“We spent over six months getting to know

them,” says Mr. Huston. “It was not unusual

to have 16 members of the family in the

room, all wanting to understand the future

partnership.”

“It’s extremely important to recognize that

we did close to 12 months of due diligence

before we even closed the deal,” added Mr.

Huston.

“The deal as concluded gives Graphite

One a 100 percent interest in the claims on

payments to the Tweet family trust totaling

$425,000 by March 2014. The agreement also

allows for a five percent production royalty

that can be reduced to three percent on pay-

ment of $2 million for each one per cent cut,”

according to Mr. Charles Chebry, Graphite

One chairman, CEO and director

Part of the due diligence Mr. Huston men-

tions included a 2011 report stating that the

Kigluaik graphite deposits were in an “excel-

lent configuration for open-pit mining” and

represented “an excellent exploration oppor-

tunity.”


Mr. Dean Besserer, Vice President of

Exploration at Graphite One, recalls: “We

used some geologists with local knowledge to

do a 10-day program. We did some mapping

that showed a strike length extending along

5 kilometers and the schists were about 100

meters thick. We had a good feeling, based

on the grades we were seeing and we became

increasingly excited.”

Subsequent events have more than justi-

fied the early optimism and indications, Mr.

Chebry added: “The deal with the Tweets also

required Graphite One to spend $1.525 mil-

lion on exploration over a three-year period.

To date, the company has spent more than

$4.5 million, partly to fund an aerial survey

in which a helicopter picked up electromag-

netic evidence strongly suggesting that the

strike length in fact extends for 18 kilometers,

more than three times as long as previously

mapped.”

The NI 43-101 report states: “an important

conclusion of the SkyTEM survey is the likeli-

hood that high-grade graphite mineralization

at the Graphite Creek Property extends con-

tinually for a distance of at least 18 km.”

An 18-hole diamond drilling program,

totaling 4,248 meters, was begun in June

2012 and the NI 43-101 results included an

impressive “inferred” resource of 165.5 mil-

lion tonnes at 4.61 percent graphite with a

“potential” resource of between 235 and 492

million tonnes of 4.2 percent to 7.9 percent

graphite. The resource also

includes 25.44 million tonnes

of 9.69 percent graphite and 7.8

million tonnes of 13.5 percent

graphite which is all at surface

according to Mr. Besserer.

As good as these results are

Mr. Besserer notes that the

potential for 492 million tonnes

relates to only a small part of the

entire 6,799-hectare Graphite

Creek property — less than 30

percent.

“The deposit is scalable to meet any future

demand. With our inferred resource and our

potential, we are already far larger than any-

body else and could easily exceed 1 billion

tonnes.”

Mr. Besserer lists other positive aspects of

the Property, including the size and grade of

the coarse flake graphite and the relative ease

with which it can be extracted.

“Undoubtedly, we will have the best strip

ratio of anybody,” says Mr. Besserer. “Our high

grade deposit is exposed along the face of the

mountain, unlike most deposits. With us, it’s

day one.”

Even putting a “conservative” estimate of

US$1,200 a tonne on the price of graphite,

Graphite One could earn some US$60 million

producing only 50,000 tonnes a year.

Prices for graphite are constantly fluctuating.

They crashed to as low as US$600 in the 90s as

Chinese producers flooded the market. Prices

recovered and in 2005, premium product was

selling at close to US$3,000, but the global

recession has seen those levels cut by half.

Nevertheless, industry watchers note that

current supplies are tight and that very few

new graphite mines have come on line. They

say the supply problem could become more

acute as economies recover and new, high

growth applications for graphite, such as

lithium ion batteries, fuel demand and con-

sumption.

Ceasars Report, a popular online site cov-

ering junior mining companies, noted last

year that Graphite One is “standing out in

the crowd” as “the only successful graphite

explorer in the USA.”

Mr. Ken Chernin, Equity Research Analyst

with Jennings Capital Inc., in Toronto, said of

Graphite One’s Alaska prospect: “We found it

very interesting the first time we spoke with

Anthony (Huston) prior to the NI 43-101.

It’s obviously very sizeable and the logistics

appear very workable. And, of course, there’s

the fact that it’s situated in the United States in

a mining-friendly jurisdiction.”

Mr. Huston, whose background is in tech-

nology, says he “foresees a multitude of new

uses for graphite as new technologies emerge

in the booming economies of Brazil, India

and China, as well as in developed economies

such as the U.S. and Japan. This is a unique

opportunity for Graphite One and all stake-

holders which merit a fast-track to produc-

tion,” says Mr. Huston. The company

fast-track to-do list is an 8,000-meter drill-

ing program, metallurgy, engineering and

permitting.

Decisions yet to be reached include how

to get the ore from the mine to its custom-

ers. Graphite Creek can currently be reached

only on foot or by helicopter, even though

it’s only a stone’s throw from open water and

two roads.

“People say, ‘Well, how are you going to get

the graphite out of there?’” says Huston. If in

the early 1900s they figured out how to get

graphite on to a barge and ship it to Seattle

and San Francisco, I think that we will figure

something out.”

One thing is certain: Once

the graphite gets to the deep-sea

port in Nome, it will be conve-

niently close to prime custom-

ers in the U.S. and along the

Asia-Pacific seaboard.

In conclusion, being in the

right place at the right time can

sometimes lead to a treasure

trove of great riches. n


cial conferences we attend and you only pay

to access and distribute to the SNN database.

SNN products are all designed to be user

friendly and efficient. Why not try video or

a radio sound bite or article from micro-cap

review magazine or newsletter banner ad? Or

even your link to your website or 10q, 8k, a

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simply choose your wish list from our buffet

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send us your link message for distribution.

Compare your past years return on invest-

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Calculate and answer the following four

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Do not make the common mistake of cutting

back on investor relations when you need it

the most; simply deploy your budget differ-

ently. Continue to do what works and begin a

reach and frequency market awareness cam-

paign with SNN as your service provider. n


Targeted Market Awareness & Pinpoint Investor Visibility

One of my trusted colleagues

recently texted me the follow-

ing comment: “SNN has so

much distribution we are going to burst”.

I read his text and realized how right and

spot on he was! It was as if we had reached

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send SNN products such as SNNlive vid-

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or press releases, announcements, product

news to a database of more than 40 Million.

In comparison: using SNN is like fishing the

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a great deal better for a good catch, even a

whale catch could be possible. For example

send an SNNLive interview link to 5,000

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as investors interested in micro-cap compa-

nies. You can track opens, reads & video views

and confirm that your message is actually in

front of your target audience. The SNNlive

video interview is complimentary at finan-n BY ROBERT “BOBBY” kRAFT

Once Cash was King,

Then Content was King,

Today…Distribution is King!

Over 40 milliOn targeted database

n Over 45,000 US and Global Media Outlets

n 23 Online Video Social Networks

n Reach Targeted Individual and Institutional Investors

Accredited Investors

Registered Investment Advisors

Financial Advisors

Investors (Micro-Cap)

Fund Managers

CEOs/Companies

Institutional Investors

email: [email protected]

Phone: 213/706-3000

www.stocknewsnow.com

snn is tHe King

OF distribUtiOn

Ask Mr. WallStreet is much different from other newsletters.

They are short in length, filled with innuendo and puns, and humorously

sensible about topical subjects like the Facebook IPO, Obamacare and the

Jobs Act to mention a few.

The Ask Mr. WallStreet Newsletter began as my chicken scratch notes

and simple commentary inspired by my reaction to events taking place in

the stock market, observations from reading market news and current events

plus I needed to vent both my frustrations and give advice. Once I figured

out how to use my iPhone I was able to use time on planes and waiting

areas to quickly spew my thoughts digitally without losing my own self

proclaimed pearls of wisdom. The first ten I wrote and sent to friends,

family and associates got wonderful feedback and they started to get

sent around and suddenly the world was turned on to Ask Mr. WallStreet.

You may ask why Ask Mr. WallStreet? So my answer is because the Mr.

WallStreet’s URL was taken and I like the moniker so why not Ask Mr.

WallStreet. The other reason for Ask Mr. WallStreet is because I am asked

more questions about things regarding Wall Street whether at a financial

conference, cocktail party or sitting on a panel or airplane. Answering

questions is fun unless so ridiculous they shouldn’t be answered.

From its humble beginning, Ask Mr. Wallstreet now has over 100,000

subscribers and is growing every day. With almost 30 years of experience

on Wall Street under my belt I do my best to reflect the nature of things on the “Street” as well as my perception of the world. Although

fully ensconced in the micro-cap world I have morphed from stockbroker into a story teller and now I get to combine my interests with

my experiences and shout it out to anyone willing to subscribe, and it’s FREE to subscribe. No worry we aren’t starving, we make money

allowing our sponsors and advertisers to try and sell you something.

So hopefully you get the picture and please send me your questions to send me a question please send it to [email protected]

and subscribe at StockNewsNow.com. Lastly the graphic of Ask Mr. WallStreet comes from the cartoon and comic strip, the “Wall Street

Chicken”, who’s main character, was a young Wall Street guy like me. The AMWS graphic is an older and wiser character. Okay tacky

but we think it works and makes some sense. I used to love creating jokes when I sat on a trading desk believe me when I tell you Ask Mr.

WallStreet is a joy to write and great to share. So if you have a smile on your face after checking out the newsletter I did my job!

Subscribe to FREE Newsletter

Advertise Your Company Here!Advertise Your Company Here!


Advertise Your Company Here!

BUY AD SPACE HERE to advertise go to: [email protected]

to subscribe go to:

Over 100,000 Subscribers

StockNewsNow.comAsk Mr. WallStreet is published by SNN Incorporated. Copyright 2012 & Trademark of SNN Incorporated. All Rights Reserved.

