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SPRING 2019 The Official Magazine of the MicroCap Stock Market Since 2006

Hemispherx Biopharma, Inc. NYSE American: HEB Orgenesis, Inc. NASDAQ CM: ORGS

14 8
Page Thomas K. Equels, CEO Page Vered Caplan, Chairman, CEO & President
www.hemispherx.net www.orgenesis.com

Citius Pharmaceuticals, Inc. NASDAQ CM: CTXR Taronis Technologies, Inc. NASDAQ CM: TRNX

18 12
Page Leonard Mazur, Chairman Scott Mahoney, CEO, President & Director
Page
www.citiuspharma.com Delicious Flickr Twitter
www.taronistech.com
Retweet

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21 My 8 Rules for MicroCap Value Investors 60 Public Venture Capital in Canada 80 Dos and Don’ts for Private Companies
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26 MicroCap Investing By Brandon Mackie 64 Understanding Short Sale Activity 82 Hand Over Fist . . . Picking Teams and
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but did it END? By Steven M. Shelton, MS, 66 Reading the Proxy Statement to Evaluate 84 A Cannabis Play that Won’t Get Smoked
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 CONTENTS
STOCKNEWSNOW.COM

F E AT U R E D A RT I C L E S
spring 2019

21 My 8 Rules for MicroCap Value Investors 66 Reading the Proxy Statement to Evaluate
By Tobias Carlisle Management By Sam Namiri

26 MicroCap Investing: 4 Reasons Why Share Structure
is Critical By Brandon Mackie
32 Microcaps’ 2009 Trend has been Your Friend but did
it END? By Steven M. Shelton, MS, MBA, CFP®, CLU,
CHFC, TEP, CIMA®, CMT
41 The Dual Listing Process for Foreign Issuers in the
United States By Richard Revelins
60 Public Venture Capital in Canada By Brady Fletcher
64 Understanding Short Sale Activity
By Cromwell Coulson
68 Form 4 Filings By Maj Soueidan
80 Dos and Don’ts for Private Companies when
Reverse Merging By John Lowy, Esq.
82 Hand Over Fist . . . Picking Teams and Making
Money By Jae Sly, PhD MBA
84 A Cannabis Play that Won’t Get Smoked
By Sean Peasgood
86 The Impact of the Repeal of PASPA on the Tribal
Gaming Market By Ralph Garcea, P.Eng, MBA

Profiled Companies 25 Marrone Bio Innovations 50 OptimizeRx Corporation

8 Orgenesis, Inc. NASDAQ CM: MBII NASDAQ CM: OPRX
NASDAQ CM: ORGS
28 Jerash Holdings (US), Inc. 56 SRAX
12 Taronis Technologies, Inc NASDAQ CM: JRSH NASDAQ CM: SRAX
NASDAQ CM: TRNX
30 KNeoMedia Limited 59 Imugene Limited
14 Hemispherx Biopharma Inc. ASX: KNM ASX: IMU
NYSE AMERICAN: HEB
31 Tinybeans Group Ltd. 74 First AU Limited
18 Citius Pharmaceuticals, Inc. ASX: TNY ASX: FAU
NASDAQ CM: CTXR
48 CBD Unlimited, Inc. 78 ShiftPixy, Inc.
24 Femeda Ltd. PINK: EDXC NASDAQ CM: PIXY
PRIVATE COMPANY

Cybersecurity Corner Commodities Corner Australia Corner

11 How to Protect Your Clients’ 42 Managed Futures for Microcap 72 Australian Non-Resource
Investments from Cyber Investors Microcaps
Attacks By Mark Shore, MBA By Mark Tobin
By Jake Lehmann
Legal Corner Resources Corner
Accounting Corner 46 Uplisting – More Than Meets 76 Q&A with Brent Cook,
36 Life After Regulatory The Eye Geologist
Onslaught By Joe Lucosky, Esq. By Shelly Kraft
By Corey Fischer, CPA
Life Sciences Corner Comic Strip
Family Office Corner 54 Now, More than Ever 83 WallStreet Chicken
38 Family Offices are Investing By Ramses Erdtmann and A look back to Episode 1
Heavily in Artificial Intelligence Thomas Butler
By Karl Douglas Asia Corner
Beltway Corner 92 Hong Kong Stock Market
62 Taking Stock Robust in 2019
By Dina Ellis Rochkind, Esq. and By Leslie Richardson
Lara Kaplan, Esq.

www.stocknewsnow.com MicroCap Review Magazine 7

 P R O F I L E D C O M PA N Y NASDAq CM: ORGS

Orgenesis, Inc.
A Seismic Shift In Cell Biology Is Fueling A New Breed
Of Biotech Companies

I
t’s the transformation in healthcare ment team have proven they can execute:
Estimated Global Cell & Gene Therapy Market
where many investors are just at the the company has inked manufacturing deals
200
beginning of an investment surge. 180 with some of the most respected companies
160 150
Orgenesis, Inc. (NASDAQ: ORGS) stands to 140
120
in the industry, and they continue signing
Global Market 105
benefit from this transformation. Volume (USD, in bn)
100
80 75 on new partners every month and evolv-
60 56
44
Cell therapies and regenerative medicines, 40
20
21 23 26
30 36 ing innovations even faster. Their revenue
where cells or cell materials are used to 0
20 6 has been increasing consistently, and the
20 7
20 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
26
1
1
1
1
2
2
2
2
2
2
treat diseases, are transforming a variety company is making a name for itself as a top
20

~26$ billion ~150$ billion 33%

Annual growth
of previously untreatable conditions. Cell Current value of global Market volume
Cell & Gene Therapy anticipated by expected between partner in the sciences industries.
market 2025 2020-2025

therapies called CAR-T cells are curing can-

cer patients; gene therapies are correcting Figure 1: Data source Roland Focus:
Global Cell & Gene Therapy Clinical Trials
Regenerative Medicine, Sept 2017
genetic disorders by replacing faulty DNA 250 225 Gene Therapy
200 Gene-modified Cell Therapy
170
and bone marrow transplants are becoming # of Clinical
150
144 Cell Therapy
113 106
Trials
safer and faster. first two drugs of this type, called CAR-T 100 90

50 30 38

Advances in technology and our under- cells, were approved in 2017. Industry lead- 0
9

Phase I Phase II Phase III

standing of human biology have created and
rapidly progressed an entirely new class of
potential drug products. Cell therapies are
taking the biotech sector by storm.
Cancer has been the biggest success story
so far, and lives are being transformed at
an increasing pace in the U.S., where the
Vered Caplan, Chairman, CEO & President
ing Gilead Sciences (NASDAQ:GILD) and
Novartis (NASDAQ:NVS) led the charge,
each with their own new product. Industry
sources anticipate the need for these drugs
to be within billions of dollars in the coming
5-10 years.
Now that the first few cell therapies are
across the finish line and approved by reg-
ulators, it’s smaller companies with deep
development pipelines and quality know-
how that are taking the baton.
Orgenesis, Inc. (NASDAQ: ORGS) is one
of the fastest-growing companies in this sub-
sector. Orgenesis both develops a Point of
Care platform for new therapy products, and
processing of therapeutics (“POC”), devel-
oping and collaborating with third parties
for therapeutics, and also provides manufac-
turing expertise for other companies in its
CDMO business. In doing so, they’re build-
ing a unique pipeline of products and reve-
nue, and the company benefits economically
from advancements across the sector. CEO
Vered Caplan and the experienced manage-
925
Clinical trials underway
That utilize Cell & Gene Therapies
Figure 2: Data source Roland Focus:
Regenerative Medicine, Sept 2017
DRUG DEVELOPERS AREN’T
ALWAYS GREAT DRUG
MANUFACTURERS
Cell therapies are products that use human
cellular material, sometimes modified, to
treat disorders.
An immense host of companies and
research facilities are developing products
based around this modality. In Figure 2, it’s
apparent that most of these are still early
in development (Phase 1 and 2 of clinical
trials), while only a minority are in phase 3
development, near the end of their research
phase or before possible expedited approval
by regulatory agencies like the FDA.
Though not the very first cell thera-
pies approved, CAR-T cells were the first
resounding success for modified cell thera-

8 MicroCap Review Magazine www.stocknewsnow.com

 Orgenesis Revenue, in Thousand $
pies. CAR-T stands for Chimeric Antigen in Masthercell’s gross margins, which have
20,000

Receptor T-cells, a process through which increased to about 40% in the last year. 17,500
18,655

a cancer patient’s immune “T” cells are 15,000

12,500
Revenues
10,089
removed and modified to give them pre- POINT OF CARE (POC) (USD, in thousand) 10,000

7,500 6,397
cise cancer-seeking capabilities. They are COMPONENT… 5,000
2,974
2,500

then multiplied and re-infused back into a 0

2015 2016 2017 2018
patient. So far, they’ve been able to produce Orgenesis is also growing their own Point
amazing and sometimes curative effects in of Care development platform for advance- Figure 3: Orgenesis Financial Statements
certain types of cancers. ment of autologous therapeutics in collabo-
Cell therapies are extremely costly and can ration with leading research and medical
Cell Therapy manufacturing market, in millions $
go up to $500K per patient treated. Why the institutes. One of their lead programs alters 4,500 US Annual growth, %
390

cost? For one, many of these cell therapies human liver cells to produce insulin, called 4,000 EU
46.1
Asia
3,500 305
RoW 498 46.2

are one-time treatments. The companies that “Autologous Insulin Producing Cells” (AIP)
3,000
230
Market size 2,500
387

(USD, in millions) 167 290

1,587 40.7
2,000
develop them need to make as much as they and they’ve inked licensing deals with sev- 1,500 49
63
84
109
121

155
213
1,021
1,296

23 785
1,000 267

can from this single, possibly curative treat- eral collaborations.

6 7.3 11 30 260 599
15
500
7.6 9.5
44 66
131
128 438 988 1,254 1,535 40.6
37
43 65 760
36 579
425
0

ment. But second, these are also very costly 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

and time-consuming to manufacture and THUS, A MULTI-BILLION

supply. This process for autologous therapy
involves removing a patient’s cells, sending
them around the country for specialized
modification and manipulation, and finally,
re-infusion with ongoing long-term moni-
toring in the hospital. This can take in some
instances weeks to complete.
Enter Orgenesis and their dual business
model. The company’s core expertise is in
processing cells efficiently utilizing innova-
tive technologies for the advancement of
autologous therapies. Their Masthercell sub-
sidiary is a specialized contract development
and manufacturing organization (“CDMO”)
focused on cell and regenerative therapies,
like CAR-T cells therapies. Orgenesis has
made a name for themselves as a high-
quality provider of manufacturing services
for other companies developing new cell
therapies; they can also help the compa-
nies streamline their development processes.
Orgenesis’ expertise in this field can be seen
DOLLAR OPPORTUNITY AS
NEW DRUGS EMERGE
The addressable market for those in the
business of manufacturing cell therapies is
growing rapidly as more of these potential
products enter development.
Orgenesis’ revenues through their
Masthercell subsidiary has been growing
steadily as a result.
Masthercell has an expanding global
footprint, with their primary facilities in
Belgium, South Korea, Israel and North
America. This expansion is a top priority
for the coming years, and the company has
an intriguing financing and collaboration
agreement with a top healthcare invest-
ment fund in the U.S. for just this purpose.
In 2018, Great Point Partners invested up
to $25 million in Masthercell to fund their
CDMO expansion plans, with some of Great
Point Partners’ own people taking direct
Figure 4: Data source Roots Research.
Cell Therapy Manufacturing Market, 2017-
2027
roles in operations. This kind of collabora-
tion is a rare sight in the world of biotech-
nology and it speaks to the potential of this
business.
ORGENESIS’ MULTI-VERTICAL
PLATFORM DIVERSIFIES THE
FUTURE
Orgenesis’ multi-pronged business strategy
builds on the company’s core expertise in
manufacturing and scaling cell therapies.
Masthercell is a strong business growing
steadily with an increasing number of high-
profile clients. Meanwhile, the company is
expanding their own Point of Care develop-
ment program among them, the AIP cells.
The first indication for AIP cells is in the
treatment of severe diabetes following a total
pancreatectomy. Orgenesis has developed
a novel approach to utilizing liver cells as a
source of insulin production after cell modi-
fication, in essence creating new insulin
producing cells in patients who no longer
make their own. In fact, the company signed
a collaboration agreement with the New
York Blood Center (NYBC), one of the larg-
est independent, community-based blood
centers in the world in order to collect liver

www.stocknewsnow.com MicroCap Review Magazine 9


cells for the therapy validation. The company
also expects to receive approval for collection
and processing of such cells for use in human
research in 2019, setting up a key catalyst for
Orgenesis when the first results emerge.
The company has taken a licensing
approach to Point of Care collaborative
development. In 2018, they began a collabo-
ration on the development of Hemogenyx’s
(LSE: HEMO) Human Postnatal Hemogenic
Endothelial (Hu-PHEC) technology.
Hu-PHEC is a cell replacement product can-
didate being designed to generate cancer-
free, patient-matched blood stem cells after
transplantation into the patient.
MANAGEMENT THAT CAN
EXECUTE
Orgenesis’ management team brings together
a broad background, pairing strong business
acumen with the research and cell therapy
experience to attract and retain cell therapy
clients and partners.
VERED CAPLAN
Vered Caplan, Chairman, CEO and
President
Ms. Caplan has been the Chairman of
the Board of Directors and CEO since 2014,
10 MicroCap Review Magazine
prior to which she was Interim President • Kangstem Biotech Co., Ltd. (KOSDAQ:
and CEO since December 23, 2013. Since 217730)
2008, Ms. Caplan had been CEO of several • Hemogenyx Pharmaceuticals Plc (LSE:
biotech companies. Ms. Caplan has an M.Sc. HEMO)
in biomedical engineering from Tel Aviv
University specializing in signal processing And, this list includes only those clients
as well as a B.Sc. in mechanical engineer- that have been discussed publicly; there
ing from the Technion-Israel Institute of are undoubtedly more that the company is
Technology specialized in software and CAD unable to name in public.
systems.
WHAT’S NEXT FOR ORGENESIS?
SARAH FERBER, CSO
Professor Sarah Ferber – Chief Scientific If 2018 is any indicator Orgenesis will con-
Officer tinue to move quickly in 2019. The company
Professor Ferber was appointed on signed on additional major clients during
February 2, 2012. Since 2017, Professor last year and a number of new licensing and
Ferber has been the Principle Investigator collaboration agreements. Global expansion
of cell therapy for TMU DiaCure. Professor is their top priority, and as manufacturing
Ferber studied biochemistry at the Technion needs climbs so too will their revenue poten-
under the supervision of Professor Avram tial. There’s little doubt that this nascent
Hershko and Professor Aharon Ciechanover industry is growing by leaps and bounds –
winners of the Nobel Prize in Chemistry in the question is who will provide solutions
2004. Most of the research was conducted and who will soak up the demand. Orgenesis
in Professor Ferber’s Endocrine Research is well-positioned for the new century of cell
Lab. Professor Ferber received Teva, Lindner, therapies. n
Rubin and Wolfson awards for this research.
Professor Ferber’s research work has been www.orgenesis.com
funded over the past 15 years by the JDRF,
the Israel Academy of Science Foundation
(ISF), BIODISC and DCure. Professor Ferber
earned her B.Cs. from Technion-Haifa and a
Ph.D. in Medical Sciences from Technion-
Haifa. She also holds a Post Doctorate degree
in Molecular Biology from Harvard and a
degree in Cell Therapy Sciences from UTSW,
Dallas.
The quality of Orgenesis clients speaks to
the quality of the business. Orgenesis counts
among their development and manufactur-
ing clients and partners:
• Servier (private)
• Imcyse (private)
• Adaptimmune (NYSE: ADAP)
• Athersys (NASDAQ: ATHX)
• Gamida Cell (NASDAQ: GMDA)
• CRISPR Therapeutics (NASDAQ: CRSP)
• Iovance Biotherapeutics, Inc. (NASDAQ:
IOVA)
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 CYBERSECURITY CORNER
How to Protect Your Clients’ Investments from Cyber Attacks
I nvesting personal funds in the digital age
has never been easier—from placing sizable
investments via mobile devices to establishing
regular wire transfers from your laptop during
a flight layover. When banks, brokerage firms,
mutual fund companies and high-net-worth
individuals turn to you as an asset manager,
they rely on you to protect their finances—
wherever they are. According to recent cyber
security studies, the average cost of lost busi-
ness for a U.S. company is $3.8 million. Taking
a personalized approach to protecting your cli-
ents’ financial assets will help you keep wealth
in the hands of its rightful owners.
According to the 2018 Verizon Data Breach
Investigations Report (DBIR), 95 percent of
all attacks on enterprise networks are carried
out through the email vector. Business Email
Compromise (BEC) is a type of advanced email
attack that relies on identity deception. BEC
evades detection by avoiding the use of a detect-
able payload such as a spear phishing email that
contains a fraudulent URL or attachment. A
hacker will pose as someone you know or trust
– a colleague, vendor, or client – and either ask
you to perform a payment or share sensitive data.
THERE ARE THREE DIFFERENT
TYPES OF IDENTITY DECEPTION:
• Spoofing
• look-alike domains
• display name deception
BEC scams have a wide range of sophistica-
tion. These scams span simple display name
attacks using free webmail accounts to sophis-
ticated multi-level hacker organizations, which
n BY JAKE LEHMANN
www.stocknewsnow.com
leverage everything from look-alike display
names to proxies hiding their actual locations.
HERE ARE STEPS YOU CAN TAkE
TO PREVENT AND PROTECT
AGAINST CYBER CRIMINALS:
• Train your employees through Spear
Phishing Simulations. CyZen’s advi-
sors design and execute campaigns to
raise awareness, and help lower the
success of these threats to your com-
pany. The team leverages techniques
that teach employees how to be more
mindful when opening and responding
to emails, especially with links, attach-
ments, or money transfer requests.
• Hire a third party to perform a vulnerabil-
ity or penetration test of your business’s
systems. This will let you know how vul-
nerable your business is by scanning and
testing databases and networks for weak-
nesses. These scans should be conducted
regularly and our cyber security experts
have the capability to perform thorough
testing in order to evaluate the level of
your systems’ vulnerabilities.
• Advise your employees to create strong
passwords that are long and hard to
guess, but easy to remember. Using a
password manager application to orga-
nize and store all passwords in one place
(12 characters minimum) is another
way to safely keep track of passwords.
• Use two-factor authentication, or 2FA.
This adds an additional layer of security to
verify that the person trying to gain access
to an account is really your client. After
submitting their username and password,
they will be required to provide another
piece of information, like a passcode.
• Deploying “next-gen” endpoint solu-
tions is another service that CyZen
offers. This approach gives your com-
pany an added layer of heuristic based
software that not only blocks malicious
processes, but allows our team of profes-
sionals to detect and respond if a user
falls victim to clicking a phishing email.
For any questions you have about protect-
ing your financial assets, contact Managing
Director of CyZen, Jake Lehmann at jlehm-
ann@cyzen.io. n
Jake Lehmann
Managing Director 
Jake works to quantify and remediate clients’ cyber
risks, leading engagements across industries and
spanning small and medium businesses and high-
net-worth individuals to big enterprise-level engage-
ments and successful start-ups. For more than 10
years, he has spearheaded pro-active, innovative and
custom-tailored solutions that help safeguard clients
from cybersecurity risks.
Jake focuses on each client and their needs, bring-
ing deep-rooted service, industry knowledge and
a passion for delivering excellence. He has helped
clients target and remediate security vulnerabilities
including IT misconfigurations, exploitable systems,
open source intelligence and information leaks. His
toolbox of technical services includes cyber defense,
vulnerability/risk assessments, penetration testing,
architectural reviews, cybersecurity training, open
source intelligence and spear phishing simulations.
As a cybersecurity thought leader, Jake has led inter-
nal client awareness trainings and presented at educa-
tional retreats. He received a Bachelor’s of Technology
in Information Technology with a concentration in
Network Administration from SUNY Morrisville.
When Jake isn’t combatting cyber-attacks, you can
find him globetrotting with his wife, deep-sea diving
with sharks, or spending quality time with his four-
legged friends, Chloe and Teddy.
Company bio:
In today’s digital world of emerging cyber-threats, it is
increasingly difficult to know the right steps needed to
protect your business. The security experts at CyZen will
help your organization achieve peace of mind by empow-
ering you to make sense of cybersecurity and defend
against attacks. We draw on the inspiration of the ensō,
or the circle of enlightenment, to shape our values and
influence our human-centric way of conducting business.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 11
 P R O F I L E D C O M PA N Y NASDAq CM: TRNX

Taronis Technologies, Inc.

M agneGas Applied Technology Solutions, Inc. got a new

name in 2019: Taronis Technologies, Inc. (Taronis or
the Company).
Taronis recently expanded their technol-
ogy offerings and launched a new corporate
brand that can be used across its various
businesses comprised of industrial gas, a
new fluid decontamination and sterilization
business, and also emerging power gen-
eration capabilities. As part of this initiative,
the Company initiated a shift of emphasis
towards resource management, facilitating
an expanding portfolio of renewable fuels,
water management, and eventually power
generation. These activities now enable
Taronis to enhance the market’s perception
and understanding of the Company’s busi-
ness model. irrigation purposes rather than incurring dis-
The company’s core technology centers posal costs. The gasification units may also be
on plasma arc applications, which is a very used to convert many types of hydrocarbon-
scientifically complex version of lightning based waste into syngas or biodiesel, both of
in a bottle. What better way to remind the which can be used as substitute fuels.
consumer of the power of Taronis’ patented It was a busy and productive year for the
technology than by referencing the Celtic Company after acquiring seven companies
God of lightning? Taronis has developed a in 2018, an additional purchase in January
plasma-based system for the sterilization and and two more in February. Each of these
gasification of waste. This process generates transactions were necessary and enabled the
a hydrogen-based fuel called MagneGas as Company to achieve several of its corporate
a by-product, which is sold as an alternative objectives including establishing itself as a
metal-cutting fuel to acetylene. MagneGas leading independent gas distributor in the
is a safer, more efficient, and cost-effective two largest industrial gas markets in the U.S.
replacement for acetylene. The company also – California and Texas. Taronis is now well
sells a variant of the gasification technology positioned to pursue its future ambitions from
for sterilizing bio-contaminated liquid waste a stronger market position and with greater
such as pig manure or water draining from financial stability.
landfills. This variant of its gasification tech- “We have a clear focus on building a top
Scott Mahoney, CEO, President & Director
nology can be sold for use as a fertilizer for tier competitive position in the best markets

12 MicroCap Review Magazine www.stocknewsnow.com


Taronis has a unique, patented technology that
enables the company to deliver innovative,
industry-changing solutions. Equally importantly,
the Company has a committed team of experienced,
passionate employees that service their customers
with an incredible sense of responsibility and pride.
in the U.S. today,” according to Taronis’ CEO,
Scott Mahoney. “Taronis delivers excellent
customer service and competitive pricing to
our clients. We are beginning to grow our
market share well above industry norms.
As a result, we have been approached by a
number of potential partners, and we selec-
tively evaluate the opportunity to grow our
business when the right situation arises. Our
recent expansion in Tyler, Texas, is an excel-
lent example. We acquired a dominant local
player with a fantastic reputation. The entire
management team came aboard as part of this
transaction, and we are excited to build on
their 45 years of success together.”
As for Taronis’ strategy for 2019, CEO
Scott Mahoney says, “We are very focused on
building a world-class industrial gas business
in the best markets in the U.S. We have made
ten acquisitions the past 15 months, with a
clear focus on the Texas and California mar-
kets. These are the two strongest markets for
industrial gases in the U.S., and our renew-
able metal cutting fuel products are a pow-
erful competitive advantage for marketing,
business expansion, and building customer
loyalty. We have the most cost-efficient, and
most highly-discussed, metal cutting fuel on
the market today.”
In addition to U.S. expansion plans, Taronis
wants to continue its work at unlocking
potential in the European market. European
operations are also a part of the rebranding,
as MagneGas Europe LLC was launched in
December of 2017. The Company plans to
launch their first metal cutting fuel produc-
www.stocknewsnow.com
deliver a renewable fuel product that could
be a direct substitute for compressed natural
gas as well as a renewable propane product.
Early testing results appear to be encouraging
and management is confident due to feedback
from its engineering team.
Taronis has a unique, patented technology
that enables the company to deliver inno-
vative, industry-changing solutions. Equally
importantly, the Company has a committed
team of experienced, passionate employees
that service their customers with an incred-
ible sense of responsibility and pride.
tion in Europe later in 2019 with a focus Mr. Mahoney said of the recent rebrand,
on the highly trafficked port regions of “We are now a resource conservation com-
Amsterdam and Rotterdam as initial bases of pany, and we help manage two of our most
operations in Europe. precious resources – fuel and water. Our
With respect to its European plans, Mr. new corporate mission statement is: Cleaner
Mahoney says, “We are very focused on mak- – Safer – Smarter. Our technology will drive
ing our European expansion a success. The global solutions that meet these three criteria
European market is rapidly moving towards at all times as we seek to solve some of the
adopting more renewable fuel solutions mak- most pressing global issues at hand today.” n
ing our product a natural fit. With the added
cost savings and proven safety attributes of www.taronistech.com
our product, we believe this market repre-
sents an exceptional growth opportunity for
the Company for many years to come.”
Mr. Mahoney says, “We expect our exist-
ing operations to generate upwards of 50%
revenue growth in 2019, and we believe our
recent acquisitions, as well as potential future
acquisitions, could help us to accelerate our
growth model even further. When you com-
pare this to industry-wide growth rates that
rarely exceed 5%, we are very grateful for the
growth we are experiencing.”
Taronis operates 17 locations across
California, Texas, Louisiana, and Florida,
and sells MagneGas into the metal work-
ing market as a replacement to acetylene
which it distributes through its wholly owned
distributors: ESSI, Green Arc Supply, Paris
Oxygen, Latex Welding Supplies, Tyler
Welders Supply, United Welding Supplies,
Trico Welding Supply and Complete Welding
of San Diego.
Taronis is also working on some new prod-
ucts potentially being brought to market,
including developing a long-term plan to
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 13
 P R O F I L E D C O M PA N Y NYSE AMERICAN: HEB
Hemispherx Biopharma Inc.
The Coming Ampligen Revolution
“Ten shots on goal.”
Spend a bit of time with Thomas K.
Equels, or Tom, as he prefers to be called, as
he goes about his workday — and nights and
weekends — and this sports metaphor will
quickly become familiar. In analyst meet-
ings, during investor presentations, on inter-
nal phone calls and even in casual conversa-
tions in the hallways of his office in Ocala,
Fla., he talks about his goals for the future of
Hemispherx Biopharma Inc.
When Tom talks about those “ten shots,”
he’s talking about the Ampligen oncology
clinical trials designed to save lives.
Ampligen (rintatolimod) is being evalu-
ated in a variety of oncology indications. In
addition to its cancer-fighting potential, it is
also used in an Early Access Program (EAP)
for the treatment of myalgic encephalomy-
elitis/chronic fatigue syndrome (ME/CFS),
and with regulatory approval in Argentina
it is the world’s only approved therapeutic
for ME/CFS.
THE COMPANY
Hemispherx is an immuno-pharma com-
pany focused on the research and develop-
ment of therapeutics to treat multiple types
of cancers, as well as immune-deficiency
disorders. Hemispherx’s corporate head-
quarters is in Ocala, Fla., and its 30,000 sq.
ft. Manufacturing and Research Facility is in
New Brunswick, N.J.
“I initiated the current oncology clini-
cal trials/programs and Dutch EAP over
the past three years. We have had success
after success in animal experiments, human
Thomas K. Equels
tumor explants, and proof-of-concept clini-
Chief Executive Officer
14 MicroCap Review Magazine
cal studies. All of those successes would
mean nothing but for the great work of
our manufacturing team in New Brunswick.
Hemispherx’ Chief Manufacturing Officer,
Carol Smith, Ph.D. and her team have nailed
it, and have provided more than 16,000 vials
of Ampligen to support these clinical tri-
als in humans. Our clinical, quality control
and quality assurance departments, under
the leadership of David Strayer, M.D., Chief
Medical Officer, and Vickie Scott, M.S., have
succeeded in coordinating clinical trials and
maintaining the highest levels of quality in
the process. On behalf of Team Hemispherx,
we also deeply appreciate the commitments
from the major cancer research institutes
and big-pharma for funding the clinical tri-
als that are currently underway,” said Equels.
AMPLIGEN IN ONCOLOGY
Hemispherx has seen tremendous success in
its research in the field of immuno-oncol-
ogy, which has guided the company’s focus
toward the potential use of Ampligen as
a combinational therapy with checkpoint
inhibitors for the treatment of a variety of
solid tumors.
Checkpoint inhibitors are powerful immu-
no-therapy drugs that block the signals that
restrain the body’s immune system from
fighting cancer, and are, therefore, used in
the treatment for a number of advanced
solid tumor malignancies. The object of
these combination clinical trials is to mea-
sure synergistic improvements in therapeutic
outcomes.
“Or, to put it more plainly, to determine
whether combining an already proven drug
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with Ampligen can create an even more
effective synergistic cancer-fighting therapy,”
said Equels.
Dr. David Strayer states, “Checkpoint
blockade therapies work best with what are
known as ‘hot’ tumors. Unfortunately, many
solid tumors are ‘cold.’ Clinical proof-of-
concept findings using an Ampligen cocktail
in colorectal carcinoma have demonstrat-
ed an ability to convert ‘cold’ tumors into
‘hot’ tumors. The Ampligen cocktail accom-
plishes a conversion from ‘cold’ to ‘hot’ by
stimulating a more favorable ratio of killer
T-cells to regulatory T-cells in the tumor
microenvironment. Killer T-cells attack can-
cer cells but their presence in the tumor
microenvironment can be inhibited by regu-
latory (suppressor) T-cells. Therefore, the
suppressor cells essentially reduce a patient’s
immune response to cancer. An increase
in killer T-cells, without a corresponding
increase in suppressor T-cells, is therefore
an indicator of the body’s increased abil-
ity to mount a potentially effective immune
response and through this mechanism of
action supports the strong pre-clinical evi-
dence of Ampligen’s activity in converting
‘cold’ tumors into ‘hot’ tumors.”