StockNewsNow RadioStockNewsNow

StockNewsNow

Email: [email protected] Phone: 213/706-3000 || [email protected]: 910/255-0336

Hosted by Former CBS Radio Anchor Gary McKenzieAchieve National Reach/Frequency on RadioYour Radio Spot on Top Financial Radio Programming


Print

Radio

Newsletter

Distribution

MARKET AWARENESS & INVESTOR VISIBILITY PROGRAM

Digital Versions:orStockNewsNow.com MicroCapReview.com

818-983-5500RKraft@snnwire.comwww.StockNewsNow.comwww.SNNwire.comwww.microcapreview.com

Robert “Bobby” KraftV.P. Communications andBusiness Development

“Start Spreading Your News”

A Financial Publishing, Media & Infotainment Company @StockNewsNow Ph: 818/983-5500 • Email: [email protected]


Once Cash was King,

Then Content was King,


Over 40 milliOn targeted database

n Over 45,000 US and Global Media Outlets

n 23 Online Video Social Networks

n Reach Targeted Individual and Institutional Investors

Accredited Investors

Registered Investment Advisors

Financial Advisors

Investors (Micro-Cap)

Fund Managers

CEOs/Companies

Institutional Investors

email: [email protected]

Phone: 213/706-3000


snn is tHe King

OF distribUtiOn

Ask Mr. WallStreet is much different from other newsletters.

They are short in length, filled with innuendo and puns, and humorously

sensible about topical subjects like the Facebook IPO, Obamacare and the

Jobs Act to mention a few.

The Ask Mr. WallStreet Newsletter began as my chicken scratch notes

and simple commentary inspired by my reaction to events taking place in

the stock market, observations from reading market news and current events

plus I needed to vent both my frustrations and give advice. Once I figured

out how to use my iPhone I was able to use time on planes and waiting

areas to quickly spew my thoughts digitally without losing my own self

proclaimed pearls of wisdom. The first ten I wrote and sent to friends,

family and associates got wonderful feedback and they started to get

sent around and suddenly the world was turned on to Ask Mr. WallStreet.

You may ask why Ask Mr. WallStreet? So my answer is because the Mr.

WallStreet’s URL was taken and I like the moniker so why not Ask Mr.

WallStreet. The other reason for Ask Mr. WallStreet is because I am asked

more questions about things regarding Wall Street whether at a financial

conference, cocktail party or sitting on a panel or airplane. Answering

questions is fun unless so ridiculous they shouldn’t be answered.

From its humble beginning, Ask Mr. Wallstreet now has over 100,000

subscribers and is growing every day. With almost 30 years of experience

on Wall Street under my belt I do my best to reflect the nature of things on the “Street” as well as my perception of the world. Although

fully ensconced in the micro-cap world I have morphed from stockbroker into a story teller and now I get to combine my interests with

my experiences and shout it out to anyone willing to subscribe, and it’s FREE to subscribe. No worry we aren’t starving, we make money

allowing our sponsors and advertisers to try and sell you something.

So hopefully you get the picture and please send me your questions to send me a question please send it to [email protected]

and subscribe at StockNewsNow.com. Lastly the graphic of Ask Mr. WallStreet comes from the cartoon and comic strip, the “Wall Street

Chicken”, who’s main character, was a young Wall Street guy like me. The AMWS graphic is an older and wiser character. Okay tacky

but we think it works and makes some sense. I used to love creating jokes when I sat on a trading desk believe me when I tell you Ask Mr.

WallStreet is a joy to write and great to share. So if you have a smile on your face after checking out the newsletter I did my job!

Subscribe to FREE Newsletter



Advertise Your Company Here!

BUY AD SPACE HERE to advertise go to: [email protected]

to subscribe go to:

Over 100,000 Subscribers

StockNewsNow.comAsk Mr. WallStreet is published by SNN Incorporated. Copyright 2012 & Trademark of SNN Incorporated. All Rights Reserved.

StockNewsNow RadioStockNewsNow

StockNewsNow

Email: [email protected] Phone: 213/706-3000 || [email protected]: 910/255-0336

Hosted by Former CBS Radio Anchor Gary McKenzieAchieve National Reach/Frequency on RadioYour Radio Spot on Top Financial Radio Programming


Print

Radio

Newsletter

Distribution

MARKET AWARENESS & INVESTOR VISIBILITY PROGRAM

Digital Versions:orStockNewsNow.com MicroCapReview.com

818-983-5500RKraft@snnwire.comwww.StockNewsNow.comwww.SNNwire.comwww.microcapreview.com

Robert “Bobby” KraftV.P. Communications andBusiness Development

“Start Spreading Your News”

A Financial Publishing, Media & Infotainment Company @StockNewsNow Ph: 818/983-5500 • Email: [email protected]



no longer dedicated solely to new pools of

hydro-carbon deposits, but on new ways to

monetize hydro-carbon reservoirs that have

existed for decades if not hundreds of years.”

As a result of an ever changing industry,

PROFILED COMPANIES

marksmen energy“the best Place to look for oil is where it’s already been Found.”Ticker symbol: MAH.V

According to Archie Nesbitt,

President & CEO of Marksmen

Energy; “2013, is set to be an excit-

ing year for oil and gas exploration and

development as the industry’s attention is


shale has received a lot of media attention

in recent years. In particular, notice has been

brought to Ohio’s Utica shale deposits, a

region in which major oil companies drill

deep horizontal wells. These wells typically

include the costly expenditure of many mil-

lions of dollars in order to frac and develop

resources that may not be economically via-

ble due to the current global price of natural

gas.

As public opinion shifts demand to a more

efficient management of the world’s natural

resources, scientists and industry experts,

have been hard at work to develop new

methods of oil and gas exploration; drill-

ing and completion techniques which can

provide more efficient extraction methods

of hydro-carbon resources around the world.

While industry and media attention has

shifted towards the more glamorous contro-

versial oil markets, it should be noted that at

the most recent turn of the century, Ohio`s

Lima-Indiana region was the world`s larg-

est oil field! In fact it is controlled by none

other than the Rockefeller family whose

vast wealth was built in this very region.

Production records indicate that close to one

billion barrels of oil were extracted from the

vast reserves of the Lima-Indiana field alone.

These fields were so enormously productive

and they were also responsible for creating

some of the world`s best oil (42 API) with

production taking place very near to the sur-

face reducing the cost of drilling leading and

providing rapid return on investment (ROI)

and tremendous profits for the producers

and their investors.

The discovery of oil gushers like Spindletop

in Texas, wildcatters abandoned Ohio in

favor of greener pastures. Local operators

continued to explore Ohio on a hit and miss

wildcat basis, without the benefits of mod-

ern scientific and technical expertise, nor the

high-tech computer animated technologies

that modern scientists have discovered and

refined over time.

So interestingly, in Ohio, without

the advantage of modern technology, oil

fields as large as 127,000,000; 50,000,000

and 40,000,000 barrels of light recoverable

“Pennsylvania Crude” and high BTU gas,

with associated and value liquids, were nev-

er-the- less discovered.

Modern Ohio remains an economically

sound region for oil producers looking to

explore and develop lucrative reserves with

associated natural gas and liquids potential.

Many operators continue to drill without

2D Seismic interpretation and data at costs

of $200,000 - $300,000. These processes and

their associated costs typically yield 100,000

to 200,000 barrels of oil, making for excellent

economics.

Marksmen Energy Inc. has assembled a

proven team of experienced public company

management and resource executives for its

management and Board of Directors.

In addition, Marksmen is using the ser-

vices of top flight technical professionals,

geologists, engineers and geophysicists to

direct projects and land acquisition in Ohio.

The Marksmen team has been responsible

for identifying and developing roughly two

hundred drill locations using its own pro-

prietary technical information over the last

twenty years.

Mr. Archie Nesbitt, President and CEO of

Marksmen Energy Inc. started his career in

public company resource exploration well

before he had even obtained his business

and law degrees some forty-three years ago.

Archie has the following to offer about

Marksmen and its future in the Ohio region:

“I am very excited about what really can

be said to be a once in a lifetime opportunity

and the potential we have to build a signifi-

cant oil company in Ohio. I have assembled a

talented, professional team of proven indus-

try experts and together, I’m convinced we

will create very significant shareholder value

for our investors. Marksmen has developed

joint ventures with a number of family

owned Ohio based operating teams that have

been in the business for generations and

have significant land positions ready for

immediate exploration and development.

What we will bring to the table are the

financial resources and the proven techni-

cal and engineering expertise that’s just not

otherwise available to them.”

“The Best Place to Look for Oil is Where

it’s Already Been Found.” n

While industry and media attention has shifted

towards the more glamorous controversial oil mar-

kets, it should be noted that at the most recent turn

of the century, Ohio`s Lima-Indiana region was the

world`s largest oil field!


He currently dedicates his time to lecturing

throughout the world on the therapeutic

benefits of vitamins and minerals and lobby-

ing the U.S. Food and Drug Administration

on behalf of the dietary supplement indus-

try. Dr. Wallach’s work has been published in

more than 70 peer-reviewed and referenced

scientific journals and books. Dr. Wallach’s

40 year message of preventa-

tive health is the foundation

of Youngevity’s 90 for Life

marketing campaign.

The 90 for Life cam-

paign, which is the largest

generator of revenue and

growth for the company,

has made it easier than ever

for Youngevity’s large field

of distributors to introduce

people to the concept that

the body needs a core group of 90 essen-

tial nutrients to function at optimal levels.

These core products have undergone clini-

cal studies at Clemson University’s Institute

of Nutraceutical Research (www.youngev-

ity.com), which is one of the most highly

regarded organizations in the field of phyto-

nutrients, vitamins and minerals. The 90 for

Life campaign is going strong and as a result

of this powerful message Youngevity’s field

leaders have seen their business grow by 300

percent since the merger.

Youngevity stands by its commitment to

provide its customers with the most accurate

PROFILED COMPANIES

Direct Selling and traditional marketing…

AL International, Inc. (Ticker:

JCOF) (www.alintjcof.com), is a fast grow-

ing, innovative, global direct marketer

dedicated to improving lifestyles through

vibrant health and flourishing economics.

AL International offers more than 400 high-

quality, technologically advanced products;

including nutritional products, sports and

energy drinks, health and wellness-related

services, lifestyle products (pets, spa and

bath, garden), gourmet fortified coffee, skin-

care and cosmetics. Our Nutritional and

Healthy Lifestyle products and services are

distributed through a global network of

Preferred Customers and Distributors. AL

International believes that combining the

best of the direct selling industry with the

fundamentals and capabilities of a tradition-

al business model will exponentially maxi-

mize shareholder value.

AL International is a newly created com-

pany that was formed in July of 2011, by the

merger between Youngevity Essential Life

Sciences and Javalution Coffee Company.

AL International’s goal is to provide health

conscious consumers with nutritional and

healthy lifestyle solutions that will help them

achieve their health and wellness goals. Since

the merger, AL International has shown an

impressive track record of steady growth

and revenues. On February 12th, 2013 the

Company filed its Form 10 Registration

Statement with the SEC.

According to a recent research report, by

Opus Group Research http://www.alintjcof.

com/investors.php, AL International has

had impressive revenue growth in a short

period of time and is now past the half-way

mark of becoming a $150 million annual

revenue company by 2014. Revenues have

doubled each year since 2010 and continue

to exceed market expectations.

multi-FaceteD

aVenueS oF

SucceSS…

younGeVity

Youngevity Essential Life

Sciences is the direct selling

division of AL International

and offers nutritional and

lifestyle products and services

through a global “consumer

cloud” of direct selling networks. Youngevity

is headquartered in San Diego, Ca., and was

founded in 1997 by Dr. Joel Wallach, DVM,

ND and Dr. Ma Lan, MS, MD. The world

headquarters, in Southern California, has

grown to 58,000 sq. feet and within five years

AL International has a global network of dis-

tributors and preferred customers, including

offices in Canada, Australia, New Zealand,

Singapore, and Japan.

A biomedical research pioneer, Dr. Joel

D. Wallach, DVM, ND is renowned for

his groundbreaking research on the health

benefits of selenium and other minerals.

where the new economy meets the best of the old

economy!


and thorough information needed in order

for them to make comprehensive decisions

regarding their health. Youngevity man-

agement feels so strongly about this that

they have successfully petitioned the U.S.

Food and Drug Administration to establish

Qualified Health Claims for Selenium and

Omega-3 Essential Fatty Acids.

Youngevity’s Scientific & Athletic Advisory

Boards comprises some of the most respect-

ed names in nutrition and athletics. Working

together with the Company’s founder, Dr.

Joel Wallach, DVM, ND, the Board’s respon-

sibility is to keep the Youngevity products

on the cutting edge of performance science

and continue its relevancy in highly stressful

conditions such as professional sports.

On May 2nd 2013, Youngevity® will hold

its national convention in Las Vegas, Nevada,

where Marilu Henner (www.Marilu.com), the company’s new celebrity brand

ambassador will be the key note speak-

er. Marilu Henner further substantiates

the company’s mission in promoting active,

healthy lifestyles.

clr roaSterS

CLR Roasters represents the traditional mar-

keting side of the company, based out of

Miami, Florida it is a wholly-owned sub-

sidiary of AL International. CLR Roasters

produces coffees under its own boutique

brands, Café La Rica®, Josie’s Java House®,

and Javalution®, as well as manufactures a

variety of private labels throughout vari-

ous tiers of distribution. Industries served

include major national sales outlets, hos-

pitality, cruise lines, health and wellness

facilities, office coffee service providers, and

convenience store distribution.

CLR Roasters created a unique line of cof-

fees with health benefits under the JavaFit®

brand, marketed through Youngevity, and is

the first entrant in the highly unique niche

market of fortified coffee. CLR Roasters

is one of the largest coffee suppliers to the

cruise line industry in North America and

provides private label blends to a variety of

cruise lines in South Florida.

CLR Roasters, which represents 12% of the

company’s total revenues, has grown 160%

since the merger in July of 2011. Recently,

CLR Roasters executed a lease agreement to

increase the size of its plant by 60% and has

expanded its roasting, grinding, and pack-

aging capacity to meet increasing demand.

CLR Roasters has secured distribution with

Publix, Winn Dixie, Wal-Mart, Sedano’s,

and several large independent operators.

(INSERT PIC OF CLR ROASTERS)

beinG an eFFectiVe Direct

SellinG comPany

AL International is dedicated to bringing

people the finest array of nutrition and life-

style-related services to enrich lives and help

people Live Younger, Longer! The Company

has provided health-conscious consum-

ers and independent business owners with

innovative lifestyle solutions since 1997.

The Company continues to grow its

unique product line by continuously launch-

ing new and innovative products. One of the

newest items launched through direct selling

is called Root Beer Belly, a probiotic supple-

ment, which has already shown great inter-

est from Youngevity consumers and is sure

to add to AL International’s sales for 2013.

On the traditional marketing side of the

business, CLR Roasters recently inked a deal

with Norwegian Cruise Lines that will begin

generating revenues in the first half of 2013.

AL International is committed to grow-

ing aggressively through direct selling, tra-

ditional marketing, mergers and acquisi-

tions, and organic growth. The Company’s

direct sales model and international roll

out strategy is ideally suited to fully lever-

age the significant upside potential in high

growth emerging markets. AL International

is dedicated to improving lifestyles through

its unique nutritional and healthy lifestyle

solutions that enhance the quality of life of

each customer and help people achieve their

health and wellness goals.

hiGhliGhtS anD key

FeatureS

• AL International is now well past the

half-way mark of becoming a $150 million

annual revenue company by 2014.

• International Markets represent the

greatest future opportunity. Currently only

7% of sales revenue is derived from outside

the United States.

• The senior management team behind

AL International commands decades of

experience in the core components of the

firm’s business model.

• The company has completed 10 acquisi-

tions and/or marketing alliances since 2010.

• Marilu Henner is the new celebrity

brand ambassador in its effort to continue

promoting active, healthy lifestyles.

• Exciting results of a series of clinical

research studies performed by Clemson

University - Institute of Nutraceutical

Research

• 400-plus unique Health and Wellness

products

• Distinguished Medical and Sports

Advisory Board

• Well Capitalized and Profitable n


2012 Total of New Firms:

127firms

2012 Total Shuttered: 269 firms

2012 Net Loss:

142 firms

The ratio of NEW formations vs. BDW's is 47%, and the average net loss continues at about 12 firms per month.

New BD Formations & BD Withdrawal Summary 15 Jan 2013, as of 31 December by DAVID ALSUP www.fishbowlstrategies.com

December: 8 New Formations… and 18 Withdrawals. (The three-‐year average is 14 New Formations and 25 Closures per month.)

This 14 month chart shows the types of firms admitted.

2011 173 New firms vs: 317 Withdrawals. 2010: 177 New firms vs: 325 Withdrawals. ==================================================================================================

105 equities trading firms closed in 2012. The net loss was 74 firms. This 14 Month BDW Chart shows the types of firms that are closing.

There are 4391 FINRA Member firm CRD Numbers as of Dec 31, 2012. (Note: There are some bankrupt firms still carried in CRD, such as Lehman Bros, & Stanford Group.) The above data has been sourced from regulatory agencies publications' and statistics, along with some independent third parties. While it is believed to be reliable there can be no guarantee of the accuracy of the data. The numbers have been cross-checked for accuracy, and they should be within plus/minus two percent. David Alsup [email protected] 949-468-0111 A Detailed analysis (or Customized) is available by Subscription.

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Trouble Is Opportunity

interest, points, and fees; rather than going

through a costly foreclosure and becoming

an owner of the property.

The next threshold question that must be

answered is, what I call, “skin in the game”.

“Skin in the game” refers to the equity

contribution of the borrower towards the

purchase and/or real estate project. For pur-

poses of clarity, all private money loans will

be secured by either a Deed or Mortgage and

should be in the First Priority Lien position,

with equity behind it. The more equity that

is required to be contributed to the project

by the borrower, the safer the real estate

loan. That is because in a properly struc-

tured secured private money loan transac-

tion, 100% of the equity will be lost prior to

any debt being lost. This is reflected in the

Loan to Value Ratio (LTV) of the property

or Loan to Cost Ratio (LTC) (in a develop-

ment project). By way of example, a loan

of $1,000,000.00 at a 50% LTV would have

the borrower contributing $1,000,000.00 in

equity. “Skin in the game” not only protects

the debt, it also indicates the level of com-

mitment the borrower has to the property. It

is important to point out that when under-

writing a private money real estate deal, you

want to see real dollars put toward the real n BY jONAThAN hORNIk, ESq.

The fact is, we are still recovering from

the worst economic crisis since the Great

Depression. While values of real estate in

2012 are substantially less than they were

in 2007, the demand for capital is increas-

ing in order to fund real estate transactions

throughout the country. Yet the ability to

get loans from conventional lenders remains

difficult, it creates a tremendous opportunity

for those who want to be in the private/hard

money lending market.

This article will touch a little on what it

takes to be successful in today’s private lend-

ing or hard money world. It is important

to note that the private lending world has

changed dramatically since the credit crash

of 2007 and subsequent deep recession that

the United States has suffered. Careful and

meticulous underwriting and due diligence

needs to be performed on each hard money

deal being considered for a loan.

Let’s begin by underwriting a private loan

transaction. There are threshold questions

that must be answered before one is to con-

sider moving forward on a private money

transaction. The first is understanding the

borrower’s “exit strategy”. The borrower

must have a realistic vision on how they plan

on repaying the lender. Will they sell out

the property if it’s a construction project,

or bulk sale multiple properties in a col-

lateralized package? Are they hoping for a

refinance from a conventional lender. In

such case, you must have some assurance

the refinance will take place. Those enter-

ing into the private lending business must

understand that you are a lender and not a

real estate owner of property. This under-

standing is important as your intention is

always, for each loan, to be repaid with

2013 appears to be beginning the same way 2012 ended. A divided President

and Congress fighting about going over a “Fiscal Cliff” and raising our

country’s debt ceilings. An uncertain economy. Conventional lenders unwilling to provide

credit to fund real estate acquisitions and projects because of the economic uncertainty.


estate (which increases the value of the real

estate as opposed to soft costs (which are

paid to professionals and do not increase the

value of the real estate). Be wary of those

borrowers that do not want to contribute

equity to their own project.