HEMISPHERX’S ONCOLOGY
EFFORTS
An Early Access Program (EAP) approved
by the Inspectorate of Healthcare in the
Netherlands for pancreatic cancer at Erasmus
Medical Center has been ongoing for two
years. Supervised by Prof. Casper van Eijck,
MD, a world-renowned specialist in this
dread malignancy, and Diba Latifi, MD,
the team at Erasmus is making progress. As
disclosed recently, the Dutch government
has approved and extended the therapeutic
program for an additional year.
At Erasmus 8 out of 24 patients with either
locally advanced or metastatic disease have
survived for more than one year since the
start of Ampligen. Further, Ampligen was
administered to 5 resected patients, 2 died at
24 and 27 months after resection. The other
3 patients are still alive with a current mean
survival of 26 months after resection and
subsequent Ampligen treatment.
All patients reported improvement in
quality of life during treatment. A more com-
prehensive update from the Erasmus team
on the immunological response in relation
to survival is expected soon. Hemispherx
hopes to work with Dr. Van Eijck, Dr. Latifi,
and Erasmus M.C. to initiate a combination
therapy program to extend the results seen
thus far in the Netherlands by combining
Ampligen with checkpoint blockade therapy.
The four Ampligen immuno-oncology
clinical trials initiated/ongoing in the U.S.
are:
• Recurrent ovarian cancer  - Phase 1 / 2
study of intraperitoneal chemo-immuno-
therapy in recurrent ovarian cancer at
University of Pittsburgh Medical Center.
Dr. R. Edwards, PI. Study underway. An
interim report from Dr. Edwards’ team is
expected within thirty days and a summa-
ry of same will be disclosed upon receipt.
• Colorectal cancer  - Phase 2a study of
Ampligen as a component of chemokine
modulatory regimen on colorectal can-
cer metastatic to liver at Roswell Park
Comprehensive Cancer Center. Dr. P.
Boland, PI. Study underway.
• Metastatic triple negative breast cancer  -
Open label study of metastatic triple-
negative breast cancer using chemokine
modulation therapy, including Ampligen
and pembrolizumab, at Roswell Park
Comprehensive Cancer Center. Dr.
M. Opyrchal, PI. Initiation of study is
expected in the near future and will be
announced forthwith.
• Recurrent ovarian cancer - This is a Phase

www.stocknewsnow.com MicroCap Review Magazine 15


“Success in any of these trials has the potential
to light a path to a new and more effective way
of fighting cancer and dramatically change the
immuno-oncology landscape. This is all about R&D
to develop therapies aimed for those fighting lethal
malignancies who currently have no real hope,” said
Equels. “There can be no higher calling.”
2 investigator-sponsored trial being con-
ducted in advanced recurrent ovarian can-
cer at the University of Pittsburgh Medical
Center that will evaluate Ampligen in
combination with pembrolizumab. Patient
enrollment has been initiated in this study
designed for 45 subjects. Dr. Robert
Edwards, world renowned expert in ovar-
ian cancer is the lead investigator.
In addition, five Ampligen clinical trials
are planned for initiation in 2019, subject to
funding:
1. Phase 2 study that will evaluate Ampligen
in combination with pembrolizumab in
refractory metastatic colorectal carcinoma
at Roswell Park Comprehensive Cancer
Center. Dr. P. Boland, PI. Study design and
budget being developed.
2. Phase 2 study of advanced urothelial
(bladder), melanoma and renal cell car-
cinoma, resistant to checkpoint blockade
that will evaluate Ampligen in combina-
tion with a checkpoint blockade therapy
at Roswell Park Comprehensive Cancer
Center. Dr. M. Opyrchal, PI.
3. First-line therapy for non-small cell lung
cancer with SOC chemotherapy that will
evaluate Ampligen in combination with
pembrolizumab at University of Nebraska
Medical Center. Dr. V. Ernani, PI. Study
design and budget being developed.
4. Phase 2 study in advanced pancreatic
cancer using checkpoint blockade plus
Ampligen at University of Nebraska
Medical Center. Dr. K. Klute, PI. Protocol
16 MicroCap Review Magazine
and budget being developed.
5. Phase 2 study of neoadjuvant condition-
ing of prostate cancer using Ampligen as
a component of chemokine modulation
at Roswell Park Comprehensive Cancer
Center. Dr. G. Chatta, PI. An Independent
New Drug application has been filed and
is under review by the FDA.
These ten trials/programs include nine
different solid tumor types: pancreatic, ovar-
ian, colorectal, prostate, lung, bladder, breast,
melanoma and renal cell carcinoma. These
are what Equels is referring to when he talks
about Hemispherx’s “ten shots on goal.”
“Success in any of these trials has the
potential to light a path to a new and more
effective way of fighting cancer and dramati-
cally change the immuno-oncology land-
scape. This is all about R&D to develop
therapies aimed for those fighting lethal
malignancies who currently have no real
hope,” said Equels. “There can be no higher
calling.”
MANAGEMENT
Thomas K. Equels, M.S., J.D. — Chief
Executive Officer
Equels was named Chief Executive Officer in
February 2016 and has served as President
since August 2015, having first joined
Hemispherx in 2010 as General Counsel
from 2010 to 2016. Prior to that, Equels’ suc-
cessful legal career included extensive expe-
rience in the pharma sector. He has over the
years served as a court-appointed receiver
turning around businesses in a number of
different fields. Equels received his J.D. with
high honors from Florida State University.
He is also a summa cum laude graduate of
Troy University and obtained his Masters’
Degree in Management from Troy. Equels is
also a highly decorated combat aviator, twice
awarded the Distinguished Flying Cross
and awarded the Purple Heart, the Bronze
Star and 15 Air Medals, including three for
extraordinary valor. In 2012 he was knighted
by Pope Benedict as a knight of the Papal
States.
David R. Strayer, M.D. — Chief Scientific &
Medical Officer
Dr. Strayer was appointed Chief Scientific
Officer in February 2016 and has acted as
Hemispherx’s Medical Director since 1986.
With this background and experience, he
is the world’s foremost medical expert on
both Ampligen and Alferon. He served as
Professor of Medicine at the Medical College
of Pennsylvania and Hahnemann University
from 1987 to 1998. Dr. Strayer is Board
Certified in Medical Oncology and Internal
Medicine, with research interests in the
fields of cancer and immune system disor-
ders. He has served as principal investigator
in studies funded by the Leukemia Society of
America, the American Cancer Society, and
the National Institutes of Health. Dr. Strayer
received his M.D. in 1972 from the School of
Medicine at the University of California at
Los Angeles. n
www.hemispherx.net
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 BECOME A HERO OF SPORT
Heroes of sport believe we are more alike than we are different. We’re all striving
for the same things in sports: to practice, play, compete and celebrate. Yet, for
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For 25 years, the Challenged Athletes Foundation (CAF) has empowered thousands
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Help join their efforts this year to do more and become a hero of sport that will
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www.stocknewsnow.com MicroCap Review Magazine 17

 P R O F I L E D C O M PA N Y
Citius Pharmaceuticals, Inc.
EXECUTIVE SUMMARY
Citius Pharmaceuticals, Inc. (Nasdaq:
CTXR) is a specialty pharmaceutical com-
pany dedicated to the development and
commercialization of drug products and
devices that address important unmet medi-
cal needs. The Company focuses on adjunc-
tive cancer therapies, critical care medicine,
infectious disease and special opportunities.
Citius’ products offer new expanded indica-
tions for existing pharmaceutical entities
to achieve leading market positions. The
Company primarily utilizes the U.S. Food
and Drug Administration’s (FDA’s), 505(b)
(2) pathway for new drug approvals. Citius
believes this pathway is comparatively faster,
lower risk and less expensive than other new
drug approval pathways. By using previ-
ously approved drugs with substantial safety
Leonard L. Mazur, Chairman
18 MicroCap Review Magazine
and efficacy data, Citius seeks to reduce
the risks associated with product develop-
ment. The Company is focused on obtain-
ing intellectual property protection for a
significant post approval period, and also
seeks to identify regulatory opportunities
for market exclusivity. Citius is advancing 3
product candidates – Mino-Lok is in Phase
3 trials and is enrolling patients, CITI-002
is being prepared for a phase 2b trial later
this year, and Mino-Wrap (CITI-101) has
recently been licensed and is being submit-
ted to FDA to determine the appropriate
regulatory pathway – device or drug. The
markets for these products are large and
underserved, and provide unique positions
for the Company.
INVESTMENT CATALYSTS
Market Opportunity – Critical
Care/Infectious Disease
The Mino-Lok therapy market is estimated
at >$700 million per year in the U.S., and
more than $1 billion worldwide. Central
venous catheters (CVCs) are life-saving
vascular access ports in patients requir-
ing long term intravenous therapy. Of the
approximately 7 million CVCs used annu-
ally, up to 500,000 become infected leading
to serious, life threatening infections called
catheter-related blood stream infections
(CRBSIs). Infected CVCs must be removed
and most need to be replaced; these pro-
cedures are costly and 15-20% of the pro-
cedures are associated with significant
morbidity. Although ALTs are sometimes
attempted when venous access is unavail-
able, there are not adequate data available
to evaluate their efficacy; additionally, it
has been shown that antibiotics alone are
unable to penetrate the biofilm formed by
bacteria to protect the colonies. There are
NASDAq CM: CTXR
currently no approved therapies to salvage
infected CVCs. Mino-Lok is an antibiotic
lock solution used to treat patients with
CRBSIs in combination with appropriate
systemic antibiotic(s), to preserve central
venous access and to avoid the complica-
tions and morbidities associated with cath-
eter removal and reinsertion. Mino-Lok
penetrates biofilm, eradicates bacteria and
salvages infected, indwelling vascular cath-
eters while providing anti-clotting proper-
ties. Mino-Lok has the potential to change
the standard-of-care for the management of
these serious infections.
Market Opportunity –
Gastrointestinal
In the U.S., hemorrhoids affect nearly 5%
of the population, with approximately 10
million patients annually reporting symp-
toms of hemorrhoidal disease; approxi-
mately one-third visit a physician for evalu-
ation and treatment of their hemorrhoids.
Between 50% and 90% of the general popu-
lation will experience hemorrhoidal disease
at least once in life. According to IMS, over
25 million units of topical combination pre-
scription products for hemorrhoids are sold
in the U.S. Hemorrhoids are a common gas-
trointestinal disorder characterized by pain,
swelling, itching, tenderness, and bleeding.
Although hemorrhoids are not life-threat-
ening, individual patients often suffer pain-
ful symptoms that can limit social activities
and have a negative impact on the quality of
life. Citius believes the market for hemor-
rhoid treatment is large and underserved;
an effective prescription product would
be unique and highly welcomed by both
professionals and consumers alike offering
a prescription-strength therapy for hemor-
rhoids.
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Market Opportunity – Post-
Mastectomy/Infectious
Disease
The frequency of post-mastectomy breast
reconstruction, following breast cancer treat-
ment, has been increasing on an annual
basis. In 2017, the American Society of
Plastic Surgeons reported that over 105,000
women in the United States underwent a
postmastectomy breast reconstructive proce-
dure. 30% of the time breast reconstruction
occurs simultaneously with the mastectomy;
most occur weeks after. A common breast
reconstruction technique is tissue expansion,
which involves expansion of the breast skin
and muscle using a temporary implanted tis-
sue expander. Approximate 80% of the time,
a tissue expander (TE) is used to prepare the
surgical site for permanent breast implants
either immediately after mastectomy or in
a separate procedure afterwards. A TE is a
silicone implant that serves as a temporary
device that is placed within a surgical pocket
in the mastectomy space and inflated with
saline over a period of time to prepare the
area for a permanent breast implant. After
a few months, the expander is removed and
the patient receives either microvascular flap
reconstruction, or the insertion of a perma-
nent breast implant.
There is a reported rate of TE-related
infections of between 2.5% and 24%,
depending on the extent of surgery, duration
of post-operative drainage and many other
factors. It is assumed that mean infection
rate is around 10%. There is a high asso-
ciation of positive microbial cultures with
TE-associated infections, the most preva-
lent culprit organisms being Staphylococcus
aureus, Staphylococcus epidermidis and
Pseudomonas aeruginosa. TE infections fre-
quently require removal of the TE, treat-
ment with culture-directed antibiotics, and
could result in further complications for the
patient. Currently, the preventive measures
used to decrease the rate of TE infections
are (a) systemic perioperative antimicro-
bial agents, (b) immersion of the implant
or irrigation of the surgical pocket with an
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antimicrobial solution prior to insertion of
the device, and/or (c) immediate postop-
erative oral antimicrobials. Except for (a),
all of the other preventive modalities are of
debatable use.
PRODUCT DEVELOPMENT
PIPELINE
Mino-Lok®
Mino-Lok is a late-stage development prod-
uct that is expected to complete Phase 3 trials
within 18 months. Citius has partnered with
a world leading cancer center to develop
Mino-Lok. Mino-Lok has received QIDP
Company Highlights
• Over $24 million invested privately by the found-
ers and insiders; $16.5 million by the public
• Announced $5.3 million registered direct offering
• Announced $10.0 million underwritten offering
priced at-the-market
• Announced $2.0 million registered direct offering
• Provided a status report on the Mino-Lok® Phase 3 trial
• Reported Phase 2b development plan for the hem-
orrhoid program
• Published expert roundtable discussion on treat-
ment consideration for catheter related bacteremias
• International study at MD Anderson sister
Institutions supports Mino-Lok® Phase 2b results:
95% efficacy in salvaging infected catheters
• Received “Fast Track” designation by FDA for
Mino-Lok® investigational trial
• Targeting large market opportunities with unmet
medical needs with cost-effective products. High
growth categories with low developmental risk
• Highly experienced and successful management
team investing significantly in company
• Multiple near-term milestones
Upcoming Milestones
Milestone When
Mino-Lok® FPFV Q1 ’18
M-L Phase 3 Status Q2 ’19
M-L Phase 3 Interim Data Q4 ’19
CITI-101Jurisdictional Decision Q2 ’19
CITI-002 Animal Tox Data Q3 ’19
CITI-002 Phase 2b Trial Initiation Q4 ’19
Management
Myron Holubiak, President & CEO
Mr. Holubiak has extensive experience in managing both
large and emerging pharmaceutical companies. Most
recently he was the Founder, Director and CEO of Leonard
Meron Biosciences, Inc. which merged with Citius. He is
the former President of Roche Laboratories, Inc., USA, a
designation providing fast track status, prior-
ity review, and additional market exclusivity.
Mino-Lok provides a superior alternative to
removing and replacing a CVC, a reduction in
patient discomfort, and cost savings to health-
care system. In February 2018, the Company
announced the first patient was randomized
into the Mino-Lok Phase 3 clinical trial for
catheter related bacteremias (“CRBSIs”) at
the Henry Ford Health System in Detroit,
Michigan. When fully-recruited, it is planned
that there will be 700 patients enrolled in 50
participating institutions, throughout the U.S.
On October 2, 2018, received notice from
MD Anderson Cancer Center (“MDACC”)
major research based pharmaceutical company. During
his tenure as President of Roche, Holubiak transformed
Roche Labs into a major antibiotic company.
Leonard Mazur, Chairman
Mr. Mazur is a highly accomplished industry executive
with notable accomplishments in founding, building
and creating value and returns for investors. Mr. Mazur
is a founder/co-founder of the following companies:
Genesis; Triax, Akrimax, and Rouses Point. He previ-
ously served as Executive VP at Medicis Pharmaceutical
Corporation and VP of Sales & Marketing at ICN
Pharmaceuticals, Inc/, Knoll Pharma.
Jamie Bartushak, CFO
Mr. Bartushak is an experienced finance professional
for early stage pharmaceutical companies, and has
over 20 years of corporate finance, business develop-
ment and strategic planning experience.
Gary F. Talarico, EVP Operations
Mr. Talarico is highly experienced and successful
in developing and leading commercial activities for
a number of p[harmaceutical companies. He has
directed all of the commercial disciplines including
marketing, sales, operations, training, trade and
managed markets, KOL development.
Alan Lader, PhD, VP Clinical Operations
Dr. Lader, has over 25 years of experience in medical
research. Dr. Lader earned his Masters degree from the
Hartford Graduate Center of Rensselaer Polytechnic
Institute, He went on to receive his Ph.D. in Biomedical
Science and Physiology from the University of South
Carolina School of Medicine, then returned for post-doc-
toral training at Harvard Medical School and Massachusetts
General Hospital. Following his post-doctoral training, Dr.
Lader was an Instructor in Medicine at Harvard Medical
School and Brigham and Women’s Hospital.
Disclaimer: This fact sheet contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such statements are
valid only as of today, and we disclaim any obligation to update this
information. Actual results may differ significantly from management’s
expectations.
MicroCap Review Magazine 19
that the US Patent and Trademark Office
(“USPTO”) issued United States Patent
Number 10/086,114 entitled “Antimicrobial
Solutions with Enhanced Stability”. The
patent will provide and strengthen intel-
lectual property protection for Mino-Lok
through November of 2036. Citius also
received official notification from MDACC
that the European Patent Application (No.
16806326.1) for Mino-Lok with Enhanced
Stability was published (September 12, 2018)
under serial number 3370794.
CITI-002 - Hemorrhoid
Topical Program
Citius is developing a topical formulation
of a corticosteroid and lidocaine to provide
anti-inflammatory and anesthetic symptom-
atic relief to persons with hemorrhoids.
Several corticosteroids and lidocaine have
each been separately approved by the FDA
for other indications, and are commercially
available and marketed by other compa-
nies. Citius is advancing its combination
therapy for hemorrhoids as being synergistic
to its individual components and has com-
pleted Phase 2a studies. If Citius receives
FDA approval for its topical corticosteroid-
lidocaine combination cream for the treat-
ment of hemorrhoids, it will qualify for
at least three years of market exclusivity.
Citius will be pursuing a patent for the new
formulation. Citius may have the only FDA-
approved prescription product on the mar-
ket proven to be safe and effective for the
treatment of hemorrhoids. In March 2018,
the Company selected a higher potency cor-
ticosteroid in its steroid/anesthetic topical
formulation program for the treatment of
hemorrhoids. While not used in combina-
tion in currently marketed products, the
proposed corticosteroid is included as an
FDA-approved topical product to treat a
variety of dermatological disorders.
CITI 101 - Mino-Wrap
Mino-WrapTM is a bioabsorbable, antimi-
crobial solid film wrap that is placed in the
surgical pocket to provide cushioning of the
20 MicroCap Review Magazine
TE and provide prophylaxis against infec-
tion for an extended period of time. Mino-
Wrap is designed to allow the temporary
tissue expander to be inflated without any
restrictions, protect tissue from inflam-
matory responses, and also prevent infec-
tion and biofilm formation on the implant
over longer durations than current practice,
which are primarily irrigation with an anti-
microbial solution. Mino-Wrap would also
be used with breast implants during recon-
struction post-TE removal.
Mino-Wrap has been studied preclinically
and the following are the conclusions of
those experiments:
• Mino-Wrap remains intact at least for 1 that are typically prescribed by a relatively
week after being submerged in a collage-
nase-saline solution at 37⁰C;
• Mino-Wrap Is safe and not cytotoxic ized;
towards human fibroblasts;
• The active ingredients remain active after advanced technologies to provide our new
gamma radiation sterilization; and,
• The antibacterial components are active characteristics and intellectual property
against the most common bacterial clini-
cal isolates responsible for TE infections,
for at least 10 days.
Mino-Wrap appears to have the char-
acteristics necessary for an advance in the
protection of human implants from subse-
quent infection.
In January 2019, Citius signed a defini-
tive license agreement with MD Anderson
Cancer Center (MDACC) to develop and
commercialize a novel approach to reduc-
ing post-operative infections associated
with surgical implants
A US Patent was filed on April 17, 2014
and issued on Dec. 26, 2017.
Citius is filing an application with the
Center for Devices and Radiological Health
(CDRH) of the FDA to determine if Mino-
Wrap could be considered a device since
there are a number of predicates with simi-
lar components that have been accepted by
this regulatory route; and, such a pathway
would expedite the development time to
bring this important new technology to the
market.
DEVELOPMENT &
COMMERCIALIzATION
STRATEGY
Citius’ goal is to build a successful pharma-
ceutical company through developing and
commercializing innovative, efficacious, and
cost-effective products that address compel-
ling market opportunities. Citius seeks to
leverage the FDA’s, 505(b)(2) pathway for
new drug approvals and bring products to
market faster and with less cost as compared
to other FDA new drug approval pathways.
Objectives include:
• Identifying new drug product candidates
small number of specialist physicians and
can therefore be successfully commercial-
• Obtain licenses for the most relevant and
product candidates with superior product
protection;
• Outsource formulation development and
manufacturing in order to reduce upfront
capital investment;
• Leverage in-house clinical and regulatory
expertise to advance the development of
product candidates in the pipeline more
rapidly;
• Establish strategic relationships with mar-
keting partners to maximize sales poten-
tial of products that require significant
commercial support; and,
• Manage our business in a financially disci-
plined and cost-conscious manner. n
www.citiuspharma.com
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 FEATURED ARTICLE
My 8 Rules for
MicroCap Value
Investors
1. zIG WHEN THE CROWD zAGS
For any potential investment we compare
the crowd’s view—the consensus—with our
own. How do we find the consensus? It’s
revealed in the difference between the price
of a stock and its value. We do our own
research to work out the value. We look for
stocks where our estimate diverges from the
crowd’s. In other words, we try to zig when
the crowd zags.
Here’s why: The only way to get a good
price is to buy what the crowd wants to sell,
and sell what the crowd wants to buy.
A “good” price implies a lopsided bet:
n BY TOBIAS CARLISLE
www.stocknewsnow.com
A small downside and a big upside. The
downside is small because the price already
assumes the worst-case scenario. That cre-
ates a margin for error. If we’re wrong, we
won’t lose much. If we’re right, we’ll make
a lot. An upside bigger than the downside
means we break even though we err more
often than we succeed. If we manage to suc-
ceed as often as, or more often than we err,
we’ll do well.
Undervalued and out-of-favor companies
offer lots of chances to zig—make contrarian
bets. When a company owns a scary, bad,
or boring business, the crowd overreacts or
grows impatient and sells. That’s how the
MicroCap Review Magazine 21
stock becomes undervalued. Given time,
many businesses turn out to be less scary,
bad, or boring than they seem at first. The
reason is mean reversion.
2. BUY UNDERVALUED COMPA-
NIES
The bigger the discount to value the bet-
ter the return. This is true in the US, UK,
Europe, Africa, Asia, Australia and New
Zealand. It’s true in developing and emerg-
ing markets. It’s true globally. Deep dis-
counts and good returns go together.
For most industrial companies, the
Acquirer’s Multiple is the best single mea-
sure of undervaluation. The Acquirer’s
Multiple is a company’s enterprise value
compared to its operating earnings. It is the
metric private equity firms use when buying
companies whole, and activist investors use
when seeking hidden value.
The enterprise value is the “true” price
we must pay for a company. It includes the
market cap. Market cap is the share price
multiplied by the number of shares on issue.
The market cap alone can mislead because it
ignores other costs borne by the owner. The
enterprise value also examines the balance
sheet and off-balance sheet items. It rewards
companies for cash. And it penalizes com-
panies for debt, preferred stock, minority
interests and off-balance sheet debts. These
are all real costs paid by the owner.
Operating earnings are the income flow-
ing from a business’s operations. It excludes
one-off items like sales of assets and legal
settlements. We adjust operating earnings
for interest and tax payments because they
are affected by the capital structure: the mix
of debt or equity. The adjustment makes
possible an apples-to-apples comparison
between two companies with different mixes
of debt and equity.
For non-industrial businesses like finan-
cials—banks and insurers—book value is the
better single measure. Whatever the proxy,
the goal is deep undervaluation.
22 MicroCap Review Magazine
3. SEEk A MARGIN OF SAFETY
This is a threefold test of the discount to
the valuation, the balance sheet and the
business.
First, the greater the company’s discount
to its value, the safer the purchase. A wide
discount allows for errors and any decay in
value. This is the corollary to the last rule,
that the biggest returns flow from the big-
gest discounts. It breaks the received wis-
dom of the market and academia that higher
returns mean more risk. Here, the greater
the margin of safety, the higher the returns
and lower the risk.
Second, on the balance sheet we favor
cash and other liquid securities over debt.
We watch for off-balance debts like leases
and underfunded pensions. We look for
credit issues and signs of financial distress.
No company ever “won” with too much
cash, but many have sunk with too much
debt.
Finally, the company should own a real
business. The business should have strong
operating earnings with matching cash flow.
Matching cash flows ensures the account-
ing earnings are real, and not merely the
figment of a clever embezzler’s mind. We
look for signs of earnings manipulation.
Companies that own science experiments,
or toys in search of a business model are for
speculators. But weak current profits in a
stock with a good past record offer a good
chance for mean reversion in those profits.
4. TREAT A SHARE AS AN
OWNERSHIP INTEREST, NOT A
MERE TICkER SYMBOL
A share is an ownership interest in a com-
pany. This has two implications:
First, a shareholder has rights as an owner
of a company. Shareholder exercise those
rights by voting.
Second, shareholders should pay atten-
tion to everything a company owns. That
includes its business and its assets, chiefly
its cash.
We look at both the business and the bal-
ance sheet to find financial robustness. A
business can be worth a great deal, worthless,
or worth less-than-nothing (if it’s a regular
money loser).
In the same way, a balance sheet can hold
great value, or have a negative net worth if
the debt outweighs the assets.
Many investors follow profits—the fruits
of the business—but ignore assets on the
balance sheet. They ignore cash. A seem-
ingly poor business with a strong balance
sheet could represent hidden value. The asset
value offers a free call option on any recovery
in the business.
5. BE WARY OF HIGH EARNINGS
GROWTH AND PROFITS
Mean reversion is a powerful force. It pushes
down on fast growth rates and high profits.
And it pushes up on low growth and losses.
Fast growth and good profits attract
competition. And competition eats away
at the growth and profit. Investors follow-
ing Warren Buffett’s example seek highly
profitable businesses with a “moat”—a com-
petitive advantage. But moats are harder to
find—and easier to cross—than most inves-
tors realize.
Researchers have studied how businesses
sustain high profits. The data show most
highly profitable companies’ profits mean
revert down over time. A small subset of
businesses do earn persistent, high profits.
But we have not yet been able to identify the
causal factors ex ante—before the fact. In
other words, we don’t know beyond broad
observations what factors predict steady
growth and profits.
The evidence shows the odds of finding
the next high-growth or high-profit stock are
about the same as flipping a coin. Buffett’s
genius has been to identify these businesses.
Mere mortals are better served buying at a
steep discount to value.
The best place to find future growth and
profit is in businesses enduring hard times.
These businesses are also likely to trade at a
www.stocknewsnow.com
wide discount to value. Buyers of these busi-
nesses can enjoy both an improvement in
the business and a narrowing of the market
price discount.
6. USE SIMPLE, CONCRETE
RULES TO AVOID MAkING
ERRORS
Cognitive errors happen when we make
odds-based decisions about uncertain future
outcomes. Investing in the stock market
presents exactly this type of problem.
The secret to avoiding these errors is to
use a set of simple, concrete rules. Ideally, we
should write them down and strictly follow
them.
Simple, concrete rules are testable. They
should be back tested and battle tested. The
back test makes sure the rules work over his-
torical data sets, ideally in different countries
and stock markets. The battle test makes sure
the rules work in practice. No strategy has
ever failed in theory. Almost all have failed
in reality.
7. CONCENTRATE, BUT NOT
TOO MUCH
If you want to match the market, buy the
market. If you want to beat the market, you
must do something different. That means
buying only the best ideas, or “focusing.”
The trade-off for focus is twofold:
First, concentrated portfolios tend to be
more volatile than the broader stock mar-
ket. This means they move around more,
both up and down. Good years for the mar-
ket can be great years for the portfolio. Bad
years for the market can be terrible years for
the portfolio.
Second, concentrated portfolios don’t
closely follow the market. We call this “track-
ing error.” It means concentrated portfolios
can go down when the market goes up, and
up when the market goes down. The second
kind of tracking error—portfolio up, market
down—is great to have. But you won’t notice
it. You’ll only notice when your concentrated
www.stocknewsnow.com
portfolio is down while the market is up.
Academics have found high tracking error
to be associated with good long-term perfor-
mance. But the market can beat portfolios of
undervalued stocks for a long time. Tracking
error won’t feel good then.
Don’t become too concentrated. Assume
your calculations and thinking are wrong.
Remember, it’s more likely you are wrong
and the rest of the market is right.
8. AIM TO MAXIMIzE AFTER-TAX
GAINS OVER THE LONG TERM
Our aim is to maximize the real, after-tax
return over the long term. This has three
important implications:
First, thinking long term—beyond the
next few quarters or years—offers a huge
advantage to investors. Companies often
become mispriced because the next year or
so looks tough. This creates a good spot for
investors willing to lag over the short term.
We call this “time arbitrage.” It offers an
enduring edge available to patient investors,
no matter the size of their portfolio.
Second, the effects of compounding take
a long time to become observable. But inter-
est-on-interest or gains-on-gains become
significant over the long term.
Third, taxes and fees are hidden enemies
of long-term compounding. High-fee mutu-
al funds and other flow-through vehicles will
struggle to beat passive indexes. But low-fee,
active ETFs are more tax efficient and can do
so over the long term.
Value investing is a logical, time-tested
investment method. The best value investors
zig while others zag. They maximize their
margin of safety and minimize their costs
and taxes. They treat high growth and profits
skeptically. And they assume their calcula-
tions and thinking are wrong. Skepticism,
humility and low costs maximize our chance
of surviving. With luck and time, we can beat
the market.
Note: This article was Adapted from
Carlisle, T.E. (2017) Zig when the invest-
ing crowd zags. In Parker, C. (Ed.).
(2017). Harriman’s New Book of
Investing Rules: The do’s and don’ts of
the world’s best investors. London, UK.
Harriman House. n
Tobias Carlisle is the founder and portfolio manager
of Acquirers Funds, LLC.
He is the author of the bestselling book The
Acquirer’s Multiple: How the Billionaire
Contrarians of Deep Value Beat the Market
(2017), Deep Value: Why Activists Investors
and Other Contrarians Battle for Control of
Losing Corporations (2014). He is a co-author
of Concentrated Investing: Strategies of the
World’s Greatest Concentrated Value Investors
(2016), and Quantitative Value: A Practitioner’s
Guide to Automating Intelligent Investment
and Eliminating Behavioral Errors (2012). His
books have been translated into six languages. Tobias
also runs the website AcquirersMultiple.com—home
of The Acquirer’s Multiple® stock screeners. His
Twitter handle is @greenbackd.
He has broad experience in investment manage-
ment, business valuation, corporate governance,
and corporate law. Before founding the precursor
to Acquirers Funds in 2010, Tobias was an analyst
at an activist hedge fund, general counsel of a com-
pany listed on the Australian Stock Exchange, and a
corporate advisory lawyer. As a lawyer specializing
in mergers and acquisitions he has advised on deals
across a range of industries in the United States,
the United Kingdom, China, Australia, Singapore,
Bermuda, Papua New Guinea, New Zealand, and
Guam.
He is a graduate of the University of Queensland
in Australia with degrees in Law (2001) and Business
(Management) (1999).
Note: This article is not an attempt to provide
investment advice. The content is purely the author’s
personal opinions and should not be considered
advice of any kind. Investors are advised to conduct
their own research or seek the advice of a registered
investment professional.
www.acquirersmultiple.com
MicroCap Review Magazine 23
 P R O F I L E D C O M PA N Y
Femeda Ltd.
F
emale health company Femeda
develops Pelviva® – a pioneer-
ing Pelvic Floor muscle re-trainer,
clinically proven to have a life-changing
impact on women’s quality of life.
Femtech (female technology) is one of the
fastest growing sectors of healthcare, forecast
to reach $50bn by 2025. Urinary Incontinence
is the largest unmet need in female health and
a $14bn global opportunity.
Life changing clinically proven technol-
ogy: One in three women (over 750 mil-
lion worldwide) experience bladder leakage,
which has a negative impact on daily life
and relationships This is a condition which
changes the lives of millions of women,
though over 60% of US women haven’t told
their partners/husbands. Femeda is a spe-
cialist UK-based company driving strategic
innovation to develop a range of technically
groundbreaking medical devices for female
urinary incontinence (UI), just launching the
unique Pelviva® device life changing clinically
proven technology. With no drug-related side
effects, this multiple award-winning product
is unique in a rapidly accelerating market.
Pelviva addresses THE biggest unmet need
in female health – Urinary incontinence (UI).
It is the first product of its kind that is clini-
cally proven and is really easy to use. Pelviva
is a pioneering medical device that has a life-
changing impact on women’s quality of life.
Supported by an in-depth research and
development programme and driven by con-
sumer needs, Pelviva is the first of its kind
to provide one combined treatment for both
Andrew Tasker, CEO
24 MicroCap Review Magazine
stress and urinary continence. It offers women
a clinically effective, safe and discrete treat-
ment for bladder leakage. Each single-use,
disposable intra-vaginal device incorporates a
revolutionary pattern of neuromuscular elec-
trical stimulation using a programme devel-
oped by Professor Oldham at The University
of Manchester. Reactive Pulse Technology
causes the Pelvic Floor muscles to contract,
mimicking the way the body works natu-
rally, helping to restore speed and strength to
the power fibres, preventing bladder leakage
when women cough, laugh, sneeze or exer-
cise. It is made of a Body Responsive Foam,
so adapts to each woman’s individual shape.
The unique development is the result of
combining advanced research and patents
from University of Manchester with internal
product development expertise to deliver
a product which meets core patient needs.
Pelviva is CE marked,  Class IIa medical
device which can be recommended by the
hospital practitioner, and bought directly by
the end consumer. The business is now com-
mencing a global out licensing programme.  maceutical, medical device and consumer
Pelviva offers a long-awaited treatment
supported by a comprehensive package
of clinical data. In single-blind controlled
trial, women using Pelviva® reported a four-
times greater improvement in quality of life
than those who simply followed an exercise
programme, with 84% reporting improved
symptoms of bladder leakage. Having an
ongoing programme of clinical evaluation
is paramount to Femeda’s development and
a post marketing 330 women patient ran-
domised real world primary care study has
been commissioned for Q2 2019.
PRIVATE COMPANY
Bladder leakage is not life-threatening,
but it is life-changing – it affects women psy-
chologically, emotionally, socially and sexu-
ally. This is a global problem, affecting women
of all ages, often exacerbated by childbirth
and menopause. Only one in four women
with this condition is likely to consult with a
healthcare professional due to embarrassment
over the nature of the condition.
The recent issues with mesh and tape sur-
gery are prompting an immediate rethink into
treatment pathways which Pelviva can become
1st line recommendation – the UK, Australia,
New Zealand and others have banned surgical
mesh in UI, and a major medical device sup-
plier has recently announced withdrawal of
mesh across the whole of Europe.
Introducing Femeda: a UK based health-
care company focused on the development of
an innovative female health portfolio and is
positioning itself to be a global Femtech leader. 
With its specialism in female health, it has
recently launched its first product Pelviva, a
treatment for female urinary incontinence
(UI). The product is a result of an innova-
tive research and development activity led
by highly skilled internal R&D resource,
which has integrated leading technology
from world class academia.
The Femeda team is led by Andrew Tasker,
Chief Executive who has extensive phar-
healthcare experience in global markets. He
has set a culture of instinctive innovation,
integral understanding of patient and con-
sumer insights, and continued delivery of
core business objectives. The business has
put in place a highly experienced senior
management team with international health-
care and operational skills. 
Femeda has recently opened a new
London headquarters, and has it own
advanced ISO13485 manufacturing plant in
Cramlington (North East UK). n
www.femeda.com
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 P R O F I L E D C O M PA N Y
Marrone Bio Innovations
A Clear Leader in the Emerging Biological Pest Control Industry
C
onsumers are increasingly con-
cerned about the environment,
health, and food safety. The world
needs effective, sustainable pest manage-
ment solutions that are both safe for human
consumption and protect the earth’s natural
resources. Dr. Pamela Marrone, CEO of
Marrone Bio Innovations (NASDAQ: MBII),
was acutely focused on these challenges back
in 2006 when she founded MBII to discover
and develop effective, sustainable, biologi-
cally-based products for pest management
and plant health.
MBII is the only public pure-play com-
pany in biological pest management and
plant health and is widely recognized as the
thought leader in the space given the com-
pany’s industry-leading product portfolio
consisting of 6 EPA approved products.
Dr. Pamela Marrone, President & CFO
www.stocknewsnow.com
The total global pesticide market is more
than $50 billion annually and is growing at
a compound annual growth rate of about
2%. The newly emerging biological market
is approximately $3-4 billion but is growing
at a compound annual growth rate between
10% and 20%.
MBII’s growth is significantly outpacing
both the traditional pesticide market and the
biologicals market – revenues grew 29% in
Q3 2018 YoY to $5.4 million at the same time
achieving a record gross margin of 48.3%
and climbing.
MBII’s proprietary products are not only
used in organic farming, where historically
the Company has provided pest control
solutions where no good alternative previ-
ously existed, but in conventional farming,
where farmers traditionally use synthetic
chemicals but are increasingly looking for
sustainable programs that utilize biologicals.
Conventional farmers account for approxi-
mately 70% of the company’s sales. “The
benefits are significant,” explained Pam
Marrone, MBII’s CEO. “First, by implement-
ing our products as one part of an integrated
program, conventional growers can improve
yields and crop quality, creating a higher
return on investment than chemical pesti-
cides alone. A notable example was in straw-
berries, where a trial implementing MBII’s
products resulted in a $1,400/acre increase
in revenues, or a >9x ROI on investment.
In addition, pests developing resistance to
synthetic chemicals is reduced or eliminated
by using our products in a sustainable, inte-
grated program, again increasing return on
investment. And our products do not harm
the beneficials, such as bees, also an impor-
tant yield issue for today’s farmers.”
NASDAq CM: MBII
An area of growth and opportunity for
the company is the rapidly growing can-
nabis industry, where MBII products are
impacting cannabis production through
the reduction of toxic chemicals and pesti-
cide residues that are harmful to both the
environment and to consumers. To provide
some scale of the market opportunity, a
study from the UC Davis Graduate School
of Management estimated the current
Cannabis inputs market in just Colorado,
Oregon, and Washington alone to be $91
million. The study estimates the pesticide
and fertilizer inputs market for Cannabis,
including California due to recent changes
in California Cannabis legislation, will grow
to $1.4 billion within the next five years in
just those four states.
MBII has made significant progress in
penetrating its target markets in the U.S. and
is expanding rapidly abroad, where there
are similar drivers for both consumers and
farmers. MBII is well positioned to continue
to gain market share in the emerging bio-
logical pest management and plant health
market. n
www.marronebioinnovations.com
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 25
 F E AT U R E D A R T I C L E
MicroCap Investing:
4 Reasons Why Share Structure is Critical
The choice is yours!
n BY BRANDON MACKIE
26 MicroCap Review Magazine
Y
ou have the choice of investing in
two microcaps. Both are in the same
industry. They have the same profit-
ability and growth metrics. They even have
the same valuation.
The only difference is Stock A is trading
at $1.00 per share with 100 million shares
outstanding and Stock B is trading at $10.00
per share with 10 million shares out.
Which would you invest in? Does it even
matter if the valuations are the same? They’re
mathematically equivalent... right?
Not quite. In this article we will look at 4
reasons why share structure is critical and
discover why one of these stocks is likely to
produce much better returns over the long-
term.
1) CLUES INTO THE COMPANY’S
HISTORY
Share structure has two primary compo-
nents: 1) the total number of shares out-
standing – the pieces of the pie – and 2) the
type of shares – common stock, options,
warrants, etc.
A company is not assigned a share struc-
ture upon founding or listing on an exchange.
Nor is it the result of a single decision by the
founding team. Rather, it’s the cumulative
impact of thousands of decisions by the
founders and management team over the life
of the company.
This single data point then gives you a
major clue into the company’s history –
everything from how successfully the origi-
nal business plan was executed to manage-
ment’s capital markets savvy.
Early on in a company’s life, everything
is in flux. The target markets, product lines,
industry dynamics. All these can turn on a
dime and threaten a microcap’s existence.
The wise management team recognizes this
and runs lean, raising only what is necessary
to iterate to a successful business model –
and only at prices they can’t turn down.
As the company gains customers, valida-
tion, and moves closer to profitability, it
gains leverage in the markets. More leverage
= less dilution = higher returns for you.
Your job as an investor is to study history
to inform the future. History as they say,
doesn’t repeat but it often rhymes. And few
things will teach you more about a com-
pany’s history than the share structure.
2) CAPITAL ALLOCATION
SCORECARD
Investing in a good share structure is criti-
cal. But it’s not enough. Share structure is
dynamic – it can change in an instant with
a single decision by the CEO. And how that
structure changes over your holding period
will often be one of the biggest predictors of
success.
Every day management is faced with
countless decisions. Should we fund a new
product development program? Should we
acquire a key competitor? Should we issue
shares and raise capital?
All these decisions come down to trans-
forming capital into value. The better man-
agement becomes at capital allocation, the
more value they will create.
In his bestselling book, The Outsiders,
William N. Thorndike explains most CEOs
get to the top by being really good at one
thing. Maybe they’re a great salesperson or
product innovator. But it’s rare to find a CEO
www.stocknewsnow.com