The ability for any lender to lend against

real estate depends on the lenders permis-

sible LTV and LTC as discussed above. The

various types of Real Estate types carry

various risks. Types range from residen-

tial to commercial to industrial properties.

The below matrix gives some indication of

market LTV’s for specific types of real estate

assets. As a general rule, the less risky the

real estate, (i.e., the less suspect the value of

the real estate), the higher the LTV the lender

is typically willing to go to in order to close

any loan transaction.

As a general rule, lenders should never

take uninsurable risk. Therefore, a full

review of Title, Survey, and Environmental

on the real estate that will be collateral for

the loan must be performed. Purchasing

a Title Policy to insure that the lender has

a First Priority Lien with nobody ahead

of the lender, will protect the lien priority

of the loan. An environmental review of

the real estate is strongly recommended, as

an environmentally contaminated property,

requiring costly remediation, can substan-

tially impact the value of the property and

the yield on the investment. It is important

to note that one must not only do desk

underwriting, but also must visit each and

every real estate property that is the subject

of a loan. Everybody in the private lending

business has too many stories indicating how

potential borrowers have misrepresented the

condition of a property that can only be dis-

covered by a property visit.

Careful Pricing is another aspect of private

lending that needs to be fully understood.

Pricing usually consists of a combination

of interest rate, points and fees paid at the

closing. The pricing matrix for private loans

is directly impacted by the LTV and any

other circumstance which in the analysis

of the underwriter would make the loan

more risky. This could include the risk of

approvals not being in place, infrastructure

and other similar issues which may impact

the viability of any real estate project , bor-

rower’s background and past experience.

Pricing on private loans can range from 8%

to 14% interest and 1 to 10 plus points. As

you can see by the range of pricing, being in

the private lending business can be lucrative

to say the least.

Should you have any questions regarding

this article or to acquire further information

about the private lending business, please do

not hesitate to contact me at my law firm at

732-409-1144.

Jonathan Hornik is a founding partner in the law firm of LaRocca Hornik Rosen Greenberg & Blaha (LHRG&B) where he serves as co-chair of the Real Estate and Finance Department. His practice con-centrates in the financing, investment and acquisi-tion and generation of mortgages, mortgage pools and other real estate and commercial transactions. Mr. Hornik has successfully handled many significant financing, real estate and other corporate transac-tions over his career. He has advised his clients in all aspects of transactional real estate and corpo-rate matters, including, private placement memo-randums, subscription agreements, limited liability companies, the acquisition and disposition of prop-erties, businesses and other assets, operation and financing of projects, stock and asset purchases, institutional investments, credit facilities, joint ven-tures, partnerships, commercial lending and leasing. Jon has developed a specific expertise in workouts and the restructuring of loan transactions, frequently advising clients on the restructuring and disposition of loans and distressed real estate in and out of the foreclosure process. Prior to joining LHRG&B as partner, Mr. Hornik was Vice President and General Counsel of one of the nation’s largest direct private lenders. Mr. Hornik is an acknowledged expert in deal structuring and negotiation.

Mr. Hornik has been admitted to the Bar in New York and New Jersey. LHRG&B is a business oriented full service Wall Street law firm with offices in New York and New Jersey.

Mr. Hornik is also serving his second term as Mayor of the Township of Marlboro, New Jersey. n

“Trouble is Opportunity”

2

to commercial to industrial properties. The below matrix gives some indication of market LTV’s for specific types of real estate assets. As a general rule, the less risky the real estate, (i.e., the less suspect

the value of the real estate), the higher the LTV the lender is typically willing to go to in order to close any loan transaction.

As a general rule, lenders should never take uninsurable risk. Therefore, a full review of Title, Survey, and Environmental on the real estate that will be collateral for the loan must be performed.

Purchasing a Title Policy to insure that the lender has a First Priority Lien with nobody ahead of the lender, will protect the lien priority of the loan. An environmental review of the real estate is strongly recommended, as an environmentally contaminated property, requiring costly remediation, can

substantially impact the value of the property and the yield on the investment. It is important to note that one must not only do desk underwriting, but also must visit each and every real estate property that is the subject of a loan. Everybody in the private lending business has too many stories indicating

how potential borrowers have misrepresented the condition of a property that can only be discovered by a property visit.

Careful Pricing is another aspect of private lending that needs to be fully understood. Pricing usually consists of a combination of interest rate, points and fees paid at the closing. The pricing matrix for

private loans is directly impacted by the LTV and any other circumstance which in the analysis of the underwriter would make the loan more risky. This could include the risk of approvals not being in place, infrastructure and other similar issues which may impact the viability of any real estate project ,

borrower’s background and past experience. Pricing on private loans can range from 8% to 14% interest and 1 to 10 plus points. As you can see by the range of pricing, being in the private lending business can be lucrative to say the least.

Should you have any questions regarding this article or to acquire further information about the private lending business, please do not hesitate to contact me at my law firm at 732-‐409-‐1144.

Jonathan L. Hornik

Type of Real Property Securing Loan Loan to Value Ratio

(“as is”)

Loan to Value Ratio

(“as improved”)

Non-‐owner-‐Occupied Single Family Residential

60% 80%

Commercial, industrial, or Rental

Property

60% 70%

Unimproved Land 50% 70%


n BY GREG BOWES


What I Learned About Graphite

2. For commodities that China imports,

such as iron ore and coal, its policy is to over

stimulate new supply from the rest of the

world to a point where there is excess capac-

ity and low prices. For commodities where it

is the dominant producer, such as REEs and

graphite, China is consolidating very inef-

ficient, fragmented industries, improving

labor and environmental standards, curtail-

ing illegal mining and moving toward more

professional management of its resources.

China does not want to sell scarce resources

cheaply to the rest of the world as it has done

for years, especially while incurring a huge

environmental cost to do so. In graphite we

have seen export duties, the formation of

an amorphous graphite monopoly that will

reduce the number of mines from 210 to 20

and serious restrictions on new and existing

mines and processing plants. This trend will

continue and new graphite mines outside of

China are needed.

3. Graphite prices flat lined for over 15 years

due to excess production capacity in China

and economic cycles had little effect. After

that excess capacity was used up, prices

more than tripled due to growth in emerg-

ing economies. However, it also meant that

graphite prices are now subject to economic

cycles and slower growth in China has since

resulted in them falling by about a third. So

graphite is now a bet on a recovery but it is a

good bet as no new mines were built during

the last cycle. The supply problem will be

more acute in the next cycle.

In 2008 Gregory Bowes became a direc-

tor of the predecessor of Northern

Graphite Corporation (NGC:TSXV,

NGPHF:OTCBB) and in 2009 became the

CEO. At the time, graphite was a sleepy indus-

trial mineral that no one new anything about.

Like REEs and Lithium, everyone has had to

get up the learning curve including Greg who

probably did more than anyone to publicize the

graphite story. Now there are over 60 companies

but he remains one of the most credible sources

in the industry and NGC is widely regarded

as the leading company. It is the only graphite

company to have completed a bankable fea-

sibility study and is in the advanced stages of

permitting. NGC has a large flake, high purity,

scalable deposit that is located in Canada, close

to infrastructure, and has very competitive

operating costs. We asked Greg to share some of

what he has learned in the last four years.

1. Well, a major difference is that with

base and precious metals everyone gets the

same price. In industrial minerals prices

vary greatly according quality. With graph-

ite, prices are a function of flake size and

purity (carbon content of the concentrates).

Graphite deposits can contain little or no

“battery grade” material. Or, a very large

percentage of the “graphite” may be low

purity, micro-flake with no commercial

value or at the very least, serious marketing

challenges. Impurities can also affect mar-

ketability. Grade is always important but

with industrial minerals, metallurgy is often

more important.


4. When gold, copper and other metals first

broke out of historical trends, everyone was

concerned about where the new price bot-

tom would be in an economic downturn.

The same is true of graphite prices which are

in uncharted territory. However, it appears

the bottom has been reached as prices have

stabilized and may even be edging upward.

We are close to the marginal cost of Chinese

production when export duties, VAT and

transportation costs are factored in.

5. While there are over 60 public graph-

ite companies, there are very few serious

development stage stories that can come on

line in the next three or four years. This is

enough to meet growing industrial and bat-

tery demand and replace aging production.

There have been some very interesting new

discoveries but still a lot of questions to be

answered on metallurgy and infrastructure.

Greenfield projects typically take 5-10 years

get into production and that is in a best case

scenario.

6. Our Bissett Creek deposit will produce

about 20,000 tonnes of graphite per year

for 23 years based on probable reserves

only. We have another 50 years of inferred

resources and the deposit is open on surface

and down dip so it could conceivably pro-

duce in excess of 50,000 tonnes per year. A

couple new discoveries have over 100 million

tonnes of resources and could also produce

at this level or higher. However, it would be

suicide to bring on a mine at this rate as the

market could not absorb the production and

prices would crash. So in effect, size does

not matter. Large deposits can’t really take

advantage of economies of scale. Being first

to market is much more important. This

will enable us to establish our markets and

our customer base and expand as the market

grows. It is much easier to expand a mine

that is located close to infrastructure in a

favorable jurisdiction than it is to build a

new mine in a third world country. These

big, new projects really require the EV mar-

ket to take off which could very well happen.

7. The rise in graphite prices was really

the result of the ongoing industrialization

of emerging economies and its affect on

traditional steel and automotive markets

which are still the most important ones for

graphite. However, much of the interest in

graphite is the result of lithium ion batteries

and their use in EVs and HEVs. Both the

US and China have set a goal of one million

EVs on the roads by 2015. One million EVs

will need about 80,000 tonnes of graphite

or approximately 15% of the current flake

graphite market. If EVs gain only one per

cent of the new car market and HEVs 5%, it

would require 286,000 tonnes of graphite to

make the batteries. This is almost half the

current market. Clearly, EV/HEVs will have

a substantial effect on the graphite market

even if they are only modestly successful.

8. Graphite is not dependent on lithium

ion batteries for future success. In addition

to growing industrial demand, applications

such as fuel cells, vanadium redox batteries

and pebble bed nuclear reactors are all big

graphite users and will find increasing com-

mercial traction.

9. Graphene is also bringing a lot of atten-

tion to the graphite space. There is still a lot

of work to be done, especially to develop a

commercial process to economically make

graphene in scale and it remains to be seen

how much it will affect graphite demand in

the foreseeable future. If a 1mm thick flake

of graphite contains three million layers of

graphene, then a few tonnes of graphite are

enough to make a blanket that would cover

New York city.

10. Graphite is a wonder material with very

many attractive qualities. As reliable, high

quality sources are developed outside of

China it will attract many new uses.

Gregory Bowes, B.Sc. (Geology), MBA has over 30 years of experience in the resource and engineering industries. He holds an MBA from Queens University and an Honours B.Sc., Geology degree from the University of Waterloo. Mr. Bowes was previously Senior Vice President of Orezone Gold Corporation (ORE:TSX) and President and CEO of San Anton

Resource Corporation. n

The rise in graphite prices was really the

result of the ongoing industrialization of

emerging economies and its affect on tradi-

tional steel and automotive markets which

are still the most important ones for graphite.



The Evolving Direct Public Offering Market Shows Promise for Early Stage Companies

lenges for the DPO company was where to

take the deal.

While investment banks, venture capitalists

and investment professionals possess respec-

tive abilities to syndicate a transaction, and

move clients through the “going to market”

process with roadshows, presentations and

related ballyhoo, companies “going it alone” via

DPO had to knock on the doors of prospec-

tive investors that presided in their own, much

smaller database. Or, still worse, cold call.

And while investment banks, venture capi-

talists and investment professionals also bring

“investment packaging” resources, assisting

companies in tightening up the “pitch”, refining

the business plan and client’s value proposi-

tion, companies “going it alone” via DPO have

to just do their best to fine-tune their presenta-

tions and pitches.

It isn’t hard to see why the DPO market

hasn’t been grabbing much attention histori-

cally.

But the “really” good news for smaller,

“off-the-wall-street radar” companies is the

emergence of a couple key trends that are

changing the game:

Enabling technologies and social net-

working trends are democratizing the early

stage investment landscape, creating greater

• The environment for raising capital is

extremely tough,

• Investors are more risk averse than ever,

• Your deal is too small to attract an invest-

ment banking firm,

• It is extremely difficult finding an invest-

ment banker willing to engage without sig-

nificant up-front fees, or

• If you are trying to attract VC inter-

est, for every 100 plans submitted, 10 get

reviewed and only 1 is funded.

These points are all true - and depressing.

Especially when you consider the fact that

there are more than 27 million small busi-

nesses in the United States and it is probably

safe to assume that on any given day, at least

a few million of them are thinking about

how to access third party capital.

The good news for small businesses,

whether they are not getting VC or invest-

ment banking attention because they are

“too small”, “too immature”, “too ‘Main

Street’”, or doesn’t measure up on some

other measure, is that there is a tried and

tested way to ‘do it yourself.’

To be sure, self-underwritten offerings, or

“direct-public offerings” (DPOs) have been

around for years. But the process was not

exactly efficient. One of the primary chal-

If you are a small or development stage business and are planning to raise

capital, chances are pretty good that you have either heard one, or a com-

bination of the following cautionary statements:

n BY ThOMAS CARTER

B of I Holding, Inc.NASDAQ: BOFI

BofI Holding, Inc. is the holding company for BofI Federal Bank, a nationwide branchless bank that provides �nancing for single and multifamily residential properties, small-to-medium size businesses in target sectors, and selected specialty �nance receivables. With over $2.8 billion in assets, BofI Federal Bank provides consumer and business banking products through its low-cost distribution channels anda�nity partners.

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Miller Energy ResourcesNYSE: MILL

Miller Energy Resources, Inc. is an oil and natural gas explora-tion, production and drilling company operating in multiple exploration and production basins in North America. Miller's focus is in Cook Inlet, Alaska and in the heart of Tennessee's Appalachian Basin including the Mississippian Lime and the Chattanooga Shale. Miller is headquartered in Knoxville, Tennessee with o�ces in Anchorage, Alaska and Huntsville, Tennessee.

www.millerenergyresources.com

ENSERVCO CorporationOTCQB: ENSV

ENSERVCO through its various operating subsidiaries, has emerged as one of the energy service industry's leading providers of hot oiling, acidizing, frac heating and �uid management services. The Company owns and operates a �eet of more than 245 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO operates in Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia.

www.enservco.com

Stellar BiotechnologiesOTCQB: SBOTF

Stellar Biotechnologies, Inc. is the world leader in sustainable manufacture of Keyhole Limpet Hemocyanin (KLH). KLH is an important immune-stimulating protein used in wide-ranging therapeutic and diagnostic markets. Potent, yet proven safe in humans, KLH operates as both a vital compo-nent for conjugate vaccines (targeting cancer, autoimmune, and infectious diseases) as well as an antigen for measuring immune status.

www.stellarbiotechnologies.com

C

M

Y

CM

MY

CY

CMY

K

MicroCap Magazine Ad v3.pdf 1 2/14/2013 10:09:43 AM


awareness of small and development stage

companies seeking capital and greater par-

ticipation; and

Regulatory developments are creating

pressure on the SEC to update pre-Internet

rules for companies raising capital.

the emerGence oF Social

networkS, Social inVeStinG

anD eQuity marketPlaceS

Technology is enabling the emergence of

online platforms for investors to learn about

investment opportunities, more efficiently

vet deals and pitches, and to gain access to

other informed investor opinions as part

of a community. These emerging platforms

will enable small and early stage companies

in the DPO process to more efficiently and

effectively market their value proposition to

prospective and better informed investors.

Technology will enable average investors

to compete with institutions. Historically,

information about issuers was accessible

only to investment banking patrons. The

DPO community platform will enable “Joe”

and “Jane Six-pack” to access issuer infor-

mation like never before - at the tip of the

browser - and being able to process that

information in a community setting, with

discussion and input from other investors,

can be far more valuable than the feedback

of a broker and a static research report.

In addition, an important consequence

of the more successful, higher-trafficked,

online DPO sites will be that companies will

be able to better plan for a secondary market

- which has historically been a shortcoming

of the DPO process. More investors will be

aware of the DPO companies’ story, and

more likely to participate in the business as

an investor in a post-effective registration

statement world.

Small buSineSSeS matter

- they neeD caPital - anD

conGreSS GetS it

According to the SBA, small businesses rep-

resent 99.7% of all employer firms, employ

half of all private sector employees, pay 44%

of total U.S. payroll, generate 65% of net

new jobs over the past 17 years, and drive

more than half of nonfarm private GDP.

They matter.

However, the fact is that most small busi-

nesses fail. The SBA reports that while the

estimated 552,600 new employer firms

which opened for business in 2009, 660,900

firms closed (average an turnover of about

10%). Seven out of ten new employer firms

survive at least 2 hears, five out of 10 at least

5 years and slightly more than three out of

ten survive at least 10years. One of the pri-

mary causes is lack of sufficient and ready

access to capital.

In response to this state of affairs, Congress

passed the Jumpstart Our Business Startups

Act (JOBS Act).

The JOBS Act is generally anticipated to

be a prospective game-changer for small

businesses seeking capital, describing a spe-

cific framework (equity-based crowdfund-

ing) which will enable companies to solicit

smaller financings online, through “funding

portals”. The idea is, that if crowdfunding

takes off, small businesses will have access to

capital that historically has been either non-

existent or prohibitively expensive.

Chances are, however, that the crowd-

funding market will likely develop at a pace

much slower than the JOBS Act legislators

and its advocates want, as the Securities and

Exchange Commission still needs to finalize

the rules, and participants will still need to

get comfortable with those rules and confi-

dent in the crowdfunding process.

DPOs, on the other hand, are better

understood and the rules are clearly defined.

Unlike proposed rules for equity crowdfund-

ing, DPOs allow companies to raise more

than $1 million and in certain cases (SCOR

and California 25102(n) exemptions) adver-

tise the offering, selling stock directly to the

public without the registration and report-

ing requirements of a conventional IPO and

without the higher costs.

While the JOBS Act is ostensibly legisla-

tion geared to crowdfunding, not DPOs, its

being passed into law is in itself a major shift

in regulatory acknowledgement that small

businesses need better and more efficient

access to investment capital and acknowl-

edgement that the status quo is not accept-

able. We think that a byproduct of this

shift in mindset will only benefit companies

undertaking the DPO process going forward.

In fact, under the proposed rules of the

JOBS Act, in August, the SEC proposed the

elimination of the prohibition against gen-

eral solicitation and general advertising to

offer securities under Rule 506 of Regulation

D of the Securities Act and Rule 144A of the

Securities Act.

At Equity Round Services Co., we believe

that with an improving regulatory trend

to promote transactions to accredited and

institutional investors in an online environ-

ment where the social networking technolo-

gies are enabling a more transparent, effi-

cient and informed marketplace, the outlook

for the DPO financing structure has never

been better.

Our focus is to work with small and early

stage companies, helping them structure and

position their businesses to more efficiently

accept capital (equity and debt), providing

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INSURANCE CORNER

Micro-Cap Company Insuranceimpairment of all underlying insurers, claim

denial due to a materially false warranty made

by any person or organization (other than the

insured person), or if all underlying insurance

is rescinded.