More important than the number of shares is often
who owns them. Because if insiders don’t own a
significant piece, how can you expect them to treat
your shares like gold?
that can operate and allocate capital well.
The greatest capital allocator ever accord-
ing to Warren Buffett was Henry Singleton,
CEO of Teledyne. In the 1960’s, when
Teledyne’s shares were flying high in the con-
glomerate boom, Singleton diluted heavily
to acquire companies and build his empire.
But when the stock plummeted in the early
1980’s, Singleton changed course and began
buying back his shares, eventually reducing
the share count by 90%.
The lesson here? It’s all context. Dilution
can be horrible. It can also be great. You
must constantly assess management’s capital
allocation and ask the question: are they cre-
ating or destroying value?
Watching revenue and earnings growth
per share is one of the best ways we know
to do this.
3) UNDERSTAND THE INCEN-
TIVES
More important than the number of shares
is often who owns them. Because if insiders
don’t own a significant piece, how can you
expect them to treat your shares like gold?
With microcaps, though, share structure
incentives can get tricky. You may find a
promising company where the CEO owns
20% and think, “great our interests are
aligned.” Check the box.
But what if that CEO is making $350,000
per year in salary and because the company
is so small, his or her shares are worth only
$200,000? Here the incentives say it’s better
to coast along than risk capital to try and
grow the business.
Options can pose another problem. If
management has exposure primarily
www.stocknewsnow.com
through options, they have big upside if the
share price goes up. But if shares languish,
or decline, the options expire worthless and
they’re in the same place as before. It’s an
asymmetric structure that incentivizes man-
agement to take big swings – say with a risky
acquisition – to increase the share price.
We always want to see management own a
good chunk, 25-40%, and ideally that equity
is worth at least 3 times their annual sal-
ary. The more they acquire with their own
money, the more bullish we become.
4) SUPPLY AND DEMAND
Our final reason has little to do with a
company’s fundamental value. Stock trading
follows economics 101: supply and demand.
The fewer shares in the float, the higher the
price will be for a given level of demand.
This becomes important when a fund
wants to build a position in a promising
microcap. Large institutional demand com-
bined with a tight share structure can be a
recipe for a rocketing share price – often
going far beyond what the fundamentals
justify.
These boons are unique opportunities
you’ll rarely see happen to companies with
over 100 million shares outstanding.
THE BOTTOM LINE
So, is there a magic number of shares out-
standing? Not exactly. Like most things in
investing, it’s more art than science.
A company can do a reverse split and over-
night go from 100 million shares outstand-
ing to 2 million. Don’t be fooled though...
all those existing shareholders will still have
sky-high cost bases that can weigh on the
share price.
That said, we’ve been amazed over the
years by how many multi-baggers – compa-
nies with 10, 20, even 50x returns – all had
20-30 million shares outstanding.
These companies often had no warrants,
convertible notes, or even options outstand-
ing. Employees were bonused in cash and
went in the open market to buy their posi-
tions. It was an investor’s dream.
There are management teams that treat
their shares like gold. And then there are
teams that treat their shares like toilet paper.
Make sure you know which side manage-
ment is on before you invest. n
www.smallcapdiscoveries.com
Brandon is a passionate microcap investor. He has
developed a specific set of criteria for selecting
investment ideas. The key attributes include:
Attractive business models
Compelling valuations
Quality management teams
He then conducts intensive research, talking to
management teams, industry contacts, and other
like-minded investors. His philosophy is to know his
stocks better than anyone else and build a concen-
trated portfolio around them.
Based in Texas, Brandon spent several years as a
project manager and engineer with a multi-nation-
al oil company, a place where he could use BSc
in Chemical and Biomolecular Engineering. That’s
where he developed his technical writing skills.
But then he got the investing bug. He started read-
ing articles and books by the gurus of value investing:
Warren Buffett and Ben Graham. He was hooked.
After following boring large cap stocks for a while,
he began channeling all that experience to microcap
stocks with cash flow. After being completely self-
taught in the investing arena, he couldn’t get enough.
He started getting all these ideas about stocks and
companies, so he began writing a blog, which he has
now rolled into https://smallcapdiscoveries.com/.
Brandon writes about stocks he likes, but he also
writes about process, how he thinks, and he analyzes
his mistakes in an honest, raw manner. That’s where
a lot of the best information is for retail investors.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 27
 P R O F I L E D C O M PA N Y
Jerash Holdings (US), Inc.
Jerash Holdings is a profitable, growing global manufacturer of sport
and outerwear garments for top global brands at facilities located in
US & EU tariff-free zones in Jordan.
J
ordan may not be the best-known man-
ufacturing location to US investors, but
it is quickly becoming one of the most
important in the garment industry, and for
US consumers. This stable US ally in the
Richard J. Shaw, CFO
28 MicroCap Review Magazine
Middle East boasts a low cost, highly trained
global work force and key free trade zones
that generate duty-free imports to the US
and EU. When import duties on popular
fleece jackets and outerwear can run 30%-
plus, that tariff savings is critical to the final
price consumers pay, and to profits at major
clothing brands.
Jerash has leveraged its Jordanian facto-
ries and duty-free capabilities to become a
key strategic manufacturer to 17 top global
brands such as The North Face, Columbia,
VF Corp, and PVH, with more on the way.
Its sterling reputation for quality and pen-
chant for on-time delivery have consistently
filled its factories to maximum capacity, even
as the company announces new expansion
plans.
DOING WELL BY DOING GOOD
As a socially responsible employer, Jerash’s
factories are audited by Jordanian agencies,
the United Nations, its customers and other
global organizations. The company was even
an invited speaker at the United Nations for
its efforts in hiring Syrian refugees.
Jerash’s workforce comes to Jordan from
around the world seeking stable employ-
ment. In fact, 75% of the workforce are
immigrants on work visas. Employees typi-
cally sign three-year contracts with wages
averaging $300 a month, a significant cost
savings compared with popular garment
manufacturing markets such as China.
Immigrant workers are provided housing,
meals, healthcare, child care and more.
NASDAq CM: JRSH
Dedication to its workers has paid off,
as Jerash has reported five years of record
revenue, rising profitability and increased
demand from customers. Through the first
nine months of fiscal 2019 (fiscal year end-
ing March 31, 2019), Jerash has reported a
record $70.5 million in revenue, $5.3 million
in GAAP net income, or $0.47 per share,
and $11.9 million in cash from operations.
The company recently initiated a $0.20 per
year dividend to further enhance shareholder
returns.
In order to meet rapidly rising customer
demand for manufacturing capacity, Jerash
recently announced a 1.5 million piece capac-
ity expansion, on top of its current 6.5 mil-
lion pieces of annual production. The new
capacity begins production in April 2019,
and included 800,000 pieces in new customer
orders even before the doors opened.
WHY JERASH
While the new capacity positions Jerash for
another year of growth and financial records,
the company is not resting on its laurels. It is
presently looking for opportunities to further
augment its organic growth, averaging 15%
or more annually, with strategic acquisitions
to grow more quickly, diversify its produc-
tion capabilities and enhance its geographic
footprint. n
Jerash Holdings (NASDAQ: JRSH)
For more information, visit:
www.jerashholdings.com
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 Help a child or widow who is coping with the aftermath of a
traumatic loss. Make a tax-deductible clothing donation, become
a youth mentor, fundraise, or simply call and tell us how you'd
like to get involved.

Our families need your support.

For more information, please call 212-332-2980 or visit www.tuesdayschildren.org

Tuesday's Children provides a lifetime of healing for those whose lives have been forever changed by
terrorism or traumatic loss. Through a time tested, long-term approach, Tuesday's Children programming
keeps the promise to support all those impacted by 9/11; builds resilience and common bonds in
communities worldwide recovering from tragedies; and serves and supports our nation's military Families
the Fallen.
ofwww.stocknewsnow.com MicroCap Review Magazine 29
 P R O F I L E D C O M PA N Y
kNeoMedia Limited
K
NeoMedia Limited (ASX:KNM) is
an Australian listed company in the
process of obtaining an OTCQB list-
ing. The company has operations in 4 conti-
nents, principally in the US and delivers SaaS
products via its portal www.KneoWorld.com
to schools and districts on a Business 2 Schools
basis. The main activity of the company is
online education publishing to assist education
of children with learning difficulties, whether
they are genetic or socio-economic.
In excess of 10 percent of all students are
present as challenged learners and while the
Company focuses on elementary students,
this represents a very substantial market that
is far less competitive and under-catered for
in comparison to the crowded general educa-
tion online market.
KneoMedia has pioneered and devel-
oped a highly sophisticated suite of game-
based  learning programs that engage chal-
lenged learners enabling improved educa-
tion and behavior within the classroom and
beyond. Curated to enhance teaching and
learning in both general education and special
needs classrooms, KneoWorld work closely
with educators and administrators of cur-
ricula to develop programs that help students
of all abilities master academic and life skills
to reach their full potential. All programs are
COPPA and GDPR security compliant.
Educators are further assisted by detailed
James Kellett, Executive Chairman
30 MicroCap Review Magazine
student performance analytics. KneoMedia’s
learning programs are quite remarkable as
detailed in a recent university study strong-
ly supporting the highly positive results
received to date.
KneoWorld programs inspire students to
want to learn through the power of play
and digital game-based learning is non-
discriminatory. All children, at any level of
ability can learn and progress with the right
digital tools.
We create programs to help educators
bridge the achievement gap to provide edu-
cational equity to all students, regardless of
learning ability.
Our intuitive programs target four student
ability levels:
• Early Learner
• Emerging Learner
• Developing Learner
• Proficient Learner
All programs are geared to a continuum
of learning.
Whether teacher directed or student ini-
tiated, our audio assisted programs are a
powerful in-class learning tool that mea-
sures performance mapped to global stan-
dards. Identified in six categories of learn-
ing: Literacy, Science, Maths and Art, in line
with US based standards and alternative
assessments, plus Critical Thinking and Life
Skills  to address the practical skills of daily
living as well as the social and emotional
skills necessary to navigate in the world.
• Game-based programs
• For students of all abilities
• Engaging and empowering
• Mapped and measured
• Integrates to curriculum
• Meaningful analytics
• Real time feedback
• Ongoing PDs and support
We believe all children should be given every
opportunity to succeed, regardless of their aca-
demic ability and game-based learning is an
ASX: kNM
integral part of childhood education. Growth in
educational markets, combined with advances
in mobile devices and connectivity, will con-
tinue to accelerate innovation, adoption, and
affordability of our products around the world.
The Company’s primary focus during the
year was the refinement of its operating
platform to deliver sustainable sales through
four key pillars:
• Partnerships that deliver access to mul-
tiple funding channels from govern-
ment and private enterprise;
• Leading technology to ensure we main-
tain a commanding position in Special
Needs education;
• Validated content by globally recognised
and credible health and education bodies;
• Recruitment of top talent in Special Needs
learning and development to deliver scale
in the markets where we deploy content.
Using the four key pillar strategy plus the
continued recruitment of key sales personal,
the Company will continue to remain fully
focused on its Software as a Service (SaaS)
platform under a Business-to-School sales
model in its now defined markets
The Company recognises the education
markets have a lengthy sales lead time, much
of which has been deployed and together with
the investment to date in both the SaaS strat-
egy and the opening of those markets at the
earliest opportunity and the extensive work
of curriculum alignment within those mar-
kets, will, the Company believes, provide long
term sustainable income and further growth
in new markets due to the readily translatable
design of the KneoWorld platform. n
www.kneomedia.com
Appointed Executive Chairman October 2015. Mr
Kellett has over 30 years’ experience in global cor-
porate finance and business management and has
held senior executive positions in the finance and
communications industries, including ASX listed
companies. Mr Kellett has been the driving force in
establishing KNeoWorld Inc. in the game-based edu-
cation sector in America and other global markets.
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 P R O F I L E D C O M PA N Y
Tinybeans Group Limited
T
inybeans is a mobile and web-based
technology platform that connects
now over 3 Million parents with
the most trusted tools and resources on the
planet to help every family thrive.
Tinybeans offers an experience without
the distractions or privacy concerns that arise
on other platforms when sharing a child’s
memories. Tinybeans generates revenue from
advertising from brands, premium subscrip-
tions and printed products. Founded in
Sydney, Australia in 2012, Tinybeans serves
a deeply engaged user base of over 3 Million
members and over 1.1 Million monthly active
in over 200 countries/territories and keeps
over 200 million precious memories safe.
From that small sprout in Sydney, Tinybeans,
now with a Net Promoter Score (NPS) of 80,
has grown to add headquarters in New York
and is now a must-have app for every new
parent, with over 55,000 5-star reviews in the
Apple App and Google Play stores.
As the audience continues to grow, so do
the company’s revenues. In the December
half of 2018, Tinybeans generated over
$1.2M USD, which was nearly as much as
what it delivered the previous 12 months.
This growth reflects the momentum
continuing to build across the Company’s
revenue drivers, largely advertising, with
supported recurring revenues in premium
subscriptions and printed product sales.
Advertising revenues increased to over $800k
USD representing growth of over 185% on
the previous year, driven by seasonal holiday
www.stocknewsnow.com
The largest family only
platform on the planet!
campaigns. More brands are signing up for
direct advertising deals plus more advertis-
ers are increasing their investments across
the programmatic platform. These results
demonstrate the value to advertisers in the
Tinybeans audience and our targeting capa-
bilities based on the unique data set to get to
the right people with the right message.
“We want to provide for parents a product
that meets the needs they have now around
organizing their children’s stories and shar-
ing,” said Geller, “and the needs they don’t
even know they have yet, like easy ways to
look back on those first moments and con-
venient ways to print.”
To December 2018, Tinybeans attracted
many new advertisers on the platform. Some
running tests, while others re-signed for ongo-
ing programs. Some of the advertising part-
ners that have recently run on the Tinybeans
platform include Macmillan Kids, Haven Life,
Peppa Pig, Mixbook, DK Books, BuyBuyBaby,
BarkBox & Kabrita to name but a few.
“With Tinybeans, we want to harness the
power of the trust we have with our audi-
ence—other parents—on an emotional level.
We speak to our audience as peers: those
who’ve been in our shoes; shared the same
joys and worries; who understand the awe-
some responsibility of parenting, but also
ASX: TNY
the incredible journey on which it takes us.
We’re connecting with a global community
of parents over what we have in common and
sharing a unique way to capture the emo-
tional moments that mean so much.” Eddie
Geller, Tinybeans’ CEO said.
Tinybeans has recently been getting a
lot of press and was included in a Harvard
Business Review1 article, stating…
“Consider TinyBeans, a fast growing private
social media network with over 3 million users.
It’s a photo and video sharing site focused
on newborns and the many delightful mile-
stones they achieve over the next months. Unlike
Facebook where everyone can see your posts,
photos and videos, TinyBeans is private and
invite only to close friends and family so there is
a tremendous amount of trust which encourages
more sharing. This newborn Maximum Density
Market (MDM) sparks a cornucopia purchase
behavior related to becoming a parent—like life
insurance, a ~$700 billion dollar industry that is
normally unpleasant to talk about. But becom-
ing a parent unlocks greater motivation to make
it through the purchase funnel.”
Looking ahead, Tinybeans has cash and
solid runway—and has confirmed many
times to the market it’s confidence of reach-
ing cashflow positive in calendar 2019.
Tinybeans is traded on the Australian
Stock Exchange (TNY) and https://www.
otcmarkets.com/stock/TNYYF/overview n
For more: tinybeans.com/investor
1 https://hbr.org/2019/03/why-businesses-should-
know-where-their-densest-markets-are
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 31
 F E AT U R E D A R T I C L E
Microcaps’ 2009 Trend has been Your
Friend but did it END?
n BY STEVEN M. SHELTON,
MS, MBA, CFP®, CLU, CHFC, TEP,
CIMA®, CMT
32 MicroCap Review Magazine
CORNERSTONE GLOBAL
GROUP “T-REPORT”
IN BRIEF
• Prior analysis of 29 January 2018 contin-
ues to be relevant and accurate, per details
and charts provided in this technical note.
• As the Preferred Scenario, expecting
Index to crest and rollover to confirm a
major TOP and trend down to establish a
major low, parameters provided below.
• Alternative Scenario, if the 2018 high is
taken out, the final top will only be delayed
to the last quarter 2019 or no later than mid-
2020, possible but not probability favored at
this time.
COMMENTARY AND ANALYSIS
First, below is a verbatim Restatement of
Noteable Comments, written 29 January
2018 and published in the Spring
MicroCap Review
• “The Russell Microcap® Index breaking
out of a six month near sideways consolida-
tion, led to an impulsive bullish move up to
the current testing of its upper trend line. It
remains in a confirmed uptrend but is sub-
ject to downward corrections, as it moves
toward its end of trend, an anticipated his-
toric crest or at least a “truncated” crest”.
• “Select technical indicators, stock market
cycles, Elliott Wave analysis, Prof. Wheeler’s
cycle analysis, Benner cycle analysis and
more are suggesting a near term short term
top, followed by a corrective decline into
early 2018 and a major top ideally in mid-
2018 but no later than end of 2018, with a
potential crash 2018-2019”.
• “Until more definitive index market
action takes place that allows for calling
a high probability end of the 2009 “cycli-
cal” bull market trend and a lasting crest,
a decisive breakdown from its lower 2009
trend line and 200 week moving average, will
strongly indicate a trend change. A decisive
move under the February 2016 low will con-
firm the long term trend is down.”
SECOND, HOW DID WE DO? – A
REVIEW OF 29 JANUARY 2018
ANALYSIS AND COMMENTS
• As of date, the 2018 Primary Scenario
comments and analysis continue to be in line
with market action from 29 January 2019 to
20 March 2019, a rather long stretch in time!
• Indeed, there was a deep correction in
early 2018, 8 February 2018 to be exact, pro-
jected as chart point 4 in blue on the above
2018 weekly chart.
• That correction penetrated the 200 week-
ly simple moving average but closed above
that line.
• In fact, the daily move created a bullish
daily key reversal, which led to a decisive
crest, at least as of date.
• Thus far, a major top, as projected for
between mid-2018 to end of 2018, may have
occurred on 31 August 2018, pending market
action confirmation.
• In fact, it was the highest top of what
would be considered a triple top, painted on
21 June 2018 at 682.83, 10 July 2018 at 684.1
and 31 August 2018 at 686.14, only a 3.3
point spread between crests!
• As for the potential crash, suggested
for the time frame of 2018-2019, the Index
www.stocknewsnow.com
Weekly Russell Microcap® Index bar chart – 29 January 2018

did indeed decline 29.51% over about 4
months into 24 December 2018, a “proper
crash”.
• Additionally, the Index broke its lower
2016 channel trend line and its 200 week
simple moving average in a decisive manner
but “bounced” off its 2009 trend line, most
interesting and important!!
• This action met the “partial” stated
parameters for a trend change to down, at
least short term to intermediate term.
• However, as stated in the 2018 publi-
cation, for such a move to go beyond an
intermediate trend change to a confirmed
long term trend change down, the Index
must take out not only its 2009 lower trend
channel line but the 29 February 2018 low of
364.89, per basic technical analysis.
• It should be noted that from an “Elliott
Wave perspective”, a move under its
December 2018 low would “structurally”
confirm a major top and the progression
of a long term move down to a meaning-
ful low.
THIRD, CURRENT WEEkLY
CHART ANALYSIS – 20 MARCH
2019
• The 20 March 2019 weekly Index chart

Weekly Russell Microcap® Index bar chart – 30 March 2019

www.stocknewsnow.com MicroCap Review Magazine 33

Monthly Russell Microcap® Index bar chart – 20 March 2019

clearly indicates the Index closed below its will provide a high probability of a major top, has much more market history and such
2016 lower trend line channel and did close which should be followed by an upward cor- history has noted that after each market rise
below its 200 week and 50 week Simple rection, an opportunity to consult with your from 1998 to 2000 and 2002 to 2007, the
Moving Averages, as well as creating a bear- financial advisors to consider exiting long index has returned to its origin; that would
ish “Death Cross” on the daily bar chart, positions, rebalance portfolios, and potential suggest a potential decline of the Russell
confirming the short term and intermedi- shorting opportunities Microcap® Index to around 130-150 for
ate term trend to down a major low during the 2020-2023 time
• Unless the Index takes out its October FOURTH, CURRENT MONTHLY frame.
2018 high, the intermediate trend remains CHART ANALYSIS – 20 MARCH
down but the short term trend is up, as the 2019 LASTLY, IN SUMMARY
Index is likely in an upward correction
• Looking next for a crest and a move • Monthly chart puts it all together and • Historically, markets top on GOOD
under the 2018 low, creation of a weekly extols the order and trend of the 2009 advance news, not bad news, as well as extreme opti-
“Death Cross” and ultimately, taking out the and pending decline, as well as the potential mism and compliancy.
2016 low path of an Alternative Scenario in red • Therefore, it is not a surprise that
• However, a close under the 2018 low • NOTE: the Russell 2000 small cap index extreme optimism and complacency toward
financial asset prices has emerged in the
currently perceived “Good Times”, setting
the stage for explosive volatility in various
However, a close under the 2018 low will provide asset classes, as many believe the “Fed has
their backs”!
a high probability of a major top, which should be • Look back at prior markets for guid-
followed by an upward correction, an opportunity ance, as market crashes tend not to occur
at the top of the market but come later in
to consult with your financial advisors to consider an already established downtrend, just as
the DJIA and S&P 500 did in 1968, 1987,
exiting long positions, rebalance portfolios, and 2000, 2007!
potential shorting opportunities. • Add in the global backdrop of the cresting
and decline of the 125 year “Revolutionary”