Why consider a PDL policy? If you’re a

Director or Officer of any company, it’s defi-

nitely worthwhile to consider this type of

program, especially if you have assets worth

protecting. Here are few of the common

scenarios that a D and O can encounter with

their traditional D&O policy:

• D’s and O’s run the risk that large claim(s)

settlements can exhaust D&O limits

• Entity or individual directors can erode

coverage protection for D’s and O’s

• D&O program can be tied up in bank-

ruptcy estates and defense costs may not be

provided for many years (i.e. a U. S. bank-

ruptcy court has ruled that all underlying

insurance and its proceeds are assets of a

bankruptcy estate and unavailable to pay any

covered loss)

• The D&O policies can be rescinded by the

carrier for various causes

• Poorly structured severability provisions

can expose innocent directors

common inSurance

miStakeS:

When providing insurance reviews, I often

find that a great deal of time was spent on

D&O insurance, but very little time was

spent on the other coverages. If not struc-

tured properly, these other coverages may

not respond to a claim, which can have a

significant impact on the company’s balance

sheet, income, and if severe enough, can even

result in bankruptcy. Carriers are unforgiv-

ing when it comes to using the fine print in

their policies to disclaim coverage. Someone

needs to make sure that you have the right

Most articles written about the

insurance needs for Micro-Cap

companies focus on changes cre-

ated by The Sarbanes-Oxley Act of 2002, the

resulting additional responsibilities and the

shift in corporate protective measures. This

column, however, aims to inform C Suite

executive officers, company board members,

and shareholders regarding important and

often overlooked insurance aspects of corpo-

rate well being and financial protection. I will

be highlighting important insurance prod-

ucts, going over some common mistakes, pro-

viding general insurance strategies, and also

offering some do’s and don’ts of coverage.

Directors & Officers (D&O) insurance is

purchased to protect personal assets of direc-

tors and officers as well as to protect the assets

of the firm. It serves to provide reimburse-

ment to the organization, to indemnify Ds

and Os for their losses, and to help the firm

monitor and provide defense costs associated

with responding to lawsuits or investigations.

The basic D&O policy includes coverage

for the entity as well as the Ds and Os on an

aggregate basis, but can leave the Ds and Os

exposed should the entity use up the limits of

liability and not have the means to indemnify

the Ds & Os for their defense and indemnity

expense. A popular D&O derivative product

is Side A “DIC” policy. This is basically the

same D&O coverage, except it only applies to

Ds and Os (no entity) and is non-rescindable

n BY EUGENE B. PODOkShIk

by the carrier. Many SME’s and Micro-Caps

already purchase this type of a program,

however, I’d like to introduce another D&O

derivative product, the Personal Director’s

Liability Insurance (PDL).

ProDuct hiGhliGht-

PerSonal Director’S

liability inSurance (PDl)

PDL is essentially an individual personal

liability policy for independent directors serv-

ing on one or more boards. It’s unique as the

limits are not shared with other directors or

with the organization and the policy can be

tailored for the individual to cover one, all, or

any combination of boards a director serves

on. Insured directorships can be with pub-

licly traded, privately owned, or not-for-profit

organizations.

This policy is an excess policy over any

other D&O coverage that may be available

containing drop-down and limited differ-

ence-in-conditions (DIC) features. In other

words, PDL activates when indemnification is

not available from any source, and losses are

in excess of other D&O liability insurance, or

losses are not paid by underlying D&O liabil-

ity insurance and certain drop down or DIC

features of the policy are triggered. Limits

available are generally up to $10 million.

Some positive features of PDL policy are:

• No deductible

• Freedom to choose defense counsel with

carriers consent

• Spousal coverage included

• Bilateral extended reporting period

• Dedicated PDL claims professionals are

available to guide insureds through the claims

process even if the policy is not triggered.

• PDL responds as primary Insuring Clause

1 coverage if a loss is not paid under the

underlying insurance because of financial


coverages, and that they are written correctly

from a technical standpoint. Take a look at

your insurance program to see if you can find

some of these common insurance mistakes.

• Missing names on the named insured

schedule

• Missing locations

• Limits are too low (building, contents,

liability)

• No flood or earthquake insurance, no

utility service interruption coverage

• Insufficient business income

• No hired/non-owned liability coverage

• Improper classifications / Exclusions for

your business activity

• Professional liability definition of your

services is too narrow or incorrect

• Your broker, or a lower level employee

completed your insurance application

• The excess policy does not follow from the

primary or underlying policies

• You didn’t purchase the proper cover-

age -you can see a listing of common cover-

ages purchased by Micro-Cap companies

here www.ffbinsurance.com/microcap

General inSurance

Procurement aDVice:

Here are some of the generic takeaways

that might be of benefit to know relating to

insurance procurement.

• If your insurance premiums are over

$200,000, ask your broker to net out their

commission and instead negotiate a service

fee with them.

• The name of the game is to be prepared.

You need to dedicate a professional to be

responsible for risk (insurance) manage-

ment. For most Micro-Cap companies, this

falls on the shoulders of the CFO. Whoever

it is, please make sure that adequate time

is spent on exposure review and analysis.

Hire a consultant or engage your insurance

broker to perform this service if you can-

not dedicate the time or do not possess the

expertise. Your broker relies on the informa-

tion you give him/her, and your insurance

carrier can use the submitted application to

deny coverage if they find misrepresentation.

• Engage an insurance broker who can

provide risk management services and act as

an extension of your firm, rather than just be

an insurance vendor.

• No matter how solid your relationship

is with your insurance provider, we rec-

ommend that you engage a third party to

“check” your program at least once every

three years. There may be significant gaps

in your insurance program and you may

not be utilizing the optimal risk transfer

structure for your operations. Reviews can

be confidential.

• Meet your underwriter. If there’s a claim,

you want to know the underwriter person-

ally. He/she is the only one (other than your

attorney and broker) that can go to bat for

you when you have a questionable claim.

• Understand your indemnification rela-

tionship with your company.

• Read and understand your policy. Well,

that actually may not be realistic, the under-

standing that is. It is better to hire an attor-

ney who is familiar with insurance policies

and have them liaison with your broker to

secure the appropriate coverages. This addi-

tional expense will be a tiny fraction of the

premiums you pay, but you will be in a better

position when the claim does arrive. If you

don’t want to rely on your corporate counsel

who may not have this expertise and need a

recommendation, please contact us, we have

put together a panel of various insurance

attorneys.

FirSt FiDelity inSurance

rate ProjectionS For 2013:

Below is a general guide to what is expected to

take place in commercial insurance in 2013.

The actual rates will depend on the specific

exposure changes, carrier appetite changes,

carrier rate increase mandates, loss history

of the insured, class of business, and many

other factors.

I hope this information was useful. Until

next time.

about FirSt FiDelity

brokeraGe:

Founded in 1994, First Fidelity Brokerage is

a leading international property and casualty

insurance broker. First Fidelity developed and

administrates several special insurance prod-

ucts, including insurance programs for Micro-

Cap companies. Headquartered in New York

City, First Fidelity differentiates itself by pro-

viding insurance procurement and advocacy

services using experienced legal professionals.

The addition of legal expertise in insurance

procurement is what FFB refers to as “The

game changer in insurance procurement.”™

This service model untimely leads to better

protection and less claim denials.

For more information on First Fidelity

Brokerage, please visit www.ffbinsurance.com.

bioGraPhy

Eugene B. Podokshik, CPCU, CRIS, an insurance cover-age technician, is the Principal & CEO of First Fidelity Brokerage, a specialty commercial insurance broker pro-viding insurance risk transfer solutions to SMEs & Micro-Cap companies. Mr. Podokshik has worked in insurance product development and in various positions servicing middle market and national accounts (ranging from privately held companies to large publically traded investment banks) most recently as an EVP for a national insurance broker where he led insurance due diligence, program placement and portfolio aggregation programs (domestic and international) for private equity firms. Eugene graduated from NYU with a BS in Economics and a BA in Political Science, and holds the CPCU and the CRIS insurance designations. He also serves as Board President of CIDNY-ILS, a New York City not-for-profit Home Care Agency with nearly 700 employees, and is Treasurer of the Brighton Ballet Theater, one of the nation’s largest children’s ballet schools.

If you have any questions for Eugene Podokshik, he can be reached at (212) 933-9050 x1801 or via email [email protected]. Mention “MicroCap Review” magazine to have First Fidelity’s fees waived when engaging them for a basic insurance review and rate comparison. n

need a recommendation, please contact us, we have put together a panel of various insurance attorneys.

First Fidelity insurance rate projections for 2013:

Below is a general guide to what is expected to take place in commercial insurance in 2013. The actual

rates will depend on the specific exposure changes, carrier appetite changes, carrier rate increase

mandates, loss history of the insured, class of business, and many other factors.

Coverage* % Increase Property 7% to 12% Casualty 2% to 8% Excess Liability 3% to 12% Workers Compensation 3% to 15% Directors & Officers 5% to 10% Errors & Omissions 4% to 6% Employment Practices 3% to 12% Employee Benefits 3% to 10% *Assumes good loss experience. I hope this information was useful. Until next time.

About First Fidelity Brokerage:

Founded in 1994, First Fidelity Brokerage is a leading international property and casualty insurance

broker. First Fidelity developed and administrates several special insurance products, including

insurance programs for Micro-‐Cap companies. Headquartered in New York City, First Fidelity

differentiates itself by providing insurance procurement and advocacy services using experienced legal

professionals. The addition of legal expertise in insurance procurement is what FFB refers to as “The

game changer in insurance procurement.”™ This service model untimely leads to better protection and

less claim denials.

For more information on First Fidelity Brokerage, please visit www.ffbinsurance.com.

Biography


control. Whether as a young adult or as a

senior, this profound sense of loss prevents

closure and transition into the next stage of

life, fully and completely. This basic principle

of human development teaches us that no

task is ever truly completed or every really

comes to closure.

After having worked as a Rabbi and coun-

selor for over fifty years, I am conscious of all

those tasks in my life that I finished but was

never really completed, because in some way

I resisted letting them go so I could move on.

At the same time, as I resist loss and anxiety, I

embrace the moment looking forward to the

new possibilities of what the new stage in my

life, the new tasks, and the opportunity for

new growth is presented to me. It is so free-

ing to open the door onto pathways untrav-

eled. I feel so good about them, because all

the prior years have prepared me for what

is next. Even though I feel excitement and

hope, there is that part of me that is anxious

and frightened that I will not be able to do

what is expected of me and more than that,

what I expect of myself.