34 MicroCap Review Magazine www.stocknewsnow.com


Therefore, it is not a surprise that extreme
optimism and complacency toward financial asset
prices has emerged in the currently perceived
“Good Times”, setting the stage for explosive
volatility in various asset classes, as many believe
the “Fed has their backs”!
Cycle, Long Wave Cycle and many shorter
term cycles, all pointing to a potential his-
toric economic and equity market decline
that is synch with global history, a grand
economic “reset” to cleanse economies of
excess debt and overcapacity, much like the
Biblical Year of Jubilee.
• These cyclical tendencies are clearly
evidenced by nationalism not seen since
the 1930s, rising global protectionism, a
fractured European Union, yellow jackets in
France, BREXIT, 5 Star Movement in Italy,
far left political agendas emerging globally,
Anti-Semitism on the rise, large and violent
global demonstrations, the toppling of once
honored statues of patriots, desecration of
once sacred memorials, a decisive slowing
Chinese economy, liquidity on the decline,
reversing credit cycle, extremely divided cit-
izenry and sabre rattling around the world.
• It is a slow and steady build, with spurts
and pauses in between, all leading to a trend-
ing conclusion to be witnessed by those who
are aware of a long and well documented
global history and who think independently
Look back at prior markets for guidance, as market
crashes tend not to occur at the top of the market
but come later in an already established downtrend,
just as the DJIA and S&P 500 did in 1968, 1987,
2000, 2007!
www.stocknewsnow.com
from the “Thundering Herd”!
• Oh, ponder upon the wisdom of King
Solomon, considered to have been one of
the wisest men ever, who was attributed
in Ecclesiastes for this “market applicable”
statement, “The thing that has been, it is
what will be, and that which has been done,
and there is nothing new under the sun.” n
About the Author:
Steven Shelton is a Financial Services veteran of more
than 30 years, having served in senior management
in both the insurance and broker/dealer commu-
nity, on and off shore. He has expertise in econom-
ics, financial market analysis, wealth management,
traditional and alternative investments, financial
planning, marketing, insurance, sales and consult-
ing as well as an international speaking regarding
global economics and financial markets. This is
evidenced by advanced degrees in business admin-
istration and economics as well as six professional
designations to include, Certified Financial Planner,
Chartered Life Underwriter, Chartered Financial
Consultant, Certified Investment Management
Analyst, Tax and Estate Practitioner and Chartered
Market Technician. He is the Managing Member
of Cornerstone Global Group LLC, an Institutional
consultancy and financial services publishing entity,
as well as, Managing Partner of Shelton Farms and
Enterprises LLC. He is a personal affiliate of Weild &
Co., member FINRA/SIPC, an institutional Broker/
Dealer focused on investment banking.
Cornerstone Disclaimer
Broker/Dealer services and investments are offered
by Steven M. Shelton, independent contractor and
FINRA Registered Representative, through Weild &
Co., http://www.weildco.com, a Member of FINRA
http://www.finra.org and SIPC, http://www.sipc.org
Cornerstone Global Group LLC is not affiliated
with Weild & Co.; Cornerstone Global Group LLC
does not offer securities nor securities advice and is
not a member of FINRA/SIPC.
Cornerstone Global Group LLC, 3240 North Lake
Shore Drive, Suite 11-D, Chicago Illinois 60657, may
provide institutional non-FINRA related consultan-
cy on farming as well as marketing, distribution and
product/service development to and for institutional
use only, without contact with any of the individual
clients of the consulted firms
Cornerstone Global Group LLC is also a financial
literacy newsletter publisher of the CGG Global
Market Technical Report and CGG Technical
Research Notes, all of which are general informa-
tional services regarding Global Macro Economics
and Market Technical Analysis. Cornerstone Global
Group LLC’s independent contractor consultants are
not investment advisers. At no time may a reader,
caller, viewer or consultancy client be justified in
inferring that any advice from Cornerstone Global
Group or its Non-FINRA registered consultants
is intended as investment advice or as investment
recommendations directed to any particular person
or in view of the particular circumstances of any
particular person. Investing carries risk of losses,
and trading futures or options is especially risky
because these instruments are highly leveraged,
and traders can lose more than their initial margin
funds. Before investing consult with your investment
advisor. Cornerstone Global Group LLC does not
render tax, accounting or legal advice and the infor-
mation contained in this communication should
not be regarded as such. Information provided by
Cornerstone Global Group is expressed in good faith
but is not guaranteed in any way.
Note: This article is not an attempt to provide
investment advice. The content is purely the author’s
personal opinions and should not be considered
advice of any kind. Investors are advised to conduct
their own research or seek the advice of a registered
investment professional.
MicroCap Review Magazine 35
 ACC O UN T I N G COR N ER
Life After Regulatory Onslaught
F
inancial reporting executives, audit
committees, and independent audi-
tors have been wrestling with a num-
ber of developments in the U.S. recently,
including new accounting standards, tech-
nological impacts on financial reporting, tax
reform and other regulatory developments.
Implementation of new accounting standards
has been burdensome for many companies,
including new standards for equity linked
derivatives, credit losses, nonemployee stock
compensation, the definition of a business
in business combinations, and, the two most
significant changes, the new revenue and leas-
ing standards. But these are all effective now,
so the accounting onslaught is over for the
foreseeable future. So what is on the horizon?
SIMPLIFICATION NOT SO SIMPLE
Effective November 5, 2018, the SEC issued its
final rule that eliminates or revises a number
of disclosure requirements that are redundant
or outdated in light of changes in US GAAP,
or the business or technological environment.
The simplification rules are 308 pages long,
and actually add a new requirement to dis-
close interim changes in stockholders’ equity.
This results in a new equity statement format
to replace a single statement of changes in
stockholders’ equity with up to four equity
statements for interim and year to date peri-
ods for two comparable years.
INTRODUCING CRITICAL AUDIT
MATTERS
Under the newly-revised PCAOB standard,
n BY COREY FISCHER, CPA
36 MicroCap Review Magazine
auditors must augment their traditional audit
opinion with a discussion of “critical audit
matters” (CAMs), essentially matters that “kept
the auditor up at night.” A CAM is defined
as any matter that is required to be commu-
nicated to the audit committee that relates to
accounts or disclosures that are material to the
financial statements and involve especially chal-
lenging, subjective or complex auditor judgment.
Disclosure of CAMs will be effective for large
accelerated filers for fiscal years ending after
June 30, 2019 (and all other filers for fiscal
years ending after December 15, 2020).
A CAM could include matters related to
revenue recognition, management override of
controls, receivables, inventories, intangibles,
covenants, investment valuations, deriva-
tives, fixed assets, lease accounting, pension
accounting, expenses, reserves, and related
parties, just to name a few. The PCAOB has
said it expects that, in most audits, the auditor
will identify at least one CAM.
INEFFECTIVE INTERNAL
CONTROLS
In January 2019, the SEC settled charges
against four public companies for failing
to maintain internal control over financial
reporting (ICFR) for seven to 10 consecu-
tive annual reporting periods. According
to the SEC’s orders, year after year, the four
companies disclosed material weaknesses
in ICFR involving certain high-risk areas
of their financial statement presentation.
Each of the four companies took months,
or years, to remediate their material weak-
nesses after being contacted by the SEC staff. 
The companies involved three accelerated
filers and one smaller reporting company
that all had audits of their ICFR. Three
of these companies had clean ICFR audit
reports in their most recent fiscal year, but
the SEC still charged them for continually
having ineffective controls in prior years.
CHANGES TO EMPLOYEE
BENEFIT PLAN AUDITS
A new standard for employee benefit plan
audits is coming soon that primarily focuses on
expanded reporting and disclosures. It follows a
collaborative effort by the Department of Labor
(DOL) and Auditing Standards Board (ASB), in
response to weaknesses found in a number of
benefit plan audits. A new report format will
replace what is currently known as a limited-
scope audit. The new standard will require new
procedures for engagement acceptance; audit
risk assessment and response; and communica-
tions with those charged with governance. The
standard is expected to be issued in the first half
of 2019 and for audits of financial statements
for periods ending on or after Dec. 15, 2020 (i.e.
December 31, 2020 audits).
AUDIT COMMITTEE
RESPONSIBILITIES
Both the SEC and the PCAOB continue to
focus on the responsibility of the audit com-
mittee to understand financial reporting
requirements fully, and to challenge senior
management on major, complex decisions
if necessary. The audit committee should
review all financial communications to satisfy
itself that all information is presented fairly
and in a transparent and consistent manner.
Also, as part of their oversight of the external
audit, audit committees need to ask probing
questions of external auditors related to audits
and any significant deficiencies or material
weaknesses that were identified. n
Corey Fischer, CPA, is Firm Managing Partner of
Weinberg & Company, a multi-office PCAOB and
CPAB-Registered firm specializing in the audit, assur-
ance and tax needs of micro and small cap companies. 
He has more than 25 years of experience, having worked
with Big 4 accounting firms, and as an SEC reporting
officer for a number of NASDAQ-listed companies. 
Based in Los Angeles, he is an expert in financial report-
ing, SEC compliance, raising debt and equity, mergers
and acquisitions and structuring accounting operations.
E-mail: coreyf@weinbergla.com or 310-601-2200.
Visit www.weinbergla.com
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 FA M I LY O F F I C E C O R N E R
Family Offices are Investing
Heavily in Artificial Intelligence
Here are Five Reasons Why . . .
A
s our fourth article on family offices
for Microcap Review, we’re focusing
on new investment trends in invest-
ment practices seen in the family office inves-
tor space as well as related investment man-
dates presented to us over the last 12 months.
The second half of 2018, and to a greater
degree, the first quarter of 2019 has been
marked by a continued expansion of family
office mandates from the traditional focus
on real estate assets to more diverse invest-
ment strategies. Smart money always seems
to have the ability to identify and capitalize
on mega-trends before those trends become
mainstream. And the major anomaly that
we’ve seen develop since last year is a spike
in inquiries about investments in artificial
intelligence.
n BY KARL DOUGLAS
Figure 1. The Era of Deep Learning. Source: Nvidia, JP Morgan
38 MicroCap Review Magazine
REASON 1: BIGGEST ECONOMIC
CATALYST IN 150 YEARS
AI is too big to be ignored. The smart money
realizes that sitting on the sidelines is tanta-
mount to putting money in a mattress.
Imagine knowing what you know today
about the last 100+ years of economic his-
tory, and being a peer of John D. Rockefeller,
Henry Ford, Alexander Graham Bell,
Thomas Edison, and Charles Babbage. Your
“crystal ball” would have resulted in one of
the more impressive investment portfolios
of all time, because you’d have gone long in
the petroleum, automobile, telecommunica-
tions, power and computer sectors in their
infancy before most investors understood
that those industries would define the 20th
century economy. You would have shorted
www.stocknewsnow.com

Figure 2. Source: Morgan Stanley
Figure 3. Deep Learning Will Drive Industries. Source: ARM Limited
dying industries and focused on the emerg-
ing ones. AI, and the Fourth Revolution that
it’s creating is the modern-day equivalent of
that period, but with an effect on logarithmic
proportions. And that is the reason that AI
as an investment area cannot be ignored.
REASON 2: ADVANCES IN ML
AND DL ARE UNPRECEDENTED
Ask anyone in the AI field to describe arti-
ficial intelligence and they’ll talk about
Machine Learning (ML) and Deep Learning
(DL) as the two major components. Where
these two components are the basis of AI,
in translation they bear little resemblance
to the actual effect that AI will have on our
economy, sociology and culture. That being
said, it is useful to have a basic understand-
ing of the two components.
www.stocknewsnow.com
Machine Learning, or ML, relies on algo-
rithms and statistical formulas run on an
Figure 4. ImageNet - Superbowl of Image Computing. Source: Pacific Crest
iterative basis to “learn” and generate an
algorithmic understanding of a dataset. In
effect, rather than requiring a program-
mer to code specific instructions based on
the programmer’s knowledge. The comput-
er analyzes data and “learns” based on a
defined data set, and refines a series of algo-
rithms. Take driver automation for example:
The computer analyzes programmer defined
data such as maps, obstacle data, traffic rules
and laws and derives a series of complex
algorithms to seamlessly guide a level three
enabled autonomous vehicle down a major
highway without incident. In ML, the dataset
is largely defined. The Adoption Cycle for
New Technology is Getting Progressively
Shorter.
REASON 3: THE ADOPTION
CYCLE IS GETTING SHORTER
Deep learning is the next generation of ML
in the sense that DL is unstructured. In DL,
the program analyzes all data, determines all
correlations and determines its own datasets
and algorithms, not a predetermined subset,
and identifies correlations, and then creates
algorithms. Imagine a program that rather
than figuring out how to move a car down a
highway, analyzes all available data and cor-
relations and designs the most efficient way
MicroCap Review Magazine 39

Time is being compressed and innovation is
increasing at a pace beyond our comprehension.
For a basic investment approach look at the
requirements of AI. By its very nature AI uses and
creates massive amount of data.
to move people from point A to point B. That
is the second generation of ML. It’s far closer
to what we view as invention. But imagine an
inventor that can seamlessly access terrabytes
of data. The speed and complexity of innova-
tion is infinite. And the rate of adoption is
shrinking.
Welcome to the fourth industrial revolu-
tion. Time is being compressed and innova-
tion is increasing at a pace beyond our com-
prehension. For a basic investment approach
look at the requirements of AI. By its very
nature AI uses and creates massive amount
of data. So data storage, data processing and
ability to move massive amounts of data are
three core categories of investment opportu-
nity. In effect data warehousing, data mining
and networks are broad categories of invest-
ment opportunities.
REASON 4: MANY ENTIRELY
NEW BUSINESS TYPES THIS BE
CREATED
In terms of data processing, think in terms
of GPU manufacturers such as Nvidia to
Mobile phones and autonomous vehicles are going
to have the most obvious direct influence in the
near term for the consumer. And the combination
of AI chips, and additional AI programming will
dramatically enhance the user experience in both
examples.
40 MicroCap Review Magazine
participate in the AI processing arena. The
value associated with ability to move the
massive amounts of data that this model
requires lies in the rollout of 5G. So think 5G
value chain. And data storage is tantamount
to the modern utility. However the fourth
industrial economy, or AI economy will
reach far beyond those three areas.
Mobile phones and autonomous vehicles
are going to have the most obvious direct
influence in the near term for the consum-
er. And the combination of AI chips, and
additional AI programming will dramati-
cally enhance the user experience in both
examples. From the hardware perspective
alone, the revenue growth could be signifi-
cant. Certain technological breakthroughs
which have been in the works for the last 15
years are poised to drive significant growth.
Consider the improvements made in image
recognition for example.
REASON 5 - PREDICTABLE
GROWTH
Just nine years ago, NEC Corp was the
standard with 72% accuracy vs the human
benchmark of 95% accuracy. As of 2016,
computers are 97% accurate in image rec-
ognition, two percent better that the human
eye. From an investment perspective con-
sider the various components of the image
recognition value chain. From the lens man-
ufacturers to the chip manufacturers, these
companies will see significant growth.
An example of this is the average smart-
phone currently has one to two cameras.
However by the end of 2019, the average
phone will have eight cameras to support the
growing functionality increasingly revealed.
A clear understanding of these drivers will
set your company and your capital raising
efforts well ahead of your competition in
terms of securing a family office backer. n
About the author:
Karl B. Douglas is Chief Investment Officer at
PPMT Capital Advisors, Ltd.., a multi family office
advisory firm. Mr. Douglas has a career that spans
over 30 years investing in private and public compa-
nies. PPMT Capital invests in private equity and debt
investments of $15M to $100M in Energy, Mining,
Industrials and Real Estate.
For further information contact:
kdouglas@ppmtcapital.com
800-401-9017
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
www.stocknewsnow.com
 O P I N ION
The Dual Listing Process for Foreign Issuers
in the United States
US investors crave high quality new
investment ideas. Today there are less
US companies going public, as a result,
investors are looking elsewhere. Foreign
listed companies are turning to OTC
Markets for access to US investors. OTC
provides a cost-effective solution: a listing
on the OTCQB or OTCQX makes it far
easier to for US investors to get exposure
to earlier stage, high value opportunities
and take positions. This is known as the
dual listing process.
Less US companies are looking at going
public, particularly in the MicroCap space.
The reasons for this include structural mar-
ket considerations (i.e. availability of pri-
vate equity funding), cost, complexity, time,
legal liability and regulatory and compliance
considerations. Consequently, astute inves-
tors are turning toward companies listed
on foreign exchanges to identify interest-
ing, undervalued opportunities which have
the potential to generate superior invest-
ment returns. The issue for many US inves-
tors, including funds and family offices, is
often the burden of having to set up and
administer banking arrangements, broker
agreements and trading facilities in overseas
jurisdictions. As an ex-pat Australian invest-
ment banker and corporate adviser living in
the US, I have been working with a number
of Australian Securities Exchange (“ASX”)
listed entities, assisting them to dual list
Richard Revelins
www.stocknewsnow.com
their securities on the OTCQB and OTCQX
markets respectively, which creates invest-
ment opportunities for US-based investors
and exposure to US investors for companies.
From the onset it is important to dis-
tinguish OTCQB and QX from the “pink
sheet” and “grey sheet” companies, which are
regarded as far more speculative investment
markets. The QB and QX markets offer a far
greater degree of transparency and disclo-
sure. ASX listed companies are subject to the
very exacting reporting rules imposed under
the ASX listing rules, including the continu-
ous disclosure of all material information
and a very strong duty of care by the man-
agement and directors. Historically, foreign
issuers have been attracted to US Exchanges
like the NYSE, AMEX and NASDAQ to
gain exposure to US investment markets.
However, foreign issuers are increasingly
becoming more concerned with cost, time
obligations and legal liability associated with
becoming and maintaining their status as US
reporting issuers. OTCQB and QX allows
foreign issuers direct exposure to the US
investment community at a far more cost
effective and less time-consuming impost
than is offered by the other US exchanges.
From an investor’s perspective, the dual list-
ing allows investors to buy and sell securities in
foreign entities in real time through the inves-
tor’s existing broking and trading arrange-
ments. In this context, it is important that the
foreign issuer be DTC eligible (Depository
Trust Clearing Corporation, which is a mem-
ber of the US Federal Reserve System). DTC
compliance allows for both electronic and
broker-initiated trading of OTCQB and QX
listed stocks and many funds are unwilling,
or specifically excluded from trading in stocks
that are not DTC compliant.
The foreign issuer operates on the basis
of its primary listing, in this case the ASX,
without the requirement to comply with
additional and often onerous US reporting
obligations, as long as its filings are com-
plete and accurate on its home exchange.
OTC Markets automatically uploads or
“EDGARizes” the announcements from the
ASX, and other approved exchanges, to the
OTC Markets platform ensuring that US
investors are fully informed of all mate-
rial developments as and when they are
announced and have access to historical
reports and financial information.
Microcap companies in Australia tend to
go public at an earlier stage than their US
counterparts and at far lower multiples and
relative market capitalizations. This creates
an opportunity for US investors to gain
exposure to prospective microcap companies
and investment opportunities at earlier stag-
es of development than is usually available
from traditional US stock market investing
with the probity offered by the strong com-
pliance regime of the ASX.
We see dual listing of “suitable” foreign
companies on OTCQB and QX as a win/win
situation for the company and the investor.
The company gains exposure to the larg-
est investment market in the world and the
investor has the ability to gain exposure to
new and interesting investment opportuni-
ties, often at an earlier stage of development,
than is generally being offered through tradi-
tional US listed companies. n
Richard Revelins has worked as an international
investment banker for over 30 years and specializes in
listed public companies. He is a co-founder of Peregrine
Corporate Limited based in Australia and is also a
Managing Director at Cappello Group Limited based
in Los Angeles, USA. He currently resides in Venice,
California and divides his time between the US and
Australia.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 41
 COMMODITIES CORNER

Managed Futures
for Microcap
Investors
T here is both academic and practitioner research literature that dis-
cusses the use case of managed futures as potential benefits when
employed with large cap equity indices, such as the S&P 500 index
(SPX) for portfolio allocation.
However, there is very little, if any, literature DEFINITIONS
discussing the comparison of microcap indi-
ces to managed futures. In researching these Microcap stocks are defined as firms with
twoThe
4) investments, the results
correlation difference is more pronouncedain low
demonstrate market capitalization
the three-year between
rolling correlation $50
chart (Figure
2) as it filters out some of the shorter-term noise of the one-year rolling
how managed futures may be a beneficial million and $300 million. Managed futures correlation.
2 Except for
the downward correlation spike in 1999/ early 2000s, the correlation between micro and large
allocation to a microcap
cap remained consistent over the lastare
relativelyportfolio. fewprofessional
decades and managers
more so who trade the
in roughly futures
last 15
years. The chart also supports evidence of thecontracts, options on futures contracts and
diversification of managed futures to microcap
stocks.

Figure1:1:One-Year
Figure One-YearRolling
Rolling Correlation
Correlation
Micro to CTA Micro to SPX
1.00

0.80

0.60

0.40

0.20

0.00

-0.20

-0.40

-0.60

-0.80

-1.00
10/1/1993

6/1/1995
4/1/1996
2/1/1997
12/1/1997
10/1/1998
8/1/1999

4/1/2001

10/1/2003

6/1/2005
4/1/2006
2/1/2007
12/1/2007
10/1/2008
8/1/2009

4/1/2011

10/1/2013

6/1/2015
4/1/2016
2/1/2017
12/1/2017
10/1/2018
8/1/1994

6/1/2000

2/1/2002

8/1/2004

6/1/2010

2/1/2012

8/1/2014
12/1/1992

12/1/2002

12/1/2012

n BY MARK SHORE, MBA

Source: Bloomberg data
Source: Bloomberg data

42 MicroCap Review Magazine www.stocknewsnow.com

Figure2:2:Three-
Figure Three-Year
Year Rolling
Rolling Correlation
Correlation
DATA
Micro to CTA Micro to SPX

1.00
I compared the monthly returns of the
0.80 BarclayHedge CTA index to the Wilshire
0.60 U.S. Micro-Cap index. The Wilshire U.S.
0.40
Micro-Cap Index is a cap-weighted index
with constituents of all stocks in the Wilshire
0.20
5000 Index below the 2501st rank of the
0.00 Wilshire 5000 Index.4 The BarclayHedge
-0.20 CTA index is an equal-weighted managed
futures index and rebalanced annually. For
-0.40
2018, there were 541 programs included in
-0.60
the managed futures index. Between 1992
-0.80 and 2018 the index had an average of 396
-1.00 programs.5
9/1/1995
6/1/1996
3/1/1997
12/1/1997
9/1/1998
6/1/1999

9/1/2001

3/1/2003
12/1/2003

6/1/2005
3/1/2006
12/1/2006
9/1/2007
6/1/2008
3/1/2009
12/1/2009

6/1/2011

9/1/2013

3/1/2015
12/1/2015
9/1/2016
6/1/2017
3/1/2018
12/1/1994

12/1/2000

12/1/2012
The data is January 1992 to November
3/1/2000

6/1/2002

9/1/2004

9/1/2010

3/1/2012

6/1/2014
2018, nearly 27 years of monthly returns.
This period includes economic expansions,
Source:
Source: Bloomberg data
data
contractions and various volatility regimes.
Tail Risk
Figure 3 is often referred to as the Ò managed futures smileÓ or the Ò CTA smileÓ . The
forex markets.
quarterly Thereturns
microcap managers arethe
are on alsox axis
known day strategies
(horizontal or managed
axis) and the hold positions
futuresfor only a METHODOLOGY/ RESULTS
quarterly
as Commodity
returns are on the Trading Advisors
y axis (vertical axis).(CTAs). fewofdays,
The right side whiledemonstrates
the chart others will hold
whenfor several
stocks are
positive, many times managed futures is also positive. But there are plenty of times when microcap
They are known for being systematic, trend- months or longer. Some managers trade only This research was broken into multiple parts:
stocks are positive and managed futures are not, often when microcap stocks have relatively
following
smaller strategists.
returns, However,
as managed some
futures manag-
tend commodityinvestment
to be a diversifying futures, while
for theothers trade
portfolio, butonly
itÕ s 1. Examining both static correlations
6
ers are discretionary and there are a variation financial futures, and some will trade a and rolling correlations (Jan 1992 to Nov
not a hedge. However, the more imperative characteristic is found on the left (negative) side of the
scatter plot.
of strategies and time horizons employed, combination of commodity and financial 2018). The static correlation is -0.08 between
such asWhen
spreadmicrocap
tradingstocks experience
strategies a negative
and option quarter,
futures. 3 there are several moments when microcap stocks and CTAs, thus implying
managed futures will be positive, thus offering potential reduction in both tail risk and correlation
strategies.
risk. Some
The black managers
dotted trend linemay use intra-
in Figure 3 offers evidence for potential non-correlation in periods non-correlation between the two indices.
of both positive and negative months. It also demonstrates the relationship between the two The correlation of the microcap index to
indices is non-linear.
Figure 3: Managed Futures Smile with quarterly returns of microcap stocks and man- the S&P 500 index is 0.70, noting, over
aged futures time a relatively strong positive correlation
between the two indices.
2. The rolling correlation chart (Figure
1) supports the above results of a positive
correlation between microcap stocks and
large cap stocks on a 12-month basis. And
a non-correlation between microcap stocks
and managed futures. This suggests when
investing in microcap stocks, an allocation
to large cap investments offers some diversi-
fication for microcap investments, but it may
not offer a strong diversifier or vice versa.
3. Figure 1 notes when investing in micro-
cap stocks, allocating to managed futures
may offer greater diversification than allo-
cating to large cap stocks may offer, as the
correlation tends to cycle between positive
and negative, thus non-correlated.
4. The correlation difference is more pro-
Source: Bloomberg data

www.stocknewsnow.com MicroCap Review Magazine 43

Figure 4: Managed Futures Smile with quarterly returns of SPX and managed futures
Source: Bloomberg data
nounced in the three-year rolling correla-
tion chart (Figure 2) as it filters out some
of the shorter-term noise of the one-year
rolling correlation. Except for the downward
correlation spike in 1999/ early 2000s, the
correlation between micro and large cap
remained relatively consistent over the last
few decades and more so in roughly the last
15 years. The chart also supports evidence
of the diversification of managed futures to
microcap stocks.
Figure 5: Quarterly returns of Microcap stocks and managed futures
Source: Bloomberg data
44 MicroCap Review Magazine
TAIL RISk
Figure 3 is often referred to as the “man-
aged futures smile” or the “CTA smile”. The
quarterly microcap returns are on the x axis
(horizontal axis) and the managed futures
quarterly returns are on the y axis (vertical
axis). The right side of the chart demon-
strates when stocks are positive, many times
managed futures is also positive. But there
are plenty of times when microcap stocks
are positive and managed futures are not,
often when microcap stocks have relatively
smaller returns, as managed futures tend to
be a diversifying investment for the portfo-
lio, but it’s not a hedge.6 However, the more
imperative characteristic is found on the left
(negative) side of the scatter plot.
When microcap stocks experience a nega-
tive quarter, there are several moments when
managed futures will be positive, thus offer-
ing potential reduction in both tail risk and
correlation risk. The black dotted trend line
in Figure 3 offers evidence for potential
non-correlation in periods of both positive
and negative months. It also demonstrates
the relationship between the two indices is
non-linear.
The managed futures smile in Figure 4
with the S&P 500 index on the X axis and
managed futures on the Y axis, demonstrates
a similar relationship between large cap
stocks and managed futures as the orange
trendline is parabolic with a u-shaped curve
at the extremes of the return distribution.
The correlation results are also supported in
evidence with a low R2 of 1.3% for microcap
stocks to managed futures. R2 of 0.72% of
SPX to managed futures. Lastly, an R2 of 55%
for SPX to microcap stocks.
Figure 5 demonstrates the greater volatil-
ity of microcap stocks vs managed futures
on a quarterly basis. Microcap stocks had
the maximum and minimum quarterly
returns of 48.65% and -39.02%. Whereas, the
managed futures benchmark experienced
a smaller dispersion between positive and
negative tails with maximum and minimum
quarterly returns of 12.39% and -8.70%,
respectively.
Figure 6 exhibits the change of portfolio
performance metrics as the allocation shifts
from 100% microcap stocks to 100% man-
aged futures (X axis). As the allocation shifts,
the gap between the monthly maximum and
minimum returns narrows. The monthly
standard deviation and the monthly returns
decline. This is due to the larger return tails
of microcap stocks. However, the portfolio’s
skewness (yellow line, based on the right
axis) moves from -0.25 to 0.42, indicating as
www.stocknewsnow.com
Figure 6: Performance metrics with microcap stocks and managed futures portfolio
allocations
Source: Bloomberg data
the standard deviation decreases, there is a
potential for tail returns to be derived more
from the positive returns than the negative
returns, thus potentially reducing the port-
folio’s tail risk. As I’ve often stated, volatil-
ity is like cholesterol, there is good and bad
volatility. Volatility derived from positive
returns is the “good’ volatility. While the bad
volatility is derived from the negative returns
and is what investors would like to control
or reduce.7
CONCLUSION
In summary, the results show, managed
futures may offer diversification for a micro-
cap investment as noted in the rolling cor-
relations, the managed futures smile and the
change of portfolio metrics as the alloca-
When microcap stocks experience a negative
quarter, there are several moments when managed
futures will be positive, thus offering potential
reduction in both tail risk and correlation risk.
www.stocknewsnow.com
tions shift from microcap stocks to managed
futures. n
(Endnotes)
1 10 compelling reasons to consider adding man-
aged futures ... (n.d.). Retrieved from https://www.
cmegroup.com/education/files/10-reasons-to-con-
sider-managed-futures.pdf.
Shore, M. (2005). Skewing Your Diversification.
Retrieved from https://www.cmegroup.com/edu-
cation/alternative-investment-resource-center/
research/skewing-your-diversification.html
Kat, H. M. (2002). Managed Futures and Hedge
Funds: A Match Made in Heaven.  SSRN Electronic
Journal.
2 https://www.sec.gov/reportspubs/investor-pub-
lications/investorpubsmicrocapstockhtm.html
3 Shore, M. (2018). Managed Futures Lecture
Notes
4 https://wilshire.com/indexes/wilshire-us-style-
indexes/wilshire-us-micro-cap-index
5 https://www.barclayhedge.com/barclay-cta-indi-
ces/barclay-cta-index/
6 Shore, M. (2015). Decoding the Myths of
Managed Futures. Retrieved from https://www.cme-
group.com/education/files/decoding-the-myths.pdf
7 Shore, M. (2005). Skewing Your Diversification.
Retrieved from https://www.cmegroup.com/edu-
cation/alternative-investment-resource-center/
research/skewing-your-diversification.html
Mark Shore, Director of Educational Research
at Coquest Advisors LLC, has more than 30 years
of experience in alternative investments, publishes
research, consults on alternative investments and
conducts educational workshops. mshore@coquest.
com
Mr. Shore is also an Adjunct Professor at DePaul
University’s Kellstadt Graduate School of Business
where he teaches a managed futures / global macro
course. He is a board member of the Arditti Center
for Risk Management at DePaul University. Mr. Shore
is a frequent speaker at alternative investment events.
He is a contributing writer for the Eurex Exchange,
Cboe, Swiss Derivatives Review, MicroCap Review,
ReachX and Seeking Alpha.
Prior to Coquest Advisors, Mr. Shore founded
Shore Capital Research, a research/ consulting firm
for alternative investments. Prior to Shore Capital,
Mr. Shore was Head of Risk for Octane Research
Inc ($1.1 billion AUM), where he was responsible
for quantitative risk management analysis and due
diligence of Fund of Funds. He chaired the Risk
Management Committee and was a voting mem-
ber of the Investment Committee. Prior to joining
Octane, he was the COO of VK Capital Inc, a wholly
owned Commodity Trading Advisor unit ($300 mil-
lion AUM) of Morgan Stanley. Mr. Shore provided
research and risk management expertise on portfolio
construction, product development and business
strategy.
He received his MBA from the University of
Chicago and is currently a doctoral candidate at
DePaul University.
Past performance is not necessarily indicative of
future results. There is risk of loss when investing in
futures and options. Futures can be a volatile and
risky investment; only use appropriate risk capital; this
investment is not for everyone. The opinions expressed
are solely those of the author and are only for educa-
tional purposes. Please talk to your financial advisor
before making any investment decisions.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 45
 L EG A L C OR NER
Uplisting – More Than
Meets The Eye
T rading on a national securities exchange is often the goal of most micro-
cap companies. Unless a company qualifies to engage in an initial public
offering directly onto a national exchange, reaching this goal is accomplished
by uplisting.
n BY JOE LUCOSKY, Esq.
46 MicroCap Review Magazine
This is the process of moving a company
from having its stock quoted on the OTC
Capital Markets to trading on a national
exchange, such as the NASDAQ or NYSE.
The potential benefits of uplisting include
increased marketplace attention, improved
liquidity for existing shareholders and
potential investors, ease of depositing shares,
and improved availability of capital (includ-
ing the possibility of doing an S-3 shelf take-
down quickly following the uplist), among
many other benefits.
As is the case in many things in life, how
you begin often dictates how you end up.
The first step is the most important. For a
microcap company to succeed in this pro-
cess, the company must engage a competent
team of professionals – each of whom have
a track-record of successfully bringing OTC
companies to the next level. Typically, a
competent attorney should quarterback the
process – outlining the macro plan and
keeping the team of professionals on track to
meet each of the company’s micro objectives
throughout the process.
The three main initial listing require-
ments are well-known: minimum share
price, number of shareholders, and stock-
holders’ equity; however, there are often
misconceptions as to the simplicity of these
requirements. Upon committing to begin-
ning the uplisting process, the company and
its advisors should outline the timeline and
requirements, keeping in mind possible con-
tingencies, both generally and with respect
to the three main uplisting criteria discussed
in detail below.
I. MINIMUM SHARE PRICE
Regarding the minimum share price, most
people believe that a company simply needs
to obtain a $3 or $4 share price prior to
uplisting and that the company can simply
complete a reverse stock split if its shares are
below that price. In reality, however, the first
question is the length of time the minimum
share price needs to be sustained prior to
uplisting. Is it five business days? Thirty of
sixty trading days? Does the stock trade on
every trading day? The answer to the tim-
ing question depends upon whether the
company seeking to uplist is the product of
a reverse merger. If so, how long ago did the
reverse merger take place?
For the reverse split, the complexity arises
because a reverse split raises numerous legal
and business issues. Does the company have
the legal authority to consummate the reverse
split (common versus preferred votes)? From
a business standpoint, there could be objec-
tions from existing shareholders concerned
with a depressed stock price following such
an action. When should the company effect
the reverse split and how large of a split does
the company need in light of possible price
www.stocknewsnow.com
reductions in the market? Finally, as dis-
cussed below, reverse splits could negatively
impact the company’s ability to comply with
other listing requirements. Organic growth
does not carry the dilution inherent to a
reverse split, however, it brings uncertainty
with respect to the timeframe in which (and
whether) the threshold will be met.
When considering whether the lower $3
price can be used, do the company’s latest
audited financial statements reflect net tan-
gible assets? How much revenue has the com-
pany averaged per year over the last 3 years?
II. NUMBER OF SHAREHOLDERS
A common misconception about the mini-
mum number of shareholders required is
that the company only needs to have 300
shareholders prior to uplisting. This seem-
ingly straightforward requirement still leaves
a number of questions unanswered: Do they
have to be round lot shareholders? Do shares
held in street name count or must they
be held by shareholders of record? If the
company is doing a reverse split, will the
company still have the required number
of shareholders following the split? If the
company is doing a registered offering in
connection with the uplist and it does not
meet the shareholder requirement prior to
the offering, can the company’s underwriter
sell securities to enough small shareholders
to meet this requirement?
What about the value of the shares out-
standing? The misconception is that there is
just a $15 million value requirement for the
publicly held shares. Who counts as an affili-
ate? Has the company made a profit during
the last year? What about a profit in two of
the last three years? If so, the requirement
could be $5 million instead of $15 million.
III. STOCkHOLDERS’ EqUITY
Far too often we hear that the $5 million
stockholders’ equity requirement is simply
a matter of converting liabilities into equity
to increase the stockholders’ equity on the
www.stocknewsnow.com
balance sheet. Is the company’s debt widely
held? Is erasing these liabilities as simple as
a 3(a)(9) exchange? A tender offer? Both?
Who will coordinate those efforts and at
what cost? Again, has the company made
a profit during the last year? If not, what
about Nasdaq’s informal rule regarding burn
rate which could require subtracting certain
amounts from your stockholders’ equity cal-
culations?
The other initial listing requirements,
while understandably rarely the focus of
uplisting candidates, cannot be ignored: Will
1 million shares still be held by non-affiliates
following the reverse split? Does the com-
pany have the required number of indepen-
dent directors and does it have the needed
Board of Director’s committees in place? If
not, does the company have enough D&O
Insurance and indemnification policies to
attract quality directors?
THE WAY FORWARD: SEEk
LEGAL COUNSEL FROM
COMPETENT PROFESSIONALS
AND OUTLINE A STRATEGY FOR
SUCCESS
In summary, to uplist, companies need to
have a clear path to meeting the seemingly
straightforward yet often tricky require-
ments of a proven share price of at least
$3.00, at least 300 shareholders with a large
enough float value, and sufficient stockhold-
ers’ equity, among many other criteria.
In addition, prior to even beginning the
uplisting process, there are numerous legal,
practical, and strategic questions that must
be answered, including, for example, might
the company qualify for an “organic” uplist-
ing? Can the company afford to enter the
“quiet period” associated with the regis-
tration process? Does the company have
enough capital to complete the uplist pro-
cess and, if not, must the company hire an
investment bank to access bridge financing?
Following a successful uplist, will the com-
pany have enough operating capital so that it
does not need to do another private or public
offering for at least 1 year? Each of these
questions must be discussed with company
counsel to properly outline a plan for achiev-
ing the company’s uplist objectives.
A competent attorney should quarterback
the process – outlining the macro plan and
keeping the team of professionals on track to
meet each of the company’s micro objectives
throughout the process. To be sure you are
leaving as little to chance as possible when
you are thinking of starting the uplisting
process, please email the corporate and secu-
rities professionals at Lucosky Brookman
LLP at info@lucbro.com for a free analysis
of your company’s ability to uplist, an action
timeline, and a master strategic plan. n
Lucosky Brookman is a corporate finance and secu-
rities law firm with offices in New York and New
Jersey, representing both domestic and internation-
al clients in sophisticated corporate and securities
transactions, mergers and acquisitions, secured and
unsecured lending transactions, PIPEs, commercial
and securities litigation, insurance coverage and
defense, real estate, and general corporate matters.
Joseph M. Lucosky is the founding and managing
partner of Lucosky Brookman LLP and oversees both
the transactional and litigation departments. Mr.
Lucosky has a broad multidisciplinary practice that
includes extensive experience in litigation and dis-
pute resolution, regulatory investigations (including
FINRA and SEC matters), negotiated mergers and
acquisitions (including reverse mergers); domestic
and cross-border investments/joint ventures; the
representation of private equity; venture capital and
other private investment funds; securities offerings;
private and public financings (including secured
and unsecured lending); bankruptcy transactions;
real estate matters; and various other types of com-
mercial transactions. In addition, he counsels cor-
porate boards, board committees (including special
committees) as well as being a personal adviser to
many entrepreneurs, business leaders and corporate
executives. He has counseled clients on significant
litigation, regulatory and transactional matters across
a number of industry sectors.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 47
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 P R O F I L E D C O M PA N Y
OptimizeRx Corporation
Delivering Results in Digital Health
R ARELY DO YOU FIND AN EMERGING GROWTH COMPANY that has
taken a sea change in a major industry and turned it into a powerhouse of
high-margin revenue and earnings. This is OptimizeRx (NASDAQ: OPRX).
In recent years, the U.S. healthcare system
has become exceedingly complex and costly
for everyone, and not only for patients, but
also for doctors and hospitals. Even pharma
is feeling the pinch.
Patients are facing an increasing cost bur-
den due to expensive medications, and record-
high deductibles and co-pays. The Kaiser
Family Foundation reports that deductibles
have risen 300 percent since 2006, while co-
insurance costs have nearly doubled.
Combined with fewer generic drug
options, this has created a ‘perfect storm’ that
is undermining patient adherence to their
doctor-prescribed medications. Patients
simply cannot afford them, and doctors are
increasingly frustrated.
Will Febbo, CEO
50 MicroCap Review Magazine
Yet doctors want to help. A recent survey
of 642 physicians by OptimizeRx revealed
several key trends:
Nearly all physicians believe they have a
role to play in discussing the cost of health
care with patients (91%) and are comfortable
doing so (86%).
Patients raise the issue of prescription
drug costs with their doctors nearly 40% of
the time.
Prescription drug costs are “very impor-
tant” or “extremely important” to the vast
majority of doctors (73%) and impact their
prescribing decisions.
So, it’s clear that patients and providers
want to discuss the cost of prescriptions.
Providers also want to help patients look
for savings opportunities, like through co-
pay coupons and other patient assistance
programs.
But how? Both parties are ham-strung
by the prevailing lack of information show-
ing total drug price, including true patient
out-of-pocket price, as well as access to cost-
savings coupons.
Largely to blame is the continuing break-
down in doctor/patient education tradition-
ally provided by pharma companies. It has
become increasingly more difficult for phar-
ma companies, acting through their sales
reps in the field, to provide clinical informa-
tion, drug samples and savings coupons.
Due to the Sunshine Act and other bur-
densome reporting requirements related to
sales reps providing such materials, these
NASDAq CM: OPRX
SUBMIT ePrescription
OptimizeRx’s proprietary technology alerts 
doctors of prescription savings and automatically 
sends info to patient’s pharmacy.
days more and more doctors, and now more
than half the hospitals in the U.S., will not
even let pharma reps in the door.
As a result, millions of dollars in coupons
and vouchers from pharmaceutical manu-
facturers are going unused due to patient
lack of information and access.
Further, new research is showing that the
increasing widespread failure to take pre-
scribed medications is now costing the U.S.
healthcare system more than $100 billion
annually due to poor healthcare outcomes,
disease progression and other avoidable
healthcare issues.
All this is not good for drug companies
either. Despite spending billions of dollars
on developing new drugs, pharma compa-
nies are increasingly challenged with not
being able to communicate with and educate
healthcare providers on clinical benefits and
encourage prescribing. This hits the bottom
line.
There is hope, however. According to
research published by the National Institutes
www.stocknewsnow.com

of Health, simply by lowering the cost of
patient co-payments, doctors can improve
patient adherence and outcomes. Yet, still,
the question is, how?
ENTER OPTIMIzERX
OptimizeRx has emerged as the only public
company that has been able to effectively
address this challenge of escalating drug
costs, patient adherence and pharma-doctor
communication, while providing a simple
solution right within a doctor’s everyday
workflow.
As the largest digital health network of its
kind, OptimizeRx provides patient access to
savings directly through the doctor-man-
aged electronic health records (EHR) and
ePrescribing system.
This point-of-care presence has become
increasingly essential, given how EHRs
today dominate the attention of healthcare
providers. Most physicians now spend more
than five hours a day interacting with patient
health records through an EHR interface,
whether it be viewing test results and logging
notes, or issuing ePrescriptions.
In 2017 alone, more than 2 billion in ePre-
scriptions were transmitted from doctor to
www.stocknewsnow.com
pharmacy. This phenomenally high number
reflects how 90 percent of ambulatory care
providers now use EHRs, and that ePrescrib-
ing now exceeds 85 percent of all prescrip-
tions written, according to a 2018 Surescripts
report. In fact, most hospital systems now
require that all medications be ePrescribed.
OptimizeRx’s powerful digital health care
messaging platform improves critical com-
munication between pharma companies and
healthcare providers, where providers can be
alerted to available financial programs right
at the point-of-care. In real-time, the patient-
savings solution checks eligibility and deliv-
ers an offer to the prescribing physician. The
voucher or coupon is then printed for the
patient to present to their pharmacist or is
sent along with the prescription electroni-
cally.
By delivering patient savings and clinical
content from pharmaceutical manufacturers
directly through the EHR and at the point-
of-care, doctors are alerted to opportunities
during the ePrescribing process as a natural
part of their workflow. The content is deliv-
ered, tracked and reported across a large
point-of-prescribe promotional network.
Physicians can search for a brand name drug
within the EHR and be instantly alerted to
alternatives or potential savings for a specific
patient.
This technology not only helps improve
patient adherence to medications and clini-
cal outcomes, it also allows healthcare pro-
viders to extract greater value from their
EHR investments by streamlining the pro-
cess of identifying cost savings for patients.
In addition to savings information, the
intelligent point-of-care technology can also
alert physicians about recommended tests or
procedures related to a patient’s condition,
prompting additional action if needed.
A WIN-WIN WITH POWERFUL
RESULTS
The OptimizeRx digital communication
platform now reaches more than half of
the office-based healthcare providers in the
country. This highly-effective solution to a
growing problem has not only been good for
doctors, patients and major drug brands, it
has also generously rewarded the sharehold-
ers of OptimizeRx.
For 2018, revenue hit a record $21.2 mil-
lion, growing at a 53% CAGR since 2011.
For the fourth quarter of 2018, the company
reported its seventh quarter in a row of rev-
enue growth and its first year of profitability.
At $6.6 million, fourth quarter revenue was
up 64% from the year-ago quarter.
These results demonstrated how the com-
pany’s low fixed-overhead model contin-
ues to support a highly-scalable financial
opportunity, which was also evident in its
MicroCap Review Magazine 51
expanding margins. In fact, at 62.2% for the
quarter, the company for the third time in
a row surpassed its previously announced
gross margin goal of 55%.
Driving this growth is the record addition
of new pharmaceutical brands on the plat-
form, fast-growing digital health messaging
volume sponsored by these brands, and an
expanding distribution channel of EHRs
and ePrescribing systems. The company’s
recent entry into hospital systems and physi-
cal decision support is expected to fuel this
growth even further.
In just the last year, OPRX more than
doubled. The stock climbed above $14.00
per share the day after its recent quarterly
report. But according to company CEO, Will
Febbo, they have only just begun.
“We believe we are in the earlier days of
this opportunity with a huge first-mover
advantage and are truly a pure play in this
space,” said Febbo. “We have advanced tech-
nological infrastructure in place at the right
time in this industry sea-change, where we
are able to reconnect pharmaceutical manu-
facturers and physicians in a seamless, effi-
cient way, and generate high-ROI for our
pharma customers.”
For 2019, Febbo says the company will
remain focused on revenue generation from
core products and expanding its channel
and partner networks both domestically and
internationally. “We see doing this while
maintaining strong gross margin as we
scale,” noted Febbo.
MULTI-BILLION DOLLAR
OPPORTUNITY
Of the 2 billion ePrescriptions transmitted
annually, 10% of these transactions involve
brands with a co-pay savings program. This
means OptimizeRx has the potential to
deliver more than 200 million transactions
annually.
Given the escalating cost of healthcare
and especially the cost prescriptions being
shifted increasingly to patients, the need
for co-pay saving programs is expected to
52 MicroCap Review Magazine
increase. The pharma industry has report-
edly set aside more than $8 billion to cover
co-pay programs.
Based on these factors and indicators from
OptimizeRx clients, agencies and partners,
the company estimates its total addressable
market is worth well north of a $1 billion
once the market fully adopts this channel.
“Using our digital health platform, major
pharma brands are discovering that the
point-of-care, where the patient and doctor
are directly engaged, is now the most effec-
tive space for them to communicate their
message,” said Febbo.
As personalized medicine grows in popu-
larity and specialty treatments are more com-
monly prescribed, platforms like OptimizeRx
that exist at the point-of-care will be the
greatest technology-based enablers of com-
munication between the pharma industry
and healthcare professionals. “In this way, we
are becoming an increasingly critical com-
ponent for improving outcomes and reduc-
ing costs throughout the healthcare system,”
added Febbo.
MARkET EXPANSION
OptimizeRx plans to use a portion of the
proceeds from a recent $9 million raise to
make additional sales and channel invest-
ments for expanding further into its core
ambulatory market where it continues to
demonstrate high ROI for pharma market-
ing spend. It also plans to further expand
into the hospital market, a new channel for
OptimizeRx that also represents a significant
growth opportunity.
The company’s recent strategic acquisition
of CareSpeak Communications allows it to
complement and diversify its revenue streams
while continuing to scale. Febbo added:
“CareSpeak allows us to further bridge the
critical communication gaps between phar-
ma, healthcare providers and patients.”
PLATFORM DEVELOPMENT
OptimizeRx continues to invest in the under-
lying technology that powers its solutions
and is investing in a broader data strategy.
It has hired new technical leadership and
increased the size of its software develop-
ment team.
A new data warehouse represents the
underpinning of new reporting and data
analytic capabilities that will provide valu-
able insights to its customers. These changes
are expected to support future growth, pro-
vide recurring revenue, and significantly
enhance the company’s value proposition.
“Investments in our growth initiatives
may result in quarterly fluctuations in prof-
itability,” noted company president, Miriam
Paramore, who has been leading these
efforts, “but our shareholders can expect
these investments to drive further strong
topline growth and margin expansion while
sustaining our position as the clear market
leader.”
Any way you look at it, the company’s
current and in-development solutions have
tremendous mar-
ket potential. This
potential is being
realized more and
more every day as
OptimizeRx expands
its client base and
channel reach, and President Miriam
integrates deep- Paramore
er within the ePrescription workflow and
point-of-care. n
For more, go to OptimizeRx.com
CONTRIBUTING PHOTOGRAPHERS
Isabella Febbo and Tito Febbo
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 A Unique Perspective

Imagine corporate and securities lawyers who are as interested in your business as you are. Who
understand and value it and who are prepared to work with you to create it, grow it, protect it and
ultimately maximize your return on it. Who will help you to finance it, or bring it to the public
markets, or eventually sell it. Imagine lawyers with passion, creativity and, most importantly,
dedication. This is Lucosky Brookman.

• NYSE, NASDAQ and NYSE Amex Listings • General Corporate Matters & Governance
• Public Offerings • Term and Revolving Lending transactions
• Private Placements / PIPEs • Asset-based Lending transactions
• Equity Lines of Credit • Revolving Lines of Credit
• Recapitalizations (Reverse / Forward Splits) • Bridge Loans
• Rule 144 Matters • Registration Statements (S-1, S-3, S-8, Form 10)
• Mergers and Acquisitions • Commercial Litigation and Arbitration
• Joint Ventures • Regulatory Investigations (SEC / FINRA)
• SEC Compliance Matters

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www.stocknewsnow.com MicroCap Review Magazine 53
info@lucbro.com | www. lucbro.com
 LIFE SCIENCES CORNER
O ver the past years we have seen a shift
in the biotech market. A truly deep
dive into the science was often not necessary
to make an investment. Many decisions were
made based on general analytical work, and
when combined with some good luck and the
overall appreciation in the field - due to the
solutions created by a few companies - many
investors were able to achieve great returns.
If you did a thorough job, digging deep into
the science, analyzing preclinical as well as
clinical data, did a check with physicians,
understood the differences in the often times
strong competitive field, and really did your
homework, the pay out was formidable.
The world has since changed. Venture fund-
ing more than doubled over the past 10 years for
biotech companies, with more than $8 billion
invested by VCs this past year (1). The number
of trials has also exploded, with over 300,000
studies filed on clinicaltrials.gov in 2018 up
from about 130,000 just 5 years ago (2). There
are currently over 6,000 clinical studies ongoing
in oncology alone (3)(4) and R&D expenditures
by big and small pharma currently exceeds $70
billion in the US (5). There is a massive focus
on biotech research. Unfortunately, the dollars
invested have not translated to patient benefits
per se. In 2018, the FDA only approved 59 new
drugs and biologics (6) and an even more
frightening trend is the overall drop in the clini-
cal success rate of new chemical compounds in
development. Today, the probability is less than
10% that a Phase I asset makes it all the way to a
governmental approval (7).
While many invest in the biotech sector
because they are interested in fostering progress
and helping others, the known low likelihood
n BY RAMSES ERDTMANN AND
THOMAS BUTLER OF
POINT SUR INVESTORS LLC
54 MicroCap Review Magazine
Now, More than Ever
of success has attracted also those that play the
odds. With a 90% probability of losing, short-
ing an early biotech stock makes ‘good’ sense,
with odds that are better than in Las Vegas. A
short seller lives off bad news, unclear signals,
uncertainty, delays, missed outcome and disap-
pointments. Our beloved biotech sector is a
perfect investment target for the new-age short
seller. Good news of a successfully executed trial
travels fast and is promoted by the company, its
investors, employees and can cast a wide net.
However, the biotech short seller knows this
as well and will actively spread news that will
convince the community of the potential, or the
presumed reality, of failure and live off the dam-
aged share price. Long as well as short investors
will do their best to gain mind share, creating
tremendous confusion in the market place.
There is a lot of news-flow in biotech today,
with more Phase I, II and III studies being initiat-
ed than ever before, more money dedicated to an
ever-increasing number of chemical compounds,
a plethora of incremental updates, and a healthy
long as well as a very active short investment
community. The general investment public has
gotten a bit fatigued by much of the news flow
and often confused by the conflicting data dis-
semination from the various market participants.
An analyst must understand the innovative
character of a molecule, dig in deep to under-
stand and properly value the scientific advances
and the real patient benefits, in order to properly
evaluate what new and innovative therapies are
promising. The modern analyst has to practice
patience and resist the increasing pressure for
performance. Scientific progress is rarely mono
directional - it evolves, it lives, and it develops –
the analyst can easily get swayed to sell too early
as the fundamentals still unfold. There is also a
lot of messaging, with many copy-cat develop-
ers and often weak market participants, to sort
through and discern.
At Point Sur Investors, we have been suc-
cessful because we are at heart with biotech
operators and scientists, with experience
in building and growing successful biotech
programs that today are providing great ben-
efits to patients all over the world. We have
a defined research approach to analyze novel
therapies, and to identify the lasting patient
benefits within them. We use a long-term
oriented investment approach with disci-
plined buying and selling rules that guide
our portfolio allocation. Our analytical and
disciplined approach has resulted in success-
fully beating the NASDAQ Biotech Index as
of March 1 by 1.63x over the past three years.
Now, more than ever, a biotech investor has to
recognize that the market is very dynamic and
often purports conflicting viewpoints. Now, more
than ever, a biotech investor has to be mindful
not to miss things that were subtly evident in
early clinical and preclinical data sets. Now, more
than ever, in order for a biotech investor to be
successful in the long run, he or she has to do
the extra work and go the extra mile to separate
real solutions, providing benefits to patients, from
those that will stall somewhere in the long clinical
development pathway. n
The authors are portfolio managers of Point Sur
Investors Fund I. Please find further information on
Point Sur Investors at www.pointsurinvestors.com or call
650-600-8302. Since its inception in April of 2016, Point
Sur Investors has consistently beat the Nasdaq Biotech
Index, cumulatively 1.63 fold as of 1 March 2018.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
References:
1. https://endpts.com/six-top-biotech-vcs-take-
a-look-at-the-latest-trends-and-offer-their-
thoughts-on-2018/
2. https://clinicaltrials.gov/ct2/resources/trends#Typ
esOfRegisteredStudies
3. Thomas D and Wessel C. Emerging Therapeutic
Company Investment and Deal Trends, BIO
Industry Analysis; 2018.
4. Lloyd I and Shimmings A. Pharma R&D Annual
Reviews 2018.
5.https://www.statista.com/statistics/265085/
research-and-development-expenditure-us-
pharmaceutical-industry/
6. https://www.raps.org/news-and-articles/news-
articles/2019/1/fdas-record-year-a-look-at-2018-
new-drug-approva
7. Clinical Development Success Rates 2006-2015,
BIO Industry Analysis-2016.
www.stocknewsnow.com
 P R O F I L E D C O M PA N Y
SRAX
Providing the tools to unlock the value
of data across marketing channels.
Figure 1: SRAX IR insights feature highlighting shareholder behavior including buyers, sellers, and share change over time.
S
RAX is a [digital marketing and] con-
sumer data management technology
company that builds valuable verticals
around specific data sets. Since 2010, SRAX
has actualized multiple revenue-generating
products centered on identifying and engag-
ing brands’ core audiences. The company’s
major driving growth is leveraging its verti-
cal model, proven successful with the sale
of healthcare vertical, SRAXmd, for total
consideration of $52.5 million in August
2018. Recently, the company’s efforts have
been focused on fueling growth by expand-
ing its sales infrastructure and technology
Chris Miglino, CEO stack. SRAX increased its sales force from six
56 MicroCap Review Magazine
NASDAq CM: SRAX
people in January of 2018 to 30 team mem-
bers in January of 2019. Two illustrations of
the company’s expanded technology stack
are the rapid advancement of consumer data
management platform, BIGtoken, and the
launch of new investor relations vertical,
SRAX IR.
TRACkING SHAREHOLDER
BUYING AND SELLING
BEHAVIOR
As a publicly-traded company since 2012,
SRAX recognizes the challenges companies
face in attracting new investors to their
www.stocknewsnow.com

Figure 2. Source: Roland Berger Focus. Regenerative Medicine, 2017. Orgenesis
Investor Presentation.
stories and holding onto existing ones. In
January 2019, SRAX IR joined the roster
of SRAX’s verticals including SRAX Auto,
SRAX Shopper, and SRAX Social. SRAX IR
is a software as a service (SaaS) platform that
analyzes stock buyer behavior and trends for
issuers of publicly traded companies. With
SRAX IR, executives can understand their
shareholder base behavior including who
is buying and selling stock, and can engage
with those investors across marketing chan-
nels.
The platform currently consists of three
key offerings. The first enables users to
identify key shareholders and market mak-
ers to discover trends in their buying and
selling behavior. The second enables man-
agement teams using multiple advisors to
attribute acquired shareholder credit to spe-
cific banks, analysts, and investor relations
firms to track return on investment. Lastly,
SRAX IR offers precise audience building,
targeting, and delivery across marketing
channels, including but not limited to pro-
grammatic display, social, and hyperlocal.
Hyperlocal campaigns enable companies to
www.stocknewsnow.com
target investors with mobile ads at specific
locations such as investment conferences,
trade desks, and at home on both desktop
and mobile. SRAX IR is just one example
of SRAX’s strength in addressing vertical-
specific challenges with unique technology.
Learn more at sraxir.com.
Figure 3: BIGtoken’s user growth and revenue potential (January 2020 –January 2022)
BREAkING DOWN CONSUMER
DATA BARRIERS
BIGtoken, or BIG, a wholly owned subsid-
iary of SRAX, is the first consumer-managed
data marketplace where people can get paid
for their data. Now available for all to down-
load on the App Store and Google Play, BIG
enables consumers to manage their digital
data and earn rewards for opting to share
that data in the marketplace.
For consumers, BIG gives them control
over what pieces of their data are for sale
and who can buy them—all while rewarding
them with cash, gift cards, charitable dona-
tions, or assets. For advertisers, BIG solves
the inefficiencies and inaccuracies that affect
how they acquire and target consumer data.
A recent study shows that while 95% of mar-
keters use personal data to form their strat-
egy, 64% don’t fully understand where that
data comes from. BIG provides advertisers
with accurate, consumer-verified and opted-
in data for targeting and enhanced campaign
performance. In addition, BIG supports
third-party application integrations to help
marketers learn more about their consumers
and earn revenue through data sales.
In February, SRAX integrated major bank-
ing and financial institutions such as TD
Ameritrade, Chase, Citibank, and Bank
of America into the BIGtoken app. BIG’s
MicroCap Review Magazine 57

SRAX Auto effectively surfaces the full range of
accurate, actionable data on your target customer
and engages them across the customer journey.
Fueled by data-driven technology, SRAX Auto
delivers digital ads to a matched list of people
leasing and/or looking to buy.
machine learning technology analyzes a
user’s transaction log to identify patterns in
spending and places that user into the appro-
priate advertising segments. For example,
if a user’s log shows multiple transactions
from Walmart, the user would be placed
into the following segments: Walmart shop-
per, Superstore shopper, Value shopper.
A user’s personal account information
is never accessible to BIGtoken. Users are
rewarded in BIGtoken points for the initial
bank integration, on a monthly basis if the
bank account remains integrated, and each
time an advertiser buys access to their
segments based on transaction data. All
in all, the BIGtoken platform is looking
promising for user growth and revenue
potential. As reported on November 15,
2018, by January 2020, the platform is
expected to serve one million users, gener-
ating $3.5 million in monthly revenue ($90
million annualized). By January 2022, the
intended user base is estimated to hit 10
million, which would generate $30 mil-
lion in monthly revenue ($400+ million
annualized revenue). The best part of BIG
is that SRAX can leverage this consumer-
verified and opted-in data across our other
verticals like SRAX Social, SRAX Auto,
and SRAX Shopper. Learn more at bigto-
ken.com.
AUTOMATING SOCIAL MEDIA
CONTENT AND PROMOTIONS
SRAX Social is a free artificial intelligence
58 MicroCap Review Magazine
marketing tool that makes it easy for busi-
nesses and individuals to manage, grow, and
measure engagement across multiple social
media networks. The platform’s most nota-
ble feature, Auto Boost, enables marketers
to automatically trigger social media cam-
paigns beyond their Facebook Page com-
munities. Users can set up rules that trigger
a new social media campaign based on
specific parameters such as number of reac-
tions, likes, or comments. Creating multiple
rules enables users to A/B test different audi-
ences and rules to maximize performance
and guide future campaigns. This data can
be analyzed through the platform’s powerful
analytics component, eliminating the need
to export data from multiple platforms. The
platform also comes free with an intelligent
budget that allows users to load funds and
easily allocate spending to multiple cam-
paigns. Learn more at sraxsocial.com.
STRATEGICALLY TARGETING
SHOPPERS’ BUYING BEHAVIOR
SRAX’s shopper marketing solution, SRAX
Shopper, enables marketers to engage shop-
pers, drive foot traffic into stores and boost
sales lift. Businesses can use SRAX Shopper
to layer both social and shopping data with
media buying. This approach enables mar-
keters to target a single, verified shopper
across multiple devices and inventory sourc-
es. Marketers will no longer have few oppor-
tunities for meaningful interactions with
their target shoppers within a very limited
timeframe to purchase. Only SRAX Shopper
can deliver a cross channel, premium digital
experience at scale targeted to high value
audiences and optimized to performance
whether targeting by demographics, behav-
ioral or lifestyle, category and brand past,
purchase data, or geographic location.
ENGAGING AUTO INTENDERS
ON THE PATH TO PURCHASE
SRAX Auto effectively surfaces the full range
of accurate, actionable data on your tar-
get customer and engages them across the
customer journey. Fueled by data-driven
technology, SRAX Auto delivers digital ads
to a matched list of people leasing and/or
looking to buy. Additionally, advertisers can
reach test drivers after leaving a location
or visitors to a competitor’s location. The
company’s proprietary technology also uses
cookie-less real-time fingerprinting from
users’ browsing behavior and social media
engagement to develop high value audiences
that can be targeted across SRAX.
SRAX is dedicated to creating positive
and repeatable outcomes, which is why in
addition to being named a Deloitte Fast 500
winner two years in a row, the company is
also part of the Russell Microcap® Index,
which remains in place for one year and
means automatic inclusion in the appropri-
ate growth and value style indexes. n
For more information, please visit:
www.srax.com.
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 P R O F I L E D C O M PA N Y
Imugene Limited
Emerging Leader in Cancer Immuno-Oncology
I
mugene Limited (ASX:IMU) is a clinical
stage cancer immuno-oncology compa-
ny based in Sydney, Australia. Immuno-
oncology is an innovative area of research
that seeks to help the body’s own immune
system fight cancer. Immuno-oncology
treatments are at the forefront of cancer
innovation with the leading drugs generat-
ing over USD $ 23 billion in 2018. Imugene’s
cancer immunotherapies (B-cell peptide
vaccines) harness the body’s immune sys-
tem to generate antibodies against tumors,
potentially achieving similar or greater effect
than synthetically manufactured monoclo-
nal antibody therapies. Following promis-
ing Phase 1 clinical trial results across lead
candidate B-cell vaccines, the company is
recruiting patients for Phase 2 trials with all
clinical research programs fully funded from
the company’s existing cash resources.
Leslie Chong, CEO & Managing
Director
www.stocknewsnow.com
Imugene currently has 2 therapies (HER-
Vaxx and B-Vaxx) in Phase 2 studies with a
pipeline of other therapies and combinations
undergoing earlier stage development and
the company anticipates a number of key
clinical and preclinical catalysts in 2019.
HER-Vaxx activates and stimulates the
patient’s B-cells to produce antibodies that
target only those cancer cells with HER-2
(Human Epidermal Growth Factor Receptor)
overexpressed on their surface. Imugene’s
products have the potential to improve
upon well-known HER-2 treatments such as
Herceptin ($7.1 bn in 2018 sales) and Perjeta
($2.8 bn in 2018 sales).
Similar to HER-Vaxx, B-Vaxx is a B-cell
peptide cancer vaccine designed to treat
tumors that overexpress the HER-2 receptor,
such as gastric and breast cancers.
KEY-Vaxx is a B-cell peptide cancer vac-
cine designed to treat tumors such as lung
cancer by interfering with the PD-1/PD-L1
binding and interaction and produce an anti-
cancer effect similar to Keytruda ($ 7.2 bn in
2018 sales), Opdivo ($6.7 bn in 2018 sales)
and other immune checkpoint inhibitor
monoclonal antibodies that are transforming
treatment of a range of cancers.
Imugene recently presented a number
of its clinical programs at the American
Association for Cancer Research (AARC)
Annual Meeting. These presentations were
ASX: IMU
delivered by members of the company’s
Scientific Advisory Board which consists
of world leading oncologists, research-
ers and developers from esteemed centers
including the Mayo Clinic (USA), Medical
University of Vienna (Austria), Memorial
Sloan Kettering Cancer Centre (USA), City
of Hope (USA), Queen Mary University
(London), Ohio State University (USA)
and Vall D’Hebron (Spain). The company’s
Managing Director and CEO, Leslie Chong
has had over 20 years’ experience in oncol-
ogy and was the former Senior Clinical
Program Lead at Genentech, one of the
world’s most successful biotech businesses
which sells the bestselling breast cancer drug
Herceptin.
With a strong cash balance sheet (cash of
USD $ 17 million as at December, 2018) and
fully funded Phase 2 clinical trials underway
for key indications, Imugene is very well
positioned to build upon its past success
and deliver highly anticipated further results
moving forward. n
www.imugene.com
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 59
 O P I N ION
Public Venture Capital in Canada
A unique opportunity for US companies and investors
T
oronto Stock Exchange (TSX) and
TSX Venture Exchange (TSXV) are a
unique funding and listing platform
for high growth US companies looking to
raise Series B+ capital. Companies with early
revenue, a strong management team, and a
growth strategy to eventually list on a US
exchange should consider the Canadian capital
markets as an alternative that may be the right
fit. For US investors, TSX and TSXV provide
an opportunity to access investment opportu-
nities not necessarily available in the US.
FINANCING OPPORTUNITY FOR
US COMPANIES
Every entrepreneur and management team
should consider all of their funding options.
With the introduction of equity crowdfund-
ing and Initial Coin Offerings (ICOs), there
are now more financing options than ever,
including the public markets.
However, in the US going public typical-
ly means being quoted on the unregulated
over-the-counter markets on one end of the
spectrum, or completing a large initial public
offering (IPO) on one of the country’s main
exchanges on the other end. The average IPO
in the US is currently around $250M… result-
ing in the US regulated exchanges being more
of an exit market than a growth capital market.
The Canadian capital markets are unique
in that TMX Group owns and operates a
n BY BRADY FLETCHER
60 MicroCap Review Magazine
two-tiered marketplace - unlike any in the
world - serving companies from early stage
pre-revenue companies on TSXV to multi-
billion dollar established businesses on TSX.
• TSX is the senior market for larger, more
stable companies with a track record.
The average financings on TSX fall in the
$25-$100M range and have an average
market cap of $2.0B. These companies
benefit from increased analyst coverage
and being eligible for our index products.
• For smaller, early-stage growth compa-
nies, TSXV is a unique platform that is
tailored to companies of this size. TSXV
provides financings typically in the
$5-$25M range and TSXV issuers have
an average market cap of about $30M.
For currently listed OTC companies, the
opportunity is to dual list on TSXV to access
new pools of capital, gaining exposure to
new research analysts and investors.
WHY CONSIDER A LISTING OR
DUAL-LISTING ON TSX OR TSXV?
1. A Source of Growth Capital
Last year, TSX and TSXV issuers raised over
$40B, a significant amount of capital consid-
ering the size of the Canadian population.
Approximately 40% of TSX/V daily trading
originates from outside of Canada (a major-
ity of that coming from US sources), provid-
ing access to international investors.
As an alternative to private venture capital, a
TSXV listing can provide the benefit of raising
small, subsequent rounds of capital. Financings
on TSXV in 2018 were up 11% for a total of
$6.8B raised by TSXV companies, with an
average financing of $4M. These are small pub-
lic companies raising “public venture capital”,
as companies are accessing rounds of capital
similar to the typical VC route of Series A, B,
and C rounds. TSX companies raised $34B
with an average financing of $64.8M… still
considered venture capital in US terms.
2. Tailored to Small Public Companies
With a 165-year history of financing explora-
tion companies, the Canadian public markets
have evolved to support small cap public com-
panies. From the securities commissions, the
exchanges, and analysts to the retail and insti-
tutional investors… everyone in the Canadian
ecosystem understands and embraces small
public companies. This is not the case in the
US. TSXV companies benefit from right-sized
www.stocknewsnow.com
 2019 TSX VENTURE 50 - TOP COMPANIES BY SECTOR
corporate governance and reduced time and
costs to listing. Listing vehicles like the Capital Company Sector Ticker Market 2018 Share Location
Cap Trading Price
Pool Company (CPC) program allow growth Change Volume Change
companies to access the public markets with-
Aleafia Health Inc. Cleantech ALEF 762% 300,836,368 107% BC
out the high costs and risk of a large IPO. & Life
Sciences

theScore, Inc. Diversified SCR 112% 79,532,269 88% ON

3. No Longer Just a Resource Exchange Industries
While TSX has historically been known as
Alvopetro Energy Ltd. Energy ALV 169% 14,919,645 137% AB
a natural resource market - given our 165
Westhaven Ventures Inc. Mining WHN 1386% 65,908,876 980% BC
years financing mining and energy compa-
Kraken Robotics Inc. Technology PNG 218% 51,569,562 111% BC
nies - today our stock list is quite diverse. In
fact, our mining issuers currently account Several US companies also made the 2019 TSX Venture 50 ranking:
for just 10% of the market cap of all issuers,
Company Sector Ticker Market 2018 Share Location
with other sectors surpassing them. Cap Trading Price
Change Volume Change
For the past five years, the number one
source of new listings has been tech and life Hamilton Thorne Ltd. Cleantech HTL 33% 30,123,350 20% MA
& Life
sciences companies (including cannabis). Sciences