Do you ever find yourself replaying old

conversations, confrontations, presenta-


“Closure”

For each of us, leaving a stage in life in

which we have become both comfortable

and competent engenders a profound sense

of loss because the hard won competence

brought a feeling of wellbeing. It added to

our emerging identities, a sense of ourselves,

as more fully developed and able to cope

with, compete with and develop our own

place in the world. It is sad to let go off

such feelings. It also produces an anxiety of

helplessness because the next stage comes to

us whether we want it or not. Having passed

myself from adulthood into becoming a

senior it produces all of the same kinds of

emotional responses that I had as a child

moving from childhood into adolescence. I

don’t like to give up the strength and agil-

ity of my physical life. I worry about my

capacity to compete in a world where youth,

energy and potential are stressed over older

age, wisdom, knowledge, and experience.

When I look in the mirror I do not see me,

but, my father and/or my mother. The agil-

ity of my mind is becoming filled with those

“senior moments,” where my consciousness

has become sluggish. This is the change that

happens naturally, organically and out of my n BY RABBI STEPhEN ROBBINS

Just as many people have trouble beginning a new project, or task, so do people frequently have trouble with ending

the same, or bringing closure. In developmental psychology, in the works of Erikson and Piaget, as well as the neuropsycholo-gists, who focus on attachment theory, from the time of earliest childhood we have trouble moving from stage to stage in human development.

2013 Conference February 19-20Georgia Tech Global Learning Center

Atlanta, GARegister Now!www.semda.net

F e a t u re d S p e a k e r s

Pat MackinSVP & President of the

Cardiac Rhythm Disease Management Division

Medtronic Corporation

Jon EllenthalPresident, TEDMED

Mir ImramChairman & CEO

InCube LabsManaging Director

InCube Ventures

Mark LeaheyPresident & CEO

Medical Device Manufacturers

Association (MDMA)

Jeffrey Shuren, M.D., J.D.

Director of the Center for Devices

and Radiological Health, FDA

The SEMDA annual conference is the premier gathering of

the Southeast medical device and MDDS industries, offering

company presentations to investors; informative programs

and speakers; partnering; and networking opportunities.

Here’s why you should attend:

u Grow your medical device or MDDS company

u Make meaningful connections with leaders among the investor and business community

u Company presentations from existing and emerging medical device companies to investors and industry executives

u Programming to meet the needs of entrepreneurs, startups and established companies

u Free 1:1 partnering lets you schedule meetings at the conference and connect before and after the conference

u Gala Dinner on February 19th to celebrate the medical device industry and recognize SEMDA SpotLight winners

u Poster session highlighting early stage medical device developments

2013 Conference February 19-20Georgia Tech Global Learning Center

Atlanta, GARegister Now!www.semda.net

F e a t u re d S p e a k e r s

Pat MackinSVP & President of the

Cardiac Rhythm Disease Management Division

Medtronic Corporation

Jon EllenthalPresident, TEDMED

Mir ImramChairman & CEO

InCube LabsManaging Director

InCube Ventures

Mark LeaheyPresident & CEO

Medical Device Manufacturers

Association (MDMA)

Jeffrey Shuren, M.D., J.D.

Director of the Center for Devices

and Radiological Health, FDA

The SEMDA annual conference is the premier gathering of

the Southeast medical device and MDDS industries, offering

company presentations to investors; informative programs

and speakers; partnering; and networking opportunities.

Here’s why you should attend:

u Grow your medical device or MDDS company

u Make meaningful connections with leaders among the investor and business community

u Company presentations from existing and emerging medical device companies to investors and industry executives

u Programming to meet the needs of entrepreneurs, startups and established companies

u Free 1:1 partnering lets you schedule meetings at the conference and connect before and after the conference

u Gala Dinner on February 19th to celebrate the medical device industry and recognize SEMDA SpotLight winners

u Poster session highlighting early stage medical device developments


tions etc because you were dissatisfied with

the outcome? Those replayed moments of

unfullfillment, are part of the fundamental

“mind chatter” of worry/anxiety that goes

on in most people’s consciousness. The other

part of that mind chatter is listing of all the

things which are yet undone and need to be

“completed.” One side of mind chatter keeps

you in the past, the other keeps you in the

future, both of them together keep you out

of the here and now, and therefore, nothing

ever gets completed. In this constant state

of anxiety/worry “mind chatter,” everything

we do is conditioned by past failures. Most

tasks are never finished because much of the

motivation that drives us is the anxiety of

dissatisfaction. To truly complete anything,

to come to a sense of closure, whether it’s

at work, in a project, or collegial relations,

whether in friendships, whether in family,

whether in loving or whether in spiritual

moment of insight into meaning and pur-

pose, one must always be in the present

focusing on what is in front of you.

So how does all of this apply to those of

us whose business lives are bound up in

finance, investments and/or micro-cap? First

there is the matter of closing out a year. It

may be a year that we are satisfied with or

even proud. In this case closure can bring a

sense of elation and celebration, which also

frequently is accompanied by the haunting

question, “Can I do this again next year?” or

“is this something that others will continue

to expect of me”? The inherent conflict of

emotions in such a scenario are further

complicated by the deeper uniquely personal

issues of loss, separation and anxiety that

each of us experienced as I described above.

Letting go of something successful is usually

very difficult for most people. The new level

of “risk/expectation,” can raise ones inner

level of self-doubt to intolerable, even panic

laden, standards. Success is a very much

double-edged sword. I remember through-

out my years in college the feeling of turning

in completed work, a paper or a project,

a thesis and/or dissertation, putting all of

that effort into the hands of others to judge

required quite an act of surrender and a

feeling of both satisfaction and helplessness

at the same time. The same is true for any

annual financial reports; year-end summa-

ries and projects which we have to turn over

to investors and our employers engender

the same feelings. In my years of experience,

doing coaching and counseling, relating to

business, companies, divisions, and proj-

ect groups, teams, leadership cadres etc. I

have seen this as a constant threat usually

expressed in those who are perpetually late

in turning their final work or who get work

in at the deadline. Those of us, who work in

a steady way, preparing reports as the infor-

mation becomes available, generally only

have a compilation and editing task at the

end. But those of us, who avoid completion,

usually have one of those classic “all nighters

or all weekenders” in which there is a furi-

ous panic accompanying the work, which

could have and should have been done in a

timely manor. This “completion, avoidance

pattern” is reflective of much earlier attach-

ment issues that probably characterize the

individual’s life in so many different ways.

There are much salutary and supportive

ways to help people change their work pat-

terns than threats and punishments, which is

probably what they lived with through their

childhood. Shame is always a bad motivator!

On another level, those who struggle with

completion, especially in the closing com-

ments of making summary assessments and

recommendations may be reflecting a much

deeper issue about closure - the issues of

purpose and meaning. The psycho-spiritual

issues of purpose and meaning are not about

the work itself, but rather how the work

makes it possible for the person to find their

purpose in the world and to act meaning-

fully in a way that makes them feel that their

life is more than just a process of survival.

There are those we know who work, espe-

cially in the financial world, are driven by

material concerns. For them financial suc-

cess defines their fulfillment of their purpose

which is to prove their value by demonstrat-

ing it through their wealth and possessions.

There are those who work in the world of

finance who see it as an act of doing service

for their clients. They feel responsible for

the aggregate of their clients as a whole and

for each individual client who they know

and feel a direct responsibility for. For these

individuals finance is only the means of a

greater purpose. The satisfaction comes in

finding meaning in ones inner life through

the service that they provide for others in

caring for their financial well-being. There

are those in the industry who feel that sense

of fulfillment by being of service, but also

understand that the service they provide to

individuals and companies has an impact

on the lives of dozens, hundreds and even

thousands of more people than one can

possibly imagine. These individuals know

that their work is like a pebble dropped in a

pond, the ripple effect intersects with many

more similar choices made by others setting

up either harmonious or dissonant patterns

of financial life in all levels of market places,

from local to international. There are those

who see only the immediacy of a recom-

mendation for investment and there are

those who have the larger vision of impact

of their recommendations and actions on

the financial life of so many. For them there

is a deep moral/ethical imperative to, like the

doctors oath, “do no harm,” but beyond that

One side of mind chatter keeps you in the past, the other

keeps you in the future, both of them together keep you

out of the here and now, and therefore, nothing ever gets

completed.


like the physician, they know their work can

either heal or wound the people for whom

they work. Such a broad sense of vision and

impact opens for those people the under-

standing of the power they wield to impact

the lives of others who are so dependent on

them. At a higher level, there are those who

embody all the prior, knowing that their

work serves a grander purpose in moving the

world toward prosperity, harmony, growth

and expansion in a moral/ethical climate.

It is not greedy or rapacious. The way they

begin and end their projects either in an

annual or multi-year cycle, do so with all

the levels of purpose and meaning that they

now understand and to which they are com-

mitted. This turns finance and business from

the calculation of facts and risks to the level

of art and intuition driven by the need to live

a purposeful life that provides the greatest

opportunity for well-being for as many as

possible. For these people completion like

the ending of a prayer, it is a great ‘Amen’ and

an expression of gratitude.

As we have come to the end of 2012 there

is a stark contrast that faces us in the com-

mitment of so many to serve the highest

purposes through their work in the financial

world. Contrasted by the horrible acts of

death and destruction that we see going on,

not in other countries, but in our cities. The

recent massacre in Newtown, Connecticut,

reminds us that there are fundamental ill-

nesses in our economic systems that make

it impossible to care for those with illnesses

mind and spirit who wish to end their lives

in a grizzly orgy of destruction that will leave

their name written across the memory of

families, communities and this nation that

says ‘you may not have paid attention to me

when I was alive but you will never forget

me and my name and how I died, the ones

I massacred are my epitaph.’ At the heart of

a healthy business community is a caring

for and a protection of those whose anguish

can lead them to such twisted acts of infamy.

Their way is not a way to have closure or

complete a life, it is the way those of us who

get up every day and go to work, taking with

us the portfolio of the highest level of duty,

responsibility, creativity and intuition to

provide the greatest opportunities for those

who are in our care. So is the meaning of

these words, ‘have a happy, healthy and pros-

perous New Year.’ n


Mr. Sawyer worked at ARCO and The

Superior Oil Company in the field and has

consulted for petroleum giant, Shell Oil

Company, on various field projects. Mr.