2018 was a record year for the innovation
sector with 59 new listings (#1 sector for new
listings) and $14.7B in capital raised (#1 sec-
tor for equity capital raised).
4. A Platform for Long Term Growth
The key benefit of this two-tiered market is
the potential for early stage growth companies
to list on TSXV, raise several rounds of capital,
and when ready, graduate to TSX. In the past
20 years, over 650 companies graduated from
the junior board to the senior board, and almost
40% of current TSX-listed technology compa-
nies started on TSXV.
TSX is also a true stepping stone to the US
markets. Once a TSX issuer is large enough and
relevant enough, it can look to interlist on a US
stock exchange. If your end goal is to be listed
on Nasdaq or NYSE, TSXV and TSX are a viable
path to get there. Currently there are 183 com-
panies dual listed on TSX/V and a US exchange.
For the growth company that is looking to
build a long-term sustainable business that
requires ongoing access to capital, TSX and TSXV
are important financing options to consider. Visit
the US landing page for more information and to
access the Guide to Listing: us.tsx.com
INVESTMENT OPPORTUNITIES
FOR US INVESTORS
From the cannabis stocks not available on US
XPEL Technologies Diversified DAP.U
Corp. Industries
Evergreen Gaming Diversified TNA
Corporation Industries
POET Technologies Technology PTK
Inc.
Trackx Holdings Inc. Technology TKX
Universal mCloud Corp. Technology MCLD
markets to the high-performing companies on the
venture board, TSX and TSXV provide unique
investment opportunities for US investors.
This is most evidenced by the 2019 TSX
Venture 50®, a ranking of top performers
on TSXV over the last year. The rank-
ing is comprised of 10 companies from
each of five industry sectors, selected
based on three equally weighted criteria:
Market Capitalization Growth, Share Price
Appreciation, and Trading Volume Amount.
For the full 2019 TSX Venture 50 list and
videos of the companies, go to: www.tsx.
com/venture50
For more information, contact Delilah
Panio, VP Capital Formation, Toronto Stock
Exchange and TSX Venture Exchange at
delilah.panio@tmx.com. n
Note: All numbers are quoted in Canadian dollars.
The views, opinions, and advice provided in this article
reflect those of the individual author and do not reflect
the opinions or views of, nor are they endorsed by,
TMX Group Limited or its affiliated companies. This
article is not intended to provide legal, accounting,
tax, investment, financial or other advice and should
343% 6,748,522 343% TX
53% 10,936,163 53% WA
39% 148,041,191 26% CT
21% 41,685,711 21% CO
78% 25,890,725 -17% CA
not be relied upon for such advice. The information
provided is not an invitation to purchase securities
listed on Toronto Stock Exchange and/or TSX Venture
Exchange. TMX Group and its affiliated companies do
not endorse or recommend any securities referenced in
this document/presentation.
A Computer Engineer by background, Brady spent
almost a decade in investment banking, primarily
focused on financing and advising technology and
diversified issuers through strategic transactions,
before leaving to found Coastr.
With Coastr, Brady successfully took a concept
through ideation, building a development team,
and launching the platform. We successfully sold a
network of almost 30 venues locally while using cus-
tomer feedback to drive iterative revisions to the app
and back-end platform.
Throughout his investment banking career, Brady
has advised hundreds of companies on business strat-
egy, capital raising, public and private markets, and
exit strategies – having successfully executed over
$500million in growth equity financings, secondary
transactions, and sell-side advisory mandates.
Brady joined TMX Group recently and is
Managing Director of TSX Venture, the world’s lead-
ing public venture capital marketplace.
www.tsx.com
Note: This article is not an attempt to provide investment
advice. The content is purely the author’s personal opin-
ions and should not be considered advice of any kind.
Investors are advised to conduct their own research or
seek the advice of a registered investment professional.

www.stocknewsnow.com MicroCap Review Magazine 61

 B E LT WAY C O R N E R
Taking Stock
Latest in US FinTech Legislation and Regulation
W
e are at the beginning stages of
legislators working to under-
stand and influence potential
FinTech regulation and legislation – with
many players operating at the federal and
state level. The ultimate goal of reducing the
complexity of regulation to encourage inno-
vation will require a delicate balance among
competing priorities.
CONGRESS
Following the November midterms,
Democrats retook control of the House
while Republicans expanded their majority
in the Senate. The resultant shift in power
dynamics and personalities will influence
the direction of legislation and action at the
agencies. As the Democrats have gained the
chairmanship of the House committees and
therefore the ability to issue subpoenas and
call hearings, we can expect an uptick in
investigations and targeted hearings.
In the 116th Congress, the House
Financial Services Committee is chaired by
Congresswoman Maxine Waters (D-CA), with
Congressman Patrick McHenry (R-NC) serv-
ing as Ranking Member. Rep. Waters is known
as a bipartisan deal maker who has vowed to
n BY DINA ELLIS ROCHKIND, Esq.
AND LARA KAPLAN, Esq.
62 MicroCap Review Magazine
encourage responsible fintech innovation and
promote diversity and inclusion. The expect-
ed creation of a new House Task Force on
Financial Technology will aid her endeavors.
Congressman Bill Foster (D-IL), who also co-
chairs the Blockchain Caucus, has expressed
interest in leading the newly formed task force
to tackle issues such as marketplace lending,
cryptocurrencies, and artificial intelligence.
On the Senate side, Senator Chuck Grassley
(R-IA) took over the Chairmanship of the
Senate Finance Committee, and therefore
Senator Mike Crapo (R-ID) remains Chair
of the Banking Committee, with and Senator
Sherrod Brown (D-OH) serving as Ranking
Member. The loss of red state Democrats Joe
Donnelly (IN) and Heidi Heitkamp (ND) on
the Senate Banking Committee may decrease
the likelihood of bipartisan compromise on
financial services bills.
CONGRESSIONAL INITIATIVES
There have been a number of bipartisan bill
proposals in the House aimed at promoting
innovation, clarifying regulation or combat-
ing anti-money laundering in FinTech and
digital currencies.
Congressmen Darren Soto (D-FL) and Ted
Budd (R-NC) have sponsored two bills, H.R.
922 - Virtual Currency Consumer Protection
Act; and H.R. 923 - Virtual Currency Market
and Regulatory Competitiveness Act, with
the aim to “direct the CFTC and other finan-
cial regulators to make critical recommenda-
tions for how to improve the regulatory envi-
ronment for both the consumer and business
development side” of virtual currencies.
Increasingly, Congress is becoming more
sophisticated about the potential malevolent
abuse of FinTech. Congressman Juan Vargas
(D-CA) sponsored H.R. 502, the “Fight Illicit
Networks and Detect Trafficking Act or the
FIND Trafficking Act” which directs the
Government Accountability Office (GAO)
to report on the use of virtual currencies
and online marketplaces in sex and drug
trafficking. Another similar bill, H.R. 56 the
“Financial Technology Protection Act” was
introduced by Congressmen Ted Budd and
Stephen Lynch (D-MA) intended to deter
abuse of FinTech by bad actors.
STATE LEVEL ACTION
There have also been some interesting legis-
lative drives at the individual state level, with
a patchwork of regulation evolving. Some
states are seeking to encourage innovation,
such as Wyoming which recently passed a
bill, HB 185, which would authorize corpo-
rations to issue certificate tokens in lieu of
stock certificates. The Wyoming Senate also
recently passed SF0125, the “Digital Assets
Existing Law” making Wyoming the first
state to enact a law promoting the private
ownership of digital assets, giving crypto-
currencies a legal status. Following Arizona’s
Fintech Regulatory Sandbox1, The District
of Columbia recently launched its own
21 member Financial Services Regulatory
Sandbox to analyze the risks and benefits to
residents of FinTech companies. Colorado’s
Senate recently unanimously passed SB19-
023, the “Colorado Digital Token Act,” which
exempts digital tokens that are sold to con-
sumers rather than investors from being
deemed securities. The idea behind this law
is to address the issues involved in ICOs
1 https://www.azleg.gov/legtext/53leg/2R/bills/
HB2434H.pdf
www.stocknewsnow.com
often accused of being vehicles for fraud, and
enabling entrepreneurs to raise capital.
AGENCY ACTIONS
The longest partial government shutdown
in US history constrained the activity of
the regulatory agencies over the new year,
limiting oversight of the cryptocurrency
market, registration applications and rules.
However, as industry and congress become
more fluent in the potential of FinTech, the
US agencies are trying to avoid stifling inno-
vation through unnecessary regulation. To
that end, multiple banking regulators have
set up tech focused task forces, which have
each been up to different things:
1. FDIC in October 2018 launched
its Office of Innovation, with the goal of
encouraging innovation in the FinTech space
for banks. FDIC Chair, Jelena McWilliams,
has been vocal on the negative effects of
regulation on FinTech innovation.
2. CFPB in July 2018 under former act-
ing director Mick Mulvaney established an
Office of Innovation, which in September
proposed the creation of a “disclosure sand-
box” which  will “focus on creating poli-
cies to facilitate innovation, engaging with
entrepreneurs and regulators, and reviewing
outdated or unnecessary regulations”.
3. CFTC established the LabCFTC which
“is the focal point for the CFTC’s efforts to
promote responsible FinTech innovation and
fair competition” and held its first Fintech
conference in October. CFTC’s LabCFTC
released a primer about smart contracts
as part of its effort to engage with innova-
tors and market participants on a range of
FinTech topics.
4. SEC launched a strategic hub for inno-
vation and financial technology in October
2018 and issued a statement on digital assets,
noting how technological advances of block-
chain and distributed ledger technologies have
impacted the markets. SEC Chair Jay Clayton
has discussed concerns over cryptocurrencies
being manipulated and stolen on exchanges
by noting that “safeguards don’t exist in many
www.stocknewsnow.com
of the markets where digital currencies trade.”
SEC Commissioner Peirce voiced different
concerns over cryptocurrencies, noting that
“While the application of the Howey test seems
generally to make sense in this space, we need
to tread carefully,” as ICOs don’t map squarely
on the existing traditional security offering
legal framework. The SEC has also had two
ICO registration enforcement actions that set-
tled in November 2018; its first cases imposing
civil penalties solely for ICO securities offering
registration violations. In early February 2019,
the SEC has announced that it wants to hire a
private vendor to gather data from the “most
widely used blockchain ledgers” to help it over-
see digital assets.
The agencies’ actions are not without their
criticisms however, 22 democratic Attorney
Generals wrote a comment letter to the
CFPB criticizing its sandbox proposal and
policies on innovation. Cryptocurrency fund
Blockvest LLC argued that evidence submit-
ted by the SEC in its enforcement case was
based upon hearsay and “self-serving out-of-
court statements” that are “masquerade[ing]
as foundational evidence” and therefore
should not be considered in the agency’s
effort to block their initial coin offering.
AN EYEGLASS TO THE FUTURE:
It may be a while until we see results at the
federal level, due to the lengthy legislative
process with bills in initial stages. However,
with state legislature and agencies growing
their guidance and surveillance of crypto
assets and FinTech firms, we can expect
continued growth with increased coopera-
tion amongst the states. This could pressur-
ize Congress to take more concrete action.
There is a lot of global action in the FinTech
Sphere, with the Global Financial Innovation
Network, the European banking Authority
publishing its assessment of crypto-assets
and the UK Financial Conduct Authority
consulting on its approach to crypto-assets
and when they would be considered a secu-
rity. This will also influence the pace of
American development in FinTech. n
Dina Ellis Rochkind is Of Counsel in the Paul
Hastings Government Affairs practice and is based
in the firm’s Washington, D.C. office. Her practice
focuses on representing clients before Members of
Congress on Capitol Hill and the Executive Branch.
Ms. Rochkind represents clients in matters involving
regulatory initiatives, policymaking and legislation,
and enforcement actions. Ms. Rochkind’s legislative
experience allows her to advise her clients on the lat-
est client initiatives, from starting a business to crowd-
sourcing; bitcoin ($bitcoin) and ICOs; and block-
chain technologies. Ms. Rochkind has over 20 years
of experience on Capitol Hill, lobbying, and working
for the Executive Branch. Prior to joining Paul
Hastings, she served as Washington Director in the
office of Rep. Mike Coffman (R-CO). Other Capitol
Hill experience includes serving as senior staff for
various Congressional Committees and for Senator
Pat Toomey (R-PA). Ms. Rochkind also served in the
George W. Bush Administration as Deputy Assistant
Secretary at the Treasury Department. She has been
involved in drafting major pieces of legislation over
the last two decades, including: the 2005 bankruptcy
reform legislation, the FACT Act, E-Sign, Check 21,
Federal Deposit Insurance Reform Act, Gramm-
Leach-Bliley Act, and, most recently, the comprehen-
sive and bipartisan JOBS Act, for which she was the
lead staffer in the Senate.
T 1(202) 551-1938
F 1(202) 551-0438
dinaellis@paulhastings.com
Lara Kaplan is a foreign qualified professional in
the Corporate department of Paul Hastings and is
based in the firm’s Washington DC office. Her prac-
tice focuses on financial services regulation, FinTech
and payment systems. She has worked as a lawyer
for the UK Financial Conduct Authority in London
and prior to that, she spent two years in the London
and Brussels offices of an international law firm. She
completed the Accelerated Legal Practice Diploma
with Distinction at the University of Law, gained an
MPhil in History from Cambridge University and
received a first class Law with Politics degree from
the University of Manchester. Ms Kaplan is an inter-
national Attorney admitted in England and Wales
only. She is not engaged in the practice of law of the
District of Columbia.
At Paul Hastings, our purpose is clear — to help
our clients and people navigate new paths to growth.
With a strong presence throughout Asia, Europe,
Latin America, and the U.S., Paul Hastings is recog-
nized as one of the world’s most innovative global
law firms.
https://www.paulhastings.com
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 63
 F E AT UR E D A RT ICL E

Understanding Short Sale Activity

Q uality data is essential to well-function- OTC Markets Group (OTCQX: OTCM) SHORT INTEREST Data
ing markets. Improving the availabil-
DATE SHORT % AVG. DAYS SPLIT NEW
ity, relevance and usefulness of data aligns with INTEREST CHANGE DAILY TO ISSUE
SHARE COVER
OTC Market Group’s mission to create better VOL
informed, more efficient financial markets.  In
09/28/2018 97 11.49 5,551 1 No No
our experience, short selling remains one of the
09/14/2018 87 8.75 4,423 1 No No
most highly-debated topics among academics,
companies, investors, market makers and broker- 08/31/2018 80 100.00 6,818 1 No No

dealers. As a market operator and company CEO, 07/31/2018 103 -48.24 3,197 1 No No

I believe it’s critical to address the misconceptions 07/13/2018 199 -27.64 2,124 1 No No
that still exist around short sale data and the cor- 06/29/2018 275 166.99 3,239 1 No No
relation to a stock’s fundamental value.  
06/15/2018 103 24.10 2,739 1 No No
  Short selling, the sale of a security that
05/31/2018 83 -72.33 3,925 1 No No
the seller does not own, has long been a
05/15/2018 300 1.69 3,944 1 No No
controversial practice in public markets. 
Advocates for short selling believe it builds 04/30/2018 295 100.00 4,278 1 No No

price efficiency, enhances liquidity and helps

improve the public markets, while critics are
concerned that it can facilitate illegal market
manipulation and is detrimental to investors
and public companies.  Given the diverse
range of opinions and opposing views, we
believe the first step is to take a deeper dive
into the data and help separate out the noise.
“THE RELIABLE” - FINRA
EqUITY SHORT INTEREST DATA
The most accurate measure of short selling
is the data reported by all broker-dealers to
FINRA on a bi-weekly basis. These num-
bers reflect the total number of shares in the
security sold short, i.e. the sum of all firm and
customer accounts that have short positions.
This information is available on www.otc-
n BY CROMWELL COULSON
markets.com on the company quote pages.
As an example, OTC Markets Group has a
few hundred shares sold short on average,
which represents a fraction of our daily trad-
ing volume and shares outstanding.
FINRA Rule 45601 requires FINRA member
firms to report their total short positions in
all over-the-counter (“OTC”) equity securities
that are reflected as short as of the settlement
date. In 2012 FINRA clarified that firms must
report short positions in each individual firm
or customer account on a gross basis2 under
FINRA Rule 4560. Therefore, firms that main-
tain positions in master/sub-accounts or par-
ent/child accounts must calculate and report
short interest based on the short position in
each sub- or child account.
Since this data is part of a clearing firm’s
books and records, it is of high quality
and FINRA regularly inspects broker-dealer
compliance with the rule. Of course, it
would be great if this data was collected and
published daily (with an appropriate delay).
“THE MISLEADING” – DAILY
SHORT VOLUME
In contrast, the most frequently misinterpret-
ed data is the Daily Short Volume, sometimes
referred to as Naked Short Interest. This
data shows the percentage of published trade
reports3 (called media transactions in FINRA
Rules) that were marked short. As an exam-
ple, the recent data for OTC Markets Group
shows that up to 90% of the trading volume
comes from short selling on some days. If
we did not carefully track our bi-weekly Short
Interest, we could easily be led to believe that
short selling is rampant in our stock.
Seeing the above data can be alarming for
public companies and their investors, until
they understand the inner workings of how
dealer markets function and broker trades
are reported—which render the data virtu-
ally meaningless.
Since this data also comes from FINRA,
what gives? The daily short selling volume
is misleading because market makers and
principal trading firms report a large num-
ber of trades as short sales in positions that
they quickly cover. For market makers with a
customer order to sell, they will temporarily
sell short (which gets published to the tape
as a media transaction for public dissemina-
tion) and then immediately buy from their
customer in a non-media transaction that

64 MicroCap Review Magazine www.stocknewsnow.com

Historical Short Volume Data for OTC Markets Group (OTCX: OTCM)
want good public data sources that bring greater
Date Volume Short Volume % of Vol Shorted
Oct 18 3,341 1,399 41.87
transparency to legal short selling activity as well
Oct 17 5,989 3,198 53.40 as shine a light on manipulative activities. All
Oct 16 16,120 7,509 46.58 while not restricting bona fide market makers
Oct 15 24,155 12,991 53.78 from providing short-term trading liquidity that
Oct 12 6,297 4,914 78.04
reduces volatility. n
Oct 11 4,059 1,553 38.26
www.otcmarkets.com
Oct 10 2,185 999 45.72
Oct 09 7,473 4,556 60.97
1. 4560. Short-Interest Reporting
Oct 05 880 525 59.66
Oct 04 492 200 40.65 (a) Each member shall maintain a record of total
Oct 03 2,041 801 39.25 “short” positions in all customer and proprietary
firm accounts in all equity securities (other than
Oct 02 4,786 1,560 32.60
Restricted Equity Securities as defined in Rule
Oct 01 3,973 2,607 65.62 6420) and shall regularly report such information
Sep 28 244 23 9.43 to FINRA in such a manner as may be prescribed
by FINRA. Reports shall be received by FINRA
Sep 27 882 805 91.27 no later than the second business day after the
Sep 26 259 189 72.97 reporting settlement date designated by FINRA.
Sep 25 3,085 2,250 72.93
(b) Members shall record and report all gross short
Sep 24 967 571 59.05
positions existing in each individual firm or
Sep 21 2,350 825 35.11 customer account, including the account of a
Sep 20 7,164 6,453 90.08 broker-dealer, that resulted from (1) a «short
sale,» as that term is defined in Rule 200(a) of SEC
Sep 19 297 202 68.01
Regulation SHO, or (2) where the transaction(s)
that caused the short position was marked “long,”
is not publicly disseminated to avoid double tributes to efficient price formation, enhances consistent with SEC Regulation SHO, due to the
firm’s or the customer’s net long position at the time
counting share volumes. SEC guidance also liquidity and facilitates risk management. of the transaction. Members shall report only those
short positions resulting from short sales that have
mandates that almost all principal trading Experience shows that short sellers provide settled or reached settlement date by the close of the
firms that provide liquidity at multiple price benefits to the overall market and investors reporting settlement date designated by FINRA.
levels, or arbitrage international securities, in other important ways which include iden- http://finra.complinet.com/en/display/display_main.
must mark orders they enter as short, even tifying and ferreting out instances of fraud html?rbid=2403&element_id=6288

though those firms might also have strate-
gies that tend to flatten by end of day. Since
the trade reporting process for market mak-
ers and principal trades makes the Daily
Short Volume easily misleading, we do not
display it on www.otcmarkets.com.
Making daily short reporting data easily-
digestible and relevant is not hard. On the
contrary, it should be easy to aggregate all of
the short selling that is reported as agency
trades, as well as all of the net sum of buy-
ing and selling by each market maker and
principal trading firm. This would paint a
clear picture for investors of overall daily
short selling activity. Fixing the misleading
daily short selling data would bring greater
transparency and trust to the market.
“THE MISSING PIECE”– SHORT
POSITION REPORTING BY
LARGE INVESTORS
There is ample evidence that short selling con-
and other misconduct taking place at public
companies. That said, we agree with the New
York Stock Exchange and National Investor
Relations Institute that there is a serious gap
in the regulation of short sellers related to
their disclosure obligations4. We under-
stand that well-functioning markets rely on
powerful players who cannot be allowed to
hide in the shadows. Since we require large
investors, who accumulate long positions, to
publicly disclose their holdings, why aren’t
there disclosure obligations for large short
sellers? This asymmetry deprives companies
of insights into their trading activity and
limits their ability to engage with investors.
It also harms market functions and blocks
investors from making meaningful invest-
ment decisions.
One point is clear, we all need to continue to
work collaboratively with regulators to improve
transparency, modernize regulations and pro-
vide investors with straightforward, understand-
able information about short selling activity. We
2. http://www.finra.org/industry/notices/12-38
3. “certain matching principal trades involving
a Market Maker are now explicitly included
within the riskless definition, and reported to the
public tape only once.” Notice of change to the
NASD’s trade reporting rules designed to reduce
fees charged under Section 31 of the Securities
Exchange Act and to limit the double-counting
of volume for trades executed in the over-the-
counter market. https://www.finra.org/sites/
default/files/NoticeDocument/p004191.pdf
4.NYSE Group. Inc., along with the National Investor
Relations Institute (“NIRI”), hereby respectfully
submits this petition for rulemaking to the
U.S. Securities and Exchange Commission (the
“Commission”) pursuant to Rule 192(a) of the
Commission’s Rules of Practice, requesting that the
Commission promulgate rulemaking pursuant to
Sections 10 and 13(f) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), which
were amended by the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010
(the “Dodd-Frank Act”), in order to require the
periodic public disclosure of short-sale activities by
institutional investment managers. https://www.sec.
gov/rules/petitions/2015/petn4-689.pdf
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.

www.stocknewsnow.com MicroCap Review Magazine 65

 F E AT UR E D A RT ICL E
Reading the Proxy Statement
to Evaluate Management
O ne of the main focuses in my microcap investment strategy
is to find high quality companies. However, a high qual-
ity company needs a high quality management team and board
members as well. Thoroughly reviewing the Proxy Statement From the company’s perspective, the
also known as the DEF 14A, as referred to
by the SEC, gives valuable information that
investors can use in their evaluation of the
management of any company.
I believe that there are only a small minor-
ity of investors who read the Proxy Statement
thoroughly. Even those that do, likely only
glance at the management compensation
section and ignore the rest. The Proxy
Statement is meant to provide shareholders
with valuable information that allows them
to be informed as shareholders of the com-
pany when voting their shares.
n BY SAM NAMIRI
66 MicroCap Review Magazine
Proxy is meant to disclose compensation
guidelines and governance policies, show-
case board members and their committee
roles, explain what is being voted on at the
annual meeting, and present materials that
shareholders can use to understand what
they are voting on.
However as an investor and shareholder,
the Proxy Statement is helpful to understand
the motivations and incentives of the people
managing the company to make sure that
they are aligned with shareholders. Warren
Buffett stated on CNBC: “You want to figure
www.stocknewsnow.com
out ... how well that they treat their owners,”
he said. “Read the proxy statements, see what
they think of —see how they treat them-
selves versus how they treat the shareholders
… The poor managers also turn out to be the
ones that really don’t think that much about
the shareholders, too.”
So what are some of the key things that I
look for? First I evaluate the board members
and their backgrounds and prior experience.
In addition to reading the Proxy to learn
about their biographies and backgrounds, I
run a simple web search and also look on
social media to learn more about them. If I
have any mutual connections, I talk to them
as well to see what they think or know about
the board member. My goal is to find out if
the board member is an active contributor or
if they are just golfing buddies with the CEO
looking to cash an extra check. The easiest
way to tell if a board member is truly aligned
with the shareholders is to find out if he or
she owns a meaningful position in the stock
of the company.
The Board structure of a company is
very important as well. One important
consideration is whether the CEO is also
the Chairman of the Board. The Chairman
holds a lot of power and having both roles
may vest too much authority in one per-
son, which can potentially cause problems.
Especially if the CEO is well paid yet doesn’t
own many shares, his or her goal often
becomes to do whatever they can to keep
collecting paychecks for as long as possible.
If the CEO is also Chairman then they are
more likely to be able to stay in the CEO
position longer regardless of performance.
Compensation is another extremely
important section to analyze. Something to
pay attention to is the percentage of execu-
tive compensation that is fixed versus vari-
able. Look at the past and see the rate of
increase in compensation and compare their
compensation to other companies of similar
size. Read about the short term metrics that
the company looks at to evaluate manage-
ment and what the targets are. Do these
align with shareholder interests? If Earnings
www.stocknewsnow.com
Per Share (EPS) is a metric that management however, in the MicroCap space where com-
is evaluated against for their annual bonuses, panies are not as much in the spotlight and
they may push for a stock buyback to lower are more likely to suffer with poor manage-
the share count and boost EPS for their ment and corporate governance, the Proxy
own benefit even though buying back the Statement can be an indispensable resource
shares is not the best use of capital. I prefer in helping investors to sniff out the good, the
companies that set targets and evaluate man- bad, and the downright ugly. n
agement on multi-year return on invested
Sam Namiri is a Portfolio Manager and Analyst at
capital and free cash flow metrics instead of
Ridgewood Investments, where he concentrates on
metrics that can be more easily manipulated managing the Ridgewood Select Value Fund, our
such as EPS and adjusted EBITDA. fund focused on investing in small and micro-cap
companies. Ridgewood focuses on implementing
Equity compensation is another metric intelligent value-oriented investing strategies (mod-
that I look at closely. I want to make sure eled after investors like Warren Buffett, Ben Graham,
and Phil Fisher). Prior to Ridgewood, Mr. Namiri
that the company isn’t just giving out shares
was an analyst at a small cap hedge fund and the
annually just for showing up, but truly values founder of a jewelry television and manufactur-
its shares and gives them for truly good per- ing company. Mr. Namiri has a BS in Industrial
Engineering and Operations Research from the
formance. I also prefer that companies give University of California, Berkeley and an MBA from
restricted stock that vests over a few years Columbia Business School.
instead of options, as this better aligns man-
Note:
agement with shareholders. When granted This article is informational in nature and should not
options, management is more likely to swing be construed as providing individualized investment
advice. Investors are advised to conduct their own
big and take more risk. research and due diligence or seek the advice of a
Finally, in particular with microcap com- registered investment professional. Both the Author
and Ridgewood Investments disclaim any liability
panies, it is important to look at the employ-
from the use or misuse of this information.
ee agreements and severance agreements of
the key executives and learn about how they Note: This article is not an attempt to provide invest-
benefit from a potential change in control or ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
acquisition. You ideally want a good balance of any kind. Investors are advised to conduct their
where they are incentivized to accept a good own research or seek the advice of a registered invest-
ment professional.
deal from an acquirer, but also not be too
expensive where their payout from an acqui-
sition would be so expensive that it deters a
potential acquirer.
A few other things that are important to
notice and look for in the Proxy Statement
are insider ownership and how much of the
company management owns, who the major
outside shareholders are, whether there are
different classes of shares, who the peer com-
panies are according to the compensation
consultant, perks and related party transac-
tions and also who the auditor is and wheth-
er the audit firm has changed frequently. All
of this information helps provide more data
points to paint either a pretty or ugly picture
of the people leading the company that you
might invest in.
As a shareholder in any size company, it
is important to read the Proxy Statement,
MicroCap Review Magazine 67
 F E AT UR E D A RT ICL E
Form 4 Filings Insider Buying 101
I
n my last article about how multi-baggers
hide out in “easy money” places, I  dis-
cussed five strategies microcap investors
can add to their tool box.  Deep “in the
trenches” microcap and nanocap investors
are always looking for an information edge to
exploit positive or negative information and
to make money or protect portfolios.  One
of these Information Arbitrage (“InfoArb”)
tools is tracking buy and sell stock transac-
tions disclosed in Form 4 filings (Form
4’s) by  Management,  Employees,  Board of
Directors or 10% Owners (MEBO).  I wrote
this article for beginner investors, and for
those who may still have a vague under-
standing of the overall layout of Form 4
filings, including related codes contained
within them.
“The insider anomaly advantage has been
estimated to be as much as 11 percentage
points over the market return annually. The
advantage tops out closer to seven percentage
points, says Ian Dogan, founder of Insider
Monkey, who wrote his doctoral dissertation
on insider trading.”
n BY MAJ SOUEIDAN
68 MicroCap Review Magazine
TRACkING FORM 4 FILINGS
I monitor Form 4’s for several reasons:
1. To see when insiders or large investors
start loading the boat after shares have fallen
hard
2. To see if insiders start buying stock after
a hit piece has been published
3. To see if management is buying stock
near new 52 week highs
4. To find patterns that set a near-term
bottom in a stock
5. To see if insiders are selling as they
glowingly talk about their company
Why do I consider the Form 4 as a type
of InfoArb? The default view at SEC.gov that
lists a company’s filings does not include
Form 4’s. The example below is that of Evans
& Sutherland (OOTC:ESCC).
I even bet that some beginner microcap
and nanocap investors may not even know
that they can track Form 4’s. However, all
you need to do is select “include” or “only”
under the “Ownership” header to view Form
4 and other types of ownership filings.
I know it’s subtle, but any task that takes
the slightest extra effort for other investors
can be your investing advantage. Luckily,
there are some services that allow you to
track Form 4 activity such as  SECFilings.
com, where you can track stock symbols for
free (to a limit).  You can also set up an RSS
feed  from the SEC website that will send
Form 4 filings to your email, free of charge.
Or you can link to the RSS feed directly from
the page that lists the Form 4 filings of a
target company (see above).  However, you
can’t really customize your searches.
We conveniently track the last handful
of  Form 4’s at GeoInvesting  here, and are
planning to address some of the shortcomings
of different services that allow you to track
Form 4 activity in the microcap universe.
It really irks me when a microcap man-
agement team does not have skin in the
game, as opposed to just “acquiring” shares
through indirect methods with little cash
outlay.  That’s why it’s important to learn how
to read a Form 4 filing.
www.stocknewsnow.com

THE FORM 4
The Form 4 must be filed before the end
of the second business day after the execu-
tion of a transaction resulting in a change
in beneficial ownership. There are many
transactions that can result in purchases by
MEBO.  Some of these include “FREE” or
below-the-current-price instances such as
options, warrants, share based compensa-
tion and other indirect transactions.  Boiling
it down to what it is important, we focus on
the buys that took place directly in the open
market where MEBO is taking on the same
risks as any other market participants.
Above is an image of a Form 4 filed on
January 27, 2017 by billionaire Peter Kellogg
on microcap ESCC, highlighting two open
market purchases made on January 25 and
26:
The first thing to take note of is that Mr.
Kellogg bought his shares through one of his
companies, Bermuda Partners.   Still, “cold
hard cash” was laid out to execute these two
purchases at open market prices.   The “I” in
column 6 signifies that the recent purchases
were indirect (through Bermuda) and shows
that he also owns 2.9 million shares acquired
www.stocknewsnow.com
in his own name (“D”).   Column 5 shows
how much a filer owns after each transac-
tion.
We began to take notice of Mr. Kellogg’s
purchase of shares on  September 16,
2016  when the stock was trading at $0.83.
Looking into it further, we saw that he already
had a sizable ESCC position. Whenever we
notice large blocks or high volume in ESCC,
we speculate that “Peter is back in town.”
Next, notice that the filing is divided into
two sections
• Non-Derivative Table
• Derivative Table
The non-derivative section is what you
want to focus on when searching for bullish
signals related to purchases by insiders at
market prices. This is where it gets a little
tricky, as you can’t automatically assume that
a transaction outlined in this section did not
originate from a derivative security.
For example, insiders often own stock
options or warrants awarded to them by their
company (approved by the Board). The ini-
tial grant of these derivatives is first recorded
in the Derivative section of a Form 4.  But
when/if insiders convert them (also referred
to as  exercise) into ownership of common
stock at predetermined prices (usually below
market prices and sometimes at zero), the
transaction shows up in the Non-Derivative
table. That is why it’s important to reference
codes that are included in the filings.
THE SECRET CODES
The codes are outlined  here  on page 6 so
that you can determine if a purchase was
or was not related to a derivative security
reported on various transaction filings
such as Form 4 and Form 5. The direct
purchase non-derivate codes you should
be most interested in are “P” for buy and
“S” for sale. Essentially, all other codes are
mainly related to derivative instruments or
other transactions that are not the result of
meaningful “skin in the game” transactions.
As you can see, Peter Kellogg executed his
purchase of ESCC shares indirectly through
open market transactions as evidenced by
the code “P” in column 3 next to the corre-
sponding transaction (as opposed as “D” for
disposed).  Leave it to the SEC to use similar
letters for different codes.
Take another example of a stock we
are long, GSE Systems Inc. Common
Stock (AMEX:GVP).
A constant flow of non-derivative direct
market purchases by insiders confirmed by
Form 4 analysis was a big reason we placed
a bullish bet on microcap GVP at around
$1.40 (even though shares appeared expen-
sive at face value). Similar purchases have
continued at prices over $3.00.   You can see
our initial coverage on GVP here.
GVP Insiders were also awarded perfor-
mance based stock warrants that can be
exercised in different tranches when shares
reach certain predetermined levels. Some
of these levels have been reached, which
prompted insiders to exercise some of their
warrants. Notice that even though the trans-
action is included in the Non-Derivative
Table, the codes “M” and “F” show that it
was the result of a conversion of derivative
security (performance rights). A peek at the
Derivative Table supports this fact. These
MicroCap Review Magazine 69
performance rights have a zero cost basis.
Here is a list of all the Form 4 codes:
General Transaction Codes
P – Open market or private purchase of
non-derivative or derivative security
S – Open market or private sale of non-
derivative or derivative security
V – Transaction voluntarily reported ear-
lier than required
Rule 16b-3 Transaction Codes
A – Grant, award or other acquisition pur-
suant to Rule 16b-3(d)
D – Disposition to the issuer of issuer
equity securities pursuant to Rule 16b-3(e)
F – Payment of exercise price or tax liabil-
ity by delivering or withholding securities
incident to the receipt, exercise or vesting
of a security issued in accordance with Rule
16b-3
I – Discretionary transaction in accor-
dance with Rule 16b-3(f) resulting in acqui-
sition or disposition of issuer securities x
M – Exercise or conversion of derivative
security exempted pursuant to Rule 16b-3
Derivative Securities Codes (Except for
transactions exempted pursuant to Rule 16b-
3)
C – Conversion of derivative security
E – Expiration of short derivative position
H – Expiration (or cancellation) of long
derivative position with value received
O – Exercise of out-of-the-money deriva-
tive security
X – Exercise of in-the-money or at-the-
money derivative security
Other Section 16(b) Exempt Transaction
and Small Acquisition Codes (except for Rule
16b-3 codes above)
G – Bona fide gift
L – Small acquisition under Rule 16a-6
W – Acquisition or disposition by will or
the laws of descent and distribution
Z – Deposit into or withdrawal from vot-
ing trust Other Transaction Codes
J – Other acquisition or disposition
(describe transaction)
K – Transaction in equity swap or instru-
ment with similar characteristics
U – Disposition pursuant to a tender of
70 MicroCap Review Magazine
shares in a change of control transaction
I hope this summary helped you if you
were unsure of how to properly use Form
4 filings in your research process.  Other
MEBO purchase forms also exist (Source:
Investopedia):
• Form 3  – This document must be filed
with the SEC no later than 10 days after an
insider becomes affiliated with a company,
and it must be filed for each company in
which a person is an insider, regardless of
whether the insider has an equity position in
the company at that time.
• Form 5  – Insider transactions
involving small amounts of money and
certain transactions such as gifts of shares
received from another party are sometimes
exempt from the usual Form 4 reporting
requirements; therefore, a Form 5 submission
is required from an insider who has at least
one transaction which was not reported
during the year. Form 5 submissions are
due to the SEC no later than 45 days after
the company’s fiscal year ends, or within
six months after an insider ends his or her
affiliation with the company.
• Form 144  – A form that must be filed
with theSEC  when an executive officer,
director, or  affiliate  of a company places
an order to sell that company’s stock. Also
known as Rule 144.
• 13D  – The Schedule 13D is a form
that must be filed with the SEC under Rule
13D. The form is required when a person
or group acquires more than 5% of any
class of a company’s shares (and wishes
to reserve the right to exert control). This
information must be disclosed within 10
days of the transaction. Rule 13D requires
the owner to also disclose any other person
who has voting power or the power to sell
the security.
• 13G – To be able to file 13G instead of
13D, the party must own between 5 and
20% in the company. It must also be clearly
understood that the party acquiring the
stake in the company is only a passiveinves-
tor  and does not intend to exert control. If
these criteria are not met, and if the size in
the stake exceeds 20%, a 13D must be filed.
In a follow up article, I will go over end-
of-year insider transaction arbitrage and
highlight examples where you could have
used Form 4 research to find microcap
stocks in which insiders were telegraphing
expectations of higher prices or confidence
that sharp drops in share prices were buying
opportunities. Tracking insider purchases
correctly is a great tool anyone can use to
increase conviction when making short-
term or long-term bets alongside manage-
ment.  Notice that I mainly talked about
insider buys — why? Peter Lynch said it best:
“Insiders might sell their shares for any
number of reasons, but they buy them for only
one: They think the price will rise.” n
ABOUT MAJ SOUEIDAN
I lead the GeoInvesting Team on a daily basis to
increase build a healthy investment opportunity
pipeline and heighten GeoInvesting’s awareness in
the financial market. I stress the concept of “informa-
tion arbitrage” in an era where information overload
has actually made it more difficult for investors to
locate profitable information. An arbitrage exists
when a disconnect between stock prices and available
public information on a company is noticeable, and
monetarily worth pursuing. 
ABOUT GEOINVESTING
GeoInvesting is a research boutique which specializes
in microcap stock research and portfolio protection
investigations for its members. Co-founders Maj
Soueidan and Dan David find money-making oppor-
tunities that others flat out miss. In a nutshell:
** We share our ideas in hopes that others can
profit alongside our team.
** We clarify the dynamics of the micro-cap space
to show you that big investments can come in small
packages.
** We provide education on how to do conduct
real research, leading by example.
** Our expertise gives us,  and therefore you, an
advantage over the everyday investor.
www.geoinvesting.com
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
www.stocknewsnow.com
www.stocknewsnow.com MicroCap Review Magazine 71
 AUSTRALIA CORNER
Australian Non-Resource Microcaps
A
ustralian microcap stocks provide
an abundance of undiscovered
non-resource focused microcap
stocks for US investors who are looking
for such stocks listed on the Australian
Securities Exchange (ASX). A bit similar to
the Canadian market, the Australian micro-
cap market is considered a junior resource
market primarily but there is so much more
listed on the ASX than just junior resource
microcap stocks. This article provides a brief
overview of the Australian microcap market
and highlights 6 ASX microcap stocks which
exhibit some of the diversity to be found
within the ASX microcap stock universe.
ASX MICROCAP MARkET
OVERVIEW
The ASX has circa 2,100 stocks listed on
the exchange. Unlike the US and Canada,
there is only one main ASX board/exchange
where everything is listed. A few legacy
competing stock exchanges remain but are
so small as to be irrelevant for all practi-
cal purposes. The S&P/ASX 200 Index is
widely used as the main barometer for the
performance of the Australian equity market
n BY MARK TOBIN
72 MicroCap Review Magazine
currently. However, outside of the top 200
largest stocks is an extremely long tail of
microcap stocks for investors to delve into.
ASX microcap stocks, for the most part, are
largely overlooked by both Australian and
international investors.
The ASX provides its own microcap
index, the S&P/ASX Emerging Companies
Index. Comprised of 157 stocks currently
with a median market cap of AUD$158m/
USD$114m. The index is heavily weighted
to resource stocks with the materials and
energy sectors comprising 34% of the index.
However, comparing this with TSX.V, for
example, and adding together the mining
and energy sectors weightings on the TSX.V
you get a combined index weighting of 43%.
So yes, like Canada, there are a lot of junior
resources stocks on the ASX, but it’s not
as heavily skewed as the TSX.V and offers
more non resource stocks for US investors
to research.
Some other differences I find when
comparing ASX microcap stocks to US or
Canadian microcap stocks is that the bal-
ance sheets are usually “cleaner” for ASX
microcap stocks. You rarely see convertible
notes or debt on ASX microcap stocks bal-
ance sheets. The norm is usually just listed
stock, listed options and/or unlisted options.
The amount of litigation being faced by
the ASX stocks is also substantially less
than the volume of cases reported by US
and Canadian microcap stocks I find in
general. This means you don’t have to worry
about these contingent legal liabilities com-
ing through and severely denting the stocks
profitability and cash reserves.
Below are some ASX non-resource stocks
which typify some of the opportunities avail-
able.
Six Non-Resource ASX Microcap Stocks
Energy One (EOL: AU) Mkt Cap
AUD$28m/USD$20m is a provider of
energy trading software to both generators
and a host of downstream customers in
order to effectively manage their supply and
demand at the optimum price. The company
is the market leader in both gas and electric-
ity trading in Australia and New Zealand
with a small presence in Singapore and the
Philippines. The company recently entered
the European energy market through the
acquisition of Contigo Software which was
a non-core asset from Trayport a subsid-
iary business of the TSX which it acquired
in 2017. The company has successfully
deployed capital into acquisitions over recent
years to build out its product and market
presence with funding for these acquisitions
chiefly coming through deploying existing
cash reserves or through debt financing. To
date, all debt has been repaid timeously and
no major integration problems have been
encountered. This speaks to the quality of
both the capital allocation and post deal
execution of the integration by the manage-
ment team. The executive management and
the board are also large shareholders in the
company so are well aligned with minority
holders. A profitable, dividend-paying, high
return on equity microcap stock with a solid
and aligned management team in place it’s
one of the more interesting ASX microcap
stocks.
Avita Medical (AVH: AU / OTCQX:
AVMXY) Mkt Cap AUD$261m/
USD$188m is a healthcare technology
company focused on regenerative medi-
cine in the treatment of burns, aesthetic
indications and chronic wounds. The com-
pany’s RECELL products have recently
gained FDA approval, after a near decade
in development. This comes on the back of
RECELL’s approval in China, Australia and
Europe. Since its USA regulatory market
approval the company has had significant
interest from both medical profession-
als and insurers in getting the RECELL
product into the market as quickly as
www.stocknewsnow.com
possible. The RECELL product provides
better patient outcomes at a lower cost
than conventional treatments so it is a real
win-win for all stakeholders. The company
is now in full commercialization mode and
is expecting a solid uptake of the product
and associated sales in the US market
over the coming quarters. While currently
unprofitable, this marks a major milestone
for the company and currently looks to be
at an inflection point in its development.
City Chic Collective (CCX: AU) Mkt Cap
AUD$271m/USD$195m is an omnichan-
nel apparel retailer specializing in plus size
women’s fashion. While predominately
operating in Australia and New Zealand,
they have started to achieve success in the
US market in recent times. Indeed 16% of
their total sales now come from the north-
ern hemisphere. The business was previ-
ously known as Specialty Fashion but after a
boardroom battle a few years ago the current
management team has executed a superb
repositioning of the business by selling off
non-core brands and assets and working on
the company’s strategic direction, the results
of which are now starting to filter through
their data.
Jayride (JAY: ASX) Mkt Cap AUD$32m/
USD$23m listed on the ASX in only January
2019. Think of it as the Uber for airport
transfers. They service individuals, fami-
lies, groups in getting from the airport to
their accommodation by allowing people
to search for appropriate transport and
compare prices between similar transport
operators. They offer their service to DIY
customers or travel agents making a book-
ing on behalf of their customers. They are
in the midst of a large global rollout and
currently operate in 44 countries around the
globe and nearly 700 airports. The company
has an aggressive rollout plan for the next
12/24 months and a large runway of airports
and customers still in front of it. Given the
hoopla currently surrounding the Uber and
Lyft IPO’s, it will be interesting to compare
the valuation multiples they achieve to what
JAY is currently trading on.
www.stocknewsnow.com
Credible Labs Inc. (CRD: ASX) Mkt Cap
AUD$263m/USD$189m is fintech business
focused on providing a marketplace for loans
to US millennials. It is a San Francisco based
company that is listed on the ASX. The com-
pany has spent the last few years building out
its marketplace to bring millennial consum-
ers and financial product providers together
for the benefit of both parties. The business
specifically targets millennials with a slick
mobile-only offering that appeals to its core
customers. The company started out with
student loans, then moved into personal
loans and is now about to launch into the
home mortgage market. The company is still
very much in the growth phase and seeking
volume through its platform in order to reap
the benefits of both scale and the associated
network effects at significant scale down the
line.
Dubber (DUB: AU) Mkt Cap AUD$137m/
USD$99m provides call recording as a ser-
vice on an enterprise level scale. Their cus-
tomers are telecommunication providers
such as AT&T and Cisco Broadcloud pro-
viding them with call recording functional-
ity but also some more advanced features
such as analytics and keyword searches as
required. The end users are primarily gov-
ernments at various levels of governance, be
that federal, state or local level. The service is
provided on an SAAS monthly subscription
type basis. The business is still run by the
founder who founded the business almost
30 years ago. The business is seeing increas-
ing uptake in its product offering over the
last 12/24 months and has been hitting new
monthly revenue records over that time. It
has signed quite a few new telecommunica-
tion customers to use its platform but the
billing for these has yet to start in earnest so
there is a lag in the revenue from contract
signing to the actual first billing. This situ-
ation should normalize over the course of
2019 and will lead to a step change in the
company’s revenue profile moving forward.
The company looks to be at a noteworthy
point in its growth.
CONCLUSION
Hopefully, US investors will recognize the
latent opportunity which exists in some of
the non-resource ASX microcaps as dis-
played by some of the names above.
ABOUT INDEPENDENT
INVESTMENT RESEARCH
Independent Investment Research, “IIR”, is an
independent investment research house based in
Australia and the United States. IIR specializes in
the analysis of high quality commissioned research
for Brokers, Family Offices and Fund Managers. IIR
distributes its research in Asia, United States and the
Americas. IIR does not participate in any corporate
or capital raising activity and therefore it does not
have any inherent bias that may result from research
that is linked to any corporate/ capital raising activity.
No ownership by IIR of individuals of shares. n
For more information about Independent Investment
Research, please visit: 
www.independentresearch.com.au
Mark Tobin Senior Analyst at IIR
After graduating with a Master’s Degree in Economic
Science from University College Cork in Ireland in
2004 Mark spent several years working as a hedge
fund accountant both on the service provider side and
the client side in Dublin, London and Sydney. During
which time he attained Fellowship of The Association
of Chartered Certified Accountants one of the largest
professional accounting bodies in the world. Mark then
changed careers becoming a small cap equity analyst
with highly respected Australian fund management
group Wilson Asset Management in Sydney. After a
few years working in Sydney, Mark relocated to South
Africa for family reason and took up an opportunity
to work at the coal face of the family food business so
has actually worked in small business and gained a
day to day operational perspective of what it is like to
run a small company. Mark has been providing ASX
microcap consulting services to IIR for the last couple
of years and is a regular contributor to Australian finan-
cial media on microcaps. Mark maintains an extensive
network of relationships with Australian microcap fund
managers, brokers and companies in the Australian
microcap space.
Note: This article is not an attempt to provide
investment advice. The content is purely the author’s
personal opinions and should not be considered
advice of any kind. Investors are advised to conduct
their own research or seek the advice of a registered
investment professional. The author does not own
shares or any equity or debt interest in any companies
mentioned in this article before or at its publishing.
MicroCap Review Magazine 73
 P R O F I L E D C O M PA N Y
First Au Limited
A ustralia is the world’s
second largest gold pro-
ducer behind China, producing
around 10.4 million ounces of
gold a year, worth around USD$
13.2 billion. Kalgoorlie, Western
Australia, is undoubtedly the gold capital of
Australia and gold has been mined there con-
tinuously for over 125 years. The Golden Mile,
which sits within the Kalgoorlie gold region,
has produced over 60 million ounces of gold.
Accordingly, some market observers found it
surprising when a recently listed junior min-
ing and exploration company announced a
brand-new gold discovery in one of the most
heavily explored and historically successful
gold regions in the world.
After listing on the Australian Securities
Exchange less than a year ago, First Au
Limited (ASX: FAU) announced on March
18 this year that it had intersected significant
lode gold mineralization at its 100% owned
flagship Gimlet Gold Project, which sits 9.3
miles northwest of Kalgoorlie. The Company’s
recent 2,900m reverse circulation (“RC”) drill-
ing program followed up outstanding results
from its previous RC and aircore programs,
which returned strong intersections, includ-
ing 3m at 462 g/t gold (15 ounces per tonne)
from 52m (refer ASX release dates November
8, 2018 and December 14, 2018).
First Au’s exploration results have delineated
mineralization over a strike length of over
400m with mineralization remaining open
to the north and at depth. Gimlet adjoins
the tenements of Intermin Resources Limited
(ASX: IRC), which contain the Teal, Jacques
Find and Peyes Farm gold deposits which
Richard Revelins, Executive Director
74 MicroCap Review Magazine
Brand New Gold Discovery in the heart of
“Gold Town” Kalgoorlie, Western Australia
currently host JORC classified
resources of 289,000 ounces
of gold. Over recent years the
Kalgoorlie region has seen sig-
nificant merger and consolida-
tion activity as junior companies
have sought to maximize their reach and
development opportunities by merging with
similar or larger listed companies.
First Au’s Executive Chairman, Bryan Frost
recently commented “We are delighted with
the excellent results from our follow up RC
program. We believe these results, together
with our previous drilling programs, provide a
solid basis to undertake further work aimed at
pursuing FAU’s first JORC classified resource.”
Assay result reported to the ASX, from the latest
RC Drilling program include:
Drillhole 19GRC005- 3m @ 4.0 g/t Au from 48m
Drillhole 19GRC011- 4m @2.9 g/t Au from 98m
Drillhole 19GRC013- 15m @7.2 g/t Au from 93m
(including 2m @ 16.4 g/t from 101m & 2m @ 17.4
g/t Au from 105m)
Drillhole 19GRC015- 26m @3.1 g/t Au from 90m
(including 1m @ 19.1 g/t Au from 94m)
Drill hole 19GRC019- 5m @ 3.9g/t Au from 89m
(including 1m @ 9.7 g/t Au from 90m & 2m @ 2.7
g/t Au from 111m)
Drillhole 19GRC022- 4m@ 18.8 g/t Au from 38m
(including 1m @ 71.2 g/t Au from 38m)
Drillhole 19GRC025- 11m @ 4.0 g/t Au from 99m
Drillhole 19GRC029- 16m @ 1.2 g/t Au from 53m
Drillhole 19GRC030- 15m @ 6.6 g/t Au from 157m
(including 2m @ 31.4 g/t Au from 169m)
The Company recently applied for a mining
lease in respect to the Gimlet Mineralized Zone,
which represents the majority of the project area.
In addition to the new gold discovery at
Gimlet, First Au is also involved in exploration
for gold and base metals in the East Pilbara
region of Western Australia. This region recently
came to prominence with announcements by
Novo Resources (CN: NVO), and other explor-
ers, in respect to the discovery of numerous
“watermelon style “characterized gold nuggets
ASX: FAU
of the Hardy Formation and other disseminated
conglomerate gold occurrences. First Au’s Emu
Creek Project, which also contains unexplored
Hardy Formation conglomerates, is located
23kms northwest of Nullagine, and 25kms north
of Novo Resources’ Beatons Creek conglomerate
gold deposit (6.4mt @ 2.7g/t Au for 658,000
ozs of gold), the largest known conglomerate
gold resource discovered in the Pilbara to date
and is considered to geologically similar. First Au
recently increased its exposure to the conglom-
erate gold story in the East Pilbara, by entering
into a Joint Venture with fellow junior West Wits
Mining Limited (ASX: WWI) which holds a
number of granted mining leases in the area,
known as the Tambina project.
First Au boasts a highly experienced and
successful exploration team headed by Brian
Richardson (formerly Thunderlara Resources
and Royal Resources) and Gavin England (PhD
in conglomerate gold, substantial public com-
pany experience), as well as Brett Keillor (for-
merly Independence Group Chief Geologist
and two-time winner of AMEC Prospector of
the Year Award) and Denis O’Meara (highly
respected Australian mining identity and win-
ner of AMEC Prospector of the Year Award).
Richard Revelins, Executive Director at First
Au, commented. “We are indeed fortunate to
have such a well credentialled exploration team,
who have achieved so much in a very short time-
frame. We are moving into the 2019 field season
full of confidence with the knowledge that we are
onto something quite significant.”
Further information and analyst reports
can be accessed from the Company’s website
at www.firstau.com n
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
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www.stocknewsnow.com MicroCap Review Magazine 75

 RESOURCES CORNER
Q&A with Brent Cook, Geologist
W
e recently conducted a Q & A
with Brent Cook about US inves-
tors investing in resource com-
panies within a diversified MicroCap portfolio.
Brent writes the Resource Corner column for
MicroCap Review magazine and has years of
experience and expertise in the field.
Question 1. As a microcap company inves-
tor why should I invest in resource com-
panies? (Please discuss diversification,
relationship to EV market, explain the dif-
ference between exploration, developers,
and producers).
There is virtually nothing in our modern
society that does not require metal, from the
antimony, silver, zinc, cadmium, chrome,
aluminum, gold, palladium, etc., that go
into your computer to the iron, lead, copper,
nickel, etc., that go into the farm equipment,
processing facilities, trucks and stores that
bring you food.
The global push towards cleaner energy
and electrification will increase the demand
for copper, lithium and a number of other
metals as shown below. Significantly, the
whole world wants the same lifestyle as most
Americans enjoy meaning the demand for
metals will continue to grow.
The problem, but more importantly, the
opportunity, for microcap investors is that
n BY SHELLY KRAFT
76 MicroCap Review Magazine
the mining industry is not finding enough
new metal deposits to meet demand. The
bloated and bureaucratic nature of the major
mining companies means they are relying
more and more on nimble and innovative
microcap junior exploration companies to
make these new metal discoveries to fill their
future production gaps. Majors will pay a
significant premium for a legitimate deposit,
one that may deliver 5 to 10 times returns to
an early speculator in the junior exploration
company.
Question 2. Are resource companies
mostly Canadian and traded on Canadian
exchanges?
The Toronto main and Venture exchang-
es host the vast majority of mining and
exploration companies. There are over 1,000
exploration and mining companies listed on
the Toronto exchange, 700 on the Australian
exchange, and far fewer on the US and
London exchanges.
Question 3. Can a US citizen buy Canadian
resource stocks through their US broker
or online? (I would answer this by saying
many Canadian and foreign based resource
companies are dual listed in US on OTC
Markets, Nasdaq or NYSE …etc.
It is very easy for US residents to buy
Canadian listed stocks. Any stockbro-
ker can facilitate the trade (I use Sprott
USA which specifically deals in resource
stocks) and many online brokers allow
US residents to trade Canadian stocks,
although do be cautious with fees on
penny stocks. Additionally, many micro-
cap explorers are dual listed in the US.
Question 4.  As a value investor how do I
compare a resource company balance sheet
to companies with revenues? 
Exploration is a risky and expensive busi-
ness that often requires additional funds via
financings or contributions from mining
partners. The risk to reward is extremely
high. It can be compared to biotech com-
panies searching for a cure to diabetes, or
technology companies working on the next
app or video game and therefore requires
constant due diligence on the speculator’s
part. However, an early stage exploration
program sufficient to make a discovery and
significant impact on a microcap explorer’s
share price can take as little as $1M to $2M.
www.stocknewsnow.com

Question 5. How would an investor cre-
ate a portfolio of both base metals and
precious metals, and would you suggest
mostly exploration companies?
I think an intelligent mining and explora-
tion portfolio should consist of a few high
quality royalty companies, some solid and
growing base and precious metal mining
companies, and a select group of explora-
tion companies. Royalty companies generate
profits by taking a cut of a mine’s produc-
tion and therefore face minimal operat-
ing challenges. Mining companies should
be growing their reserves organically and
have a cost of production in the lower
third of the industry unit cost. Exploration
companies should be run by competent,
experienced professionals who know the
difference between a mineral deposit and
a geochemical anomaly. They should be
exploring for a deposit that is large enough
to attract a major mining company buyout.
Question 6. As an investor how would you
describe the liquidity in resource stocks?  require an in depth understanding of the
The larger mining and exploration com-
panies generally have sufficient liquidity for
a modest sized investor to execute trades.
For instance, Newmont Mining (NEM.
NYSE) trades 5 to 10 million shares a day,
and Kirkland Lake (KL.T) trades 1 to 2
million shares a day. At the other end of
the spectrum, microcap exploration com-
panies can be very illiquid, trading only a
few tens of thousands of dollars per day.
Question 7. Do you think it is prudent
to diversify a microcap portfolio with
resource companies? If so why?
The mining and exploration space has had
a rough few years while the “hot money”
chased crypto and weed stocks. However,
the mining space has always been cyclical,
and, when it comes back, provides returns
equal to any other specialty microcap sector.
The demand for new deposits is real and I
www.stocknewsnow.com
think the depressed level of the mining sec-
tor offers a fine opportunity to diversify one’s
microcap portfolio.
Question 8. How do resource commodity
prices affect microcap resource stocks?
Metal prices are certainly a key compo-
nent of any surge of interest into the mining
sector. The gold price is the big mover and
I expect the gold price to rise over the next
few years. Gold is essentially the reciprocal
of the US dollar and given a wide range of
geopolitical issues related to the US, its allies,
China, plus the massive debt and decreased
purchases of US treasuries by foreign inves-
tors, odds are the dollar declines while the
gold price increases. If gold gets even close
to $1,400/ounce I expect that will trigger a
significant rally into the sector.
Question 9. Please explain your newsletter
and how it helps investors remain informed.
Just as the biotech and technology sectors
underlying sciences, so does the exploration
business. Geology, metal recovery, processing
options, social and environmental issues, as
well as local and national politics all play into
valuing and assessing a junior explorer’s chanc-
es of success. Exploration Insights is a newslet-
ter written by Joe Mazumdar and myself, both
seasoned economic geologists who travel the
world evaluating exploration projects. The let-
ter is about what Joe and I are doing with our
own money in the sector. We are completely
independent, paid only by subscriptions plus
what we make from our investments. That’s
about as straightforward as it gets. n
www.explorationinsights.com
Disclaimer
This letter/article is not intended to meet your specif-
ic individual investment needs, and it is not tailored
to your personal financial situation. Nothing con-
tained herein constitutes, is intended, or deemed to
be--either implied or otherwise--investment advice.
This letter/article reflects the personal views and
opinions of Brent Cook and Joe Mazumdar, and
that is all it purports to be. While the information
herein is believed to be accurate and reliable, it is
not guaranteed or implied to be so. The information
herein may not be complete or correct; it is provided
in good faith but without any legal responsibility or
obligation to provide future updates. Research that
was commissioned and paid for by private, insti-
tutional clients is deemed to be outside the scope
of the newsletter, and certain companies that may
be discussed in the newsletter could have been the
subject of such private research projects done on
behalf of private institutional clients. Neither Brent
Cook, nor Joe Mazumdar, nor anyone else, accepts
any responsibility, or assumes any liability, whatso-
ever, for any direct, indirect or consequential loss
arising from the use of the information in this letter/
article. The information contained herein is subject
to change without notice, may become outdated, and
may not be updated. The opinions are both time and
market sensitive. Brent Cook, Joe Mazumdar, and the
entities that they control, family, friends, employees,
associates, and others, may have positions in securi-
ties mentioned, or discussed, in this letter/article.
While every attempt is made to avoid conflicts of
interest, such conflicts do arise from time to time.
Whenever a conflict of interest arises, every attempt
is made to resolve such conflict in the best possible
interest of all parties, but you should not assume
that your interest would be placed ahead of anyone
else’s interest in the event of a conflict of interest. No
part of this letter/article may be reproduced, copied,
emailed, faxed, or distributed (in any form) without
the express written permission of Brent Cook or Joe
Mazumdar. Everything contained herein is subject to
international copyright protection.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 77
 P R O F I L E D C O M PA N Y
ShiftPixy, Inc.
OVERVIEW
ShiftPixy is a California-based technology
company that designs, manages, and sells
access to a disruptive, revolutionary plat-
form that facilitates employment in the rap-
idly growing Gig Economy. The cloud-based
ShiftPixy ecosystem offers businesses an out-
sourced employment solution for securing
part-time employees, and offers individuals
such as Millennials access to a pool of tem-
porary employment opportunities. The com-
pany primarily focuses on the restaurant,
hospitality and maintenance services indus-
tries, and aims to differentiate its offering by
leveraging sophisticated technology to help
businesses and employees efficiently connect
on mobile devices. The ShiftPixy platform
is designed to automate the matching of
companies with a pre-approved pool of pre-
vetted employees for shift-based work, while
managing the wide variety of burdensome
regulatory employment mandates, thereby
reducing administrative hassles for small
businesses and workers alike.
Our purpose is to bring efficiency to
the part time labor markets by deliver-
ing workplace level liberation and ease
through an ecosystem designed to lever-
age mobile technology to better engage
workers to work opportunities.
kEY POINTS
• A sophisticated, technology-driven
solution to the unique challenges faced
by employers and employees alike in the
Millennial-driven Gig Economy.
• A nationwide “Uber-like” technology pro-
viding critical connections between shift
workers and the open shifts they seek.
ShiftPixy has experienced rapid growth
since its founding, and positive secular forces
can help drive profitable growth even in
weaker economies.
78 MicroCap Review Magazine
NASDAq CM: PIXY
BACkGROUND
ShiftPixy was established to address a nation-
al labor market weakness that was identified
by management during its decades of expe-
rience delivering essential employer ser-
vices to small businesses. The Company has
developed a nationwide platform providing
a unique service and support ecosystem to
connect shift workers (Shifters) with open
shift opportunities at employers
(Providers). The ShiftPixy ecosystem
delivers and supports a legally compliant
engagement between shift workers and shift
work providers, one shift at a time.
ShiftPixy’s keys to success are rooted
in management’s deep experience helping
small business owners with risk, compli-
ance and process management over the past
25 years. Given the unique nature of the
Millennials and Generation Z, the ShiftPixy
solution arrives at a perfect time to quickly
become a disruptive market influence.
Using an already existing, well-estab-
lished national network of business
insurance agents to introduce our prod-
ucts to their clients based on insurance
coverage needs
FINANCIAL MODEL
The ShiftPixy business model generates rev-
enue from both the Shifter and Provider
sides of the transaction. The Shifter pays a
nominal monthly subscription fee to access
the shift network, while the Provider pays
Scott W. Absher
Co-Founder, Chairman, President & CEO
process fees for each hour that a Shifter
works.
Our target market is the 30+ million
part time workers in the US
For the employer, the ShiftPixy platform
provides a legally compliant, outsourced
payroll and employment solution that auto-
mates and accelerates the entire staffing
process to include pre-qualification, hiring,
on-boarding, scheduling, payroll processing,
taxes and benefits. For the employee, the
mobile application provides easy access to
multiple shifts and “gigs” and provides fric-
tionless and flexible scheduling and payroll
fulfillment of a classic PEO.
Initially targeting hotel and restau-
rant industries (13 million workers) in
major metro markets
ShiftPixy has experienced rapid growth from
a pre-revenue start up in 2015 to gross billings of
$51 million in fiscal 2016, $126 million in fiscal
2017, and $222 million in fiscal 2018.
Additional monetization opportunities, once
clients and shift workers are in the ShiftPixy
ecosystem, such as restaurant self-delivery and
driver management.
UNDERLYING TECHNOLOGY
Artificial Intelligence
Active User Engagement
Active User Workflows
Blockchain
Ultimate Transaction Security
Distributed Ledger Integrity
Amazon Web Service Server Infrastructure
Rapid SaaS Scalability
Deep Global Operating Capacity n
www.shiftpixy.com
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 PPMT Capital Advisors, Inc. DO WE HAVE
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www.stocknewsnow.com MicroCap Review Magazine 79
 O P I N I ON
Dos and Don’ts for
Private Companies
when Reverse Merging
T
o principals of, and advisors to,
privately-owned companies:
It’s well-documented that pub-
licly-held companies are generally worth
considerably more than similar private com-
panies.  There are many good reasons for
the disparity--liquidity, of course, is para-
mount. Also, it’s much easier to raise capital,
because investors see the exit strategy; and,
public companies can use stock options to
hire more qualified employees, whose tal-
ent enables public companies to increase
revenues, profits and value. Not to mention,
of course: the added prestige and personal
wealth of the principal shareholders (which
I just mentioned).
To be sure, however, going public isn’t for
the faint of heart. So, before a private com-
pany embarks upon this route, the follow-
ing not all-inclusive list of Dos and Don’ts
n BY JOHN LOWY, Esq.
80 MicroCap Review Magazine
should be considered carefully:
The Dos:
Do retain experienced attorneys—espe-
cially those who have completed many
reverse mergers—to represent your private
company. The documents that are required,
especially the Reorganization Agreement,
the “Super 8-K,” and the filings with the
SEC, FINRA, OTC Markets, the state of
incorporation of the public company and
probably the private company (depending
on the structure of the transaction), are
often complex and very detailed.
Do engage experienced, PCAOB-
registered accountants to audit the private
company’s financial statements. The repu-
tation of the accounting firm is important
in establishing and maintaining credibility
of the new-public company in the investing
community.
www.stocknewsnow.com