Sawyer knows oil field operations, knows

older wells, and knows where to look for

potential new reserves. To that point, Sawyer

directed Lucas Energy, Inc. in 2006, towards

the Austin Chalk properties in Gonzales

County, Texas, which eventually led to Lucas

Energy controlling more than 15,000 acres

of potentially oil rich Eagle Ford properties

in that and adjacent counties southeast of

San Antonio, Texas.

In January 2009, when Mr. Sawyer took

over as President and CEO of Lucas Energy,

Inc. when the Lucas had only 500 sharehold-

ers, average daily trading volume of less

than 20,000 shares per day, approximately

8 million shares outstanding, and an esti-

mated 2 million shares in the float. The

market cap was around $3.5 million, and

the market price range was about $0.40 a

share (about 25% of book value). During

his tenure as CEO, Lucas Energy’s stock price

reached above $5.00 per share, and during

his administration and through his leader-

ship led the company to greater than $50

million in market capitalization. In addition,

the number of shareholders increased to

PROFILED COMPANIES

For Matmown Inc., the Future is Now

Matmown management announced recently

that William A. Sawyer, former co-founder

and CEO of Lucas Energy, Inc. will take the

reins as new CEO of Matmown, Inc. Mr.

Sawyer brings his years of experience and

expertise in the area of oil and gas and in

the area of public company management to

Matmown.

Matmown, Inc. and its forward looking founder and Chairman, Alex Portelli, has made a decision to move the Company into what should be a bright future as the company has announced the appointment of a highly recognized and respected new CEO.

In a February 21, 2013 press release:

Matmown announced the appointment of

Mr. William A. Sawyer as its President and

Chief Executive Officer effective on February

19, 2013. Mr. Sawyer brings over 30 years

of diverse experience in the energy industry

with such firms as, ARCO, Houston Oil &

Minerals, and The Superior Oil Company. He

is the former President, CEO and co-founder

of Lucus Energy Inc. Mr. Sawyer has a

Bachelor of Science in Chemical Engineering

from Louisiana State University in 1970 and

his Masters of Business Administration from

Southern Methodist University in 1976.

For a complete copy of the press release in

its entirety visit www.matmown.com

why DiD matmown chooSe

william Sawyer?

“Mr. Sawyer represents the right CEO at

the right time for Matmown and provides

the company a CEO with a proven track

record of success. Mr. Sawyer is a petroleum

engineer with more than 35 years of oil and

gas experience. His expertise in the area of

micro-cap public companies and his broad

experience with oil and gas operations is a

perfect match for the position of CEO for

Matmown,” According to Alex Portelli.


over 7,000 by 2011 and the daily trading vol-

ume averaged approximately 300,000 shares.

In addition, Mr. Sawyer is a licensed pro-

fessional engineer in the State of Texas and

for more than 10 years acted as a consultant

to the United States Department of Justice.

why DiD william Sawyer

chooSe matmown?

In the words of William Sawyer, “the answer

to that question is quite simple, and is in

three parts. Firstly, I have not felt as com-

fortable with anyone as I am with Alex

Portelli, since the formation of Lucas Energy,

Inc. in 2005 when Jim Cerna, and Peter

Grunebaum, and I founded Lucas Energy,

Inc. Secondly, people like Alex Portelli are

rare indeed. They are the type of founders

who look out for the shareholder first and

create companies with solid fundamentals

and growth potential.” Mr. Sawyer went on

to say, “Thirdly, I am comfortable with the

base of Matmown’s current assets, espe-

cially the oil and gas assets.” Sawyer added,

“The Matmown oil and gas properties are

centered in the upper part of the Austin

Chalk Trend near Giddings Field, in Texas,

with underlying Eagle Ford potential, and

I like the potential for expansion.” To that

point, older Austin Chalk wells have been a

specialty of Sawyer’s which he exploited and

capitalized upon while at Lucas Energy.

Mr. Sawyer further stated, “The position

of Matmown today is similar to where my

previous company was in 2009. Matmown

has assets, a good shareholder base, and a

potential upside beyond the current mar-

ket value” Sawyer continued, “The float is

good, the number of shares outstanding is

adequate, and the potential climate to raise

money for future capital operations is excel-

lent in my opinion.”

According to Mr. Sawyer, he had several

substantial companies courting his leader-

ship, or consulting advice at the time he

elected to join Matmown, Inc. Portelli

added, “We are impressed with the pre-

cision at which Mr. Sawyer operates and

the planning he puts forth into each step

of corporate development. Considering his

substantial track record of success, we feel

his decision to lead Matmown is one he

would only do with a very strong belief in

Matmown’s growth potential.”

what iS the Sawyer buSi-

neSS Plan For matmown

lookinG ForwarD?

Considering the expertise of William

Sawyer, he will most probably focus the

forward looking business plan first on the

development of the Matmown oil and gas

assets. His prior efforts concentrated on

converting low producing, and non-produc-

ing assets to cash flowing assets. In the past,

Sawyer has targeted 500 BOPD and 1,000

BOPD of operated production in an effort to

bring revenues up to the range of $3 million

to $5 million a year. We anticipate this to be

a strategy initially for Matmown. However,

the primary question many companies have

is where will the growth capital come for

the future development? Sawyer believes

that the time is right for raising capital.

“The capital markets for private placements

and publicly registered offerings seem to be

ripe for investment capital into Matmown

projects” quotes Sawyer. “It could be the

time in the market for joint ventures and

joint participation by investment groups to

look at unique opportunities like Matmown.

Smaller oil and gas investor groups seem to

be actively seeking operator type partners

which might be of great benefit to Matmown

within the proper structure.” Taking market

conditions into consideration, the timing

seems to be right for Matmown to raise

needed amounts of capital to grow the com-

pany.

We have heard about the Matmown oil

and gas properties but what about the gold?

Before joining forces with Mr. Sawyer,

Matmown’s strategy was to ramp up the

gold production on its 17,000 acre conces-

sion in Peru, which was approximately 16.4

grams per ton during past limited beta

test production. As Mr. Sawyer vision the

potential assets in Peru and the structure for

further development, he is cognizant of the

values and benefits to Matmown’s growth.

However, considering his expertise and

development history on oil and oil project

fundings, Matmown’s initial concentrated

focus will be on rapid expansion in the oil

and gas area of the company and plan for the

development of the gold assets of Matmown.

What are the future goals of Matmown?

As a part of the corporate strategy for

Matmown Mr. Sawyer stated, “Matmown

will continue to seek out joint venture part-

ners starting with smaller transactions and

hopefully move up into a larger size transac-

tion within a reasonable time period.” He

also stated, “ I belief that when raising capital

in the public markets and seeking joint ven-

ture partners it is best for the company to go

to the individual investor market and stay

away from hedge funds and debt conversion

capital transactions”. It is his opinion that

this approach allows for better probabilities

for increased shareholder values.

If you followed Mr. Sawyer at Lucas Energy,

you know that when he took over as CEO in

2009, in addition to his corporate duties, he

also focused on stock market awareness and

investor visibility. He believes that trad-

ing volume through corporate awareness in

the market place is most likely a large part

of the corporate strategy for the future of

Matmown, Inc.

With William Sawyer now at the helm, it

is anticipated that the overall goals will cen-

ter on increasing shareholder value. “Steady

growth in stock value, an increasing market

cap and liquidity is the key to shareholder

loyalty and confidence” according to Sawyer.

In conclusion, Mr. Sawyer’s vision, pas-

sion and capabilities combined with the

Matmown assets, could provide existing and

future shareholders a very good opportunity

for success in the future. n


The SEC has replaced Mary Shapiro with Elisse B. Walter, a commissioner, as interim

chairman. Mary Jo White has been nominated as a candidate for the position of chair-

man. She is a former United States attorney from New York. Currently a white –collar

defense attorney, she has been involved in a number of high profile cases. The obliga-

tion in this position is to assure impartial and appropriate oversight of the rules while

enforcing them.

What is necessary in this position is a fair individual that works to the benefit of

investment in the United States free market system. We cannot allow individuals to

destroy the liquidity of our markets. We also cannot over regulate our system to the

extent of paralysis. There must be a common ground for the good of our economic

survival.

It is absurd that litigation of many of the class action suits is instigated by collusion

of many of the initial parties without consideration of the harmed investors. More often

than not, the lawyers make more money than investors. The establishment of a maxi-

mum allowable legal fee, if adopted, would serve to insure a more appropriate return

to those actually losing money. The trustee has an obligation to carry out the duties

instructed by the court. Why are the attorneys allowed to solicit lawsuits in states they

are not registered in? How do they get the names of the investors of a private placement

in the first place? Somewhere along the way investor’s money is diluted. This process

needs to be changed. In some cases, the encouragement to litigate costs the investor

more money than if he or she settled in a fair and impartial arbitration. I have been

an arbitrator and an expert witness and have seen an investor misled on what the final

payment to them will be.

The State Department of Securities in each state needs to censure the unsavory actions

of these miscreants who are creating this unfair practice. To be certain, there are a num-

ber of good and qualified Trustees as well as attorneys. The regulation needs to make

sure that the return of one’s investment, if warranted, is done in a more efficient manner

than we are currently doing.

Limiting the legal costs is a fair and judicious start in appropriate regulation reform.

To all the Broker Dealers that may face extinction in the next few years from over regula-

tion, use the office of the Ombudsman. Contact your local congressman, the Senators

in your State, and urge them to instill a fair practices act limiting legal costs that are

sacrificing jobs in their State.

If you are having trouble contacting the Ombudsman, email us at Investor Consultants

and we will offer our assistance. Standing on the sidelines encourages more apathy, do

something for you and the entity you own. n

ombudsman

V I E W P O I N T S

What is

ahead for

the New Year?

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Micro-Cap Review Magazine Quarter 1 - 2013

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Transcript of Micro-Cap Review Magazine Quarter 1 - 2013