Don’t go into the reverse merger process blindly.
Going public is an important milestone for
any private company. So, and as noted above,
communicate early in the process, and often, with
experienced advisers who have gone this route
before.
Do try to hire a CEO and a CFO with
previous public company experience. These
two persons will be the “face” of the public
company at most, if not all, shareholder
meetings, conferences, telephone conferenc-
es, etc. with investment bankers, company
podcasts and presentations, etc. In my expe-
rience, if the private company’s principal
does not have this background, he or she is
often “kicked upstairs” to be Chairperson,
thus allowing the new CEO to fend with
Wall Street, among other duties. Finding,
hiring and retaining quality persons with
the requisite experience and reputation to be
CEO and CFO isn’t easy, and—candidly—it
will probably be expensive; but in the long
run, it will be a bargain.
Do carefully check the backgrounds of the
people you are dealing with on the public
company side, before the reverse merger
is completed. There are many “bad boys”
lurking, looking for unsuspecting private
companies to reverse merge into what could
become a “pump and dump” scheme.
Do retain a reputable Investor Relations
firm to best get the company’s message out
to the investment community, shareholders
and others. Using an IR firm is usually help-
ful in several areas: getting the word out to
the Street about the company, introductions
to broker-dealers, investment bankers, and
in some instances to direct sources of capital.
Do: prepare and disseminate, as widely
and as often as possible, news/announce-
ments about the company. This can be tricky,
because your obligation as a public company
www.stocknewsnow.com
is to file periodic reports (three 10-Qs and
the 10-K each year), plus 8-Ks as and when
material events occur. So, for example, it
would be inconsistent, and probably a viola-
tion of securities laws, to make a glowing
announcement and then, shortly after, file a
dismal 10-Q without making an announce-
ment with the same distribution. And take
note that there are different newswire servic-
es, some of which provide better distribution
than others; be sure to use one which has the
widest distribution, and use it consistently.
The above are many, but not all, of the Dos
for private companies that want to go public
by reverse merging. Here are some of the
don’ts (many are the opposite of the Dos):
Don’t go into the reverse merger process
blindly. Going public is an important mile-
stone for any private company. So, and as
noted above, communicate early in the pro-
cess, and often, with experienced advisers
who have gone this route before.
Don’t think that going public via reverse
merger is a “get rich quick” deal. As noted
above, there are many reasons why a private
company can gain important advantages by
being public; but most of those advantages
take time to take effect. And, they don’t
take effect automatically; rather, they require
additional time and effort beyond what exec-
utives devote to running their business. Put
another way: executives should devote 100%
of their time to running their business, as
usual, and an additional 50% or more to
what is involved with being a public com-
pany. Difficult math, but it makes the point.
Don’t ignore your shareholders: as a public
company, they can be your biggest sup-
porters (or your adversaries). They, and
the investing public in general, need to be
informed of company developments as they
occur. Also, have a good website—essential.
Going public is a major step in a com-
pany’s corporate history. Like any other
endeavor, there are good ways and bad ways
to go about it. But by working with experi-
enced and competent advisers following the
other “dos” above, and avoiding the “don’ts,”
the process of becoming and then being a
public company can be a lot less arduous,
and far more rewarding, both emotionally
and financially. n
www.ocgfinance.com
John Lowy is the founder (in 1990) and senior part-
ner of John B. Lowy, P.C. (www.johnlowylaw.com),
and (in 1993) of Olympic Capital Group, Inc. (www.
ocgfinance.com), both based in New York City.
John is a highly-respected and acknowledged expert
in reverse mergers, representing public companies,
capital formation, strategic consulting and initial
private and public offerings of all types.
As an attorney, an advisor and principal, John
has led or participated in more than 200 such
transactions, creating market value well in excess
of $5 billion. He has been instrumental in leading
the process by which these companies have raised
capital or reverse merged, and achieved listings on
the NASDAQ or the AMEX, or were sold to larger
companies.
In addition to the U.S., John has completed trans-
actions for clients based in at least 15 foreign coun-
tries. The sectors in which his clients are engaged
range from low tech to high tech, cryptocurrency/
blockchain, real estate, pharmaceuticals, medical
devices, biotech, oil and gas, mining, renewable
energy, entertainment, food, agriculture, education
and retail, among others.
He received his undergraduate degree from Tufts
University and graduated from the University of
Pennsylvania Law School, and is a licensed attorney
in New York and New Jersey. He is a frequent con-
tributor to MicroCap Review.
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 81
 FEATURED ARTICLE
W hy do we say someone is mak-
ing money  hand  over  fist? Does it
have to do with two competitors putting
one  hand  over  the other on a baseball  bat  to
determine who’s up first?  This idiom of the
English language paints a vivid picture of the
BioPharma Industry, regarding the competi-
tion within the Industry and the scramble to
invest in start-ups that fuel innovation.
Start-ups are driving biopharma innovation,
accounting for 63% of all new technology and
drug approvals over the last eight years.
New approaches to combat drug resistance,
elimination of side effects, more targeted thera-
pies are urgently in need to be developed.
Despite growing recognition of this threat,
there is an early stage funding gap for new
technologies.Top of FormBottom of Form This
is a huge global problem in need of R&D,
but many Big Pharma companies have pulled
out in the last 10 to 15 years because they
see a challenging ROI. Most Big Pharma or
Investing Partners would rather wait as startup
biopharma take the risk out of development.
The economic challenge the industry faces is
undeniable. That’s because the average cost to
develop and FDA approval for a new prescrip-
tion drug in the United States is about $2.6
billion, reports the Tufts Center for the Study of
Drug Development. Despite high development
costs, most drug launches achieve modest sales
in the first five years on the market. Only  19
drugs have reached $1 billion in annual sales
within five years  of launch over the past 20
years, reported by QuintilesIMS Institute.
An Industry shift has Big BioPharma  and
others looking to become more entrepreneurial.
Increasingly, these big players are setting up
venture capital funds and investing in start-ups
and licensing technology to fuel their own drug
n BY JAE SLY, PhD, MBA
82 MicroCap Review Magazine
Hand Over Fist . . . Picking Teams and Making Money
pipelines. Many are also outsourcing R&D, while
reducing product development efforts internally.
New investments for startup trends are
accelerating at a rapid pace. Behind the
scenes, pint-size ventures are driving pharma
innovation. This scramble is multifaceted.
Small BioPharma start-ups are quick on their
feet, and many can do research and product
development faster. By investing in a broad
portfolio of young ventures, a big drug com-
pany can leverage outside scientific talent
and cast a wide net in order to gain access
to breakthrough discoveries in areas of the
company’s strategic interest. For investors
the sheer market size of the industry can-
not be ignored. It’s a global market growing
at 6.5 percent compounded annually that is
expected to reach $1.06 trillion by 2022.
Johnson & Johnson invests over $10 billion
on R&D annually across the company’s differ-
ent sectors — medical devices, Biotech, pre-
scription drugs — they also invest over $250
million a year in everything from seed invest-
ments to Private Investment of Public Equity.
The League of Companies leading the
field are those working to develop creative
approaches to the R&D productivity crisis with
all kinds of early stage collaborations. Applying
business service teams that help manage start-
up’s operations and navigate the regulatory
and product development pathway, facilitate
permits and licenses and foster the funding
startups need to grow. Cultivate relationships
with fresh Start ups and Institutions that have
great ideas and build a newco around them.
Prime example is a unit of the R&D group
formed out of Sanofi’s global R&D. Sanofi-
Sunrise, a company creation that seeks to invest
in seed ideas or co-invest with venture capitalists
on promising new technologies. Leading the
effort is a team of scientists with Sanofi’s global
R&D department who have ties or actively seek
out venture capitalists and academic networks.
Companies leading the league are those devel-
oping creative approaches to the R&D productiv-
ity crisis with all kinds of early stage collabora-
tions.  That then comes down to what do we
mean by “early stage”.  To a biotech hedge fund
trader, it might be pre-Phase 2.  To those of us
Note: This article is not an attempt to provide investment advice. The content is purely the author’s personal opinions and should not be considered
advice of any kind. Investors are advised to conduct their own research or seek the advice of a registered investment professional.
in the venture world, early stage could simply
mean a new company, or a preclinical program,
or a new drug discovery initiative.  Unfortunately,
without common and easily measured defini-
tions, generalizations about early stage biotech
venture data are challenging. New company for-
mation has grown as an important route to com-
mercializing technologies from research institu-
tions. Although new company formation may
not be the most efficient route to market for all
technologies, to those concerned with economic
development, the formation of new, successful
companies is seen as a route to create and support
jobs. Many countries have specifically developed
programs to support this trend by the formation
of “business incubators” and science parks to cre-
ate a supportive environment.
Incubators are expanding opportunities
for research to develop into startups, various
research institutions are spinning technologies
out into New Companies, and Venture Capital
and Investors developing Start up Studios that
take scientific discoveries made at universities
are turning them into companies focused on
growth. Big Pharma Companies are employing
“fostering” investment payments on milestones
that encourage early stage to success! The play-
field is changing and the will to win is not near-
ly so important as the will to prepare to win.
The field is expansive, the Stake Holders are
lining the stands, new innovative technologies are
on deck and teamwork makes the dream work! n
Jae Sly is the CEO of Strategic BioPharm Consulting,
Inc. Jae has over 20 years in the Biopharmaceutical
Industry, from R&D to Clinic. Jae is an Industry
Leader providing strategic partnering of Biopharma
technologies and services.  Jae has initiated cross
border partnering platforms, investment forums and
is a corporate mentor in the DE and MD Incubator
Startup Programs. Much of Jae’s career has been with
numerous start-up and small BioPharma Companies
seeking to expand infrastructure, technology expo-
sure on an International level.. Contract negoti-
ations and technology evaluation for Investment
Opportunities, has been primary expansion within
Jae’s portfolio of services in last few years. Jae main-
tains a strong Industry presence by presenting and
attending at major conferences. Jae received her
Ph.D. in Immunology from University of Washington
and MBA from San Diego State University. Jae is
a member of LES, Maryland ICOY, ESACT,  BIO
and is Adjunct Faculty at University of Delaware,
Bioinformatics Core.. Jae possesses the skills of being
Multi-lingual and well versed in Cultural negotia-
tions.
www.stocknewsnow.com MicroCap Review Magazine 83
 O P I N ION
A Cannabis Play that
Won’t Get Smoked
THE “CANNABIS IS A
COMMODITY” DEBATE
Let’s be clear – THC and CBD, the canna-
bis components that affect our cannabinoid
receptors, are commodities. This has caused
many bearish cannabis investors to claim
that cannabis company valuations are ripe
for share price destruction. We, at Sophic
Capital, believe that although market valu-
ations for public cannabis companies are
lofty, many licensed producers of cannabis
will survive by branding, just like other com-
modity companies do.
For example, ethanol is the active ingre-
dient in alcoholic beverages and is a com-
modity. Most consumers of beverage alcohol
products don’t focus on the type or source of
ethanol; they are more concerned with the
taste, smell, labelling, and the story behind
n BY SEAN PEASGOOD
84 MicroCap Review Magazine
the product. So, the way beverage alcohol
companies add value to ethanol is by brand-
ing and creating illusory experiences around
the product – think “natural spring water;”
“aged in oak casks;” and “king of beers.”
CANNABIS DIFFERENTIATION
A cannabis company relying solely upon grow-
ing plants likely won’t last. But cannabis com-
panies with branding strategies that differenti-
ate strains, packaging, or storefronts could be
good investments. But differentiation can be
expensive: Coke spent almost US$4 billion in
2017 to differentiate itself from Pepsi and Dr.
Pepper. That’s a lot of dough to convince people
to drink branded sugar water. Even crazier,
Centers for Disease Control and Prevention
reported that cigarette manufacturers spent
$9.5 billion in 2016 marketing their products,
www.stocknewsnow.com
and a lot of that was spent marketing the nega-
tive health effects of tobacco. That’s about $26
million a day to convince consumers whose
brand (not necessarily tobacco) was best while
trying to convince those consumers that they
shouldn’t smoke tobacco.
A BIGGER POTENTIAL THREAT
TO CANNABIS GROWERS
Let’s assume that THC and CBD never
become commoditized (we are often wrong).
One technology could outright displace can-
nabis growers - synthetic cannabinoids.
Synthetic cannabinoids are created in a lab-
oratory. Pundits have vilified synthetic canna-
binoids since many illegal designer drugs are
synthesized to stimulate cannabinoid recep-
tors. But some labs have “grown” legal syn-
thetic cannabinoids for medical treatments.
In fact, they can do it cheaper, cleaner, and
faster than licensed producers – (one com-
pany we met can synthesize grape plants in 3
weeks and claims cannabinoids will take no
longer!). These could be why licensed pro-
ducer Cronos Group (TSX:CRON) invested
US$22 million in Ginko Bioworks, a private
firm that uses biology to build sustainable
products in food, pharma, manufacturing,
and more. The partnership will see Ginkgo
work with Cronos Group on research and
development of microorganisms capable of
producing certain target cannabinoids. If all
milestones are met, the deal could be worth
US$100 million.
WHERE TO LOOk IF THE
THREAT IS NOT REAL
Achieving the quality, scale, cost reductions,
and time savings of synthesizing cannabi-
noids strengthens our thesis that THC and
CBD are commodities. But assuming we’re
wrong (again) and labs cannot achieve the
aforementioned benefits, investors need to
consider that: a) licensed producers will
need to spend big bucks to compete on
brand, b) as new jurisdictions legalize can-
nabis, export markets will likely shrink as
www.stocknewsnow.com
domestic producers ramp, and c) licensed
producers will have to backfill lofty valua-
tions or risk share price contraction.
We don’t like any of these scenarios. But
we like the cannabis industry – not for the
commodities or plants but for the evolving
supporting technologies. And one technol-
ogy we think could be big targets medicinal
cannabis data.
“MEDICINAL” CANNABIS
REALLY ISN’T
In a typical scenario where a physician
decides to treat a patient with FDA-approved
pharmaceuticals, the physician must assess
the benefit to harm outcomes and determine
what medication could help the patient.
Over 2,000 approved pharmaceutical drugs
exist. We can’t expect doctors to know all of
them, but diagnostic tools exist to help doc-
tors recommend medications. These tools
consolidate medical research to provide phy-
sicians with the knowledge base, guiding
them to provide informed decisions that will
best help their patients
No such evidenced-based tools exist for
cannabis treatments, and doctors do not
have the time to absorb whatever peer-
reviewed clinical cannabis trials researchers
publish. Doctors therefore hesitate to recom-
mend cannabis treatments for patients. For
those that do, cannabis-based treatments are
guesses, at best, based on anecdotal infor-
mation. We need science to define the best
potential patient outcomes.
LOOk FOR DATA MOATS
In an interview with The Globe and Mail,
Professor Janice Stein from the University of
Toronto said, “Tomorrow’s challenge is who’s
got access to the largest amount of data in the
cheapest and fastest way.” We agree. Access to
data is a moat. Aggregating data from several
sources is a bigger moat.
We’ve seen data moats before. They come
from onboarding major industry players
before competitors have a chance, exten-
sive sales cycles that make it difficult for
the vendor to switch solutions, or unique
data-collecting, hardware platforms that are
difficult to replicate. The #1 and #2 best per-
forming companies in 2018 on the Toronto
Stock Exchange Venture Technology Index
are creating these types of data moats.
DATA DRIVEN INFORMATION
WITHOUT TOUCHING
CANNABIS PLANTS
Data exists in medical cannabis clinics, but
no standard protocols exist to collect it. CB2
Insights (CSE: CBII) is going to change that.
They operate profitable cannabis evaluation
and education centers in 12 states, servicing
65,000 patients and plan to continue consoli-
dating profitable clinics. The clinics are a data
pool for CB2 to collect and aggregate what
clinicians are prescribing for specific condi-
tions. More patient data refines recommenda-
tions, leading to better patient outcomes and
improving doctor and practitioner cannabis
recommendations. The Company will also
use this data to create a software knowledge
base of possible cannabis treatments that
doctors, clinicians and patients can access
(another data collection tool). Big pharma
is already losing tens of billions to cannabis
substitutions - it needs data. This is the type of
data moat Sophic Capital loves - and we didn’t
even get into CB2’s machine learning plans. n
www.sophiccapital.com
Disclosures
Sean Peasgood, Sophic Capital, and Sophic Capital’s
employees own common shares of Legend Power
Systems, Inc.
Legend Power Systems has contracted Sophic Capital
for investor relations services.
Here is a link to Sophic Capital Disclosures and
Disclaimers: http://sophiccapital.com/disclaimers/
Note: This article is not an attempt to provide invest-
ment advice. The content is purely the author’s per-
sonal opinions and should not be considered advice
of any kind. Investors are advised to conduct their
own research or seek the advice of a registered invest-
ment professional.
MicroCap Review Magazine 85
 OPINION

The Impact of the Repeal of PASPA

on the Tribal Gaming Market

T he tribal gaming sector generates between 45-50% of all gam-

ing revenue in the U.S. Since the passage of the Indian Gaming
Regulatory Act (IGRA) in 1988, tribal gaming has grown from a $121
million to a $37 billion plus segment in 28 states in 2018 (Source:
AGA, Meister, NIGA).
That revenue allows tribal casinos across the potential tribal online gambling market of Virginia, Pennsylvania, Rhode Island and
country to provide diverse career opportu- $3.4 billion. And if we assume that sports New Mexico.
nities, support local businesses and fund betting is 50% of the online market, that New Mexico provides an interesting
critical state, local, and tribal government yields a potential tribal sports betting market study as the Santa Ana Star Casino & Hotel
programs. of $1.7 billion. launched a sportsbook in October 2018.
According to a recent study by Eilers & Under the Professional and Amateur Santa Ana is a tribal casino, and the tribe
Krejcik Gaming (EKG), 32 states will likely Sports Protection Act (PASPA) of 1992, can take sports bets on its property even
have legalized sports gambling within five sports betting in the U.S. was banned from though sports betting is not yet legal in the
years and as many as 14 could be ready 1992 to 2018 (except for four states that state. In this case, sports betting is regu-
for legislation within two years. Based on were grandfathered in under PASPA since lated by the Pueblo of Santa Ana Gaming
32 states, EKG estimates that the overall they had previously allowed sports betting Regulatory Commission.
U.S. sports betting market could generate - Nevada, Delaware, Oregon, and Montana). According to the National Indian Gaming
approximately $6 billion in revenue, with an Since PASPA’s repeal in May 2018, six other Commission (NIGC), there are 460 tribal
annual turnover of $100 billion. states have passed laws to allow for legal gaming casinos in the U.S., operated by 240
sports betting – Delaware (allowing single- federally recognized tribes. We believe the
HOW BIG CAN THE TRIBAL game bets), New Jersey, Mississippi, West
SPORTS BETTING MARkET BE?

If we assume that online gambling is ~10%

of the overall market, that would yield a

Exhibit 1 - Economic Impact of Tribal Gaming (2016) Source: American Gaming Association
n BY RALPH GARCEA, P.ENG, MBA
(AGA), Meister Economic Consulting

86 MicroCap Review Magazine www.stocknewsnow.com

tribal sports betting market will be a frag-
mented one because not all tribes have com-
pacts with their respective states. Compacts
outline what kind of gambling tribal casinos
can offer, and how much taxes are paid to the
state as a percentage of revenue. To compli-
cate matters further, each state compact is
different.
The National Indian Gaming Association
(NIGA), led by Chairman Ernie Stevens Jr.,
supports sports betting on tribal land, and
issued a set of guidelines just a few months
after the U.S. Supreme Court repealed
PASPA and ruled that sport betting could
be legalized on a state-by-state basis. The
guidelines are as follows:
• Tribes must be acknowledged as govern-
ments with authority to regulate gaming;
• Tribal government sports betting rev-
enues will not be subject to taxation;
• Customers may access tribal government
sports betting sites as long as sports
betting is legal where the customer is
located;
• Tribal rights under the Indian Gaming
www.stocknewsnow.com
Regulatory Act (IGRA) and existing
tribal-state gaming compacts must be
protected;
• IGRA should not be opened up for
amendments;
• Tribal governments must receive a pos-
itive economic benefit in any federal
sports betting legalization proposals;
• Indian tribes possess the inherent right
to opt into a federal regulatory scheme
to ensure broad-based access to markets;
• Tribal governments acknowledge the
integrity and protection of the game and
patron protections for responsible gam-
ing are of the utmost importance;
• Any consideration of the use of mobile,
online or internet gaming must adhere to
these principles.
Source: www.sportshandle.com
FINAL THOUGHTS
Just looking at the recent growth in sports
betting handle and gross gaming revenue
(GGR) in New Jersey, Mississippi and
Pennsylvania, we believe most estimates are
conservative and the US could grow to be the
largest sports betting market globally over
the next 10 years. n
About the Author
Mr. Garcea co-founded Focus Merchant Group in
September 2018 and has more than 22 years experi-
ence in senior analyst positions at major domes-
tic and international firms. He was a top-ranked
research analyst, well regarded for the depth and
breadth of knowledge he brings to bear on his cover-
age of technology, gaming and industrial companies
across a broad range of market capitalizations. Over
the years, he has received top three rankings from
Brendan Woods, Greenwich, Starmine and Thomson
Reuters surveys. One of Mr. Garcea’s clients currently
is Newgioco Group (NWGI-OTC QB), where he is
the VP Corporate and Business Development.
Note: This article is not an attempt to provide
investment advice. The content is purely the author’s
personal opinions and should not be considered
advice of any kind. Investors are advised to conduct
their own research or seek the advice of a registered
investment professional. Mr Garcea does not own
any shares in companies mentioned.
MicroCap Review Magazine 87
88 MicroCap Review Magazine www.stocknewsnow.com
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devoted to contributing time and resources to giving back to the community through a hands-on approach to
charitable activities. Since 2014, Lucosky Brookman, together with its friends, clients and colleagues, has
donated over $775,000 to charitable endeavors throughout the world. In 2017, Lucosky Brookman founded the
Lucosky Brookman Foundation, a public 501(c)(3) charity, through which the Firm uses the power of
philanthropy to impact the lives of those less fortunate.

Lucosky Brookman invites you to join it in supporting The Save A Child’s Heart Foundation (SACH). SACH
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www.stocknewsnow.com MicroCap Review Magazine 89

90 MicroCap Review Magazine www.stocknewsnow.com
www.stocknewsnow.com MicroCap Review Magazine 91
 ASIA CORNER
Hong Kong Stock
Market Robust in 2019
T he Heng Seng Index has recovered most of its losses from 2018
with a robust start this year, up 13.2 percent as of March 14th,
rebounding from a 14 percent drop in 2018.
Despite having the Index’s worst perfor-
mance in seven years, Hong Kong won
back the title for top global IPO market in
2018, beating the previous year’s winner:
New York. Fundraising through initial pub-
lic offerings increased to US$36.8 billion, the
highest fundraising in eight years. A record
218 companies listed in Hong Kong’s main
board and GEM during the year. More than
70 percent of the funds raised were from
mainland companies, including 36 high
growth mainland “new economy” compa-
nies as Hong Kong remains their number
one choice to raise capital from international
investors. The surge in tech company list-
ings was driven by the change in listing rules
allowing dual class shares structure to go
public on the exchange. Telecommunications
and hi-tech were the two biggest fundraising
sectors in Hong Kong, representing 39 per
cent of funds raised, compared to 10 per cent
in 2017. The financial sector, traditionally
the largest sector in Hong Kong, represented
n BY LESLIE RICHARDSON
92 MicroCap Review Magazine
just 9.5 percent of all fundraising, compared
to 32 percent the previous year.
This year, more than 200 companies are
already lined up to list on the exchange to
raise an expected US$29.4 billion, the major-
ity of which are new economy companies
in the TMT, biotech and education sector.
Small and medium size IPOs are expected
to dominate the landscape with only one
or two mega-sized IPO anticipated, accord-
ing to PWC.  Companies preparing to list
in Hong Kong this year include Shenzhen-
based Belle International. With a 6.7 per-
cent share of China’s apparel and footwear
specialist retailer segment, according to
Euromonitor, Belle is aiming for a valuation
of at least HK$20 billion (US$2.55 billion)
to HK$25 billion. The company has a solid
position in China’s rapidly growing sports-
wear industry which Euromonitor estimates
will increase to US$58 billion in 2023 from
US$40 billion in 2018. Another highly
anticipated IPO is Koolearn, an online edu-
cation company under New Oriental. The
company has plans to file for a Hong Kong
initial public offering (IPO) this year to raise
US$90 million to US$104 million. Koolearn
is the largest online education brand in the
Chinese college-exam preparation market,
holding 8.2% market share in 2017 by rev-
enue, according to consulting firm Frost &
Sullivan. ESR-Reit  is also planning an IPO
on the Hong Kong stock exchange expecting
to raise US$1 billion to US$1.5 billion. ESR
is the largest Asia-Pacific-focused logistics
real estate platform, formed by a merger of
Shanghai-based warehousing services firm
e-Shang and Singaporean logistics real estate
www.stocknewsnow.com
investment firm The Redwood Group in
2016. With Hong Kong revamping its listing
rules, it is generating increased interest from
overseas companies. Controlled by Chinese
investors, U.K.-based data center operator,
Global Switch is in the process to list in the
HKEX later this year, raising up to US$1 bil-
lion and Erdenes Tavan Tolgoi, a Mongolian
state company controlling one of the world’s
largest coal mines, plans to raise up to $3 bil-
lion in a public stock offering in Hong Kong.
As the world’s third largest exchange by
capitalization, Hong Kong Exchange contin-
ues to expand its offerings with the goal of
becoming the go to giant for investment in
Asia. In March, it announced a new three-
year strategy to add currencies, fixed-income
products and other financial derivatives to
its offerings. Included in the plan, the
HKEX will shorten the IPO settlement cycle
and work to attract more ETFs to list in the
SARS. It is also looking at ways to expand
its yuan products, by offering more yuan
futures and yuan bond products as well as
develop infrastructure to help international
investors access the onshore yuan markets.
It is providing foreign investors new tools
to hedge their risk and better manage their
exposure to mainland equity by introduc-
ing futures contracts on the MSCI Ching A
Index, which represents the A-share portion
of MSCI’s flagship Emerging Markets Index.
While northbound trading under the stock
connect mechanism between the mainland
and Hong Kong bourses had a slow start
when initially launched, net inflow into the
A-share market through northbound trading
hit a record high of 60.69 billion yuan ($8.97
billion) in January.
China Continues to Build for the Future
In March, China revealed its annual policy
blueprint with a set growth target of 6.0 to
6.5 percent for 2019 as the country faces
graver and more complex risks and chal-
lenges. The PRC stated it is reorganizing and
restructuring its economy toward a more
rational and healthier pattern of growth
and consumption that aims to balance the
global expectations of China’s high GDP
www.stocknewsnow.com
growth against its environment, health-care
and overall social welfare responsibilities.
Consumption is expected to be the major
component of GDP growth in 2019, contrib-
uting over 80 percent, up from 76.2 percent
in 2018.
China’s economic future is being fueled
by its two major programs, the Greater Bay
Area and The Belt and Road which are to
act as a catalyst to further drive the opening-
up of its economy. The Guangdong-Hong
Kong-Macao Greater Bay Area is expected
to create unprecedented opportunities for a
wide range of sectors including infrastruc-
ture, financial services, capital markets and
technology. While the Belt and Road project
which reached its 5th year in March, is intend-
ed to help facilitate economic and social
development of the countries and regions
along the B&R routes, mainly Euroasia, by
providing cutting-edge technologies and
high-quality products and services. As B&R
construction enters new stage of econom-
ic and trade cooperation, China’s outward
investment is expected to expand to wider
fields from large-scale infrastructure, energy
and resources to tourism, e-commerce, as
well as cultural, educational and people-to-
people exchanges, according to CGG. A
noteworthy absence from the annual policy
blueprint was the mention of “Made in
China 2025” a strategy that has caused sus-
picion within the United States and Europe.
Still, Beijing remains committed to build-
ing a powerful manufacturing country as
it enhances its industrial development and
technology innovation. Along with increas-
ing technology advancement, a number of
high-quality new mainland brands such as
Lenovo and Alibaba are emerging and look-
ing to expand their market globally.
With consumption now China’s largest
power for growth, retail sales in China are
forecasted to grow 7.5 percent to $5.6 trillion
this year, surpassing the US retail sales of
$5.5 trillion for the first time to become the
world’s top retail market, according to eMar-
keter. Of China’s 802 million-strong online
population, 28 percent are aged between
20 and 29, according to the China Internet
Network Information Centre. This group
known as the “post-90s” generation is one of
the fastest-growing and increasingly influen-
tial segments of Chinese consumers. China’s
post-90s, the first generation to fully benefit
from China’s reform, grew up in a country
unknown to their parents, one with rap-
idly growing levels of wealth, exposure to
Western culture, and access to new technolo-
gies. They are expected to represent more
than 20 percent of total consumption growth
in China between now and 2030, higher
than any other demographic segment, mak-
ing them the engine of consumption.   This
generation, born on the internet and living
on their mobile devices, are non-savers,
willing to spend on themselves. They spend
most on smartphones, fashion, travel, expe-
riences, products where brand and qual-
ity matter and on things that make their
life more comfortable and convenient. With
younger generations driving consumption,
they are powering transformational eco-
nomic and social change across the country,
which Fung Business Intelligence believes
combined with technological advances will
continue to disrupt the retail landscape. n
Ms. Leslie Richardson has over 20 years of investment
management and equity research experience. She oper-
ates a boutique investor relations firm in Hong Kong
for Asian companies listed in the U.S. and Hong Kong.
She also assists private companies develop investment
material and build an investor following in prepara-
tion for a public listing. Additionally, she is the Asian
Correspondent for Micro-Cap Review, www.microcap-
review.com, a financial magazine focused on mirco-cap
companies. Previously, she worked for CCG Elite in
assisting Asian-based, U.S. listed clients formulate key
communication strategies. Ms. Richardson began her
investment career at U.S. Trust Company then went
on to join Odyssey Advisors as a portfolio manager
and Director of Research. Ms. Richardson specialized
in high growth sectors such as bio-tech, alternative
energy, IT and telecommunications. She earned her
M.B.A. from the University of Southern California. Ms.
Richardson is based in Hong Kong.
www.elite-ir.com.
Note: This article is not an attempt to provide
investment advice. The content is purely the author’s
personal opinions and should not be considered
advice of any kind. Investors are advised to conduct
their own research or seek the advice of a registered
investment professional. Leslie does not own shares
in IPOs or companies mentioned.
MicroCap Review Magazine 93
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